Document:

Exhibit

Exhibit 10.2

Strictly private and confidential

From:     Ligand Holdings UK Ltd.
C/O Legalinx Limited
One Fetter Lane
London, EC4A 1BR
    
To:     Vernalis plc
100 Berkshire Place
Wharfedale Road
Winnersh
Berkshire RG41 5RD

___9 August 2018

Dear Sirs

Break fee letter

We refer to the proposed offer (“Offer”) by Ligand Holdings UK Ltd. (“Ligand”) to acquire the entire issued and to be issued share capital of Vernalis plc (“Vernalis”) (the “Acquisition”) for a cash consideration of 6.2 pence per Vernalis ordinary share (the “Offer Price”).

The parties hereto acknowledge that Ligand has and continues to commit time, expense and personnel to investigating the affairs of Vernalis, including incurring the expense of instructing advisers for the purposes of the Offer and making necessary preparations for the purposes of the documentation and execution of the Offer. As a result and by way of acknowledgement of such commitments, Vernalis hereby undertakes to Ligand  to pay a break fee to Ligand by way of compensation on the terms set out below:

1.    Definitions and Interpretation

1.1    The following definitions apply for the purposes of this letter:
    
	
		
	“Break Fee”
	means  an amount in cash equal to one per cent. of the aggregate value of the issued share capital of Vernalis by reference to the Competing Proposal;

	“Break Fee Event”
	has the meaning given in paragraph 2.1;

	“Business Day”
	means a day (other than Saturdays, Sundays and public holidays) on which banks are open for business in the United Kingdom;

	“Code”
	means the City Code on Takeovers and Mergers as from time to time amended and interpreted by the UK Panel on Takeovers and Mergers;

	“Competing Proposal”
	means an offer (as defined in the Code) for Vernalis made by a third party which is not acting in concert with Ligand;

	“Ligand Group”
	means Ligand Pharmaceuticals Incorporated and its subsidiaries and subsidiary undertakings from time to time and “member of the Ligand Group” shall be construed accordingly;

	“Rule”
	means a rule of the Code;

	“Scheme”
	means the proposed scheme of arrangement under Part 26 of the Companies Act 2006 to implement the Acquisition; and

	“Takeover Offer”
	should the Acquisition be implemented by way of a takeover offer as defined in Chapter 3 of Part 28 of the Companies Act 2006, the offer to be made by or on behalf of Ligand to acquire the entire issued and to be issued share capital of Vernalis not already owned by Ligand.

		
	1.2
	In addition, the expressions “acting in concert”, “control” and “offer” shall, for the purposes of this letter, have the meanings given in the Code.

		
	2.
	Break fee

		
	2.1
	Vernalis shall pay to Ligand (or its nominee) the Break Fee in the event that the Offer is formally announced for the purposes of Rule 2.7 on a recommended basis and, after such announcement a Competing Proposal is announced and that Competing Proposal subsequently becomes or is declared unconditional in all respects or is completed or becomes effective in any other manner whatsoever (the “Break Fee Event”).

		
	2.2
	Vernalis shall pay the Break Fee (which shall be deemed to include VAT, if applicable) by not later than ten Business Days after the date on which the Break Fee Event occurs. Payment shall be made in the form of an electronic funds transfer for same day value to such bank account as may be notified to Vernalis in writing by Ligand and shall be paid in full without any deduction or withholding and without regard to any lien, right of set-off, counterclaim or otherwise.

		
	2.3
	The parties anticipate, and shall use all reasonable endeavours to procure, that the Break Fee is and will not be treated as consideration (in whole or in part) for a taxable supply for VAT purposes.

3.    General

		
	3.1
	No failure or delay by either party in exercising any of its rights under this letter shall operate as a waiver thereof, nor shall any single or partial exercise preclude any other further exercise of such rights.

		
	3.2
	Ligand may assign its rights under this letter to any member of the Ligand Group.

		
	3.3
	Each party shall pay its own costs and expenses in relation to the preparation, negotiation and execution of this letter.

		
	3.4
	For the avoidance of doubt this letter does not constitute a firm intention to make an offer for the purposes of the Code, or such an offer.

		
	3.5
	No variation of this letter shall be effective unless in writing and signed by or on behalf of each of the parties. This letter does not create any rights under the Contracts (Rights of Third Parties) Act 1999 for a person who is not a party to it.

		
	3.6
	This letter and any dispute or claim arising out of or in connection with it or its subject matter shall be governed by and construed in accordance with English law and the parties hereby submit to the exclusive jurisdiction of the English courts.

Please indicate your acceptance of these terms by signing the enclosed duplicate of this letter and returning it to us.

Yours faithfully,

/s/ Matthew Korenberg                
Director
for and on behalf of Ligand Holdings UK Ltd.

We hereby agree to the terms of your letter dated ___9___ August 2018 of which a copy is set out above.

/s/ David Mackney            
Director
for and on behalf of Vernalis plc

Dated:  9 August 2018catc-ex1020_50.htm

EX: 10.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Executive Short-Term Incentive Plan

 

Plan Summary

 

2018 

1

 
 

 

 

 

 

Introduction and Objective

 

Cambridge Trust’s Annual Incentive Plan is designed to recognize and reward management for their collective contributions to the Bank’s success.   The Plan focuses on financial measures that are critical to the Bank’s growth and profitability. Individually and collectively, we all have the ability to influence and drive our success.   When Cambridge Trust succeeds, our employees will succeed. This document summarizes the elements and features of the Plan.

 

In short, the objectives of the Incentive Plan are to:

 

•Focus executive attention on key business metrics.

 

•Align pay with organizational and individual performance.

 

	
 
	
•
	
Encourage  teamwork  and  collaboration  across  all  areas  of  the  Bank.  Our  collective contributions will drive improved business results.
	
 

 

•Motivate and reward the achievement of specific and measurable performance objectives.

 

•Provide competitive total cash compensation.

 

•Provide significant reward for achieving and exceeding performance results.

 

•Enable the Bank to attract and retain the talent needed to drive success.

 

 

Eligibility

 

	
 
	
•
	

	
 

 

	
 
	
•
	
Employees hired during the Plan year will receive pro-rated awards based on their month of hire.
	
 

 

	
 
	
•
	
Participants must be an active employee as of the last day of the measurement period to receive an award, unless they terminate due to death or disability (as determined by the company).  Individuals who terminate for these reasons during the plan year will receive a pro- rated award as further explained in the Terms and Conditions of this plan.
	
 

 

 

Performance Period

 

The performance period and plan operates on a calendar year basis (January 1 – December 31). Actual payout awards are made in cash following year-end after Cambridge Bancorp’s financial results and performance are known.

 

Incentive Payout Opportunity

 

Each participant will have a target incentive opportunity based on his/her role.  The target incentive will  reflect  a  percentage  of  base  salary  and  be  determined  consistent  with  competitive  market practices. Actual awards will vary based on achievement of specific goals.  The opportunity reflects a range of potential awards.  Actual awards may range from 0% of target (for not achieving threshold performance) to 150% of target (for stretch performance).

 

2

 
 

The table below summarizes the incentive ranges for the 2018 Plan year.

 

					
	
 

2018 Short-Term Incentive Targets

	
 

Role
	
Below

Threshold
	
Threshold

(50% of Target)
	
Target

(100%)
	
Stretch

(150% of Target)

	
 

Chief Executive Officer
	
 

0%
	
30%
	
 

60%
	
90%

	
President
	
0%
	
         25%
	
50%
	
75%

	
EVP, Wealth Management 
	
0%
	
 20%
	
40%
	
60%

	
SVP, Chief Financial Officer
	
0%
	
17.5%
	
35%
	
52.5%

	
EVP, Chief Lending Officer
	
0%
	
20%
	
40%
	
60%

	
SVP, Chief Information Officer
	
0%
	
17.5%
	
35%
	
52.5%

	
SVP, Director of Consumer Lending
	
0%
	
17.5%
	
35%
	
52.5%

	
SVP, Director of Private Banking Offices
	
0%
	
17.5%
	
35%
	
52.5%

	
SVP, Marketing
	
0%
	
17.5%
	
35%
	
52.5%

	
SVP, Human Resources
	
0%
	
17.5%
	
35%
	
52.5%

 

Incentive Plan Measures

 

Each participant will have defined performance goals that will determine his/her annual incentive award.  There are two performance categories:  Bank and Individual.  The table below provides guidelines for the allocation of participant’s incentives for each performance component.   The specific allocation of goals will be weighted to reflect the focus and contribution for each role/level in the Bank. Weightings for each performance goal will be determined for each participant at the beginning of each plan year.

 

			
	
Position
	
Bank Performance
	
Individual Performance

	
 

Chief Executive Officer
	
75%
	
25%

	
President
	
25%
	
75%

	
EVP, Wealth Management
	
25%
	
75%

	
SVP, Chief Financial Officer
	
75%
	
25%

	
EVP, Chief Lending Officer
	
40%
	
60%

	
SVP, Director of Consumer Lending  Director
	
40%
	
60%

	
SVP, Director of Private Banking Offices
	
25%
	
75%

	
EVP, Chief Information Officer
	
70%
	
30%

	
SVP, Marketing
	
75%
	
25%

	
SVP, Human Resources
	
75%
	
25%

 

3

 
 

 

Plan Trigger:   In order for the Annual Incentive Plan to ‘activate’, Cambridge Trust must achieve at least 50% of its targeted operating income before securities gains and losses.  If the Bank does not meet this level, the plan will only pay awards at the Committee’s discretion.

 

Bank Performance

 

The Bank performance goals for 2018 are Return on Equity vs. peer and Pre-tax Operating Income.  Return on equity (after tax) will be assessed relative to Cambridge Trust’s performance as compared to the 75th percentile performance of its peer index at the end of the plan year. The peer index is defined as Commercial Banks with assets $500M - $5B, located in the Northeast (CT, MA, ME, NH, NJ, NY, PA, RI and VT) and traded on NYSE, NASDAQ, and OTCBB. The operating income goal will be tied to Cambridge Trust’s fiscal year budget and reflects operating income prior to security gains/losses and taxes and other extraordinary items.

 

The table below shows the specific performance goal at threshold, budget and stretch for 2017. A minimum achievement of threshold level performance is required for the plan to pay for each component.

 

				
	
Bank Performance
	
2017 Performance Goals

	
 

Measures
	
Threshold
	
Target
	
Stretch

	
 

Return on Equity (after tax)
	
80% of 75th Percentile of Peer Index Performance
	
75th Percentile of Peer Index Performance
	
120% of 75th Percentile of Peer Index Performance

	
Operating Income

(before security gains/ losses and taxes)
	
 

50%
	
 

Per Budget
	
 

120%

 

 

Individual Performance

 

In addition to the Bank performance, participants will have individual goals (up to 5 key objectives) that will focus on either department/team performance (e.g. lending growth, deposit growth) and/or individual performance. The mix of these goals will vary by role.     Where possible, performance targets and ranges for each measure will be set at the beginning of the plan year.  If performance-to- goal cannot be quantified, Committee discretion will be used to evaluate goal attainment as follows:

 

					
	
 

Performance
	
 

Did not Achieve
	
 

Partially Achieved
	
 

Fully Achieved
	
 

Clearly Exceeded

	
Award as % of Target
	
0% to 25%
	
26% to 90%
	
91% to 110%
	
111% to 150%

 

Discretion within performance zones will allow for the quality of the result and the impact of external circumstances on performance. For example, if the CEO made great progress toward goal attainment under difficult circumstances, he might receive an award of 85%, even though the goal was not reached.  The same CEO progress toward goal attainment reached under favorable circumstances might only result in a 30% award.

 

Payouts

 

Payouts will be made in cash as soon as possible after the closing of Bank financials each year but typically during the month of February. Awards are calculated based on actual performance relative to target. For Bank goals, achieving threshold performance will pay out at 50% of target incentive, target 

4

 
 

performance will pay out 100% of target, and stretch performance will pay out at 150% of target incentive. Performance below threshold will result in a 0% payout. 

 

Actual payouts for each performance goal will be interpolated between threshold. target and stretch levels to reward incremental improvement. Payouts are assessed by component  such  that  one  goal  may  achieve  stretch  and  another  may  achieve  only  threshold  for individual goals, the range of payout will be 0%- 150% in accordance with the payout grid above.

 

Illustration

 

The table below is an illustration of a simple plan design for a SVP (Tier 4) with a base salary of

$150,000 and an incentive target of 35% of base salary ($45,000). Goals and weightings are for illustration purposes only. This example assumes that Cambridge Trust’s Peer Index performance at the 75th percentile (i.e. target performance goal) was 11%.

 

 

 

							
	
Participant Goals
	
Performance and Payout

	
Performance

Measure
	
Performance Goal

threshold/target/stretch
	
 

Weight
	
 

$
	
Actual

Performance
	
Payout

Allocation

(0% - 150%)
	
 

Payout ($)

	
ROE (after tax)
	
 

8.8% / 11% / 13.2%
	
 

37.5%
	
 

$19,687
	
 

8.8%
	
 

50%
	
 

$9,844

	
Operating

Income
	
 

$13.3M / $16.6M / $19.9M
	
 

37.5%
	
 

$19,687
	
 

$16.6M
	
 

100%
	
 

$19,687

	
Individual performance Goals
	
 

TBD
	
 

25%
	
 

$13,125
	
 

Stretch
	
 

150%
	
 

$19,687

	
TOTAL
	
 
	
100%
	
$52,500
	
90% payout
	
$49,218

 

This participant’s payout of $49,218 is 90% of target. The payout reflects Cambridge Trust’s ROE performance at “threshold”, Operating Income at target and one Individual goal at stretch and another that was not achieved.

5

 
 

Terms and Conditions

 

 

Effective Date

 

This Program is effective January 1, 2018 to reflect plan year January 1, 2018 to December 31, 2018. The Plan is reviewed and approved annually by the Bank’s Compensation Committee to ensure proper alignment with the Bank’s business objectives. Cambridge Trust retains the rights as described below to amend, modify or discontinue the Plan at any time during the specified period. The Incentive Plan will remain in effect until December 31, 2018.

 

Program Administration

 

The Plan is authorized by the Compensation Committee, which reports to the Board of Directors.  The Compensation Committee has the sole authority to interpret the Plan and to make or nullify any rules and procedures, as necessary, for proper administration. Any determination by the Committee will be final and binding on all participants.

 

Program Changes or Discontinuance

 

Cambridge  Trust  has  developed  the  plan  based  on  existing  business,  market  and  economic conditions. If substantial changes occur that affect these conditions, Cambridge Trust may add to, amend, modify or discontinue any of the terms or conditions of the plan at any time.

 

The Compensation Committee and Board of Directors also have the ability to adjust/modify or cancel plan payouts to reflect results from regulatory and/or safety and soundness exams.

 

The Compensation Committee may, at its sole discretion, waive, change or amend the Plan, as it deems appropriate.

 

Incentive Award Payments

 

Awards will be paid as a cash bonus before the end of the first quarter following the Plan year. Awards will be paid out as a percentage of a participant’s base salary earned during the year as of December 31 for a given calendar year. Incentive awards will be considered taxable income to participants  in  the  year  paid  and  will  be  subject  to  withholding  for  required  income  and  other applicable taxes.

 

Any rights accruing to a participant or his/her beneficiary under the Plan shall be solely those of an unsecured general creditor of Cambridge Trust. Nothing contained in the Plan, and no action taken pursuant to the provisions hereof, will create or be construed to create a trust of any kind, or a pledge, or a fiduciary relationship between Cambridge Trust or the CEO and the participant or any other person. Nothing herein will be construed to require Cambridge Trust or the CEO to maintain any fund or to segregate any amount for a participant’s benefit.

 

New Hires, Promotions, and Transfers

 

New participants  will receive a pro rata incentive award based on their month of hire during their initial Plan year.

 

A participant whose work schedule changes during the Plan year will be eligible for prorated treatment that reflects his/her time in the different schedules.

 

6

 
 

 

 

If a participant changes his/her role or is promoted during the Plan year, he/she will be eligible for the new role’s target incentive award on a pro rata basis (i.e. the award will be prorated based on the number of months employed in the respective positions.)

 

Termination of Employment

 

If a Plan participant is terminated by the Bank for any other reason than retirement, death or disability prior to award payouts, no incentive award will be paid. To encourage employees to remain in the employment of Cambridge Trust, a participant must be an active employee of the Bank at the time of the award. (See exceptions for death and disability.)

 

Retirement, Disability and Death

 

Individuals who will be retiring must be an active employee as of December 31 of the plan year in order to receive a payout. If an employee retires prior to this date, the individual will not receive an award. For the purposes of this plan, retirement is defined as age 65; consistent with guidelines established in Cambridge Trust’s existing retirement plan(s).

 

If a participant is disabled by an accident or illness, and is disabled long enough to be placed on long- term disability, his/her bonus award for the Plan period shall be prorated so that no award will be earned during the period of long-term disability.

 

In the event of death, Cambridge Trust will pay to the participant’s estate the pro rata portion of the

award that had been earned by the participant.

 

Ethics and Interpretation

 

If there is any ambiguity as to the meaning of any terms or provisions of this plan or any questions as to the correct interpretation of any information contained therein, the Bank’s interpretation expressed by the Compensation Committee will be final and binding.

 

The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards will subject the employee to disciplinary action up to and including termination of employment.  In addition, any incentive compensation as provided by the plan to which the employee would otherwise be entitled will be revoked.

 

Participants who have willfully engaged in any activity, injurious to the Bank, will upon termination of employment, death, or retirement, forfeit any incentive award earned during the award period in which the termination occurred.

 

Clawback

 

In  the  event  that  Cambridge  Trust  is  required  to  prepare  an  accounting  restatement  due  to  a significant error, omission or fraud (as determined by the members of the Compensation Committee or the Board of Directors), each executive officer who is considered a member of “Senior Management” shall reimburse the Bank for part or the entire incentive award made to such executive officer on the basis of having met or exceeded specific targets for performance periods. For purposes of this policy, (i) the term “incentive awards” means awards under the Bank’s Annual Incentive Plan (AIP), the amount of which is determined in whole or in part upon specific performance targets relating to the financial results of the Bank; and (ii) the term “Senior Management” means employees in SVP roles and above who are eligible to participate in the Bank’s Annual Incentive Plan (AIP). The Bank may seek to reclaim incentives within a three-year period of the incentive payout, even if the participant has terminated employment.

 

 

7

 
 

 

 

 

Miscellaneous

 

The Plan will not  be deemed to give any participant the right to be retained in the employ of Cambridge Trust, nor will the Plan interfere with the right of Cambridge Trust to discharge any participant at any time.

 

In the absence of an authorized, written employment contract, the relationship between employees and Cambridge Trust is one of at-will employment. The Plan does not alter the relationship.

 

This incentive plan and the transactions and payments hereunder shall, in all respect, be governed by, and construed and enforced in accordance with the laws of the state of Massachusetts.

 

Each provision in this Plan is severable, and if any provision is held to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not, in any way, be affected or impaired thereby.

 

 

8

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