Document:

ex10_2.htm

EXHIBIT 10.2 

Share Exchange Agreement

This Share Exchange Agreement (the “Agreement”), dated to be effective as of June 7, 2013, by and among Alas Aviation Corp., a Delaware corporation, (“Alas”), Corporacion Ygnus Air, S.A. a corporation organized under the laws of Spain (“Cygnus”); and Arnold Leonora (“Leonora”) and Air Transportation Group Private Equity, Inc., a Delaware corporation (“ATG”), as shareholders of Cygnus, with reference to the following:

A. Alas is a Delaware corporation organized on June 7, 2013 following a triangular merger pursuant to Section 251(g) of the Delaware General Corporation Law.  Alas has authorized capital stock of 60,000,000 shares of common stock, $0.01 par value (“Alas Common Stock”), of which 35,000,000 are issued.  There are 1,000,000 shares authorized for the issuance of preferred stock, $0.01 par value, of which none are outstanding.

B.  Cygnus is a privately held corporation organized under the laws of Spain.  Cygnus has one class of ordinary shares issued and outstanding, fifty one percent (51%) of which are held by Leonora and forty nine percent (49%) of which are held by ATG.

C. The respective Boards of Directors of Alas and Cygnus have deemed it advisable and in the best interests of Alas and Cygnus and their respective shareholders that Cygnus be acquired by Alas pursuant to the terms and conditions set forth in this Agreement.

D. Alas and Cygnus propose to enter into this Agreement which provides among other things, that forty nine percent (49%) of the issued and outstanding shares of Cygnus held by ATG be acquired by Alas and the financial rights related to the fifty one percent (51%) held by Leonora in exchange for thirty one million five hundred thousand (31,500,000) shares of restricted Alas Common Stock as more fully described in this Agreement.

E.  The parties desire the transaction to qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.

NOW THEREFORE, the parties hereto, intending to be legally bound, make the following promises, covenants, representations, warranties and agreements:

1.           Pre-Closing Actions of Alas.  Either prior to or immediately upon execution of this Agreement and prior to the Closing Date as set forth herein, Alas shall undertake the following actions:

(a)           The Board of Directors of Alas shall unanimously approve and deliver to Davisson & Associates, PA (the “Escrow Agent”) in escrow, a resolution  approving the transactions set forth herein;

(b)           Alas shall prepare and deliver to counsel for Cygnus, for review, a Form 8-K filing which reflects the transactions contemplated by this Agreement, as required to be filed with the Securities and Exchange Commission (the “Commission”) on the Closing Date (defined below);

(c)           Alas shall take such actions as are required such that at Closing there shall be a total of no more than thirty five million (35,000,000) shares of common stock issued and outstanding;

(d)           Alas shall issue / deliver to the Escrow Agent a total of thirty one million five hundred thousand (31,500,000) shares of common stock of Alas (which at the time of Closing will reflect at least 90% of the fully diluted issued and outstanding shares of common stock of Alas) for delivery to ATG, Leonora or their designees at Closing;

 

  

 

  

 

(e)           Alas may, but is not required to deliver letters of resignation of Frank Dreschler, as the sole officer and director of Alas to be effective at the Closing Date, however subject to the effectiveness of any Schedule 14F-1 Information Statement that may be required to be filed with the Commission immediately upon closing of this Agreement; and

(f)           Alas shall use its reasonable best efforts to prepare and complete the documents necessary to be filed with local, state and federal authorities to consummate the transactions contemplated hereby.

2.           Pre-Closing Actions of Cygnus.  Immediately upon execution of this Agreement and prior to the Closing Date as set forth herein, Cygnus shall undertake the following actions:

(a)           Cygnus shall cause its Board of Directors to execute and deliver resolutions approving the transactions set forth herein, including but not limited to the approval to transfer and transfer of all Cygnus Shares held by ATG representing forty nine percent (49%) of the issued and outstanding securities of Cygnus.  Cygnus shall cause its shareholders to execute and deliver resolutions approving the transactions set forth herein;

(b)           Cygnus shall complete an audit of its financial statements for the two fiscal years ended 2011 and 2012, and all interim financial statements required for inclusion in the Form 8-K filing to be completed at Closing (the “Cygnus Financial Statements”);

(c)           Cygnus shall deliver to Davisson & Associates, as Escrow Agent, common/ordinary shares representing forty nine percent (49%) of the issued and outstanding shares of Cygnus, for delivery to Alas at Closing (the “Escrowed Cygnus Shares”); and

(d)           Cygnus shall cooperate with its reasonable best efforts to assist Alas to prepare and complete the documents necessary to be filed with local, state and federal authorities to consummate the transactions contemplated hereby

3.           Pre-Closing Actions of ATG.                                                      ATG shall deliver to Davisson & Associates, as Escrow Agent, common/ordinary shares representing forty nine percent (49%) of the issued and outstanding shares of Cygnus, for delivery to and cancelation by Cygnus at Closing along with all necessary documents of transfer including stock powers, signature guarantees etc. (the “ATG Cygnus Shares”);

4.           Conditions to Closing.  The parties’ obligation to close the proposed acquisition will be subject to specified conditions precedent including but not limited to, the following:

(a)           The representations and warranties of Cygnus as set forth in Section 7 herein shall remain accurate as of the Closing Date and no material adverse change in the business of Cygnus shall have occurred;

(b)           The representations and warranties of Alas as set forth in Section 8 herein shall remain accurate as of the Closing Date and no material adverse change in the business of Alas shall have occurred;

(c)           All the documents necessary to be filed with local, state and federal authorities, including without limitation the Form 8-K, are prepared;

(d)           Alas shall have provided the board resolution and any other approval required to complete an election or appointment to the Alas’ board of directors;

(e)           Cygnus shall have completed and delivered its audited financial statements in a form as required to complete and file the Form 8-K at Closing; and

 

  

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(f)           Alas shall retain its good standing as a publicly traded company quoted on the OTCBB under the symbol “VERL,” which trading symbol the parties contemplate will be changed to reflect the change in name effected by the reverse triangular merger referred to in Recital A, above. The following symbols will be submitted to the Financial Industry Regulatory Authority (“FINRA”): “ALAS,” “AIRL” or “WING.”

5.           At and Subsequent to the Closing.

(a)           At the Closing, Davisson & Associates, PA shall release from escrow letters of resignation as may have been voluntarily tendered by Frank Dreschler and any Alas Board Resolutions which may effect the election of Arnold Leonora, Pablo Morera and John Wensveen to its Board of Directors;

(b)           At the Closing, Davisson & Associates, PA shall deliver the Escrowed Alas Shares to Cygnus for delivery to the shareholders of Cygnus;

(c)           At the Closing, Davisson & Associates, PA shall deliver the Escrowed Cygnus Shares to Alas;

(d)           At the Closing, Davisson & Associates, PA shall deliver the Escrowed ATG Cygnus Shares to Cygnus for cancelation;

(e)           At the Closing, if the existing officers of Alas resign which is contemplated by the parties but not a condition to this Agreement, they shall be replaced by those officers appointed by the new Board of Directors;

(f)           Immediately subsequent to the Closing, the combined entities will file the Form 8-K required for the transactions contemplated by this Agreement; and

(g)           The execution and delivery of this Agreement shall have the following effect at Closing, the financial rights, but not voting or any other control rights with respect to the fifty one percent (51%) of the shares of Cygnus held by Arnold Leonora individually shall be held in trust for the benefit of Alas and the assignment of such rights to Alas shall be irrevocable.  It is the intent of the parties to have 100% of the financial rights in Cygnus be acquired by Alas or the right to receive the maximum financial benefits associated with those shares allowable without jeopardizing the flight certificate held by Cygnus.  The Spanish Civil Aviation Authority requires that control of a company holding such flight certificates must be held by a national of the European Union, of which by virtue of his citizenship, Mr. Leonora is a member. Subsequent to Closing the parties will seek to amend this temporary assignment/beneficiary-trustee relationship to provide a more formal structure that may include the reincorporation of Cygnus as an S.R.L. so that financial and governance rights may be separated in a manner that will be in full compliance with all applicable rules and regulation. Notwithstanding anything to the contrary in the event that the Spanish Civil Aviation Authority were to challenge this assignment of all financial rights associated with the fifty one percent (51%) of Cygnus’ shares, this arrangement shall be void ab initio but then, only to the extent that it could violate the requirements of the civil aviation authority and the remainder of those rights assigned shall be modified to give full force and effect to the intent of the parties.

6.           Timing of Closing.  The initial closing shall occur on June 25, 2013, at 10:00 A.M., Central Standard Time regardless of the Escrow Agent being in receipt of the items described above, whereby the records of the parties shall reflect this closing and the respective equity ownership as provided for herein, subject to final closing upon Escrow Agent’s receipt of all documents and audited financial statements by Alas.

 

7.           Representations of Cygnus.  Except as set forth in the Cygnus Financial Statements delivered as set forth in Section 2(b) above, Cygnus represents and warrants as follows:

(a)           Ownership of Shares.  As of the Closing Date, Alas will become the record and beneficial owner of the Escrowed ATG Cygnus Shares.  The Escrowed ATG Cygnus Shares will be free from claims, liens or other encumbrances, except as provided under applicable federal and state securities laws.  The Escrowed ATG Cygnus Shares shall reflect 49% of the ownership equity of Cygnus.

(b)           Fully paid and Nonassessable.  The Escrowed ATG Cygnus Shares constitute duly and validly issued ownership interests of Cygnus, and are fully paid and nonassessable, and Cygnus further represents that it has the power and the authority to execute this Agreement and to perform the obligations contemplated hereby;

  

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(c)           Organization of Cygnus; Authorization.  Cygnus is a corporation duly organized, validly existing and in good standing under the laws of Spain with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action and this Agreement constitutes a valid and binding obligation of Cygnus; enforceable against it in accordance with its terms.

(d)           Capitalization.  All of the issued and outstanding shares of Cygnus are validly issued, fully paid and non-assessable and there is not and as of the Closing Date there will not be outstanding any warrants, options or other agreements on the part of any of Cygnus obligating such entity to issue any additional shares of common or preferred stock, any ownership interest or any of its securities of any kind.

(e)           No Conflict as to Cygnus.  Neither the execution and delivery of this Agreement nor the consummation of the exchange of the Escrowed ATG Cygnus Shares will (a) violate any provision of the Corporate Charter or Bylaws (or other governing instrument) of Cygnus or (b) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any Encumbrance upon any property or assets of Cygnus under, any material agreement or commitment to which Cygnus is a party or by which its property or assets is bound, or to which any of the property or assets of Cygnus is subject, or (c) violate any statute or law or any judgment, decree, order, regulation or rule of any court or other Governmental Body applicable to Cygnus except, in the case of violations, conflicts, defaults, terminations, accelerations or encumbrances described in clause (b) of this Section for such matters which are not likely to have a material adverse effect on the business or financial condition of Cygnus.

(f)           Consents and Approvals of Governmental Authorities. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body is required to be made or obtained by Cygnus in connection with the execution, delivery and performance of this Agreement by Cygnus or the consummation of the sale of the Escrowed ATG Cygnus Shares.

(g)           Other Consents. No consent of any Person is required to be obtained by Cygnus to the execution, delivery and performance of this Agreement or the consummation of the sale of the Escrowed ATG Cygnus Shares, including, but not limited to, consents from parties to leases or other agreements or commitments, except for any consent which the failure to obtain would not be likely to have a material adverse effect on the business and financial condition of Cygnus as a whole.

(h)           Litigation.  There is no action, suit, inquiry, proceeding or investigation by or before any Court or Governmental body pending or threatened in writing against or involving Cygnus which is likely to have a material adverse effect on the business or financial condition of Cygnus as a whole, or which questions or challenges the validity of this Agreement.  Cygnus is not subject to any judgment, order or decree that is likely to have a material adverse effect on the business or financial condition of Cygnus as a whole.

(i)           Absence of Certain Changes. Cygnus has not:

1.           suffered the damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the business or financial condition, or made any disposition of any of its material properties or assets other than in the ordinary course of business;

2.           made any change or amendment in its certificate of incorporation or bylaws, or other governing instruments;

3.           other than the Escrowed ATG Cygnus Shares and the balance of the Cygnus Shares held by Arnold Leonora equal to 51% of the issued and outstanding shares of Cygnus, Cygnus has not issued or sold any Equity Securities or other securities, acquired, directly or indirectly, by redemption or otherwise, any such Equity Securities, reclassified, split-up or otherwise changed any such Equity Security, or granted or entered into any options, warrants, calls or commitments of any kind with respect thereto;

  

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4.           organized any new Subsidiary or acquired any Equity Securities of any Person or any equity or ownership interest in any business;

5.           borrowed any funds or incurred, or assumed or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability with respect to any such indebtedness for borrowed money;

6.           paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business;

7.           prepaid any material obligation having a maturity of more than 90 days from the date such obligation was issued or incurred;

8.           cancelled any material debts or waived any material claims or rights, except in the ordinary course of business;

9.           disposed of or permitted to lapse any rights to the use of any material patent or registered trademark or copyright or other intellectual property owned or used by it;

10.           sold, transferred or otherwise disposed of any material assets, including without limitation technology and intangible assets;

11.           granted any general increase in the compensation of officers or employees (including any such increase pursuant to any employee benefit plan);

(j)           Compliance with Law. The operations of Cygnus have been conducted in accordance with all applicable laws and regulations of all Governmental Bodies having jurisdiction over them, except for violations thereof which are not likely to have a material adverse effect on the business or financial condition of Cygnus as a whole.  Cygnus has not received any notification of any asserted present or past failure by it to comply with any such applicable laws or regulations.  Cygnus has all material licenses, permits, orders or approvals from the Governmental Bodies required for the conduct of its business, and is not in material violation of any such licenses, permits, orders and approvals.  All such licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any thereof has been threatened.

(k)          Title to Properties.  Cygnus owns all the material properties and assets that it purports to own (real, personal and mixed, tangible and intangible), including, without limitation, all the material properties and assets reflected in the Cygnus Financial Statements.  All properties and assets, including without limitation technology and intangible assets, are free and clear of all material encumbrances and are not, in the case of real property, subject to any material rights of way, building use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever except, with respect to all such properties and assets, (a) mortgages or security interests shown on the Cygnus Financial Statements as securing specified liabilities or obligations, with respect to which no default (or event which, with notice or lapse of time or both, would constitute a default) exists, (b) mortgages or security interests incurred in connection with the purchase of property or assets after the date of such financial statements (such mortgages and security interests being limited to the property or assets so acquired), with respect to which no default (or event which, with notice or lapse of time or both, would constitute a default) exists, (c) as to real property, (i) imperfections of title, if any, none of which materially detracts from the value or impairs the use of the property subject thereto, or impairs the operations of Cygnus as a whole and (ii) zoning laws that do not impair the present or anticipated use of the property subject thereto, and (d) liens for current taxes not yet due.  The properties and assets of Cygnus include all rights, properties and other assets necessary to permit Cygnus to conduct business in all material respects in the same manner as it is conducted on the date of this Agreement.

8.           Representations of Alas; Alas for its respective rights and interests represents and warrants as follows:

(a)           Organization; Authorization.  Alas is a corporation duly organized, validly existing and in good standing under the laws of Delaware with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action of Alas and this Agreement constitutes a valid and binding obligation; enforceable against in accordance with its terms.  Alas has one subsidiary under the name of Alas Acquisition Company.

  

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(b)           Capitalization.  The authorized capital stock of Alas Aviation Corp. consists of 60,000,000 shares of common stock, par value $0.01 per share, and 1,000,000 shares of preferred stock, authorized.  As of the date of this Agreement, Alas has approximately 35,000,000 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.  As of the Closing Date, Alas shall have no more than 35,000,000 shares of common stock outstanding (not including the Alas Escrowed Shares).  No shares have otherwise been registered under state or federal securities laws.  As of the Closing Date, all of the issued and outstanding shares of common stock of Alas are validly issued, fully paid and non-assessable.  There are no other options or other agreements on the part of Alas obligating  Alas or its successor, LMK Global Resources, Inc. to issue any additional shares of common or preferred stock or any of its securities of any kind, except for such shares or securities called for in this Agreement.  The Common Stock of Alas is presently quoted on the over-the-counter bulletin board under the symbol “VERL.”  Alas/VERL is current in all of its required filings with the US Securities and Exchange Commission.  Upon consummation of this Agreement Alas is not a “shell” corporation as defined by Rule 405 promulgated by the US Securities and Exchange Commission.

(c)           No Conflict as to Alas and Subsidiaries.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein will (a) violate any provision of the certificate of incorporation or bylaws of Alas or any of its Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any Encumbrance upon any property or assets of Alas or any of its Subsidiaries under, any material agreement or commitment to which Alas, any of its Subsidiaries is a party or by which any of their respective property or assets is bound, or to which any of the property or assets of Alas or any of its Subsidiaries is subject, or (c) violate any statute or law or any judgment, decree, order, regulation or rule of any court or other Governmental Body applicable to Alas or any of its Subsidiaries except, in the case of violations, conflicts, defaults, terminations, accelerations or Encumbrances described in clause (b) of this Section for such matters which are not likely to have a material adverse effect on the business or financial condition of  Alas and its subsidiaries, taken as a whole.

(d)           Consents and Approvals of Governmental Authorities. Except with respect to a Form 8-K filing with the US Securities and Exchange Commission, no consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body is required to be made or obtained by Alas in connection with the execution, delivery and performance of this Agreement by Alas or the consummation of the transactions contemplated herein.

(e)           Other Consents. No consent of any Person is required to be obtained by Alas to the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated herein, including, but not limited to, consents from parties to leases or other agreements or commitments, except for any consent which the failure to obtain would not be likely to have a material adverse effect on the business and financial condition of Alas.

 (f)           Litigation.  There is no action, suit, inquiry, proceeding or investigation by or before any court or Governmental Body pending or threatened in writing against or involving Alas, its successors or any of its Subsidiaries which is likely to have a material adverse effect on the business or financial condition of Alas and any of its Subsidiaries, taken as whole, or which would require a payment by Alas or its subsidiaries in excess of $2,000 in the aggregate or which questions or challenges the validity of this Agreement. Neither Alas nor any of its successors or Subsidiaries is subject to any judgment, order or decree that is likely to have a material adverse effect on the business or financial condition of Alas or any of its Subsidiaries, taken as a whole, or which would require a payment by Alas or its Subsidiaries in excess of $2,000 in the aggregate.

(g)           Absence of Certain Changes. Neither Alas nor any of its Subsidiaries has:

1.           suffered the damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the business or financial condition of  Alas and its Subsidiaries, taken as a whole, or made any disposition of any of its material properties or assets other than in the ordinary course of business;

2.           not made any change or amendment in its certificate of incorporation or bylaws, or other governing instruments;

 

  

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3.           paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business;

4.           prepaid any material obligation having a maturity of more than 90 days from the date such obligation was issued or incurred;

5.           cancelled any material debts or waived any material claims or rights, except in the ordinary course of business;

6.           disposed of or permitted to lapse any rights to the use of any material patent or registered trademark or copyright or other intellectual property owned or used by it;

7.           granted any general increase in the compensation of officers or employees (including any such increase pursuant to any employee benefit plan);

8.           purchased or entered into any contract or commitment to purchase any material quantity of raw materials or supplies, or sold or entered into any contract or commitment to sell any material quantity of property or assets, except (i) normal contracts or commitments for the purchase of, and normal purchases of, raw materials or supplies, made in the ordinary course business, (ii) normal contracts or commitments for the sale of, and normal sales of, inventory in the ordinary course of business, and (iii) other contracts, commitments, purchases or sales in the ordinary course of business;

9.           written off or been required to write off any notes or accounts receivable in an aggregate amount in excess of  $2,000;

10.           written down or been required to write down any inventory in an aggregate amount in excess of  $ 2,000;

11.           entered into any collective bargaining or union contract or agreement; or

12.           other than the ordinary course of business, incurred any liability required by generally accepted accounting principles to be reflected on a balance sheet and material to the business or financial condition of LMK and their subsidiaries taken as a whole.

(h)           Compliance with Law. The operations of Alas, its successors and its Subsidiaries have been conducted in accordance with all applicable laws and regulations of all Governmental Bodies having jurisdiction over them, except for violations thereof which are not likely to have a material adverse effect on the business or financial condition of Alas and its Subsidiaries, taken as a whole, or which would not require a payment by Alas or its Subsidiaries in excess of $2,000 in the aggregate, or which have been cured. Neither Alas, its successors nor any of its Subsidiaries has received any notification of any asserted present or past failure by it to comply with any such applicable laws or regulations. Alas and its Subsidiaries have all material licenses, permits, orders or approvals from the Governmental Bodies required for the conduct of their businesses, and are not in material violation of any such licenses, permits, orders and approvals. All such licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any thereof has been threatened.

 

  

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9.           Notices.  Any notice which any of the parties hereto may desire to serve upon any of the other parties hereto shall be in writing and shall be conclusively deemed to have been received by the party at its address, if mailed, postage prepaid, United States mail, registered, return receipt requested, to the following addresses:

If to Cygnus Air, S.A.:                           Cygnus Air, S.A.

Attn: Arnold Leonora

4002 Highway 78, Suite 530-324

Snellville, Georgia 30039

Facsimile: (954) 212-7751

If to Alas Aviation Corp.:                   Alas Aviation Corp.

c/o Heskett & Heskett

John Heskett, Esq.

501 South Johnstone, Suite 501

Bartlesville, Oklahoma 74003

Facsimile (918) 336-3152

With copies to:                                     Lanham & Lanham, LLC

Attn: Randall J. Lanham, Esq.

28562 Oso Parkway, Unit D

Rancho Santa Margarita, CA 92688

Facsimile:  (949) 666-5006

Davisson & Associates, PA

Attn: Peder K. Davisson, Esq.

4124 Quebec Avenue North, Suite 306

Minneapolis, MN  55427

Facsimile: (763)  355-5678

 

10.           Successors.  This Agreement shall be binding upon and inure to the benefit of the heirs, personal representatives and successors and assigns of the parties.

11.           Choice of Law.  This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, and the parties submit to the exclusive jurisdiction of the courts of Delaware in respect of all disputes arising hereunder.

12.           Counterparts.  This Agreement may be signed in one or more counterparts, all of which taken together shall constitute an entire agreement.

 

  

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13.           Confidential Information.  Each of Cygnus, ATG, Leonora and Alas hereby acknowledges and agrees that all information disclosed to each other whether written or oral, relating to the other’s business activities, its customer names, addresses, all operating plans, information relating to its existing services, new or envisioned products or services and the development thereof, scientific, engineering, or technical information relating to the others business, marketing or product promotional material, including brochures, product literature, plan sheets, and any and all reports generated to customers, with regard to customers, unpublished list of names, and all information relating to order processing, pricing, cost and quotations, and any and all information relating to relationships with customers, is considered confidential information, and is proprietary to, and is considered the invaluable trade secret of such party (collectively “Confidential Information”).  Any disclosure of any Confidential Information by any party hereto, its employees, or representatives shall cause immediate, substantial, and irreparable harm and loss to the other.  Each party understands that the other desires to keep such Confidential Information in the strictest confidence, and that such party’s agreement to do so is a continuing condition of the receipt and possession of Confidential Information, and a material provision of this agreement, and a condition that shall survive the termination of this Agreement.  Consequently, each party shall use Confidential Information for the sole purpose of performing its obligations as provided herein.

 

14.           Entire Agreement.  This Agreement together with all of the transaction documents related thereto sets forth the entire agreement and understanding of the parties hereto with respect to the transactions contemplated hereby.

15.           Costs and Expenses.  Except as otherwise specifically set forth herein, each party will bear the costs its own attorneys, brokers, investment bankers, agents, and finders employed by, such party.  The parties will indemnify each other against any claims, costs, losses, expenses or liabilities arising from any claim for commissions, finder's fees or other compensation in connection with the transactions contemplated herein which may be asserted by any person based on any agreement or arrangement for payment by the other party.

16.           Attorney’s Fees.  Should any action be commenced between the parties to this Agreement concerning the matters set forth in this Agreement or the right and duties of either in relation thereto, the prevailing party in such action shall be entitled, in addition to such other relief as may be granted, to a reasonable sum as and for its attorney’s fees and costs.

17.           Finders.  Alas, Cygnus, ATG and Leonora each represents and warrants that there are no finders or other parties which have represented them in connection with this transaction which have not received appropriate compensation.

 

  

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

For and on behalf of:                           ALAS AVIATION CORP.

A Delaware Corporation

By:           /s/Frank Dreschler______________

      Frank Dreschler

      President and Chief Executive Officer

For and on behalf of:                            CYGNUS AIR, S.A.

A corporation organized under the laws of Spain

By:           /s/Arnold Leonora______________

      Arnold Leonora,

  Managing Director and President

AIR TRANSPORTIATION GROUP PRIVATE EUITY, INC.

A Delaware Corporation

By:           /s/Arnold Leonora______________

        Arnold Leonora, President

By:           /s/Arnold Leonora______________

        Arnold Leonora, Individually

    as a Shareholder of Cygnus Air, S.A.

 

 

 

- 10 -Exhibit 10.1

 

PACIFIC MERCANTILE BANCORP

CHANGE IN CONTROL SEVERANCE PLAN

 

ARTICLE 1
 ESTABLISHMENT AND PURPOSE

 

1.1                               Establishment of the Plan.  Pacific Mercantile Bancorp (the “Company”) hereby establishes a change in control severance plan to be known as the “Pacific Mercantile Bancorp Change in Control Severance Plan” (the “Plan”).

 

1.2                               Purpose of the Plan.  The Plan is designed to provide certain severance payments and other benefits to selected employees of the Company and its Subsidiaries in the event that their employment (1) is terminated by the Company without Cause or by the employee for Good Reason, and (2) such termination occurs shortly prior to or within the one (1) year period immediately following a Change in Control.  The Plan is intended as an unfunded welfare benefit plan for purposes of ERISA, and a severance pay plan within the meaning of Department of Labor Regulation 2510.3-2(b).

 

ARTICLE 2
  DEFINITIONS

 

Whenever used in the Plan, the following terms shall have the meanings set forth below (such defined terms are in addition to terms defined elsewhere in the Plan) unless the context clearly indicates to the contrary:

 

(a)                                 “Base Salary” means, except as may otherwise be specified in a Participant’s Participation Agreement, the salary of record for the Participant in United States dollars as annual salary, whether or not deferred, but excluding all other amounts received, including bonus and other incentive compensation and benefits under pension, welfare and fringe benefit plans.

 

(b)                                 “Benefit Payment” means the amount equal to the excess of the monthly COBRA premium charged by the Company to terminated employees, as in effect at the Effective Date of Termination, over the monthly premium for such benefits charged to active employees, applicable to the medical, dental and/or vision benefits for which Participant (and his or her eligible dependents) was enrolled at the Effective Date of Termination.

 

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

 

(d)                                 “Cause” means any of the following: (i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any documents or records of the Company or any Subsidiary; (ii) the Participant’s material failure to abide by the Company’s or any Subsidiary’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct); (iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the Company or any Subsidiary (including, without limitation, the Participant’s improper use or disclosure of the Company’s or any Subsidiary’s

 

1

 

confidential or proprietary information); (iv) any intentional act by the Participant which has a material detrimental effect on the Company’s or any Subsidiary’s reputation or business; (v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from the Company or any Subsidiary, and a reasonable opportunity to cure such failure or inability; (vi) any material breach by the Participant of any employment, service, non-solicitation, confidentiality or other similar agreement between the Participant and the Company or any Subsidiary, as determined in good faith by the Company, which breach is not cured pursuant to the terms of such agreement; or (vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the Participant’s ability to perform his or her duties with the Company or any Subsidiary.  A Participant’s service shall be deemed to have been terminated for Cause if, after the Participant’s service has terminated, facts or circumstances are discovered that would have justified a termination for Cause.

 

(e)                                  “Change in Control” means the occurrence or consummation of any of the following events:

 

(i)                                     the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not shareholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization fifty percent (50%) or more of the voting power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity;

 

(ii)                                  the sale, transfer or other disposition of all or substantially all of the Company’s assets;

 

(iii)                               a change in the composition of the Board, as a result of which fewer than fifty percent (50%) of the incumbent directors are directors who either (A) had been directors of the Company on the date twenty-four (24) months prior to the date of such change in the composition of the Board (the “Original Directors”), or (B) were appointed by the Board, or nominated for election to the Board, with the affirmative votes of at least a majority of the aggregate of (1) the Original Directors who were in office at the time of their appointment or nomination and (2) the directors whose appointment or nomination was previously approved in a manner consistent with this paragraph (B); or

 

(iv)                              any transaction as a result of which any one person or more than one person acting as a group (but excluding Carpenter Fund Manager GP, LLC and its affiliates) acquires ownership of stock of the Company that, together with 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. If a person or group is considered either to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a subsequent “Change in Control” of the Company.  For the avoidance of doubt, the acquisition and/or ownership of

 

2

 

stock of the Company by Carpenter Fund Manager GP, LLC and/or its affiliates shall in no circumstance constitute a “Change in Control” for purposes of the Plan.

 

(f)                                   “Change in Control Benefits” means the benefits described in Article 4.

 

(g)                                  “Change in Control Benefits Period” means the number of months specified in the Participation Agreement with respect to which the Participant shall receive Change in Control Benefits.

 

(h)                                 “COBRA” means Section 4980B of the Code and Section 601 et seq. of ERISA.

 

(i)                                     “Code” means the Internal Revenue Code of 1986, as amended.

 

(j)                                    “Committee” means the Compensation Committee of the Board.

 

(k)                                 “Disability” means a physical or mental impairment which prevents a Participant from performing the essential functions of the Participant’s position with the Company with or without reasonable accommodation.

 

(l)                                     “Effective Date of Termination” means the date on which a Participant’s Termination of Employment occurs.

 

(m)                             “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

(n)                                 “Good Reason Termination” means the termination of a Participant’s employment by a Participant pursuant to and in accordance with the procedures set forth in Section 3.2(b).

 

(o)                                 “Good Reason” means, with respect to a particular Participant, the occurrence of any one or more of the following without the Participant’s express written consent:

 

(i)                                     a change in the Participant’s position with the Company or a Subsidiary that materially reduces the Participant’s level of authorities, responsibilities or duties (including, without limitation, any change in the Participant’s position such that the Participant is no longer employed in substantially the same position with substantially the same level of authorities, responsibilities or duties at the ultimate parent corporation in an affiliated group of companies);

 

(ii)                                  a reduction in the Participant’s Base Salary by more than ten percent (10%); or

 

(iii)                               receipt by the Participant of notice that the Participant’s principal workplace will be relocated by more than thirty-five (35) miles from the Participant’s current workplace and to a location that is further from the Participant’s then current principal residence than the Participant’s then current principal workplace.

 

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(p)                                 “Involuntary Separation from Service” means the termination of a Participant’s employment by the Company for any reason other than Cause, death of the Participant, or Disability.

 

(q)                                 “Notice of Good Reason” means a written notice stating all facts constituting a Good Reason.

 

(r)                                    “Participant” means an employee of the Company or any Subsidiary who is part of a select group of management or highly compensated employees, who has been informed in writing that he or she is eligible for benefits under the Plan and who also enters into a Participation Agreement.

 

(s)                                   “Participation Agreement” means an agreement under this Plan in a form specified by the Company that is signed by the Participant and an officer of the Company.

 

(t)                                    “Prorated Annual Bonus Award” means, for any fiscal year, the annual bonus award that the Participant would have received had the Participant remained employed for the entire fiscal year/performance period, but prorated based on the actual Base Salary paid to the Participant during such fiscal year for services rendered through the Effective Date of Termination.  For the purposes of this definition, the Committee will not exercise its discretion as to the subjective portion of the annual bonus award, and any such subjective amount will be included in such annual bonus award at target, subject to proration as described above.

 

(u)                                 “Release” means a release agreement approved by the Company that is effective after the Effective Date of Termination, which will require the Participant to waive and release: (i) all known and unknown claims and rights directly or indirectly arising from his or her employment and the termination of that employment, including any and all claims under applicable state and federal laws, including but not limited to claims under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991; Sections 1981 and 1983 of the Civil Rights Act of 1866; Executive Order 11246; the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act; the Family and Medical Leave Act; ERISA; the Worker Adjustment and Retraining Notification Act (“WARN”) and California Labor Code Sections 1400 through 1408 (“Cal-WARN”); the National Labor Relations Act; the Occupational Safety and Health Act; the Genetic Information Nondiscrimination Act of 2008; the Equal Pay Act; the Rehabilitation Act of 1973; the Americans With Disabilities Act of 1990; the California Government and Business & Professions Codes; the California Family Rights Act; the United States and California Constitutions; the Private Attorneys General Act of 2004; and the California Fair Employment and Housing Act; (ii) any known or unknown claims under common law, contract, or regulation; and (iii) any other known or unknown claim or dispute that exists or may exist stemming from conduct or events arising or occurring through the time Participant signs the release.  In releasing these claims against the Company and its Subsidiaries, Participant will also be releasing the officers, directors, shareholders, managers, affiliates, agents and representatives, successors and assigns of the Company and its Subsidiaries.  Notwithstanding the foregoing, it is not a condition for Change in Control Benefits that a Participant agree to waive any rights to benefits for worker’s compensation or unemployment compensation benefits; benefits under COBRA; any rights under state or federal law which may not be waived by a release agreement; or for any right to which Participant is vested under the

 

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employee benefit plans of the Company or its Subsidiaries to the extent they are identified in the Release; said claims shall be preserved.  Also, it shall not be a condition for Change in Control Benefits that the Participant waive any claims which arise from events occurring after the execution of the release of claims.

 

(v)                                 “Subsidiary” means any entity in which the Company owns a controlling interest.

 

(w)                               “Termination of Employment” with respect to a Participant means the Participant’s “separation from service,” as defined under Code Section 409A and Treasury Regulation Section 1.409A-1(h)(i), from the Company and its Subsidiaries (as applicable).

 

ARTICLE 3
 ELIGIBLE PARTICIPANTS.

 

3.1                               Designation of Eligibility.  The Board or the Committee shall determine whether an employee is initially eligible as a Participant, whether that Participant retains that eligibility to receive Change in Control Benefits under the Plan and the level of Change in Control Benefits to which that Participant may become entitled as provided herein.  Eligibility decisions shall be made by official action of the Board or the Committee, or the individual or subcommittee to whom a delegation is made by the Board or the Committee.  Subject to Sections 3.2 and 3.3, eligibility shall be effective on the date established by the Board or the Committee.  Participants who become ineligible shall be informed in writing.  If a Participant is notified of ineligibility or termination of the Plan, such notice shall be effective on the first anniversary of the date that the Participant is notified of that decision.  Each Participant must acknowledge and agree, by executing the Participation Agreement: (a) to certain non-solicitation and confidentiality provisions; (b) that the Plan supersedes entirely any prior agreement, arrangement, plan or program for the payment of severance, salary continuation or the provision of other benefits in connection with a Change in Control; and (c) that Participant accepts the authority of the Board and the Committee under Article 5.

 

3.2                               Eligibility for Change in Control Benefits. A Participant will be eligible for Change in Control Benefits under the Plan only if, during the period (a) commencing on the earlier of (i) the occurrence of a Change in Control and (ii) public announcement of an intended or anticipated Change in Control, provided that such Change in Control actually occurs, and (b) ending on the date one (1) year following a Change in Control, one of the following occurs:

 

(a)                                 Involuntary Separation from Service.  The Participant has an Involuntary Separation from Service.

 

(b)                                 Good Reason Termination. A Good Reason occurs and the Participant terminates employment with the Company pursuant to and in accordance with the procedures set in this Section 3.2(b).  In the event a condition arises which may constitute a Good Reason, the Participant shall provide a Notice of Good Reason to the Company within 90 days of the initial existence of the Good Reason.  Upon receiving a Notice of Good Reason, the Company shall be permitted a period of 30 days to remedy the condition.  If such condition is not remedied within such 30-day period, the Participant shall terminate his or her employment within 60 days of (a)

 

5

 

providing the Notice of Good Reason to the Company or (b) the Change in Control, whichever is later.  In the event the Participant does not notify the Company within 90 days of the initial existence of the Good Reason, or a Participant does not terminate his or her employment within 60 days of the later of providing the Notice of Good Reason to the Company or the Change in Control, the Participant shall not be eligible for Change in Control Benefits under the Plan as a result of any Termination of Employment resulting from or relating to such Good Reason and any such Termination of Employment shall not constitute a Good Reason Termination.

 

3.3                               Release.  A Participant will be are eligible for Change in Control Benefits under the Plan only if, within 60 days after the Effective Date of Termination, he or she has signed and not revoked (if applicable) a Release, and such Release has become effective by its terms.  In the event a Participant should fail to execute the Release within the above timeframe after the Effective Date of Termination, or should revoke the Release (if applicable), the Company shall not have any obligation to make the payments provided under the Plan.  A Participant must also acknowledge in the Participation Agreement that the Change in Control Benefits must be repaid, and the payment of any future Change in Control Benefits, if any, will cease in the event that the Company determines, in its sole discretion, that the Participant has breached any post-employment obligations owed to the Company, including those set forth in any non-solicitation and confidentiality provision signed by the Participant.  Once payments have been made under the Plan, the Company shall have no further severance obligations to the Participant, whether under another agreement or plan, and no additional severance will be payable in connection with the Participant’s Termination of Employment; provided however, that the payment of benefits hereunder shall have no impact on retirement-type benefits such as those accrued under any supplemental executive retirement plans, deferred compensation plans or other pension benefit plans in which the Participant also participates.

 

3.4                               Restrictions on Payments by the Company.  Anything in the Plan to the contrary notwithstanding, any Change in Control Benefits provided under the Plan are subject to and conditioned upon compliance with all applicable state and federal laws, rules and regulations, including, but not limited to, the following:

 

(a)                                 Clawback and Offset.  Any payments made under the Plan may be subject to forfeiture or repayment (such forfeiture or repayment a “clawback”), in the Plan Administrator’s sole discretion, if the payment is based on performance metrics that are determined to be materially inaccurate, manipulated or fraudulent in nature.  The Plan Administrator shall have authority to determine the amount of the payment that may be forfeited or subject to repayment and may determine, in its sole discretion, not to implement a clawback, unless the clawback is mandated by applicable laws.  Unless otherwise paid back to the Company by the Participant, the Company shall have the right to offset the amount of the payment that is to be forfeited or repaid under this Section 3.4(a) against any current amounts due to the Participant, including, but not limited to, salary, incentive compensation, stock awards, severance, deferred compensation or any other funds due to the Participant from the Company.

 

(b)                                 Compliance with Banking Laws.  Any payments made pursuant to the Plan shall be subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.  If any payments contemplated to be made by the

 

6

 

Company pursuant to the Plan may not be made in compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder on the Effective Date of Termination, such payments may never be made by the Company.  In addition, any payments contemplated to be made by the Company pursuant to the Plan shall not be payable to the extent such payments are barred or prohibited by an action or order issued to the Company or any of its Subsidiaries by the Federal Deposit Insurance Corporation, the Federal Reserve Bank of San Francisco, the California Department of Financial Institutions or such other applicable banking regulatory agency.

 

ARTICLE 4
 CHANGE IN CONTROL BENEFITS

 

Provided that the conditions of Article 3 are satisfied, a Participant shall be entitled to receive the payments and benefits specified in the Participation Agreement or as otherwise specified below, in each case without duplication.  Unless otherwise specified in a Participation Agreement, payments shall be made on the first regular payroll period following the sixtieth (60) day after the Effective Date of Termination.

 

4.1                               Severance Payments.  A Participant shall be entitled to receive a lump sum payment equal to (a) his or her monthly Base Salary, multiplied by the Change in Control Benefits Period, plus (b) his or her Prorated Annual Bonus Award, if any, for the plan year in which the Effective Date of Termination occurs, prorated to the Effective Date of Termination.

 

4.2                               Benefits and Benefit Payment.  A Participant shall be eligible to elect COBRA continuation benefits as to medical, dental, and vision insurance benefits as provided by applicable law.  At the time payment is made pursuant to the initial paragraph of this Article 4, the Company shall also pay Participant, as an additional cash severance payment, a lump sum equal to the Benefit Payment multiplied by the Change in Control Benefits Period, but not to exceed 12 months.  Such payment shall be made only if and to the extent that, as of the Effective Date of Termination, the Participant is covered under the Company’s medical, dental or vision insurance benefits plans, but shall be made regardless of whether the Participant elects COBRA coverage under such plans, and shall be includible in the gross taxable income of the Participant.  The Participant may, but shall not be required to, use such additional cash severance payment for the payment of the cost of COBRA continuation coverage.

 

4.3                               Outplacement Payment. In order to assist the Participant with his or her transition, the Participant shall be entitled to receive outplacement services at the level and for the period in place under the Company’s outplacement program in effect on the Effective Date of Termination for such period; provided, however, that in no event shall any such outplacement services be provided beyond the last day of the second taxable year of the Participant following the taxable year of the Participant in which the Participant’s Separation from Service occurs.

 

4.4                               Vested Benefits.  All other benefits to which the Participant has a vested right, as of the Effective Date of Termination, shall be paid or provided according to the provisions of the governing plan or program.

 

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4.5                               Changes in Benefits.  Any change to the Plan that reduces the Change in Control Benefits described in this Article 4 with respect to any Participation Agreement then in effect shall take effect one year after that change is adopted by official action of the Board or the Committee.  The previous sentence notwithstanding, the Plan may be modified and altered at any time in order to comply with applicable laws, rules and regulations, including applicable listing standards of any exchange on which the Company’s common stock is listed.

 

4.6                               Tax Withholdings.  All payments described herein or in the Participation Agreement shall be reduced by applicable withholdings and paid pursuant to the Company’s ordinary payroll practices.  No interest shall accrue on any such payments.

 

4.7                               Limitation on Excess Parachute Payments.  In the event it shall be determined that any payment or distribution by the Company to or for the benefit of a Participant (whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise) (a “Payment”) would be nondeductible by the Company for federal income tax purposes because of Section 280G of the Code, then the aggregate present value of amounts payable or distributable to or for the benefit of the Participant pursuant to this Plan (“Plan Payments”) shall be reduced (a “Reduction”) to the extent necessary, but not below zero, so that no portion of the Plan Payments is nondeductible by the Company pursuant to Code Section 280G.  The Reduction shall be applied before any reduction of any other Payments that are not Plan Payments unless the plan or agreement calling for such Payments expressly provides to the contrary making specific reference to this Plan.  For purposes of this Section 4.7, present value shall be determined in accordance with Section 280G(d)(4) of the Code.  In the event a Reduction is required, the Plan Payments to be reduced will be determined in a manner which has the least economic cost to the Participant and, to the extent the economic cost is equivalent, will be reduced in the inverse order of when payment would have been made to the Participant until the Reduction is achieved.  The Company shall select a firm of certified public accountants of national standing, (the “Accounting Firm”), which may be the firm regularly auditing the financial statements of the Company or any affiliate of the Company.  The Accounting Firm shall make all determinations required to be made under this Section 4.7 and shall provide detailed supporting calculations to the Company and the Participant within 30 days after the Effective Date of Termination or such earlier time as is requested by the Company.  Any such determination by the Accounting Firm shall be binding upon the Company and the Participant.  The Accounting Firm shall determine which and how much of the Plan Payment shall be eliminated or reduced consistent with the requirements of this Section 4.7.

 

4.8                               Code Section 409A.

 

(a)                                 It is the Company’s intention that amounts paid under the Plan shall not constitute “deferred compensation” as that term is defined under Code Section 409A and the regulations promulgated thereunder, because the amounts paid under the Plan are structured to comply with the “short-term deferral” exception to Code Section 409A as described in Treasury Regulations Section 1.409A-1(b)(4), and this Plan and any Participation Agreement shall be interpreted and administered in accordance with such intentions.

 

(b)                                 Notwithstanding the foregoing, the Company does not warrant to any Participant that any amounts paid or benefits delivered under the Plan will be exempt from, or

 

8

 

paid in compliance with, Code Section 409A.  By executing a Participation Agreement, each Participant acknowledges and agrees that he or she bears the entire risk of any adverse federal, state or local tax consequences and penalty taxes which may result from payments under the Plan on a basis contrary to the provisions of Code Section 409A or comparable provisions of any applicable state or local income tax laws, and that in no event will the Company or any Subsidiary be required to pay any Participant any “gross up” with respect to any amounts payable by the Participant pursuant to Section 409A or comparable state or local tax laws.

 

(c)                                  Notwithstanding anything in this Plan or any Participation Agreement to the contrary, if, as of the date of his Termination of Employment, a Participant is deemed to be a “specified employee” of the Company for purposes of Code Section 409A, if and to the extent that any portion of the payments and benefits payable upon such Termination of Employment is subject to Code Section 409A, such portion shall not be paid to the Participant before the date that is six months after the Participant’s Termination of Employment or, if earlier, the date of the Participant’s death.  Any portion of the payments and benefits so delayed shall be paid in a single lump sum without interest at the end of the required delay period.

 

(d)                                 In no event may a Participant, directly or indirectly, designate the calendar year of a payment under this Plan, and where a payment may occur in one year or the next, it shall be made in the second year.

 

ARTICLE 5
 ADMINISTRATION PROVISIONS.

 

5.1                               Modification, Amendment or Termination. The Plan has been adopted by the Board.  The Board, the Committee, or a designee of the Board or the Committee may modify, amend or terminate the Plan in its sole discretion through a formal action of such individual or entity evidenced in writing.  Any modifications or amendments to the Plan that adversely affect rights of Participants in the Plan shall not be effective until one year following the adoption of such modification or amendment.  Any communications or other purported modifications to the Plan that have not been so adopted are void.  Notwithstanding the foregoing, following a Change in Control, the Plan cannot be modified, amended or terminated, or the eligibility or level of participation of a Participant, as set forth in the applicable Participation Agreement, revoked or modified for one year following such Change in Control.

 

5.2                               Claims and Appeals.

 

(a)                                 Filing Claims. Any Participant who believes he or she is entitled to Change in Control Benefits may file a claim for benefits with the Committee (or its designee).

 

(b)                                 Notification to Claimant. If a claim is wholly or partially denied, the Committee (or its designee) will furnish written or electronic notification (in accordance with Department of Labor Regulations Section 2520.104b-1(c)) of the decision to the Participant within 90 days of receipt of the claim in a manner calculated to be understood by the Participant. Such notification shall contain the following information:

 

(1)  the specific reason or reasons for the denial;

 

9

 

(2)  specific reference to pertinent Plan provisions upon which the denial is based;

 

(3)  a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

 

(4)  a description of the Plan’s claims review procedures describing the steps to be taken and the applicable time limits to submit claims for review, including a statement of the Participant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

 

If special circumstances require an extension of time for the Committee (or its designee) to process the claim, the 90-day period may be extended for an additional 90 days. Prior to the termination of the initial 90-day period, the Participant shall be furnished with a written or electronic notice setting forth the reason for the extension. The notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee (or its designee) expects to render the benefit determination.

 

(c)                                  Review Procedure. A Participant or his or her authorized representative may, with respect to any denied claim:

 

(1)  request a full and fair review upon a written application filed within 60 days after receipt by the claimant of written or electronic notification of the denial of his or her claim;

 

(2)  submit written comments, documents, records and other information relating to the claim for benefits; and

 

(3)  upon request, and free of charge, be provided reasonable access to and copies of documents and records and other information relevant to the claim for benefits.

 

Upon receipt of a timely, written application for review, the Committee (or its designee) shall undertake a review, taking into account all comments, documents, records and information submitted by the Participant relating to the claim without regard to whether the information was submitted or considered in the initial benefit determination. If the Participant (or his or her duly authorized representative) fails to appeal the initial benefit determination to the Committee (or its designee) in writing within the prescribed period of time, then the Committee’s (or its designee’s) adverse determination shall be final, binding and conclusive.

 

Any request or submission must be in writing and directed to the Committee (or its designee). The Committee (or its designee) will have the sole responsibility for the review of any denied claim and will take all steps appropriate in light of its findings.

 

(d)                                 Decision on Review. The Committee (or its designee) will render a decision upon review no later than 60 days after receipt of the request for a review. If special circumstances (such as the need to hold a hearing on any matter pertaining to the denied claim) warrant additional time, the decision will be rendered as soon as possible, but not later than 120

 

10

 

days after receipt of the request for review. Written notice specifying the circumstances requiring an extension will be furnished to the Participant prior to the commencement of the extension. The decision on review will be in writing and will include specific reasons for the decision, written in a manner calculated to be understood by the Participant, as well as specific references to the pertinent provisions of the Plan on which the decision is based, including a statement of the Participant’s right to bring a civil action under ERISA Section 502(a). If the decision on review is not furnished to the Participant within the time limits prescribed above, the claim will be deemed denied on review.

 

(e)           Exhaustion of Remedies. A Participant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under ERISA Section 502(a), within one year of the date the final decision on the adverse benefit determination on review is issued or should have been issued or lose any rights to bring such an action.  If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Committee.  A Participant may bring an action under ERISA only after he or she has exhausted the Plan’s claims and appeal procedures.

 

5.3          Administration. The Committee shall serve as the “Plan Administrator” of the Plan and the “named fiduciary” within the meaning of such terms as defined in ERISA. The Plan Administrator shall have full power and discretionary authority to determine eligibility for Change in Control Benefits and to construe the terms of the Plan, including, but not limited to, the making of factual determinations, the determination of all questions concerning benefits and procedures for claim review and the resolution of all other questions arising under the Plan. Change in Control Benefits under the Plan will be payable only if the Plan Administrator determines in the Plan Administrator’s sole discretion that the Participant is entitled to them.  The decisions of the Plan Administrator shall be final and conclusive with respect to all questions concerning the administration of the Plan upon all Participants, the Company, and all persons claiming through them.

 

The Plan Administrator may delegate to other persons responsibilities for performing certain of the duties of the Plan Administrator under the terms of the Plan and may seek such expert advice as the Plan Administrator deems reasonably necessary with respect to the Plan. The Plan Administrator shall be entitled to rely upon the information and advice furnished by such delegatees and experts, unless actually knowing such information and advice to be inaccurate or unlawful. The Plan Administrator has discretionary authority to grant or deny benefits under the Plan. In no event shall a Participant or any other person be entitled to challenge a decision of the Plan Administrator in court or in any other administrative proceeding unless and until the claim and appeals procedures established under the Plan have been complied with and exhausted.

 

5.4          Binding on Successors.  The Plan shall be binding on the Company’s successors, including following a Change in Control.

 

5.5          No Assignment.  Change in Control Benefits payable under the Plan shall not be subject to anticipation, alienation, pledge, sale, transfer, assignment, garnishment, attachment,

 

11

 

execution, encumbrance, levy, lien, or charge, and any attempt to cause such Change in Control Benefits to be so subjected shall not be recognized, except to the extent required by law.

 

5.6          No Employment Rights.  The Plan shall not confer employment rights upon any person.  No person shall be entitled, by virtue of the Plan, to remain in the employ of the Company and nothing in the Plan shall restrict the right of the Company to terminate the employment of any employee or other person at any time, for any reason and with or without notice or cause.

 

5.7          Plan Funding.  No employee shall acquire by reason of the Plan any right in or title to any assets, funds, or property of the Company.  Any payment that becomes due under the Plan is an unfunded obligation and shall be paid from the general assets of the Company.  No employee, officer, director or agent of the Company personally guarantees in any manner the payment of Change in Control Benefits.

 

5.8          Applicable Law.  The Plan shall be governed and construed in accordance with ERISA, and in the event that any reference shall be made to state law, the laws of the State of California shall apply, without regard to its conflicts of law provisions.

 

5.9          Severability. If any provision of the Plan is found, held or deemed by a court of competent jurisdiction to be void, unlawful or unenforceable under any applicable statute or other controlling law, the remainder of the Plan shall continue in full force and effect.

 

5.10        No Duplication of Benefits.  The payments and benefits under this Agreement are intended to constitute the exclusive payments in the nature of severance or termination pay that shall be due to any Participant upon his or Termination of Employment in connection with a Change in Control, and shall be in lieu of and not in addition to any such other payments under any agreement, plan, practice or policy of the Company and its Subsidiaries.  Accordingly, if a Participant is a party to an employment, severance, termination, salary continuation or other or similar agreement with, or is a participant in any other severance plan, practice or policy of, the Company or any of its Subsidiaries, the severance benefits to which the Participant is entitled under this Plan shall be reduced (but not below zero) by the amount of severance pay to which he or she is entitled under such other agreement, plan, practice or policy.  The severance benefits to which a Participant is otherwise entitled under this Plan shall be further reduced (but not below zero) by (i) any cash payments to which the Participant may be entitled under any federal, state or local plant-closing (or similar or analogous) law (including, without limitation, pursuant to WARN and Cal-WARN); or (ii) the amount of short-term or long-term disability benefits payable to the Participant under any plan, program or arrangement of the Company or any of its Subsidiaries, in the event that the severance benefits payable hereunder do not reduce the amount of short-term or long-term disability benefits payable to the Participant under such plan, program, or arrangement.

 

5.11        Effective Date. The Plan shall take effect as of January 22, 2014.

 

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