Document:

ex10-41.htm

Exhibit 10.41

 

OLD LINE BANK

SALARY CONTINUATION PLAN AGREEMENT 

(2012-B Plan)

 

THIS AGREEMENT is made and entered into this     day of    , 2012, by and between Old Line Bank, a banking corporation organized and existing under the laws of the State of Maryland, hereinafter referred to as the “Plan Sponsor”, and James W. Cornelsen, hereinafter referred to as the "Participant".

 

WITNESSETH

 

WHEREAS, it is the consensus of the Board that the Participant's services to the Plan Sponsor in the past have been of exceptional merit and have constituted an invaluable contribution to the general welfare of the Plan Sponsor bringing it to its present status of operating efficiency, and its present position in its field of activity; and,

 

WHEREAS, the experience of the Participant, the Participant’s knowledge of the affairs of the Plan Sponsor, the Participant’s reputation and contacts in the industry are so valuable that assurance of the Participant’s continued services is essential for the future growth and profits of the Plan Sponsor and it is in the best interests of the Plan Sponsor to arrange terms of continued employment for the Participant so as to reasonably assure the Participant’s remaining in the Plan Sponsor's employment during the Participant’s lifetime or until the age of retirement; and,

 

WHEREAS, it  is the desire of  the Plan Sponsor that the Participant’s services be retained as herein provided; and,

WHEREAS, the Plan Sponsor has provided the Participant with three other supplemental retirement plans, with payments generally beginning at the Participant's attainment of age 65 and ending at age 80; and

WHEREAS, the Plan Sponsor desires to provide the Participant with this supplemental retirement plan, with payments generally beginning at the Participant's attainment of age 80 and continuing for the Participant's life with five years guaranteed; and

 

WHEREAS, the Participant is willing to continue in the employ of the Plan Sponsor provided the Plan Sponsor agrees to pay to the Participant and/or the Participant’s beneficiaries certain benefits in accordance with the terms and conditions hereinafter set forth; and,

 

WHEREAS, the Plan Sponsor intends that the Plan shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified deferred compensation plan for tax purposes and for purposes of Title I of ERISA. This Plan is not intended to qualify for favorable tax treatment pursuant to IRC Section 401(a) of the Code or any successor section or statute. This Plan is intended to comply with IRC Section 409A as created under The American Jobs Creation Act of 2004 (the “Jobs Act of 2004”). It is both anticipated and expected that the terms and provisions of this Plan may need to be amended in the future to assure continued compliance. The Plan Sponsor and the Participant acknowledge that fact and agree to take any and all steps necessary to operate the plan in “good faith” based on their current understanding of the regulations;

 

NOW THEREFORE, in consideration of services performed in the past and to be performed in the future as well as of the mutual promises and covenants herein contained, it is agreed as follows:

 

  

Page 1 of 20

  

Exhibit 10.41

ARTICLE 1

DEFINITIONS

 

DEFINITION OF TERMS. Certain words and phrases are defined when first used in later Articles of this Plan. Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. For the purpose of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

 

1.1     “Accrued Benefit” shall mean, as of any date, the benefit accrued and recorded on the books of the Plan Sponsor on behalf of the Participant with respect to service beginning January 1, 2012, as shown on the attached Schedule A.

1.2      “Applicable Guidance” shall mean, as the context requires, Code § 409A and the  Final Treasury Regulations issued thereunder, or other written Treasury or IRS guidance regarding or affecting Code § 409A.

1.3     “Beneficiary”  shall  mean  the  person  or  persons,  natural  or  otherwise, designated in writing by a Participant in accordance with Article 5 before the Participant’s death to receive Plan benefits in the event of the Participant’s death.

1.4     “Board”  shall  mean  the  board  of  director’s  of  the  Plan  Sponsor,  unless specifically noted otherwise.

1.5    “Cause” shall mean any of the following acts or circumstances: (i) willful destruction by the Participant of property of the Plan Sponsor having a material value to the Plan Sponsor; (ii) fraud, embezzlement, theft, or comparable dishonest activity committed by the Participant (excluding acts involving a de minimis dollar value and not related to the Plan Sponsor); (iii) the Participant’s conviction of or entering a plea of guilty or nolo contendere to any crime constituting a felony or any misdemeanor involving fraud, dishonesty, or moral turpitude (excluding acts involving a de minimis dollar value and not related to the Plan Sponsor); (iv) the Participant’s breach, neglect, refusal, or failure to materially discharge the Participant’s duties (other than due to physical or mental illness) commensurate with the Participant’s title and function or the Participant’s failure to comply with the lawful directions of a senior managing officer of the Plan Sponsor in any such case that is not cured within fifteen (15) days after the Participant has received written notice thereof from such senior managing officer; or (v) any willful misconduct by the Participant which may cause substantial economic or reputation injury to the Plan Sponsor, including, but not limited to, sexual harassment.

1.6     “Change in Control” shall mean the occurrence of a Change in Control event, within the meaning of Treasury Regulations §1.409A-3(i)(5) and described in any of subparagraph (a), (b), or (c), (collectively referred to as “Change in Control Events”), or any combination of the Change in Control Events. To constitute a Change in Control Event with respect to the Participant or Beneficiary, the Change in Control Event must relate to: (i) the corporation for whom the Participant is performing services at the time of the Change in Control Event; (ii) the corporation that is liable for the payment of the deferred compensation (or all corporations liable for the payment if more than one corporation is liable); or (iii) a corporation that is a majority shareholder of a corporation identified in clause (i) or (ii), or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in clause (i) or (ii).

(a)       Change in Ownership.  A Change in Ownership occurs if a person, or a group of persons acting together, acquires more than fifty percent (50%) of the stock of the corporation, measured by voting power or value. Incremental increases in ownership by a person or group that already owns fifty percent (50%) of the corporation do not result in a Change of Ownership, as defined in Treasury Regulations §1.409A-3(i)(5)(v).

 

 

 

  

Page 2 of 20

  

Exhibit 10.41

 

 

(b)       Change in Effective Control. A Change in Effective Control occurs if, over a twelve (12) month period: (i) a person or group acquires stock representing thirty percent (30%) of the voting power of the corporation; or (ii) a majority of the members of the board of directors of the ultimate parent corporation is replaced by directors not endorsed by the persons who were members of the board before the new directors’ appointment, as defined in Treasury Regulations §1.409A-3(i)(5)(vi).

 

(c)       Change in Ownership of a Substantial Portion of Corporate Assets. A Change in Control based on the sale of assets occurs if a person or group acquires Forty percent (40%) or more of the gross fair market value of the assets of a corporation over a twelve (12) month period. No change in control results pursuant to this Article (c) if the assets are transferred to certain entities controlled directly or indirectly by the shareholders  of  the  transferring  corporation,  as  defined  in  Treasury  Regulations

§1.409A-3(i)(5)(vii).

1.7     “Claimant” shall mean a person who believes that he or she is being denied a benefit to which he or she is entitled hereunder.

1.8      “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.9     “Disability” shall mean a condition of the Participant whereby he or she either: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Plan Sponsor. The Administrator will determine whether the Participant has incurred a Disability based on its own good faith determination and may require the Participant to submit to reasonable physical and mental examinations for this purpose. The Participant will also be deemed to have incurred a Disability if determined to be totally disabled by the Social Security Administration, Railroad Retirement Board, or in accordance with  a  disability insurance program, provided that  the definition of  disability applied under such disability insurance program complies with the requirements of Treasury Regulation §1.409A-3(i)(4) and authoritative guidance.

1.10    “Effective Date” shall mean the later of (i) the date specified on the first page of this Plan or (ii) the date the Plan is executed by the Plan Sponsor.

1.11    “Eligible Employee” shall mean for any Plan Year (or applicable portion of a Plan Year), an Employee who is determined by the Plan Sponsor, or its designee, to be a Participant under the Plan. If the Plan Sponsor determines that an Employee first becomes an Eligible Employee during a Plan Year, the Plan Sponsor shall notify the individual in writing of its determination and of the date during the Plan Year on which the individual shall first become a Plan Participant.

1.12   “Employee” shall mean a person providing services to the Plan Sponsor in the capacity of a common law Employee of the Plan Sponsor.

1.13   “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

1.14    “Normal Retirement Age” shall mean the date the Participant attains age 65.

 

1.15   “Normal Retirement Benefit” shall mean an annual benefit payment in the amount of   Two hundred Twenty Three Thousand Seven Hundred Twenty Nine Dollars ($223,729), which shall be paid in equal monthly installments for life with five (5) years guaranteed.  For purposes of this Section 1.15, the "annual" period over which the Normal Retirement  Benefit shall be paid is a period of twelve (12) consecutive months that begins on the payment commencement date determined in accordance with Article 3 (rather that an calendar or fiscal year of the Plan Sponsor)

 

 

 

  

Page 3 of 20

  

Exhibit 10.41

 

1.16   “Participant” shall mean the Employee identified as the Participant on the first page of the Agreement.

 

1.17    “Plan” shall mean this Old Line Bank Salary Continuation Plan Agreement, all Election Forms, the Trust, (if any), and any other written documents relevant to the Plan. For purposes of applying Code § 409A requirements, this Plan is a non-account balance plan under Treasury Regulation §1.409-1(c)(2)(i)(A).

1.18   “Plan Administrator” or “Administrator” shall be a committee designated by the Plan Sponsor. If a Participant is part of a group of persons designated as a committee or Plan Administrator, then the Participant may not participate in any activity or decision relating solely to the Participant’s individual benefits under this Plan. Matters solely affecting the applicable Participant will be resolved by the remaining committee members.

1. 19  “Plan Sponsor” shall mean the person or entity receiving the services of the

Participant, as identified on the first page of this Plan.

1.20  “Plan Year” shall mean, for the first Plan Year, the period beginning on the Effective Date of the Plan and ending December 31 of such calendar year, and thereafter, a twelve (12) month period beginning January 1 of each calendar year and continuing through December 31 of such calendar year.

1.21     “Section 409A” shall mean Section 409A of the Code and other Applicable

Guidance issued under that Section.

1.22  “Separation from Service” shall mean the occurrence of a Participant’s death, retirement, or “other termination of employment” (as defined in Treasury Regulations §1.409A-

 

1(h)(1)(ii)) with the Plan Sponsor.  If the Plan Sponsor is a member of a controlled group of corporations or a group of trades or business under common control (as described in Code Section 414(b) or (c), but substituting a 50% ownership level for the 80% level set forth in those Code Sections), all members of the group shall be treated as a single employer for purposes of whether there has occurred a Separation from Service. However, a Separation from Service shall not occur if the Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant retains a right to reemployment with the Plan Sponsor under an applicable statute or by contract.

In accordance with Section 409A, a Participant will have incurred a Separation from Service where the Plan Sponsor and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the employer if the Participant has been providing services to the Plan Sponsor less than 36 months).

1.23   “Schedule A” shall mean the schedule attached to this Agreement and made a part hereof. Schedule A shall be updated upon a change in any of the benefits under Article 3.

1.24    “Specified  Employee”  shall  mean  that  the  Participant  also  satisfies  the definition of a “key employee” as such term is defined in Code §416(i) (without regard to Section 416(i)(5)). However, the Participant is not a Specified Employee unless any stock of the Plan Sponsor is publicly traded on an established securities market or otherwise, as defined in Code §1.897-1(m). If the Participant is a key employee at any time during the twelve (12) months ending on the identification date (see below), the Participant is a Specified Employee for the twelve (12) month period commencing on the first day of the fourth month following the identification date. For purposes of this Article, the identification date is December 31. The determination of the Participant as a Specified Employee shall be made by the Administrator in accordance with IRC Section 416(i), the “specified employee” requirements of Section 409A, and Treasury Regulations.

 

 

  

Page 4 of 20

  

Exhibit 10.41

 

 

1.25   “Taxable Year” shall mean the twelve (12) consecutive month period ending each December 31.

 

1.26   “Treasury Regulations” shall mean regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, as they may be amended from time to time.

1.27   “Trust” shall mean one or more trusts that may be established in accordance with the terms of this Plan.

 

ARTICLE 2

Selection, Enrollment, Eligibility

 

2.1     Selection by Plan Sponsor. Participation in the Plan shall be limited to a select group of management or highly compensated employees of the Plan Sponsor, as determined by the Plan Sponsor in its sole and absolute discretion. The initial group of Eligible Employees shall become Participants on the Effective Date. Any Eligible Employee selected as a Plan Participant after the Effective Date, shall become a Participant on a date determined by the Plan Sponsor.

2.2    Re-Employment. If a Participant who incurs a Separation from Service is subsequently re-employed, he or she may, at the sole and absolute discretion of the Plan Administrator, become a Participant in accordance with the provisions of the Plan.

2.3    Enrollment Requirements. As a condition of participation, each selected Employee shall complete, execute, and return to the Plan Administrator all form(s) required by the Plan Administrator and within the time specified by the Plan Administrator. In addition, the Plan Administrator shall establish such other enrollment requirements as it determines necessary or advisable.

2.4     Eligibility;  Commencement  of  Participation.  Provided  that  an  Employee selected to participate in the Plan has met all enrollment requirements set forth in the Plan and required by the Plan Administrator, the Employee shall commence participation in the Plan on the date the Plan is executed by the Plan Sponsor.

2.5     Termination of Participation. If the Plan Administrator determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with Section 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Plan Administrator shall cease further benefit accruals hereunder.

ARTICLE 3

BENEFITS

3.1     Normal Retirement Benefit. If the Participant remains in the service of the Plan Sponsor until reaching the Participant’s Normal Retirement Age,  the  Participant shall be entitled to the Participant’s Normal Retirement Benefit.  The Normal Retirement Benefit shall commence to be paid on the on the first day of the second month following the date the Participant reaches age 80.

 

 

 

  

Page 5 of 20

  

Exhibit 10.41

 

 

3.2   Death Prior to Commencement of Benefit Payments. In the event the Participant should die while actively employed by the Plan Sponsor at any time after the date of this Plan but prior to the Participant’s Normal Retirement Age, the Participant shall be entitled to the benefit amount shown on Schedule A under the column labeled "Early Termination Annual Benefit"  for the Plan Year in which the Participant's death occurs, multiplied by five (5) (the "Death Benefit").  The Death Benefit shall be paid in sixty (60) equal monthly installments to the Participant's Beneficiary, and shall commence to be paid on the fifteenth (15th) anniversary of the first day of the second month following the month in which the Participant dies.

 

3.3     Death Subsequent to Commencement of Benefit Payments. In the event the Participant dies after becoming entitled to a benefit under this Plan, but prior to receiving payments for five (5) years (sixty (60) payments), payments shall be made, or continue to be made, after the Participant's death to the Participant’s Beneficiary for the remainder of the five (5) year period (sixty (60) payments).  If the Participant dies after receiving payments for five (5) years (sixty (60) payments), no benefits shall be paid after the Participant's death.

3.4     Disability Benefit. In the event the Participant becomes Disabled prior to the date the Participant dies or experiences a Separation from Service, and prior to the date of a Change in Control, the Participant shall be entitled to receive the benefit amount shown on Schedule A under the column labeled "Disability Annual Benefit" for the Plan Year in which the Participant's Disability occurs, multiplied by five (5) (the "Disability Benefit").  The Disability Benefit shall be paid in equal monthly installments for life with five (5) years guaranteed, and shall commence to be paid on the on the first day of the second month following the date the Participant reaches age 80.

3.5     Separation from Service Benefit. If the Participant experiences a Separation from Service prior to Normal Retirement Age because the Participant’s employment is terminated voluntarily or involuntarily for reasons other than death, Disability, or as described in the second paragraph of Section 3.6, then the Participant shall be entitled to the benefit amount shown on Schedule A under the column labeled "Early Termination Annual Benefit" for the Plan Year in which the Participant's Separation from Service occurs, multiplied by five (5) (the "Early Termination Benefit"). The Early Termination Benefit shall be paid in equal monthly installments for life with five (5) years guaranteed, and shall commence to be paid on the  first day of the second month following the date the Participant reaches age 80.

 

3.6     Change in Control Benefit. Upon a Change in Control prior to the Participant's attainment of Normal Retirement Age, Separation from Service, death or Disability, the Participant shall be entitled to the benefit amount shown on Schedule A under the column labeled “Change in Control Annual Benefit” for the Plan Year in which the Change in Control occurs, multiplied by five (5) (the "Change in Control Benefit"). Subject to the paragraph below, the Change in Control Benefit shall be paid in sixty (60) equal monthly installments, and shall commence  to  be  paid  on  the  fifteenth (15th) anniversary of the first  day  of  the  second  month  following  the  Participant’s Separation from Service.

Notwithstanding the preceding and Section 3.5, if the Participant experiences a Separation from Service within 24 months following the Change in Control, the following provisions apply.  In lieu of receiving sixty (60) equal monthly installments, the Participant may elect to receive the Participant’s Change in Control Benefit in the form of (i) a lump sum, or (ii) equal monthly installments over two (2) years.  Any payment made pursuant to this paragraph shall commence to  be  paid  on  the  fifteenth (15th) anniversary of the first  day  of  the  second  month  following  the  Participant’s Separation from Service, so long as the election is made by the Participant and submitted to the Plan Sponsor by the Effective Date or within thirty (30) days thereafter.

3.7     Termination for Cause.  Notwithstanding anything in this Plan to the contrary, if the Plan Sponsor terminates the Participant's employment for "Cause", then the Participant shall not be entitled to any benefits under the terms of this Plan.

 

 

 

  

Page 6 of 20

  

Exhibit 10.41

 

 

3.8     Prohibition on Acceleration of Payments. Notwithstanding anything in this Plan to the contrary, neither the Plan Sponsor nor a Participant may accelerate the time or schedule of any payment or amount scheduled to be paid under this Plan, except that the Plan Sponsor, in its discretion, may accelerate payments as permitted by Treasury Regulations §1.409A-3(j)(4). The Plan Sponsor shall deny any change made to an election if the Plan Sponsor determines that the change violates the requirements of Applicable Guidance.

3.9     Subsequent Changes in the Time or Form of Payment. If permitted by the Plan Sponsor, a Participant may elect to change the time or form of payments (collectively, “payment elections”), provided the following conditions are met:

(i)        Such change will not take effect until at least twelve (12) months after the date on which the new payment election is made and approved by the Plan Administrator;

 

(ii)       If the change of payment election relates to a payment based on Separation from Service, or if the payment is at a specified time or pursuant to a fixed schedule, the change of payment election must result in payment being deferred for a period of not less than five (5) years from the date such payment would otherwise have been paid (or in the case of installment payments, which are treated as a single payment, five (5) years from the date the first amount was scheduled to be paid);

(iii)      If  the  change of  payment election relates to  a  payment at  a specified time or pursuant to a fixed schedule, the Participant or Plan Sponsor must make the change of payment election not less than twelve (12) months before the date the payment is scheduled to be paid (or in the case of installment payments, which are treated as a single payment, twelve (12) months before the date the first amount was scheduled to be paid).

3.10    Delay in Payment by Plan Sponsor.

(a)       A payment may be delayed to a date after the designated payment date under any of the circumstances described below, and the provision will not fail to meet the requirements of establishing a permissible payment event. The delay in the payment will not constitute a subsequent deferral election, so long as the Plan Sponsor treats all payments to similarly situated Participants on a reasonably consistent basis.

(i)        Payments  subject  to  Section  162(m).  A  payment  may  be delayed to the extent that the Plan Sponsor reasonably anticipates that if the payment were made as scheduled, the Plan Sponsor’s deduction with respect to such payment would not be permitted due to the application of Code §162(m). If a payment is delayed, such payment must be made either:

(1) during the Participant’s first Taxable Year in which the Plan Sponsor reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Code §162(m) or,

(2)  during the period beginning with the date of the Participant’s Separation from Service and ending on the later of the last day of the Taxable Year of the Plan Sponsor in which the Participant separates from service or the 15th  day of the third month following the Participant’s Separation from Service. Where any scheduled payment to a specific Participant in the Plan Sponsor’s Taxable Year is delayed in accordance with this Article, the delay in payment will be treated as a subsequent deferral election unless all scheduled payments to the Participant that could be delayed in accordance with this Article are also delayed. Where the payment is delayed to a date on or after the Participant’s Separation from Service, the payment will be considered a payment upon a Separation from Service for purposes of the rules under Treasury Regulations §1.409A-3(i)(2) (payments to specified employees upon a separation from service) and, the 6 month delay rule will apply for Specified Employees.

 

 

 

  

Page 7 of 20

  

Exhibit 10.41

 

 

(ii)       Payments that would violate Federal securities laws or other applicable law. A payment may be delayed where the Plan Sponsor reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law provided that the payment is made at the earliest date at which the Plan Sponsor reasonably anticipates that the making of the payment will not cause such violation. The making of a payment that would cause inclusion in gross income or the application of any penalty provision or other provision of the Internal Revenue Code is not treated as a violation of applicable law.

(iii)     Other events and conditions. The Plan Sponsor may delay a payment upon such other events and conditions as the Commissioner of the IRS may prescribe.

(iv)     Not withstanding  the  above,  a  payment  may  be  delayed  in accordance with Code section 409A where the payment would jeopardize the ability of the Plan Sponsor to continue as a going concern.

(b)       Treatment of Payment as Made on Designated Payment Date. Each payment under this Plan is deemed made on the required payment date even if the payment is made after such date, provided the payment is made by the latest of: (i) the end of the calendar year in which the payment is due; (ii) the 15th day of the third calendar month following the payment due date; (iii) in case the Plan Sponsor cannot calculate the payment amount on account of administrative impracticality which is beyond the Participant's control (or the control of the Participant's estate), in the first calendar year in which payment is practicable; (iv) in case the Plan Sponsor does not have sufficient funds to make the payment without jeopardizing the Plan Sponsor’s solvency, in the first calendar year in which the Plan Sponsor’s funds are sufficient to make the payment.

3.11   Unsecured General Creditor Status of Participant:

(a)       Payment to the Participant or any Beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part of the general, unrestricted assets of the Plan Sponsor and no person shall have any interest in any such asset by virtue of any provision of this Plan. The Plan  Sponsor’s  obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. To the extent that any person acquires a right to receive payments from the Plan Sponsor under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Plan Sponsor and no such person shall have or acquire any legal or equitable right, interest, or claim in or to any property or assets of the Plan Sponsor.

(b)       In the event that the Plan Sponsor purchases an insurance policy or policies insuring the life of a Participant or employee, to allow the Plan Sponsor to recover or meet the cost of providing benefits, in whole or in part, hereunder, no Participant or Beneficiary shall have any rights whatsoever in  said  policy  or  the proceeds therefrom. The Plan Sponsor or the Trustee of the Trust (if any) shall be the primary owner and beneficiary of any such insurance policy or property and shall possess and may exercise all incidents of ownership therein. No insurance policy with regard to any director, “highly compensated employee”, or “highly compensated individual” as defined in IRS Section 101(j) shall be acquired before satisfying the Section 101(j) “Notice and Consent” requirements.

(c)       In the event that the Plan Sponsor purchases an insurance policy or policies on the life of a Participant as provided for above, then all of such policies shall be subject to the claims of the creditors of the Plan Sponsor.

 

 

  

Page 8 of 20

  

Exhibit 10.41

 

 

(d)       If  the  Plan  Sponsor  chooses  to  obtain  insurance  on  the  life  of  a Participant in connection with its obligations under this Plan, the Participant hereby agrees to take such physical examinations and to truthfully and completely supply such information as may be required by the Plan Sponsor or the insurance company designated by the Plan Sponsor.

3.12   Facility of Payment.  If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Plan Administrator may make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains residence; or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Plan Sponsor and the Plan Administrator from further liability on account thereof.

3.13   Excise Tax Limitation.  In the event that any payment or benefit (within the meaning of Code §280G(b)(2) of the Code) to the Participant or for the Participant’s benefit paid or payable or distributed or distributable (including, but not limited to, the acceleration of the time for the vesting or payment of such benefit or payment) pursuant to the terms of this Plan or otherwise in connection with, or arising out of, the Participant’s employment with the Plan Sponsor or any of its Affiliates or a Change in Control within the meaning of Code §280G of the Code (a "Payment" or "Payments"), would be subject to the excise tax imposed by Code §4999 of the Code (the "Excise Tax"), then the Payments shall be increased in an amount necessary to provide for the payment of the excise tax imposed by Code § 4999 (the "Section 4999 Limit"). Any payment made to the Participant under this Section 3.13 shall be made no later than the end of the calendar year following the calendar year in which the Participant remits the related taxes.

ARTICLE 4

Taxes

4.1    Vesting.

(a)       Normal Retirement Benefit.  Upon attainment of Normal Retirement Age, the Participant shall be one hundred (100%) percent vested in the Normal Retirement Benefit.

(b)       Death Benefit.  Upon death, the Participant shall be one hundred (100%) percent vested in the Death Benefit (as defined in Section 3.2).

(c)       Disability Benefit.  Upon the Participant's Disability, the Participant shall be one hundred (100%) percent vested in the Disability Benefit (as defined in Section 3.4).

(d)       Early Termination Benefit.  On each January 1 during which the Plan is in effect and the Participant is employed by the Plan Sponsor, the Participant shall be one hundred (100%) percent vested in the Early Termination Benefit (as defined in Section 3.5).

(e)       Change in Control Benefit.  Upon a Change in Control, the Participant shall be one hundred (100%) percent vested in the Change in Control Benefit (as defined in Section 3.6).

4.2     FICA, Withholding and Other Taxes:

(a)       When a Participant becomes vested in a benefit under the Plan, the Plan Sponsor shall withhold from the Participant’s cash compensation in a manner determined in the sole discretion of the Plan Sponsor, the Participant’s share of FICA and other employment taxes on such vested benefit.

 

(b)       Distributions. The Plan Sponsor, or trustee of the Trust, shall withhold from any payments made to a Participant or Beneficiary under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Plan Sponsor in a manner determined in the sole discretion of the Plan Sponsor or the trustee of the Trust in compliance with applicable tax withholding requirements.

 

 

 

 

  

Page 9 of 20

  

Exhibit 10.41

 

ARTICLE 5

BENEFICIARY DESIGNATION

 

5.1     Designation of Beneficiaries.

(a)  The  Participant may  designate any  person  or  persons  (who  may  be named contingently or successively) to receive any benefits payable under the Plan upon the Participant’s death, and the designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke all prior designations by the Participant and shall be in the form prescribed  by  the Administrator, and shall be effective only when filed in writing with the Administrator during the Participant’s lifetime.

(b)  In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the Plan Sponsor shall pay the benefit payment to the Participant’s spouse, if then living, and if the spouse is not then living to the Participant’s then living descendants, if any, per stirpes, and if there are no living descendants, to the Participant’s estate. In determining the existence or identity of anyone entitled to a benefit payment, the Plan Sponsor may rely conclusively upon information supplied by the Participant’s personal representative, executor, or administrator.

(c)  If a question arises as to the existence or identity of anyone entitled to receive a death benefit payment under the Plan, or if a dispute arises with respect to any  death  benefit  payment  under  the  Plan,  the  Plan  Sponsor may  distribute the payment to the Participant’s estate without liability for any tax or other consequences, or may take any other action which the Plan Sponsor deems to be appropriate.

5.2     Information to be Furnished by Participants and Beneficiaries; Inability to Locate Participants or Beneficiaries.  Any communication, statement, or notice addressed to the Participant or to a Beneficiary at his or her last post office address as shown on the Plan Sponsor’s records shall be binding on the Participant or Beneficiary for all purposes of this Plan. The Plan Sponsor shall not be obligated to search for any Participant or Beneficiary beyond the sending of a registered letter to the last known address.

 

ARTICLE 6

ADMINISTRATION

 

6.1   Administrator Duties. The Administrator shall be responsible for the management, operation, and administration of the Plan. The Administrator  shall  act  at meetings by affirmative vote of a majority of its members. Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a unanimous written consent to the action is signed by all members and such written consent is filed with the minutes of the proceedings of the Administrator, provided, however that no member may vote or act upon any matter which relates solely to the Participant. The chair, or any other member or members of the  Administrator  designated  by  the  chair,  may  execute  any  certificate  or  other  written direction on behalf of the Administrator. When making a determination or calculation, the Administrator shall be entitled to rely on information furnished by the Participant or the Plan Sponsor. No provision of this Plan shall be construed as imposing on the Administrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or other law.

 

6.2     Administrator  Authority.  The  Administrator  shall  enforce  this  Plan  in accordance with its terms, shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

 

 

  

Page 10 of 20

  

Exhibit 10.41

 

 

(a)        To construe and interpret the terms and provisions of this Plan;

(b)  To compute and certify the amount and kind of benefits payable to the Participant and their Beneficiaries; to determine the time and manner in which such benefits are paid; and to determine the amount of any withholding taxes to be deducted;

(c)  To maintain all records that may be necessary for the administration of this Plan;

(d)  To provide for the disclosure of all information and the filing or provision of all reports and statements to the Participant, Beneficiaries, and governmental agencies as shall be required by law;

(e) To make and publish such rules for the regulation of this Plan and procedures for the administration of this Plan as are not inconsistent with the terms hereof;

(f)        To administer this Plan’s claims procedures;

(g)       To approve election forms and procedures for use under this Plan; and

(h)  To appoint a plan record keeper or any other agent, and to delegate to them such powers and duties in connection with the administration of this Plan as the Administrator may from time to time prescribe.

6.3     Binding Effect of Decision. The decision or action of the Administrator with respect to any question arising out of or in connection with the administration, interpretation, and application of this Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Plan.

6.4     Compensation,  Expenses,  and  Indemnity.  The  Administrator  shall  serve without compensation for services rendered hereunder. The Administrator is authorized at the expense of the Plan Sponsor to employ such legal counsel and/or Plan record keeper as it may deem advisable to assist in the performance of its duties hereunder. Expense and fees in connection with the administration of this Plan shall be paid by the Plan Sponsor.

6.5     Plan  Sponsor  Information.  To  enable  the  Administrator  to  perform  its functions, the Plan Sponsor shall supply full and timely information to the Administrator, on all matters relating to the compensation of the Participant, the date and circumstances of the Disability, death, or Separation from Service of the Participant, and such other pertinent information as the Administrator may reasonably require.

6.6    Periodic Statements.  Under procedures established by the Administrator, Participant shall be provided a statement on an annual basis.

 

ARTICLE 7

CLAIMS PROCEDURE

 

7.1     Claims Procedures. This Section 7.1 is based on final regulations issued by the Department of Labor and published in the Federal Register on November 21, 2000 and codified at section 2560.503 1 of the Department of Labor Regulations.  If any provision of this Section 7.1 conflicts with the requirements of those regulations, the requirements of those regulations will prevail.

 

(a)       Initial Claim.   A Participant or Beneficiary who believes he or she is entitled to any Benefit (a "Claimant") under this Plan may file a claim with the Administrator. The Administrator will review the claim itself or appoint another individual or entity to review the claim.

 

 

 

  

Page 11 of 20

  

Exhibit 10.41

 

(i)        Benefit Claims that do not Require a Determination of Disability. If the claim is for a benefit other than a disability benefit, the Claimant will be notified within ninety (90) days after the claim is filed whether the claim is allowed or denied, unless the Claimant receives written notice from the Administrator or appointee of the Administrator before the end of the ninety (90) day period stating that special circumstances require an extension of the time for decision, such extension not to extend beyond the day which is one hundred eighty (180) days after the day the claim is filed.

 

(ii)       Disability Benefit Claims.   In the case of a benefits claim that requires a determination by the Plan Administrator of a Participant’s disability status, the Plan Administrator will notify the Claimant of the Plan’s adverse benefit determination within a reasonable period of time, but not later than forty-five (45) days after receipt of the claim.  If, due to matters beyond the control of the Plan, the Plan Administrator needs additional time to process a claim, the Claimant will be notified, within forty-five (45) days after the Plan Administrator receives the claim, of those circumstances and of when the Plan Administrator expects to make its decision but not beyond seventy-five (75) days.  If, prior to the end of the extension period, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for up to one hundred five (105) days, provided that the Plan Administrator notifies the Claimant of the circumstances requiring the extension and the date as of which the Plan expects to render a decision.  The extension notice will specifically explain the standards on which entitlement to a disability benefit is based, the unresolved issues that prevent a decision on the claim and the additional information needed from the Claimant to resolve those issues, and the Claimant will be afforded at least forty-five (45) days within which to provide the specified information.

(iii)     Manner and Content of Denial of Initial Claims.  If the Plan Administrator denies a claim, it must provide to the Claimant, in writing or by electronic communication:

 

(A)       The specific reasons for the denial;

(B)       A reference to the Plan provision or insurance contract provision upon which the denial is based;

(C)        A description of any additional information or material that the Claimant must provide in order to perfect the claim;

(D)       An  explanation  of  why  such  additional  material  or information is necessary;

 

(E)       Notice that the Claimant has a right to request a review of the claim denial and information on the steps to be taken if the Claimant wishes to request a review of the claim denial; and

 

(F)       A statement of the participant’s right to bring a civil action under ERISA section 502(a) following a denial on review of the initial denial.

In addition, in the case of a denial of disability benefits on the basis of the Plan Administrator’s independent determination of the Participant’s disability status, the Plan Administrator will provide a copy of any rule, guideline, protocol, or other similar criterion relied upon in making the adverse determination (or a statement that the same will be provided upon request by the Claimant and without charge).

 

 

 

  

Page 12 of 20

  

Exhibit 10.41

 

 

(b)    Review Procedures.

 

(i)        Benefit Claims that do not Require a Determination of Disability. Except for claims requiring an independent determination of a Participant’s disability status, a request for review of a denied claim must be made in writing to the Plan Administrator within sixty (60) days after receiving notice of denial.  The decision upon review will be made within sixty (60) days after the Plan Administrator's receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later than one hundred twenty (120) days after receipt of a request for review.  A notice of such an extension must be provided to the Claimant within the initial sixty (60) day period and must explain the special circumstances and provide an expected date of decision.

The reviewer will afford the Claimant an opportunity to review and receive, without charge, all relevant documents, information and records and to submit issues and comments in writing to the Plan Administrator.  The reviewer will take into account all comments, documents, records and other information submitted by the Claimant relating to the claim regardless of whether the information was submitted or considered in the initial benefit determination.

(ii)       Disability Benefit  Claims.    In  addition to  having the  right  to review documents and submit comments as described in (i) above, a Claimant whose claim for disability benefits requires an independent determination by the Plan Administrator of the Participant’s disability status has at least one hundred eighty (180) days following receipt of a notification of an adverse benefit determination within which to request a review of the initial determination. In such cases, the review will meet the following requirements:

 

(A)       The  Plan  will  provide  a  review  that  does  not  afford deference to the initial adverse benefit determination and that is conducted by an appropriate named fiduciary of the Plan who did not make the initial determination that is the subject of the appeal, nor is a subordinate of the individual who made the determination.

(B)       The appropriate named fiduciary of the Plan will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment before making a decision on review of any adverse initial determination based in whole or in part on a medical judgment.  The professional engaged for purposes of a consultation in the preceding sentence will not be an individual who was consulted in connection with the initial determination that is the subject of the appeal or the subordinate of any such individual.

(C)    The Plan will identify to the Claimant the medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the review, without regard to whether the advice was relied upon in making the benefit review determination.

(D)      The decision on review will be made within forty-five (45) days after the Plan Administrator's receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later than ninety (90) days after receipt of a request for review.  A notice of such an extension must be provided to the Claimant within the initial forty-five (45) day period and must explain the special circumstances and provide an expected date of decision.

(iii)     Manner and Content of Notice of Decision on Review.   Upon completion of its review of an adverse initial claim determination, the Plan Administrator will give the Claimant, in writing or by electronic notification, a notice containing:

(A)       its decision;

(B)       the specific reasons for the decision;

 

 

 

  

Page 13 of 20

  

Exhibit 10.41

 

 

(C)      the relevant Plan provisions or insurance contract provisions on which its decision is based;

 

(D)      a statement that the Claimant is entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information in the Plan’s files which is relevant to the Claimant’s claim for benefits;

(E)       a statement describing the Claimant’s right to bring an action for judicial review under ERISA section 502(a); and

(F)       if  an  internal rule,  guideline, protocol or  other similar criterion was relied upon in making the adverse determination on review, a statement that a copy of the rule, guideline, protocol or other similar criterion will be provided without charge to the Claimant upon request.

(c)       Calculation of Time Periods. For purposes of the time periods specified in this Section, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim.  If a period of time is extended due to a Claimant's failure to submit all information necessary, the period for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds.

(d)       Failure of Plan to Follow Procedures.  If the Plan fails to follow the claims procedures required by this Section 7.1, a Claimant shall be deemed to have exhausted the administrative remedies available under the Plan and shall be entitled to pursue any available remedy  under  ERISA  section  502(a)  on  the  basis  that  the  Plan  has  failed  to  provide  a reasonable claims procedure that would yield a decision on the merits of the claim.

 

(e)       Failure of Claimant to Follow Procedures.  A Claimant's compliance with the foregoing provisions of this Section 7.1 is a mandatory prerequisite to the Claimant's right to commence any legal action with respect to any claim for benefits under the Plan.

7.2     Arbitration  of  Claims.    All  claims  or  controversies  arising  out  of  or  in connection with this Plan shall, subject to the initial review provided for in the foregoing provisions of this Article, be resolved through arbitration. Except as otherwise mutually agreed to by the parties, any arbitration shall be administered under and by the Judicial Arbitration & Mediation Services, Inc. (“JAMS”), in accordance with the JAMS procedures then in effect. The arbitration shall be held in the JAMS office nearest to where the Claimant is or was last employed by the Plan Sponsor or at a mutually agreeable location.

 

ARTICLE 8

AMENDMENT AND TERMINATION

8.1     Amendment. The Plan Sponsor reserves the right to amend this Plan at any time to comply with Section 409A or for any other purpose, provided that such amendment will not cause the Plan to violate the provisions of Section 409A. Except to the extent necessary to bring this Plan into compliance with Section 409A, no amendment or modification shall be effective to decrease the value or vested percentage of a Participant’s Accrued Benefit in existence at the time an amendment or modification is made to the Plan.

8.2     Plan Termination.  The Plan Sponsor reserves the right to terminate this Plan in accordance with one of the following, subject to the restrictions imposed by Section 409A and authoritative guidance:

 

 

  

Page 14 of 20

  

Exhibit 10.41

 

 

(a)  Corporate Dissolution or Bankruptcy. This Plan may be terminated within twelve (12) months of a corporate dissolution taxed under Code § 331, or with the  approval  of  a  Plan  Sponsor  bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), and distributions may then be made to the Participant provided that the amounts payable under this Plan are included in the Participants’ gross income in the latest of:

 

(i)        The calendar year in which the Plan termination occurs;

(ii)       The calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or

(iii)  The first calendar year in which the payment is administratively practicable.

 

(b)  Change in Control.  This Plan may be terminated within the thirty (30) days preceding or the twelve (12) months following a Change in Control. This Plan will then be treated as terminated only if all substantially similar arrangements sponsored by the Plan Sponsor are terminated so that all participants in all similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date of termination of the arrangements.

(c)       Discretionary Termination. The Plan Sponsor may also terminate this

Plan and make distributions provided that:

(i)  All plans sponsored by the Plan Sponsor that would be aggregated with any terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated;

(ii)  No payments, other than payments that would be payable under the terms of this plan if the termination had not occurred, are made within twelve (12) months of this plan termination;

(iii)  All payments are made within twenty-four (24) months of this plan termination; and

(iv)  Neither the Plan Sponsor nor any of its affiliates adopts a new plan that would be aggregated with any terminated plan if the same Participant participated in both arrangements at any time within three (3) years following the date of termination of this Plan.

(v)  The termination does not occur proximate to a downturn in the financial health of the Plan Sponsor.

 

ARTICLE 9

THE TRUST

9.1     Establishment of Trust.  The Plan Sponsor may establish a grantor trust (the “Trust”), of which the Plan Sponsor is the grantor, within the meaning of subpart E, part I, subchapter J, subtitle A of the Code, to pay benefits under this Plan. If the Plan Sponsor establishes a Trust, all benefits payable under this Plan to a Participant shall be paid directly by the Plan Sponsor from the Trust. To the extent such benefits are not paid from the Trust, the benefits shall be paid from the general assets of the Plan Sponsor. The Trust, (if any), shall be a grantor trust which conforms to the terms of the model trust as described in IRS Revenue Procedure 92-64, I.R.B. 1992-33, as same may be amended or modified from time to time. If the Plan Sponsor establishes a Trust, the assets of the Trust will be subject to the claims of the Plan Sponsor’s creditors in the event of its insolvency. Except as may otherwise be provided under the Trust, the Plan Sponsor shall not be obligated to set aside, earmark, or escrow any funds or other assets to satisfy its obligations under this Plan, and the Participant and/or her designated Beneficiaries shall not have any property interest in any specific assets of the Plan Sponsor other than  the  unsecured right  to  receive payments from the  Plan  Sponsor, as provided in this Plan.

 

 

 

  

Page 15 of 20

  

Exhibit 10.41

 

9.2     Interrelationship of the Plan and the Trust.  The provisions of this Plan shall govern the rights of a Participant to receive distributions pursuant to this Plan. The provisions of the Trust (if established) shall govern the rights of the Participant and the creditors of the Plan Sponsor to the assets transferred to the Trust. The Plan Sponsor and each Participant shall at all times remain liable to carry out its obligations under this Plan. The Plan Sponsor’s obligations under this Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust.

9.3     Contribution to the Trust.  Amounts may be contributed by the Plan Sponsor to the Trust at the sole discretion of the Plan Sponsor.

 

ARTICLE 10

MISCELLANEOUS

 

10.1    Validity.  In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein; except to the extent that Section 409A requires that this Section 10.1 be disregarded because it purports to nullify Plan terms that are not in compliance with Section 409A.

10.2   Nonassignability. Neither any Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment,  be  subject  to  seizure,  attachment, garnishment (except  to  the  extent  the  Plan Sponsor may be required to garnish amounts from payments due under this Plan pursuant to applicable law), or sequestration for the payment of any debts, judgments, alimony, or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency, or be transferable to a spouse as a result of a property settlement or otherwise. If any Participant, Beneficiary, or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate, or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary, or successor in interest in such manner as the Plan Administrator shall direct.

10.3     Not a Contract of Employment.  The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Plan Sponsor and the Participant. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Plan Sponsor as an employee or otherwise or to interfere with the right of the Plan Sponsor to discipline or discharge the Participant at any time.

10.4   Unclaimed Benefits. In the case that the Plan Administrator is unable to locate the Participant or Beneficiary to whom a benefit is payable, such Plan benefit shall be forfeited to the Plan Sponsor upon the Plan Administrator’s determination. Notwithstanding the foregoing, payment may be made to a Participant, and that payment will be treated as made upon the date specified under the Plan, if the Participant provides notice to the Plan Sponsor within ninety (90) days of the latest date upon which the payment could have been timely made in accordance with the terms of the Plan and Section 409A, and if not paid, if the Participant takes further enforcement measures within one-hundred eighty (180) days after such latest date.

 

 

 

  

Page 16 of 20

  

Exhibit 10.41

 

10.5   Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of Maryland without regard to its conflicts of laws principles.

 

10.6   Notice.  Any notice, consent or demand required or permitted to be given under the provisions of this Plan shall be in writing and shall be signed by the party giving or making the same. If such notice, consent, or demand is mailed, it shall be sent by United States certified mail, postage prepaid, addressed to the addressee’s last known address as shown on the records of the Plan Sponsor. The date of such mailing shall be deemed the date of notice consent or demand. Any person may change the address to which notice is to be sent by giving notice of the change of address in the manner aforesaid.

10.7   Coordination with Other Benefits.  The benefits provided for a Participant and Participant’s Beneficiary under this Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Plan Sponsor. This Plan shall supplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided herein.

10.8   Compliance.  A Participant shall have no right to receive payment with respect to the Participant’s Accrued Benefit until all legal and contractual obligations of the Plan Sponsor relating to establishment of the Plan and the making of such payments shall have been complied with in full.

10.9   Compliance with Section 409A and Authoritative Guidance. Notwithstanding anything in this Plan to the contrary, all provisions of this Plan, including but not limited to the definitions of terms, elections to defer, and distributions, shall be made in accordance with and shall comply with Section 409A and any authoritative guidance.  The Plan Sponsor will amend the terms of this Plan retroactively, if necessary, to the extent required to comply with Section 409A and any authoritative guidance.  No election made by a Participant hereunder, and no change made by a Participant to a previous election, shall be accepted by the Plan Sponsor if the Plan Sponsor determines that acceptance of such election or change could violate any of the requirements of Section 409A or the authoritative guidance.   This Plan and any accompanying forms shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A and the authoritative guidance, including, without limitation, any such Treasury Regulations or other guidance that may be issued after the date hereof.

10.10 Aggregation of Plans.   If the Plan Sponsor offers non-account balance deferred compensation plans in addition to the Plan, those plans, together with the Plan, shall be treated as a single plan to the extent required under Section 409A.

 

 

 

 

  

Page 17 of 20

  

Exhibit 10.41

 

IN WITNESS WHEREOF, the Plan Sponsor and Participant have signed this Plan document as of the date indicated below.

 

	
WITNESS:

	 	
FOR THE PLAN SPONSOR:

	  	 	  
	  	 	  
	
(signature)

	 	
(signature)

	  	 	  
	  	 	  
	
(print name)

	 	
(print name)

	  	 	  
	  	 	  
	  	 	
(date)

	  	 	  
	  	 	  
	  	 	  
	  	 	
PARTICIPANT:

	  	 	  
	  	 	  
	  	 	
(signature)

	  	 	  
	  	 	  
	  	 	
(print name)

	  	 	  
	  	 	  
	  	 	
(date)

	  	 	  

 

 

  

Page 18 of 20

  

 

 

James W. Cornelsen

 

Age 80 Payment for Life with 5 Year Guarantee

 

	
 

 

Assumed Separation Date

	
 

 

 

Annual

Age

	
Early Termination Annual Benefit(1)

	
 

 

Disability Annual Benefit(1)

	
 

 

Change in Control Annual Benefit(2)

	
1/1/2012

	
57

	
0

	 	
0

	 	
155,013

	 
	
1/1/2013

	
58

	
18,599

	 	
18,599

	 	
162,764

	 
	
1/1/2014

	
59

	
39,430

	 	
39,430

	 	
170,902

	 
	
1/1/2015

	
60

	
62,694

	 	
62,694

	 	
179,447

	 
	
1/1/2016

	
61

	
88,607

	 	
88,607

	 	
188,419

	 
	
1/1/2017

	
62

	
117,404

	 	
117,404

	 	
197,840

	 
	
1/1/2018

	
63

	
149,339

	 	
149,339

	 	
207,732

	 
	
1/1/2019

	
64

	
184,682

	 	
184,682

	 	
218,119

	 
	
6/23/2019(3)

	
65

	
223,729

	 	
223,729

	 	
223,729

	 

 

(1)    As described in the Plan, the Participant's Early Termination Benefit or Disability Benefit under the plan shall be the Annual Benefit amount determined for the year in which termination or disability occurs, as applicable, multiplied by five (5).

 

(2)    As described in the Plan, the Participant's Change in Control Benefit shall be the Change in Control Annual Benefit amount determined for the year in which the Change in Control occurs, multiplied by five (5).

 

(3)    This is the date the Participant reaches Normal Retirement Age and becomes vested in the Normal Retirement Benefit.

 

 

 

 

  

Page 19 of 20

  

 

 

 

OLD LINE BANK

Salary Continuation Agreement (2012-B Plan)

BENEFICIARY DESIGNATION FORM

 

(  ) New Designation

 

(  ) Change in Designation

 

I __________________, designate the following as Beneficiary under this Agreement:

 

	
Primary:

	  	
 

	  	
%

	  
	  	
Name of Beneficiary

	  	  	  	  
	  	  	  	  	  	  
	  	  	  	  	
%

	  
	
 

	
Name of Beneficiary

	  	  	  	  
	  	  	  	  	  	  
	
Contingent:

	
 

	  	
 

	
%

	  
	  	
Name of Beneficiary

	  	  	  	  
	  	  	  	  	  	  
	  	  	  	  	
%

	  
	
 

	
Name of Beneficiary

	  	  	  	  

Notes:

 

	 	 o	

Please PRINT CLEARLY the names of the beneficiaries.

	 	 o	To name a Trust as Beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.
	 	 o	To name your Estate as Beneficiary, please write “Estate of <your name>”.
	 	 o	Be aware that none of the contingent beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you.

 

I understand that I may change these beneficiary designations by delivering a new written designation to the Plan Administrator, which shall be effective only upon receipt and acknowledgment by the Plan Administrator prior to my death.  I further understand that the designations will be automatically revoked if the Beneficiary predeceases me, or, if I named my spouse as Beneficiary and our marriage is subsequently dissolved.

 

Name:    _____________________________________      

 

	Signature: 	 	 	Date:	 
	 	 	 	 	 

 

Received by the Plan Administrator this _____________ day 

of ___________________________________, ________________________________________.

 

By:  ____________________________________

Title:  ___________________________________

 

 

Page 20 of 20exh10-4.htm

Exhibit 10.4

EXCHANGE AGREEMENT

EXCHANGE AGREEMENT (the “Agreement “) dated September 30, 2012, by and among KOKO LTD., a Nevada corporation whose principal office is located at 2727 East 53rd  Avenue, F-302, Spokane, Washington 99223 (“KOKO”);  Cardinal Energy Group, LLC, an Ohio Limited Liability Company (“CEGLLC”) whose principal office is located at 2665 Fairfax Drive, Upper Arlington, Ohio 43220;  Gregory Ruff, an individual, (“PRINCIPAL KOKO SHAREHOLDER”);  and, each person listed on the signature page who are owners of ownership interests of CEGLLC  (“SELLERS”).

 

 

R E C I T A L S

A.             CEGLLC is engaged in the business of exploring for oil and gas.

B.             SELLERS owns the number of ownership interests of CEGLLC set forth on signature page attached hereto.

C.             KOKO is a publicly traded company engaged in the business selling steak timers. On the Closing Date (as defined herein), KOKO will have authorized capital of 100,000,000 shares of common stock, $0.00001 par value per share.

D.             Prior to the Closing Date of the Agreement, KOKO will have 8,625,000 shares of common stock outstanding.

E.             KOKO desires to acquire one hundred percent (100%) of the issued and outstanding ownership units of CEGLLC, in consideration for which KOKO shall issue to SELLERS collectively 77,625,000 restricted shares of KOKO common stock.

  

-1-

  

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows.

ARTICLE I

ACQUISITION OF CEGLLC OWNERSHIP INTERESTS BY KOKO

1.1            Acquisition of CEGLLC. In the manner and subject to the terms and conditions set forth herein, KOKO shall acquire from SELLERS, one hundred percent (100%) of the issued and outstanding ownership interests of CEGLLC (the “CEGLLC shares of common stock”).

1.2            Effective Date. If all of the conditions precedent to the obligations of each of the parties hereto as hereinafter set forth shall have been satisfied or shall have been waived, the transactions set forth herein (the “Exchange”) shall become effective on the Closing Date as defined herein.

1.3            Consideration.

     (a)           In connection with the acquisition of the CEGLLC ownership interests,  KOKO will issue to SELLERS 77,625,000 restricted shares of KOKO common stock.  (the “KOKO Shares”).

     (b)           If the outstanding shares of KOKO Common Stock are changed into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization, or other similar transaction, then the number of shares of Common Stock referenced in Section 1.3(a), above, will be appropriately adjusted.

     (c)           No fractional shares of KOKO Common Stock will be issued in connection with this Agreement, and no certificates or scrip for any such fractional shares shall be issued.

	
  

	
1.4

	
Effect of Stock Exchange. As of the Closing Date, all of the following shall occur:

     (a)           The Articles of Organization of CEGLLC and the Articles of Incorporation of KOKO, as in effect on the Effective Date, shall continue in effect without change or amendment.

     (b)           The operating agreement of CEGLLC and the bylaws of KOKO, as in effect on the Closing Date, shall continue in effect without change or amendment.

     (c)           Upon the Closing Date or as soon as practical thereafter, Rashmi Yajnik will be appointed president and a director of KOKO; Timothy Crawford will be appointed chief executive officer and a director; John C. May will be appointed senior vice president and a director; Roger Gray will be appointed director of field operations; Dan Troendly will be appointed chief financial officer and chief accounting officer; Terrence Dunne will be appointed as a director and chairman of the board of directors; and Gregory Ruff will remain as a director.  Craig Littler will resign as an officer of KOKO.   Messrs. Yajnik, Crawford, May, and Dunne will be appointed to the KOKO Board of Directors in accordance with the notice provisions of Rule 14f-1 of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) if required by law.

1.5            Disclosure Schedules. Simultaneously with the execution of this Agreement: (a) KOKO shall deliver a schedule relating to KOKO which, along with the reports of KOKO filed with the Securities and Exchange Commission, shall be referred to as the “KOKO Disclosure Schedule” , and (b) SELLERS and

  

-2-

  

CEGLLC shall deliver a schedule relating to SELLERS and CEGLLC (the “CEGLLC Disclosure Schedule” and collectively with the KOKO Disclosure Schedule, the “Disclosure Schedules”) setting forth the matters required to be set forth in the Disclosure Schedules as described elsewhere in this Agreement. The Disclosure Schedules shall be deemed to be part of this Agreement. KOKO’S Disclosure Schedule shall include, but is not limited to, all publicly filed documents of KOKO.

1.6            Further Action. From time to time after the Closing, without further consideration, the parties shall execute and deliver such instruments of conveyance and transfer and shall take such other action as any party reasonably may request to more effectively transfer the CEGLLC ownership interests and KOKO Shares.

ARTICLE II

CONDUCT OF BUSINESS PENDING CLOSING; STOCKHOLDER APPROVAL

KOKO, SELLERS and CEGLLC covenant that between the date hereof and the Closing Date (as hereinafter defined):

2.1            Access by SELLERS and CEGLLC. KOKO shall afford to SELLERS, CEGLLC, and their legal counsel, accountants and other representatives, throughout the period prior to the Closing Date, full access, during normal business hours, to (a) all of the books, contracts and records of KOKO, and shall furnish SELLERS and CEGLLC, during such period, with all information concerning KOKO that SELLERS or CEGLLC may reasonably request and (b) all property of KOKO in order to conduct inspections at SELLERS’ and CEGLLC’s expense to determine that KOKO is operating in material compliance with all applicable federal, state and local and foreign statutes, rules and regulations, and that KOKO’s assets are substantially in the condition and of the capacities represented and warranted in this Agreement. Any such investigation or inspection by SELLERS or CEGLLC shall not be deemed a waiver of, or otherwise limit, the representations, warranties and covenants contained herein. SELLERS and CEGLLC shall grant identical access to KOKO and its agents.

2.2            Conduct of Business. During the period from the date hereof to the Closing Date, the business of KOKO and CEGLLC shall be operated by the respective entities in the usual and ordinary course of such business and in material compliance with the terms of this Agreement. Without limiting the generality of the foregoing:

     (a)           KOKO and CEGLLC, respectively, shall each use their reasonable efforts to (i) keep available the services of the present agents of KOKO and CEGLLC; (ii) complete or maintain all existing material arrangements; (iii) maintain the integrity of all confidential information of KOKO and CEGLLC; and (iv) comply in all material respects with all applicable laws; and (b) except as contemplated by this Agreement, KOKO and CEGLLC shall not (i) sell, lease, assign, transfer or otherwise dispose of any of their material assets or property including cash; (ii) agree to assume, guarantee, endorse or in any way become responsible or liable for, directly or indirectly, any material contingent obligation; make any material capital expenditures; (iii) enter into any transaction concerning a merger or consolidation other than with the other party hereto or liquidate or dissolve itself (or suffer any liquidation or dissolution) or convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of related transactions, all or a substantial part of its property, business, or assets, or stock or securities convertible into stock of any subsidiary, or make any material change in the present method of conducting business; (iv) declare or pay any dividends or make any other distribution (whether in cash or property) on any shares of its capital stock, in the case of KOKO, or in the case of CEGLLC, any ownership interests, or purchase, redeem, retire or otherwise acquire for value any securities whether now or hereafter outstanding; (v) make or suffer to exist any advances or loans to, or investments in any person, firm, corporation or other business entity not a party to this Agreement; (vi) enter into any new material agreement or be or become liable under any new material agreement, for the lease, hire or use of any real or personal

  

-3-

  

property; (vii) create, incur, assume or suffer to exist, any mortgage, pledge, lien, charge, security interest or encumbrance of any kind upon any of its property or assets, income or profits, whether now owned or hereafter acquired; or (viii) agree to do any of the foregoing.

2.3            Exclusivity to SELLERS and CEGLLC. KOKO and its officers, directors, representatives and agents, from the date hereof, until the Closing Date (unless this Agreement shall be earlier terminated as hereinafter provided), shall not hold discussions with any person or entity, other than SELLERS and CEGLLC or their respective agents concerning the Exchange, nor solicit, negotiate or entertain any inquiries, proposals or offers to purchase the business of KOKO, nor the shares of capital stock of KOKO from any person other than SELLERS and CEGLLC, nor, except in connection with the normal operation of KOKO’s respective business, or as required by law, or as authorized in writing by SELLERS, disclose any confidential information concerning KOKO to any person other than SELLERS, CEGLLC and SELLERS and CEGLLC’s representatives or agents. SELLERS and CEGLLC shall from the date hereof, and until the Closing Date, owe the identical obligations of confidentiality and exclusivity to KOKO concerning the Exchange as stated in this Section.

2.4            Board and Shareholder Approval. The Board of Directors of KOKO has determined that the Exchange is fair to and in the best interests of its stockholders and has approved and adopted this Agreement and the terms of the Exchange.  Shareholders of KOKO will not vote or approve of the transaction contemplated by this agreement.  This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by KOKO, the valid and binding obligation of KOKO, enforceable in accordance with their respective terms.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF KOKO

Except as set forth in the KOKO Disclosure Schedule (which incorporates all the reports of KOKO filed with the United States Securities and Exchange Commission) KOKO represents and warrants to SELLERS and CEGLLC as follows:

3.1            Organization and Standing. KOKO is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. KOKO has all requisite corporate power to carry on its business as it is now being conducted and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary under applicable law except where the failure to qualify (individually or in the aggregate) will not have any material adverse effect on the business or prospects of KOKO. The copies of the Articles of Incorporation and Bylaws of KOKO, as amended to date, which have been delivered to SELLERS and CEGLLC, are true and complete copies of these documents as now in effect.

	
  

	
3.2

	
Capitalization.

     (a)           There are currently 8,625,000 shares of KOKO common stock issued and outstanding. All of such shares of common stock that are issued and outstanding are duly authorized, validly issued and outstanding, fully paid and non-assessable, and were not issued in violation of the preemptive rights of any person. Other than as set forth in the KOKO Disclosure Schedule, there are no subscriptions, warrants, rights or calls or other commitments or agreements to which KOKO is a party or by which it is bound, pursuant to which KOKO is or may be required to issue or deliver securities of any class. Other than as set forth in the KOKO Disclosure Schedule and Recital D, there are no outstanding securities convertible or exchangeable, actually or contingently, into common stock or any other securities of KOKO.

  

-4-

  

     (b)           To KOKO’S knowledge, all outstanding shares of KOKO capital stock have been issued and granted in compliance with all applicable securities laws and other applicable legal requirements.

     (c)           KOKO has good and marketable title to all of the KOKO Shares, free and clear of all liens, claims and encumbrances of any third persons.

3.3            Subsidiaries. KOKO owns no subsidiaries nor does it own or have an interest in any other corporation, partnership, joint venture or other entity.

3.4            Authority. KOKO’s Board of Directors has determined that the Exchange is fair to and in the best interests of KOKO’s stockholders. The execution, delivery and performance by KOKO of this Agreement (including the contemplated issuance of up to 77,625,000 KOKO Shares in accordance with this Agreement) has been duly authorized by all necessary action on the part of KOKO. KOKO has the absolute and unrestricted right, power and authority to perform its obligations under this Agreement. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by KOKO in accordance herewith, the valid and binding obligations of KOKO, enforceable in accordance with their respective terms.

3.5            Assets. Except as set forth in the KOKO Disclosure Schedule, KOKO has no material assets.  KOKO has good and marketable title to all of the assets and properties listed on Schedule 3.5 and as reflected on the balance sheet included in the KOKO Financial Statements (as hereinafter defined).

3.6            Contracts and Other Commitments. Except as set forth in the KOKO Disclosure Schedule, KOKO is not a party to any contracts or agreements.

3.7            Litigation. There is no claim, action, proceeding, or investigation pending or, to its knowledge, threatened against or affecting KOKO before or by any court, arbitrator or governmental agency or authority which, in its reasonable judgment, could have a material adverse effect on the operations or prospects of KOKO. There are no decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against KOKO or asserted against KOKO that has not been paid.

3.8            Taxes. For purposes of this Agreement, (A) “Tax” (and, with correlative meaning, “Taxes”) shall mean any federal, state, local or foreign income, alternative or add on minimum, business, employment, franchise, occupancy, payroll, property, sales, transfer, use, value added, withholding or other tax, levy, impost, fee, imposition, assessment or similar charge together with any related addition to tax, interest, penalty or fine thereon; and (B) “Returns” shall mean all returns (including, without limitation, information returns and other material information), reports and forms relating to Taxes.

            (a)           KOKO has duly filed all Returns required to be filed by it other than Returns (individually and in the aggregate) where the failure to file would have no material adverse effect on the business or prospects of KOKO. All such Returns were, when filed, and to the knowledge of KOKO are, accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations. KOKO has paid or will pay in full or has adequately reserved against all Taxes otherwise assessed against it through the Closing Date.

            (b)           KOKO is not a party to any pending action or proceeding by any governmental authority for the assessment of any Tax, and, to the knowledge of KOKO, no claim for assessment or collection of any Tax related to KOKO has been asserted against KOKO that has not been paid. There are no Tax liens upon the assets of KOKO. There is no valid basis, to KOKO’s knowledge, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to KOKO by any governmental authority.

  

-5-

  

3.9            Compliance with Laws and Regulations. KOKO has complied and is presently complying, in all material respects, with all laws, rules, regulations, orders and requirements (federal, state and local and foreign) applicable to it in all jurisdictions where the business of KOKO is conducted or to which KOKO is subject, including all requisite filings with the SEC. KOKO has not made any misrepresentation nor has omitted any material facts in any of its SEC filings to date.

3.10          Hazardous Materials. To the knowledge of KOKO, KOKO has not violated, or received any written notice from any governmental authority with respect to the violation of any law, rule, regulation or ordinance pertaining to the use, maintenance, storage, transportation or disposal of “Hazardous Materials.” As used herein, the term “Hazardous Materials” means any substance now or hereafter designated pursuant to Section 307(a) and 311 (b)(2)(A) of the Federal Clean Water Act, 33 USC §§ 1317(a), 1321(b)(2)(A), Section 112 of the Federal Clean Air Act, 42 USC § 3412, Section 3001 of the Federal Resource Conservation and Recovery Act, 42 USC § 6921, Section 7 of the Federal Toxic Substances Control Act, 15 USC § 2606, or Section 101(14) and Section 102 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC §§ 9601(14), 9602.

3.11          No Breaches. The making and performance of this Agreement will not (i) conflict with or violate the Articles of Incorporation or the Bylaws of KOKO, (ii) violate any laws, ordinances, rules, or regulations, or any order, writ, injunction or decree to which KOKO is a party or by which KOKO or any of its businesses, or operations may be bound or affected or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any material asset of KOKO under, or create any rights of termination, cancellation or acceleration in any person under, any contract.

3.12          Employees. KOKO has no employees that are represented by any labor union or collective bargaining unit. Nor does KOKO have any employment agreements or compensation plans which are in effect with anyone.

3.13          Financial Statements. Year end audited financial statements and unaudited quarterly stub financial statements are available online at www.sec.gov (collectively the “Financial Statements”). The Financial Statements present fairly, in all material respects, the financial position on the dates thereof and results of operations of KOKO for the periods indicated, prepared in accordance with generally accepted accounting principles (“GAAP”), consistently applied. There are no assets of KOKO the value of which is materially overstated in said Financial Statements.

3.14          Absence of Certain Changes or Events. Except as set forth in the KOKO Disclosure Schedule, since June 30, 2012 (the “Balance Sheet Dates”), there has not been:

     (a)           any material adverse change in the financial condition, properties, assets, liabilities or business of KOKO;

     (b)           any material damage, destruction or loss of any material properties of KOKO, whether or not covered by insurance;

     (c)           any material adverse change in the manner in which the business of KOKO and has been conducted;

     (d)           any material adverse change in the treatment and protection of trade secrets or other confidential information of KOKO; and

     (e)           any occurrence not included in paragraphs (a) through (d) of this Section 3.14 which has

  

-6-

  

resulted, or which KOKO has reason to believe, might be expected to result in, a material adverse change in the business or prospects of KOKO.

3.15          Government Licenses, Permits, Authorizations. KOKO has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted (“Licenses and Permits”). All such Licenses and Permits are in full force and effect, and no proceedings for the suspension or cancellation of any thereof is pending or, to the knowledge of KOKO, threatened.

3.16          Employee Benefit Plans.

     (a)           KOKO has no bonus, material deferred compensation, material incentive compensation, stock purchase, stock option, severance pay, termination pay, hospitalization, medical, insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plan.

     (b)           KOKO has not maintained, sponsored or contributed to, any employee pension benefit plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) or any similar pension benefit plan under the laws of any foreign jurisdiction.

     (c)           Except as set forth in the KOKO Disclosure Schedule, neither the execution, delivery or performance of this Agreement, nor the consummation of the Exchange or any of the other transactions contemplated by this Agreement, will result in any bonus, golden parachute, severance or other payment or obligation to any current or former employee or director of any of KOKO, or result in any acceleration of the time of payment, provision or vesting of any such benefits.

3.17          Business Locations. Other than as set forth in the KOKO Disclosure Schedule, KOKO does not own or lease any real or personal property in any state or country.

3.18          Intellectual Property. KOKO owns no intellectual property of any kind. KOKO is not currently in receipt of any notice of any violation or infringements of, and is not knowingly violating or infringing, or to the best of its knowledge has not violated or infringed the rights of others in any trademark, trade name, service mark, copyright, patent, trade secret, know-how or other intangible asset.

3.19          Governmental Approvals. Except as set forth in the KOKO Disclosure Schedule, no authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by KOKO with, any governmental authority, domestic or foreign, federal, state or local, is required in connection with KOKO’s execution, delivery and performance of this Agreement. Except as set forth in the KOKO Disclosure Schedule, no consents of any other parties are required to be received by or on the part of KOKO to enable KOKO to enter into and carry out this Agreement.

3.20          Transactions with Affiliates. Except as set forth in the KOKO Disclosure Schedule, KOKO is not indebted for money borrowed, either directly or indirectly, from any of its officers, directors, or any Affiliate (as defined below), in any amount whatsoever; nor are any of its officers, directors, or Affiliates indebted for money borrowed from KOKO; nor are there any transactions of a continuing nature between KOKO and any of its officers, directors, or affiliates not subject to cancellation which will continue beyond the Closing Date, including, without limitation, use of the assets of KOKO for personal benefit with or without adequate compensation. For purposes of this Agreement, the term “Affiliate” shall mean any person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified. As used in the foregoing definition, the term (i) “control” shall mean the power through the ownership of voting securities, contract or otherwise to direct the affairs of another person and (ii) “person” shall mean an individual, firm, trust, association, corporation, partnership, government (whether federal, state, local or other political subdivision, or any agency or bureau of any of them) or other

  

-7-

  

entity.

3.21          No Distributions. KOKO has not made nor has any intention of making any distribution or payment to any of its shareholders with respect to any of its shares prior to the Closing Date.

3.22          Liabilities. KOKO has no material direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise (“Liabilities”), whether or not of a kind required by generally accepted accounting principles to be set forth on a financial statement, other than (i) Liabilities fully and adequately reflected or reserved against on the KOKO Balance Sheet, (ii) Liabilities incurred since the Balance Sheet Date in the ordinary course of the business of KOKO, or (iii) Liabilities otherwise disclosed in this Agreement, including the exhibits hereto and KOKO Disclosure Schedule.

3.23          Accounts Receivable. Except as set forth in the KOKO Disclosure Schedule, KOKO has no accounts receivable.

3.24          Insurance. KOKO has no insurance policies in effect.

3.25          Principal KOKO Shareholder Representations and Warranties. The PRINCIPAL KOKO SHAREHOLDER represents and warrants that he has the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and the other Closing Documents to which he is a party and to perform his obligations under this Agreement and the other Closing Documents to which he is a party, and he, with his wife, Linda Ruff, has good and marketable title to all of the KOKO Shares listed in Exhibit A hereto, free and clear of all liens, claims and encumbrances of any third persons.

3.26          No Omissions or Untrue Statements. To the best of each party’s knowledge no representation or warranty made by KOKO or the PRINCIPAL KOKO SHARHOLDER (with respect to Section 3.25 only) to SELLERS and CEGLLC in this Agreement, the KOKO Disclosure Schedule or in any certificate of an KOKO officer required to be delivered to SELLERS pursuant to the terms of this Agreement, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading as of the date hereof and as of the Closing Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLERS

SELLERS, jointly and severally and CEGLLC represent and warrant to KOKO as follows as of the date hereof and as of the Closing Date:

4.1            Organization and Standing of CEGLLC. CEGLLC is an Ohio Limited Liability Corporation duly organized, validly existing and in good standing under the laws of  the State of Ohio, and has the power to carry on its business as now conducted and to own its assets and is duly qualified to transact business as a foreign limited liability corporation in each state where such qualification is necessary except where the failure to qualify will not have a material adverse effect on the business or prospects of CEGLLC. The copies of the Articles of Organization and Operating Agreement of CEGLLC, as amended to date, and made available to KOKO, are true and complete copies of those documents as now in effect.

4.2            Authority. The Managers of CEGLLC have approved this Agreement.

4.3            No Conflict. The making and performance of this Agreement will not (i) conflict with the Articles of Organization or Operating Agreement of CEGLLC, (ii) violate any laws, ordinances, rules, or

  

-8-

  

regulations, or any order, writ, injunction or decree to which CEGLLC is a party or by which CEGLLC or any of their material assets, business, or operations may be bound or affected or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any material asset of CEGLLC, or create any rights of termination, cancellation, or acceleration in any person under any material agreement, arrangement, or commitment.

4.4            Properties. Except as set forth in the CEGLLC Disclosure Schedule, SELLERS have good and marketable title to all of the ownership interests of CEGLLC, free and clear of all liens, claims and encumbrances of third persons whatsoever, and CEGLLC has good and marketable title to all of the assets and properties which it purports to own as reflected on the balance sheet included in the CEGLLC Financial Statements (as hereinafter defined), or thereafter acquired.

4.5            Capitalization of CEGLLC.   The ownership of GEGLLC consists of 1,000,000 (one million) ownership interests owned by 32 individuals and/or entities registered in the names of the SELLERS.  There are no other ownership interests of CEGLLC issued and outstanding.  All ownership interests are duly authorized, validly issued, fully paid, and non-assessable. As of the date hereof, there were no outstanding options, warrants or rights of conversion or other rights, agreements, arrangements or commitments relating to the securities of CEGLLC or obligating CEGLLC to issue or sell any securities of CEGLLC to anyone.    To CEGLLC’S knowledge, all outstanding ownership interests of CEGLLC have been issued and granted in compliance with all applicable legal requirements.

4.6            Governmental Approval; Consents. No authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by SELLERS or CEGLLC with any governmental authority, domestic or foreign, federal, state or local, is required in connection with SELLERS’ OR CEGLLC’s execution, delivery and performance of this Agreement. Except as set forth in the CEGLLC Disclosure Schedule, no consents of any other parties are required to be received by or on the part of SELLERS or CEGLLC to enable SELLERS and CEGLLC to enter into and carry out this Agreement.

4.7            Adverse Developments. Since CEGLLC’s inception, there have been no material adverse changes in the assets, liabilities, properties, operations or financial condition of CEGLLC, and no event has occurred other than in the ordinary and usual course of business or as set forth in the CEGLLC Financial Statements which could be reasonably expected to have a materially adverse effect upon CEGLLC.

4.8            Taxes. CEGLLC has duly filed all returns required to be filed. All such returns were, when filed, and to SELLER’S knowledge are, accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations. CEGLLC has paid in full all taxes through the Closing Date. CEGLLC is not a party to any pending action or proceeding by any governmental authority for the assessment of any tax, and, to the knowledge of CEGLLC, no claim for assessment or collection of any tax has been asserted against CEGLLC that have not been paid. There are no tax liens upon the assets of CEGLLC. There is no valid basis, to CEGLLC’s knowledge, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any tax to be issued to CEGLLC by any governmental authority.

4.9            Litigation. Except as set forth on the CEGLLC Disclosure Schedule, there is no material claim, action, proceeding, or investigation pending or, to their knowledge, threatened against or affecting SELLERS or CEGLLC before or by any court, arbitrator or governmental agency or authority. There are no material decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against SELLERS or CEGLLC.

4.10          Compliance with Laws and Regulations. CEGLLC has complied and is presently complying, in all material respects, with all laws, rules, regulations, orders and requirements applicable to it in all

  

-9-

  

jurisdictions in which its operations are currently conducted or to which it is currently subject.

4.11          Governmental Licenses, Permits and Authorizations. CEGLLC has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted. All such licenses, permits, authorizations and approvals are in full force and effect, and no proceedings for the suspension or cancellation of any thereof is pending or threatened.

4.12          Liabilities. CEGLLC has no material direct or indirect liabilities, as that term is defined in Section 3.22 (“CEGLLC Liabilities”), whether or not of a kind required by generally accepted accounting principles to be set forth on a financial statement, other than (i) CEGLLC Liabilities fully and adequately reflected or reserved against on the CEGLLC Balance Sheet, (ii) CEGLLC Liabilities incurred in the ordinary course of the business of CEGLLC, and (iii) CEGLLC Liabilities otherwise disclosed in this Agreement, including the Exhibits hereto.

4.13          SELLERS’s Representations Regarding KOKO Shares.

     (a)           SELLERS acknowledges that KOKO has limited assets and business and that the KOKO Shares are speculative and involve a high degree of risk, including among many other risks that the KOKO Shares will be restricted as elsewhere described in this Agreement and will not be transferable unless first registered under the Securities Act of 1933, as amended (“Act”), or pursuant to an exemption from the Act’s registration requirements.

     (b)           SELLERS acknowledges and agrees that it has been furnished with copies of the periodic reports of KOKO filed with the United States Securities and Exchange Commission including those on Forms 10-K, 10-Q, and 8-K since KOKO’s inception. SELLERS have had an opportunity to ask questions of and receive answers from KOKO regarding its business, assets, results of operations, financial condition and plan of operation and the terms and conditions of the issuance of the KOKO Shares.

     (c)           SELLERS are each an accredited investor as that term is defined in Regulation 501 of the Securities Act of 1933, as amended and are each acquiring the KOKO Shares for his own account, and not for the account of any other person other than for the benefit of SELLERS, and SELLERS have no current intent to make any resale, pledge, hypothecation, distribution or public offering of the KOKO Shares except as permitted by applicable law.

 

     (d)           SELLERS, acting with the assistance of counsel and other professional advisers, possess such knowledge and experience in financial, tax and business matters as to enable them to utilize the information made available by KOKO, to evaluate the merits and risks of acquiring the KOKO Shares and to make an informed investment decision with respect thereto.

     (e)           SELLERS were not solicited by KOKO or anyone on KOKO’s behalf to enter into any transaction whatsoever, by any form of general solicitation or general advertising, as those terms are defined in the rules, regulations and rulings of the Securities and Exchange Commission.

4.14          Contracts and Other Commitments. Schedule 4.14 of the CEGLLC Disclosure Schedule consists of a true and complete list of all material contracts, agreements, commitments and other instruments (whether oral or written) to which CEGLLC is a party. CEGLLC has made or will make available to KOKO a copy of each such contract. All such contracts are valid and binding upon CEGLLC and are in full force and effect and are enforceable in accordance with their respective terms. No such contracts are in breach, and no event has occurred which, with the lapse of time or action by a third party, could result in a material default under the terms thereof. To CEGLLC’S knowledge, no stockholder of CEGLLC has received any payment from any contracting party in connection with or as an inducement for causing CEGLLC to enter into any such

  

-10-

  

contract.

4.15          Absence of Certain Changes or Events. Except as set forth in the CEGLLC Disclosure Schedule, since June 30, 2012 (the “Balance Sheet Date”), there has not been:

     (a)           any material adverse change in the financial condition, properties, assets, liabilities or business of CEGLLC;

     (b)           any material damage, destruction or loss of any material properties of CEGLLC, whether or not covered by insurance;

     (c)           any material adverse change in the manner in which the business of CEGLLC and has been conducted;

     (d)           any material adverse change in the treatment and protection of trade secrets or other confidential information of CEGLLC; and,

     (e)           any occurrence not included in paragraphs (a) through (d) of this Section 4.15 which has resulted, or which CEGLLC has reason to believe, might be expected to result in a material adverse change in the business or prospects of CEGLLC.

4.16          Financial Statements. The CEGLLC Disclosure Schedule contains audited financial statements (consolidated if necessary) for the years ending December 31, 2011 and 2010.  The CEGLLC Financial Statements present fairly, in all material respects, the financial position on the dates thereof and results of operations of CEGLLC for the periods indicated, prepared in accordance with GAAP, consistently applied.  Further, the financial statements have been prepared in compliance with Article 8 for Reg. S-X of the Securities Exchange Act of 1934, as amended, and Item 2.01(f) and Item 9.01 of Form 8-K of the Securities Exchange Act of 1934, as amended.  There are no assets of CEGLLC the value of which is materially overstated in said balance sheets.

4.17          CEGLLC Intellectual Property. Schedule 4.17 of the CEGLLC Disclosure Schedule sets forth a complete and correct list and summary description of all intellectual property, including computer software, trademarks, trade names, service marks, service names, brand names, copyrights and patents, registrations thereof and applications therefore, applicable to or used in the business of CEGLLC, together with a complete list of all licenses granted by or to CEGLLC with respect to any of the above. Except as otherwise set forth in Schedule 4.17 all such trademarks, trade names, service marks, service names, brand names, copyrights and patents are owned by CEGLLC, free and clear of all liens, claims, security interests and encumbrances of any nature whatsoever. CEGLLC is not currently in receipt of any notice of any violation or infringements of, and is not knowingly violating or infringing, the rights of others in any trademark, trade name, service mark, copyright, patent, trade secret, know-how or other intangible asset. CEGLLC has not (i) licensed any of the material proprietary assets to any person or entity on an exclusive basis, or (ii) entered into any covenant not to compete or agreement limiting its ability to exploit fully any proprietary asset or to transact business in any market or geographical area or with any person or entity.

4.18          Subsidiaries. Except as set forth in Schedule 4.18 of the CEGLLC Disclosure Schedule, CEGLLC owns no subsidiaries nor does it own or have an interest in any other corporation, partnership, joint venture, limited liability company, or other entity.

  

-11-

  

4.19          Hazardous Materials.  To the knowledge of CEGLLC, CEGLLC has not violated, or received any written notice from any governmental authority with respect to the violation of any law, rule, regulation or ordinance pertaining to the use, maintenance, storage, transportation or disposal of “Hazardous Materials.” As used herein, the term “Hazardous Materials” means any substance now or hereafter designated pursuant to Section 307(a) and 311 (b)(2)(A) of the Federal Clean Water Act, 33 USC §§ 1317(a), 1321(b)(2)(A), Section 112 of the Federal Clean Air Act, 42 USC § 3412, Section 3001 of the Federal Resource Conservation and Recovery Act, 42 USC § 6921, Section 7 of the Federal Toxic Substances Control Act, 15 USC § 2606, or Section 101(14) and Section 102 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC §§ 9601(14), 9602.

4.20          Employees. CEGLLC has no employees that are represented by any labor union or collective bargaining unit.

4.21          Employee Benefit Plans. The CEGLLC Disclosure Schedule identifies each salary, bonus, material deferred compensation, material incentive compensation, stock purchase, stock option, severance pay, termination pay, hospitalization, medical, insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plan, program or material agreement.

4.22          Business Locations. Set forth in the CEGLLC Disclosure Schedule filed herewith are the interests CEGLLC has in each property in which it owns any mineral interest, revenue interest or working interest.

4.23          Insurance.  CEGLLC has the insurance policies set forth in Schedule 4.23 of the CEGLLC Disclosure Schedule.

4.24          No Omission or Untrue Statement. To the best of each party’s knowledge, no representation or warranty made by CEGLLC or SELLERS to KOKO in this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading as of the date hereof and as of the Closing Date.

ARTICLE V

CLOSING

5.1            Closing. The Exchange shall be completed on the first business day after the day on which the last of the conditions contained in this Article V is fulfilled or waived (the “Closing Date”); provided, however, that in no event shall the Closing occur later than September 30, 2012, unless otherwise agreed to by the parties. The Closing shall take place as the parties may agree. At the Closing, KOKO and SELLERS shall make the deliveries contemplated by this Agreement, and in accordance with the terms of this Agreement.

5.2            KOKO’s Closing Deliveries. At the Closing, in addition to documents referred elsewhere, KOKO shall cause to be delivered to SELLERS:

     (a)           a certificate, dated as of the Closing Date, executed by the President of KOKO, to the effect that the representations and warranties contained in this Agreement are true and correct in all material respects at and as of the Closing Date and that KOKO has complied with or performed in all material respects all terms, covenants and conditions to be complied with or performed by KOKO on or prior to the Closing Date;

     (b)           certificates representing the KOKO Shares issuable upon consummation of

the Exchange;

  

-12-

  

     (c)           a certified resolution of the Board of Directors and shareholders authorizing and approving the transactions set forth herein;

     (d)           The KOKO Disclosure Schedule;

     (e)           such other documents as SELLERS or CEGLLC or their counsel may reasonably require.

5.3            CEGLLC’s Closing Deliveries. At the Closing, in addition to documents referred to elsewhere, SELLERS and CEGLLC shall deliver to KOKO:

     (a)           a certificate of SELLERS and CEGLLC dated as of the Closing Date that the representations and warranties of SELLERS and CEGLLC contained in this Agreement are true and correct in all material respects and that SELLERS and CEGLLC have complied with or performed in all material respects all terms, covenants, and conditions to be complied with or performed by SELLERS and CEGLLC on or prior to the Closing Date;

     (b)           certificates representing CEGLLC ownership interests owned by SELLERS, duly endorsed for transfer or accompanied by a properly executed stock power;

     (c)           the CEGLLC Disclosure Schedule;

     (d)           such other documents as KOKO or its counsel may reasonably require.

ARTICLE VI

CONDITIONS TO OBLIGATIONS OF KOKO

The obligation of KOKO to consummate the Closing is subject to the following conditions, any of which may be waived by it in its sole discretion.

6.1            Compliance by SELLERS and CEGLLC. SELLERS and CEGLLC shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with in all material respects by SELLERS and CEGLLC prior to or on the Closing Date;

6.2            Accuracy of SELLERS’ and CEGLLC’s Representations. SELLERS’ and CEGLLC’s representations and warranties contained in this Agreement (including the Disclosure Schedule) or any schedule, certificate, or other instrument delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby shall be true and correct in all material respects at and as of the Closing Date (except for such changes permitted by this Agreement) and shall be deemed to be made again as of the Closing Date.

6.3            Documents. All documents and instruments required hereunder to be delivered by SELLERS and CEGLLC to KOKO at the Closing shall be delivered in form and substance reasonably satisfactory to KOKO and its counsel.

6.4            Litigation. No litigation seeking to enjoin the transactions contemplated by this Agreement or to obtain damages on account hereof shall be pending or, to CEGLLC’s or SELLERS’ knowledge, be threatened.

6.5            Material Adverse Change. Except for operations in the ordinary course of business, no material adverse change shall have occurred subsequent to June 30, 2012 in the financial position, results of operations, assets, or liabilities of CEGLLC, nor shall any event or circumstance have occurred which would result in a

  

-13-

  

material adverse change in the financial position, results of operations, assets, or liabilities of CEGLLC.

6.6            Approval by CEGLLC Managers. The Managers of CEGLLC shall have approved this Agreement and the transactions contemplated hereby.

6.7            Satisfaction with Due Diligence. KOKO and shall have been satisfied with its due diligence review of CEGLLC, its subsidiaries and their operations.

6.8            Regulatory Compliance. CEGLLC shall have received any and all regulatory approvals and consents required to complete the transactions contemplated hereby.

ARTICLE VII

CONDITIONS TO SELLERS’ OBLIGATIONS

SELLERS obligation to consummate the Closing is subject to the following conditions:

7.1            Compliance by KOKO.  KOKO shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by them prior to or on the Closing Date.

7.2            Accuracy of Representations of KOKO and PRINCIPAL KOKO SHAREHOLDER.  The representations and warranties of KOKO and PRINICIPAL KOKO SHAREHOLDER contained in this Agreement (including the exhibits hereto and the KOKO Disclosure Schedule) or any schedule, certificate, or other instrument delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby shall be true and correct in all material respects at and as of the Closing Date (except for changes permitted by this Agreement) and shall be deemed to be made again as of the Closing Date.

7.3            Continuation as Publicly Traded Company. KOKO shares shall continue to trade on the Bulletin Board.

7.4            Litigation. No litigation seeking to enjoin the transactions contemplated by this Agreement or to obtain damages on account hereof shall be pending or to SELLERS’ knowledge, be threatened.

7.5            Documents. All documents and instruments required hereunder to be delivered by KOKO at the Closing shall be delivered in form and substance reasonably satisfactory to SELLERS and their counsel.

7.6            Balance Sheet. Except as set forth in Section 7.6 of the KOKO Disclosure Schedule, KOKO shall have no liabilities except as incurred in the ordinary course of business, as reflected on KOKO’s most recent balance sheet, or as otherwise approved by SELLERS.

7.7            Approval by the Managers and Owners of CEGLLC.   The Managers and owners of CEGLLC shall have approved this Agreement and the transactions contemplated hereby.

7.8            Satisfaction with Due Diligence. SELLERS shall have been satisfied with their due diligence review of KOKO and satisfied themselves that KOKO continues to trade its shares on the Bulletin Board.

7.9            Regulatory Compliance. CEGLLC shall have received any and all regulatory approvals and consents required to complete the transactions contemplated hereby.

7.10          Outstanding Shares. KOKO remains a publicly traded corporation and KOKO shall have

  

-14-

  

8,625,000 shares of KOKO common stock and outstanding immediately prior to the Closing.

7.11          Existing CEGLLC Contracts.  All existing CEGLLC contracts, provided the same are included in the CEGLLC Disclosure Schedules, will remain in full force and affect and will be the obligation of KOKO.

7.12          Name Change.  As soon as practical after Closing, KOKO will change its name and Bulletin Board symbol to be more reflective of the business of CEGLLC.

7.13          Form 8-K.  Within four (4) business days of Closing, KOKO will file a Form 8-K with the SEC complying with the provisions of Items 2.01(f), 5.06, and 9.01 of Form 8-K.

7.14          Steak Timers.   Prior to closing and as a condition thereto, KOKO will divest itself of all ownership interest in and to the steak timers which currently holds in inventory.  SELLERS, KOKO and CEGLLC waive any right to the proceeds from the disposition of the steak timers.

ARTICLE VIII

TERMINATION

8.1            Termination Prior to Closing.

     (a)           If the Closing has not occurred by September 30, 2012, any party may terminate this Agreement at any time thereafter by giving written notice of termination to the other, provided, however, that no party may terminate this Agreement if such party has breached any material terms or conditions of this Agreement and such breach has prevented the timely closing of the Exchange. Notwithstanding the above, such deadline may be extended one or more times, only by mutual written consent of SELLERS and KOKO.

     (b)           Prior to September 30, 2012,  any party may terminate this Agreement following the insolvency or bankruptcy of the other party hereto, or if any one or more of the conditions to Closing set forth in Article VI or Article VII shall become incapable of fulfillment or there shall have occurred a material breach of this Agreement and either such condition of breach shall not have been waived by the party for whose benefit the condition was established, then KOKO (in the case of a condition in Article VI) or SELLERS (in the case of a condition specified in Article VII) may terminate this Agreement. In addition, either KOKO or SELLERS may terminate this Agreement upon written notice to the other if it shall reasonably determine that the Exchange has become inadvisable by reason of the institution or threat by any federal, state or municipal governmental authorities of a formal investigation or of any action, suit or proceeding of any kind against either or both parties.

8.2            Consequences of Termination. Upon termination of this Agreement pursuant to this Article VIII or any other express right of termination provided elsewhere in this Agreement, the parties shall be relieved of any further obligation under this Agreement except for the obligations in Section 11.4; provided, however, that no termination of this Agreement, pursuant to this Article VIII hereof or under any other express right of termination provided elsewhere in this Agreement shall operate to release any party from any liability to any other party incurred otherwise than under this Agreement before the date of such termination, or from any liability resulting from any willful misrepresentation of a material fact made in connection with this Agreement or willful breach of any material provision hereof.

  

-15-

  

ARTICLE IX

ADDITIONAL COVENANTS

9.1            Mutual Cooperation. The parties hereto will cooperate with each other, and will use all reasonable efforts to cause the fulfillment of the conditions to the parties’ obligations hereunder and to obtain as promptly as possible all consents, authorizations, orders or approvals from each and every third party, whether private or governmental, required in connection with the transactions contemplated by this Agreement.

9.2            Changes in Representations and Warranties of a Party. Between the date of this Agreement and the Closing Date, no party shall directly or indirectly, enter into any transaction, take any action, or by inaction permit an otherwise preventable event to occur, which would result in any of the representations and warranties of such party herein contained not being true and correct at and as of the Closing Date. Each party shall promptly give written notice to the other parties upon becoming aware of (A) any fact which, if known on the date hereof, would have been required to be set forth or disclosed pursuant to this Agreement, and (B) any impending or threatened breach in any material respect of any of the party’s representations and warranties contained in this Agreement and with respect to the latter shall use all reasonable efforts to remedy same.

9.3            Name Change. As soon as practicable after the Closing, KOKO shall change its name to CARDINAL ENERGY GROUP INC. or other similar name approved by KOKO.

9.4            SEC Filings. The parties agree that the following filings shall be made with the Securities and Exchange Commission (“Commission”): (a) an information statement prepared pursuant to the requirements of Rule 14f-1 under the Exchange Act, if required by law, shall be filed with the Commission; (b) a report on Form 8-K will be filed with the Commission disclosing the consummation of the exchange if required by law; and, (c) any and all other filings necessary to comply with the Exchange Act.

9.5            Conduct of Business. During the period from the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, CEGLLC shall continue to conduct its businesses and maintain its business relationships in the ordinary and usual course consistent with past practice and will not, without limitation, without the prior written consent of KOKO:

     (a)           Sell, lease, assign transfer or otherwise dispose of any of its material assets, including cash;

     (b)           Agree to, or assume, guarantee, endorse or otherwise in any way be or become responsible or liable for, directly or indirectly, any material contingent obligation;

     (c)           Make any material capital expenditures;

     (d)           Enter into any transaction concerning a merger or consolidation other than with the other party hereto or liquidate or dissolve itself (or suffer any liquidation or dissolution) or convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of related transactions, all or a substantial part of its property, business, or assets, or stock or securities convertible into stock of any subsidiary, or make any material change in the present method of conducting business;

     (e)           Declare or pay any dividends or make any other distribution (whether in cash or property) on any shares of its capital stock or purchase, redeem, retire or otherwise acquire for value any shares of its capital stock or warrants or options whether now or hereafter outstanding;

     (f)           Make any advances or loans to, or investments in any person, firm, corporation or other

  

-16-

  

business entity not a party to this Agreement;

     (g)           Enter into any new material agreement or be or become liable under any new material agreement, for the lease, hire or use of any real or personal property; or

     (h)           Create, incur, assume or suffer to exist, any mortgage, pledge, lien, charge, security interest or encumbrance of any kind upon any of its property or assets, income or profits, whether now owned or hereafter acquired.

ARTICLE X

SECURITIES

10.1          KOKO Shares Not Registered. SELLERS have been advised that the KOKO Shares have not been and when issued, will not be registered under the Securities Act of 1933, as amended, the securities laws of any state of the United States or the securities laws of any other country and that in issuing and selling the KOKO shares to SELLERS pursuant hereto, KOKO is relying upon the exemption provisions of Regulation 506 of the Securities Act of 1933, as amended for offers and sales occurring inside the United States of America and Regulation S of the Securities Act of 1933, as amended, for offers and sales of securities occurring outside the United States.   Resales of the KOKO Shares may only be made pursuant to an effective registration statement or the availability of an exemption from registration. All certificates evidencing the KOKO Shares shall, unless and until removed in accordance with law, bear a restrictive legend substantially in the following form:

The securities evidenced hereby have not been registered under the Securities Act of 1933, as amended, nor any other applicable securities act (the “Acts”), and may not be sold, transferred, assigned, pledged or otherwise distributed, unless there is an effective registration statement under such Acts covering such securities or the Company receives an opinion of counsel for the holder of these securities (concurred on by counsel for the Company) stating that such sale, transfer, assignment, pledge or distribution is exempt from or in compliance with the registration and prospectus delivery requirements of such Acts.

or

These securities are subject to Regulation S of the Securities Act of 1933, as amended and may not be sold, transferred, assigned, pledged or otherwise distributed, unless there is an effective registration statement under such Acts covering such securities or the Company receives an opinion of counsel for the holder of these securities (concurred on by counsel for the Company) stating that such sale, transfer, assignment, pledge or distribution is exempt from or in compliance with the registration and prospectus delivery requirements of such Acts.

10.2          Indemnification by KOKO. KOKO shall indemnify SELLERS and CEGLLC in respect of, and hold SELLERS and CEGLLC harmless against, any and all debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), monetary damages, fines fees, penalties, interest obligations, deficiencies, losses and expenses (including without limitation attorneys fees and litigation costs) incurred or suffered by SELLERS or CEGLLC:

     (a)           resulting from any misrepresentation, breach of warranty or failure to perform any covenant or agreement of KOKO contained in this Agreement; and,

  

-17-

  

     (b)           resulting from any liability of KOKO incurred or resulting from activities that took place prior to the Closing not disclosed on the KOKO Financial Statements.

10.3          Indemnification by SELLERS and CEGLLC. SELLERS and CEGLLC shall jointly and severally indemnify KOKO in respect of, and hold KOKO harmless against, any and all debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), monetary damages, fines fees, penalties, interest obligations, deficiencies, losses and expenses (including without limitation attorneys fees and litigation costs) incurred or suffered by KOKO:

     (a)           resulting from any misrepresentation, breach of warranty or failure to perform any covenant or agreement of SELLERS and CEGLLC contained in this Agreement; and,

     (b)           resulting from any liability of SELLERS and CEGLLC incurred or resulting from activities that took place prior to the Closing not disclosed on the CEGLLC Financial Statements.

ARTICLE XI

MISCELLANEOUS

11.1          Expenses.  CEGLLC will advance sufficient funds to KOKO to pay KOKO’s and CEGLLC’s expenses incident to the negotiation, preparation, and carrying out of this Agreement, including legal and accounting and audit fees.   KOKO will only be obligated to repay funds so advanced if KOKO fails to close the transaction evidenced by this Agreement.

11.2          Survival of Representations, Warranties and Covenants. All statements contained in this Agreement or in any certificate delivered by or on behalf of KOKO or SELLERS pursuant hereto, or in connection with the actions contemplated hereby shall be deemed representations, warranties and covenants by SELLERS, CEGLLC, and KOKO as the case may be, hereunder. All representations, warranties, and covenants made by KOKO or SELLERS or CEGLLC in this Agreement, or pursuant hereto, shall survive the Closing in a period of two (2) years.

11.3          Publicity. SELLERS, CEGLLC and KOKO shall not issue any press release or make any other public statement, in each case, relating to, in connection with or arising out of this Agreement or the transactions contemplated hereby, without obtaining the prior approval of the other, which shall not be unreasonably withheld or delayed, except that prior approval shall not be required if, in the reasonable judgment of KOKO prior approval by SELLERS and CEGLLC would prevent the timely dissemination of such release or statement in violation of applicable federal securities laws, rules or regulations or policies of the Bulletin Board.

11.4          Non-Disclosure. A disclosing party will not at any time after the date of this Agreement, without the recipient’s consent, except in the ordinary operation of its business or as required by law, divulge, furnish to or make accessible to anyone any knowledge or information with respect to confidential or secret processes, inventions, discoveries, improvements, formulae, plans, material, devices or ideas or know-how, whether patentable or not, with respect to any confidential or secret aspects of such party (including, without limitation, customer lists, supplier lists and pricing arrangements with customers or suppliers) (“Confidential Information”). The parties will not at any time after the date of this Agreement and prior to the Exchange use, divulge, furnish to or make accessible to anyone any Confidential Information (other than to its representatives as part of its due diligence or corporate investigation). Any information, which (i)  at or prior to the time of disclosure by the disclosing party was generally available to the public through no breach of this covenant, (ii) was available to the public on a non-confidential basis prior to its disclosure by the disclosing party, or (iii) was made available to the public from a third party provided that such third party did not obtain or disseminate such

  

-18-

  

information in breach of any legal obligation of the disclosing party, shall not be deemed Confidential Information for purposes hereof, and the undertakings in this covenant with respect to Confidential Information shall not apply thereto. The undertakings of the parties set forth above in this Section 11.4 shall terminate upon consummation of the Closing. If this Agreement is terminated pursuant to the provisions of Article VIII or any other express right of termination set forth in this Agreement, the recipient shall return to the disclosing party all copies of all Confidential Information previously furnished to it by the disclosing party.

11.5          Succession and Assignments and Third Party Beneficiaries. This Agreement may not be assigned (either voluntarily or involuntarily) by any party hereto without the express written consent of the other parties. Any attempted assignment in violation of this Section shall be void and ineffective for all purposes. In the event of an assignment permitted by this Section, this Agreement shall be binding upon the heirs, successors and assigns of the parties hereto. There shall be no third party beneficiaries of this Agreement except as expressly set forth herein to the contrary.

11.6          Notices. All notices, requests, demands, or other communications with respect to this Agreement shall be in writing and shall be (i) sent by facsimile transmission, (ii) sent by the United States Postal Service, registered or certified mail, return receipt requested, or (iii) personally delivered by a nationally recognized express overnight courier service, charges prepaid, to the following addresses (or such other addresses as the parties may specify from time to time in accordance with this Section)

	  	
If, to SELLERS or CEGLLC:

	
Timothy W. Crawford

	  	  	
Cardinal Energy Group, LLC.

	  	  	
2665 Fairfax Drive

	  	  	
Upper Arlington, Ohio  43220

	  	  	
Tel:  (614) 459-4959

	  	  	
Fax:  (614) 459-4959

	  	  	
Email:  tim.crawford@cardinalenergygroup.com

	  	  	  
	  	
Counsel for KOKO:

	
Conrad C. Lysiak

	  	  	
The Law Office of Conrad C. Lysiak, P.S.

	  	  	
West 601 First Avenue

	  	  	
Suite 903

	  	  	
Spokane, WA  99201

	  	  	
Tel:  (509) 624-1475

	  	  	
Fax:  (509) 747-1770

	  	  	
Email: cclysiak@lysiaklaw.com

	  	  	  
	  	
If, to KOKO:

	
Gregory Ruff, President

	  	  	
KOKO LTD.

	  	  	
2727 East 53rd Avenue

	  	  	
F-302

	  	  	
Spokane, Washington  99223

	  	  	
Tel:  (509) 991-5761

	  	  	
Email :  gregorypaulruff@aol.com

Any such notice shall, when sent in accordance with the preceding sentence, be deemed to have been given and received on the earliest of (i) the day delivered to such address or sent by facsimile transmission, (ii) the tenth business day following the date deposited with the United States Postal Service or the PRC Postal Service, as the case may be, or (iii) 72 hours after shipment by such courier service.

  

-19-

  

11.7          Construction. This Agreement shall be construed and enforced in accordance with the internal laws of the State of Nevada without giving effect to the principles of conflicts of law thereof. All parties hereby irrevocably submit to the exclusive jurisdiction of the any state or federal court sitting in the State of Nevada for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waive, and agree not to assert in any suit, action or proceeding, any claim that he/she/it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper.

11.8          Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same Agreement.

11.9          No Implied Waiver; Remedies. No failure or delay on the part of the parties hereto to exercise any right, power, or privilege hereunder or under any instrument executed pursuant hereto shall operate as a waiver nor shall any single or partial exercise of any right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. All rights, powers, and privileges granted herein shall be in addition to other rights and remedies to which the parties may be entitled at law or in equity.

11.10        Entire Agreement. This Agreement, including the Exhibits and Disclosure Schedules attached hereto, sets forth the entire understandings of the parties with respect to the subject matter hereof, and it incorporates and merges any and all previous communications, understandings, oral or written as to the subject matter hereof, and cannot be amended or changed except in writing, signed by the parties.

11.11        Headings. The headings of the Sections of this Agreement, where employed, are

for the convenience of reference only and do not form a part hereof and in no way modify,

interpret or construe the meanings of the parties.

11.12        Severability. To the extent that any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted hereof and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

11.13        Attorneys Fees. In the event any legal action is brought to interpret or enforce this Agreement, the party prevailing in such action shall be entitled to recover its attorneys’ fees and costs in addition to any other relief that it is entitled.

11.14        Consultants. Each party represents to the others that there is no broker or finder entitled to a fee or other compensation for bringing the parties together to effect the Exchange.

11.15        Reverse Stock Split. After completing the transactions contemplated herein, SELLERS will take the steps necessary to reverse split the outstanding shares of KOKO on the basis of 1 share of common stock for each 2.5 shares of common stock outstanding.

11.16        Counterparts.  This Exchange Agreement may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document.  All counterparts shall be construed together and shall constitute one and the same instrument.  Execution and delivery of this Exchange Agreement by exchange of facsimile or other electronically transmitted counterparts bearing the signature of a party hereto shall be equally as effective as delivery of a manually executed counterpart by such party provided that this Exchange Agreement shall not be effective as to any Party until a majority of Cardinal Energy Group, LLC members have executed a counterpart to this Exchange Agreement.

  

-20-

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.

	
KOKO:

	
KOKO LTD.,

a Nevada Corporation

	  	  
	  	  
	  	  	
By.

	
GREGORY RUFF

	  	  	  	
Gregory Ruff, President

	
CEGLLC

	
Cardinal Energy Group, LLC,

An Ohio Limited Liability Company

	  	  
	  	  
	  	  	
By.

	
TIMOTHY W. CRAWFORD

	  	  	  	
Timothy W. Crawford, Managing Member

	
PRINCIPAL KOKO SHAREHOLDER:

	  	
GREGORY RUFF

	  	  	
Gregory Ruff

  

-21-

  

	  	
Member:

	  	  
	  	
Continental Capital Partners, Inc.

	  	  
	  	  	  
	  	
By:

	
TIMOTHY W. CRAWFORD

	  	
Name:

	
Timothy W. Crawford

	  	
Title:

	
CEO

  

-22-

  

	  	
Member:

	  	  
	  	
California Hydrocarbons Corporation

	  	  
	  	  	  
	  	
By:

	
RASHMI YAJNIK

	  	
Name:

	
Rashmi Yajnik

	  	
Title:

	
CEO / President

  

-23-

  

	  	
Member:

	  	  
	  	
Carol & Mildred Hill

	  	  
	  	  	  
	  	
By:

	
CAROL HILL

	  	  	  
	  	
By:

	
MILDRED HILL

  

-24-

  

	  	
Member:

	  	  
	  	
Adam R. Foust

	  	  
	  	  	  
	  	
By:

	
ADAM R. FOUST

  

-25-

  

	  	
Member:

	  	  
	  	
Brandon Foust

	  	  
	  	  	  
	  	
By:

	
BRANDON FOUST

  

-26-

  

	  	
Member:

	  	  
	  	
Holly R. Snead

	  	  
	  	  	  
	  	
By:

	
HOLLY R. SNEAD

  

-27-

  

	  	
Member:

	  	  
	  	
Aaron Crawford

	  	  
	  	  	  
	  	
By:

	
AARON CRAWFORD

  

-28-

  

	  	
Member:

	  	  
	  	
Donald D. Conaway

	  	  
	  	  	  
	  	
By:

	
DONALD D. CONAWAY

  

-29-

  

	  	
Member:

	  	  
	  	
Timothy R. Gatens

	  	  
	  	  	  
	  	
By:

	
TIMOTHY R. GATENS

  

-30-

  

	  	
Member:

	  	  
	  	
Charles J. Slater

	  	  
	  	  	  
	  	
By:

	
CHARLES J. SLATER

  

-31-

  

	  	
Member:

	  	  
	  	
Ronald and Janet Holsinger

	  	  
	  	  	  
	  	
By:

	
RONALD HOLSINGER

	  	  	  
	  	
By:

	
JANET HOLSINGER

  

-32-

  

	  	
Member:

	  	  
	  	
Edward Panos

	  	  
	  	  	  
	  	
By:

	
EDWARD PANOS

  

-33-

  

	  	
Member:

	  	  
	  	
Todd E. Crawford

	  	  
	  	  	  
	  	
By:

	
TODD E. CRAWFORD

  

-34-

  

	  	
Member:

	  	  
	  	
Ron Cameron

	  	  
	  	  	  
	  	
By:

	
RON CAMERON

  

-35-

  

	  	
Member:

	  	  
	  	
Scott Rouda

	  	  
	  	  	  
	  	
By:

	
SCOTT ROUDA

  

-36-

  

	  	
Member:

	  	  
	  	
Telepath, LLC

	  	  
	  	  	  
	  	
By:

	
MAX WELDON

	  	  	  
	  	
Max Weldon

	  	  
	  	
Title:

	
member / manager

  

-37-

  

	  	
Member:

	  	  
	  	
Jeffrey A. Corder

	  	  
	  	  	  
	  	
By:

	
JEFFREY A. CORDER

  

-38-

  

	  	
Member:

	  	  
	  	
Manoj Yajnik

	  	  
	  	  	  
	  	
By:

	
MANOJ YAJNIK

  

-39-

  

	  	
Member:

	  	  
	  	
Virginia R. Murdock

	  	  
	  	  	  
	  	
By:

	
VIRGINIA R. MURDOCK

  

-40-

  

	  	
Member:

	  	  
	  	
Asha M. Joshi

	  	  
	  	  	  
	  	
By:

	
ASHA M. JOSHI

  

-41-

  

	  	
Member:

	  	  
	  	
Akul Yajnik

	  	  
	  	  	  
	  	
By:

	
AKUL YAJNIK

  

-42-

  

	  	
Member:

	  	  
	  	
Ishawn Yajnik

	  	  
	  	  	  
	  	
By:

	
ISHAWN YAJNIK

  

-43-

  

	  	
Member:

	  	  
	  	
P. John Alfano

	  	  
	  	  	  
	  	
By:

	
P. JOHN ALFANO

  

-44-

  

	  	
Member:

	  	  
	  	
Christine Miller

	  	  
	  	  	  
	  	
By:

	
CHRISTINE MILLER

  

-45-

  

	  	
Member:

	  	  
	  	
John C. May

	  	  
	  	  	  
	  	
By:

	
JOHN C. MAY

  

-46-

  

	  	
Member:

	  	  
	  	
Brenda K. Nell, IRA

	  	  
	  	  	  
	  	
By:

	
BRENDA K. NELL

	  	  
	  	
Brenda K. Nell

  

-47-

  

	  	
Member:

	  	  
	  	
Susan Goldstein Trust

	  	  
	  	  	  
	  	
By:

	
J. RICHARD BLAZER

	  	  	  
	  	
By:

	
J. RICHARD BLAZER, Trustee

	  	  	
Printed Name

	  

  

-48-

  

	  	
Member:

	  	  
	  	
Eldri Sue Wagner Trust

	  	  
	  	  	  
	  	
By:

	
ERIC M. WAGNER

	  	  	  
	  	
By:

	
ERIC M. WAGNER, Trustee

	  	  	
Printed Name

	  

  

-49-

  

	  	
Member:

	  	  
	  	
Bedug, LLC

	  	  
	  	  	  
	  	
By:

	
ROBERT J. BEHAL

	  	  	  
	  	
Name:

	
Robert J. Behal

	  	  	  
	  	
Title:

	
Man. Mem.

  

-50-

  

	  	
Member:

	  	  
	  	
Terrance Dunne

	  	  
	  	  	  
	  	
By:

	
TERRENCE J. DUNNE

  

-51-

  

	  	
Member:

	  	  
	  	
Daniel Troendly

	  	  
	  	  	  
	  	
By:

	
DANIEL TROENDLY

  

-52-

  

	  	
Member:

	  	  
	  	
Mary Elizabeth Tappan Trust

	  	  
	  	  	  
	  	
By:

	
MARY E. TAPPAN

	  	  	  
	  	
Mary Tappan, Trustee

  

-53-

  

	  	
Member:

	  	  
	  	
Diana Cuillo

	  	  
	  	  	  
	  	
By:

	
DIANA CUILLO

  

-54-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}]]