Document:

ex101form8k071411.htm

  

  

  

MERGER AGREEMENT AND PLAN OF MERGER

THIS MERGER AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made and entered into this 13th day of July 2011, by and between FasTrack, Inc., a corporation organized under the laws of the State of Delaware (hereafter “Fast”) and North Horizon, Inc., (hereinafter "North"), a corporation organized under the laws of the State of Nevada, and North First General, Inc, a wholly owned subsidiary of North (hereafter "Sub").

WITNESSETH:

WHEREAS, North desires to acquire Fast by way of a merger transaction whereby Sub will be merged with and into Fast and 100% of the issued and outstanding shares of Fast common stock will be exchanged for shares of North common stock, whereupon Fast will be the surviving corporation and become the wholly owned subsidiary of North (Merger Sub and Fast are collectively referred to herein as the “Constituent Corporations”);

 

WHEREAS, the Boards of Directors of Sub and Fast, respectively deem it advisable and in the best interest of each entity and their respective shareholders that Sub merges with and into Fast pursuant to those terms and conditions set forth in this Agreement and the Articles of Merger or Certificate of Merger to be filed and pursuant to applicable provisions of law (such transaction is hereafter referred to as the “Merger”);

 

WHEREAS, each of the parties to this Agreement desires to make certain representations, warranties, and agreements in connection with the transactions contemplated herein and also to prescribe various conditions thereto.

 

NOW THEREFORE, in consideration of the promises and of the mutual covenants herein contained and other good and valuable consideration, the sufficiency of which is hereby acknowledged,  the parties hereto hereby agree as follows:

 

SECTION 1. ACQUISITION OF FAST.

 

 The parties to this Agreement do hereby agree that at the Closing and Effective Time of the Merger (the terms Closing and “Effective Time of the Merger” as defined in Section 6 hereof),  Sub will merge with and into Fast premised upon the terms and conditions set forth herein and in accordance with the provisions of applicable law.  Pursuant to the Merger Fast shareholders on a fully diluted basis will exchange their Fast common stock for shares of North’s authorized but previously unissued common stock after the reverse split is effective. The Fast shareholders shall receive the number of shares that will constitute ninety-two per cent (92%) of the issued and outstanding shares of North after the Closing or Effective Time of the Merger.  It is the intention of the parties hereto that this transaction qualifies as a tax-free reorganization under Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, and related sections thereunder.

 

SECTION 2.   TERMS OF MERGER.

 

In accordance with the provisions of this Agreement and the requirements of applicable law, Sub will be merged with and into Fast as of the Effective Time of the Merger.  Fast will be the surviving corporation (hereafter sometimes referred to as the “Surviving Corporation”) as the wholly owned subsidiary of North and the separate existence of Sub will cease at the Effective Time of the Merger.  Fast as the Surviving Corporation, will succeed to and assume all the rights and obligations of Sub in accordance with applicable law, as described below.  Consummation of the Merger will be upon the following terms and subject to the conditions set forth herein.

 

  

  

  

(a) Corporate Existence.  Commencing at the Effective Time of the Merger, the separate corporate existence of Sub will cease and the Surviving Corporation will continue its corporate existence as a Delaware corporation: and

 

(i) The Surviving Corporation will thereupon and thereafter possess all rights, privileges, powers franchises and property (real, personal, and mixed) of each of the Constituent Corporations;

 

(ii) all debts due to either of the Constituent Corporations, on whatever account, all causes in action and all other things belonging to either of the Constituent Corporations, will, except as otherwise set forth herein, be taken and deemed to be transferred to and will be vested in the Surviving Corporation by virtue of the Merger without further act or deed; and

 

(iii) all rights of creditors and all liens, if any, upon any property of any of the Constituent Corporations will be preserved unimpaired, limited in lien to the property affect by such  liens immediately prior to the Effective Time of the Merger, and all debts, liabilities, and duties of the Constituent Corporation will thenceforth attach to the Surviving Corporation.

 

(b) Effective Time of the Merger.  At the Effective Time of the Merger,

 

(i) the Certificate of Incorporation and Bylaws of Fast, as existing and in effect immediately prior to the Effective Time of the Merger will be and remain the Certificate of Incorporation and Bylaws of the Surviving Corporation;

 

(ii) the members of the Board of Directors of Sub holding office immediately prior to the Effective Time of the Merger will resign as directors and executive officers, effective at the Effective Time of the Merger and the incumbent directors of Fast will remain as the directors of the Surviving Corporation; and

 

(iii) the North Board of Directors of North will take all necessary requisite actions to appoint as additional directors to the North Board those persons set  forth in Section 2(e)(ii) below.

 

(c) Conversion of Securities.  At the Effective Time of the Merger and without any action of the part of North, Sub, Fast or the holders of any of the securities of any of these corporations, each of the following will occur:

 

(i) The shares of Fast common stock on a fully diluted basis will be converted into the right to receive an aggregate number of shares of North common stock to constitute ninety-two per cent (92%) of the issued and outstanding shares of North. “Fully diluted” shall mean that Fast shall include all shares it will issue in connection with its present obligation to others. Holders of certificates previously evidencing shares of Fast common stock outstanding at the Effective Time of the Merger, will cease to have any rights with respect to such shares of Fast common stock, except as otherwise provided herein or by law.  Those persons receiving shares of North common stock and the number of shares to be received pursuant to the terms of the Merger and this Agreement are set forth in Attachment No. 2(c) annexed hereto.

 

  

  

  

(ii) Any shares of Fast capital stock held in the treasury of Fast immediately prior to the Effective Time of the Merger, will automatically be canceled and extinguished without any conversion thereof and no payment will be made with respect thereto.  After the Merger, the stock transfer books of Fast will be closed and thereafter, there will be no further registration of transfers on the stock transfer books of the Surviving Corporation of any shares of Fast common stock.

 

(iii) The one share of common stock of Sub issued and outstanding immediately prior to the Effective Time of the Merger will remain in existence as one share of common stock of the Surviving Corporation, which will be owned solely by North.

 

(d) Restricted Securities.

 

(i) None of the shares of North common stock into which the shares of Fast common stock are to be converted will be registered under the Securities Act of 1933, as amended (the “Securities Act”), but will be deemed to have been issued pursuant to an exemption or exemptions therefrom (subject to the satisfaction of certain other terms and conditions hereof) and will be considered “restricted securities” within the meaning of Rule 144 promulgated under the Securities Act.  All shares of North common stock to be issued pursuant to this Agreement will be exempt from registration under the Securities Act pursuant to Section 4(2) of that Act and/or Regulation D, Rule 506 promulgated thereunder or other exemption, and certificates representing the shares will bear a restrictive legend worded substantially as follows and as may otherwise be required:

“The shares represented by this certificate have not been registered under the Securities Act of 1933 (the “Act”) and are “restricted securities” as that term is defined in Rule 144 under the Act.  The shares may not be offered for sale, sold or otherwise transferred except pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the corporation.”

 

(ii) At the Closing, North will direct its transfer agent to record as soon as practicable after the Closing, the issuance of North common stock to the holders of Fast common stock pursuant to the provisions set forth above.  The transfer agent will annotate its records to reflect the restrictions on transfer embodied in the legend set forth above.  There will be no requirement of North to register under the Securities Act any shares of Fast common stock in connection with the Merger.

 

(e) Other Matters.

 

(i) Immediately prior to the Merger, Fast shall notify North as to the number of shares of common stock it has issued and outstanding on a fully diluted basis.  North will have no more than 13,251,250 shares of North common stock outstanding which shares are prior to the reverse split.  There are no other series of common stock or preferred stock of either Fast or North issued and outstanding.

 

  

  

  

(ii) Immediately prior to the Closing, North’s Board of Directors will nominate and elect directors of the North Board, Vivian Liu, Henry Esber, Ph. D., and Ziad Mirza, M.D.; which persons will be designated by Fast and which appointment shall be effective upon the Closing.  All new directors will accept their appointment and will serve in such capacities until the next meeting of shareholders of North at which directors are elected.

 

(iii) Upon the execution of this Agreement North will make the appropriate requisite notice filings with the Securities and Exchange Commission (“SEC”) to report the contemplated transaction and will also make such other filings and notifications with the SEC and state regulatory agencies as may be necessitated by this Agreement.

 

(iv) Prior to the Closing North will take all necessary and requisite actions to amendits Articles of Incorporation and change its corporate name to Innovus Pharmaceuticals, Inc., and adopt resolutions providing for a reverse split of the issued and outstanding shares of common stock of North on the basis of ten shares into one share of common stock and providing for authorized shares of common stock of 150,000,000 shares, par value of $.001 per share.  North will prepare such documents and make such filings necessary to amend North’s Articles of Incorporation.

 

(v) If at any time after the Closing any further action is necessary, desirable, or prudent to carry out the intent and purposes of this Agreement, the officers and directors of North are hereby fully authorized to take, and will use their reasonable efforts to take all such lawful and necessary action.

 

SECTION 3.  DELIVERY OF SHARES.

 

On or as soon as practicable after the Effective Time of the Merger, Fast will use its reasonable efforts to cause the holders of Fast common stock (“Fast Shareholders”) to surrender to North’s transfer agent for cancellation all certificates or other evidences of ownership representing shares of Fast common stock, against delivery of certificates representing the shares of North common stock for which Fast common stock is to be converted in the Merger pursuant to Section 2 hereof.  Each Fast Shareholder will be required prior to or upon surrender of their Fast common stock to deliver to North an “investment letter” or other written instrument acceptable to the parties hereto, providing, among other things, whether or not the investor is an “accredited investor” as defined under Regulation D of the Securities Act.  Until surrendered and exchanged as provided herein, each outstanding certificate which prior to the Effective Time of the Merger represented Fast common stock will be deemed for all corporate purposes to evidence ownership of the number of shares of North common stock into which the shares of Fast common stock represented by such Fast certificate will be converted hereunder.

 

                SECTION 4. REPRESENTATIONS AND WARRANTIES OF FAST.

 

 Fast hereby represents and warrants to North as of the date hereof and as of the Closing of this Agreement the following representations and warranties:

 

(a) Fast is duly and validly incorporated under the laws of the State of Delaware and is in good standing and duly qualified to do business in any state where required to be so qualified.

 

  

  

  

(b) Fast has the requisite power and authority to enter into this Agreement and such other agreements and documents relating to this Agreement (the ”Transaction Documents”), to which it is a party and to perform its obligations and covenants hereunder and thereunder.  The execution and delivery of this Agreement and other Transaction Documents to which Fast is a party and the consummation of the transactions contemplated hereby and thereby, have been or will prior to the Closing and the Effective Time of the Merger be duly authorized by Fast’s Board of Directors as appropriate and by its shareholders, if required.  The execution of this Agreement and other Transaction Documents do not materially violate or breach any material agreement or contract to which Fast is a party and, to the extent required.  Fast has or will have by Closing, obtained all necessary approvals or consents required by any agreement to which Fast is a party.  The execution and performance of this Agreement and the other Transaction Documents will not violate or conflict with any provision of Fast’s Articles of Incorporation or Bylaws in effect as of the date hereof.

 

(c) Fast has financial statements which are maintained in accordance with United States generally accepted accounting principles and the most recent financial statements have been presented to North. Fast is engaged in the business of developing and marketing pharmaceutical products and other products for the medical industry, nationally and internationally.  Any liens and encumbrances against the assets of Fast are disclosed and set forth in the financial statements attached as Exhibit B.  Fast has no obligations, liabilities, or commitments, contingent or otherwise, of a material nature, which have not been disclosed on its audited financial statements.

 

(d) Fast warrants and represents that it has the authority to execute this Agreement whereby North will become the owner of Fast.

 

(e) Fast is not a party to any material pending litigation and to the knowledge of its executive officer, no governmental investigation or proceeding and no litigation, claims, assessments, or  governmental proceedings are threatened in writing against Fast.

 

(f)  Neither Fast nor any of its officers, employees, or agent or any other person acting on behalf of Fast has directly or indirectly within the past five years, given or agreed to give any gift or similar benefit to any person who is or may be in a position to help or hinder Fast’s business, or assist in connection with any actual or proposed transaction, which (i) might be reasonably expected to subject it to any material damage or penalty in any action or to have a material adverse effect on Fast or its business, assets, properties, financial condition, or results of operation (a “Material Adverse Effect”), (ii) if not given in the past, might have reasonably been expected to have had a Material Adverse Effect, or (iii) if not continued in the future, might be reasonably expected to have a Material Adverse Effect or to subject Fast to material suit or penalty in any action.

 

(g) Fast has, or by the Effective Time of the Merger will have filed all material tax, governmental and/or related forms and reports (or extensions thereof) due or required to be filed in the ordinary course to its business and has paid, or will have paid or made adequate provisions for all taxes or assessments which have become due as of the Effective Time of the Merger.

 

(h) Fast hast not materially breached any material agreement to which it is a party or obligated by.  Fast has given North copies of or access to all material contracts, commitments, and/or agreements to which it is a party.

 

(i)   Information regarding Fast which has been delivered to North for use in connection with the Merger, was at the time provided true and accurate in all material respects.

 

(j) Fast has and at the Closing will have disclosed in writing to North all events, conditions and facts materially affecting the business, financial conditions (including any liabilities contingent or otherwise) or results of operations of Fast.

 

  

  

  

(k)  Fast has complied in all material respects with all applicable laws, regulations, and orders of all governmental bodies and agencies, including applicable securities laws, and regulations, and environmental laws and regulations, except where such noncompliance in the aggregate has not had, and would not be reasonably expected to have a Material Adverse Effect. Fast has not received notice of any noncompliance with the foregoing, not is it aware of any claims or claims threatened in writing in connection therewith.

 

(l)  Except as otherwise disclosed herein or by a written attachment hereto, no officer, director, or affiliate of Fast has been, within the past five years, (i) a party to any bankruptcy petition against such person or against any business of which such person was affiliated; (ii) convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (iii) subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending, or otherwise limiting their involvement in any type of business, securities, or banking activities; or (iv) found by a court of competent jurisdiction in a civil action by the SEC or the Commodity Futures Trading Commission, to have violated a federal or state securities or commodities law and which judgment has not been reversed, suspended, or vacated.

 

(m)   Except as disclosed to North in writing and annexed hereto as Attachment No. 4(m) Fast has no material contracts, commitment, arrangements, or understandings relating to its business, operations, financial condition, prospects, or otherwise.  For purposes of Section 4(m) “material” means payment or performance of a contract, commitment, arrangement, or understanding in the ordinary course of business, which is expected to involve payments to any third party in excess of $10,000. Fast disclosed and provided copies of and Employment Agreement with Vivian Liu and a Financial Advisory and Consulting Agreement with Dawson James Securities, Inc.

 

(n) Fast does not have or maintain any employee benefit, bonus, incentive compensation, profit-sharing, equity, stock bonus, stock option, stock appreciation rights, restricted stock, other stock-based incentive, executive compensation agreement, employment agreement, deferred compensation, pension, stock purchase, employee stock ownership, savings, retirement, supplemental retirement, employment related change-in-control, severance, salary continuation, layoff, welfare (including without limitation, health, medical, prescription, dental, disability, salary continuation, life, accidental death, travel accident, and other insurance), vacation, holiday, sick leave, fringe benefit, or other benefit plan, program, or policy, whether qualified or nonqualified, and any trust, escrow, or other agreement related thereto covering any present or former employees, directors, or their respective dependents other than the Employment Agreement between Fast and Vivian Liu.

 

(o)   There are no actions, proceeding, or investigations pending or threatened against Fast and, after making appropriate investigation to the best of its knowledge, none is threatened before any federal or state environmental regulatory body, or before any federal or state court, alleging noncompliance by Fast or any predecessor in interest with the Comprehensive Environmental Response, Compensation and Liability Act of 1990 (“CERCLA”) or any other Environmental Laws.  To Fast’s knowledge after due investigation:

 

  

  

  

(i) there is no reasonable basis for the institution of any action, proceeding, or investigation against Fast under any Environmental Law;

 

(ii) Fast is not responsible under any Environmental Law for any release by any person at or in the vicinity of real property of any hazardous substance (as defined by CERCLA), caused by the spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing of any such hazardous substance into the environment;

 

(iii) Fast is not responsible for any costs of any remedial action required by virtue of any release of any toxic or hazardous substance, pollutant, or contaminant into the environment including, without limitation, costs arising from security fencing, alternative water supplies, temporary evacuation and housing, and other emergency assistance undertaken by any environmental regulatory body;

 

(iv) Fast is in material compliance with all applicable Environmental Laws; and

 

(v) no real property, now or in the past, used, owned, managed, or controlled by Fast contains any toxic or hazardous substance including, without limitation, any asbestos, PCBs, or petroleum products or byproducts in any form, the presence, location, or condition of which violates any Environmental Law, or cannot be cleaned by ordinary reclamation procedures customary in the oil and gas industry.

 

For purposes of this Agreement, “Environmental Laws” means any federal state, local or municipal statute, ordinance, or regulation or order, ruling or other decision of any court, administrative agency, or other governmental authority pertaining to the release of hazardous substances (as defined in CERCLA) into the environment.

 

(p)    No representation or warranty in this section, nor statement in any document, certificate, or schedule furnished or to be furnished pursuant to this Agreement by Fast or in connection with the transactions contemplated hereby, contains or contained any untrue statement of a material fact, nor does or will omit to state a material fact necessary to make any statement of fact contained herein or therein not misleading.  Fast has maintained, and will until the Closing, maintain in full force and effect adequate policies of insurance with coverage sufficient to meet the normal requirements of its business.

 

(q) Fast had the opportunity to ask questions and receive answers regarding the business, affairs, and matters of North.

 

(r) Fast is satisfied with their understanding and knowledge regarding North and its current status.

 

SECTION 5.    REPRESENTATIONS AND WARRANTIES OF NORTH AND ITS SUB.

 

North and its Sub, jointly and severally, represent and warrant as of the date hereof and as of the Closing that:

 

(a) As of the date hereof and the Closing and the Effective Time of the Merger, the shares of North common stock to be issued and delivered to Fast shareholders hereunder and in connection herewith will, when so issued and delivered, constitute duly authorized, validly and legally issued, fully-paid and nonassessable shares of North common stock, free of all liens and encumbrances.

 

  

  

  

(b) North and its Sub have the requisite corporate power to enter into this Agreement and to perform their respective obligations hereunder.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, (i) have been or will, prior to the Closing and the Effective Time of the Merger, be duly authorized by the respective Boards of Directors of North and its Sub, and by North as the sole stockholder of Sub; and (ii) except as otherwise set forth herein, do not have to be approved or authorized by the shareholders of North other than the amendments and changes to North’s Articles of Incorporation.  The execution and performance of this Agreement will not constitute a material breach of any agreement, indenture, mortgage, license, or other instrument or document to which North or its Sub is a party or to which either is otherwise subject and will not violate any judgment, decree, order, writ, law, rule, statute, or regulation applicable to North or its Sub.  The execution and performance of this Agreement will not violate or conflict with any provisions of the respective Certificates of Incorporation or Bylaws of either North or its Sub.

 

(c) North has delivered to Fast its audited financial statements for the period ended December 31, 2010, with unaudited financial statements for the three month period ended March 31, 2011.  The North Financial Statements are complete, accurate, and fairly present the financial condition of North as of the dates thereof and the results of its operations for the periods then ended.  The North Financial Statements have been prepared in accordance with United States generally accepted accounting principals applied on a consistent basis (except as may be indicated therein or in the notes thereto) and fairly present the financial position of North as of the dates thereof and the results of  operations and changes in financial position for the periods then ended.  Other than as set forth in any schedule or exhibit attached hereto, and except as may otherwise be set forth or referenced herein, there are no material liabilities or obligations, either fixed or contingent, not disclosed or referenced in the North Financial Statements or in any exhibit or notes thereto other than contracts or obligations occurring in the ordinary course of business, since March 31, 2011, and no such contracts or obligations occurring in the ordinary course of business constitute liens or other liabilities which materially alter the financial condition of North as reflected in the North Financial Statements.  North has, or will have at the Closing good title to all assets, properties, or contracts shown on the North Financial Statements subject only to dispositions and other transactions in the ordinary course of business, the disclosures set forth herein, and liens and encumbrances of record.

 

(d) North is categorized as a shell company under the periodic reporting forms of the U.S. Securities and Exchange Commission.

 

(e) North’s Sub has no financial statements because it was recently organized for the sole purpose of effectuating the Merger and it has been, is, and will be inactive except for purposes of the Merger.  Sub has no assets, liabilities, material contracts, or obligations of any kind other as incurred in the ordinary course in connection with its incorporation in Utah.  Sub has no subsidiaries or affiliates.

 

(d) North is not a party to any litigation in any capacity and North has no liabilities or commitments other than those stated in its most recent financial statements.

 

(e) Other than a liability to its major shareholder North is not a party to any employment contract with any officer or director or stockholder, nor to any lease, agreement, or any other commitment not in the usual and ordinary course of business, nor to any pension, insurance, profit-sharing or bonus plan.

 

(f) North is not a defendant, nor a plaintiff against whom a counterclaim has been asserted, in any litigation, pending or threatened, nor has any material claim (which claim is in excess of $10,000) been made or asserted against North, nor are there any proceedings threatened or pending before any federal, state, or municipal government, or any department, board, body, or agency thereof, involving North.

 

  

  

  

(g) North is not in default under any agreement to which it is a party nor in the payment of any of its obligations other than the liability to its major shareholder.

 

(h) North filed its report on Form 10-Q for the period ended March 31, 2011, and North received notification of the acceptance of the filing.  North has no pending comments from the SEC.

 

 (i)  Between the date hereof and the Closing, North will not have (i) paid or declared any dividends on or made any distributions in respect of, or issued, purchased or redeemed, any of the outstanding shares of its capital stock, or (ii) made or authorized any changes in its Articles of Incorporation or in any amendment thereto or in its Bylaws except for those as provided in this Agreement, or (iii) made any commitments or disbursements or incurred any obligations or liabilities of a substantial nature and which are not in the usual and ordinary course of business, or (iv) mortgaged or pledged or subjected to any lien, charge, or other encumbrance any of its assets, tangible or intangible, except in the usual and ordinary course of its business, or (v) sold, leased, or transferred or contracted to sell, lease, or transfer any assets, tangible or intangible, or entered into any other transactions, except in the usual and ordinary course of business, or (vi) made any material change in any existing employment agreement or increased the compensation payable or made any arrangement for the payment of any bonus to any officer, director, employee, or agent.

 

(j)  This Agreement has been duly executed by North and the execution and performance of this Agreement will not violate, or result in a breach of, or constitute a default in, any agreement, instrument, judgment order or decree to which it is a party or to which it is subject nor will such execution and performance constitute a violation of or conflict with any fiduciary to which it is subject.

 

(k) North is not in default with respect to any order, writ, injunction, or decree of any court or federal, state, municipal, or other governmental department, commission, board, bureau, agency or instrumentality, and there are no actions, suits, claims, proceedings, or investigations pending or, to the knowledge of North, threatened against or affecting North at law or in equity, or before or by any federal, state, municipal or other governmental court, department, commission, board, bureau, agency, or instrumentality, domestic or foreign.  Other than the exception noted above, North has complied in all material respects with all laws, regulations and orders applicable to its business.

 

(l) All information regarding North provided to Fast or set forth in any document or other communication, to the best of North’s knowledge, is true, complete, and accurate in all material respects, not misleading and was and is in compliance with all applicable laws and regulations.

 

(m) North believes that it is and has been in material compliance with and has conducted its business in compliance with applicable laws, orders, rules, and regulations including applicable securities laws and regulations and environmental laws and regulations, except where any noncompliance has and will have, in the aggregate, no material adverse effect.

 

(n) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) result in any payment, whether severance pay or unemployment compensation becoming due and payable to any person or entity; (ii) increase any benefits otherwise payable to any person or entity; or (iii) result in the acceleration of the time of payment or vesting of any benefits.

 

  

  

  

(o) After the closing of this Agreement North’s business, operations, or assets will not be restricted or impaired.

 

(p) To the best of North’s knowledge North is unaware of any reasonable basis for the initiation of any action, proceeding, or investigation against North under any Environmental Law.

 

(q) No representation or warranty by North stated in this Agreement nor any statement contained in any certificate, schedule, or other communication provided relating to the provisions hereof contains or will contain any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein not misleading or incomplete. All documents North delivers will be original or exact copies thereof.

 

(r)  North is a corporation duly organized and validly existing and in good standing under the laws of the State of Nevada, is not qualified to transact business in any other state; and has an authorized capitalization of 80,000,000 shares of which there are issued and outstanding 13,251,250 shares of common stock, par value of $0.001 per share. North has the corporate power to enter into this Agreement.   All of North’s issued and outstanding shares of common stock are duly authorized, validly issued, fully paid and nonassessable.  There are no existing options, calls, claims, warrants, preemptive rights, registration rights, or commitment of any character relating to the issued or unissued capital stock other than as set forth in this Agreement.

 

(s) No representation or warranty by North or its Sub stated in this Agreement and no statement contained in any certificate, schedule, or other communication furnished pursuant to or in connection with the provisions hereof, contains or will contain any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein not misleading.  All documents delivered by North will be complete and accurate copies thereof.

 

 SECTION 6. TIME AND PLACE OF CLOSING.

 

 The Closing shall be held on such date and at such other time and place as may be mutually agreed upon between the parties in writing (hereinafter "the Closing.") The “Effective Time of the Merger” will be that date and time specified in the Articles of Merger or Certificate of Merger as the date on which the Merger will become effective.

 

SECTION 7.  ACTIONS PRIOR TO CLOSING.

 

(a)  During the period between the date hereof and the Closing, North shall conduct its business and operations in the same manner in which the same have heretofore been conducted.  Fast during the period between the date hereof and the Closing, shall conduct its business and operations in the same manner in which the same have heretofore been conducted.  During such period, unless it has received written consent thereto from the other party, neither Fast nor North will:

 

(1)  Incur any obligation, liability or commitment, absolute or contingent, other than current liabilities incurred in the ordinary and usual course of business.

(2)  Declare or pay and dividends on or make any distributions in respect of , or issue, purchase, or redeem any of its shares of stock or partnership interests except in accordance with the Agreement.

(3)  Subject any of its properties to a mortgage, pledge, or lien, except in the usual and ordinary course of business.

(4)  Sell or transfer any of its properties, except in the usual and ordinary course of business.

  

  

  

(5)  Make any investment of a capital nature, except in the usual and ordinary course of business.

(6)  Enter into any long-term contracts or commitments or modify or terminate any existing agreements, except in the usual and ordinary course of business.

(7)  Use any of its assets or properties except for proper corporate purposes.

(8)  Sell, contract to sell, or issue any equity or debt securities.

 

(b)  During the period between the date of this Agreement and the Closing, North and Fast,  shall each accord representatives of the other party access to the offices, plants, records, files, books of account and tax returns, provided the same will not unreasonably interfere with the normal operations of such entities.

 

(c) If the Closing does not occur for any reason, each of the parties and their respective affiliates will promptly return or destroy all such confidential information and compilation thereof, as is practicable, and will certify to such destruction or return to the other party.

 

               (d) Prior to the Closing or in connection therewith, any written news releases or public disclosure by either North or Fast regarding the Agreement or the transactions contemplated thereby, will be submitted to the other party for its review and approval prior to such release or disclosure, provided that such approval will not be unreasonably withheld and such review and approval will not  be required of disclosures required to comply, in the judgment of counsel, with federal or state securities or corporate laws or policies.

 

(e) Contemporaneous with the Closing or the Effective Time of the Merger, North’s Board of Directors will take all necessary and requisite actions to nominate and appoint new directors designated by Fast, Vivian Liu; Henry Esber, Ph.D.; and Ziad Mirza, M.D.; which appointment shall become effective upon the completion of the transactions contemplated herein.

 

(f) North, acting through its Board of Directors, will authorize and take all requisite and necessary actions to prepare and file the requisite reports and/or filings with the SEC and make whatever other reports and/or filings that may be required pursuant to applicable law.

 

(g) Fast will provide to North any documents and information necessary for inclusion in the requisite reports and/or filings of North with the SEC or other agency concerning the transactions contemplated hereby.  Fast agrees to correct promptly any information provided for use in the reports and/or filings, if and to the extent that, such information has become incorrect or misleading in any material respect, Fast agrees to assist North to take all necessary steps to cause the reports and/or filings, as so corrected if necessary, to be prepared and delivered to the appropriate party to the extent required by applicable state and federal securities laws.

 

(h) Except as required by law, neither Fast nor North will voluntarily take any action that would, or that is reasonably likely to result in any of the conditions agreed to herein not being satisfied.  Without limiting the foregoing neither Fast nor North will take any action that would result in:  (i) any of the representations and warranties set forth in this Agreement that are qualified as to materiality becoming untrue; or (ii) any of such representations and warranties that are not so qualified becoming untrue or inaccurate in any material respect.

 

(i) North will continue to satisfy throughout the period from the date hereof to the Closing any disclosure or filing requirements.

  

  

  

SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FAST.

 

All obligations of Fast under this Agreement and the transactions contemplated hereby, are subject to the fulfillment prior to or as of the Closing and/or the Effective Time of the Merger as indicated below, of each of the following conditions:

 

(a) The representations and warranties by North in this Agreement or in any certificate or document delivered pursuant to the provisions hereof or in connection herewith, will be true at the Closing and as of the Effective Time of the Merger as though such representations and warranties were made at and as of such time.

 

(b) North and Sub will have performed and complied with, in all material respects, all covenants agreements, and conditions required by this Agreement to be performed prior to the Closing.  No legal action will be in effect which would affect the consummation of the transactions contemplated herein or would prohibit the consummation of the Merger.

 

(c) On or before the Closing the Board of Directors of North and the Sub will have approved in accordance with applicable provisions of state corporate law, the execution and delivery of this Agreement and consummation of the transactions contemplated herein and will have submitted same to the shareholders as may be required.

 

(d) On or before the Closing North will have delivered to Fast certified copies of resolutions of the Board of Directors approving and authorizing: (i) the execution, delivery, and performance of this Agreement and all necessary and proper actions to enable North to comply with the terms of this Agreement; (ii) the appointment or election of Fast’s nominees to North’s Board of Directors; and (iii) all other matters set forth or contemplated herein.

 

(e) The Merger will proceed by applicable state law and North will have sufficient shares of its common stock authorized to complete the Merger as of the Effective Time of the Merger and the transactions contemplated hereby.

 

(f) At the Closing the directors and officers of North and Sub will have resigned in writing from their positions effective at the Closing, and those persons designated by Fast as nominees, Vivian Liu, Henry Esber, Ph.D., and Ziad Mirza, M.D., will be duly appointed as directors on the North Board which appointment will be effective upon the Closing and acceptance of the appointment by the new directors.

 

(g) At the Closing, all instruments and documents delivered by North to Fast will be reasonably satisfactory to legal counsel for Fast.

 

(h) The capitalization of North will be effective as set forth herein.

 

(i) The shares of common stock of North to be issued to Fast Stockholders at or after the Closing will be validly issued, nonassessable, and fully paid under the provisions of applicable state law and will be issued in a private, nonpublic offering in compliance with federal, state, and applicable securities laws.

 

(j) Fast will have completed its due diligence investigation of North with satisfactory  results.

 

SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NORTH.

 

All obligations of North under this Agreement to effect the transactions contemplated hereby are subject to the fulfillment, prior to or at the Closing or the Effective Time, of each of the following conditions:

 

  

  

  

(a) The representations and warranties by Fast as stated in this Agreement or in any certificate or document delivered pursuant to the provisions hereof or in connection herewith will be true at and as of the Closing and the Effective Time of the Merger as though such representations and warranties were made at and as of such times.

 

(b) Fast will have performed and complied with in all material respects all covenants, agreements, and conditions required by this Agreement to be performed or complied with by Fast .(c) On or before the Closing the Fast Board of Directors will have approved in accordance with applicable provisions of state corporate law, the execution and delivery of this Agreement and the consummation of the transactions contemplated herein.

 

(d) At the Closing all instruments and documents delivered by Fast pursuant to the provisions hereof will be reasonably satisfactory to legal counsel for North.

 

(e) The Merger will be permitted by applicable state law.

 

(f) North will have an exemption from registration under the Securities Act of 1933 and the laws of the various states of residence of Fast Stockholders for issuance of the shares of North common stock to be issued to Fast Shareholders pursuant to this Agreement.

 

SECTION 10.  SURVIVAL.

 

The representations and warranties contained in this Agreement and any other document or certificate relating hereto except the investment letters executed by the Fast Shareholders  will survive and continue in full force and effect for a period of three months after the Closing.

 

SECTION 11.  INDEMNIFICATION.

 

(a) From and after the Closing of this Agreement, North agrees to indemnify, defend, and hold harmless Fast and each person who is now, or has been at any time prior to the date of this Agreement, or who becomes prior to the closing an officer or director of Fast against any costs or expenses including reasonable attorneys’ fees, judgments, fines, losses, claims, demands, liabilities, damages, and deficiencies, including interest and penalties, incurred or suffered in connection with any claim, action, suit, proceeding, or investigation, whether civil, criminal, or administrative arising from matters existing or occurring prior to the Closing, whether asserted or claimed prior to, at, or after the Closing, which is based in whole or in part on, or arising in whole or in part from the fact that such person is or was a director or executive officer of Fast, including, without limitation, all losses, claims, damages, costs, expenses, liabilities, judgment, or settlement amounts based in whole or in part on, or arising in whole or in part from, or pertaining to this Agreement or the transactions contemplated hereby to the fullest extent that Fast could have been permitted under applicable state laws and its certificate of incorporation, bylaws, and other agreements in effect on the date hereof to indemnify such individual.

 

  

  

  

(b) From and after the Closing of this Agreement, Fast agrees to indemnify, defend, and hold harmless, North and each person who is now, or has been at any time prior to the date of this Agreement, who was prior to the Closing a director or officer of North against any costs or expenses, including reasonable attorneys’ fees, judgments, fines, losses, claims, demands, liabilities, damages, and deficiencies, including interest and penalties, incurred or suffered in connection with any claim, action, suit, proceeding, or investigation, whether civil, criminal, or administrative arising from matters existing or occurring prior to the Closing, whether asserted or claimed prior to, at, or after the Closing, which is based in whole or in part on, or claimed prior to,  at, or after the Closing which is based in whole or in part on, or arising in whole or in part from the fact that such person is a party to this Agreement or is, or was a director or officer of North including without limitation, all losses, claims, damages, costs, expenses, liabilities, judgments, or settlement amounts based in whole or in part on, or arising in whole or in part from or pertaining to this Agreement or the transactions contemplated hereby to the fullest extent that North could have been permitted under applicable state laws and its certificate of incorporation, bylaws, and other agreements in effect on the date hereof to indemnify such individual.

 

(c) Any indemnified party wishing to claim indemnification under subsection (a) or (b) of this Section, upon learning of any such claim, action, suit, proceeding, or investigation will promptly notify North if under subsection (a), or Fast if under subsection (b).  However failure to so notify the appropriate party will not relieve the indemnifying party from any liability which it may have under this Section, except to the extent such failure materially prejudices such party.  In the event of any such claim, action, suit, proceeding, or investigation, (i) the indemnifying party will have the right to assume the defense thereof and will not be liable to any such indemnified party in connection with the defense thereof; (ii) the indemnified party will cooperate in all respects as requested by the indemnifying party in the defense of any such matter, and (iii) the indemnifying party will not be liable for any settlement effected without its prior written consent, which consent will not be unreasonably withheld; provided however, that the indemnifying party will not have any obligation hereunder to any indemnified party and when a court will ultimately determine, and such determination will have become final, that the indemnification of such indemnified party in the manner contemplated hereby is prohibited by law.

 

 SECTION 12.   NATURE OF REPRESENTATIONS.

 

 All of the parties hereto are executing and carrying out the provisions of this Agreement in reliance solely on the representation, warranties, covenants, and agreements contained in this Agreement and the other Transaction Documents delivered at the Closing and not upon any representation, warranty, agreement, promise, or information, written or oral, made by the other party or any other person other than as specified herein.

 

SECTION 13. DOCUMENTS AT CLOSING.

 

At the Closing the following documents will be delivered:

 

The Closing the transactions contemplated herein will take place on such date (the “Closing”) as mutually determined and agreed upon by the North and Fast.  The parties will use all reasonable effort to cause the Closing to occur as expeditiously as possible.  The Agreement shall be given effect immediately upon the Effective Time of the Merger. The Closing of this Agreement shall proceed as follows:

 

North shall provide the following:

 

(a) Resolutions of the Board of Directors of North pertaining to:

 

(1)  approval and ratification of  the Merger Agreement and Plan of Merger and documents relating thereto;

 

(2) amendments to its Articles of Incorporation to:

 

(a)  change the corporate name to Innovus Pharmaceuticals, Inc.

 

(b) effect a reverse split whereby the issued and outstanding shares of North shall be reduced by the ratio of ten to one.

 

(c) provide for authorized capital of 150,000,000 shares of common stock, par value of $.001 per share.

 

  

  

  

(b) North shall provide resolutions adopted by the written consent of the shareholders approving the amendments to the Articles of Incorporation of North and resolutions adopted by the shareholder of the Sub approving the Merger Agreement and Plan of Merger and approving the Certificate of Merger.

 

(c)  North shall provide resignations of its current officers and directors and shall provide appropriate corporate resolutions for the appointment of directors as provided herein.

 

(d) North shall provide a corporate resolution adopted and approved by the North Board of Directors authorizing the issuance of shares of North restricted common stock (post reverse split), par value of $0.001 per share, to the Fast Shareholders whereby Fast shareholders shall own ninety-two per cent (92%) of the issued and outstanding shares after the consummation of the transactions set forth herein.

 

               (e) North shall provide Fast with an opinion of counsel that the shares to be issued in the merger  will be  validly issued, fully paid and nonassessable.

 

(f) North shall deliver instructions to its transfer agent to issue certificates evidencing the North shares of common stock (post reverse split) to the Fast Shareholders, at the exchange ratio in accordance with the terms of this Agreement. North shares will be issued when shares of Fast have been presented to the transfer agent in proper form. Each certificate evidencing shares of North common stock issued to the Fast Shareholders will bear a restrictive legend prohibiting the transfer by the holder without first complying with the Securities Act of 1933, as amended, or any exemption thereunder, or Rule 144 promulgated thereunder.

 

Fast shall provide the following:

 

(a) Fast shall present a certification that Fast is a corporation in good standing under the laws of the Delaware.

 

(b)  Fast shall provide resolutions adopting the Merger Agreement and Plan of Merger as well as the Certificate of Merger approved by not less than a majority of the issued and outstanding shares of common stock of Fast.

 

(c) Present a certification from its president that Fast has performed all corporate acts required under statute, regulations, articles of incorporation, bylaws or any other requirement to effect the transaction with North including the certification that the issued and outstanding shares of common stock of Fast are fully diluted as of the Closing.

 

(d) Present audited financial statements of Fast for the period ended as of December 31, 2010, and unaudited financial statements for the period ended March 31, 2011.

 

SECTION 14.  CONDITIONS TO CLOSING.

 

The obligations of Fast and North to complete the transactions provided for herein shall be subject to the performance of all their respective agreements hereunder on or before the Closing, to the material truth and accuracy of the respective representations and warranties of  Fast  and of North contained herein, and to the further conditions that:

 

(a)  All representations and warranties contained in this Agreement are substantially true and correct on and as of the Closing with the same effect as if made on and as of said date.

 

(b)  As of the Closing there shall have been no material adverse change in the affairs,

 

business, property, or financial condition of North and Fast and North and Fast shall so certify in writing.

 

  

  

  

(c)  All of the agreements and covenants contained in this Agreement that are to be complied with, satisfied and performed by each of the parties hereto on or before the Closing, shall, in all material respects, have been complied with, satisfied, and performed.

 

SECTION 15. FINDER’S FEES.

 

North represents and warrants to Fast and Fast represents and warrants to North that neither of them has incurred any liabilities, express or implied, to any “broker” or “finder” or similar person in connection with this Agreement or any of the transactions contemplated hereby.

 

SECTION 16. TERMINATION AND ABANDONMENT

 

This Agreement may be terminated and abandoned at any time prior to the Closing upon the following conditions:

 

(a)  By the mutual consent of the parties.

 

(b)  By the Board of Directors of North or Fast if, in the opinion of either party, the Closing of the Agreement is impracticable by reasons of litigation or change of circumstances.

 

(c)  By the Board of Directors of North or Fast  if, in the bona fide judgment of either, there shall have been a material violation of any covenant or agreement set forth herein, or any warranty or representation shall be untrue; or the Board of Directors should, in its bona fide judgment, deem the Agreement inadvisable or impracticable by reason of any defect which, in the opinion of counsel, for the party who has made such determination, constitutes a material defect in the title of the other party, or which defect affects a material part of its assets, or which has otherwise subjected the party to a substantial liability or obligation.

 

(d)  By either party if any action or proceeding before any court or governmental body or agency shall have been instituted or threatened to restrain or prohibit the consummation of this Agreement and such party deems it inadvisable to proceed.

 

(e) Effect of termination.  In the event of termination, notice shall be given to North or Fast and thereupon this Agreement shall become wholly void and of no effect and there shall be no liability on the part of either to the other or their respective officers or directors.

 

SECTION 17. MISCELLANEOUS.

 

(a) Further Assurances.  At any time and from time to time after the Closing each party will execute such additional instruments and take such action as may be reasonably requested by the other party to confirm or to perfect or to carry out the intent and purposes of this Agreement.

 

(b) Waiver.  Any failure by any party hereto to comply with any of its obligation, agreements, covenants, or conditions provided herein may be waived in writing by the party (in its sole discretion) to whom such duty or compliance is owed.

 

(c) Amendment.  This Agreement may be amended only in writing as agreed to by all parties hereto.

 

(d) Notices. Any notice under this Agreement shall be deemed to have been sufficiently given if sent by registered or certified mail, postage prepaid, addressed as follows:

 

If to Fast to:

Vivian Liu

FasTrack, Inc.

80 West Sierra Madre Blvd., #392

Sierra Madre, CA 91024

  

  

  

If to North and Sub to:

Wallace Boyack

2290 East 4500 South, Suite 130

Salt Lake City, Utah 84117

or to any other address which may hereafter be designated by either party by notice given in such manner.  All notices shall be deemed to have been given when sent, addressed as aforesaid.

 

(e) Headings.  The headings in this Agreement are inserted for convenience only and have no effect in any way on the meaning or interpretation of this Agreement.

 

(f) Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed an original, but all such counterparts shall constitute one and the same instrument.

 

(g) Final Agreement and Merger.  This Agreement supersedes all prior agreements and understandings between the parties and may not be changed or terminated orally.  Any modification or change or waiver of any of the provisions hereof shall not be binding unless in writing and signed by the parties hereto.  There are no oral promises, conditions, representations, understandings, interpretations, or terms of any kind as conditions or inducement to the execution hereof.

 

(h) Severability.  If any part of this Agreement is determined or deemed to be unenforceable, the remaining provisions of the Agreement will remain in full force and effect and valid.

 

(i) Responsibility and Costs. Whether the Agreement is consummated or not and except as otherwise set forth below, all fees, expenses, and out-of-pocket costs including, but not limited to, fees and disbursements of counsel, financial advisors and accountants and expenses associated with fulfillment of the obligations set forth herein, that are incurred by the parties hereto, will be borne solely and entirely by the party that has incurred such costs and expenses, unless the failure to consummate the Agreement constitutes a breach of the terms hereof, in which event the breaching party will be responsible for all costs related hereto.

 

(j) Binding Effect.  This Agreement will be binding upon the parties hereto and inure to the benefit of the parties, their respective heirs, administrators, executors, successors, and assigns.

 

(k) Legal Representation.  The parties hereto acknowledge and agree that each respective party is represented by the same legal counsel and that each party hereby waives any existing or potential conflict of interest that may exist or occur by such common representation.

 

(l) Governing Law.  This Agreement will be governed and construed in accordance with the laws of the State of Utah without regard to principles of conflicts of law.

  

  

  

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

 

                                                                                         NORTH HORIZON, INC.

By  s/Wallace Boyack 

                                                                           President

STATE OF UTAH                              )

:  ss.

SALT LAKE COUNTY                     )

 

On this _____ day of __________, 2011, before me the undersigned officer, personally appeared Wallace Boyack  known to be the President of the above-named corporation, and that he, holding such position, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

 

 

NOTARY PUBLIC

NORTH FIRST GENERAL, INC.

By  s/Wallace Boyack

                                                                           President

  

  

  

STATE OF UTAH                              )

:  ss.

SALT LAKE COUNTY                     )

 

On this 13 day of July 2011, before me the undersigned officer, personally appeared Wallace Boyack  known to be the President of the above-named corporation, and that he, holding such position, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

 

 

NOTARY PUBLIC

FASTRACK, INC.

By  s/Vivian Liu  

President

 

STATE OF                                          )

:  ss.

COUNTY                                            )

 

On this _____ day of __________, 2011, before me the undersigned officer, personally appeared  , known personally to me to be the  , respectively, of the above-named corporation, and that she, as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by herself as such officer.

 

IN WITNESS WHEREOF, I have hereunto set my hand and official seal.

 

 

NOTARY PUBLICExhibit 10.18

 

SECOND AMENDED AND RESTATED
 DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES
 OF MIDLAND STATES BANCORP, INC.
 (Effective July 2011)

 

R E C I T A L S

 

Midland States Bancorp, Inc. (the “Company”) desires to assist its directors and executives in their ability to better provide for their own financial future by permitting such directors and executives to defer all or a portion of their current director fees and a portion of their annual salary and any bonus compensation.

 

The Company desires that such deferrals are to be made without restrictions imposed by those provisions of the Code which apply to tax-qualified retirement plans.

 

The Company previously adopted the Second Amended and Restated Deferred Compensation Plan For Directors and Executives of Midland States Bancorp, Inc. (Effective November 2010) to allow for certain directors and executives to make such deferrals of director fees, salary and bonus compensation.

 

The Company desires to further amend and restate the Plan in connection with the Company’s initial public offering.

 

SECTION 1
 DEFINITIONS

 

1.1                                 “Applicable Interest Rate” shall mean with respect to each calendar quarterly period, the average during the then most recently completed calendar quarter of the monthly averages for 20-year U.S. Treasury securities, adjusted to a constant maturity, as published by the Board of Governors of the Federal Reserve System in its “Federal Reserve Statistical Release.”

 

1.2                                 “Applicable Interest Rate Fund” shall mean a Measurement Fund in which earnings are calculated based on the Applicable Interest Rate.

 

1.3                                 “Bank” shall mean Midland States Bank, a wholly owned banking subsidiary of the Company.

 

1.4                                 “Beneficiary” shall mean the person or persons Participant has designated in writing to the Committee to receive benefits under this Plan in the event of the Participant’s death.  If the Participant has not specifically designated any Beneficiary for purposes of the Plan, then the Beneficiary shall become the Participant’s estate.  In the case of the death of the Beneficiary before completion of payments under the Plan to the Beneficiary, then the Beneficiary’s estate shall become entitled to any remaining payments.

 

1.5                                 “Board” means the Board of Directors of the Company.

 

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1.6                                 “Bonus” shall mean any special and/or discretionary compensation amounts in excess of Salary determined by the Company, the Bank or any member of the Controlled Group to be payable to a Participant with respect to services rendered; provided, however, that the term Bonus shall not include any signing bonus payable to a Participant.

 

1.7                                 “Cash Subpart Account” shall mean the portion of the Participant’s Deferred Compensation Subaccount that is credited as cash.

 

1.8                                 “Change in Capital Stock” shall mean any increase or decrease in the number of shares of issued Common Stock resulting from a subdivision or consolidation of shares, whether through reorganization, recapitalization, stock split-up, stock distribution or combination of shares, or the payment of a share dividend or other increase or decrease in the number of such shares outstanding effected without receipt of consideration by the Company.

 

1.9                                 “Change of Control” shall mean the first to occur of the following:

 

A.                                   Any Person (as defined in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act), directly or indirectly, of securities representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding Voting Stock;

 

B.                                     During any period of twelve (12) consecutive months, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

 

C.                                     Consummation of:  (i) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Stock of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) a complete liquidation of the Company or the Bank or an agreement for the sale or disposition by the Company of all or substantially all the Company’s or the Bank’s assets.

 

However, in no event shall a Change of Control be deemed to have occurred, with respect to the Participant if the Participant is part of a purchasing group which consummates the

 

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Change of Control transaction.  The Participant shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Participant is an equity participant in the purchase company or group (except for (i) passive ownership of less than two percent (2%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change of Control by a majority of the continuing Directors).

 

In the event that any amount under the Plan constitutes deferred compensation (as defined under Section 409A of the Code), and the settlement of, or distribution of such amount is to be triggered by a Change of Control, then such settlement or distribution shall be subject to the event constituting the Change of Control also constituting a “change in the ownership” or “change in the effective control” of the Company, as permitted under Section 409A of the Code.

 

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

 

1.11                           “Committee” shall mean the Compensation Committee of the Board or any other committee of the Board as may be designated from time to time by the Board, or any designee of either.

 

1.12                           “Common Stock” shall mean  the common stock of the Company.

 

1.13                           “Company” shall mean Midland States Bancorp, Inc.

 

1.14                           “Controlled Group” shall mean any and all entities which share common ownership with the Company resulting in a “parent-subsidiary controlled group,” as that term is defined by Code Section 1563(a)(1), or “brother-sister controlled group,” as that term is defined by Code Section 1563(a)(2), or any “combined group,” as that term is defined by Code Section 1563(a)(3).

 

1.15                           “Deferred Compensation” shall mean: (A) with respect to an Executive (excluding any Inside Director), the sum of his or her Salary and/or Bonus that is the subject of an elective deferral under Section 4.1 of the Plan; (B) with respect to an Inside Director, the sum of his or her Salary, Bonus and/or Director Fees that is the subject of an elective deferral under Section 4.1 of the Plan; and (C) with respect to a Director, his or her Director Fees that are the subject of an elective deferral under Section 4.1 of the Plan.

 

1.16                           “Deferred Compensation Election Form” or “Form” shall mean the form (as set forth in EXHIBITS B-1 and B-2 to the Plan) which Participants use to defer Salary, Bonus and/or Director Fees and to elect distribution options.

 

1.17                           “Deferred Compensation Subaccount” shall mean the bookkeeping account established for a Participant under the Plan to which Deferred Compensation with respect to such Participant is credited from time to time, as provided in Section 5.3 of the Plan.  For purposes of this definition, unless otherwise indicated by the Plan, a Deferred Compensation Subaccount shall refer to both the Cash Subpart Account and Stock Subpart Account thereof.

 

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1.18                           “Director” shall mean any person duly elected or appointed and serving as a director of the Company, the Bank or any other member of the Controlled Group and who is not a current employee of the Company, the Bank or any other member of the Controlled Group and has not been an employee of the Company, the Bank or any other member of the Controlled Group for at least one year.

 

1.19                           “Director Fees” shall mean with respect to a Director the sum of his or her retainer and fees paid to such Director for services rendered in the capacity of a Director.

 

1.20                           “Disability” shall mean with respect to a Participant, that the Participant: (A) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (B) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of such Participant’s employer, as determined in accordance with Section 409A(a)(2)(C) of the Code and the Treasury Regulations thereunder.

 

1.21                           “Distributable Amount” of a Participant’s subaccounts with respect to a Plan Year shall mean the sum of the vested balance of the subaccounts in a Participant’s Deferred Compensation Subaccount and Matching Contribution Subaccount with respect to such Plan Year subject to the rules of Section 7 of the Plan.

 

1.22                           “Election Period” with respect to a Plan Year shall mean the period designated by the Committee; provided, however, that such period shall be no less than ten (10) business days.  The Election Period with respect to a Plan Year shall end not later than the last day of the prior Plan Year; provided, however, that, in the case of a Participant who first becomes eligible to participate in the Plan during a Plan Year, the Election Period may be the thirty (30) day period commencing on the date such Participant first becomes eligible to participate in accordance with Section 409A(a)(4)(B)(ii) of the Code and the Treasury Regulations thereunder.

 

1.23                           “Eligible Executive” shall mean any Executive who is selected by the Committee to participate in the Plan, including any Executive who is also an Inside Director.

 

1.24                           “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

1.25                           “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

1.26                           “Executive” shall mean any officer or other employee of the Company, the Bank or any other member of the Controlled Group whom the Committee, in its sole

 

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discretion, determines is a member of a select group of management or highly compensated employees.

 

1.27                           “Fair Market Value” means, on any date, the officially-quoted closing selling price of the shares on such date on the principal national securities exchange on which the shares are listed or admitted to trading (including the New York Stock Exchange, Nasdaq Stock Market, Inc. or such other market or exchange in which such prices are regularly quoted) or, if there have been no sales with respect to the shares on such date, or if the shares are not so listed or admitted to trading, the Fair Market Value shall be the value established by the Committee in good faith and in accordance with Sections 422 and 409A of the Code.

 

1.28                           “Inside Director” shall mean a Director of the Company, the Bank or any other member of the Controlled Group who is an employee of the Company, the Bank or any other member of the Controlled Group and is also an Eligible Executive.

 

1.29                           “Matching Contribution Subaccount” shall mean the bookkeeping account established for a Participant under Section 5.4 of the Plan to which the Company’s Matching Contributions under Section 4.2 of the Plan are credited from time to time.

 

1.30                           “Measurement Fund” shall mean one or more of the investment funds selected by the Committee.

 

1.31                           “Participant” shall mean a Director, an Inside Director or an Eligible Executive who has been selected by the Committee to participate in the Plan, and who has elected to participate in the Plan.

 

1.32                           “Participation Certificate” shall mean that agreement (as set forth in EXHIBIT A to the Plan) entered into by a Participant and the Company prior to participation in the Plan.

 

1.33                           “Payment Date” shall mean, unless otherwise designated by the Participant on his or her Deferred Compensation Election Form, the last day of the calendar month following the date of the Participant’s Separation from Service.

 

1.34                           “Plan” shall mean the Second Amended and Restated Deferred Compensation Plan for Directors and Executives of Midland States Bancorp, Inc., as set forth herein and as amended from time to time.

 

1.35                           “Plan Year” shall mean the twelve (12) consecutive month period beginning on each January 1 and ending on each December 31.

 

1.36                           “Retirement” shall mean the cessation of the services of a Director for any reason other than death or Disability, provided such Director is at least 70 years of age.

 

1.37                           “Rule 701” means Rule 701 promulgated under the Securities Act.

 

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1.38                           “Salary” shall mean the regular annual base compensation paid by the Company, the Bank or any other member of the Controlled Group to an Eligible Executive (without regard to any reduction thereof pursuant to the Plan, any 401(k) plan or Code Section 125 flexible benefits plan maintained by the Company, the Bank or any other member of the Controlled Group), exclusive of Bonus and any other incentive payments made by the Company, the Bank or any other member of the Controlled Group to such Eligible Executive.

 

1.39                           “Securities Act” shall mean the Securities Act of 1933, as amended.

 

1.40                           “Separation from Service” shall mean a Participant’s Termination, if such Termination is a “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code.

 

1.41                           “Stock Subpart Account” shall mean the portion of the Participant’s Deferred Compensation Subaccount that is credited as Stock Units.

 

1.42                           “Stock Units” shall mean the number of shares of Common Stock (carried to four decimal places) credited to a Participant’s Deferred Compensation or Matching Contribution Subaccount in accordance with the provisions of Sections 5.3 and 5.4 of the Plan; provided, however, that in the event of a Change in Capital Stock, the Stock Units then credited to a Participant’s Deferred Compensation and Matching Contribution Subaccounts shall be appropriately adjusted, based on the Committee’s directions, to account for the change in number of issued and outstanding shares of Common Stock.  Any Stock Units or Common Stock credited to a Participant’s Deferred Compensation or Matching Contribution Subaccount shall, to the extent required by law or as otherwise deemed advisable by the Committee, be issued under the Midland States Bancorp, Inc. Amended and Restated 2010 Long-Term Incentive Plan.

 

1.43                           “Stock Unit Election” shall mean the election by a Director (with respect to Director Fees) or an Inside Director (with respect to Director Fees, but not with respect to Salary or Bonus) to designate all or any portion of such Participant’s Director Fees to constitute Stock Units to be allocated to the Stock Subpart Account portion of his or her Deferred Compensation Subaccount.

 

1.44                           “Subaccount” means the accounts established for each Participant pursuant to Section 5.1, consisting of a Deferred Compensation Subaccount (comprised of a Cash Subpart Account and a Stock Subpart Account) and a Matching Contribution Subaccount.

 

1.45                           “Termination” shall mean: (A) for any Participant who is an employee, ceasing to be an employee of the Company, the Bank and each member of the Controlled Group for reasons other than death or Disability; (B) for any Director Participant, ceasing to be a Director of the Company, the Bank and each other member of the Controlled Group for reasons other than death or Disability; or (C) for any Inside Director Participant, ceasing to be both an employee and Director of the Company, the Bank and each other member of the Controlled Group.

 

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1.46                           “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant resulting from: (A) an illness or accident of the Participant, or the Participant’s spouse, Beneficiary, or dependent (as defined in Section 152 of the Code, without regard to Sections 152(b)(1), (b)(2), and (d)(1)(B) of the Code); (B) loss of the Participant’s property due to casualty; or (C) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant’s control, as determined by the Committee, in its sole discretion, based on the relevant facts and circumstances and as provided for in Treasury Regulations §1.409A-3(i)(3) or any successor provision.

 

1.47                           “Voting Stock” shall mean that class (or classes) of Common Stock entitled to vote in the election of the Company’s directors.

 

SECTION 2
 ELIGIBILITY AND PARTICIPATION

 

2.1                                 Eligibility.  Individuals eligible to participate in the Plan shall consist of the Directors and Eligible Executives of the Company, the Bank or any other member of the Controlled Group.

 

2.2                                 Participation.  Participation in the Plan by Eligible Executives shall be determined by the Committee, in its sole discretion, and shall be subject to the terms and conditions of the Plan, the Deferred Compensation Election Form and the Participation Certificate; provided, however, that all Directors shall be eligible to participate in the Plan without discretion on the part of the Committee.  All Participants in the Plan shall, prior to participation, execute a Participation Certificate.

 

Upon becoming a Participant in the Plan, a Participant shall continue to participate in the Plan until such time as (A) the Participant ceases to be a Director and/or an Eligible Executive, as the case may be, or (B) the Committee takes action to terminate the Eligible Executive’s right to continued participation in the Plan.  Should an individual cease to be a Participant under this Section 2.2  while still employed by or serving as a Director of the Company, the Bank or any other member of the Controlled Group, any payment to Participant will be made in accordance with the provisions of Section 7.1  upon the Participant’s Separation from Service.

 

SECTION 3
 ADMINISTRATION

 

3.1                                 General Powers Of Administration.  The Plan shall be administered by the Committee.  The Committee is authorized to construe and interpret the Plan and promulgate, amend and rescind rules and regulations relating to the implementation, administration and maintenance of the Plan.  Subject to the terms and conditions of the Plan, the Committee, in its sole discretion, shall make all determinations necessary or advisable for the implementation, administration and maintenance of the Plan including, without limitation, determining the Eligible Executives and correcting any technical

 

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defect(s) or technical omission(s), or reconciling any technical inconsistencies, in the Plan.

 

The Committee may designate persons other than members of the Committee to carry out the day-to-day ministerial administration of the Plan under such conditions and limitations as it may prescribe.  The Committee’s determinations under the Plan need not be uniform and may be made selectively among Eligible Executives (but not Directors), whether or not such Eligible Executives are similarly situated.

 

Any determination, decision or action of the Committee in connection with the construction, interpretation, administration, implementation or maintenance of the Plan shall be final, conclusive and binding upon all Participants and any person(s) claiming any Plan benefits under or through any Participants.

 

3.2                                 Indemnification.  The Company will indemnify and hold harmless the Committee, any Director or any employee charged with duties associated with the Plan against any cost or expense (including, without limitation, attorneys’ fees) or liability (including, without limitation, any sum paid with the approval of the Company in settlement of a claim) arising out of any act or omission to act, except in the case of willful gross misconduct or gross negligence.

 

SECTION 4
 DEFERRAL AND MATCHING CONTRIBUTIONS

 

4.1                                 Deferred Compensation.  Participants may defer all or a portion of their Salary and/or Bonus, in the case of Eligible Executives (including Inside Directors), or Director Fees, in the case of Directors (including Inside Directors), earned during any calendar year, in accordance with the following provisions.

 

A.                                        Deferral Election.  To defer compensation during any particular year, Participants must execute a Deferred Compensation Election Form and file such Form with the Committee.

 

B.                                          Timing of Election.  Deferral elections by Participants shall be completed and filed with the Committee during the Election Period.

 

C.                                          Content of Deferral Elections.  The following shall apply to all deferral elections:

 

(i)                                          All deferral elections shall contain a statement that the Participant elects to defer all or a portion of such Participant’s Director Fees or Salary and/or Bonus, as the case may be, for a specified calendar year, that is earned and becomes payable to the Participant after the filing of such deferral election and, with respect to a Director, including an Inside Director, that portion of such Participant’s Deferred Compensation to constitute Stock Units;

 

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(ii)                                       Except for the provisions of subsection (iii) below, any deferral election shall only apply to the Director Fees or Salary and/or Bonus, as the case may be, that is attributable to the Participant’s services rendered to the Company during the calendar year for which such election is made (whether or not such compensation is actually paid and received in such calendar year);

 

(iii)                                    If a Participant is currently deferring Director Fees or Salary and/or Bonus and fails to complete and return a Form prior to January 1 of the calendar year to which such Form is to be effective, then the deferral election made by the Participant on the most recently filed Form shall be considered effective for the new calendar year; and

 

(iv)                                   A Participant may terminate a deferral election for any calendar year by filing with the Committee written notice of such termination prior to January 1 of the calendar year in which such termination is to become effective, whereupon a Participant shall not be entitled to participate in the Plan for such calendar year.  Such a Participant may, however, participate in the Plan effective for the calendar year following the calendar year in which such termination becomes effective in the same manner as prescribed in the Plan.

 

4.2                                 Matching Contributions.  Provided the Participant is then serving as a Director or Inside Director and has elected to defer all (but not less than all) of his or her Director Fees relative to service for the Board or a board of directors of a Controlled Group member in the form of Stock Units pursuant to Section 4.1C(i), on the first business day of each calendar quarter, or such other time as may be determined by the Committee in its sole discretion, the Company shall credit to the Participant’s Matching Contribution Subaccount, pursuant to Section 5.4, a contribution equal to 25% of such Participant’s Director Fees deferred under the Plan by the Participant during the preceding quarter (or other such period).  No matching contributions shall be made with respect to Salary or Bonus.

 

SECTION 5
 PLAN SUBACCOUNTS

 

5.1                                 Establishment of Plan Subaccounts.  The Company shall establish one or more Subaccounts for each Participant, including (A) a Deferred Compensation Subaccount, consisting of a Cash Subpart Account and, in the case of Directors and Inside Directors who so elect, a Stock Subpart Account, and (B) a Matching Contribution Subaccount.

 

5.2                                 Election of Measurement Funds In Cash Subpart Account.  In the manner designated by the Committee, Participants may elect one or more Measurement Funds to be used to determine the additional amounts to be credited to their Cash Subpart Account. The Committee shall select from time to time, in the Committee’s sole discretion, the Measurement Funds to be available under the Plan.

 

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Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation to his Cash Subpart Account thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Cash Subpart Account shall not be considered or construed in any manner as an actual investment of his Cash Subpart Account in any such Measurement Fund. In the event that the Company, in its own discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Cash Subpart Account shall at all times be a bookkeeping entry only and shall not represent any investment made on his behalf by the Company. The Participant shall at all times remain an unsecured creditor of the Company.

 

A.                                        Investment Elections.  Participants may designate how their Cash Subpart Accounts, if any, shall be deemed to be invested under the Plan.

 

(i)                                          Such Participants may make separate investment elections for their future deferrals, and the existing balances of their Cash Subpart Accounts.

 

(ii)                                       Such Participants may make and change their investment elections by choosing from the Measurement Funds designated by the Committee in accordance with the procedures established by the Committee.

 

(iii)                                    Except as otherwise designated by the Committee, the available Measurement Funds under Section 5.2A(i) above shall generally be the same as, or similar to, investment funds under the Company’s 401(k) plan (excluding any brokerage account option).

 

(iv)                                   If a Participant fails to elect a Measurement Fund under this Section, he shall be deemed to have elected the Applicable Interest Rate Fund for his Cash Subpart Account.

 

B.                                          Continuing Investment Elections.  Participants who have had a Termination but not yet commenced distributions under the Plan or Participants who are receiving installment payments may continue to make investment elections pursuant to subsection A. above, as applicable, except as otherwise determined by the Committee.

 

5.3                                 Credit to Deferred Compensation Subaccount.  A Deferred Compensation Subaccount shall be created for each Participant, to which all Deferred Compensation shall be credited.

 

A.                                        Initial Credit to Deferred Compensation Subaccount.  Each Participant’s Deferred Compensation Subaccount shall be credited no less frequently than the first business day of each calendar quarter with an amount

 

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equal to the sum of the Deferred Compensation deferred by the Participant during the preceding calendar quarter in accordance with Section 4.1 of the Plan.

 

(i)                                          Credit to Cash Subpart Account.  The actual dollar amount of Deferred Compensation as to which no Stock Unit Election has been deferred shall initially be credited as cash to the Participant’s Cash Subpart Account.

 

(ii)                                       Credit to Stock Subpart Account.  The dollar amount of the Deferred Compensation as to which (and to the extent that) a Stock Unit Election has been made shall be credited as Stock Units, the number of which shall be calculated by dividing the dollar amount deferred by the Fair Market Value of the Common Stock as of the date such Deferred Compensation is credited to the Participant’s Stock Subpart Account.

 

B.                                          Earnings Credit to Subaccount.  The Cash Subpart Account and Stock Subpart Account (if any) of the Participant’s Deferred Compensation Subaccount shall be credited with earnings amounts equal to the following.

 

(i)                                          Earnings Credit to Stock Subpart Account.  On the first business day of each calendar quarter, an amount equal to the sum of the cash dividends that would have been payable on all Stock Units then allocated to the Participant’s Stock Subpart Account had such Stock Units then been converted to shares of Common Stock and distributed to the Participant immediately prior to last business day of the immediately preceding calendar quarter, shall be credited to such Participant’s Stock Subpart Account, whereupon the dollar amount of such cash dividends shall be converted into Stock Units by dividing such dollar amount by the Fair Market Value of the Common Stock as of the first business day of such calendar quarter.

 

(ii)                                       Earnings Credit to Cash Subpart Account.  Each Cash Subpart Account shall be divided into separate investment fund subaccounts, each of which corresponds to a Measurement Fund elected by the Participant.  The performance of each elected Measurement Fund (either positive or negative) shall be determined by the Committee, based on the performance of the Measurement Funds themselves.  A Participant’s Cash Subpart Account shall be credited or debited on each December 31st, or more frequently as determined by the Committee, based on the performance of each Measurement Fund selected by the Participant, as though (a) a Participant’s Cash Subpart Account and the underlying separate investment fund subaccounts were invested in the Measurement Fund(s) selected by the Participant, in the percentages applicable to such period, as of the close of business on the first business day of such period, at the closing price on such date, (b) the portion of the Participant’s Deferred Compensation that was actually deferred during any period were invested in the Measurement Fund(s) selected by the Participant, in the

 

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percentages applicable to such period, no later than the close of business on the first business day after the day on which such amounts are actually deferred, at the closing price on such date, and (c) any withdrawal or distribution made to a Participant that decreases such Participant’s Cash Subpart Account ceased being invested in the Measurement Fund(s), in the percentages applicable to such period, no earlier than one business day prior to the distribution, at the closing price on such date.

 

The Committee shall establish and maintain, with respect to a Participant’s Cash Subpart Account, an additional subaccount with respect to each Plan Year, to which shall be credited the amount equal to the portion of the Participant’s Deferred Compensation for such Plan Year, debited by amounts equal to distributions to and withdrawals made by the Participant and adjusted for investment earnings and losses as described herein.

 

5.4                                 Matching Contribution Subaccount.  Each Participant’s Matching Contribution Subaccount shall be credited no less frequently than the first business day of each calendar quarter with an amount equal to the Company’s contributions made in accordance with Section 4.2 of the Plan.  The dollar amount of such Company contributions shall be converted into Stock Units by dividing such dollar amount by the Fair Market Value of the Common Stock as of the date such Deferred Compensation is credited, which shall be credited to the Participant’s Stock Subpart Account.

 

SECTION 6
 VESTING OF PLAN SUBACCOUNTS

 

6.1                                 Vesting.  Subject to 10.12 below, a Participant’s Subaccounts shall vest in accordance with the following.

 

A.                                        Deferred Compensation Subaccount.  A Participant’s Deferred Compensation Subaccount shall at all times be 100% vested.

 

B.                                          Matching Contribution Subaccount.  The respective portion of a Participant’s Matching Contribution Subaccount credited in a Plan Year shall vest in accordance with the following schedule:

 

	
At End of Year
    	
 
    	
Vested Percentage
    	
 
    
	
1
    	
 
    	
25
    	
%
    
	
2
    	
 
    	
50
    	
%
    
	
3
    	
 
    	
75
    	
%
    
	
4
    	
 
    	
100
    	
%
    

 

Notwithstanding the above vesting schedule under Section 6.1B, upon the following events, a Participant’s Matching Contribution Subaccount shall become 100%

 

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vested: (i) the death or Disability of the Participant; (ii) a Change of Control of the Company; or (iii) the Participant’s Retirement.

 

SECTION 7
 PAYMENT TO PARTICIPANTS

 

7.1                                 General Rule. Each Participant shall make a separate distribution election with respect to each Plan Year for which such Participant elects to defer Salary, Bonus or Director Fees.  A Participant’s distribution election with respect to a Plan Year shall apply to each subaccount in his Deferred Compensation Subaccount and Matching Contribution Subaccount.  A Participant’s Deferred Compensation Election Form with respect to a Plan Year shall specify the Payment Date and the form of distribution of his or her Distributable Amount with respect to such Plan Year.  The Deferred Compensation Election Form must be filed with the Committee during the Election Period with respect to such Plan Year, and any such elections shall be irrevocable once the Plan Year begins.  Any distribution to a Participant pursuant to the Plan shall be made or commence on such Participant’s Payment Date.

 

The limitations under this subsection shall be applied in accordance with Section 409A(a)(4)(C) of the Code and the Treasury Regulations thereunder.

 

A.                                        Normal Form.  Except as provided in paragraph B below, a Participant’s Distributable Amount with respect to each Plan Year shall be paid to the Participant in a single lump sum in cash on the Participant’s Payment Date.

 

B.                                          Optional Forms.  Instead of receiving his Distributable Amount with respect to each Plan Year in the form of a single lump sum, the Participant may elect an optional form of payment (on the Deferred Compensation Election Form) at the time of his deferral election for such Plan Year.  The Participant may elect on his or her timely executed and filed Deferred Compensation Election Form to receive his Distributable Amount in equal annual installments in cash over a period of from two (2) to fifteen (15) years beginning on the Participant’s Payment Date.  The payment of such Participant’s Distributable Amount with respect to each Plan Year shall be made or commence on such Participant’s Payment Date.

 

All installment payments made under the Plan shall be determined in accordance with the annual fractional payment method, calculated as follows: the balance of the Participant’s Subaccounts with respect to a Plan Year shall be calculated as of the date of distribution.  The annual installment shall be calculated by multiplying this balance by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due to the Participant.  By way of example, if the Participant elects 10 annual installments for the distribution of his or her Subaccounts with respect to a Plan Year, the first payment shall be 1/10 of the balance of such Subaccounts calculated as described in this paragraph.  The following year, the payment shall be 1/9 of the balance of the Participant’s Subaccounts, calculated as described in this paragraph.  The final distribution shall be based on 100% of the balance of the Participant’s Subaccounts

 

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as of the date of distribution.  Each annual installment shall be paid on the last business day of the applicable year.

 

7.2                                 Death Before Payment Of Benefits.  Should a Participant die before the balance of the Participant’s Deferred Compensation and Matching Contribution Subaccounts have been paid to the Participant, any remaining payments will be made to the Participant’s Beneficiary in the same form and manner as they would have been made to the Participant under the provisions of Section 7.1 of the Plan.

 

7.3                                 Distributions In Cases Of Hardship.  Notwithstanding the provisions of Section 7.1 of the Plan, the Committee may, in its sole discretion, choose to permit a Participant to withdraw amounts from his or her Deferred Compensation Subaccount upon a showing by such Participant that an Unforeseeable Emergency has occurred.  Such distribution shall be limited to the amount shown to be necessary to meet the Unforeseeable Emergency, and no more than one withdrawal will be permitted from a Participant’s Deferred Compensation Subaccount during any calendar year.

 

The dollar amount of any withdrawal shall reduce the value of both the Participant’s Cash Subpart Account and Stock Subpart Account.  To determine the cash value of the Participant’s Stock Subpart Account on the date of withdrawal of funds, the number of Stock Units credited on the date of withdrawal of funds shall be multiplied by the Fair Market Value of the Common Stock as of such date.  To determine the value of the Participant’s Cash Subpart Account on the date of withdrawal of funds, the cash amount credited to such Cash Subpart Account on such date shall be utilized.

 

Any amounts distributed to a Participant pursuant to an Unforeseeable Emergency shall be considered to be taxable wages to the Participant in the calendar year of withdrawal.

 

7.4                                 Prohibition on Acceleration of Distributions.  The time or schedule of payment of any withdrawal or distribution under the Plan shall not be subject to acceleration, except as provided under Treasury Regulations promulgated in accordance with Section 409A of the Code.

 

SECTION 8
 PARTICIPANT STATEMENTS

 

8.1                                 Annual Participant Statements.  Within a reasonable period of time following the end of each calendar year, each Participant shall be provided with a statement showing the balances (vested and nonvested) in the Participant’s Deferred Compensation and Matching Contribution Subaccounts.

 

8.2                                 Termination of Participant’s Service.  Within 30 days following the date of the Participant’s Termination (for any reason), the Participant shall be provided with a statement showing the vested balances of his or her Deferred Compensation and Matching Contribution Subaccounts as of the date of such Termination.

 

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SECTION 9
 AMENDMENT OR TERMINATION OF PLAN

 

Any amendment to this Plan shall be made pursuant to a duly adopted resolution of the Board; provided, however, that if such amendment directly or indirectly affects the benefits payable under the Plan, such amendment must be mutually agreed to in writing by a Participant (or, in the event that such Participant is deceased at the date of amendment, the Beneficiary).

 

SECTION 10
 GENERAL PROVISIONS

 

10.1                           Participant’s Rights Unfunded.  The Plan at all times shall be unfunded as defined under provisions of the Code.  The right of any Participant or Beneficiary to receive a distribution hereunder shall be an uninsured claim against the general assets of the Company in the event of the Company’s insolvency or bankruptcy.  The Company may implement a form of trust arrangement (known generally as a “rabbi trust”) to hold the Company assets which will be used to make payments to the Participant (or any Beneficiary) under the terms of the Plan.  Such trust arrangement will not be a “funded” arrangement under the provisions of the Code.

 

10.2                           Independence Of Other Benefit Arrangements.  Participation in the Plan shall in no way restrict or otherwise impact Participant’s participation in any other welfare benefit plan, employment or other contract, deferred compensation arrangement, equity participation plan or any other form of retirement benefit arrangement sponsored by the Company.

 

10.3                           No Secured Guarantee Of Benefits.  In the event of the insolvency or bankruptcy of the Company, Participant shall remain a general creditor of the Company with respect to any benefits payable under the Plan, and nothing contained in the Plan shall constitute a secured guaranty by the Company or any other person or entity that the assets of the Company will be sufficient to pay any benefit hereunder in the event of the Company’s insolvency or bankruptcy.

 

10.4                           No Enlargement Of Rights.  No Participant shall have any right to receive a distribution of any benefits under the Plan except in accordance with the terms of the Plan.  Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Company or any other member of the Controlled Group, whether as an employee, officer or director.

 

10.5                           Spendthrift Provision.  No interest of any person or entity in, or right to receive a distribution under the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

 

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10.6                           Applicable Law.  The Plan shall be construed and administered under the laws of the State of Illinois.

 

10.7                           Severability.  In the event that any of the provisions of the Plan are held to be inoperative or invalid by any court of competent jurisdiction, then: (i) insofar as is reasonable, effect will be given to the intent manifested in the provision held invalid or inoperative; and (ii) the validity and enforceability of the remaining provisions of the Plan will not be affected thereby.

 

10.8                           Incapacity Of Recipient.  If any person entitled to a distribution under the Plan is deemed by the Committee to be incapable (physically or mentally) of personally receiving and giving a valid receipt for any payment pursuant to the Plan, then, unless and until claim therefore shall have been made by a duly appointed guardian or other legal representative of such person, the Company may provide for such payment or any part thereof to be made to any other person or institution then contributing towards or providing for the care and maintenance of such person.  Any such payment shall be a payment for the account of such person and a complete discharge of any liability of the Company and the Plan with respect to such payment.

 

10.9                           Successors.  The terms and conditions of the Plan will be binding on the Company’s and Participant’s successors, heirs and assigns (herein, “Participant Successors” and “the Company Successors”).

 

10.10                     Unclaimed Benefits.  Participant shall keep the Company informed of his or her current address and the current address of his or her Beneficiary.  The Company shall not be obligated to search for the whereabouts of any person.  If the location of any Participant is not made known to the Company within a one (1) year period after the date on which payment is to be made under the provisions of Section 7.1, then payment may be made by the Company to the Beneficiary instead.  If, within one (1) additional year after such initial one (1) year period, the Company is unable to locate any designated Beneficiary of the Participant, then the Company shall use its reasonable best efforts to distribute all unclaimed benefits to the estate or other representative of the Participant.

 

10.11                     Limitations on Liability.  Participant and any other person claiming benefits under the Plan shall be entitled under this Plan only to those payments provided in accordance with the provisions of the Plan (“Payment Claims”).  With the exception of the provisions of Section 10.13 of the Plan, neither the Company, the Company Successor nor any individual acting as an employee or agent of the Company or the Company Successor, shall be liable to Participant or any other person for any other claim, loss, liability or expense under this Plan not directly related to a Payment Claim.

 

10.12                     Forfeiture Of Benefits.  Notwithstanding any other provision of the Plan, should Participant engage in theft, fraud or embezzlement causing significant property damage to the Company, then any benefits payable to such Participant under the Plan will automatically be forfeited.  The determination of theft or embezzlement will be made by the Board in good faith, but such determination does not require an actual criminal indictment or conviction prior to or after such decision.  In any determination of

 

16

 

forfeiture pursuant to this Section 10.12, the Participant will be given the opportunity to refute any such decision by the Board, but the Board’s decision on the matter will be considered final and binding on Participant and all other parties.

 

10.13                     Payment Of Attorneys’ Fees, Court Costs, And Interest On Loss Of Benefits.  Should either the Company or the Company Successor or a Participant bring an action at law (or through arbitration) in order that the Plan’s terms be enforced, then the party prevailing in the action at law (or through arbitration) shall be entitled to reimbursement from the losing party for reasonable attorneys’ fees, court costs and other similar amounts expended in the enforcement of the terms of the Plan.  In addition, should the prevailing party be Participant, he or she shall also be entitled to interest on any delayed payments, with such interest computed at the Applicable Interest Rate.

 

10.14                     Withholding.  There shall be deducted from all payments under the Plan the amount of any taxes required to be withheld by any federal, state or local government.  The Participants, any Beneficiaries and personal representatives shall bear any and all federal, foreign, state, local, income or other taxes imposed on amounts paid under the Plan.

 

10.15                     Participants Bound By Terms Of The Plan.  Each Participant shall be deemed conclusively to have accepted and consented to all terms of the Plan and all actions or decisions made by the Company with regard to the Plan.  Such terms and consent shall also apply to and be binding upon any Beneficiaries, personal representatives and other Participant Successors of each Participant.  Each Participant shall receive a copy of the Plan.

 

10.16                     Rule 701.  It is the intent of the Board in establishing the Plan that the offering and sale of any securities to a Participant hereunder be exempt from any applicable registration requirements of the Securities Act, pursuant to Rule 701.  Accordingly, notwithstanding anything to the contrary contained herein, any offer or sale of securities hereunder shall be subject to any applicable limitations set forth in Rule 701, and any and all constructions of this Plan by the Committee shall be consistent with the requirements of Rule 701.

 

10.17                     No Distribution of Fractional Shares.  Notwithstanding the credit of fractional interest in Stock Units in a Participant’s Stock Subpart Account, no fractional shares or interests shall be distributed to a Participant.  Rather, such Participant shall be entitled to receive cash for such fractional shares or interest in an amount equal to the value thereof, determined with reference to the then per share Fair Market Value of the Common Stock.

 

10.18                     Effective Date Of The Plan.  The most recent amendment and restatement of the Plan shall be effective as of the first business day after adoption by the Board (with the actual date to be reflected in the final Plan document attached to the resolutions as presented in the corporate record).

 

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SECTION 11
 CLAIMS PROCEDURES

 

11.1                           Presentation of Claim.  Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan.  If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant.  All other claims must be made within one hundred-eighty (180) days of the date on which the event that caused the claim to arise occurred.  The claim must state with particularity the determination desired by the Claimant.

 

11.2                           Notification of Decision.  The Committee shall consider a Claimant’s claim within a reasonable time, but no later than ninety (90) days; provided that claims based on Disability shall be considered within forty-five (45) days, unless, within such time, the Committee notifies the Claimant in writing that an extension is required pursuant to Labor Regulation 2560.503-1 (up to ninety (90) days for non-Disability claims and thirty (30) days for Disability claims).  Once a decision is made, the Committee shall notify the Claimant in writing:

 

A.                                        That the Claimant’s requested determination has been made, and that the claim has been allowed in full; or

 

B.                                          That the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to the understood by the Claimant:

 

(i)                                          the specific reason(s) for the denial of the claim, or any part of it;

 

(ii)                                       the specific reference(s) to pertinent provisions of the Plan upon which such denial was based;

 

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

 

(iv)                                   an explanation of the claim review procedure set forth in Section 11.3 below, including the Claimant’s right to bring a civil action under Section 502(a) of ERISA as described in Section 11.5 below.

 

11.3                           Review of a Denied Claim.  Within sixty (60) days (one hundred-eighty (180) days for a claim based on Disability) after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s’ duly authorized representative) may file with the Committee a written request for a review of the denial of the claim.  Thereafter, but not later than thirty (30) days after the review procedure began, the Claimant (or the Claimant’s duly authorized representative):

 

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A.                                        may review pertinent documents;

 

B.                                          may submit written comments or other documents; and/or

 

C.                                          may request a hearing, which the Committee, in its sole discretion, may grant.

 

11.4                           Decision on Review.  The Committee shall render its decision on review promptly, and not later than sixty (60) days (forty-five (45) days for a claim based on Disability) after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Committee’s decision must be rendered within one hundred-twenty (120) days after such date; provided that this period shall include up to one (1) forty-five (45)-day extension for claims based on Disability.  Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

 

A.                                        specific reasons for the decision;

 

B.                                          specific reference(s) to the pertinent Plan provisions upon which the decision was based; and

 

C.                                          such other matters as the Committee deems relevant.

 

11.5                           Legal Action.  A Claimant’s compliance with the foregoing provisions of this Section 11  is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan.

 

19

 

EXHIBIT A

 

SECOND AMENDED AND RESTATED
 DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES
 OF MIDLAND STATES BANCORP, INC.
 (Effective July 2011)

 

PARTICIPATION CERTIFICATE

 

THIS PARTICIPATION CERTIFICATE certifies that the Compensation Committee of the Board of Directors of Midland States Bancorp, Inc. has selected                                                                 (“Participant”) as a Participant in the Second Amended and Restated Deferred Compensation Plan For Directors and Executives of Midland States Bancorp, Inc. (the “Plan”), with all of the rights and privileges appurtenant thereto.

 

By signing this Certificate in the space provided below, Participant acknowledges having received a copy of the Plan and having read and reviewed the terms and provisions thereof.

 

Dated as of the                day of                                              , 20      .

 

 

	
 
    	
MIDLAND   STATES BANCORP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Received by Participant the          day of                               ,   20      .
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[Name   of Participant]
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
City,   State and Zip Code
    	
 
    	
 
    

 

 

EXHIBIT B-1

 

[For Directors, with respect to Director Fees]

 

SECOND AMENDED AND RESTATED
 DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES
 OF MIDLAND STATES BANCORP, INC.
 (Effective July 2011)

 

DEFERRED COMPENSATION ELECTION FORM

 

Pursuant to the Second Amended and Restated Deferred Compensation Plan For Directors and Executives of Midland States Bancorp, Inc. (the “Plan”), a copy of which I have in my possession and have read, I hereby elect the following actions in conjunction with my service as a Director.  Unless the context clearly requires otherwise, capitalized terms herein shall have the same meanings as ascribed to them under the Plan.

 

·                  To defer Director Fees otherwise payable to me for the 20         Plan Year in the aggregate amount of o all or o $                          .

 

Of the amount deferred,                      shall be allocated to the Stock Subpart Account of my Deferred Compensation Subaccount and                            shall be allocated to the Cash Subpart Account of my Deferred Compensation Subaccount.

 

I understand that no Matching Contributions will be credited unless all of my Director Fees are deferred and allocated to the Stock Subpart Account of my Deferred Compensation Subaccount.

 

·                  Timing of Distributions (Participant Payment Date) (select one):

 

o            Date Certain Election:  For all deferrals for the 20         Plan Year, I elect payment on the last day of                  (month)                  (year), or

 

o            Separation from Service:  For all deferrals for the 20         Plan Year, I elect payment only upon a Separation from Service, or

 

o            I elect payment on earlier of the last day of                (month)                  (year) or upon a Separation from Service.

 

·                  Method of Distribution (select one):

 

o            Monthly Installments over                years (minimum of 2, maximum of 15).

 

o            Lump-sum.

 

The elections specified above (if any) will continue in effect for future years until revoked.

 

	
Date:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Print Name
    	
 
    

 

 

EXHIBIT B-2

 

[For Executives, including Inside Directors, with respect to Salary and/or Bonus Only]

 

SECOND AMENDED AND RESTATED
 DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES
 OF MIDLAND STATES BANCORP, INC.
 (Effective July 2011)

 

DEFERRED COMPENSATION ELECTION FORM

 

Pursuant to the Second Amended and Restated Deferred Compensation Plan For Directors and Executives of Midland States Bancorp, Inc. (the “Plan”), a copy of which I have in my possession and have read, I hereby elect the following actions in conjunction with my employment with                                         .  Unless the context clearly requires otherwise, capitalized terms herein shall have the same meanings as ascribed to them under the Plan.

 

·                  Deferrals:

 

o            Salary otherwise payable to me for the 20         Plan Year in the  aggregate amount of o all, or  o $                          , or o                           % thereof, and/or

 

o            Bonus otherwise payable to me for the 20         Plan Year in the aggregate amount of o all, or o  $                          , or o                           % thereof.

 

·                  Timing of Distributions (Participant Payment Date) (select one):

 

o            Date Certain Election:  For all deferrals for the 20         Plan Year, I elect payment on the last day of                  (month)                  (year), or

 

o            Separation from Service:  For all deferrals for the 20         Plan Year, I elect payment only upon a Separation from Service, or

 

o            I elect payment on earlier of the last day of                (month)                  (year) or upon a Separation from Service.

 

·                  Method of Distribution (select one):

 

o            Monthly installments over                years (minimum of 2, maximum of 15).

 

o            Lump-sum.

 

The elections specified above (if any) will continue in effect for future years until revoked.

 

I understand that neither my participation in the Plan nor my election deferral of all or any portion of my Bonus shall affect in any manner my right to continued employment with my employer or guarantee that I will receive a Bonus for any year.

 

	
Date:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signature
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Print   Name
    	
 
    

 

 

EXHIBIT B-3

 

SECOND AMENDED AND RESTATED
 DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES
 OF MIDLAND STATES BANCORP, INC.
 (Effective July 2011)

 

BENEFICIARY DESIGNATION FORM

 

Pursuant to the Second Amended and Restated Deferred Compensation Plan For Directors and Executives of Midland States Bancorp, Inc. (the “Plan”), a copy of which I have in my possession and have read, I hereby designate the following persons as my beneficiaries to receive all amounts held for me under the Plan which have not been paid to me at the date of my death:

 

	
Primary Beneficiary(ies):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Relationship:
    	
 
    	
 
    	
Relationship:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Percentage:
    	
 
    	
 
    	
Percentage:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Secondary Beneficiary(ies)
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Relationship:
    	
 
    	
 
    	
Relationship:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Percentage:
    	
 
    	
 
    	
Percentage:
    	
 
    

 

The designation of beneficiaries specified above (if any) will continue in effect for future years until revoked.

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Print   Name
    	
 
    	
 
    	
 
    

 

 

EXHIBIT B-4

 

SECOND AMENDED AND RESTATED
 DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES
 OF MIDLAND STATES BANCORP, INC.
 (Effective July 2011)

 

REQUEST FOR HARDSHIP WITHDRAWAL

 

Pursuant to the Second Amended and Restated Deferred Compensation Plan For Directors and Executives of Midland States Bancorp, Inc. (the “Plan”), a copy of which I have in my possession and have read, I hereby request a hardship withdrawal from the balance in my Deferred Compensation Subaccount relative to the                Plan Year in the amount of $                                 as a result of the occurrence of an Unforseeable Emergency, as more particularly described on the page attached hereto.

 

 

	
Date:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Signature
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Print Name

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