Document:

ex101.htm

Exhibit 10.1

ASHLAND INC. SUPPLEMENTAL DEFINED CONTRIBUTION PLAN

FOR CERTAIN EMPLOYEES

(Effective January 1, 2015)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ashland Inc.  Supplemental and Excess

Defined Contribution Plan for Certain Employees

  

  

  

  

TABLE OF CONTENTS

 

 

	 ARTICLE 1. PURPOSE AND EFFECTIVE DATE	1
	
1.1

	
Purpose

	
1

	
1.2

	
Restatement

	
1

	
1.3

	
Effective Date

	
1

	 ARTICLE 2. DEFINITIONS	2
	
2.1

	
“Account”

	
2

	
2.2

	
“Ashland”

	
2

	
2.3

	
“Base Compensation”

	
2

	
2.4

	
“Base Compensation Deferrals”

	
2

	
2.5

	
“Basic Retirement Contribution”

	
2

	
2.6

	
“Beneficiary”

	
2

	
2.7

	
“Board”

	
2

	
2.8

	
“Cause”

	
2

	
2.9

	
“Change in Control”

	
2

	
2.10

	
“Code”

	
3

	
2.11

	
“Committee”

	
3

	
2.12

	
“Credited Service”

	
3

	
2.13

	
“Deferred Compensation Plan”

	
3

	
2.14

	
“Disabled” or “Disability”

	
3

	
2.15

	
“Effective Date”

	
4

	
2.16

	
“Effective Retirement Date”

	
4

	
2.17

	
“Election”

	
4

	
2.18

	
“Eligible Employee”

	
4

	
2.19

	
“Employer”

	
4

	
2.20

	
“Employer Contribution”

	
4

	
2.21

	
“ERISA”

	
4

	
2.22

	
“Excess Base Compensation”

	
5

	
2.23

	
“Excess Base Compensation Deferrals”

	
5

	
2.24

	
“Grandfathered Employee”

	
5

	
2.25

	
“Hercules Employee”

	
5

	
2.26

	
“Identification Date”

	
5

	
2.27

	
“Incentive Compensation”

	
5

	
2.28

	
“Incentive Compensation Deferrals”

	
5

	
2.29

	
"Key Employee"

	
5

	
2.30

	
“Participant”

	
5

	
2.31

	
“Performance Retirement Contribution”

	
5

	
2.32

	
“Period of Service”

	
5

	
2.33

	
“Plan”

	
5

	
2.34

	
“Plan Year”

	
5

	
2.35

	
“Related Employer”

	
5

	
2.36

	
“Savings Plan”

	
6

	
2.37

	
“Separation from Service”

	
6

	
2.38

	
“SERP”

	
6

	
2.39

	
“Substitute Contribution”

	
6

	
2.40

	
“Unforeseeable Emergency”

	
6

	
2.41

	
“Valuation Date”

	
6

	
ARTICLE 3. PARTICIPATION

	
7

	
3.1

	
Participation

	
7

	
3.2

	
Termination of Participation

	
7

	
ARTICLE 4. EMPLOYER CONTRIBUTIONS

	
8

	
4.1

	
Substitute Contribution

	
8

	
4.2

	
Other Employer Contributions

	
8

	
4.3

	
Crediting Employer Contributions

	
9

	
ARTICLE 5. PAYMENT SCHEDULE AND FORM OF PAYMENT

	
10

	
5.1

	
Payment Schedule and Form of Payment

	
10

	
5.2

	
Time of Distribution or Transfer

	
10

	
5.3

	
Death Before Payment

	
10

	
ARTICLE 6. ACCOUNTS AND CREDITS AND FUNDING

	
11

	
6.1

	
Contribution Credits to Account

	
11

	
6.2

	
Earnings Credits to Account

	
11

	
6.3

	
Adjustment of Accounts

	
11

	
6.4

	
Establishment of Trust for Funding

	
11

	
ARTICLE 7. RIGHT TO BENEFITS

	
12

	
7.1

	
Vesting

	
12

	
7.2

	
Amount of Benefits

	
12

	
ARTICLE 8. DISTRIBUTION OF BENEFITS

	
13

	
8.1

	
Method and Timing of Distributions

	
13

	
8.2

	
Unforeseeable Emergency

	
13

	
8.3

	
Disability

	
13

	
8.4

	
Prohibition on Acceleration

	
13

	
8.5

	
Key Employees

	
13

	
8.6

	
Permissible Delays in Payment

	
14

	
ARTICLE 9. AMENDMENT AND TERMINATION

	
17

	
9.1

	
Amendment by Employer

	
17

	
9.2

	
Retroactive Amendments

	
17

	
9.3

	
Plan Termination

	
17

	
9.4

	
Distribution Upon Termination of the Plan

	
18

	
ARTICLE 10. PLAN ADMINISTRATION

	
19

	
10.1

	
Powers and Responsibilities of the Employer

	
19

	
10.2

	
Powers and Responsibilities of the Committee

	
19

	
10.3

	
Claims and Review Procedures.

	
19

	
10.4

	
Plan Administrative Costs

	
20

	
ARTICLE 11. MISCELLANEOUS

	
21

	
11.1

	
Unsecured General Creditor of the Employer

	
21

	
11.2

	
Employer's Liability

	
21

	
11.3

	
Limitation of Rights

	
21

	
11.4

	
Anti-Assignment

	
21

	
11.5

	
Facility of Payment

	
22

	
11.6

	
Notices

	
22

	
11.7

	
Tax Withholding

	
22

	
11.8

	
Indemnification

	
22

	
11.9

	
Permitted Acceleration of Payment

	
23

	
11.10

	
No Guarantee or Employment or Participation

	
23

	
11.11

	
Unclaimed Benefit

	
24

	
11.12

	
Governing Law

	
24

	
11.13

	
Erroneous Payment

	
24

  

  

  

  

ARTICLE 1.  PURPOSE AND EFFECTIVE DATE

           1.1           Purpose.  The purpose of this Plan is to provide benefits for certain employees that supplements the limitation on compensation imposed by Section 401(a)(17) of the Code (including successor provisions thereto) on the Savings Plan.  It is intended that the Plan be maintained primarily for a select group of management or highly compensated employees and be exempt from the Employee Retirement Income Security Act of 1974, as amended.

 

           1.2           Restatement. The Ashland Inc. Supplemental Defined Contributions Plan for Certain Employees is amended and restated.

 

           1.3           Effective Date.  This Plan is restated to be effective January 1, 2015 except where a special effective date is indicated herein.

 

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain Employees

 

  

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ARTICLE 2.  DEFINITIONS

Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise.  Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

           2.1           “Account” means an account established for the purpose of recording amounts credited on behalf of a Participant and any income, expenses, gains, losses or distributions included thereon.  The Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant pursuant to the Plan.  Separate Accounts shall be established for a Participant by Plan Year and by type of contribution to the Participant.

 

           2.2           “Ashland”  means Ashland Inc. and all of its present or future subsidiaries.

 

           2.3           “Base Compensation” means compensation paid to a Participant that is included in the definition of Compensation for deferral purposes in the Savings Plan without giving effect to any reduction required by Code Section 401(a)(17) and which is not Incentive Compensation.

 

           2.4           “Base Compensation Deferrals” means Base Compensation that is deferred into the Deferred Compensation Plan.

 

           2.5           “Basic Retirement Contribution” means the Basic Retirement Contribution as defined in the Savings Plan.

 

           2.6           “Beneficiary” means the persons, trusts, estates or other entities designated in writing by a Participant, or otherwise entitled to receive benefits under the Plan upon the death of a Participant. If a Participant fails to designate a Beneficiary, then the Participant’s Beneficiary shall be the Participant’s spouse or, if the Participant does not have a spouse on the Participant’s date of death, the Participant’s estate.

 

           2.7           “Board” means the Board of Directors of Ashland Inc.

 

           2.8           “Cause”, for Participants without a Change in Control agreement with Ashland, as defined by Section 3.02 of the SERP, and, for Participants with a Change in Control agreement with Ashland, as defined by the Participant’s Change in Control agreement.

 

           2.9           “Change in Control” shall be deemed to occur (1) upon approval of the shareholders of Ashland (or if such approval is not required, upon the approval of the Board) of (A) any consolidation or merger of Ashland (a “Business Combination”), other than a consolidation or merger of Ashland into or with a direct or indirect wholly-owned subsidiary, in 

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain Employees

 

  

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which the shareholders of Ashland own, directly or indirectly, less than 50% of the then outstanding membership interests or shares of the Business Combination that are entitled to vote generally for the election of directors of the Business Combination or pursuant to which shares of Ashland would be converted into cash, securities or other property, other than a merger of Ashland in which the holders of the Ashland shares immediately prior to the merger have substantially the same proportionate ownership of membership interests of the surviving company immediately after the merger, (B) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of Ashland, provided, however, that no sale, lease, exchange or other transfer of all or substantially all the assets of Ashland shall be deemed to occur unless assets constituting 80% of the total assets of Ashland are transferred pursuant to such sale, lease exchange or other transfer, or (C) adoption of any plan or proposal for the liquidation or dissolution of Ashland, (2) when any person (as defined in Section 3(a)(9) or 13(d) of the Exchange Act), other than Ashland or any subsidiary or employee benefit plan or trust maintained by Ashland, shall become the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 25% of Ashland’s shares outstanding at the time, without the approval of the Board, or (3) at any time during a period of two consecutive years, individuals who at the beginning of such period constituted the Board shall cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by Ashland’s shareholders of each new director during such two-year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such two-year period.

 

           2.10           “Code” means the Internal Revenue Code of 1986, as amended.

 

           2.11           “Committee” means the Personnel and Compensation Committee of the Board and its designees.

 

           2.12           “Credited Service” means a period of employment with the Employer or a Related Employer for which credit is given under the Employer’s Adjusted Service Date policy in effect when the Employee suffers a Separation from Service.

 

           2.13           “Deferred Compensation Plan” means the Ashland Inc. Deferred Compensation Plan for Employees (2005), as may be amended from time to time.

 

           2.14            “Disabled” or “Disability” means a determination by Ashland that the Participant 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 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Ashland or any Related Employer.  A Participant also will be considered disabled if he is determined (a) to be totally disabled by the Social Security Administration, or (b) to be disabled in accordance with a disability insurance program, provided that the definition of disability applied under such disability insurance program complies with the 

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain Employees

 

  

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requirements of Treasury Regulation Section 1.409A-3(i)(4).  The Committee or its delegate shall determine whether a Participant has incurred a Disability.

 

2.15           “Effective Date” means January 1, 2015 except where a special effective date is indicated herein.

 

2.16           “Effective Retirement Date” means:

 

	
  

	
(a)

	
In General.  The Effective Retirement Date of an Employee that is a Participant under this Plan is when:

	
  

	
(1)

	
the Participant has at least five years of Credited Service; and

	
  

	
(2)

	
attained the first day of the month following the date the Participant incurred a Separation from Service –

	
  

	
(i)

	
on or after the date the sum of the Participant’s Age and Credited Service is 80; or

	
  

	
(ii)

	
on or after the date the Participant attains Age 55.

	
  

	
(b)

	
Change in Control.  The Effective Retirement Date in the event of a Change in Control of a Participant who has a Change in Control agreement with Ashland shall be the first day of the month following (i) such Participant’s termination for reasons other than Cause or (ii) such Participant’s resignation for “Good Reason” (as that term is defined in the applicable Change in Control agreement).  The Effective Retirement Date in the event of a Change in Control of a Participant who does not have a Change in Control agreement, shall be the first day of the month following such Participant’s termination for reasons other than Cause.

2.17           “Election” means a Participant’s delivery of a notice of election, in writing or electronically, to defer payment of all or a portion of his Employer Contributions.

 

2.18           “Eligible Employee” means an employee of Ashland who is determined by the Employer to be a member of a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and who are classified in base salary and grades 21 and above and are not eligible for the SERP as of the Effective Date.

 

2.19           “Employer” means Ashland Inc., or any successor entity thereto.

 

2.20           “Employer Contribution” means the contributions provided in ARTICLE 4.

 

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

 

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain Employees

 

  

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           2.22           “Excess Base Compensation” means compensation paid to a Participant that is included in the definition of Compensation in the Savings Plan but that is in excess of the limitation in Code Section 401(a)(17) and which is not Incentive Compensation.

 

           2.23           “Excess Base Compensation Deferrals” means compensation that is deferred to the Deferred Compensation Plan other than Incentive Compensation Deferrals.

 

           2.24           “Grandfathered Employee” means the Grandfathered Employee as defined in the Savings Plan.

 

           2.25           “Hercules Employee” means the Hercules Employee as defined in the Savings Plan.

 

           2.26           “Identification Date” means the date at which Key Employees are determined which shall be December 31st.

 

           2.27           “Incentive Compensation” means bonuses paid to Eligible Employees under any applicable incentive compensation plans that are excluded from the definition of Compensation in the Savings Plan and which is not Base Compensation.

 

           2.28           “Incentive Compensation Deferrals” means Incentive Compensation that is deferred into the Deferred Compensation Plan.

 

           2.29           "Key Employee" means a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) who satisfies the conditions set forth in Section 8.5.

 

           2.30           “Participant” means an Eligible Employee who commences participation in the Plan in accordance with ARTICLE 3.

 

           2.31           “Performance Retirement Contribution” means the Performance Retirement Contribution as defined in the Savings Plan.

 

           2.32           “Period of Service” means a period of employment with the Employer or a Related Employer commencing on the date an Employee works at least one hour for which the Employee is paid and ending on the date such Employee suffers a Separation from Service.

 

           2.33           “Plan” means this Ashland Inc. Supplemental and Excess Defined Contribution Plan for Certain Employees, as amended from time to time.

 

           2.34           “Plan Year” means each 12 month period ending on December 31st.

 

           2.35           “Related Employer” means the Employer and (a) any corporation that is a member of a controlled group of corporations as defined in Code Section 414(b) that includes the Employer, and (b) any trade or business that is under Common Control as defined in Code Section 414(c) that includes the Employer.

 

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain Employees

 

  

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           2.36           “Savings Plan” means the Ashland Inc. Employee Savings Plan, as amended from time to time.

 

           2.37           “Separation from Service” means a Participant's termination of employment with the Employer or Related Employer for any reason other than death that meets the requirements of the definition of "separation from service" set forth in Treasury Regulation Section 1.409A-1(h).  For purposes of determining whether a Separation from Service has occurred, the 20% default threshold set forth in Treasury Regulation Section 1.409A-1(h)(1)(ii) shall be utilized.

 

           2.38           “SERP” means the Ashland Inc. Supplemental Early Retirement Plan for Certain Employees, as amended from time to time.

 

           2.39           “Substitute Contribution” means the Employer Contribution provided in Section 4.1.

 

           2.40           “Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from an illness or accident of the Participant, the Participant's spouse, the Participant's Beneficiary, or the Participant's dependent (as defined in Code Section 152, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)); loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  The purchase of a home and the payment of college tuition are not unforeseeable emergencies.

 

           2.41           “Valuation Date” means each business day of the Plan Year.

 

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain Employees

 

  

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ARTICLE 3.  PARTICIPATION

 

 

           3.1           Participation.  Each Eligible Employee of the Employer shall be eligible for the Plan immediately.  An Eligible Employee shall execute an Election in the form and manner as deemed appropriate by the Committee or its delegate as provided in the Deferred Compensation Plan detailing the timing of distribution of any portion of the Participant’s Account attributable to Employer Contributions. In the event an Eligible Employee fails to complete an Election with respect to Employer Contributions, such amount shall be paid in the means as detailed in ARTICLE 5.

 

           3.2           Termination of Participation.  The Employer may terminate a Participant's participation in the Plan, provided, however, any such termination at the direction of the Employer shall not take effect until the first day of the next Plan Year.

 

 

 

 

 

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Contribution Plan for Certain Employees

 

  

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ARTICLE 4.  EMPLOYER CONTRIBUTIONS

 

 

           4.1           Substitute Contribution.

 

(a)           Substitute Contribution. The Employer will credit a Participant's Account with a Substitute Contribution in an amount equal to 4% of the Participant's Incentive Compensation, Excess Base Compensation and Excess Base Compensation Deferrals for the Plan Year.

 

(b)           Special Effective Date. This Section 4.1 shall be retroactively effective as of January 1, 2011. No Participant benefit is reduced as a result of this retroactive special effective date, and no matching contributions have accrued or will accrue under this Plan.

 

           4.2           Other Employer Contributions.

 

(a)           Performance Retirement Contribution.  To the extent the Employer makes a Performance Retirement Contribution under the Savings Plan for a Plan Year, the Employer shall credit each Participant’s Account with a contribution equal to the declared Performance Retirement Contribution under the Savings Plan percentage multiplied by the Participant’s Incentive Compensation, Excess Base Compensation and Excess Base Compensation Deferrals for the Plan Year. Notwithstanding the foregoing, a Performance Retirement Contribution will only be credited to a Participant’s Account if the Participant has not Separated from Service in the Plan Year.

 

                      (b)           Basic Retirement Contributions.

 

                                (i)           Basic Retirement Contribution for Participants Eligible for the Savings Plan on or after January 1, 2011.  The Employer shall credit to the Account of each Participant who is either (A)(1) a Hercules Employee, or (2) who became eligible for the Savings Plan on or after January 1, 2011, and (B) who is not a Grandfathered Employee, an amount equal to the Basic Retirement Contribution based on percentage of the Participant’s Incentive Compensation, Excess Base Compensation and Excess Base Compensation Deferrals determined in accordance with the following tables:

 

	
Period of Service

 

	  	  	
Percentage of Applicable Compensation

	
0-10  Years

	  	  	
1.5%

	
11-20 Years

	  	  	
3.0%

	
21 or more Years

 

	  	  	
4.5%

 

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain Employees

 

  

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(ii)           Basic Retirement Contribution for Participants Eligible for the Savings Plan as of December 31, 2010. The Employer shall credit to the Account of each Participant who was eligible for the Savings Plan as of December 31, 2010 and who is not a Grandfathered Employee an amount equal to a Basic Retirement Contribution based on percentage of the Participant’s Incentive Compensation, Excess Base Compensation and Excess Base Compensation Deferrals determined in accordance with the following tables:

 

	
Period of Service

 

	  	  	
Percentage of Applicable Compensation

	
0-10  Years

	  	  	
1.5%

	
11-20 Years

	  	  	
3.0%

	
21 or more Years

 

	  	  	
4.5%

 

 

plus, a transition contribution equal to:

	
Age as of January 1, 2011

 

	  	  	
Percentage of Applicable Compensation

	  	  	  	  
	
40-44

	  	  	
2.0%

	
45-49

	  	  	
3.0%

	
50-54

	  	  	
4.0%

	
55 or greater

	  	  	
5.0%

 

(iii)           Any Participant other than described in subsections (i) or (ii) immediately above, shall not be entitled to a Basic Retirement Contribution under the Plan.

 

(iv)           A Participant shall only be eligible to receive a Basic Retirement Contribution under one subsection of this Section 4.2(b) during any given Plan Year. For purposes of this Section 4.2(b), Period of Service shall be determined in accordance with the provisions of the Savings Plan.

 

(v)           Notwithstanding the foregoing, a Basic Retirement Contribution will only be credited to a Participant’s Account if the Participant has not Separated from Service in the Plan Year.

 

(c)           Discretionary Profit Sharing Contributions.  The Discretionary Profit Sharing Contribution may be made by the Employer for the benefit of one or more Participants in an amount determined solely by Employer for any Plan Year.

 

           4.3           Crediting Employer Contributions. Each Participant shall be credited with the applicable Employer Contributions in accordance with this ARTICLE 4, as soon as administratively feasible following each Plan Year.

 

 

 

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Contribution Plan for Certain Employees

 

  

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ARTICLE 5. PAYMENT SCHEDULE AND FORM OF PAYMENT

           5.1           Payment Schedule and Form of Payment.  The Participant's benefit under the Plan shall be distributed in accordance with the Deferred Compensation Plan on the Participant’s Effective Retirement Date (or as soon thereafter as reasonably possible), and held pursuant to the terms of that the Deferred Compensation Plan. Notwithstanding anything in the Plan to the contrary, a Participant who is a Key Employee shall not have the distribution of his benefit which is made on account of Separation from Service commence on a date earlier than the first day of the seventh month following his Separation from Service.

 

           5.2           Time of Distribution or Transfer.  Subject to the required delay of a distribution of a Plan benefit for an eligible employee who is a Key Employee, the transfer of a benefit provided in this Section shall be paid by the later of (a) the end of the calendar year in which occurs the Effective Retirement Date or (b) the 15th day of the third calendar month following such date.

 

           5.3           Death Before Payment.  If a Participant dies before his Effective Retirement Date, the benefit that would have been paid to such Participant had he or she survived to his Effective Retirement Date shall be transferred to the Deferred Compensation Plan and paid to the Beneficiary designated by such Participant under the terms of that plan.

 

 

 

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Contribution Plan for Certain Employees

 

  

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ARTICLE 6. ACCOUNTS AND CREDITS AND FUNDING

           6.1           Contribution Credits to Account.  A Participant's Account will be credited with the Employer Contributions credited on his behalf under ARTICLE 4.  Separate Accounts shall be maintained for each Participant and for each type of contribution.

 

           6.2           Earnings Credits to Account.  The Participant's Account shall be credited (or debited) on each Valuation Date with income (or loss) based upon a hypothetical investment in any one or more of the investment options available under the Plan, as prescribed by the Committee or its delegate, for the particular Compensation credited.  The crediting or debiting on each Valuation Date of income (or loss) shall be made for the each respective Account.  All investments of a Participant’s Account shall be valued at fair market value.  Additionally, all distributions, investments and investment exchanges allowed and made under the Plan shall be as of the relevant Valuation Date at fair market value.

 

6.3           Adjustment of Accounts.  Each Account maintained for a Participant shall be adjusted for interest credits and any expenses allocable under the terms of the Plan to the Account.  The Account shall be adjusted as of each Valuation Date to reflect: (a) the interest credits and expenses described in this ARTICLE 6; (b) amounts credited pursuant to ARTICLE 4; and (c) distributions or withdrawals.

 

6.4           Establishment of Trust for Funding.  The Employer may but is not required to establish a trust to hold amounts which the Employer may contribute from time to time to correspond to some or all amounts credited to Participants under this ARTICLE 6.  If the Employer establishes a trust, the provisions of Sections 6.4(a) and (b) shall become operative.

 

(a)           Grantor Trust.  Any trust established by the Employer shall be between the Employer and a trustee pursuant to a separate written agreement under which assets are held, administered and managed, subject to the claims of the Employer's creditors in the event of the Employer's insolvency, until paid to the Participant and/or his Beneficiaries.  The trust is intended to be treated as a grantor trust under the Code, and it is intended that the establishment of the trust shall not cause the Participant to realize current income on amounts contributed thereto.  The Employer must notify the trustee in the event of a lawsuit regarding the Plan or regarding its bankruptcy or insolvency.

 

(b)           Investment of Trust Funds.  Any amounts contributed to the trust by the Employer shall be invested by the trustee in accordance with the provisions of the trust and the instructions of the Committee or its delegate.

 

 

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Contribution Plan for Certain Employees

 

  

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ARTICLE 7.  RIGHT TO BENEFITS

7.1           Vesting.  Unless a Participant is terminated for Cause, a Participant shall have a 100% nonforfeitable right to his Accounts representing Employer Contributions upon to earlier of a Change In Control or the attainment of five years of Credited Service. Notwithstanding the preceding sentence, if a Participant is terminated for Cause, the Participant shall forfeit all rights to his Accounts representing Employer Contributions.

 

7.2           Amount of Benefits.  The vested amounts credited to a Participant's Account as determined under ARTICLE 4 shall determine and constitute the basis for the value of benefits payable to the Participant under the Plan.

 

 

 

 

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Contribution Plan for Certain Employees

 

  

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ARTICLE 8.  DISTRIBUTION OF BENEFITS

8.1           Method and Timing of Distributions.  Except as otherwise provided under the Plan, including this ARTICLE 8, distributions under the Plan shall be made in accordance with ARTICLE 5 of the Plan.

 

8.2           Unforeseeable Emergency.  A Participant or a Participant’s legal representative may submit an application for a distribution from the Participant's Accounts because of an Unforeseeable Emergency.  The amount of the distribution shall not exceed the amount necessary to satisfy the needs of the Unforeseeable Emergency.  Such distribution shall include an amount to pay taxes reasonably anticipated as a result of the distribution.  The amount allowed as a distribution under this Section shall take into account the extent to which the Unforeseeable Emergency may be relieved by reimbursement, insurance or liquidation of the Participant’s assets (but only to the extent such liquidation would itself not cause a severe financial hardship).  The distribution shall be made in a single sum and paid as soon as practicable after the application for the distribution on account of the Unforeseeable Emergency is approved.  The provisions of this Section 8.2 shall be interpreted and administered in accordance with applicable guidance that may be issued by the Treasury.

 

8.3           Disability.  A Participant or a Participant’s legal representative may submit an application for a distribution from the Participant's Accounts because of the Participant’s Disability.  The distribution shall be made in a single sum and paid as soon as practicable after the application for the distribution on account of the Participant’s Disability is approved.  The provisions of this Section shall be interpreted and administered in accordance with applicable guidance that may be issued by the Secretary of the Treasury.  If such guidance should allow an election of a period of distribution at the time of the application for a distribution on account of the Participant’s Disability then the Plan shall allow such elections.

 

8.4           Prohibition on Acceleration.  Except as otherwise provided in the Plan and except as may be allowed in guidance from the Secretary of the Treasury, distributions from a Participant’s Compensation Account(s) may not be made earlier than the time such amounts would otherwise be distributed pursuant to the terms of the Plan.

 

8.5           Key Employees.   In no event shall a distribution made to a Key Employee from his Accounts due to his Separation from Service occur before the date which is six months after his Separation from Service, or, if earlier, his date of death. For purposes of this Section 8.5, a Key Employee means an employee of an employer, including any corporation that is a member of a controlled group of corporations as defined in Code Section 414(b) that includes the employer and any trade or business that is under common control as defined in Code Section 414(c) with the employer, any of whose stock is publicly traded on an "established securities market," within the 

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain Employees

 

  

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meaning of Section 1.409A-1(k), or otherwise who satisfies the requirements of Code Sections 416(i)(1)(A)(i), (ii) or (iii), determined without regard to Code Section 416(i)(5), at any time during the 12-month period ending on the Identification Date. An employee who is determined to be a Key Employee on an Identification Date shall be treated as a Key Employee for purposes of the six-month delay in distributions set forth in this Section 8.5 for the 12-month period beginning on the first day of the fourth month following the Identification Date. Whether any stock of the Employer or any Related Employer is traded on an established securities market or otherwise is determined on the date a Participant experiences a Separation from Service. Installment distributions to a Key Employee that are delayed due to the application of the requirements of this Section 8.5 shall commence as of the earliest date permitted by Code Section 409A. This Section 8.5 shall not apply to any of the following distributions: (i) a distribution upon the Participant's Disability in accordance with Section 8.3 or upon a Change in Control, provided that the Participant's Separation from Service did not precede such Disability or Change in Control; or (ii) an accelerated distribution made in accordance with Section 11.9.

 

8.6           Permissible Delays in Payment.  Distributions may be delayed beyond the date payment would otherwise occur in accordance with the provisions of ARTICLE 5 in any of the following circumstances:

 

(a)           Payments Subject to Code Section 162(m). The Employer may delay payment if it reasonably anticipates that its deduction with respect to such payment would not be permitted due to the application of Code Section 162(m); provided, however, that (i) the deduction limitation of Code Section 162(m) shall be applied to all payments to similarly situated Participants on a reasonably consistent basis; (ii) the payment must be made either during the Participant's first taxable year in which the Employer reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Code Section 162(m) or during the period beginning with the date of the Participant's Separation from Service (or, if the Participant is a Key Employee, beginning with the date that is six months after Separation from Service) and ending on the later of the last day of the Employer's taxable year in which the Participant incurs a Separation from Service for the 15th day of the third month following the Participant's Separation from Service (or, if the Participant is a Key Employee, the 15th day of the third month following the date that is six months after Separation from Service); (iii) where any payment to a particular Participant is delayed because of Code Section 162(m), the delay in payment will be treated as a subsequent deferral election under Code Section 409A, unless all scheduled payments to such Participant that could be delayed are also delayed; and (iv) no election may be provided to a Participant with respect to the timing of payment hereunder.

 

(b)           Payments that would violate Federal Securities Laws or Other Applicable Law.  The Employer may also delay payment if it reasonably anticipates that the marking of the payment will violate Federal securities laws or other applicable laws provided 

 

 

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Contribution Plan for Certain Employees

 

  

14

  

  

 

payment is made at the earliest date on which the Employer reasonably anticipates that the making of the payment will not cause such violation.

 

(c)           Other Events and Conditions.  The Employer also reserves the right to delay payment upon such other events and conditions as the Secretary of the Treasury may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

 

Except as may be otherwise required under Code Section 409A, a payment is treated as made upon the date contemplated under the provisions of the Plan if the payment is made at such date or a later date within the same calendar year or, if later, by the 15th day of the third calendar month following the date contemplated by the Plan.  If calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or Participant's Beneficiary), the payment will be treated as made upon the date contemplated by the Plan if the payment is made during the first calendar year in which the payment is administratively practicable.  Similarly, if the funds of the Employer are not sufficient to make the payment at the date specified under the Plan without jeopardizing the solvency of the Employer, the payment will be treated as made upon the date contemplated by the Plan if the payment is made during the first calendar year in which the funds of the Employer are sufficient to make the payment without jeopardizing the solvency of the Employer.

If a payment is not made, in whole or in part, as of the date contemplated by the Plan because the Employer refuses to make such payment, the payment will be treated as made upon the date contemplated by the Plan if the Participant accepts the portion (if any) of the payment that the Employer is willing to make (unless such acceptance will result in forfeiture of the claim to all or part of the remaining account), makes prompt and reasonable, good faith efforts to collect the remaining portion of the payment and any further payment (including payment of a lesser amount that satisfies the obligation to make the payment) is made no later than the end of the first calendar year in which the Employer and the Participant enter into a legally binding settlement of such dispute, the Employer concedes that the amount is payable, or the Employer is required to make such payment pursuant to a final and nonappealable judgment or other binding decision.  For purposes of this paragraph, efforts to collect the payment will be presumed not to be prompt, reasonable, good faith efforts, unless the Participant provides notice to the Employer within 90 days of the latest date upon which the payment could have been timely made in accordance with the terms of the Plan and the Treasury Regulations promulgated under Code Section 409A, and unless, if not paid, the Participant takes further enforcement measures within 180 days after such latest date.  For purposes of this paragraph, the Employer is not treated as having refused to make a payment where pursuant to the terms of the Plan the Participant is required to request payment, or otherwise provide information to take any other action, and the Participant has failed to take such action.  In addition, for purposes of this paragraph, the Participant is deemed to have requested that a payment not be made, rather than the Employer having refused to make such payment, where the Employer's decision to refuse to make the payment is made by the Participant or a member of the 

 

 

 

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Participant's family (as defined in Code Section 267(c)(4) applied as if the family of an individual includes the spouse of any member of the family), or any person or group of persons over whom the Participant's family member has effective control, or any person any portion of whose compensation is controlled by the Participant or the Participant's family member.

 

 

 

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ARTICLE 9.  AMENDMENT AND TERMINATION

9.1           Amendment by Employer.  The Employer reserves the sole right to amend the Plan pursuant to a resolution of the Board.  An amendment must be in writing and executed by a representative of the Employer authorized to take such action.  The Employer hereby reserves the right to amend the Plan without the consent of the Participants in the future, as required to comply with any present or future law, regulation or rule applicable to the Plan, including, but not limited to Code Section 409A and all applicable guidance promulgated thereunder, and to prevent any Participant from becoming subject to any additional tax or penalty under Code Section 409A.  No amendment can directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of his vested Account which had accrued prior to the amendment, except to the extent required by the Code or other applicable law.

 

9.2           Retroactive Amendments.  An Amendment made by the Employer in accordance with Section 9.1 may be made effective on a date prior to the first day of the Plan Year in which it is adopted.  Any retroactive amendment by the Employer shall be subject to the provisions of Section 9.1.

 

9.3           Plan Termination.  The Plan will terminate automatically as of the date that no amounts remain to be distributed under the Plan.

 

The Employer reserves the right to terminate the Plan and accelerate the time of payment of all amounts to be distributed under the Plan in accordance with the following provisions of this Section 9.3.  The Employer may make an irrevocable election to terminate the Plan and distribute all amounts credited to all Participant Accounts within the 30 days preceding or the 12 months following a Change in Control.  For this purpose, the Plan will be treated as terminated only if all other arrangements sponsored by the Employer or any Related Employer immediately after the time of the Change in Control with respect to which deferrals of compensation are treated as having been deferred under a single plan under Treasury Regulation Section 1.409A-1(c)(2) are terminated and liquidated with respect to each Participant that experienced the Change in Control, so that under the terms of the termination and liquidation all such Participants are required to receive all amounts of compensation deferred under the terminated arrangements within 12 months of the date the Employer irrevocably takes all necessary action to terminate and liquidate the Plan and such other arrangements.  In addition, the Employer reserves the right to terminate the Plan within 12 months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to Section 503(b)(1)(A) of Title 11 of the United States Code, provided that amounts deferred under the Plan are included in the gross incomes of Participants in the earlier of (a) the taxable year in which the amount is actually or constructively received, or (b) the latest of the following years:  (1) the calendar year in which the termination occurs, (2) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture, or (3) the first calendar year in which payment is administratively practicable.  The Employer retains the 

 

 

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discretion to terminate the Plan if (1) the termination does not occur proximate to a downturn in the financial health of the Employer; (2) all arrangements sponsored by the Employer or any related Employer that would be aggregated with any terminated arrangement under Treasury Regulation Section 1.409A-1(c) if the same service provider participated in all of the arrangements are terminated, (3) no payments other than payments that would be payable under the terms of the arrangements if the termination had not occurred are made within 12 months of the termination of the arrangements, (4) all payments are made within 24 months of the termination of the arrangements, and (5) neither the Employer nor any Related Employer adopts a new arrangements that would be aggregated with any terminated arrangement under Treasury Regulation Section 1.409A-1(c), if the same service provider participated in both arrangements, at any time with the three year period following the date of termination of the arrangement.  The Employer also reserves the right to terminate the Plan and accelerate the time of payment of all amounts to be distributed under the Plan under such conditions and events as may be prescribed by the Commissioner in generally applicable guidance published in the Internal Revenue Bulletin.

9.4           Distribution Upon Termination of the Plan. Except as provided in Section 9.3, the Plan may not be terminated before the date on which all amounts credited to all Participant Accounts have been distributed in accordance with the terms of the Plan.

 

 

 

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ARTICLE 10.  PLAN ADMINISTRATION

10.1           Powers and Responsibilities of the Employer.  The Employer shall be responsible for the general operation and administration of the Plan and for carrying out the provisions thereof.  The Employer's powers and responsibilities include, but are not limited to, the following, which powers and responsibilities shall be exercised in its sole discretion:

 

(a)           To make and enforce such rules and regulations as it deems, in its sole discretion, necessary or proper for the efficient administration of the Plan;

 

(b)           To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan, in its sole discretion, subject to review by the Committee or its delegate.

 

(c)           To administer the claims and review procedures specified in Section 10.3;

 

(d)           To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan in its discretion;

 

(e)           To determine the person or persons to whom such benefits will be paid in its discretion;

 

(f)           To authorize the payment of benefits;

 

(g)           To comply with any applicable reporting and disclosure requirements of Part 1 of Subtitle B of Title 1 of ERISA;

 

(h)           To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;

 

(i)           To allocate and delegate its responsibilities in its discretion, including the formation of any administrative sub-committee to administer the Plan.

 

10.2           Powers and Responsibilities of the Committee.  The Committee or its delegate shall be responsible (a) for determining the interest rate to credit to Participant's Accounts pursuant to Section 6.3, and (b) for the review of denied claims pursuant to Section 10.3(b) in its sole discretion.  In the course of reviewing a denied claim, the Committee or its delegate shall have the power to interpret the Plan, in its sole discretion, and its interpretation thereof shall be final, conclusive and binding on all persons claiming benefits under the Plan.

 

10.3           Claims and Review Procedures.

 

 

 

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(a)           Claims Procedure.  If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Employer.  If any such claim is wholly or partially denied, the Employer will notify such person of its decision in writing.  Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review.  Such notification will be given within 90 days after the claim is received by the Employer (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90 day period).  If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim.

 

(b)           Review Procedure.  Within 60 days after the date on which a person receives a written notification of denial of claim (or, if written notification is not provided, within 60 days of the date denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Employer for a review of his denied claim and of pertinent documents and (ii) submit written issues and comments to the Employer.  The Employer will notify such person of its decision in writing.  Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions.  The decision on review will be made within 60 days after the request for review is received by the Employer (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Employer to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period).  If the decision on review is not made within such period, the claim will be considered denied.

 

10.4           Plan Administrative Costs.  All reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Employer or Employer in administering the Plan shall be paid by the Plan, to the extent not paid by the Employer.

 

 

 

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ARTICLE 11.  MISCELLANEOUS

11.1           Unsecured General Creditor of the Employer.  The Plan at all times shall be entirely unfunded.  Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Employer or any Related Employer.  For purposes of the payment of benefits under the plan, the assets of the Employer or of any Related Employer shall be, and shall remain, the general, unpledged, unrestricted assets of the Employer or of such Related Employer, respectively.  The Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.

 

11.2           Employer's Liability. The Employer's liability for the payment of benefits under the Plan shall be defined only by the Plan and by the Elections entered into between a Participant and the Employer.  The Employer shall have no obligation or liability to a Participant under the Plan except as provided by the Plan and an Election.

 

11.3           Limitation of Rights.  Neither the establishment of the Plan, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to the Participant or any other person any legal or equitable right against the Employer, the Committee or any Related Employer except as provided herein; and in no event will the terms of employment or service of the Participant be modified or in any way affected hereby.

 

11.4           Anti-Assignment.  Except as otherwise provided in connection with a division of property under a domestic relations proceeding under state law and subject to Section 9(iii), no right or interest of the eligible employees or retirees under this Plan shall be subject to involuntary alienation, assignment or transfer of any kind.  An eligible employee may voluntarily assign his rights under the Plan.  Employer, the Board, the Committee and any of their delegates shall not review, confirm, guarantee or otherwise comment on the legal validity of any voluntary assignment.  Employer and its delegates may review, provide recommendations and approve submitted domestic relations orders using procedures similar to those that apply to qualified domestic relations orders under the qualified pension plans sponsored by Employer.  A domestic relations order intended to assign a benefit hereunder to a former spouse of an eligible employee must be delivered to the Employer.  Employer will review the order to determine if it is qualified.  Upon notification by the Employer that the order is qualified, the spouse will be able to elect a distribution of the assigned benefit by the end of the fifth calendar year following the calendar year during which the Employer notifies the former spouse that the order is qualified.  In all events, the entire assigned benefit must be distributed by the end of the fifth calendar year following the calendar year during which the Employer notifies the former spouse that the order is qualified.  Notwithstanding anything in the Plan to the contrary, if an assigned benefit is equal to or less than the adjusted Code section 402(g) limit it shall be distributed to the former spouse as soon as 

 

 

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administratively possible. The Employer may prescribe procedures that are consistent with this Section 11.4 and applicable law to implement benefit assignments pursuant to qualified orders.

 

11.5           Facility of Payment.  If the Employer determines, on the basis of medical reports or other evidence satisfactory to the Employer, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Employer may disburse such payments to a  person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient.  The receipt by such person or institution of any such payments, and any such payment to the extent thereof, shall discharge the liability of the Employer for the payment of benefits hereunder to such recipient.

 

11.6           Notices.  Any notice or other communication required or permitted to be given in connection with the Plan shall be in writing and shall be deemed to have been duly given (i) upon request, if delivered personally or via courier, (ii) upon confirmation of receipt, if given by facsimile or electronic transmission, and (iii) on the third business day following mailing, if mailed first-class, postage prepaid, registered or certified mail as follows:

 

(a)           If it is sent to the Employer or a Related Employer, it will be at the address specified by the Employer; or

 

(b)           If it is sent to a Participant or Beneficiary, it will be at the last address filed with the Employer by the Participant (or Beneficiary).

 

11.7           Tax Withholding.  The Employer shall have the right to deduct from all payments or deferrals made under the Plan any tax required by law to be withheld.  If the Employer concludes that tax is owing with respect to any deferral or payment hereunder, the Employer shall withhold such amounts from any payments due the Participant or his Beneficiary, as permitted by law, or otherwise make appropriate arrangements with the Participant or his Beneficiary for satisfaction of such obligation.  Tax, for purposes of this Section 11.7, means any federal, state, local, foreign or any other governmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts deferred, any earnings thereon, and any payments made to Participants or Beneficiaries under the Plan.

 

11.8           Indemnification.  To the fullest extent allowed by law, the Employer shall indemnify and hold harmless each member of the Committee and each employee, officer, or director of the Employer or any Related Employer to whom is delegated duties, responsibilities, and authority with respect to the Plan against all claims, liabilities, fines and penalties, and all expenses reasonably incurred by or imposed upon him (including but not limited to reasonable attorneys' fees) which arise as a result of his actions or failure to act in connection with the operation and administration of the Plan to the extent lawfully allowable and to the extent that such claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased or paid for 

 

 

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by the Employer or any Related Employer.  Notwithstanding the foregoing, the Employer shall not indemnify any person for any such amount incurred through any settlement or compromise of any action unless the Employer consents in writing to such settlement or compromise.

 

11.9           Permitted Acceleration of Payment.  The Employer, in its sole discretion, may accelerate the time in which payment shall be made under the Plan to: (a) an individual other than the Participant as may be necessary to fulfill a domestic relations order within the meaning of Code Section 414(p)(1)(B), (b) the extent reasonably necessary to avoid the violation of an applicable federal, state, local, or foreign ethics law or conflicts of interest law (including where such payment is reasonably necessary to permit the Participant to participate in activities in the normal course of his position in which the Participant would otherwise not be able to participate under an applicable rule), determined in accordance with Treasury Regulation Section 1.409A-3(j)(4)(iii)(B), (c) pay the FICA tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2) on compensation deferred under the Plan, (d) pay the income tax at source on wages imposes under Code Section 3401 or the corresponding withholding provisions of the applicable, state, local or foreign tax laws as a result of the payment of any FICA tax described in clause (c), and to pay the additional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes, (e) pay state, local, or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan before the amount is paid or made available to the Participant, (f) pay the income tax at source on wages imposed under Code Section 3401 as a result of the payment described in clause (e) and to pay the additional income tax at source on wages imposed under Code Section 3401 attributable to such additional Code Section 3401 wages and taxes, (g) satisfy the debt of a Participant to the Employer or any Related Employer where such debt is incurred in the ordinary course of the service relationship between the Participant and the Employer or Related Employer, as applicable, the entire amount of the reduction in any Plan year does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant, and (h) pay the amount required to be included in gross income as a result of the failure of the Plan to comply with the requirements of Code Section 409A.  The total payment under clauses (c) and (d) shall, in no event, exceed the aggregate of the FICA tax and the income tax withholding related to such FICA tax.  The total payment under clause (e) shall, in no event, exceed the amount of such taxes due as a result of participation in the Plan.  The total payment under clauses (e) and (f) shall, in no event, exceed the aggregate of the state, local, and foreign tax amount, and the income tax withholding related to such state, local, and foreign tax amount. The total payment under clause (h) shall, in no event, exceed the amount required to be included in income as a result of the failure to comply with requirements of Code Section 409A.

 

11.10           No Guarantee or Employment or Participation.  Nothing in the Plan shall interfere with or limit in any way the right of the Employer to terminate any Participant's employment at any time and for any reason, nor confer upon any Participant any right to continue in the employ of the Employer or any Related Employer.  No employee of the Employer shall have 

 

 

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a right to be selected as a Participant under the Plan or, if selected, to continue to participate for any Plan Year. 

 

11.11           Unclaimed Benefit.  Each Participant shall keep the Employer informed of his current address and the current address of his Beneficiary.  The Employer shall not be obligated to search for the whereabouts of any person.  If the location of a Participant is not made known to the Employer within three years after the date on which payment of the Participant's vested Account is scheduled to be made (or to commence), payment may be made as though the Participant had died at the end of the three-year period.  If within one additional year after such three-year period has elapsed, or, within three years after the actual death of a Participant, the Employer is unable to locate the Beneficiary of the Participant, then the Employer shall have no further obligation to pay any benefit hereunder to such Participant or Beneficiary or any other person and such benefit shall be irrevocably forfeited.

 

11.12           Governing Law.  The Plan will be construed, administered and enforced according to the laws of the Commonwealth of Kentucky without regard to principles of conflicts of law to the extent not otherwise preempted by ERISA.

 

11.13           Erroneous Payment.  Any amount paid under this Plan in error to a Participant or to a Participant's Beneficiary shall be returned to the Employer. A payment made in error does not create on the part of the recipient a legally binding right to such payment.

 

[signature page immediately follows]

 

 

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IN WITNESS WHEREOF, Ashland Inc. has caused its duly authorized representative to execute the Plan, this 18th day of  May, 2015.

 

 

	 	ASHLAND INC.	 
	 	 	 	 
	 	
By: 

	/s/  Susan B. Esler	 
	 	Print Name:	Susan B. Esler	 
	 	Title:	Chief Human Resources and Communications Officer	 
	 	 	 	 

 

 

7390181v5

 

 

 

 

 

 

 

25

 

 

Ashland Inc.  Supplemental Defined

Contribution Plan for Certain EmployeesEXHIBIT
10.1  

 

NEITHER
THE ISSUANCE
AND SALE
OF THE
SECURITIES
REPRESENTED
BY THIS CERTIFICATE
NOR THE
SECURITIES
INTO WHICH THESE
SECURITIES
ARE CONVERTIBLE
HAVE BEEN
REGISTERED
UNDER THE
SECURITIES
ACT OF 1933, AS AMENDED,
OR APPLICABLE
STATE
SECURITIES
LAWS. 
THE SECURITIES
MAY NOT BE
OFFERED
FOR SALE,
SOLD,
TRANSFERRED
OR ASSIGNED
(I) IN
THE ABSENCE
OF (A) AN
EFFECTIVE
REGISTRATION
STATEMENT
FOR THE
SECURITIES
UNDER THE
SECURITIES
ACT OF 1933, AS
AMENDED,
OR (B)
AN OPINION OF
COUNSEL
(WHICH COUNSEL
SHALL BE
SELECTED
BY THE
HOLDER),
IN A GENERALLY
ACCEPTABLE
FORM,
THAT REGISTRATION
IS NOT REQUIRED
UNDER SAID ACT
OR (II) UNLESS
SOLD PURSUANT
TO RULE 144 OR RULE
144A UNDER SAID ACT.
NOTWITHSTANDING
THE FOREGOING,
THE SECURITIES
MAY BE
PLEDGED
IN CONNECTION WITH
A BONA FIDE
MARGIN
ACCOUNT OR OTHER
LOAN OR FINANCING
ARRANGEMENT
SECURED BY
THE SECURITIES.

 

 

	Principal Amount: $79,000.00	Issue
    Date: February 23, 2015
	Purchase Price: $79,000.00	 

 

 

 

CONVERTIBLE
PROMISSORY
NOTE

 

FOR
VALUE RECEIVED, AGRITEK
HOLDINGS,
INC., a Delaware
corporation
(hereinafter
called
the “Borrower”),
hereby
promises
to pay to
the order
VIS VIRES
GROUP,
INC., a New
York corporation,
or registered
assigns
(the “Holder”)
the sum of
$79,000.00 together
with any
interest
as set
forth
herein, on
November
25, 2015 (the
“Maturity
Date”),
and to pay
interest
on the unpaid
principal
balance
hereof at
the rate of eight
percent (8%)
(the “Interest
Rate”)
per annum
from the date
hereof
(the “Issue
Date”)
until the same becomes
due and payable,
whether
at maturity
or upon
acceleration
or by
prepayment
or otherwise.
This Note may not be prepaid
in whole or in part except
as otherwise explicitly
set forth
herein.
Any amount
of principal
or interest
on this Note which
is not paid
when due shall
bear interest
at the rate
of twenty
two percent
(22%)
per annum
from
the due date
thereof until
the same
is paid (“Default
Interest”).
 Interest
shall commence
accruing
on the date
that the
Note is fully
paid and
shall be computed
on the
basis of
a 365-day
year and
the actual
number of
days elapsed.
All payments
due hereunder
(to the extent
not converted
into common
stock, $0.0001
par value
per share
(the “Common
Stock”)
in accordance
with the terms hereof)
shall be made in lawful
money of the United
States
of America.
All payments
shall be made at
such address
as the Holder
shall hereafter
give to the
Borrower
by written
notice made
in accordance
with the provisions
of this Note.
 Whenever
any amount
expressed
to be due
by the terms
of this Note
is due on any
day
which is
not a business
day, the
same shall
instead be
due on
the next
succeeding
day which
is a business
day and,
in the case
of any
interest payment
date
which
is not the
date on
which this Note is paid
in full, the
extension
of the
due date
thereof shall
not be taken
into account for
purposes
of determining
the amount
of interest
due on such
date. As
used in
this Note, the
term “business
day” shall
mean any
day
other
than a Saturday,
Sunday
or a day
on which commercial
banks in the city
of New York,
New York
are authorized
or required
by law
or executive
order to remain
closed. Each
capitalized
term used herein,
and not otherwise defined,
shall have
the meaning
ascribed
thereto
in that
certain
Securities
Purchase
Agreement
dated
the date
hereof,
pursuant to
which this
Note was
originally
issued
(the “Purchase
Agreement”).

 

This
Note is free
from all
taxes,
liens, claims
and encumbrances
with respect
to the issue
thereof and
shall not
be subject
to preemptive
rights
or other similar rights
of shareholders
of the Borrower
and will not impose personal
liability
upon the holder
thereof.

 

The
following terms
shall apply
to this Note:

 

ARTICLE
I. CONVERSION
RIGHTS

 

1.1
 Conversion
Right. 
The Holder
shall have
the right
from time
to time,
and
at any
time during
the period
beginning
on the date
which is
one hundred
eighty
(180) days
following the date
of this Note
and ending
on the later
of: (i)
the Maturity
Date and
(ii) the
date of payment
of the Default
Amount (as
defined
in Article
III) pursuant
to Section
1.6(a) or
Article III,
each
in respect
of the
remaining
outstanding
principal
amount of
this Note to
convert
all or any
part
of the outstanding
and unpaid
principal
amount of
this Note into
fully paid
and non-
assessable
shares
of Common
Stock,
as such
Common Stock
exists on the
Issue Date,
or any
shares of
capital
stock or
other securities
of the Borrower
into which
such Common
Stock
shall hereafter
be changed
or reclassified
at the conversion
price 
(the “Conversion
Price”)
determined
as provided
herein
(a “Conversion”);
provided,
however,
that in
no event
shall the Holder
be entitled
to convert
any
portion
of this Note
in excess
of that
portion of
this Note upon
conversion
of which the sum of (1)
the number of
shares of Common
Stock beneficially
owned by the
Holder and
its affiliates
(other
than shares
of Common
Stock
which may
be deemed
beneficially
owned through
the ownership
of the unconverted
portion of the Notes
or the unexercised
or unconverted
portion of any
other security
of the Borrower
subject to a
limitation on conversion
or exercise
analogous
to the
limitations contained
herein) and
(2) the
number of
shares of Common
Stock issuable
upon the conversion
of the portion of this Note with respect
to which the
determination
of this
proviso is
being made,
would result
in beneficial
ownership by
the Holder and
its affiliates
of more
than 9.99%
of the
outstanding shares
of Common
Stock. For
purposes
of the proviso
to the immediately
preceding
sentence,
beneficial
ownership shall
be determined
 in  accordance
with  Section 
13(d) of the Securities
 Exchange
Act 
of 1934,  as amended
 (the “Exchange
 Act”),
 and 
Regulations
 13D-G 
thereunder,
 except
 as 
otherwise provided
in clause
(1)
of such
proviso, provided,
further,
however,
that the limitations
on conversion
may be waived
by the
Holder upon,
at the
election
of the Holder,
not less
than 61 days’
prior notice to
the Borrower,
and the provisions
of the conversion
limitation
shall continue
to apply until
such 61st
day (or
such later
date,
as determined
by the Holder,
as may
be specified
in such
notice of waiver).
The number of
shares
of Common
Stock
to be issued upon
each
conversion
of this Note
shall be
determined
by dividing the Conversion
Amount (as
defined below)
by the applicable
Conversion
Price
then in
effect on
the date
specified
in the notice
of conversion, in the
form attached
hereto as
Exhibit A (the
“Notice
of Conversion”),
delivered
to the Borrower
by the
Holder
in accordance
with Section
1.4 below;
provided
that the Notice
of Conversion
is submitted
by facsimile
or e-mail (or
by other means
resulting
in, or reasonably
expected
to result
in, notice)
to the Borrower
before
6:00 p.m., New
York, New
York time on such
conversion
date (the
“Conversion
Date”).
The term “Conversion
Amount” means, with respect
to any
conversion
of this Note,
the sum of
(1) the
principal
amount
of this Note
to be converted
in such
conversion
plus (2) at
the Holder’s
option, accrued
and unpaid
interest, if any,
on such
principal
amount
at the interest
rates
provided
in this Note to
the Conversion
Date,
plus (3) at
the Holder’s
option, Default
Interest,
if any,
on the amounts
referred
to in the immediately
preceding
clauses
(1) and/or
(2) plus
(4) at
the Holder’s
option, any
amounts
owed to
the Holder pursuant
to Sections 1.3 and
1.4(g)
hereof.

 

1.2
Conversion Price.

 

(a)
Calculation
 of Conversion
 Price.
 The conversion
 price
 (the “Conversion
Price”)
shall equal
the Variable Conversion
Price
(as defined
herein) (subject
to equitable adjustments
 for  stock
 splits,  stock
 dividends
 or  rights
 offerings
 by
the  Borrower
relating
to the Borrower’s
securities
or the securities
of any
subsidiary of
the Borrower,
combinations,
recapitalization,
reclassifications,
extraordinary
distributions and
similar events).
The "Variable
Conversion
Price"
shall
mean 61%
multiplied by
the Market
Price
(as
defined herein)
(representing
a discount
rate of
39%).  “Market
Price”
means the
average
of the lowest
three (3)
Trading
Prices
(as defined
below)
for the
Common Stock
during
the ten
(10) Trading
Day period
ending
on the
latest
complete
Trading
Day prior
to the Conversion
Date. 
“Trading
Price”
means,
for any
security
as of
any date,
the closing
bid price
on the Over-the-Counter
Bulletin 
Board,
 Pink 
Sheets 
electronic
 quotation 
system 
or  applicable
 trading
market 
(the “OTC”)
as reported
by a reliable
reporting
service
(“Reporting
Service”)
designated
by the Holder
(i.e.
Bloomberg)
or, if
the OTC is
not the principal
trading market
for such
security,
the closing
bid price
of such
security
on the principal
securities
exchange
or trading
market
where such
security
is listed or traded
or, if no closing bid price
of such security
is available
in any
of the foregoing
manners,
the average
of the closing
bid prices
of any
market
makers
for such
security
that are
listed in
the “pink
sheets”.
If the
Trading
Price
cannot be
calculated
for
such security
on such
date in
the manner
provided
above,
the Trading
Price
shall
be the fair
market
value as
mutually determined
by the Borrower
and the
holders of
a majority
in interest
of the Notes
being
converted
for which
the calculation
of the Trading
Price
is required
in order
to determine the
Conversion
Price
of such
Notes. “Trading
Day”
shall
mean any
day on
which the Common
Stock
is tradable
for any
period
on the OTC,
or on the
principal
securities
exchange
or other
securities
market
on which the
Common Stock
is then being
traded. 

 

(b)
Conversion Price
 During
Major 
Announcements.
 Notwithstanding anything
contained
in Section
1.2(a) to
the contrary,
in the event
the Borrower
(i) makes
a public announcement
that it
intends
to consolidate
or merge
with any
other corporation
(other than
a merger
in which
the Borrower
is the surviving
or continuing corporation
and its
capital
stock is unchanged)
or sell
or transfer
all or
substantially all
of the assets
of the Borrower
or (ii)
any person,
group
or entity
(including
the Borrower)
publicly
announces
a tender
offer
to purchase
50% or more
of the
Borrower’s
Common Stock
(or any
other takeover
scheme)
(the date
of the announcement
referred
to in clause
(i) or
(ii) is
hereinafter
referred
to as
the  “Announcement
Date”),
then the Conversion
Price
shall, effective
upon the Announcement
Date and
continuing through
the Adjusted Conversion
Price
Termination
Date (as
defined
below),
be equal
to the lower of
(x) the Conversion
Price
which would
have been
applicable
for a
Conversion
occurring
on the Announcement
Date and
(y) the Conversion
Price
that would
otherwise be in
effect. From
and after
the Adjusted Conversion
Price
Termination
Date,
the Conversion
Price
shall be determined
as set
forth
in this Section
1.2(a). For purposes
hereof,
“Adjusted
Conversion
Price Termination
Date”
shall
mean, with
respect
to any proposed
transaction
or tender
offer
(or takeover
scheme)
for which
a public announcement
as contemplated
by this
Section
1.2(b) has
been made,
the date upon
which the Borrower
(in
the case of clause
(i) above)
or the person, group
or entity
(in the
case of
clause
(ii) above)
consummates
or publicly
announces
the termination
or abandonment
of the proposed
transaction
or tender
offer
(or takeover
scheme)
which caused
this Section
1.2(b) to become
operative.

 

1.3
 Authorized
 Shares.
 The Borrower
 covenants
 that 
during 
the  period
 the conversion
right
exists,
the Borrower
will reserve
from its
authorized
and unissued
Common Stock
a sufficient
number of shares,
free
from preemptive
rights,
to provide for
the issuance of Common
Stock upon the
full conversion of
this Note issued
pursuant to the
Purchase
Agreement.
The Borrower
is required
at all
times
to have
authorized
and reserved
eight
times the number
of shares that
is actually
issuable upon
full conversion
of the Note (based
on the Conversion
Price
of the Notes in effect
from time to time)(the
“Reserved
Amount”). The Reserved
Amount shall be increased
from time to
time in accordance
with the Borrower’s
obligations
hereunder.
The Borrower
represents
that upon issuance,
such shares
will be duly and validly
issued, fully
paid and
non-assessable.
 In addition,
if the Borrower
shall
issue any
securities
or make
any change
to its capital
structure
which would
change
the number
of shares
of Common Stock
into which the Notes
shall be
convertible
at the then
current
Conversion
Price,
the Borrower
shall at
the same time make
proper
provision
so that
thereafter
there shall
be a sufficient
number of
shares
of Common Stock
authorized
and reserved,
free
from
preemptive rights,
for conversion
of the outstanding Notes.
 The Borrower
(i) acknowledges
that it
has irrevocably
instructed
its transfer
agent to issue certificates
for the Common Stock
issuable upon conversion
of this Note, and (ii)
agrees
that its issuance
of this Note shall constitute full
authority
to its officers and
agents
who are
charged
with the duty
of executing
stock certificates
to execute
and issue the necessary
certificates
for shares
of Common Stock
in accordance
with the terms and conditions
of this Note. 

 

If,
at any
time the Borrower
does not
maintain
the Reserved
Amount it will
be considered
an Event of
Default under
Section 3.2 of
the Note.

 

1.4
Method of Conversion.

 

(a)
Mechanics
of Conversion.
Subject
to Section
1.1, this
Note may
be converted
by the
Holder in
whole or in
part at
any time
from time
to time after
the Issue
Date,
by (A)
submitting to the Borrower
a Notice of Conversion
(by
facsimile,
e-mail
or other reasonable
means of communication
dispatched
on the Conversion
Date prior to
6:00 p.m., New
York, New
York time)
and (B)
subject
to Section
1.4(b),
surrendering
this Note at the principal
office of the Borrower.

 

(b)
Surrender
of Note
Upon Conversion.
 Notwithstanding anything
to the contrary
set forth
herein, upon
conversion
of this Note
in accordance
with the terms
hereof,
the Holder shall
not be required
to physically
surrender
this Note to
the Borrower
unless the
entire unpaid
principal
amount of
this Note is
so converted.
The Holder
and
the Borrower
shall maintain
records
showing the
principal
amount so converted
and the dates
of such
conversions
or shall use
such other
method,
reasonably
satisfactory
to the Holder
and the
Borrower,
so as not
to require
physical
surrender
of this Note
upon each
such conversion.
 In the
event of
any
dispute or discrepancy,
such records
of the Borrower
shall, prima
facie,
be controlling
and determinative
in the absence
of manifest
error. Notwithstanding
the foregoing,
if any
portion of
this Note is converted
as aforesaid,
the Holder
may not transfer
this Note unless
the Holder
first
physically
surrenders
this Note to the
Borrower,
whereupon
the Borrower
will forthwith
issue and
deliver upon
the order
of the Holder
a new Note of
like tenor,
registered
as the Holder
(upon payment
by the Holder
of any
applicable
transfer
taxes)
may request,
representing
in the aggregate
the remaining
unpaid principal
amount of
this Note. The
Holder and
any assignee,
by acceptance
of this Note,
acknowledge
and agree
that, by reason
of the provisions
of this paragraph,
following conversion
of a portion
of this Note,
the unpaid
and unconverted
principal
amount of
this Note represented
by this Note
may be
less than the
amount stated
on the face
hereof.

 

(c)
Payment
of Taxes.
 The Borrower
shall not
be required
to pay
any tax
which may
be payable
in respect
of any
transfer
involved in
the issue and
delivery
of shares
of Common
Stock
or other
securities
or property
on conversion of
this Note
in a name
other than
that of the
Holder (or
in street
name),
and the
Borrower
shall not
be required
to issue or
deliver any
such shares
or other
securities
or property
unless
and until
the person
or persons (other
than the Holder
or the custodian
in whose street
name such
shares are
to be held
for the Holder’s account)
requesting
the issuance
thereof shall
have paid to the Borrower
the amount of any
such tax
or shall have
established
to the satisfaction
of the Borrower
that such
tax has
been paid.

 

(d)
Delivery
of Common
Stock
Upon Conversion.
Upon receipt
by the Borrower
from the
Holder of
a facsimile
transmission
or e-mail
(or other
reasonable
means
of communication)
of a Notice
of Conversion
meeting
the requirements
for conversion
as provided
in this Section
1.4, the Borrower
shall issue and
deliver
or cause to
be issued
and delivered
to or upon the
order
of the Holder
certificates
for
the Common
Stock
issuable upon such
conversion within
three (3)
business
days
after
such receipt
(the “Deadline”)
(and, solely
in the case
of conversion
of the entire
unpaid principal
amount hereof,
surrender
of this Note)
in accordance
with the terms hereof
and the
Purchase
Agreement.

 

(e)
Obligation
of Borrower
to Deliver
Common Stock.
 Upon receipt
by the Borrower
of a Notice
of Conversion,
the Holder shall
be deemed
to be the holder
of record
of the Common Stock
issuable upon
such conversion,
the outstanding
principal
amount and
the amount
of accrued
and unpaid
interest on
this Note shall
be reduced
to reflect
such conversion,
and, unless
the Borrower
defaults on
its obligations
under this Article
I, all
rights
with respect
to the portion
of this Note being
so converted
shall
forthwith
terminate except
the right
to receive
the Common
Stock or other
securities,
cash or
other assets,
as herein
provided,
on such conversion.
If the Holder shall
have given
a Notice of Conversion
as provided
herein, the Borrower’s
obligation to issue and deliver
the certificates
for Common
Stock shall
be absolute and
unconditional,
irrespective
of the absence
of any action
by the Holder
to enforce
the same,
any waiver
or consent with respect
to any provision
thereof, the recovery
of any judgment
against
any person
or any
action
to enforce
the same,
any
failure
or delay
in the enforcement
of any other
 obligation
 of  the 
Borrower
 to  the 
holder  of 
record,
 or  any
setoff, 
counterclaim,
recoupment,
limitation or
termination,
or any
breach
or alleged
breach
by the Holder
of any obligation
to the Borrower,
and irrespective
of any other
circumstance
which
might otherwise
limit such
obligation
of the Borrower
to the Holder
in connection
with such
conversion.
The Conversion
Date specified
in the Notice
of Conversion
shall be
the Conversion
Date so
long as the Notice of Conversion
is received by
the Borrower
before
6:00 p.m., New York, New
York time, on such
date.

 

(f)
Delivery
of  Common
 Stock
 by 
Electronic
 Transfer.
 In 
lieu  of delivering
physical
certificates
representing
the Common
Stock
issuable upon
conversion, provided
 the  Borrower
is  participating
 in  the 
Depository Trust
 Company
 (“DTC”)
Fast Automated
 Securities
 Transfer
(“FAST”)
program,
 upon  request
 of  the Holder
and  its compliance
with the provisions
contained
in Section
1.1 and
in this Section
1.4, the Borrower
shall use its
best efforts
to cause its
transfer agent
to electronically
transmit
the Common
Stock issuable
upon conversion
to the Holder
by crediting
the account
of Holder’s
Prime
Broker
with DTC through
its Deposit Withdrawal
Agent Commission (“DWAC”)
system.

 

(g)
Failure to
Deliver Common
Stock
Prior to Deadline.
 Without
in any
way limiting
the Holder’s
right to pursue
other remedies,
including
actual
damages
and/or equitable
relief,
the parties
agree
that if
delivery
of the Common Stock
issuable
upon conversion
of this Note
is not delivered
by the Deadline
(other
than a
failure
due to
the circumstances
described
in Section
1.3 above,
which
failure
shall
be governed
by such
Section)
the Borrower
shall pay
to the Holder
$2,000 per
day in
cash,
for each
day beyond
the Deadline
that the Borrower
fails
to deliver
such Common
Stock. 
Such
cash amount
shall be paid
to Holder
by the fifth
day of
the month following
the month in
which it
has accrued
or, at
the option
of the Holder
(by
written
notice to
the Borrower
by the
first
day of
the month
following the
month in which
it has accrued),
shall
be added
to the principal
amount
of this Note,
in which
event
interest
shall accrue
thereon in
accordance
with the terms
of this Note and
such additional
principal
amount shall 
be  convertible
 into  Common
Stock 
in accordance
 with  the 
terms  of 
this  Note. 
The Borrower
agrees
that the right
to convert
is a valuable
right to the
Holder.  The
damages
resulting from
a failure,
attempt
to frustrate,
interference
with such
conversion
right
are difficult
if not impossible  to  qualify.
Accordingly
the  parties
 acknowledge
 that 
the  liquidated
 damages
provision contained
in this Section 1.4(g)
are justified.

 

1.5
 Concerning
 the  Shares.
 The  shares
 of  Common
 Stock
 issuable 
upon conversion
of this Note
may not
be sold or
transferred
unless  (i)
such shares
are
sold pursuant
to an effective
registration
statement
under the Act
or (ii) the Borrower
or its transfer
agent
shall have been
furnished
with an
opinion of  counsel
(which
opinion shall
be in form,
substance
and scope
customary
for opinions
of counsel
in comparable
transactions)
to the effect
that the
shares to be
sold or transferred
may be sold
or transferred
pursuant
to an exemption
from such
registration
or (iii) such
shares are sold
or transferred
pursuant to
Rule 144
under the Act (or
a successor rule)
(“Rule 144”)
or (iv) such
shares
are transferred
to an
“affiliate”
(as defined
in Rule 144) of the Borrower
who agrees
to sell or otherwise
transfer
the shares
only in accordance
with this Section
1.5 and who
is an
Accredited
Investor
(as defined
in the Purchase
Agreement).
Except
as otherwise
provided
in the Purchase
Agreement
(and subject
to the removal
provisions set
forth
below),
until such
time as the
shares
of Common
Stock issuable
upon conversion
of this Note
have been
registered
under the Act
or otherwise
may be sold pursuant
to Rule
144 without any
restriction
as to
the number
of securities
as of
a particular
date that
can
then be
immediately
sold, each
certificate
for shares
of Common
Stock issuable
upon conversion
of this Note that
has not been so
included in
an effective
registration
statement
or that has not been
sold pursuant to an
effective
registration
statement
or an exemption
that permits
removal
of the legend,
shall bear
a legend
substantially
in the following form,
as appropriate:

 

“NEITHER
THE ISSUANCE
AND SALE
OF  THE
SECURITIES
REPRESENTED
BY THIS
CERTIFICATE
NOR
THE SECURITIES
INTO WHICH
 THESE
SECURITIES
 ARE EXERCISABLE
HAVE BEEN
REGISTERED UNDER
THE SECURITIES
ACT OF
1933,
AS AMENDED,
OR APPLICABLE
STATE SECURITIES
LAWS.  THE
SECURITIES
MAY NOT
BE OFFERED
FOR SALE,
SOLD,
TRANSFERRED
OR ASSIGNED
(I)
IN THE
ABSENCE
OF (A)
AN EFFECTIVE
REGISTRATION
STATEMENT
FOR THE
SECURITIES
UNDER THE
SECURITIES
ACT OF
1933, AS AMENDED,
OR (B)
AN OPINION
OF COUNSEL
(WHICH
COUNSEL
SHALL BE
SELECTED
BY THE HOLDER),
IN A GENERALLY
ACCEPTABLE
FORM,
THAT
REGISTRATION
IS NOT REQUIRED
UNDER SAID
ACT OR (II)
 UNLESS SOLD
PURSUANT
TO RULE
144 OR RULE
144A UNDER
SAID ACT.
NOTWITHSTANDING
THE FOREGOING,
THE SECURITIES
MAY BE PLEDGED
IN CONNECTION
WITH
A BONA
FIDE
MARGIN ACCOUNT
OR OTHER
 LOAN
 OR 
FINANCING 
ARRANGEMENT
 SECURED 
BY  THE
SECURITIES.”

 

The
legend
set forth
above shall
be removed
and the Borrower
shall
issue to the Holder
a new
certificate
therefore
free
of any
transfer
legend
if (i)
the Borrower
or its transfer
agent
shall have
received
an opinion
of counsel,
in form,
substance
and scope
customary
for opinions
of counsel
in comparable
transactions,
to the effect
that a
public sale or
transfer
of such Common
Stock may
be made
without registration
under the
Act, which
opinion shall be
accepted
by the Company
so that
the sale or
transfer
is effected
or (ii)
in the case
of the Common
Stock issuable
upon conversion
of this Note,
such
security
is registered
for sale
by the
Holder under
an effective
registration
statement
filed
under the
Act
or otherwise
may be
sold pursuant
to Rule 144 without
any restriction
as to
the number
of securities
as of
a particular
date that
can
then be immediately
sold.  In the
event that
the Company
does not accept
the opinion of counsel
provided
by the Holder
with respect
to the transfer
of Securities
pursuant
to an
exemption
from registration,
such as
Rule 144
or Regulation
S, at
the Deadline,
it will be
considered
an Event
of Default pursuant
to Section 3.2 of
the Note.

 

1.6
Effect of
Certain
Events.

 

(a)
Effect of
Merger,
Consolidation,
Etc.  At
the option of the Holder,
the sale,
conveyance
or disposition of
all or
substantially
all of
the assets
of the Borrower,
the effectuation
by the Borrower
of a transaction
or series
of related
transactions
in which
more than
50% of the voting
power of
the Borrower
is disposed
of, or
the consolidation,
merger
or other business
combination
of the Borrower
with or into
any
other Person
(as
defined
below)
or Persons when
the Borrower
is not the survivor shall
either: (i)
be deemed to be an
Event of Default
(as defined
in Article III)
pursuant
to which the Borrower
shall be required
to pay to the Holder upon
the consummation
of and as
a condition
to such
transaction
an amount
equal
to the Default
Amount (as
defined
in Article
III) or (ii)
be treated
pursuant
to Section
1.6(b) hereof.
“Person”
shall mean any
individual, corporation,
limited liability
company,
partnership,
association,
trust or other
entity or
organization.

 

(b)
Adjustment Due
to Merger,
Consolidation,
Etc.  If,
at any
time when this
Note is issued
and outstanding
and prior
to conversion
of all
of the Notes,
there shall
be any
merger, 
consolidation, 
exchange
of shares,  recapitalization,
 reorganization,
 or other similar
event, as
a result
of which
shares
of Common Stock
of the Borrower
shall be changed
into the same or
a different
number of shares
of another
class
or classes
of stock or securities
of the Borrower
or another
entity,
or in case
of any
sale or
conveyance
of all
or substantially
all of
the assets
of the Borrower
other than
in connection
with a plan
of complete
liquidation of the Borrower,
then the Holder
of this Note shall
thereafter
have the right
to receive
upon conversion
of this Note,
upon the basis
and upon
the terms
and conditions
specified
herein and
in lieu
of the shares 
of  Common
 Stock
 immediately
theretofore
 issuable 
upon  conversion,
 such 
stock, securities
or assets
which the
Holder would
have
been entitled
to receive
in such
transaction
had this Note been
converted
in full
immediately
prior to
such transaction
(without regard
to any
limitations on
conversion
set forth
herein),
and in
any such
case
appropriate
provisions shall
be made with respect
to the rights
and interests
of the Holder of
this Note to
the end that
the provisions hereof
(including,
without limitation, provisions for
adjustment of the Conversion
Price
and of the
number of shares
issuable upon
conversion
of the Note) shall
thereafter
be applicable,
as nearly
as may
be practicable
in relation
to any
securities
or assets
thereafter
deliverable
upon the
conversion
hereof.
 The
Borrower
shall
not affect
any transaction
described
in this Section 1.6(b)
unless (a)
it first gives,
to the extent
practicable,
thirty (30)
days prior written
notice (but in any
event
at least fifteen
(15) days
prior written
notice) of the record
date of
the special
meeting
of shareholders
to approve,
or if there
is no such
record
date,
the consummation 
of,  such
 merger,
 consolidation,
 exchange
of  shares,
 recapitalization,
reorganization
or other
similar
event
or sale
of assets
(during which
time the Holder
shall be entitled
to convert
this Note)
and (b)
the resulting successor
or acquiring
entity (if
not the Borrower)
assumes by
written instrument
the obligations of this Section
1.6(b). The above
provisions shall
similarly apply
to successive
consolidations,
mergers,
sales,
transfers
or share
exchanges.

 

(c)
Adjustment Due to
Distribution. 
If the Borrower
shall declare
or make any
distribution of
its assets
(or rights
to acquire
its assets)
to holders
of Common
Stock
as a dividend,
stock repurchase,
by way
of return
of capital
or otherwise
(including
any dividend
or distribution
to the Borrower’s
shareholders
in cash
or shares
(or
rights
to acquire
shares)
of capital stock
of a subsidiary
(i.e.,
a spin-off))
(a “Distribution”),
then the Holder
of this Note shall be
entitled,
upon any
conversion
of this Note
after
the date
of record
for
determining
shareholders entitled
to such Distribution, to receive
the amount of
such assets
which would have
been payable
to the Holder with
respect
to the shares
of Common Stock
issuable upon such
conversion
had such
Holder been
the holder of such
shares of Common
Stock
on the record
date for
the determination
of shareholders
entitled to such
Distribution.

 

(d)
Adjustment Due
to Dilutive Issuance.
 If,
at any
time when
any
Notes are issued
and outstanding,
the Borrower
issues or
sells, or
in accordance
with this Section
1.6(d) hereof
is deemed
to have
issued or
sold, any
shares
of Common
Stock for
no consideration
or for
a consideration
per share
(before
deduction
of reasonable
expenses
or commissions or underwriting
discounts or
allowances
in connection
therewith) or
for
consideration per
share which
is less
than the
Conversion
Price
in effect
on the date
of such
issuance
(or deemed
issuance)
of such
shares
of Common
Stock
(a “Dilutive
Issuance”),
then immediately
upon the Dilutive Issuance,
the Conversion
Price will
be reduced
to the amount
of the consideration
per share
received
by the Borrower
in such Dilutive
Issuance.

 

The
Borrower
shall be deemed
to have issued
or sold
shares of Common
Stock
if the Borrower
in any
manner
issues or
grants
any
warrants,
rights
or options (not
including employee
stock
option plans),
whether
or not immediately
exercisable,
to subscribe
for or to
purchase
Common Stock
or other securities
convertible
into or
exchangeable
for Common
Stock (“Convertible
Securities”)
(such
warrants,
rights and
options to purchase Common
Stock or Convertible
Securities
are hereinafter
referred
to as
“Options”) and
the price per
share for
which Common
Stock
is issuable upon
the exercise
of such
Options is less
than the
Conversion Price
then in effect,
then the Conversion
Price
shall be equal
to such price
per share.
For purposes
of the preceding
sentence,
the “price
per
share
for
which Common
Stock
is issuable upon the exercise
of such
Options” is determined
by dividing (i) the total
amount, if any,
received
or receivable
by the Borrower
as consideration
for the
issuance
or granting of
all such
Options, plus the minimum
aggregate
amount of
additional
consideration,
if any,
payable
to the Borrower
upon the exercise
of all
such Options,
plus, in the case
of Convertible
Securities
issuable upon the exercise
of such Options,
the minimum aggregate
amount of additional
consideration
payable upon
the conversion
or exchange
thereof
at the time
such Convertible
Securities
first
become
convertible or
exchangeable,
by (ii)
the maximum
total
number of
shares of
Common Stock
issuable upon the
exercise
of all
such Options
(assuming full
conversion
of Convertible Securities,
if applicable).
No further
adjustment
to the Conversion
Price
will be made
upon the actual
issuance
of such
Common Stock
upon the exercise
of such Options or
upon the conversion or
exchange
of Convertible
Securities
issuable upon exercise
of such Options.

 

Additionally,
the Borrower
shall be
deemed
to have
issued or
sold shares
of Common
Stock
if the
Borrower
in any
manner
issues or
sells any
Convertible
Securities,
whether 
or  not  immediately
convertible
 (other
 than 
where 
the  same
 are 
issuable 
upon  the exercise
of Options),
and
the price per
share
for which
Common Stock
is issuable upon
such conversion
or exchange
is less
than the Conversion
Price
then in
effect,
then the Conversion
Price
shall be equal
to such price
per share.
For the purposes
of the preceding
sentence,
the “price
per
share for
which Common
Stock is
issuable upon
such conversion
or exchange”
is determined
by dividing
(i) the
total amount,
if any,
received
or receivable
by the Borrower
as consideration
for the issuance
or sale of all
such Convertible
Securities,
plus the minimum aggregate
amount  of additional
 consideration,
 if any,
 payable
to  the Borrower
upon  the conversion
or exchange
thereof
at the time such
Convertible Securities
first become
convertible
or exchangeable,
by (ii) the maximum
total number
of shares of Common
Stock issuable
upon the conversion
or exchange
of all
such Convertible
Securities.
No further
adjustment to the Conversion
Price
will be made upon
the actual
issuance
of such
Common Stock
upon conversion
or exchange
of such
Convertible
Securities.

 

(e)
Purchase
Rights. 
If, 
at  any
time when  any
Notes 
are issued 
and outstanding,
the Borrower
issues any
convertible
securities
or rights
to purchase
stock, warrants,
securities
or other
property
(the “Purchase
Rights”)
pro rata
to the record
holders of
any class
of Common  Stock,
 then 
the Holder of this 
Note will  be entitled
 to  acquire,
 upon  the terms
applicable to
such Purchase
Rights,
the aggregate
Purchase
Rights
which such
Holder could
have acquired
if such Holder
had held
the number of shares
of Common Stock
acquirable upon complete
conversion
of this Note
(without regard
to any
limitations on
conversion
contained
herein) immediately
before
the date on which
a record
is taken
for
the grant, issuance
or sale
of such Purchase
Rights
or, if
no such
record
is taken,
the date
as of
which the
record
holders of Common Stock
are to be determined
for the
grant,
issue or sale
of such Purchase
Rights.

 

(f)
Notice of
Adjustments.  Upon
the occurrence
of each
adjustment
or readjustment
of the Conversion
Price
as a
result of
the events
described
in this
Section
1.6, the Borrower,
at its
expense,
shall promptly
compute
such adjustment
or readjustment
and prepare
and furnish
to the Holder
a certificate
setting
forth
such adjustment
or readjustment
and showing
in detail
the facts
upon which
such adjustment
or readjustment
is based.
 The Borrower
shall, upon the
written
request at
any time
of the
Holder,
furnish
to such
Holder a
like certificate
setting forth
(i) such
adjustment
or readjustment, (ii)
the Conversion Price
at the time in effect
and (iii)
the number
of shares
of Common Stock
and the
amount, if
any,
of other
securities
or property
which at
the time would be
received
upon conversion
of the Note.

 

1.7
Trading
Market
Limitations. 
Unless permitted
by the
applicable
rules
and regulations
of the principal
securities
market
on which the
Common Stock
is then
listed or
traded, in no event
shall the Borrower
issue upon conversion
of or otherwise
pursuant to this Note and
the other Notes
issued pursuant
to the Purchase
Agreement
more than
the maximum number
of shares
of Common
Stock
that the
Borrower
can issue
pursuant
to any
rule of
the principal
United States
securities
market
on which
the Common Stock
is then
traded
(the “Maximum
Share
Amount”),
which shall
be 9.99%
of the total
shares outstanding
on the Closing Date
(as
defined
in the Purchase
Agreement),
subject
to equitable
adjustment
from time to
time for stock
splits, stock
dividends,
combinations,
capital
reorganizations
and similar
events
relating to
the Common Stock
occurring
after the
date hereof.
Once the Maximum
Share Amount
has been issued,
if the Borrower
fails to eliminate
any prohibitions
under applicable
law or the rules
or regulations
of any stock
exchange,
interdealer
quotation system
or other self-regulatory
organization
with jurisdiction
over the Borrower
or any
of its
securities
on the Borrower’s
ability to
issue shares of Common
Stock
in excess
of the Maximum
Share Amount,
in lieu
of any further
right
to convert this Note,
this will be considered
an Event of Default
under Section
3.3 of the Note.

 

1.8
Status
as Shareholder.
 Upon submission
of a Notice
of Conversion
by a Holder,
(i) the
shares
covered
thereby
(other
than
the shares,
if any,
which
cannot be
issued because their
issuance would
exceed
such Holder’s
allocated
portion of the
Reserved
Amount or Maximum
Share
Amount) shall
be deemed
converted
into shares
of Common
Stock
and (ii)
the Holder’s rights
as a
Holder of
such converted
portion
of this Note shall
cease and
terminate,
excepting
only the right
to receive
certificates
for such
shares
of Common Stock
and to
any remedies
provided herein
or otherwise available
at law or in equity
to such Holder because
of a failure by
the Borrower
to comply
with the terms of this Note. Notwithstanding
the foregoing,
if a Holder has
not received
certificates
for all
shares
of Common Stock
prior to the tenth
(10th) business
day after
the expiration
of the Deadline
with respect
to a conversion
of any
portion of this Note for
any reason,
then (unless
the Holder otherwise
elects
to retain
its status as a holder
of Common
Stock
by so notifying
the Borrower)
the Holder
shall
regain
the rights
of a Holder
of this Note with respect to such
unconverted
portions of this Note and
the Borrower
shall, as soon as
practicable,
return
such unconverted
Note to
the Holder or,
if the Note has
not been
surrendered,
adjust its
records
to reflect
that
such portion
of this Note has
not been
converted.
In all cases,
the Holder shall retain
all of its rights
and remedies
(including,
without limitation, (i) the right
to receive
Conversion
Default
Payments
pursuant
to Section
1.3 to the extent
required thereby
for such
Conversion
Default and any
subsequent
Conversion Default
and (ii)
the right
to have the Conversion
Price
with respect
to subsequent
conversions
determined
in accordance
with Section 1.3)
for the Borrower’s
failure
to convert
this Note.

 

1.9
Prepayment.
 Notwithstanding
anything
to the contrary
contained
in this Note,
at any
time during
the periods
set
forth
on the table
immediately
following
this paragraph
(the “Prepayment
Periods”),
the Borrower
shall have
the right,
exercisable
on not less
than three
(3) Trading
Days
prior written
notice to
the Holder
of the Note
to prepay
the outstanding
Note (principal
and accrued
interest),
in full,
in accordance
with this Section
1.9. Any notice
of prepayment
hereunder
(an
“Optional
Prepayment
Notice”) shall
be delivered
to the Holder of the Note
at its
registered
addresses
and shall
state:
(1) that
the Borrower
is exercising
its right
to prepay the
Note, and (2)
the date of
prepayment
which shall
be not more than
three (3) Trading
Days
from the date
of the Optional
Prepayment
Notice. On the date
fixed
for prepayment
(the “Optional
Prepayment
Date”),
the Borrower
shall
make payment
of the Optional
Prepayment
Amount (as
defined
below)
to Holder,
or upon the
order
of the Holder
as specified
by the
Holder in writing to the Borrower,
at least
one (1) business
day prior
to the Optional Prepayment
Date. If the Borrower
exercises
its right
to prepay
the Note,
the Borrower
shall make
payment
to the Holder of an
amount in
cash (the
“Optional
Prepayment
Amount”) equal
to the percentage
(“Prepayment
 Percentage”)
 as 
set  forth
 in  the 
table  immediately
following  this 
paragraph
opposite the applicable
Prepayment
Period,
multiplied by
the sum of:
(w)
the then
outstanding principal
amount of this
Note plus (x)
accrued and
unpaid interest
on the unpaid principal
amount of
this Note to the
Optional Prepayment
Date plus
(y) Default
Interest, if
any,
on the amounts
referred
to in clauses
(w) and
(x)
plus (z)
any amounts
owed to
the Holder
pursuant
to Sections 1.3 and
1.4(g)
hereof.
 If the
Borrower
delivers an
Optional Prepayment
Notice and fails
to pay the Optional
Prepayment
Amount due to the
Holder of the
Note within two
(2) business
days
following the Optional
Prepayment
Date,
the Borrower
shall forever
forfeit
its right
to prepay
the Note
pursuant
to this Section 1.9. 

 

	Prepayment
                                         Period

                                                                                 
	Prepayment
    Percentage
	1.
                                         The period
                                         beginning
                                         on the Issue
                                         Date
                                         and

        ending
        on the date
        which is thirty
        (30) days
        following the

        Issue
        Date.
	110%
	2.
                                          The
                                         period
                                         beginning
                                         on the
                                         date
                                         which
                                         is thirty-

        one
        (31)
        days
        following
        the
        Issue Date
        and ending
        on the date
        which
        is sixty
        (60) days
        following
        the Issue
        Date
	115%
	3.
                                          The
                                         period
                                         beginning
                                         on the
                                         date which
                                         is sixty-one

        (61)
        days following
        the Issue
        Date
        and ending
        on the date
        which
        is ninety
        (90) days
        following
        the Issue
        Date
	120%
	4.
                                          The
                                         period
                                         beginning
                                         on the
                                         date
                                         that
                                         is ninety-one

        (91)
        day from
        the Issue
        Date
        and ending
        one hundred
        twenty
        (120)

        days
        following
        the
        Issue Date
	125%
	5.
                                          The
                                         period
                                         beginning
                                         on the
                                         date that
                                         is one
                                         hundred

        twenty-one
        (121) day
        from the
        Issue Date
        and ending
        one hundred
        fifty
        (150)
        days following
        the Issue
        Date
	130%
	6.
                                          The
                                         period
                                         beginning
                                         on the
                                         date that
                                         is one
                                         hundred

        fifty-one
        (151) day
        from the
        Issue Date
        and ending
        one hundred
        eighty
        (180) days
        following
        the Issue
        Date
	135%

 

 After
the expiration
of one
hundred
eighty
(180) days
following the
Issue
Date,
the Borrower
shall have
no right of
prepayment.

 

 

ARTICLE
II. 
CERTAIN
COVENANTS

 

2.1
Distributions on
Capital
Stock. 
So long
as the Borrower
shall
have  any
obligation
under this
Note,
the Borrower
shall not
without the Holder’s
written
consent
(a) pay,
declare
or set
apart
for such
payment,
any
dividend
or other
distribution
(whether
in cash, property
or other
securities)
on shares of
capital
stock other
than dividends
on shares of
Common Stock
solely in
the form of
additional
shares
of Common Stock
or (b)
directly
or indirectly
or through
any subsidiary
make any
other payment
or distribution
in respect
of its capital
stock except
for distributions
pursuant to any
shareholders’
rights
plan which
is approved
by a
majority
of the Borrower’s
disinterested
directors.

 

2.2
Restriction
on Stock
Repurchases.
 So
long as
the Borrower
shall have
any obligation
under this Note,
the Borrower
shall not
without the Holder’s
written
consent
redeem,
repurchase
or otherwise
acquire
(whether
for cash
or in exchange
for property
or other
securities
or otherwise)
in any
one transaction
or series
of related
transactions
any
shares of
capital stock
of the Borrower
or any
warrants,
rights or
options to purchase
or acquire
any
such shares. 

 

2.3
Borrowings.
 So
long as
the Borrower
shall have
any
obligation
under this Note,
the Borrower
shall
not, without the Holder’s
written
consent,
create,
incur,
assume guarantee,
 endorse,
 contingently
agree
 to  purchase
 or  otherwise
 become
 liable 
upon  the obligation
of any
person,
firm,
partnership,
joint venture
or corporation,
except
by the endorsement
of negotiable
instruments
for deposit
or collection,
or suffer
to exist
any liability
for borrowed
money, except
(a) borrowings
in existence
or committed
on the date hereof
and of which
the Borrower
has informed
Holder in
writing prior
to the date
hereof,
(b) indebtedness
to trade creditors
or financial
institutions incurred
in the ordinary
course
of business
or (c) borrowings,
the proceeds
of which shall
be used to
repay this Note.

 

2.4
Sale
of Assets. 
So long
as the
Borrower
shall
have any
obligation
under this Note,
the Borrower
shall not,
without the
Holder’s
written
consent,
sell,
lease or
otherwise dispose of any
significant
portion of its assets
outside the ordinary
course
of business. Any consent
to the disposition of any
assets may be
conditioned on a specified
use of the proceeds
of disposition.

 

2.5
Advances
and Loans.
 So
long as
the Borrower
shall have
any
obligation
under this
Note, the
Borrower
shall not,
without the Holder’s
written
consent,
lend money,
give credit
or make
advances
to any
person, firm,
joint venture
or corporation,
including,
without limitation, officers,
directors, employees,
subsidiaries and
affiliates
of the Borrower,
except
loans, credits
or advances
(a) in existence
or committed
on the date hereof
and which
the Borrower
has
informed
Holder in writing
prior
to the date hereof,
(b) made
in the ordinary
course
of business or
(c)
not in excess
of $100,000.

 

 

ARTICLE
III. 
EVENTS OF DEFAULT

 

If
any
of the following
events of
default (each,
an “Event
of Default”)
shall occur:

 

3.1
Failure
to Pay
Principal
or Interest.
 The
Borrower
fails
to pay
the principal
hereof or interest
thereon
when due on
this Note,
whether
at maturity,
upon acceleration
or otherwise.

 

3.2
Conversion
and the
Shares.
 The
Borrower
fails to
issue shares
of Common Stock
to the Holder
(or announces
or threatens
in writing
that it
will not honor
its obligation
to do so) upon exercise by
the Holder of the conversion
rights of the Holder
in accordance
with the terms of this Note, fails
to transfer
or cause its transfer
agent
to transfer
(issue) (electronically
or in certificated
form)
any certificate
for shares
of Common Stock
issued to the
Holder upon conversion
of or otherwise
pursuant to this Note as
and when required
by this Note, the Borrower
directs
its transfer
agent
not to transfer
or delays,
impairs,
and/or hinders
its transfer
agent in transferring
(or issuing)
(electronically
or in certificated
form)
any certificate
for shares
of Common Stock
to be issued to the Holder upon
conversion of or otherwise
pursuant to this Note as
and when
required
by this Note,
or fails to
remove (or directs
its transfer
agent
not to remove or impairs,
delays,
and/or hinders
its transfer
agent
from removing)
any
restrictive
legend
(or
to withdraw
any
stop transfer
instructions
in respect
thereof)
on any
certificate
for any
shares of Common
Stock
issued to
the Holder upon conversion
of or otherwise pursuant
to this Note as
and when
required
by this
Note (or
makes
any
written
announcement,
statement
or threat that
it does not
intend to honor the obligations
described
in this paragraph)
and any
such failure
shall continue
uncured
(or any
written
announcement,
statement
or threat
not to honor
its obligations shall
not be rescinded
in writing) for
three (3) business
days after
the Holder shall have
delivered
a Notice of Conversion.
It is an obligation
of the Borrower
to remain current
in its obligations
to its transfer
agent.
It shall
be an event
of default
of this Note,
if a conversion
of this Note is delayed,
hindered or frustrated
due to a balance
owed by the Borrower
to its transfer
agent. If at
the option of the Holder,
the Holder advances
any funds
to the Borrower’s
transfer
agent
in order
to process
a conversion,
such advanced
funds shall
be paid by
the Borrower
to the Holder
within forty
eight
(48) hours
of a demand
from the
Holder.

 

3.3
Breach
of Covenants.
 The Borrower
breaches
any
material
covenant
or other material
term or
condition
contained
in this Note
and any
collateral
documents
including but not limited
to the Purchase
Agreement
and such
breach
continues for
a period
of ten (10)
days
after written
notice thereof
to the Borrower
from the Holder.

 

3.4
Breach
of Representations
and Warranties.
 Any
representation
or warranty
of the Borrower
made
herein
or in any
agreement,
statement
or certificate
given
in writing
pursuant
hereto or
in connection
herewith (including,
without limitation,
the Purchase
Agreement),
shall be false
or misleading
in any material
respect
when made
and the breach
of which has
(or with the
passage
of time
will have)
a material
adverse
effect
on the rights
of the Holder
with respect
to this Note or the
Purchase
Agreement.

 

3.5
Receiver
or Trustee.
 The
Borrower
or any
subsidiary
of the
Borrower
shall make
an assignment
for the
benefit
of creditors,
or apply
for or
consent
to the appointment
of a receiver
or trustee
for it
or for
a substantial
part of
its property
or business,
or such
a receiver
or trustee
shall otherwise
be appointed.

 

3.6
Judgments.
 Any
money judgment,
writ or
similar process
shall be
entered
or filed
against
the Borrower
or any
subsidiary
of the
Borrower
or any
of its property
or other
assets for
more than
$50,000, and
shall remain
unvacated,
unbonded or unstayed
for a period
of twenty
(20) days
unless otherwise
consented
to by the Holder,
which consent
will not be
unreasonably withheld.

 

3.7
Bankruptcy.
 Bankruptcy,
 insolvency,
 reorganization
 or  liquidation
proceedings
or other
proceedings,
voluntary
or involuntary,
for relief
under
any
bankruptcy
law or any
law for the relief
of debtors shall
be instituted by or against
the Borrower
or any subsidiary
of the
Borrower. 

 

3.8
Delisting of
Common Stock.
The Borrower
shall fail
to maintain
the listing
of the Common
Stock
on at
least one
of the OTC
(which
specifically
includes
the Pink
Sheets electronic
quotation  system)
or an  equivalent
 replacement
 exchange,
 the Nasdaq
 National
Market,
the Nasdaq
SmallCap
Market,
the New York
Stock
Exchange,
or the American
Stock Exchange.

 

3.9
Failure
to Comply
with the Exchange
Act.  The
Borrower
shall fail
to comply
with the reporting
requirements
of the Exchange
Act; and/or
the Borrower
shall cease
to be subject to the
reporting
requirements
of the Exchange
Act.

 

3.10
Liquidation. 
Any dissolution,
liquidation,
or winding up
of Borrower
or any
substantial portion
of its business.

 

3.11
Cessation
of Operations.
 Any
cessation
of operations
by Borrower
or Borrower
admits it
is otherwise
generally
unable
to pay its
debts as
such debts
become due,
provided, however,
that any
disclosure
of the Borrower’s
ability
to continue
as a “going
concern”
shall not be an admission
that the Borrower
cannot pay
its debts as they
become
due.

 

3.12
Maintenance
of Assets.
 The  failure
 by 
Borrower
 to  maintain
 any
material
intellectual
property
rights,
personal,
real
property
or other
assets
which are
necessary
to conduct its business
(whether
now or in the future).

 

3.13
Financial
Statement
Restatement.
 The  restatement
 of  any
financial
statements
filed
by the Borrower
with the SEC
for
any date
or period
from
two years
prior to
the Issue
Date of
this Note and
until this Note
is no longer
outstanding, if
the result of
such restatement
would, by comparison
to the unrestated
financial
statement,
have constituted
a material
adverse
effect
on the rights
of the Holder
with respect
to this Note or
the Purchase
Agreement.

 

 3.14
Reverse
Splits. The Borrower
effectuates
a reverse
split of its Common Stock
without twenty (20)
days prior
written
notice to the
Holder.

 

3.15
Replacement
of Transfer
Agent. In
the event
that the
Borrower
proposes to replace
its transfer
agent,
the Borrower
fails to
provide,
prior to the
effective date
of such replacement,
a fully
executed
Irrevocable
Transfer
Agent
Instructions
in a form
as initially
delivered
pursuant
to the Purchase
Agreement
(including but
not limited
to the provision
to irrevocably
reserve
shares
of Common
Stock
in the
Reserved
Amount) signed
by the successor
transfer
agent
to Borrower
and the Borrower. 

 

3.16
Cross-Default.
 Notwithstanding
anything
to the contrary
contained
in this Note or
the other
related
or companion
documents,
a breach
or default
by the Borrower
of any
covenant
or other
term
or condition
contained
in any
of the Other
Agreements,
after
the passage
of all applicable
notice and
cure
or grace
periods,
shall, at the
option of the Holder,
be considered
a default
under this Note
and the
Other Agreements,
in which
event
the Holder shall
be entitled
(but in
no event
required)
to apply
all rights
and remedies
of the
Holder
under
the terms
of this Note  and
 the  Other
 Agreements
 by reason
 of  a 
default
 under 
said  Other
 Agreement
 or hereunder.
“Other Agreements”
means, collectively,
all agreements
and instruments
between, among
or by:
(1) the
Borrower,
and, or for
the benefit
of, (2)
the Holder and
any
affiliate
of the Holder,
including,
without limitation,
promissory
notes; provided,
however,
the term
“Other Agreements”
shall not include
the related
or companion
documents to this
Note. Each
of the loan transactions
will be cross-defaulted
with each
other loan
transaction
and with
all other
existing
and future
debt of
Borrower
to the Holder.

 

Upon
the occurrence
of any
Event of
Default
specified
in Section
3.1 (solely
with respect
to failure
to pay the
principal
hereof
or interest
thereon when
due at
the Maturity
Date),
the Note shall
become immediately
due and
payable
and the
Borrower
shall
pay to
the Holder,
in full satisfaction
of its obligations
hereunder,
an amount
equal to the
Default
Sum (as defined
herein).
UPON THE
OCCURRENCE
OF ANY EVENT
OF DEFAULT
SPECIFIED
IN SECTION
3.2, THE NOTE SHALL BECOME
IMMEDIATELY
DUE AND PAYABLE
AND THE BORROWER
SHALL
PAY TO
THE HOLDER,
IN FULL
SATISFACTION
OF ITS
OBLIGATIONS
HEREUNDER,
AN AMOUNT EQUAL
TO: (Y)
THE DEFAULT
SUM (AS
DEFINED
HEREIN);
MULTIPLIED
BY (Z)
TWO
(2).
Upon the occurrence
of any
Event
of Default,  other
 than 
Section  3.2, 
exercisable
 through
 the  delivery
of  written
 notice 
to  the Borrower
by such
Holders
(the “Default
Notice”),
the Note shall
become
immediately
due and payable
and the
Borrower
shall pay
to the Holder,
in full
satisfaction
of its obligations
hereunder,
an amount
equal
to the greater
of (i)
150% times
the sum of
(w) the
then outstanding
principal
amount of
this Note plus (x)
accrued
and unpaid
interest on
the unpaid principal
amount of
this Note to the
date of
payment
(the “Mandatory
Prepayment
Date”)
plus (y)
Default
Interest,
if any,
on the amounts
referred
to in clauses
(w) and/or
(x)
plus (z)
any amounts
owed to
the Holder pursuant
to Sections
1.3 and
1.4(g)
hereof
(the then
outstanding principal
amount of
this Note to the
date of
payment
plus the amounts
referred
to in clauses
(x),
(y)
and (z)
shall collectively
be known as
the “Default
Sum”)
or (ii)
the “parity
value”
of the Default
Sum to be
prepaid,
where parity
value
means (a)
the highest
number of
shares
of Common
Stock
issuable
upon conversion
of or otherwise
pursuant
to such
Default
Sum in
accordance
with Article
I, treating
the Trading
Day immediately
preceding
the Mandatory
Prepayment
Date  as
the “Conversion
Date” 
for purposes
of determining
the lowest applicable
Conversion
Price,
unless the Default
Event arises
as a
result of
a breach
in respect
of a specific
Conversion
Date in
which
case such
Conversion
Date shall
be the Conversion
Date),
multiplied by
(b) the
highest
Closing Price
for the
Common Stock
during the
period beginning
on the
date of
first
occurrence
of the
Event of
Default and
ending one
day prior
to the Mandatory
Prepayment
Date (the
“Default
Amount”) and
all other
amounts payable
hereunder
shall immediately
become due and
payable,
all without demand,
presentment
 or  notice,
 all 
of  which 
hereby
are 
expressly
waived,
 together
 with  all
 costs, including,
without limitation,
legal
fees
and expenses,
of collection,
and
the Holder shall
be entitled to exercise
all other
rights and
remedies
available
at law or
in equity.

 

If
the Borrower
fails to
pay the
Default
Amount within five
(5) business
days
of written
notice that
such amount
is due and
payable,
then
the Holder
shall
have the
right
at any
time, so long and
to the extent
that there
are sufficient
authorized
shares, to
require
the Borrower,
upon written
notice, to
convert
the Default Amount
into shares
of Common Stock
of the Borrower
pursuant to Section
1.1 hereof.

 

 

 

ARTICLE
IV. MISCELLANEOUS

 

4.1
Failure
or Indulgence
Not Waiver.
 No failure
or delay
on the part
of the Holder
in the
exercise
of any power,
right
or privilege
hereunder
shall
operate
as a waiver
thereof, nor shall
any
single or partial
exercise
of any such
power, right
or privilege preclude
other or further
exercise
thereof or of any
other right,
power or privileges.
All rights and
remedies
existing
hereunder
are cumulative
to, and not exclusive
of, any
rights
or remedies
otherwise available.

 

4.2
Notices.  All 
notices,  demands,
 requests,
 consents,
 approvals,
 and 
other communications
required
or permitted
hereunder
shall be in
writing and,
unless otherwise
specified
herein,
shall be
(i) personally
served,
(ii)
deposited
in the mail,
registered
or certified,
return
receipt
requested,
postage prepaid,
(iii) delivered
by reputable
air
courier
service
with charges
prepaid,
or (iv)
transmitted
by hand
delivery,
telegram,
or facsimile,
addressed
as set
forth below
or to
such other
address
as such
party
shall
have specified
most recently
by written
notice. Any notice
or other
communication
required
or permitted
to be given
hereunder
shall be
deemed
effective
(a)
upon hand
delivery
or delivery
by facsimile,
with accurate
confirmation
generated
by the transmitting
facsimile machine,
at the
address
or number
designated
below
(if delivered
on a business
day
during
normal business
hours where
such notice
is to be received),
or the first
business day
following
such
delivery
(if delivered
other
than on a business
day during
normal
business hours
where such
notice is to
be received)
or (b) on
the second business
day following 
the  date 
of  mailing 
by  express
 courier
 service,
 fully
prepaid,
 addressed
 to  such
address, or
upon actual
receipt
of such
mailing,
whichever
shall first
occur.
 The addresses
for such communications
shall be:

 

If
to the Borrower,
to:

AGRITEK
HOLDINGS,
INC.

319
Clematis
Street -
Suite 1008

West
Palm Beach,
FL 33401

Attn:
BARRY S.
HOLLANDER,
Chief
Financial
Officer

facsimile: 

 

With
a copy
by fax
only to (which
copy
shall not constitute
notice): 

[enter
name of
law firm]

Attn:
[attorney
name]

[enter
address line
1] 

[enter
city,
state, zip]

facsimile:
[enter
fax number]

 

If
to the Holder:

VIS
VIRES GROUP,
INC.

111
Great Neck
Road –
Suite 216,

Great
Neck, NY
11021

Attn:
Curt Kramer,
President

e-mail:
info@visviresgroup.com 

 

With
a copy
by fax
only to (which
copy
shall not constitute
notice):

Naidich
Wurman
 LLP

111
Great Neck
Road –
Suite 214

Great
Neck, NY
11021

Att:
Judah A. Eisner,
Esq.

facsimile:
516-466-3555

 

4.3
Amendments. 
This Note
and any
provision
hereof
may only
be amended
by an
instrument
in writing
signed
by the
Borrower
and the
Holder. The
term “Note”
and all
reference
thereto,
as used
throughout
this instrument,
shall mean
this instrument
(and the other
Notes issued
pursuant
to the Purchase
Agreement) as
originally
executed,
or if later amended
or supplemented,
then as so
amended
or supplemented.

 

4.4
Assignability.
This Note shall be binding upon
the Borrower
and its successors
and assigns,
and shall
inure to be the benefit
of the Holder and
its successors
and assigns.
 Each
transferee
of this Note must
be an
“accredited
investor” (as
defined
in Rule 501(a)
of the 1933
Act).
Notwithstanding anything
in this Note
to the
contrary,
this Note may
be pledged 
as  collateral
 in  connection
 with  a 
bona fide margin
 account
 or  other
 lending arrangement.

 

4.5
Cost of Collection.
 If default is made
in the payment
of this Note, the

Borrower
shall pay
the Holder
hereof
costs of collection,
including reasonable
attorneys’
fees.

 

4.6
Governing
Law. 
This Note shall
be governed
by and
construed
in accordance
with the laws
of the State of New
York
without regard
to principles
of conflicts
of laws.  Any
action brought
by either
party
against
the other
concerning
the transactions
contemplated
by this Note shall
be brought
only in
the state
courts
of New
York or
in the federal
courts
located
in the state
and county
of Nassau.
The parties
to this Note
hereby
irrevocably
waive any
objection
to jurisdiction and
venue of any
action instituted
hereunder
and shall not assert
any defense
based
on lack
of jurisdiction
or venue or
based
upon forum non
conveniens.
The Borrower
and Holder
waive trial
by jury. The
prevailing
party
shall be entitled
to recover
from the other
party
its reasonable
attorney's
fees
and costs.
In the event
that any
provision
of this Note
or any
other agreement
delivered
in connection
herewith
is invalid
or unenforceable
under any
applicable
statute or rule
of law, then
such provision
shall be deemed
inoperative
to the extent
that it may
conflict
therewith and
shall be deemed
modified to conform
with such statute or rule
of law. Any
such provision
which may
prove
invalid
or unenforceable
under any
law
shall not
affect
the validity or 
enforceability
 of  any
other  provision
 of  any
agreement.
Each  party
 hereby
irrevocably
waives
personal
service
of process
and
consents
to process
being
served
in any
suit, action or
proceeding
in connection
with this Agreement
or any
other Transaction
Document
by mailing
a copy
thereof
via registered
or certified
mail or
overnight
delivery
(with evidence
of delivery)
to such
party at
the address
in effect
for notices
to it under
this Agreement
and agrees
that such
service shall
constitute good
and sufficient
service of process
and notice
thereof. Nothing
contained
herein
shall be
deemed
to limit
in any
way
any
right
to serve
process
in any
other manner
permitted
by law.

 

4.7
Certain
Amounts.  Whenever
pursuant
to this Note
the Borrower
is required
to pay an
amount in
excess
of the outstanding
principal
amount (or
the portion
thereof required
to be paid
at that
time)
plus accrued
and unpaid
interest plus
Default Interest
on such interest,
the Borrower
and the Holder
agree that
the actual
damages
to the Holder
from the receipt
of cash payment
on this Note
may be difficult
to determine
and the amount
to be so paid
by the Borrower
represents
stipulated damages
and not a penalty
and is intended
to compensate
the Holder in part
for loss of the opportunity
to convert
this Note and
to earn
a return
from
the sale of shares
of Common Stock
acquired
upon conversion
of this Note at a price
in excess
of the price paid
for such
shares
pursuant to
this Note. The Borrower
and the Holder
hereby agree
that such amount
of stipulated
damages
is not plainly disproportionate
to the possible loss to the Holder from
the receipt
of a cash payment
without the opportunity to convert
this Note into shares of Common
Stock.

 

4.8
Purchase
Agreement.
 By
its acceptance
of this Note,
each
party
agrees
to be bound by
the applicable
terms of
the Purchase
Agreement.

 

4.9
Notice of
Corporate
Events.  Except
as otherwise
provided
below, the
Holder of
this Note shall
have
no rights
as a
Holder of
Common Stock
unless and
only to the
extent
that it converts
this Note into
Common Stock.
The Borrower
shall provide
the Holder
with prior notification
of any
meeting
of the Borrower’s
shareholders
(and copies
of proxy
materials
and other
information
sent
to shareholders).
In the event
of any
taking
by the Borrower
of a record
of its shareholders
for the
purpose of
determining
shareholders
who are
entitled
to receive
payment
of any
dividend or other distribution,
any right
to subscribe for,
purchase or
otherwise acquire
(including
by way
of merger,
consolidation,
reclassification
or recapitalization)
any
share of
any
class
or any
other
securities
or property,
or to receive
any
other
right,
or for
the purpose
of determining
shareholders
who are
entitled
to vote
in connection
with any
proposed
sale,
lease
or conveyance
of all
or substantially
all of
the assets
of the Borrower
or any
proposed
liquidation, dissolution or winding up of the Borrower,
the Borrower
shall mail a notice
to the Holder, at least
twenty (20)
days
prior to
the record
date specified
therein
(or thirty
(30) days
prior to the consummation
of the transaction
or event,
whichever
is earlier),
of the
date on
which any
such record
is to be taken
for the purpose of
such dividend,
distribution, right
or other event,
and a brief
statement
regarding
the amount and
character
of such
dividend, distribution,
right
or other
event
to the extent
known at
such time.
 The Borrower
shall make
a public announcement
of any
event
requiring
notification
to the Holder
hereunder
substantially
simultaneously
with the notification
to the Holder
in accordance
with the terms of
this Section 4.9.

 

4.10
Remedies.
 The Borrower
acknowledges
that a breach
by it of its obligations
hereunder
will cause
irreparable
harm
to the Holder,
by vitiating
the intent
and purpose of
the transaction
contemplated
hereby.
 Accordingly,
the Borrower
acknowledges
that the remedy
at law
for a
breach of
its obligations
under this
Note will be inadequate
and agrees,
in the event of
a breach
or threatened
breach
by the
Borrower
of the
provisions of
this Note, that the
Holder shall
be entitled,
in addition
to all
other available
remedies
at law
or in equity,
and in addition
to the penalties
assessable
herein,
to an
injunction or
injunctions restraining,
preventing
or curing
any breach
of this Note
and to
enforce
specifically
the terms
and provisions
thereof,
without the necessity
of showing
economic loss
and without
any bond
or other
security
being required.

 

 

IN
WITNESS
WHEREOF,
Borrower
has
caused
this Note
to be signed
in its
name by
its duly authorized
officer
this February
23, 2015.

 

AGRITEK
HOLDINGS,
INC.

 

By:
________________________________

BARRY
S. HOLLANDER

Chief
Financial
Officer

    	 

    	 

    

 

 

 

EXHIBIT
A -- NOTICE OF CONVERSION

 

The
undersigned
hereby
elects
to
convert
$  principal
amount
of the
Note
 (defined
below)  into
 that
 number
 of
 shares
 of
 Common
 Stock
to
 be
 issued
 pursuant
 to
 the
conversion
of the
Note
(“Common
Stock”)
as set
forth
below,
of AGRITEK
HOLDINGS,
INC.,
a Delaware
 corporation
(the
 “Borrower”)
 according
to  the
 conditions
 of
 the
 convertible
 note
 of
 the
Borrower
dated
as of
February
23, 2015
(the
“Note”),
as
of
the date
written
below.
No fee
will
be
charged
to
the
Holder
for
any
conversion,
except
for
transfer
taxes,
if any.

 

Box
Checked as
to applicable
instructions:

 

[ 
]   The
Borrower
shall
electronically
transmit
the Common
Stock issuable
pursuant
to this
Notice
of Conversion
to the
account of
the
undersigned
or its
nominee
with
DTC
through
its Deposit
Withdrawal
Agent
Commission
system
(“DWAC
Transfer”).

 

Name
of DTC
Prime
Broker:
Account Number:

 

[
 ]   The
undersigned
hereby requests
that the
Borrower
issue
a certificate
or certificates
for the
number of
shares
of Common
Stock set forth
below
(which
numbers
are
based
on the
Holder’s
calculation
attached
hereto)
in the
name(s)
specified
immediately
below
or, if
additional
space is
necessary,
on an attachment
hereto:

 

VIS
VIRES GROUP, INC.

111
Great Neck
Road –
Suite 216,

Great
Neck, NY
11021

Attention:
Certificate
Delivery

e-mail:
info@visviresgroup.com

 

Date
of Conversion
                                                                  __________

Applicable
Conversion
Price:
                                               $__________

Number
of Shares
of Common
Stock to
be Issued

Pursuant
to Conversion
of the
Notes:                          __________
 

Amount
of Principal
Balance
Due remaining

Under
the Note
after
this
conversion:
                         __________

 

VIS
VIRES GROUP, INC.

 

By:
_______________________

Name: Curt
Kramer

Title:
President

Date:
February
23, 2015

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00245-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00245-of-00352.parquet"}]]