Document:

exv4w18

Exhibit 4.18

[Letterhead of HSBC Bank (China) Company Limited]

CONFIDENTIAL

Namtai Electronic (Shenzhen) Company Limited

Gusu Industrial Estate,

Xixiang, Baoan

Shenzhen, P.R.C

6 August 2009

Attn: Ms. Connie Sit

Dear Madam,

BANKING FACILITIES (S/N: 090714)

With reference to our recent discussion, we are pleased to advise that we have reviewed your
banking facility and offer a renewal within the following limit which will be made available on the
specific terms and conditions outlined herein and upon the satisfactory completion of security
detailed below. Notwithstanding anything to the contrary in this facility letter, this facility is
also subject to our overriding right of suspension, withdrawal and repayment on demand at any time,
including the right to call for cash cover security on demand for prospective and contingent
liabilities and also subject to review at any time, and in any event, by 30 July 2010 or such later
date as determined by the Lender at its sole discretion.

	 	 	 
	Borrower :

	 	Namtai Electronic (Shenzhen) Company Limited
	 

	 	
	 
	 	 
	Lender :

	 	HSBC Bank (China) Company Limited, Shenzhen Branch
	 
	 	 
	Facility

/Amount :

	 	

For avoidance of doubt, each and all the facilities set
out below are of the revolving nature, i.e. any utilised
but repaid amount under any such facility is available
for re-utilisation, subject to the terms and conditions
of this Facility Letter.
	 
	 	 
	 

	 	Import Facilities up to USD5,000,000.-
	 

	 	Documentary Credit to your suppliers and Import Loan
Facilities in either USD or Foreign Currency (HKD or
JPY) for up to 90 days, less any usance / credit periods
granted by your suppliers.

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	 	Within which
	 

	 	Goods under your control and/or Trust Receipts up to USD5,000,000.-
	 
	 	 
	 

	 	Facility(ies) will only be made available subject to availability of
funding.
	 
	 	 
	 

	 	We may, at our sole and absolute discretion, refuse to allow drawings under
the facilities if the transaction in question does not meet our operational
requirements in respect of these facilities.
	 
	 	 
	Purpose :

	 	To finance the Borrower’s working capital requirement
	 
	 	 
	 

	 	The Borrower shall apply the loan proceeds for the purpose as set out above
and shall comply with the requirements of the relevant PRC laws and
regulations. The Borrower shall not apply the loan proceeds for any other
purpose, including but not limited to, applying the loan proceeds for
equity investments, applying the loan proceeds for speculation in the stock
market, the futures market, the real estate market or other similar market
speculation.
	 
	 	 
	Term :

	 	The “Term” here refers to the term during which this
facility is available for drawing. The Term of this
facility is up to (and including) 30 July 2010,
subject to review and renewal at the Lender’s sole
discretion and as unilaterally advised by the Lender
from time to time.
	 
	 	 
	Market Disruption /

Increased Costs :

	 	Without prejudice to our overriding right of
suspension, withdrawal and repayment on demand, we
would reserve our right to renegotiate any of the
interest margins, fees and the applicable period of
PBOC base rate detailed herein (in case there is any
Loan denominated in RMB) in the event of any change
occurring in any applicable law or regulation (or its
interpretation) or in PRC’s financial markets or the
need to comply with any requirement of any
regulatory/governmental authority (whether or not
having the force of law), which resulted, in our
opinion, in an increase of the cost of advancing,
maintaining or funding any facilities, a change on
the basis to calculate the interest margins,
deviation from the RMB interest rate regime permitted
by PRC laws or regulations (or its interpretation),
and/or a reduction in the net return to us from the
facilities outlined herein. Before the renegotiated
interest margins, fees or applicable base rate is
agreed, the Bank has the sole discretion to charge
the Borrower the revised interest and fees with a
notice to the Borrower. However, if such change in
applicable laws and regulations or the requirements
of relevant regulatory/governmental authorities have
retrospective effect, the Customer shall indemnify
the Bank against the increase of cost and/or the
reduction in the net return suffered by the Bank in
respect of relevant period affected by such
retrospective effect within 5 Business Days upon
receipt of written notice from the Bank. The Bank’s

Initials Illegible 2

 

	 	 	 
	 

	 	written notice setting out its claim for such indemnity shall be the conclusive
evidence for the indemnity amount payable to the Bank by the Customer, unless
the Bank’s claim conflicts with relevant laws, regulations,
regulatory/governmental requirements in the PRC.
	 
	 	 
	Commission/Interest :

	 	 Import Facility Interest Rate
	 

	 	The Applicable Interest Rate for Import Loans
hereunder shall be 0.55% per annum over Singapore
Interbank Money Market Offer Rate (SIBOR)/ London
Interbank Money Market Offer Rate (LIBOR)/ Hongkong
Interbank Money Market Offer Rate (HIBOR) of
USD/JPY/HKD for 1, 2 or 3 months or any other
interest period as may be determined by the Lender
and the principal and all accrued interests shall be
paid on the due date of each drawing to the debit of
your account.
	 
	 	 
	 

	 	SIBOR: SIBOR shall be determined as the United States Dollar interest rates
quoted on the Reuters Screen page SIBOR as of 11:30 a.m. (Singapore Time),
two Singapore business days prior to the first day of each Interest Period.
	 
	 	 
	 

	 	LIBOR: LIBOR shall be determined as the JPY interest rates quoted on the
Reuters Screen page LIBOR as of 11:00 a.m. (London Time), two London
business days prior to the first day of each Interest Period.
	 
	 	 
	 

	 	HIBOR: HIBOR shall be determined as the HKD interest rates quoted on the
Reuters Screen page HIBOR as of 11:30 a.m. (Hong Kong Time), two Hong Kong
business days prior to the first day of each Interest Period.
	 
	 	 
	 

	 	ALL the above provisions shall not be read as excluding both parties’
entering into any agreement in writing on any other applicable interest
rates and/or other interest rate modification mechanism in respect of all
or any part of the above mentioned facilities in whatever currencies. Such
otherwise agreed Applicable Interest Rate shall be specified in the
relevant drawdown request of the Borrower.
	 
	 	 
	 

	 	Documentary Credits opening commission for each validity of 90 days
or part thereof to be charged as below with minimum charge of USD24.- and
payable in full at the time of issuance of all Documentary Credits.

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	Documentary Credits Amount	 	Commission
	For Documentary Credits amount below USD100,000.- or its
equivalent
	 	 	0.10	%
	For Documentary Credits amount between USD100,000.-
(USD100,000.- inclusive) and USD250,000.- or its equivalent
	 	 	0.08	%
	For Documentary Credits amount between USD250,000.-
(USD250,000.- inclusive) and USD400,000.- or its equivalent
	 	 	0.06	%
	For Documentary Credits amount above USD400,000.- (USD400,000.-
inclusive) or its equivalent
	 	 	0.04	%

	 	 	 
	Export Documentary Credits / Non- Documentary Credits Bill Handling
Commission:

	 	 	 	 	 
	Export Documentary Credits / Non- Documentary Credits Bill	 	Commission
	First USD75,000.- (inclusive) or equivalent
	 	 	0.125	%
	Between USD75,000.- and USD300,000.- (inclusive) or its
equivalent
	 	 	0.0625	%
	Balance in excess of USD300,000.-
	 	 	0.03125	%

	 	 	 
	 

	 	Commission in lieu of exchange: Waived

	 	 	 
	Default 

Interest :

	 	

Please note Default Interest will be payable on sums which
are overdue or overlimit (as well as amounts demanded and
not paid) or (in respect of loan amount) used for purposes
other than the purpose of loan stated in this letter in
respect of all or any of the facility and such interest
will be charged by the Lender as follows:
	 
	 	 
	 

	 	Overdue or overlimit sums: Default interest is charged at 3% p.a.
over the stipulated interest rate of this facility, subject to fluctuation
at the lender’s discretion.
	 
	 	 
	 

	 	Loan amount used for purposes other than stated in this letter:
	 

	 	Default interest is charged at 5% p.a. over the stipulated interest rate of
this facility, subject to fluctuation at the lender’s discretion.
	 
	 	 
	 

	 	For avoidance of doubt, the impost of Default Interest as mentioned
above shall not be deemed as the Lender’s acknowledgement or acceptance of
any such default event as mentioned above and shall be without prejudice to
any rights of the Lender as described in the first paragraph of this
facility letter.
	 
	 	 
	Prepayment :

	 	With the Lender’s prior approval (which will not be withheld, provided that the
Lender is satisfied that the funds utilized are generated from Borrower’s internal resources
out of cash flow rather than from external

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	 	refinancing), during an interest period the total
amount of a drawing may, with 5 working days advance notice to the Lender, be repaid subject to the
usual penalties (i.e. Break Funding Cost: the differential between the
return the Lender would have received had the loan run to maturity and the
return the Lender is able to obtain by the placing of the funds repaid for
the remainder of the period in the market). Each prepayment should be in a
minimum of USD400,000.- (or, if the relevant drawing is made in any other
currency, the equivalent amount in such other currency) and in an integral
multiple of USD200,000. (or, if the relevant drawing is made in any other
currency, the equivalent amount in such other currency).
	 
	 	 
	Security :

	 	As security, we shall require:
	 
	 	 
	 

	 	A Corporate Guarantee for USD5,000,000.- from Nam Tai Electronics Inc.
(“the Guarantor”) supported by a board resolution and legal opinion issued
by lawyer acceptable to the bank, which shall replace the existing
Corporate guarantee for USD5,000,000.- from Nam Tai Electronic & Electrical
Products Limited upon Nam Tai Electronic & Electrical Products Limited ‘s
formal delisting.
	 
	 	 
	 

	 	The Borrower undertakes that:

	 	 	 	 	 
	 

	 	(i) 
	 	upon the realisation of any foreign
guarantee/security in respect of this facility, it shall conduct
foreign debt registration with the local State Administration of
Foreign Exchange (“SAFE”) in a timely manner but in no event later than
15 days after realisation of such foreign guarantee/security;
	 
	 	 	 	 
	 

	 	(ii) 
	 	to procure the successful registration with
SAFE as mentioned in the foregoing item (i), the Borrower shall ensure
that it has sufficient borrowing gap at the time of the registration of
the realised foreign guarantee/security;
	 
	 	 	 	 
	 

	 	(iii) 
	 	throughout the term of the facility and as
long as the facility is existing or any indebtedness under the facility
is outstanding, the Borrower shall keep the Lender informed of the
amount of its borrowing gap (calculated as the balance of (i) its
approved total investment amount less (ii) its registered capital) and
shall forthwith advise the Lender of any change in the borrowing gap;
and
	 
	 	 	 	 
	 

	 	(iv) 
	 	the Borrower shall take all necessary measures
to ensure that all the indebtedness owed to the Lender under this
facility be fully settled in the same currency as that of such
indebtedness.

	 	 	 	 	 	 	 
	Conditions
	 	 	 	 	 	 
	Precedent :

	 	 	1)  	 	 	The Borrower shall present to the Lender a
valid Borrowing Card issued by the People’s
Bank of China.
	 
	 	 	 	 	 	 
	 

	 	 	2)  	 	 	Certified true copies of all government
approvals and certificates in relation to the establishment of the
Borrower shall be submitted to the Lender.
	 
	 	 	 	 	 	 
	 

	 	 	3)  	 	 	The Borrower has provided its internal
authorization document

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	 	 	 	 	 	(such as shareholders’ resolution, board
resolution) approving (or
authorizing others to approve) the facilities hereunder and
authorizing representative(s) to accept and sign the terms, conditions
and documents in connection with the facilities hereunder in strict
compliance with its articles of association and the PRC Company Law
(or equivalent or similar law if the Borrower is a foreign entity).
	 
	 	 	 	 	 	 
	 

	 	 	4	)	 	In the event that the Lender’s making
available any facility hereunder is subject to regulatory approval or
the completion of other procedures with the regulator(s), the
acquisition of such regulatory approval and the completion of such
procedures with regulator(s).
	 
	 	 	 	 	 	 
	 

	 	 	5	)	 	The Lender is satisfied that all the
security(ies) stated in the “Security” item above (if any) has/have
been established and is/are valid and enforceable. The security
provider’s internal authorization document (such as shareholders’
resolution, board resolution) approving (or authorizing others to
approve) the provision of the Security and authorizing
representative(s) to accept and sign the terms, conditions and
documents in connection with the Security in strict compliance with
its articles of association and the PRC Company Law (or equivalent or
similar law if the security provider is a foreign entity) has been
duly made and submitted to the Lender.
	 
	 	 	 	 	 	 
	Other 

Conditions :

	 	 	

1	
)	 	

Without prejudice to any security or other
priority right to which the Lender is
entitled (if any), this facility shall rank
at least pari-passu with all present and
future borrowings of the Borrower. The
Borrower undertakes to advise the Lender in
advance of any future borrowings.
	 
	 	 	 	 	 	 
	 

	 	 	2	)	 	The Borrower should not create or attempt to
create or permit to subsist any mortgage, debenture, charge, pledge,
lien or other encumbrance upon, or permit any lien or other
encumbrance (save a lien arising by operation of law in the ordinary
course of trading) on the whole or any part of present or future
assets of the Borrower without Lender’s prior written consent.
	 
	 	 	 	 	 	 
	 

	 	 	3	)	 	Half-yearly and audited yearly financial
statements of the Borrower and the Guarantor to be prepared by
qualified accountants shall be provided to the Lender whenever
available but in any event no later than 90 days and 120 days from the
financial half-year-ends and year-ends respectively.
	 
	 	 	 	 	 	 
	 

	 	 	4	)	 	Other financial or operational information of
the Borrower as from time to time reasonably requested by the Lender.

	 	 	 
	Expenses :

	 	All out-of-pocket expenses including but not limited to the PRC stamp duty and the legal
fees in relation to the preparation, negotiation,

Initials Illegible 6

 

	 	 	 
	 

	 	execution and enforcement of this facility shall be borne by the Borrower.
	 
	 	 
	Taxation and
	 	 
	Deduction :

	 	All payments of principal, interest, fees and other expenses shall be made by the
Borrower free and clear of taxes, levies, imposts, duties, charges or withholding of
whatsoever nature.
	 
	 	 
	Assignment :

	 	Without prejudice to any right of assignment enjoyed
by the Lender pursuant to law or any contract, the
Lender may, without any party’s consent, assign any
and/or all of its rights and obligations hereunder
to any HSBC Group member(s) that are/is more than
50% owned or controlled by HSBC Group or any of the
Lender’s branch(es) (if any).
	 
	 	 
	Governing Law :

	 	This letter shall be governed by and construed in
accordance with the laws of the People’s Republic of
China.
	 
	Jurisdiction :

	 	The Borrower submits to the jurisdiction of the PRC court at the principal office of
the Lender. Nothing in this Clause limits the right of the Lender to bring proceedings
against the Borrower in connection with this facility in any other court of any competent
jurisdiction.

(i) Section 83 of the HK Banking Ordinance and (ii) the CBRC Administration Rules on
the Connected Transactions of Commercial Banks with Insiders and Shareholders (the “CBRC Rules on
Connected Transactions”):

Please note that Section 83 of the Banking Ordinance and the CBRC Rules on Connected Transactions
have imposed on us as a bank certain limitations on advances to persons related to our directors or
employees or advances that are of the “connected transaction” nature. In acknowledging this
Facility Letter you should advise us whether you are in any way related to any of our directors or
employees within the meaning of Section 83 or otherwise are a “connected party” defined in the CBRC
Rules on Connected Transactions and in the absence of such advice we will assume that you are not
so related. We would also ask, should you become so related subsequent to acknowledging this
Facility Letter, that you immediately advise us in writing.

We may provide any information relating to any of your accounts with us and any facilities we may
provide to you from time to time or their conduct or any other information concerning your
relationship with us to any other company or office which at the relevant time belongs to or is
part of the HSBC Group.

The facility offer will remain open for acceptance until the close of business on 16
September 2009 and if not accepted by that date will be deemed to have lapsed (unless otherwise
agreed by us in writing).

We shall be grateful if you could arrange for the authorized signatory(ies) of your company in
accordance with the terms of the shareholders’ resolution or board resolution (as the case may be)
to be given to us, to sign and return to us the duplicate copy of this letter to signify your
understanding and acceptance of the terms and conditions under which the facility is granted.

Initials Illegible 7

 

We are pleased to be of continued assistance.

Yours faithfully,

	 	 	 
	For and on behalf of

	 	Accepted by
	HSBC Bank (China) Company Limited

	 	Namtai Electronic (Shenzhen) Company Limited
	Shenzhen Branch

	 	

	 	 	 	 	 
	/s/ Faye Zhou

	 	 	 	/s/ [Signature Illegible]
	 

	 	 	 	 
	Faye Zhou

	 	[Chop Impressed]
	 	Authorized Signature(s) &
	Vice President

	 	 	 	Company Chop [Chop Impressed]
	Commercial Banking

	 	 	 	Date:

	 	 	 
	/s/ Barry Yiu
 

Barry Yiu

	 	 
	Senior Vice President
	 	 
	Commercial Banking
	 	 

Initials Illegible 8exv10w3

Exhibit 10.3

AMENDMENT

To The

Hudson Valley Bank

Supplemental Retirement Plan of 1995

     THIS AMENDMENT (the “Amendment”) TO THE HUDSON VALLEY BANK SUPPLEMENTAL RETIREMENT
PLAN OF 1995 (the “Plan” or the “Agreement”) is executed on this ___day of December, 2008, by
Hudson Valley Bank, N.A., formerly known as Hudson Valley Bank, a national banking association
(hereinafter referred to as the “Plan Sponsor” and/or the “Service Provider,”) and
______ (hereinafter referred to as the “Participant”), and represents an effort by
both parties to comply with the requirements of Internal Revenue Code Section 409A. The Plan
Sponsor has operated this Plan since 2005 in good faith compliance with the provisions of Section
409A and all Applicable Guidance.

     WHEREAS the Agreement may be amended at any time by the mutual written consent of the parties
to the Agreement; and

     WHEREAS it is both anticipated and expected that the terms and provisions of the Plan may need
to be amended again in the future to assure continued compliance. The Plan Sponsor and the
Participant acknowledge that fact and agree to take any and all steps necessary to operate the plan
in “good faith” based on their current understanding of the regulations;

     NOW, THEREFORE, the Plan is hereby amended (without specific numerical reference) by adding
and/or replacing certain definitions and adding or replacing certain articles of the Plan. Nothing
contained herein is considered by the Plan Sponsor to constitute a material modification of the
original Plan:

The following definitions if specifically identified in the original Plan are hereby replaced in
their entirety, and if not found in the original Plan are hereby added:

     “Aggregated Plans” shall mean this Plan and any other like-type plan or arrangement
(nonaccount balance plan) of the Plan Sponsor in which the Participant participates and to which
the Plan or Applicable Guidance requires the aggregation of all such nonqualified Deferred
Compensation Plans in applying Code § 409A and associated regulations.

     “Applicable Guidance” shall mean, as the context requires, Code § 409A, Final Treasury
Regulations §1.409A, or other written Treasury or IRS guidance regarding or affecting Code § 409A.

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

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

 

 

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

     (c) Change in Ownership of a Substantial Portion of Corporate Assets. A Change in
Control based on the sale of assets occurs if a person or group acquires forty percent (40%)
or more of the gross fair market value of the assets of a Plan Sponsor over a twelve (12)
month period. No change in control results pursuant to this Article (c) if the assets are
transferred to certain entities controlled directly or indirectly by the shareholders of the
transferring corporation, as defined in Treasury Regulations §1.409A-3(i)(5)(vii).

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

     “Plan” shall mean this Supplemental Retirement Plan of 1997, the Participation Agreement (if
any), all Election Forms (if any), the Trust (if any), and any other written documents relevant to
the Plan. For purposes of applying Code § 409A requirements, this Plan is a nonaccount balance plan
under Treasury Regulation §1.409-1(c)(2)(i)(A.

     “Plan Sponsor” shall mean the person or entity: (i) receiving the services of the Participant;
(ii) with respect to whom the Legally Binding Right to compensation arises; and (iii) all persons
with whom such person or entity would be considered a single employer under Code §414(b) or
§414(c).

     “Section 409A” shall mean Section 409A of the Code and the Treasury Regulations and other
Applicable Guidance issued under that Section.

     “Separation from Service” shall mean:

     (a) Employee Participants. The occurrence of a Participant’s death, retirement, or
“other termination of employment” (as defined in Treasury Regulations §1.409A-1(h)(1)) with the
Plan Sponsor (as defined in Treasury Regulations §1.409A-1(h)(3)).

(i) Effect of Leave. A Participant does not incur a Separation from Service
if the Participant is on military leave, sick leave, or other bona fide leave of
absence if the period of such leave does not exceed six (6) months or, if longer,
the period for which a statute or contract provides the Participant with the right
to reemployment with the Plan Sponsor. If a Participant’s leave exceeds six (6)
months but the Participant is not entitled to reemployment under a statute or
contract, the Participant incurs a Separation from Service on the next day following
the expiration of such six (6) month period.

 

 

(ii) Termination of Employment. A Participant will have incurred a Separation
from Service where the Plan Sponsor and the Participant reasonably anticipated that no
further services would be performed after a certain date. Notwithstanding the above, a
Participant is presumed to have Separated from Service (whether as an Employee or an
Independent Contractor), when the level of bona fide services performed decreases to a level
equal to or less than twenty percent (20%) of the services performed by the Participant
during the immediately preceding 36-month period (or the full period of services to the
employer if the Participant has been providing services to the Plan Sponsor for less than 36
months). A Participant will be presumed not to have Separated from Service where the level
of bona fide services performed continues at a level that is fifty percent (50%) or more of
the average level of service performed by the Participant during the immediately preceding
36-month period (or the full period of services to the employer if the Participant has been
providing services to the Plan Sponsor for less than 36 months).

(b) Independent Contractor Participants. A Separation from Service will occur upon
the expiration of the contract (or in the case of more than one contract, all contracts)
under which services are performed for the Plan Sponsor (as defined in Treasury Regulations
§1.409A-1(h)(3)), if the expiration constitutes a good-faith and complete termination of the
contractual relationship. The Plan is considered to satisfy the requirement with respect to
an amount payable to an Independent Contractor upon a Separation from Service if: (i) no
amount will be paid to the Participant before a date at least twelve (12) months after the
day on which the contract expires under which the Participant performs services for the Plan
Sponsor (or, in the case of more than one contract, all such contracts expire); and (ii) no
amount payable to the Participant on that date will be paid to the Participant if, after the
expiration of the contract (or contracts) and before that date, the Participant performs
services for the Service Recipient as an Independent Contractor or an Employee.

     “Specified Employee” shall mean that the Participant also satisfies the definition of a “key
employee” as such term is defined in Code §416(i) (without regard to Section 416(i)(5)). However,
the Participant is not a Specified Employee unless any stock of the Plan Sponsor is publicly traded
on an established securities market or otherwise, as defined in Code §1.897-1(m). If the
Participant is a key employee at any time during the twelve (12) months ending on the
identification date, the Participant is a Specified Employee for the twelve (12) month period
commencing on the first day of the fourth (4th) month following the identification date.
For purposes of this Article, the identification date is December 31 unless a different date is
specified in writing by the Plan Sponsor. The determination of the Participant as a Specified
Employee shall be made by the Administrator in accordance with IRC Section 416(i), the “specified
employee” requirements of Section 409A, and Treasury Regulations.

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

The following articles if specifically identified in the original Plan are hereby replaced in their
entirety, and if not found in the original Plan are hereby added:

     Prohibition on Acceleration of Payments. Notwithstanding anything in this Plan to the
contrary, neither the Plan Sponsor nor a Participant may accelerate the time or schedule of any
payment or amount scheduled to be paid under this Plan, except as otherwise permitted by Treasury
Regulations §1.409A-3(j)(4). The Plan Sponsor shall deny any change made to an election if the Plan
Sponsor determines that the change violates the requirements of authoritative guidance. However,
the Plan Sponsor shall permit the acceleration of the time or schedule of payment to pay the
Participant at any time the arrangement fails to meet the requirements of Code Section 409A and the
Treasury Regulations and other guidance promulgated thereunder. Such payment shall not exceed the
amount required to be included in income as the result of the failure to comply with the
requirements of Code Section 409A.

 

 

     Delay in Payment by Plan Sponsor.

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

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

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

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

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

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

     (iv) Not withstanding the above, a payment may be delayed where the payment would
jeopardize the ability of the Plan Sponsor to continue as a going concern.

     (b) Treatment of Payment as Made on Designated Payment Date. Each payment under this
Plan is deemed made on the required payment date even if the payment is made after such date,
provided the payment is made by the latest of: (i) the end of the calendar year in which the
payment is due; (ii) the 15th day of the third calendar month following the payment due date;
(iii) in case the Plan Sponsor cannot calculate the payment amount on account of
administrative impracticality which is

 

 

beyond the Participant’s control (or the control of the Participant’s estate), in the
first calendar year in which payment is practicable; (iv) in case the Plan Sponsor does not
have sufficient funds to make the payment without jeopardizing the Plan Sponsor’s solvency,
in the first calendar year in which the Plan Sponsor’s funds are sufficient to make the
payment.

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

     (a) Claim. A Participant or Beneficiary (hereinafter referred to as a “Claimant”) who
believes he or she is entitled to any Plan benefit under this Plan may file a claim with the
Plan Sponsor. The Plan Sponsor shall review the claim itself or appoint an individual or
entity to review the claim.

     (b) Claim Decision. The Claimant shall be notified within ninety (90) days after the
claim is filed (forty-five (45) days for a Disability Claim), whether the claim is allowed
or denied, unless the claimant receives written notice from the Plan Sponsor or appointee of
the Plan Sponsor prior to the end of the ninety (90) day period (forty-five (45) days for a
Disability Claim) stating that special circumstances require an extension of the time for
decision. For a claim other than for Disability, such extension is not to extend beyond the
day which is one-hundred eighty (180) days after the day the claim is filed as long as the
Plan Sponsor notifies the claimant of the circumstances requiring the extension, and the
date as of which a decision is expected to be rendered. For a Disability Claim, a thirty
(30) day extension is permitted, with an additional thirty (30) days permitted, provided
that the Plan Sponsor notifies the claimant prior to expiration of the first 30 day
extension, of the circumstances requiring the extension, and the date as of which a decision
is expected to be rendered. If the Plan Sponsor denies the claim, it must provide to the
Claimant, in writing or by electronic communication:

     (i) The specific reasons for such denial;

     (ii) Specific reference to pertinent provisions of this Plan on which such
denial is based;

     (iii) A description of any additional material or information necessary for the
Claimant to perfect his or her claim, by providing such material to the Plan Sponsor
within forty-five (45) days, and an explanation why such material or such
information is necessary; and

     (iv) A description of the Plan’s appeal procedures and the time limits
applicable to such procedures, including a statement of the Claimant’s right to
bring a civil action under Section 502(a) of ERISA following a denial of the appeal
of the denial of the benefits claim.

     (c) Review Procedures. A request for review of a denied claim must be made in writing
to the Plan Sponsor within sixty (60) days after receiving notice of denial. The decision
upon review will be made within sixty (60) days (forty-five (45) days for a Disability
claim) after the Plan Sponsor’s receipt of a request for review. If the Plan Sponsor
determines that an extension of time for processing is required, written notice of the
extension shall be furnished to the claimant (which will include the expected date of
rendering a decision) prior to the termination of the initial period, but in no event will
the extension exceed sixty (60) days (forty-five (45) days for a Disability claim).
The reviewer shall afford the Claimant an opportunity to review and receive, without
charge, all relevant documents, information, and records and to submit issues and comments
in writing to the Plan Sponsor. The reviewer shall take into account all comments,
documents, records, and other information submitted by the Claimant relating to the claim
regardless of whether the information was submitted or considered

 

 

in the benefit determination. Upon completion of its review of an adverse initial
claim determination, the Plan Sponsor will give the Claimant, in writing or by electronic
notification, a notice containing:

     (i) its decision;

     (ii) the specific reasons for the decision;

     (iii) the relevant Plan provisions on which its decision is based;

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

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

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

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

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

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

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

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

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

 

 

amounts payable under this Plan are included in the Participants’ gross income in the latest
of:

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

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

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

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

     (c) Discretionary Termination. The Plan Sponsor may also terminate this Plan and make
distributions provided that:

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

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

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

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

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

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

     Status of Plan. The Plan is intended to be a plan that: (i) is not qualified within the
meaning of Code Section 401(a); and (ii) “is unfunded and is maintained by the Plan Sponsor
primarily for the purpose of providing deferred compensation for a select group of management or
highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3), and
401(a)(1). Furthermore, the provisions of this Plan, both in form and in operation, are intended

 

 

to comply with the requirements of Section 409A(a)(2), (3), and (4) of the Code. This Plan shall be
administered and interpreted to the extent possible in a manner consistent with these intentions.
If the Plan Sponsor or Plan Administrator determines in good faith that a Participant who has not
experienced a Separation from Service no longer qualifies as a member of a select group of
management or highly compensated employees, as membership in such group is determined in accordance
with Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, or that such a Participant’s participation
in the Plan could jeopardize the status of this Plan as a plan intended to be “unfunded” and
“maintained primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” within the meaning of ERISA Sections 201(2),
301(a)(3), and 401(a)(1), or causes the Plan to fail to comply with any requirements of Sections
409A(a)(2), (3), or (4) of the Code, the Plan Sponsor may take reasonable steps necessary to
maintain the status of the Plan as such or to prevent or cure any failure, as the case may be.

The following Article is hereby deleted:

17. LUMP SUM PAYMENT OF BENEFITS

     IN WITNESS OF THE ABOVE, the Plan Sponsor and Participant have executed this Amendment to the
Agreement.

	 	 	 	 	 
	WITNESS:

	 	 	 	FOR THE PLAN SPONSOR:
	 
	 	 	 	 
	 

	 	 	 	 
	(name)

	 	 	 	(name of Plan Sponsor)
	 
	 	 	 	 
	 

	 	 	 	 
	(signature of witness)

	 	 	 	(signature of authorized officer of Plan Sponsor)
	 
	 	 	 	 
	 

	 	 	 	 
	(title if any)

	 	 	 	(title of signing officer)
	 
	 	 	 	 
	 

	 	 	 	THE PARTICIPANT:
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(signature)
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(print name)

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