Document:

Lithium Exploration Group, Inc. - Exhibit 10.82 - Filed by newsfilecorp.com

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL IN THE FORM,
SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS. 

LITHIUM EXPLORATION GROUP, INC. 
10% OID Convertible
Promissory Note 
Due February 3, 2018 

	February 3, 2017 		 
	 	Purchase Price: 	USD $73,500.00 
	 	Principal Price: 	$80,850.00 

              For
value received, Lithium Exploration Group, Inc., a Nevada corporation
(the "Company"), hereby promises to pay to the order of JDF Capital Inc.
(together with its successors, representatives, and permitted assigns, the
"Holder"), in accordance with the terms hereinafter provided, up to an aggregate
of $80,850(Eighty thousand eight hundred fifty dollars) (the "Principal
Amount"), which includes the aggregate principal sum of $73,500
(Seventy-three thousand f i v e h u n d r e d dollars) advanced by the Holder, $
5 , 0 0 0 (five thousand dollars) legal fees (deducted from the amount funded)
and $7,350 (Seven thousand three hundred fifty dollars) Original Issue Discount
incurred by the Holder shall be due and payable on February 3, 2018. 

              The
due dates of any outstanding principal balance are referred to herein as the
"Maturity Date". 

              All
payments under or pursuant to this Note refer to and shall be made in United
States Dollars in immediately available funds to the Holder at the address of
the Holder first set forth above or at such other place as the Holder may
designate from time to time in writing to the Company or by wire transfer of
funds to the Holder's account, instructions for which are attached hereto as
Exhibit A. 

ARTICLE I 

                     Section
1.1        Purchase Agreement.
This Note has been executed and delivered pursuant to the Security Purchase
Agreement dated as of February 3, 2017 (the "Purchase Agreement'') by and among
the Company and the purchasers listed therein. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth for such terms in the
Purchase Agreement. 

                     Section
1.2        Interest. 

                     (a)        Beginning
on the issuance date of this Note (the "Issuance Date"), the outstanding
principal balance of this Note shall bear interest at a rate per annum equal to
10 percent (10%) accruing on a 12 month basis, which shall consist of the
pre-paid interest referred to above, which may be converted to shares of the
Company's common stock, par value $0.001 per share (the "Common Stock") at the
option of the Holder on the same terms as the Note. 

1 

                 
   Section
1.3        Payment on Non-Business
Days. Whenever any payment to be made shall be due on a Saturday, Sunday or
a public holiday under the laws of the State of Nevada, such payment may be due
on the next succeeding business day and such next succeeding day shall be
included in the calculation of the amount of accrued interest payable on such
date. 

                   
 Section
1.4        Transfer. This Note
may be transferred or sold, subject to the provisions of Section 4.8 of this
Note, or pledged, hypothecated or otherwise granted as security by the Holder.

                
    Section
1.5        Replacement. Upon
receipt of a duly executed, notarized and unsecured written statement from the
Holder with respect to the loss, theft or destruction of this Note (or any
replacement hereof), and without requiring an indemnity bond or other security,
or, in the case of a mutilation of this Note, upon surrender and cancellation of
such Note, the Company shall issue a new Note, of like tenor and amount, in lieu
of such lost, stolen, destroyed or mutilated Note. 

ARTICLE II 

EVENTS OF DEFAULT; REMEDIES 

                   Section
2.1        Events of Default. The
occurrence of any of the following events shall be an "Event of Default" under
this Note: 

              (a)        the
Company shall fail to make the payment of any amount of principal outstanding on
the date such payment is due hereunder; 

              (b)        the
Company shall fail to make any payment of interest in shares of Common Stock for
a period of three (3) days after the date such interest is due; 

              (c)       
the suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed on at least one of the OTC Bulletin
Board, Nasdaq Small Cap Market, Nasdaq National Market, American Stock Exchange
or The New York Stock Exchange, Inc. for a period of five (5) consecutive
Trading Days; 

              (d)        the
Company's notice to the Holder, including by way of public announcement, at any
time, of its inability to comply or its intention not to comply with proper
requests for conversion of this Note into shares of Common Stock;

              (e)       
the Company shall fail to (i) timely deliver the shares of Common Stock upon
conversion of the Note or any accrued and unpaid interest, or (ii) make the
payment of any fees and/or liquidated damages under this Note or the Purchase
Agreement, which failure in the case of items (i) and (ii) of this Section
2.1(e) is not remedied within three (3) business days after the incurrence
thereof; 

              (f)        default
shall be made in the performance or observance of (i) any material covenant,
condition or agreement contained in this Note (other than as set forth in clause
(e) of this Section 2.1) and such default is not fully cured within five (5)
business days after the occurrence thereof or (ii) any material covenant,
condition or agreement contained in the Purchase Agreement or any other
Transaction Document which is not covered by any other provisions of this
Section 2.1 and such default is not fully cured within five (5) business days
after the occurrence thereof; 

              (g)       
any material representation or warranty made by the Company herein or in the
Purchase Agreement or any other Transaction Document shall prove to have been
false or incorrect or breached in a material respect on the date as of which made; 

2 

              (h)       
the Company shall (A) default in any payment of any amount or amounts of
principal of or interest on any Indebtedness (other than the Indebtedness
hereunder) the aggregate principal amount of which Indebtedness is in excess of
$50,000 or (B) default in the observance or performance of any other agreement
or condition relating to any Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to perm it the holder or holders or beneficiary or
beneficiaries of such Indebtedness to cause with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity; 

              (i)       
the Company shall (i) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its property or assets, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the United States Bankruptcy Code (as now or hereafter in effect) or under
the comparable laws of any jurisdiction (foreign or domestic), (iv) file a
petition seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors'
rights generally, (v) acquiesce in writing to any petition filed against it in
an involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
(vi) issue a notice of bankruptcy or winding down of its operations or issue a
press release regarding same, or (vii) take any action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing; 

              (j)        a
proceeding or case shall be commenced in respect of the Company, without its
application or consent, in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, moratorium, dissolution, winding up, or
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all or any substantial
part of its assets in connection with the liquidation or dissolution of the
Company or (iii) similar relief in respect of it under any law providing for the
relief of debtors, and such proceeding or case described in clause (i), (ii) or
(iii) shall continue undismissed, or unstayed and in effect, for a period of
sixty (60) days or any order for relief shall be entered in an involuntary case
under United States Bankruptcy Code (as now or hereafter in effect) or under the
comparable laws of any jurisdiction (foreign or domestic) against the Company or
action under the laws of any jurisdiction (foreign or domestic) analogous to any
of the foregoing shall be taken with respect to the Company and shall continue
undismissed, or unstayed and in effect for a period of sixty (60) days; or 

              (k)       
the failure of the Company to instruct its transfer agent to remove any legends
from shares of Common Stock eligible to be sold under Rule 144 of the Securities
Act and issue such unlegended certificates to the Holder within five (5)
business days of the Holder's request so long as the Holder has provided
reasonable assurances and opinions of counsel to the Company that such shares of
Common Stock can be resold pursuant to Rule 144; or 

              (I)       
the failure of the Company to pay any amounts due to the Holder herein within
three (3) business days of receipt of notice to the Company. 

                   
 Section 2.2        Remedies Upon An
Event of Default. If an Event of Default shall have occurred and shall be
continuing, the Holder of this Note may at any time at its option, (a) declare
the entire unpaid principal balance of this Note, together with all interest
accrued hereon, due and payable, and thereupon, the same shall be accelerated
and so due and payable, without presentment, demand, protest, or notice, all of
which are hereby expressly unconditionally and irrevocably waived by the
Company; provided, however, that upon the occurrence of an Event of Default
described in (i) Sections (k) or (I), the outstanding principal balance and
interest hereunder shall be automatically due and payable and (ii) Sections 2.1
(a)-(j) and 2.l (m)-(n), demand the prepayment of this Note pursuant to Section 3.6 hereof, (b) subject to Section 3.4
hereof, demand that the principal amount of this Note then outstanding shall be
converted into shares of Common Stock at a Conversion Price (as defined in
Section 3.2(a) hereof) per share calculated pursuant to Section 3.1 hereof
assuming that the date that the Event of Default occurs is the Conversion Date
and demand that all accrued and unpaid interest under this Note shall be
converted into shares of Common Stock in accordance with Section 1 .2 hereof, or
(c) exercise or otherwise enforce any one or more of the Holder's rights,
powers, privileges, remedies and interests under this Note, the Purchase
Agreement, other Transaction Document or applicable law. No course of delay on
the part of the Holder shall operate as a waiver thereof or otherwise prejudice
the right of the Holder. No remedy conferred hereby shall be exclusive of any
other remedy referred to herein or now or hereafter available at law, in equity,
by statute or otherwise. 

3 

ARTICLE III 

CONVERSION; ANTIDILUTION; PREPAYMENT 

                     Section
3.1        Conversion Option.

        
     (a)        At
any time on or after the Issuance Date, this Note shall be convertible (in whole
or in part), at the option of the Holder (the "Conversion Option"), into
such number of fully paid and non- assessable shares of Common Stock (the
"Conversion Rate") as is determined by dividing that portion of the
outstanding principal balance under this Note as of such date that the Holder
elects to convert by the Conversion Price (as defined in Section 3.2(a) hereof)
then in effect on the date on which the Holder faxes a notice of conversion (the
"Conversion Notice"), duly executed, to the Company (the "Voluntary
Conversion Date"), provided, however, that the Conversion Price shall be
subject to adjustment as described in Section 3.5 below. The Holder shall
deliver this Note to the Company at the address designated in the Purchase
Agreement at such time that this Note is fully converted. With respect to
partial conversions of this Note, the Company shall keep written records of the
amount of this Note converted as of each Conversion Date. 

         
    (b)        On
any Voluntary Conversion Date, the Holder may cause the any outstanding
Principal Amount of this Note plus all accrued and unpaid interest to convert
into a number of fully paid and non-assessable shares of Common Stock equal to
the quotient of the elected outstanding principal amount of this Note plus all
accrued interest on the elected outstanding on the Voluntary Conversion Date (as
described in this Section below) divided by the Conversion Price as described in
Section 3.2(a) below. Furthermore, upon the occurrence of an Event of Default
(as defined in Section 2.1 hereof), then to the extent permitted by law, the
Company will pay interest to the Holder, payable on demand, on the outstanding
principal balance of the Note from the date of the Event of Default until such
Event of Default is cured at the rate of the lesser of fifteen percent (15%) and
the maximum applicable legal rate per annum. 

(B)               Conversion
Limitations; Holder's Restriction on Conversion. The Company shall
not effect any conversion of this Note, and the Holder shall not have the right
to convert any portion of this Note, to the extent that after giving effect to
such conversion, the Holder (together with the Holder's affiliates), as set
forth on the applicable Conversion Notice, would beneficially own in excess of
4.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to such conversion. For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Note with respect to which the determination of such sentence
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A) conversion of the remaining, nonconverted portion of
this Note beneficially owned by the Holder or any of its affiliates and (B)
Exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Notes or the
Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its affiliates. Except as set forth
in the preceding sentence, for purposes of this Section, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act. To the
extent that the limitation contained in this section applies, the determination
of whether this Note is convertible (in relation to other securities owned by
the Holder) and of which a portion of this Note is convertible shall be in the
sole discretion of such Holder. To ensure compliance with this restriction, the
Holder will be deemed to represent to the Company each time it delivers a
Conversion Notice that such Conversion Notice has not violated the restrictions
set forth in this paragraph and the Company shall have no obligation to verify
or confirm the accuracy of such determination. For purposes of this Section, in
determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as reflected in (x) the
Company's most recent Form 10-Q or Form 10-K (or such related form), as the case
may be, (y) a more recent public announcement by the Company or (z) any other
notice by the Company or the Company's Transfer Agent setting forth the number
of shares of Common Stock outstanding. Upon the written or oral request of the
Holder, the Company shall within two Trading Days confirm orally and in writing
to the Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Note, by the Holder or its affiliates since the date as of which
such number of outstanding shares of Common Stock was reported. The provisions
of this Section may be waived by the Holder upon, at the election of the Holder,
not less than 61 days' prior notice to the Company, and the provisions of this
Section 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). 

4 

                     Section
3.2        Conversion Price. 

              The
Holder of this Note is entitled, at its option, at any time, to convert all or
any amount of the principal face amount of this Note then outstanding into
shares of the Company's common stock (the "Common Stock") at a price
("Conversion Price") for each share of Common Stock equal to 50%
of the lowest trading price of the Common Stock as reported
on the OTC Markets electronic quotation service or such marketplace upon which
the Company’s shares are traded or any exchange upon which the Common Stock may
be traded in the future ("Exchange"), for the
twenty prior trading days including the day
upon which a Notice of Conversion is received by the Company or its transfer
agent (provided such Notice of Conversion is delivered by fax or other
electronic method of communication to the Company or its transfer agent after 4
P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include
the same day closing price). No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share. To the extent the
Conversion Price of the Company’s Common Stock closes below the par value per
share, the Company will take all steps necessary to solicit the consent of the
stockholders to reduce the par value to the lowest value possible under law. The
Company agrees to honor all conversions submitted pending this increase. In
the event the Company experiences a DTC “Chill” on its shares, the conversion
price shall be decreased by 10% while that “Chill” is in effect. 

                     Section
3.3        Mechanics of Conversion.

                  
  (a)        Not later than
three (3) Trading Days after any Conversion Date, the Company or its designated
transfer agent, as applicable, shall issue and deliver to the Depository Trust
Company ("DTC") account on the Holder's behalf via the Deposit Withdrawal Agent
Commission System ("DWAC") as specified in the Conversion Notice, registered in
the name of the Holder or its designee, for the number of shares of Common Stock
to which the Holder shall be entitled. I n the alternative, not later
than three (3) Trading Days after any Conversion Date, the Company shall deliver
to the applicable Holder by express courier a certificate or certificates which
shall be free of restrictive legends and trading restrictions (other than those
required by Section 5. l of the Purchase Agreement) representing the number of
shares of Common Stock being acquired upon the conversion of this Note (the
"Delivery Date"). Notwithstanding the foregoing to the contrary, the
Company or its transfer agent shall only be obligated to issue and deliver the shares to the OTC on the Holder's
behalf via DWAC (or certificates free of restrictive legends) if such conversion
is in connection with a sale and the Holder has complied with the applicable
prospectus delivery requirements. lf in the case of any Conversion Notice such
certificate or certificates are not delivered to or as directed by the
applicable Holder by the Delivery Date, the Holder shall be entitled by written
notice to the Company at any time on or before its receipt of such certificate
or certificates thereafter, to rescind such conversion, in which event the
Company shall immediately return this Note if tendered for conversion, whereupon
the Company and the Holder shall each be restored to their respective positions
immediately prior to the delivery of such notice of revocation, except that any
amounts described in Sections 3.3(b) and (c) shall be payable through the date
notice of rescission is given to the Company. 

5 

                
    (b)        The
Company understands that a delay in the delivery of the shares of Common Stock
upon conversion of this Note beyond the Delivery Date could result in economic
loss to the Holder. If the Company fails to deliver to the Holder such shares
via DWAC or a certificate or certificates pursuant to this Section hereunder by
the Delivery Date, the Company shall pay to such Holder, in cash, an amount per
Trading Day for each Trading Day until such shares are delivered via DWAC or
certificates are delivered, together with interest on such amount at a rate of l
0% per annum, accruing until such amount and any accrued interest thereon is
paid in full, equal to the greater of (A) (i) 1% of the aggregate principal
amount of the Note requested to be converted for the first five (5) Trading Days
after the Delivery Date and (ii) 2% of the aggregate principal amount of the
Note requested to be converted for each Trading Day thereafter and (B) $2,000
per day (which amount shall be paid as liquidated damages and not as a penalty).
Nothing herein shall limit a Holder's right to pursue actual damages for the
Company's failure to deliver certificates representing shares of Common Stock
upon conversion within the period specified herein and such Holder shall have
the right to pursue all remedies available to it at law or in equity (including,
without limitation, a decree of specific performance and/or injunctive relief).
Notwithstanding anything to the contrary contained herein, the Holder shall be
entitled to withdraw a Conversion Notice, and upon such withdrawal the Company
shall only be obligated to pay the liquidated damages accrued in accordance with
this Section 3.3(b) through the date the Conversion Notice is withdrawn. 

                     (c)       
ln addition to any other rights available to the Holder, if the Company
fails to cause its transfer agent to transmit to the Holder a certificate or
certificates representing the shares of Common Stock issuable upon conversion of
this Note on or before the Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
shares of Common Stock issuable upon conversion of this Note which the Holder
anticipated receiving upon such exercise (a "Buy- In"), then the
Company shall ( 1) pay in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by multi
plying (A) the number of shares of Common Stock issuable upon conversion of this
Note that the Company was required to deliver to the Holder in connection with
the conversion at issue times (B) the price at which the sell order giving rise
to such purchase obligation was executed, and (2) at the option of the Holder,
either reinstate the portion of the Note and equivalent number of shares of
Common Stock for which such conversion was not honored or deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company
timely complied with its conversion and delivery obligations hereunder. For
example, if the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted conversion of shares of
Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately preceding sentence
the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in
respect of the Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Company. Nothing herein shall limit a Holder's right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing shares of Common Stock upon conversion of this
Note as required pursuant to the terms hereof. 

6 

                     Section
3.4        Ownership Cap and Certain
Conversion Restrictions. 

                    
Notwithstanding anything to the contrary set forth in Section 3 of this Note, at
no time may the Holder convert all or a portion of this Note if the number of
shares of Common Stock to be issued pursuant to such conversion would exceed,
when aggregated with all other shares of Common Stock owned by the Holder at
such time, the number of shares of Common Stock which would result in the Holder
beneficially owning (as determined in accordance with Section l3(d) of the
Exchange Act and the rules thereunder) more than 9.9% of all of the Common Stock
outstanding at such time; provided, however, that upon the Holder providing the
Company with sixty-one (61) days notice (pursuant to Section 4.1 hereof) (the
"Waiver Notice") that the Holder would like to waive this Section 3.4 with
regard to any or all shares of Common Stock issuable upon conversion of this
Note, this Section 3.4 will be of no force or effect with regard to all or a
portion of the Note referenced in the Waiver Notice; provided, further, that
this provision shall be of no further force or effect during the sixty-one (61)
days immediately preceding the Maturity Date. 

                     Section
3.5        Adjustment of Conversion
Price. 

                     (a)        The
Conversion Price shall be subject to adjustment from time to time as follows:

                            
     (i)        Adjustments
for Stock Splits and Combinations. If the Company shall at any time or from
time to time after the Issuance Date, effect a stock split of the outstanding
Common Stock, the applicable Conversion Price in effect immediately prior to the
stock split shall be proportionately decreased. If the Company shall at any time
or from time to time after the Issuance Date, combine the outstanding shares of
Common Stock, the applicable Conversion Price in effect immediately prior to the
combination shall be proportionately increased. Any adjustments under this
Section 3.5(a)(i) shall be effective at the close of business on the date the
stock split or combination occurs. 

                              
   (ii)        Adjustments
for Certain Dividends and Distributions. If the Company shall at any time or
from time to time after the Issuance Date, make or issue or set a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in shares of Common Stock, then, and in each
event, the applicable Conversion Price in effect immediately prior to such event
shall be decreased as of the time of such issuance or, in the event such record
date shall have been fixed, as of the close of business on such record date, by
multiplying, the applicable Conversion Price then in effect by a fraction: 

                                               (1)        the
numerator of which shall be the total n umber of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date; and 

                                               (2)       
the denominator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date; plus the number of shares of Common Stock
issuable in payment of such dividend or distribution. 

                              
   (iii)        Adjustment
for Other Dividends and Distributions. If the Company shall at any time or
from time to time after the Issuance Date, make or issue or set a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in other than shares of Common Stock, then, and in
each event, an appropriate revision to the applicable Conversion Price shall be
made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the holders of this Note shall receive upon
conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section 3.5(a)(iii ) with
respect to the rights of the holders of this Note; provided, however, that if
such record date shall have been fixed and such dividend is not fully paid or if
such distribution is not fully made on the date fixed therefor, the Conversion
Price shall be adjusted pursuant to this paragraph as of the time of actual
payment of such dividends or distributions. 

7 

                              
   (iv)        Adjustments
for Reclassification, Exchange or Substitution. If the Common Stock issuable
upon conversion of this Note at any time or from time to time after the Issuance
Date shall be changed to the same or different n umber of shares of any class or
classes of stock, whether by reclassification, exchange, substitution or
otherwise (other than by way of a stock split or combination of shares or stock
dividends provided for in Sections 3.5(a)(i), (ii) and (iii), or a
reorganization, merger, consolidation, or sale of assets provided for in Section
3.5(a)(v)), then, and in each event, an appropriate revision to the Conversion
Price shall be made and provisions shall be made (by adjustments of the
Conversion Price or otherwise) so that the Holder shall have the right
thereafter to convert this Note into the kind and amount of shares of stock and
other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Note might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein. 

                                  (v)        Adjustments
for Reorganization, Merger, Consolidation or Sales of Assets. If at any time
or from time to time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split or combination
of shares or stock dividends or distributions provided for in Section 3.5(a)(i),
(ii) and (iii), or a reclassification, exchange or substitution of shares
provided for in Section 3.5(a)(iv)), or a merger or consolidation of the Company
with or into another corporation where the holders of outstanding voting
securities prior to such merger or consolidation do not own over fifty percent
(50%) of the outstanding voting securities of the merged or consolidated entity,
immediately after such merger or consolidation, or the sale of all or
substantially all of the Company's properties or assets to any other person (an
"Organic Change"), then as a part of such Organic Change an
appropriate revision to the Conversion Price shall be made and provision shall
be made (by adjustments of the Conversion Price or otherwise) so that the Holder
shall have the right thereafter to convert such Note into the kind and amount of
shares of stock and other securities or property of the Company or any successor
corporation resulting from Organic Change. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
3.5(a)(v) with respect to the rights of the Holder after the Organic Change to
the end that the provisions of this Section 3.5(a)(v) (including any adjustment
in the applicable Conversion Price then in effect and the number of shares of
stock or other securities deliverable upon conversion of this Note) shall be
applied after that event in as nearly an equivalent manner as may be
practicable. 

                              
   (vi)        Issuance of
Common Stock Equivalents. If the Company, at any time after the Issuance
Date, shall issue any securities convertible into or exchangeable for, directly
or indirectly, Common Stock ("Convertible Securities"), other than the
Note, or any rights or warrants or options to purchase any such Common Stock or
Convertible Securities, shall be issued or sold (collectively, the "Common
Stock Equivalents") and the aggregate of the price per share for which
Additional Shares of Common Stock may be issuable thereafter pursuant to such
Common Stock Equivalent, plus the consideration received by the Company for
issuance of such Common Stock Equivalent divided by the number of shares of
Common Stock issuable pursuant to such Common Stock Equivalent (the "Aggregate Per Common Share Price")
shall be less than the applicable Conversion Price then in effect, or if, after
any such issuance of Common Stock Equivalents, the price per share for which
Additional Shares of Common Stock may be issuable thereafter is amended or
adjusted, and such price as so amended shall make the Aggregate Per Share Common
Price be less than the applicable Conversion Price in effect at the time of such
amendment or adjustment, then the applicable Conversion Price upon each such
issuance or amendment shall be adjusted as provided in the first sentence of
subsection (vi) of this Section 3.5(a) on the basis that (1) the maximum number
of Additional Shares of Common Stock issuable pursuant to all such Common Stock
Equivalents shall be deemed to have been issued (whether or not such Common
Stock Equivalents are actually then exercisable, convertible or exchangeable in
whole or in part) as of the earlier of (A) the date on which the Company shall
enter into a firm contract for the issuance of such Common Stock Equivalent, or
(B) the date of actual issuance of such Common Stock Equivalent. No adjustment
of the applicable Conversion Price shall be made under this subsection (vii)
upon the issuance of any Convertible Security which is issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any adjustment shall previously have been made to the exercise price of such
warrants then in effect upon the issuance of such warrants or other rights
pursuant to this subsection (vii). No adjustment shall be made to the Conversion
Price upon the issuance of Common Stock pursuant to the exercise, conversion or
exchange of any Convertible Security or Common Stock Equivalent where an
adjustment to the Conversion Price was made as a result of the issuance or
purchase of any Convertible Security or Common Stock Equivalent. 

8 

                            
     (vii)        Consideration
for Stock. In case any shares of Common Stock or any Common Stock
Equivalents shall be issued or sold: 

                                               (1)        in
connection with any merger or consolidation in which the Company is the
surviving corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company shall be changed to
or exchanged for the stock or other securities of another corporation), the
amount of consideration therefor shall be, deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the non-surviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or warrants or options, as the case
may be; or 

                                               (2)       
in the event of any consolidation or merger of the Company in which the Company
is not the surviving corporation or in which the previously outstanding shares
of Common Stock of the Company shall be changed into or exchanged for the stock
or other securities of another corporation, or in the event of any sale of all
or substantially all of the assets of the Company for stock or other securities
of any corporation, the Company shall be deemed to have issued a number of
shares of its Common Stock for stock or securities or other property of the
other corporation computed on The basis of the actual exchange ratio on which
the transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation. If any such calculation results in adjustment
of the applicable Conversion Price, or the number of shares of Common Stock
issuable upon conversion of the Note, the determination of the applicable
Conversion Price or the number of shares of Common Stock issuable upon
conversion of the Note immediately prior to such merger, consolidation or sale,
shall be made after giving effect to such adjustment of the number of shares of
Common Stock issuable upon conversion of the Note. In the event Common Stock is
issued with other shares or securities or other assets of the Company for
consideration which covers both, the consideration computed as provided in this
Section 3.5(viii) shall be allocated among such securities and assets as
determined in good faith by the Board of Directors of the Company. 

9 

                
    (b)        Record
Date. In case the Company shall take record of the holders of its Common
Stock for the purpose of entitling them to subscribe for or purchase Common
Stock or Convertible Securities, then the date of the issue or sale of the
shares of Common Stock shall be deemed to be such record date. 

                 
   (c)        Certain
Issues Excepted Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment to the Conversion Price in
connection with (i) securities issued (other than for cash) in connection with a
merger, acquisition, or consolidation, (ii) securities issued pursuant to a bona
fide firm underwritten public offering of the Company's securities, (iii)
securities issued pursuant to the conversion or exercise of convertible or
exercisable securities issued or outstanding on or prior to the date hereof or
issued pursuant to the Purchase Agreement, (iv) the shares of Common Stock
issuable upon the exercise of Warrants, (v) securities issued i n connection
with strategic license agreements or other partnering arrangements so long as
such issuances are not for the purpose of raising capital, (vi) Common Stock
issued or options to purchase Common Stock granted or issued pursuant to the
Company's stock option plans and employee stock purchase plans as they now
exist, (vii) the payment of any accrued interest in shares of Common Stock
pursuant to this Note. 

               
     (d)       
No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith, assist in the carrying out of all the provisions of this Section 3.5 and
in the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the Holder against impairment. In the event a
Holder shall elect to convert any Note as provided herein, the Company cannot
refuse conversion based on any claim that such Holder or anyone associated or
affiliated with such Holder has been engaged in any violation of law, violation
of an agreement to which such Holder is a party or for any reason whatsoever,
unless, an injunction from a court, or notice, restraining and or adjoining
conversion of all or of said Note shall have issued and the Company posts a
surety bond for the benefit of such Holder in an amount equal to one hundred
thirty percent ( 130%) of the amount of the Note the Holder has elected to
convert, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder in the event it obtains judgment. 

                
    (e)        Certificates
as to Adjustments. Upon occurrence of each adjustment or readjustment of the
Conversion Price or n umber of shares of Common Stock issuable upon conversion
of this Note pursuant to this Section 3.5, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to the Holder a certificate setting forth such adjustment and
readjustment, showing i n detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of the Holder, at
any time, furnish or cause to be furnished to the Holder a like certificate
setting forth such adjustments and readjustments, the applicable Conversion
Price in effect at the time, and 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 the conversion of this Note. Notwithstanding the foregoing, the
Company shall not be obligated to deliver a certificate unless such certificate
would reflect an increase or decrease of at least one percent (1%) of such
adjusted amount. 

                 
   (f)        Issue
Taxes. The Company shall pay any and all issue and other taxes, excluding
federal, state or local income taxes, that may be payable in respect of any
issue or delivery of shares of Common Stock on conversion of this Note pursuant
thereto; provided, however, that the Company shall not be obligated to pay any
transfer taxes resulting from any transfer requested by the Holder in connection
with any such conversion. 

                  
  (g)        Fractional
Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of any fractional shares to
which the Holder would otherwise be entitled, the Company shall pay cash equal
to the product of such fraction multiplied by the average of the Closing Bid
Prices of the Common Stock for the five (5) consecutive Trading Days immediately
preceding the Conversion Date. 

10 

                
    (h)       
Reservation of Common Stock. The Company shall at all times when this
Note shall be outstanding, reserve and keep available out of its authorized but
unissued Common Stock, such number of shares of Common Stock as shall from time
to time be sufficient to effect the conversion of this Note and all interest
accrued thereon; provided that the number of shares of Common Stock so
reserved shall at no time be less than one hundred twenty percent ( 120%) of the
number of shares of Common Stock for which this Note and all interest accrued
thereon are at any time convertible. The Company shall, from time to time in
accordance with Nevada corporate law, increase the authorized number of shares
of Common Stock if at any time the unissued number of authorized shares shall
not be sufficient to satisfy the Company's obligations under this Section 3.5(h)
.. 

                  
  (i)        Regulatory
Compliance. If any shares of Common Stock to be reserved for the purpose of
conversion of this Note or any interest accrued thereon require registration or
listing with or approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise before
such shares may be validly issued or delivered upon conversion, the Company
shall, at its sole cost and expense, i n good faith and as expeditiously as
possible, endeavor to secure such registration, listing or approval, as the case
may be. 

                     Section
3.6        Prepayment. 

                
    (a)       
Prepayment Upon an Event of Default. Notwithstanding anything to the
contrary contained herein, upon the occurrence of an Event of Default described
i n Sections 2.1 (a)-(j)) and 2.1 (m)- (o) hereof, the Holder shall have the
right, at such Holder's option, to require the Company to prepay in cash all or
a portion of this Note at a price equal to one hundred twenty percent (120%) of
the aggregate principal amount of this Note plus all accrued and unpaid interest
applicable at the time of such request (the "Event of Default Prepayment
Price"). Nothing i n this Section 3.6(a) shall limit the Holder's rights
under Section 2.2 hereof. 

                     (b)        Prepayment
Option Upon Major Transaction. In addition to all other rights of the Holder
contained herein, simultaneous with the occurrence of a Major Transaction (as
defined in Section 3.6(e) hereof), the Holder shall have the right, at the
Holder's option, to require the Company to prepay all or a portion of the
Holder's Note at a price equal to one hundred ten percent (110%) of the
aggregate principal amount of this Note plus all accrued and unpaid interest
(the "Major Transaction Prepayment Price"). 

                 
   (c)        Prepayment
Option Upon Triggering Event. In addition to all other rights of the Holder
contained herein, after a Triggering Event (as defined below), the Holder shall
have the right, at the Holder's option, to require the Company to prepay all or
a portion of this Note in cash at a price equal to the sum of (i) the greater of
(A) one hundred twenty percent (120%) of the aggregate principal amount of this
Note plus all accrued and un paid interest and (B) in the event at such time the
Holder is unable to obtain the benefit of its conversion rights through the
conversion of this Note and resale of the shares of Common Stock issuable upon
conversion hereof in accordance with the terms of this Note and the other
Transaction Documents, the aggregate principal amount of this Note plus all
accrued but unpaid interest hereon, divided by the Conversion Price on (x) the
date the Prepayment Price (as defined below) is demanded or otherwise due or (y)
the date the Prepayment Price is paid in full, whichever is less, multiplied by
the VWAP on (x) the date the Prepayment Price is demanded or otherwise due, and
(y) the date the Prepayment Price is paid in full, whichever is greater, and
(ii) all other amounts, costs, expenses and liquidated damages due in respect of
this Note and the other Transaction Documents (the "Triggering Event Prepayment Price," and, collectively with the
"Major Transaction Prepayment Price," the "Prepayment Price"). 

11 

               
     (d)        Major
Transaction. A "Major Transaction" shall be deemed to have occurred at such
time as any of the following events: 

                              
   (i)        the
consolidation, merger or other business combination of the Company with or into
another Person (other than (A) pursuant to a migratory merger effected solely
for the purpose of changing the jurisdiction of incorporation of the Company or
(B) a consolidation, merger or other business combination in which holders of
the Company's voting power immediately prior to the transaction continue after
the transaction to hold, directly or indirectly, the voting power of the
surviving entity or entities necessary to elect a majority of the members of the
board of directors (or their equivalent if other than a corporation) of such
entity or entities); or 

                              
   (ii)        the sale
or transfer of more than fifty percent (50%) of the Company's assets (based on
the fair market value as determined in good faith by the Company's Board of
Directors) other than inventory in the ordinary course of business in one or a
related series of transactions; or 

                              
   (iii)        closing of a
purchase, tender or exchange offer made to the holders of more than fifty
percent (50%) of the outstanding shares of Common Stock in which more than fifty
percent (50%) of the outstanding shares of Common Stock were tendered and
accepted. 

                     (e)        Triggering
Event. A "Triggering Event" shall be deemed to have occurred at such time as
any of the following events: 

                            
     (i)        the
suspension from listing, without subsequent listing on any one of, or the
failure of the Common Stock to be listed on at least one of the OTC Bulletin
Board, Nasdaq SmallCap Market, Nasdaq National Market, American Stock Exchange
or The New York Stock Exchange, Inc. for a period of five (5) consecutive
Trading Days; 

                             
    (ii)        the
Company's notice to any holder of the Note, including by way of public
announcement, at any time, of its inability to comply (including for any of the
reasons described in Section 3.8) or its intention not to comply with proper
requests for conversion of any Note into shares of Common Stock; or 

                                   (iii)        the
Company's failure to comply with a Conversion Notice tendered in accordance with
the provisions of this Note within ten (10) business days after the receipt by
the Company of the Conversion Notice; or 

                            
     (iv)        the
Company deregisters its shares of Common Stock and as a result such shares of
Common Stock are no longer publicly traded; or 

                               
  (v)        the Company
consummates a ''going private" transaction and as a result the Common Stock is
no longer registered under Sections l 2(b) or 12(g) of the Exchange Act. 

               
     (f)        Mechanics
of Prepayment at Option of Holder Upon Major Transaction. No sooner than
fifteen (15) days nor later than ten (10) days prior to the consummation of a
Major Transaction, but not prior to the public announcement of such Major
Transaction, the Company shall deliver written notice thereof via facsimile and
overnight courier ("Notice of Major Transaction") to the Holder of this Note. At
any time after receipt of a Notice of Major Transaction (or, in the event a
Notice of Major Transaction is not delivered at least ten (10) days prior to a
Major Transaction, at any time within ten (10) days prior to a Major
Transaction), any holder of the Notes then outstanding may require the Company
to prepay, effective immediately prior to the consummation of such Major Transaction, all of the holder's Notes then outstanding by
delivering written notice thereof via facsimile and overnight courier ("Notice
of Prepayment at Option of Holder Upon Major Transaction") to the Company, which
Notice of Prepayment at Option of Holder Upon Major Transaction shall indicate
(i) the number of Notes that such holder is electing to prepay and (ii) the
applicable Major Transaction Prepayment Price, as calculated pursuant to Section
3.6(b) above. 

12 

                 
   (g)        Mechanics
of Prepayment at Option of Holder Upon Triggering Event. Within one (1)
business day after the occurrence of a Triggering Event, the Company shall
deliver written notice thereof via facsimile and overnight courier ("Notice of
Triggering Event") to each holder of the Notes. At any time after the earlier of
a holder's receipt of a Notice of Triggering Event and such holder becoming
aware of a Triggering Event, any holder of this Note may require the Company to
prepay all of the Notes on a pro rata basis by delivering written notice thereof
via facsimile and overnight courier ("Notice of Prepayment at Option of
Holder Upon Triggering Event") to the Company, which Notice of Prepayment at
Option of Holder Upon Triggering Event shall indicate (i) the amount of the Note
that such holder is electing to have prepaid and (ii) the applicable Triggering
Event Prepayment Price, as calculated pursuant to Section 3.6(c) above. A holder
shall only be permitted to require the Company to prepay the Note pursuant to
Section 3.6 hereof for the greater of a period of ten (10) days after receipt by
such holder of a Notice of Triggering Event or for so long as such Triggering
Event is continuing. 

                 
   (h)        Payment
of Prepayment Price. Upon the Company's receipt of a Notice(s) of Prepayment
at Option of Holder Upon Triggering Event or a Notice(s) of Prepayment at Option
of Holder Upon Major Transaction from any holder of the Notes, the Company shall
immediately notify each holder of the Notes by facsimile of the Company's
receipt of such Notice(s) of Prepayment at Option of Holder Upon Triggering
Event or Notice(s) of Prepayment at Option of Holder Upon Major Transaction and
each holder which has sent such a notice shall promptly submit to the Company
such holder's certificates representing the Notes which such holder has elected
to have prepaid. The Company shall deliver the applicable Triggering Event
Prepayment Price, in the case of a prepayment pursuant to Section 3.6(i), to
such holder within five (5) business days after the Company's receipt of a
Notice of Prepayment at Option of Holder Upon Triggering Event and, in the case
of a prepayment pursuant to Section 3.6(f), the Company shall deliver the
applicable Major Transaction Prepayment Price immediately prior to the
consummation of the Major Transaction; provided that a holder's original Note
shall have been so delivered to the Company; provided further that if the
Company is u nable to prepay all of the Notes to be prepaid, the Company shall
prepay an amount from each holder of the Notes being prepaid equal to such
holder's pro-rata amount (based on the number of Notes held by such holder
relative to the number of Notes outstanding) of all Notes being prepaid. If the
Company shall fail to prepay all of the Notes submitted for prepayment (other
than pursuant to a dispute as to the arithmetic calculation of the Prepayment
Price), in addition to any remedy such holder of the Notes may have under this
Note and the Purchase Agreement, the applicable Prepayment Price payable in
respect of such Notes not prepaid shall bear interest at the rate of two percent
(2%) per month (prorated for partial months) until paid in full. Until the
Company pays such unpaid applicable Prepayment Price in full to a holder of the
Notes submitted for prepayment, such holder shall have the option (the "Void
Optional Prepayment Option") to, in lieu of prepayment, require the Company to
promptly return to such holder(s) all of the Notes that were submitted for
prepayment by such holder(s) under this Section 3.6 and for which the applicable
Prepayment Price has not been paid, by sending written notice thereof to the
Company via facsimile (the "Void Optional Prepayment Notice"). Upon the
Company's receipt of such Void Optional Prepayment Notice(s) and prior to
payment of the full applicable Prepayment Price to such holder, (i) the
Notice(s) of Prepayment at Option of Holder Upon Triggering Event or the
Notice(s) of Prepayment at Option of Holder Upon Major Transaction, as the case
may be, shall be null and void with respect to those Notes submitted for
prepayment and for which the applicable Prepayment Price has not been paid, (ii)
the Company shall immediately return any Notes submitted to the Company by each
holder for prepayment under this Section 3.6(h) and for which the applicable
Prepayment Price has not been paid and (iii) the Conversion Price of such
returned Notes shall be adjusted to the lesser of (A) the Conversion Price as in
effect on the date on which the Void Optional Prepayment Notice(s) is delivered
to the Company and (B) the lowest Closing Bid Price during the period beginning on the
date on which the Notice(s) of Prepayment of Option of Holder Upon Major
Transaction or the Notice(s) of Prepayment at Option of Holder Upon Triggering
Event, as the case may be, is delivered to the Company and ending on the date on
which the Void Optional Prepayment Notice(s) is delivered to the Company;
provided that no adjustment shall be made if such adjustment would result in an
increase of the Conversion Price then in effect. A holder's delivery of a Void
Optional Prepayment Notice and exercise of its rights following such notice
shall not effect the Company's obligations to make any payments which have
accrued prior to the date of such notice. Payments provided for in this Section
3.6 shall have priority to payments to other stockholders in connection with a
Major Transaction. 

13 

                     (i)        Company
Prepayment Option upon Major Transaction. Upon the consummation of a Major
Transaction, the Company may prepay in cash all or any portion of the
outstanding principal amount of this Note together with all accrued and unpaid
interest thereon upon at least thirty (30) days prior written notice to the
Holder (the "Company's Prepayment Notice") at a price equal to one
hundred twenty percent (120%) of the aggregate principal amount of this Note
plus any accrued but unpaid interest (the "Company's Prepayment Price");
provided, however, that if a holder has delivered a Conversion Notice to the
Company or delivers a Conversion Notice within such thirty (30) day period
following delivery of the Company's Prepayment Notice, the principal amount of
the Notes plus any accrued but unpaid interest designated to be converted may
not be prepaid by the Company and shall be converted in accordance with Section
3.3 hereof; provided further that if during the period between delivery of the
Company's Prepayment Notice and the Company's Prepayment Date (as defined
below), a holder shall become entitled and elects to deliver a Notice of
Prepayment at Option of Holder Upon Major Transaction or Notice of Prepayment at
Option of Holder upon Triggering Event, then such rights of the holders shall
take precedence over the previously delivered Company Prepayment Notice if the
holder so elects. The Company's Prepayment Notice shall state the date of
prepayment which date shall be the date of the consummation of the Major
Transaction (the "Company's Prepayment Date"), the Company's Prepayment Price
and the principal amount of Notes plus any accrued but unpaid interest to be
prepaid by the Company. The Company shall deliver the Company's Prepayment Price
on the Company's Prepayment Date, provided, that if the holder(s) delivers a
Conversion Notice before the Company's Prepayment Date, then the portion of the
Company's Prepayment Price which would be paid to prepay the Notes covered by
such Conversion Notice shall be returned to the Company upon delivery of the
Common Stock issuable i n connection with such Conversion Notice to the
holder(s). On the Company's Prepayment Date, the Company shall pay the Company's
Prepayment Price, subject to any adjustment pursuant to the immediately
preceding sentence, to the holder(s) on a pro rata basis. If the Company fails
to pay the Company's Prepayment Price by the third (3rd) business day after the
Company's Prepayment Date, the prepayment will be declared null and void and the
Company shall lose its right to serve a Company's Prepayment Notice pursuant to
this Section 3.6(i) in the future. Notwithstanding the foregoing to the
contrary, the Company may effect a prepayment pursuant to this Section 3.6(i)
only if trading in the Common Stock shall not have been suspended by the
Securities and Exchange Commission or the Nasdaq SmallCap Market (or other
exchange or market on which the Common Stock is trading), and and the Company is
in material compliance with the terms and conditions of this Note and the other
Transaction Documents. 

                     Section
3.7        Inability to Fully
Convert. 

                  
  (a)        Holder's
Option if Company Cannot Fully Convert. If, upon the Company's receipt of a
Conversion Notice, the Company cannot issue shares of Common Stock for any
reason, including, without limitation, because the Company (w) does not have a
sufficient number of shares of Common Stock authorized and available, or (x) is
otherwise prohibited by applicable law or by the rules or regulations of any
stock exchange, interdealer quotation system or other self-regulatory
organization with jurisdiction over the Company or any of its securities from
issuing all of the Common Stock which is to be issued to the Holder pursuant to
a Conversion Notice, then the Company shall issue as many shares of Common Stock
as it is able to issue in accordance with the Holder's Conversion Notice and,
with respect to the unconverted portion of this Note, the Holder,
solely at Holder's option, can elect to: 

14 

                             
    (i)        require
the Company to prepay that portion of this Note for which the Company is unable
to issue Common Stock in accordance with the Holder's Conversion Notice (the
"Mandatory Prepayment") at a price per share equal to the
Triggering Event Prepayment Price as of such Conversion Date (the "Mandatory
Prepayment Price"); 

                              
   (ii)        void its
Conversion Notice and retain or have returned, as the case may be, this Note
that was to be converted pursuant to the Conversion Notice (provided that the
Holder's voiding its Conversion Notice shall not effect the Company's
obligations to make any payments which have accrued prior to the date of such
notice). 

In the event a Holder shall elect to convert any portion of its
Notes as provided herein, the Company cannot refuse conversion based on any
claim that such Holder or anyone associated or affiliated with such Holder has
been engaged in any violation of law, violation of an agreement to which such
Holder is a party or for any reason whatsoever, unless, an injunction from a
court, on notice, restraining and or adjoining conversion of all or of said
Notes shall have been issued and the Company posts a surety bond for the benefit
of such Holder in an amount equal to 130% of the principal amount of the Notes
the Holder has elected to convert, which bond shall remain i n effect until the
completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Holder in the event it obtains judgment. 

                     (b)        Mechanics
of Fulfilling Holder's Election. The Company shall immediately send via
facsimile to the Holder, upon receipt of a facsimile copy of a Conversion Notice
from the Holder which cannot be fully satisfied as described in Section 3.7(a)
above, a notice of the Company's inability to fully satisfy the Conversion
Notice (the "Inability to Fully Convert Notice"). Such Inability to Fully
Convert Notice shall indicate (i) the reason why the Company is unable to fully
satisfy such holder's Conversion Notice, (ii) the amount of this Note which
cannot be converted and (iii) the applicable Mandatory Prepayment Price. The
Holder shall notify the Company of its election pursuant to Section 3.7(a) above
by delivering written notice via facsimile to the Company ("Notice in
Response to Inability to Convert"). 

                   
 (c)        Payment of Prepayment
Price. If the Holder shall elect to have its Notes prepaid pursuant to
Section 3.7(a)(i) above, the Company shall pay the Mandatory Prepayment Price to
the Holder within thirty (30) days of the Company's receipt of the Holder's
Notice in Response to Inability to Convert, provided that prior to the Company's
receipt of the Holder's Notice in Response to Inability to Convert the Company
has not delivered a notice to the Holder stating, to the satisfaction of the
Holder, that the event or condition resulting i n the Mandatory Prepayment has
been cured and all Conversion Shares issuable to the Holder can and will be
delivered to the Holder in accordance with the terms of this Note. If the
Company shall fail to pay the applicable Mandatory Prepayment Price to the
Holder on a timely basis as described in this Section 3.7(c) (other than
pursuant to a dispute as to the determination of the arithmetic calculation of
the Prepayment Price), in addition to any remedy the Holder may have under this
Note and the Purchase Agreement, such unpaid amount shall bear interest at the
rate of two percent (2%) per month (prorated for partial months) until paid in
full. Until the full Mandatory Prepayment Price is paid in full to the Holder,
the Holder may (i) void the Mandatory Prepayment with respect to that portion of
the Note for which the full Mandatory Prepayment Price has not been paid, (ii)
receive back such Note, and (iii) require that the Conversion Price of such
returned Note be adjusted to the lesser of (A) the Conversion Price as in effect
on the date on which the Holder voided the Mandatory Prepayment and (B) the
lowest Closing Bid Price during the period beginning on the Conversion Date and
ending on the date the Holder voided the Mandatory Prepayment. 

                  
  (d)        Pro-rata
Conversion and Prepayment. In the event the Company receives a Conversion
Notice from more than one holder of the Notes on the same day and the Company
can convert and prepay some, but not all, of the Notes pursuant to
this Section 3.7, the Company shall convert and prepay from each holder of the
Notes electing to have its Notes converted and prepaid at such time an amount
equal to such holder's pro-rata amount (based on the principal amount of the
Notes held by such holder relative to the principal amount of the Notes
outstanding) of all the Notes being converted and prepaid at such time. 

15 

               
     Section
3.8        No Rights as Shareholder.
Nothing contained in this Note shall be construed as conferring upon the
Holder, prior to the conversion of this Note, the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company or of any
other matter, or any other rights as a shareholder of the Company. 

ARTICLE IV 

MISCELLANEOUS 

                  
  Section 4.1       
Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated in the Purchase
Agreement (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 Company will give written notice to the Holder at least ten (10) days prior
to the date on which the Company takes a record (x) with respect to any dividend
or distribution upon the Common Stock, (y) with respect to any pro rata
subscription offer to holders of Common Stock or (z) for determining rights to
vote with respect to any Organic Change, dissolution, liquidation or winding-up
and in no event shall such notice be provided to such holder prior to such
information being made known to the public. The Company will also give written
notice to the Holder at least ten (10) days prior to the date on which any
Organic Change, dissolution, liquidation or winding-up will take place and in no
event shall such notice be provided to the Holder prior to such information
being made known to the public. 

                    
Section 4.2        Governing Law. This
Note shall be governed by and construed in accordance with the internal laws of
the State of Nevada, without giving effect to any of the conflicts of law
principles which would result in the application of the substantive law of
another jurisdiction. This Note shall not be interpreted or construed with any
presumption against the party causing this Note to be drafted. 

                  
  Section
4.3        Headings. Article and
section headings in this Note are included herein for purposes of convenience of
reference only and shall not constitute a part of this Note for any other
purpose. 

                  
  Section 4.4        Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief.
The remedies provided in this Note shall be cumulative and in addition to all
other remedies available under this Note, at law or in equity (including,
without limitation, a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall limit a
holder's right to pursue actual damages for any failure by the Company to comply
with the terms of this Note. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the holder thereof and shall not, except as
expressly provided herein, be subject to any other obligation of the Company (or
the performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Holder and that the remedy
at law for any such breach may be inadequate. Therefore the Company agrees that,
in the event of any such breach or threatened breach, the Holder shall be
entitled, in addition to all other available rights and remedies, at law or in
equity, to seek and obtain such equitable relief, including but not limited to
an injunction restraining any such breach or threatened breach, without the
necessity of showing economic loss and without any bond or other security being
required. 

16 

                
    Section 4.5       
Enforcement Expenses. The Company agrees to pay all costs and expenses of
enforcement of this Note, including, without limitation, reasonable attorneys'
fees and expenses. 

                 
   Section 4.6       
Binding Effect. The obligations of the Company and the Holder set forth
herein shall be binding upon the successors and assigns of each such party,
whether or not such successors or assigns are permitted by the terms hereof.

                 
   Section 4.7       
Amendments. This Note may not be modified or amended many manner except
in writing executed by the Company and the Holder. 

                
    Section 4.8       
Compliance with Securities Laws. The Holder of this Note acknowledges
that this Note is being acquired solely for the Holder's own account and not as
a nominee for any other party, and for investment, and that the Holder shall not
offer, sell or otherwise dispose of this Note. This Note and any Note issued in
substitution or replacement therefor shall be stamped or imprinted with a legend
in substantially the following form: 

  
    
      
        "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
          BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE
          COMPANY OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY
          SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE SOLD, TRANSFERRED,
          HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION
          UNDER THE ACT AND SUCH STATE SECURITIES LAWS." 

      

    

  

                   
 Section 4.9        Consent to
Jurisdiction. Each of the Company and the Holder (i) hereby irrevocably
submits to the exclusive jurisdiction of the State of Nevada for the purposes of
any suit, action or proceeding arising out of or relating to this Note and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Holder consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under the Purchase Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in
this Section 4.9 shall affect or limit any right to serve process in any other
manner permitted by law. Each of the Company and the Holder hereby agree that
the prevailing party in any suit, action or proceeding arising out of or
relating to this Note shall be entitled to reimbursement for reasonable legal
fees from the non-prevailing party. 

               
     Section
4.10        Parties in Interest.
This Note shall be binding upon, inure to the benefit of and be enforceable by
the Company, the Holder and their respective successors and permitted assigns.

               
     Section
4.11        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 privilege. 

17 

               
     Section
4.12        Company Waivers. Except as
otherwise specifically provided herein, the Company and all others that may
become liable for all or any part of the obligations evidenced by this Note,
hereby waive presentment, demand, notice of nonpayment, protest and all other
demands' and notices in connection with the delivery, acceptance, performance
and enforcement of this Note, and do hereby consent to any number of renewals of
extensions of the time or payment hereof and agree that any such renewals or
extensions may be made without notice to any such persons and without affecting
their liability herein and do further consent to the release of any person
liable hereon, all without affecting the liability of the other persons, firms
or Company liable for the payment of this Note, AND DO HEREBY WAIVE TRlAL BY
JURY. 

               
     (a)        No
delay or omission on the part of the Holder in exercising its rights under this
Note, or course of conduct relating hereto, shall operate as a waiver of such
rights or any other right of the Holder, nor shall any waiver by the Holder of
any such right or rights on any one occasion be deemed a waiver of the same
right or rights on any future occasion. 

                
    (b)        THE
COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY
WAIVES ITS RIGHT TO NOTICE AN D HEARING 

18 

WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS
SUCCESSORS OR ASSIGNS MAY DESIRE TO USE. 

 

LITHIUM EXPLORATION GROUP, INC.

 

	 	By:	   
	 	 	Name: Alexander Walsh 
	 	 	Title: Chief Executive Officer
  

FORM OF 

NOTICE OF CONVERSION 

(To be Executed by the Registered Holder in order to Convert the
Note) 

The undersigned hereby irrevocably elects to convert
  $                            
  of the principal amount of the above Note No. ___ into shares of Common Stock of
  Lithium Exploration Group, Inc. (the "Company") according to the conditions
  hereof, as of the date written below. 

Date of Conversion:
  ____________________________________________________________________________

Applicable Conversion Price:
  _____________________________________________________________________

Number of shares of Common Stock beneficially owned or deemed
  beneficially owned by the Holder on the Date of Conversion: 

  ___________________________________________________________________________________________ 

Signature:     
  _________________________________________________________________________________

Print Name:   
  _________________________________________________________________________________

Address:      
  _________________________________________________________________________________

                       _________________________________________________________________________________mtb-ex102_1198.htm

EXHIBIT 10.2

 

SUPPLEMENTAL DEFERRED COMPENSATION AGREEMENT

 

THIS AGREEMENT, entered into this 21st day of July, 

1994, by and between Manufacturers and Traders Trust (hereinafter referred to as the "Company") and Brian J. Hickey, an individual residing at 73 Caversham Woods, Pittsford, NY 14534 (hereinafter referred to as "Executive").

 

WITNESSETH, THAT:

WHEREAS, Executive is presently employed by the Company in a key executive position and possesses substantial talent, ability and unique business experience which has been and will continue to be a great value to the Company; and

WHEREAS, the Company desires to secure for itself the continued services of Executive and to provide certain additional retirement benefits for Executive in consideration of his past and future services;

IT IS NOW THEREFORE AGREED AS FOLLOWS:

1.DEFINITIONS. For purposes of this Agreement, the following terms shall be defined as set forth in this Section 1.

1.1"Retirement Plan" shall mean the First Empire State Corporation Retirement Plan, as amended from time to time.

1.2"Average Annual Compensation" and "Compensation" shall have the same meanings accorded to such words in the Retirement Plan, except that limits imposed by Internal Revenue code Section 401(a)(17) shall not apply, and further provided that until Executive has received Compensation for at least five (5) consecutive calendar years, Average Annual Compensation shall be based upon the calendar years during which Executive actually receives Compensation (Compensation received during such years, divided by the number of such years).

1

 

EXHIBIT 10.2

 

1.3"Years of Service" shall have the same meaning accorded to such words in the Retirement Plan for vesting purposes.

1.4"Accrued Pension Benefit" shall have the same meaning accorded to such words in the Retirement Plan.

1.5"Benefit Accrual Years" shall have the same meaning accorded to such words in the Retirement Plan.

2.ELIGIBILITY FOR AND AMOUNT OF SUPPLEMENTAL RETIREMENT BENEFIT.

2.1Termination of Employment Prior to Becoming Vested in the Retirement Plan.  Upon Executive's termination of employment with no vested benefit under the Retirement Plan, except in the case of the Executive's termination by the Company for fraud, dishonesty, theft, or other unlawful actions, the Company agrees to pay Executive a monthly retirement benefit equal in amount to an Accrued Pension Benefit determined under the provisions of the Retirement Plan based on his Average Annual Compensation calculated as of his date of employment termination plus five (5) additional Benefit Accrual Years. Commencement and payment (but not eligibility for) of a monthly retirement benefit under this Agreement shall be subject to the provisions of the Retirement Plan.

2.2Termination of Employment After Becoming Vested in the Retirement Plan.  Upon Executive's termination of employment with a vested benefit under the 

Retirement Plan, except in the case of the Executive's termination by the Company for fraud, dishonesty, theft, or other unlawful actions, the Company agrees to pay Executive a monthly retirement benefit equal in amount to the differences of (a) minus (b) where: (a) is the Accrued Pension Benefit determined under the provisions of the Retirement Plan based on his Average Annual Compensation calculated as of his date of employment termination plus five (5) additional Benefit Accrual Years and (b) is the nonforfeitable benefit due to be paid by the 

2

 

EXHIBIT 10.2

 

Retirement Plan.  Commencement and payment of (but not eligibility for) a monthly retirement benefit under the Agreement shall be subject to the provisions of the Retirement Plan.

3.MISCELLANEOUS PROVISIONS.

3.1Assignment. This Agreement shall be binding upon and shall inure to the benefit of the Company and Executive and their respective successors and assigns, provided, however, that, except as set forth herein, no rights of any kind under this Agreement shall, without the written consent of the Company, be transferable or assignable by Executive or any other person, or be subject to alienation, encumbrance, garnishment, attachment, execution or levy of any kind, voluntary or involuntary.

3.2Interpretation. All questions of interpretation, construction of application arising under this Agreement shall be decided by the Board of Directors of the Company, whose decision shall be final and conclusive upon all persons.

3.3 Savings Clause. In the event that any provision or term of this Agreement is finally determined by an judicial, quasi-judicial or administrative body to be void or not enforceable for any reason, it is the agreed upon intent of the parties hereto that all other provisions or terms of the Agreement shall remain in full force and effect and that the Agreement shall be enforceable as is such void or non-enforceable provision or term had never been a part hereof.

3.4Governing Law. This Agreement is executed in and shall be construed in accordance with and governed by the laws of the State of New York.

3.5No Rights in Any Property of Company. The undertakings of the Company herein constitute merely the unsecured promise of the Company to make the payments as provided for herein. No property of the Company is or shall, by reason of this Agreement, be held in trust for Executive, or any other person, and neither Executive nor any 

3

 

EXHIBIT 10.2

 

other person shall have by reason of the Agreement, any rights, title or interest of any kind in or to any property of the Company.

3.6Employment of Executive by Company. Nothing herein shall be construed as an offer or commitment by the Company to continue Executive's employment with the Company for any period of time.

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the day and year first above written.

 

MANUFACTURERS AND TRADERS TRUST

 

"Company"

 

 

 

By  /s/ Ray E. Logan

 

 

 

 

 

   /s/  Brian E. Hickey

"Executive"

4

 

EXHIBIT 10.2

 

 

FIRST AMENDMENT OF

SUPPLEMENTAL DEFERRED COMPENSATION AGREEMENT

 

This First Amendment of the Supplemental Deferred Compensation Agreement is made and entered into effective August 1, 2006 by and between Manufacturers and Traders Trust Company (hereinafter referred to as the “Company”) and Brian E. Hickey, an individual residing at 14 Stefenage Court, Pittsford, New York 14534 (hereinafter referred to as “Executive”).

WHEREAS, the parties hereto entered into that certain Supplemental Deferred Compensation Agreement dated July 21, 1994 (the “Agreement”); and

WHEREAS, the parties wish to amend the Agreement to clarify and reflect the mutual understanding and intentions of the parties with respect to the Agreement and to comply with the requirements of the Internal Revenue Code as amended by the American Jobs Creation Act of 2004;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereto agree to amend the Agreement as follows:

1.Definitions.Except as expressly stated otherwise herein, capitalized terms in this First Amendment shall have the meanings given to them in the Agreement.

 

2.Amendments.

(a)Section 1.1 of the Agreement shall be amended by deleting the words “First Empire State Corporation Retirement Plan” and by substituting therefor “M&T Bank Corporation Pension

Plan”

 

(b)Section 1.2 of the Agreement shall be amended by deleting it in its entirety and by substituting a new Section 1.2 to read as follows:

 

	
 
	
1.2
	
“Average Annual Compensation” and “Compensation” shall have the same meanings accorded to such words under the provisions of the Retirement Plan as in effect on the Executive’s Separation from Service and without regard to the dollar amount of annual compensation limitation under Section 401(a)(17) of the Code, as in effect and adjusted from time to time under such section.

 

(c)Section 1.4 of the Agreement is amended by adding after the term “Retirement Plan” the following words: “determined under the provisions of the Retirement Plan as in effect on January 1, 2006”.

 

(d)Section 1 shall be amended by adding at the end thereof new subsections 1.6, 1.7, 1.8, 1.9, 1.10, 1.11, 1.12, and 1.13 to read as follows:

1

 

EXHIBIT 10.2

 

	
 
	
1.6
	
“Benefit” shall mean the monthly supplemental retirement benefit payable to the Executive as provided in Sections 2.1 and 2.2, of this Agreement or the Supplemental Death Benefit.
	
 

 

	
 
	
1.7
	
“Benefit Commencement Date” shall mean (a) the date on which the Executive elects to receive his Benefit or (b) in the case of the Surviving Spouse, the date on which the Surviving Spouse’s Supplemental Death Benefit becomes payable under this Agreement.
	
 

 

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

 

	
 
	
1.9
	
“Separation from Service” shall mean Executive’s separation from service (within the meaning of Section 409A of the Code) with the Company and all entities which would be considered a single employer with the Company under Section 414(b) and (c) of the Code.
	
 

 

	
 
	
1.10
	
“Disability” or “Disabled” shall mean, that the Executive is determined (a) to be totally disabled by the federal Social Security Administration, or (b) to have a “disability” under the Company’s long-term disability plan, provided that the definition of the term “disability” under such long-term disability plan satisfies the requirements for disability under Section 409A of the Code.
	
 

 

	
 
	
1.11
	
“Earliest Retirement Age” shall mean (a) age 65, if the Executive is credited with less than 10 years of Vesting Service under the Retirement Plan or (b) age 55, if the Executive is credited with at least 10 years of Vesting Service under the Retirement Plan.
	
 

 

	
 
	
1.12
	
“Surviving Spouse” shall mean the spouse (as defined and interpreted under the Retirement Plan) to whom the Executive was married for at least 12 months at the time of the Executive’s death.
	
 

 

	
 
	
1.13
	
“Supplemental Death Benefit” shall mean an annual annuity payable over the lifetime of a Surviving Spouse upon the death of the Executive prior to Executive’s commencement of his Benefit under this Agreement.
	
 

 

(e)The first sentence of Section 2.1 of the Agreement is amended by deleting the words “determined under the provisions of the Retirement Plan”.

(f)Section 2.1 of the Agreement is amended by deleting the last sentence thereof and by substituting a new sentence to read as follows:

“Commencement and payment of (but not eligibility for) a monthly benefit under this Agreement shall be subject to the Executive’s election pursuant to Section 2.3 hereof.”

(g) The first sentence of Section 2.2 of the Agreement is amended by deleting the words “determined under the provisions of the Retirement Plan” from clause (a).

2

 

EXHIBIT 10.2

 

(h)Section 2.2 of the Agreement is amended by deleting the last sentence thereof and by substituting a new sentence to read as follows:

“Commencement and payment of (but not eligibility for) a monthly benefit under this Agreement shall be subject to the Executive’s election pursuant to Section 2.3 hereof.”

(i)Amend Section 2 by adding new subsections 2.3, 2.4, 2.5, 2.6, and 2.7 to read as follows:

 

	
 
	
2.3
	
Payment Elections

 

	
 
	
(a)
	
Not later than December 31, 2006, the Executive shall make an election under (b) or (c) below regarding the date and form of payment of his Benefit. The election shall apply only with respect to Compensation earned after the date on which the election is made to the extent required by Section 409A of the Code. The election made under this Section 2.3 shall be made in the manner prescribed by the Company.

 

	
 
	
(b)
	
The Executive shall elect as his Benefit Commencement Date either (i) the date on which the Executive has a Separation from Service or becomes Disabled, whichever is earlier, or (ii) the later of the date on which the Participant (A) attains Earliest Retirement Age, or (B) has a Separation from Service or becomes Disabled, whichever is earlier.

 

	
 
	
(c)
	
The Executive shall elect to have his Benefit paid as either (i) a Single Life Annuity, (ii) a Five-, Ten- or Fifteen-Year Certain Life Annuity, or (iii) a Joint and Survivor Annuity.

 

	
 
	
(d)
	
Subject to Sections 2.4 and 2.5 hereof, the Executive’s elections under this Section 3.2 shall be irrevocable and may not be changed, except that, if the Executive elects an annuity form of payment, then prior to his Benefit Commencement Date, the Executive may revoke his annuity election and make a new election for a different actuarially equivalent (as defined in the Retirement Plan) annuity.

 

	
 
	
2.4
	
Mandatory Delay in Benefit Payments. Notwithstanding Section 2.3 hereof, to the extent required by Section 409A of the Code, the Company shall delay payment of the Benefit of the Executive if the Executive is a “specified employee” (as defined below) until the earlier of (a) the date that is six months after the date of any termination of employment or other event that constitutes the Executive’s Separation from Service, or (b) the date of the Executive’s death. The aggregate amount of payments otherwise payable during this delay period (plus interest thereon at the Applicable Federal Rate, provided that such interest does not cause this Agreement to violate Section 409A of the Code) shall be payable to the Executive as soon as practicable after the expiration of the delay period. For purposes of this Section 2.4, the term “specified employee” shall have the same meaning as under Section 409A of the Code.

 

3

 

EXHIBIT 10.2

 

	
 
	
2.5
	
Discretionary Delay in Payments. Notwithstanding Section 2.3 hereof, the Company may delay payment of any benefit provided under this Agreement by reason of any event(s) or condition(s) permitted under Section 409A of the Code, including without limitation, delays relating to (a) nondeductible compensation payments under Section 162(m) of the Code; (b) violations of loan agreements; and (c) violations of federal securities law or other applicable laws.

 

	
 
	
2.6
	
Pre-2007 Benefit Commencement and Payment Form. If the Executive begins to receive pension benefits, or a Surviving Spouse begins to receive pre-retirement survivor benefits under the Retirement Plan prior to January 1, 2007, the Benefit Commencement Date of the Executive’s Benefit or the Surviving Spouse’s Supplemental Death Benefit hereunder shall be the date on which the Executive or the Surviving Spouse begins receiving pension or pre-retirement survivor benefits under the Retirement Plan, and the form of the payment of the Executive’s Benefit or the Supplemental Death Benefit hereunder shall be the same form of payment as the Executive’s or Surviving Spouse’s pension or 50% pre-retirement survivor benefit under the Retirement Plan, respectively.

 

	
 
	
2.7
	
Post-2006 Benefit Commencement Date and Payment Form.

 

	
 
	
(a)
	
If the Executive does not begin to receive pension benefits under the Retirement Plan before January 1, 2007, the Executive’s Benefit shall be paid or begin to be paid in accordance with the Executive’s payment elections under Section 2.3.

 

	
 
	
(b)
	
If a Surviving Spouse does not begin to receive pre-retirement survivor benefits under the Retirement Plan before January 1, 2007, the Benefit Commencement Date of the Supplemental Death Benefit shall be the later of the date (i) on which the Executive attains Earliest Retirement Age (or would have attained Earliest Retirement Age assuming that the Executive terminated employment on the date of his death and survived until such age) or (ii) of the Executive’s death. The form of the Supplemental Death Benefit shall be in the same form as the 50% pre-retirement survivor benefit under the Retirement Plan.

 

	
 
	
(c)
	
The Benefit payable under this Agreement shall be paid or begin to be paid on the Executive’s Benefit Commencement Date or as soon as practicable thereafter, but not later than (i) December 31 of the calendar year in which the Benefit Commencement Date occurs, or (ii) the 15th day of the third calendar month following the Benefit Commencement Date.

 

(j)Section 3.2 of the Agreement shall be amended by inserting prior to the word “Board” the following words “Nomination, Compensation and Governance Committee of the”.

(k)Amend Section 3 of the Agreement by adding a new section 3.7 to read as follows:

 

 

4

 

EXHIBIT 10.2

 

	
 
	
3.7
	
Compliance with Section 409A of the Code . This Agreement is intended to comply with the requirements of Section 409A of the Code, and shall be administered and interpreted in accordance with its requirements. If any provision of the Agreement conflicts with the requirements of Section 409A of the Code, the requirements of Section 409A shall supersede any such provisions.

 

4. In all other respect the provisions of the Agreement shall remain unchanged.

 

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the day and year first written above.

 

 

MANUFACTURERS AND TRADERS TRUST COMPANY

 

By: /s/ Jeffrey A. Long

Jeffrey A. Long, Group Vice President

 

 

/s/ Brian E. Hickey

Brian E. Hickey

5

 

EXHIBIT 10.2

 

SECOND AMENDMENT TO 

SUPPLEMENTAL DEFERRED COMPENSATION AGREEMENT

FOR

BRIAN E. HICKEY

 

 

WHEREAS, Manufacturers and Traders Trust Company (the "Company") and Brian E. Hickey (the “Executive”) entered into a Supplemental Deferred Compensation Agreement dated July 21, 1994 (the “Agreement”); and

 

WHEREAS, the Agreement was amended by mutual agreement effective August 1, 2006, to comply with the requirements of new Internal Revenue Code (the “Code”) Section 409A; and

 

WHEREAS, the parties now wish to amend the Agreement in accordance with the transition rules to Section 409A of the Code to extend the period under which the Executive may elect a form of payment of his benefit and to clarify certain payment provisions.

 

NOW, THEREFORE, by mutual consent of the parties, the Agreement is hereby amended, effective September 1, 2008, as follows:

 

1.Section 2.3 is hereby amended by deleting subsection (a) in its entirety and substituting the following in its place:

 

(a)Not later than December 31, 2008, the Executive, in accordance with the transition rules under Section 409A of the Code, may make an election under (b) or (c) below regarding the date and form of payment of his Benefit. Any election made under this Section shall be made in the manner prescribed by the Company. Any election made under this Section in 2008 will be effective as of January 1, 2009.

 

2.Section 2.3 is hereby amended by adding the following sentence to the end of subsection (b):

 

If the Executive does not make an election under this Section, the Benefit Commencement Date will be the date on which the Executive has a Separation from Service or becomes Disabled, whichever is earlier.

 

 

3.Section 2.3 is hereby amended by adding the following sentence to the end of subsection (c):

 

If the Executive does not make an election under this Section, the Benefit will be paid in the form of a Single Life Annuity.

 

 

EXHIBIT 10.2

 

 

 

 

 

 

4.Section 2.4 is hereby amended by deleting the words “Section 2.3” in the first sentence and substituting the words “Sections 2.3 and 2.7” in their place.

 

5.Section 2.4 is hereby amended by deleting the last sentence and substituting the following in its place:

 

For purposes of this Section 2.4, the Executive will be deemed to be a “specified employee” under Section 409A of the Code.

 

 

6.Section 2.6 is hereby amended by deleting each reference to “2007” and substituting “2009” in its place.

 

7.Section 2.7 is hereby amended by deleting each reference to “2007” and substituting “2009” in its place, and by deleting each reference to “2006” and substituting “2008” in its place.

 

8.Section 2.7(c) is hereby amended by adding the words “Subject to Section 2.4,”  to the beginning of the paragraph, and by adding the words “the later of “ after the words "but not later than."

 

 

In all other respects, the Agreement remains unchanged.

 

Date:  12/11/08/s/  Brian E. Hickey

Brian E. Hickey

 

 

Date:  12/11/08MANUFACTURERS AND TRADERS

TRUST COMPANY

 

 

 

By:  /s/  Ann Marie Odrobina

Name:  Ann Marie Odrobina

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