Document:

Exhibit 10.1

 

CONTINENTAL MATERIALS CORPORATION

 

DEFERRED COMPENSATION PLAN

 

 

Effective January 1, 2019

 

 

	
1.
    	
Establishment and   Purpose
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
3.
    	
Eligibility and   Participation
    	
7
    
	
 
    	
 
    	
 
    
	
4.
    	
Deferrals
    	
7
    
	
 
    	
 
    	
 
    
	
5.
    	
Company Contributions
    	
9
    
	
 
    	
 
    	
 
    
	
6.
    	
Benefits
    	
10
    
	
 
    	
 
    	
 
    
	
7.
    	
Modifications to   Payment Schedules
    	
13
    
	
 
    	
 
    	
 
    
	
8.
    	
Valuation of Account   Balances; Investments
    	
14
    
	
 
    	
 
    	
 
    
	
9.
    	
Administration
    	
15
    
	
 
    	
 
    	
 
    
	
10.
    	
Amendment and Termination
    	
15
    
	
 
    	
 
    	
 
    
	
11.
    	
Informal Funding
    	
16
    
	
 
    	
 
    	
 
    
	
12.
    	
Claims
    	
16
    
	
 
    	
 
    	
 
    
	
13.
    	
Arbitration
    	
23
    
	
 
    	
 
    	
 
    
	
14.
    	
General Provisions
    	
24
    

 

 

1.                                      Establishment and Purpose.

 

Continental Materials Corporation (the “Company”) hereby establishes the Continental Materials Corporation Deferred Compensation Plan (the “Plan”), effective January 1, 2019.   The purpose of the Plan is to attract and retain key personnel by providing opportunities to defer receipt of salary, bonus, or other specified compensation. The Plan is not intended to meet the qualification requirements of Code Section 401(a), but is intended to meet the requirements of Code Section 409A, and shall be operated and interpreted consistent with that intent.

 

The Plan constitutes an unsecured promise by the Company to pay benefits in the future. Participants in the Plan shall have the status of general unsecured creditors of the Company or the Adopting Employer, as applicable. Each Participating Employer shall be solely responsible for payment of the benefits of its employees and their beneficiaries. The Plan is unfunded for Federal tax purposes and is intended to be an unfunded arrangement for eligible employees who are part of a select group of management or highly compensated employees of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. Any amounts set aside to defray the liabilities assumed by the Company or an Adopting Employer will remain the general assets of the Company or the Adopting Employer and shall remain subject to the claims of the Company’s or the Adopting Employer’s creditors until such amounts are distributed to the Participants.

 

2.                                      Definitions.

 

2.1.                            Account. Account means a bookkeeping account maintained by the Committee to record the payment obligation of a Participating Employer to a Participant as determined under the terms of the Plan. The Committee may maintain an Account to record the total obligation to a Participant and component Accounts to reflect amounts payable at different times and in different forms and/or deferred at different times. Reference to an Account means any such Account established by the Committee, as the context requires. Accounts are intended to constitute unfunded obligations within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

 

2.2.                            Account Balance. Account Balance means, with respect to any Account, the total payment obligation owed to a Participant from such Account as of the most recent Valuation Date.

 

2.3.                            Adopting Employer. Adopting Employer means an Affiliate who, with the consent of the Company, has adopted the Plan for the benefit of its eligible Employees.

 

2.4.                            Affiliate. Affiliate means a corporation, trade or business that, together with the Company, is treated as a single employer under Code Section 414(b) or (c).

 

2.5.                            Beneficial Owner.  Beneficial Owner means the definition given in Rule 13d-3 promulgated under the Exchange Act.

 

2.6.                            Beneficiary. Beneficiary means a natural person, estate, or trust designated by a Participant to receive payments to which a Beneficiary is entitled in accordance with provisions of the Plan. The Participant’s spouse, if living, otherwise the Participant’s estate, shall

 

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be the Beneficiary if: (i) the Participant has failed to properly designate a Beneficiary, or (ii) all designated Beneficiaries have predeceased the Participant.

 

A former spouse shall have no interest under the Plan, as Beneficiary or otherwise, unless the Participant designates such person as a Beneficiary after dissolution of the marriage, except to the extent provided under the terms of a domestic relations order as described in Code Section 414(p)(1)(B).

 

2.7.                            Bonus.  Bonus means Compensation which is designated as such by the Participant’s Employer for the purposes of this Plan and which relates to services performed during an incentive period by a Participant in addition to his or her Salary.

 

2.8.                            Business Day. Business Day means each day on which the New York Stock Exchange is open for business.

 

2.9.                            Change in Control. Change in Control means the occurrence of any of the following:

 

(a)                                 Any one person, or more than one person acting as a group as such terms are defined or described in Sections 13(d) or 14(d) of the Exchange Act (“Person”) is or becomes the Beneficial Owner, directly or indirectly, of more than 50% of the total voting power of the voting stock of the Company including by way of merger, consolidation or otherwise, provided; however, that for purposes of this subsection (a), the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in Control;

 

(b)                                 The sale, exchange, lease, or other disposition of all or substantially all of the assets of the Company to Persons provided, however, that for purposes of this subsection (b), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (i) a transfer to an entity that is controlled by the Company’s shareholders immediately after the transfer, or (ii) a transfer of assets by the Company to: (A) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (B) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (C) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, as applicable; or

 

(c)                                  A majority of the members of the Company’s Board of Directors are replaced within a 12-month period by persons whose appointment or election was not endorsed by a majority of the

 

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Company’s Board of Directors in place prior to the date of the appointment or election.

 

Notwithstanding the foregoing, a Change of Control shall not occur unless such transaction constitutes a change in the ownership of the Company, a change in the effective control of the Company, as applicable, or a change in the ownership of a substantial portion of the Company’s assets under Section 409A of the Code.

 

An event constitutes a Change in Control with respect to a Participant only if the Participant performs services for the Company, or the Participant’s relationship to the Company otherwise satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(ii).

 

With respect to any event(s) relating to an Adopting Employer, the Committee shall, in its sole discretion, make any determination as to the occurrence of a Change in Control in a manner that is similar to the above provisions of this Section 2.9.

 

Any determination under this Section 2.9 as to the occurrence of a Change in Control shall be based on objective facts and in accordance with the requirements of Code Section 409A.

 

2.10.                     Claimant. Claimant means a Participant or Beneficiary filing a claim under Section 12 of this Plan.

 

2.11.                     Code. Code means the Internal Revenue Code of 1986, as amended from time to time.

 

2.12.                     Code Section 409A. Code Section 409A means Section 409A of the Code, and regulations and other guidance issued by the Treasury Department and Internal Revenue Service thereunder.

 

2.13.                     Committee. Committee means the committee appointed by the Board of Directors of the Company (or the appropriate committee of such board) to administer the Plan. If no designation is made, the Chief Executive Officer of the Company or his delegate shall have and exercise the powers of the Committee.

 

2.14.                     Company. Company means Continental Materials Corporation.

 

2.15.                     Company  Contribution.  Company  Contribution means  a  credit  by  the  Committee  to  a  Participant’s  Account(s) in accordance with the provisions of Section 5 of the Plan. Company Contributions are credited at the sole discretion of the Committee and the fact that a Company Contribution is credited in one year shall not obligate the Committee to continue to make such Company Contribution in subsequent years. Unless the context clearly indicates otherwise, a reference to Company Contribution shall include Earnings attributable to such contribution.

 

2.16.                     Compensation. Compensation means a Participant’s Salary and Bonus, and any other amounts approved by the Committee as Compensation for purposes of this Plan, from time to time. Compensation shall not include any compensation that has been previously deferred under this Plan or any other arrangement subject to Code Section 409A.

 

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2.17.                     Compensation Deferral Agreement. Compensation Deferral Agreement means an agreement between a Participant and the Company that specifies: (i) the amount of each component of Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Section 4, and (ii) the Payment Schedule applicable to each salary and/or bonus deferral Accounts. The Committee may permit different deferral amounts for each component of Compensation and may establish a minimum or maximum deferral amount for each such component. Unless otherwise specified by the Committee in the Compensation Deferral Agreement, Participants may defer up to 80% of Salary and 100% of Bonus Compensation for a Plan Year.  A Compensation Deferral Agreement may also specify the investment allocation described in Section 8.3.

 

2.18.                     Death Benefit. Death Benefit means the benefit payable under the Plan to a Participant’s Beneficiary(ies) upon the Participant’s death as provided in Section 6.2 of the Plan.

 

2.19.                     Deferral. Deferral means a credit to a Participant’s Account(s) that records that portion of the Participant’s Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Section 4. Unless the context of the Plan clearly indicates otherwise, a reference to Deferrals includes Earnings attributable to such Deferrals.

 

Deferrals shall be calculated with respect to the gross cash Compensation payable to the Participant prior to any deductions or withholdings, but shall be reduced by the Committee as necessary so that it does not exceed 100% of the cash Compensation of the Participant remaining after deduction of all required income and employment taxes, 401(k) and other employee benefit deductions, and other deductions required by law. Changes to payroll withholdings that affect the amount of Compensation being deferred to the Plan shall be allowed only to the extent permissible under Code Section 409A.

 

2.20.                     Disability.  Disability means a condition in which the Participant is determined to be totally disabled by the Social Security Administration.

 

2.21.                     Earnings. Earnings means an adjustment to the value of an Account in accordance with Section 8.

 

2.22.                     Effective Date. Effective Date means January 1, 2019.

 

2.23.                     Eligible Employee. Eligible Employee means a member of a “select group of management or highly compensated employees” of a Participating Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined by the Committee from time to time in its sole discretion.

 

2.24.                     Employee. Employee means a common-law employee of an Employer.

 

2.25.                     Employer. Employer means, with respect to Employees it employs, the Company and each Affiliate.

 

2.26.                     ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

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2.27.                     Exchange Act.  Exchange Act means the Securities Exchange Act of 1934, as amended.

 

2.28.                     Hour of Service.  Hour of Service means an Hour of Service credited to the Participant as determined under the Continental Material Corporation Employees Profit Sharing Retirement Plan.

 

2.29.                     Normal Retirement Age.  Normal Retirement Age means the age of sixty years.

 

2.30.                     Participant. Participant means an Eligible Employee who has received notification of his or her eligibility to defer Compensation under the Plan under Section 3.1 and any other person with an Account Balance greater than zero, regardless of whether such individual continues to be an Eligible Employee. A Participant’s continued participation in the Plan shall be governed by Section 3.2 of the Plan.

 

2.31.                     Participating Employer. Participating Employer means the Company and each Adopting Employer.

 

2.32.                     Payment Schedule. Payment Schedule means the date as of which payment of an Account under the Plan will commence and the form in which payment of such Account will be made.

 

2.33.                     Performance-Based Compensation. Performance-Based Compensation means Compensation where the amount of, or entitlement to, the Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. The determination of whether Compensation qualifies as “Performance-Based Compensation” will be made in accordance with Treas. Reg. Section 1.409A-1(e) and subsequent guidance.

 

2.34.                     Plan. Plan means the “Continental Materials Corporation Deferred Compensation Plan” as documented herein and as may be amended from time to time hereafter. However, to the extent permitted or required under Code Section 409A, the term Plan may in the appropriate context also mean a portion of the Plan that is treated as a single plan under Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan and any other nonqualified deferred compensation plan or portion thereof that is treated as a single plan under such section.

 

2.35.                     Plan Year. Plan Year means January 1 through December 31.

 

2.36.                     Salary.  Salary means a Participant’s base salary earned during a Plan Year.

 

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2.37.                     Separation from Service.  Separation from Service means an Employee’s termination of employment with the Employer. Whether a Separation from Service has occurred shall be determined by the Committee in accordance with Code Section 409A.

 

An Employee who is absent from work due to military leave, sick leave, or other bona fide leave of absence shall incur a Separation from Service on the first date immediately following the later of: (i) the six month anniversary of the commencement of the leave, or (ii) the expiration of the Employee’s right, if any, to reemployment under statute or contract.

 

For purposes of determining whether a Separation from Service has occurred, the Employer means the Employer as defined in Section 2.24 of the Plan, except that in applying Code sections 1563(a)(1), (2) and (3) for purposes of determining whether another organization is an Affiliate of the Company under Code Section 414(b), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining whether another organization is an Affiliate of the Company under Code Section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in those sections.

 

2.38.                     Specified Date Account. Specified Date Account means an Account established by the Committee to record the amounts payable at a future date as specified in the Participant’s Compensation Deferral Agreement.

 

2.39.                     Specified Date Benefit. Specified Date Benefit means the benefit payable to a Participant under the Plan in accordance with Section 6.1(b).

 

2.40.                     Specified Employee. means a Participant who meets the definition of “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code.  For purposes of identifying a “specified employee,” the definition of compensation under Treas. Reg. Section 1.415(c)-2(a) will apply, the Specified Employee identification date shall be December 31, and the Specified Employee effective date shall be the first day of the fourth month following such identification date.

 

2.41.                     Substantial Risk of Forfeiture. Substantial Risk of Forfeiture means the description specified in Treas. Reg. Section 1.409A-1(d).

 

2.42.                     Termination Account. Termination Account means any Account established by the Committee to record the amounts payable to a Participant upon Separation from Service. Unless the Participant has established a Specified Date Account, all Deferrals and Company Contributions shall be allocated to a Termination Account on behalf of the Participant.

 

2.43.                     Termination Benefit. Termination Benefit means the benefit payable to a Participant under the Plan following the Participant’s Separation from Service.

 

2.44.                     Unforeseeable Emergency. Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s dependent (as defined in Code Section 152, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example,  as a result of a natural disaster); or other similar

 

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extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The types of events which may qualify as an Unforeseeable Emergency may be limited by the Committee.

 

2.45.                     Valuation Date. Valuation Date means each Business Day.

 

2.46.                     Year of Vesting Service.  Year of Vesting Service means a Plan Year in which a Participant is credited with 1,000 Hours of Service.

 

3.                                      Eligibility and Participation.

 

3.1.                            Eligibility and Participation.  An Eligible Employee becomes a Participant upon the earlier to occur of: (i) a credit of Company Contributions under Section 5, or (ii) receipt of notification of eligibility to participate.

 

3.2.                            Duration. A Participant shall be eligible to defer Compensation and receive allocations of Company Contributions (if any), subject to the terms of the Plan, for as long as such Participant remains an Eligible Employee. A Participant who is no longer an Eligible Employee but has not Separated from Service may not defer Compensation under the Plan beyond the Plan Year in which he or she became ineligible but may otherwise exercise all of the rights of a Participant under the Plan with respect to his or her Account(s). On and after a Separation from Service, a Participant shall remain a Participant as long as his or her Account Balance is greater than zero (0), and during such time may continue to make allocation elections as provided in Section 8.3. An individual shall cease being a Participant in the Plan when all benefits under the Plan to which he or she is entitled have been paid.

 

4.                                      Deferrals.

 

4.1.                            Deferral Elections, Generally.

 

(a)                                 A Participant may elect to defer Compensation by submitting a Compensation Deferral Agreement during the enrollment periods established by the Committee and in the manner specified by the Committee, but in any event, in accordance with Section 4.2. A Compensation Deferral Agreement that is not timely filed with respect to a service period or component of Compensation shall be considered void and shall have no effect with respect to such service period or Compensation. The Committee may modify any Compensation Deferral Agreement prior to the date the election becomes irrevocable under the rules of Section 4.2, as may be needed, to comply with the terms of the Plan (as it may be amended from time to time) and/or as may be required by law.

 

(b)                                 The Participant shall specify on his or her Compensation Deferral Agreement the amount of Deferrals and whether to allocate Deferrals to a Termination Account or to a Specified Date Account. If no designation is made, Deferrals shall be allocated to the Termination Account. A Participant may also specify in his or

 

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her Compensation Deferral Agreement the Payment Schedule applicable to his or her Plan Accounts. If the Payment Schedule is not specified in a Compensation Deferral Agreement, the Payment Schedule shall be the Payment Schedule specified in Section 6.1(e).

 

4.2.                            Timing Requirements for Compensation Deferral Agreements.

 

(a)                                 First Year of Eligibility. In the case of the first year in which an Eligible Employee becomes eligible to participate in the Plan, he or she has up to 30 days following his or her initial eligibility to submit a Compensation Deferral Agreement with respect to Compensation to be earned during such year. The Compensation Deferral Agreement described in this paragraph becomes irrevocable upon the end of such 30-day period. The determination of whether an Eligible Employee may file a Compensation Deferral Agreement under this paragraph shall be determined in accordance with the rules of Code Section 409A, including the provisions of Treas. Reg. Section 1.409A-2(a)(7).

 

A Compensation Deferral Agreement filed under this paragraph applies to Compensation earned on and after the date the Compensation Deferral Agreement becomes irrevocable.

 

(b)                                 Prior Year Election. Except as otherwise provided in this Section 4.2, Participants may defer Compensation by filing a Compensation Deferral Agreement no later than December 31 of the year prior to the year in which the Compensation to be deferred is earned. A Compensation Deferral Agreement described in this paragraph shall become irrevocable with respect to such Compensation as of January 1 of the year in which such Compensation is earned.

 

(c)                                  Performance-Based Compensation. Participants may file a Compensation Deferral Agreement with respect to Performance-Based Compensation no later than the date that is six months before the end of the performance period, provided that:

 

(i)                                     the Participant performs services continuously from the later of the beginning of the performance period or the date the criteria are established through the date the Compensation Deferral Agreement is submitted; and

 

(ii)                                  the Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement is filed.

 

A Compensation Deferral Agreement becomes irrevocable with respect to Performance-Based Compensation as of the day immediately following the latest

 

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date for filing such election. Any election to defer Performance-Based Compensation that is made in accordance with this paragraph and that becomes payable as a result of the Participant’s death or disability (as defined in Treas. Reg. Section 1.409A-1(e)) or upon a Change in Control prior to the satisfaction of the performance criteria, will be void.

 

4.3.                            Allocation of Deferrals. A Compensation Deferral Agreement may allocate Deferrals to a Specified Date Account or a Termination Account.  Separate elections will apply to Salary Deferrals and Bonus Deferrals. The Committee may, in its discretion, establish a minimum deferral period for the establishment of a Specified Date Account (for example, the second Plan Year following the year Compensation is allocated to such accounts).

 

4.4.                            Deductions from Pay. The Committee has the authority to determine the payroll practices under which any component of Compensation subject to a Compensation Deferral Agreement will be deducted from a Participant’s Compensation.

 

4.5.                            Cancellation of Deferrals. The Committee may cancel a Participant’s Deferrals for the balance of the Plan Year in which an Unforeseeable Emergency occurs.

 

5.                                      Company Contributions

 

5.1.                            Discretionary Company Contributions. The Committee may, from time to time in its sole and absolute discretion, credit Company Contributions to any Participant in any amount determined by the Committee. Such contributions will be credited to a Participant’s Termination Account.

 

5.2.                            Vesting. Company Contributions described in Section 5.1, above, and the Earnings thereon, shall vest in accordance with the vesting schedule below. All Company Contributions shall become 100% vested if, while actively employed, the Participant (i) dies, (ii) is deemed to have incurred a Disability, or (iii) attains Normal Retirement Age.  The Committee may, at any time, in its sole discretion, increase a Participant’s vested interest in a Company Contribution. The portion of a Participant’s Accounts that remains unvested upon his or her Separation from Service after the application of the terms of this Section 5.2 shall be forfeited.

 

If a Participant has a Separation from Service prior to attaining his Normal Retirement Age for any other reason other than his or her death or Disability, such Participant shall be entitled to receive the vested value of his or her Account(s). For this purpose, each Participant shall at all times have a nonforfeitable (vested) right to his or her Account(s) derived from any Compensation deferred pursuant to Section 4. However, with respect to any Company Contributions made on the Participant’s behalf pursuant to this Section 5, the Participant shall have a nonforfeitable (vested) right to a percentage of the value of such portion of his or her Account(s) as follows:

 

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Years of Vesting Service
    	
 
    	
Vested Percentage
    	
 
    
	
Less   than 3 years
    	
 
    	
0
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
3 years   or more
    	
 
    	
100
    	
%
    

 

For this purpose, a Participant shall be credited with a Year of Vesting Service for each Plan Year during which he is credited with 1,000 Hours of Service.

 

Notwithstanding the foregoing, a Participant’s account(s) shall become one hundred percent (100%) vested, if a Participant is actively employed, upon a Change in Control.

 

6.                                      Benefits.

 

6.1.                            Benefits, Generally. A Participant shall be entitled to the following benefits under the Plan:

 

(a)                                 Termination Benefit. Upon the Participant’s Separation from Service for reasons other than death, he or she shall be entitled to a Termination Benefit. Distribution of a Participant’s vested Termination Account(s) shall be made or commence within ninety (90) days following the date the Participant has a Separation from Service with the Company.  If the Company is subject to the provisions of Section 409A(a)(2)(B)(i) of the Code, and if the Participant is a Specified Employee, distribution shall be made or commence in the seventh month following the month in which the Participant has a Separation from Service with the Company.

 

(b)                                 Specified Date Benefit. If the Participant has established one or more Specified Date Accounts, he or she shall be entitled to a Specified Date Benefit with respect to each such Specified Date Account. Any Specified Date Account(s) established for a Participant under this Section 6 shall be distributed as of the date(s) and mode previously specified by the Participant. Notwithstanding the preceding sentence, balances remaining in Specified Date Accounts on the date the Participant Separates from Service shall be distributed in a lump sum payment within ninety (90) days following the date the Participant Separates from Service with the Company, provided; however, that with respect to a Participant who is a Specified Employee as of the date such Participant incurs a Separation from Service, payment will be made in the seventh month following the month in which such Separation from Service occurs.

 

(c)                                  Death Benefit. In the event of the Participant’s death, his or her designated Beneficiary(ies) shall be entitled to a Death Benefit. The Death Benefit shall be equal to the vested balance of

 

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Termination Account(s) and the unpaid balances of any Specified Date Accounts, and shall be paid in a single lump sum payment, within the ninety (90) day period following the Participant’s date of death.

 

(d)                                 Unforeseeable Emergency Payments. A Participant who experiences an Unforeseeable Emergency may submit a written request to the Committee to receive payment of all or any portion of his or her vested Accounts. Whether a Participant or Beneficiary is faced with an Unforeseeable Emergency permitting an emergency payment shall be determined by the Committee based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of Unforeseeable Emergency may not be made to the extent that such emergency is or may be reimbursed through insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Deferrals under this Plan. If an emergency payment is approved by the Committee, the amount of the payment shall not exceed the amount reasonably necessary to satisfy the need, taking into account the additional compensation that is available to the Participant as the result of cancellation of deferrals to the Plan, including amounts necessary to pay any taxes or penalties that the Participant reasonably anticipates will result from the payment. The amount of the emergency payment shall be subtracted pro rata from each Account. Emergency payments shall be paid in a single lump sum within the 90-day period following the date the payment is approved by the Committee.

 

(e)                                  Default Distribution Election.  Notwithstanding the foregoing provisions of this Section 6.1, except as otherwise provided under Section 409A of the Code, if a Participant fails to make a distribution election, the Participant’s vested Account(s) shall be distributed to the Participant, or the Participant’s Beneficiary in the event of death, in a single lump-sum payment within ninety (90) days following the Participant’s Separation from Service.

 

(f)                                   Payment Dates.  With respect to the payment of any amount under the Plan, a payment payable on a fixed date shall be treated as made upon the date specified under the Plan if payment is made on such date or a later date within the same taxable year of the Participant.   In the event a payment of any amount under the Plan which is required to be paid within 90 days of Separation from Service or death, straddles two calendar years, payment shall be provided in the second taxable year of the Participant.  In no event will a Participant be permitted to, directly or indirectly, to designate the taxable year of any payment. With respect to any

 

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installment payment other than the initial installment payment (“Subsequent Installment Payments”), the payment date of any Subsequent Installment Payment will not affect the payment date of any other installment payment,

 

6.2.                      Form of Payment.

 

(a)                                 Termination Benefit. A Participant who is entitled to receive a Termination Benefit will receive payment of his vested Termination Account(s) based upon the form of distribution elected by the Participant for each Termination Account. A Participant may elect, through the Compensation Deferral Agreement for each year, to have such Salary and/or Bonus Deferral directed to a Termination Account and paid based upon either of the following forms of distribution:

 

(i)                                     a single lump sum payment; or

 

(ii)                                  annual installments over a period of up to ten (10) years, the amount of each installment to equal the balance of the Participant’s vested Termination Account immediately prior to the payment of each installment divided by the number of installments remaining to be paid.  The first installment shall be made within ninety (90) days of the date of the Participant’s Separation from Service with the Company.  Each subsequent installment payment will be made each successive calendar year in the same calendar month as the initial installment payment was paid.

 

Company Contribution allocations will be designated to a separate Termination Account for each Plan Year’s allocation. The Participant will elect from the above forms of payment in (i) and (ii) for each Plan Year’s Company Contribution Termination Account.

 

(b)                                 Specified Date Benefit. The Specified Date Benefit shall be paid in a single lump sum, unless the Participant elects on the Compensation Deferral Agreement with which the account was established to have the Specified Date Account paid in substantially equal annual installments over a period of up to five years, as elected by the Participant.

 

Notwithstanding any election of a form of payment by the Participant, upon a Separation from Service the unpaid balances of any Specified Date Accounts shall be paid in a single lump sum.

 

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(c)                                  Death Benefit. A designated Beneficiary who is entitled to receive a Death Benefit shall receive payment of such benefit in a single lump sum.

 

(d)                                 Rules Applicable to Installment Payments. If a Payment Schedule specifies installment payments, annual payments will be made beginning as of the payment commencement date for such installments and with each subsequent installment being made in each successive calendar year in the same calendar month as the first installment payment was made until the number of installment payments specified in the Payment Schedule has been paid. The amount of each installment payment shall be determined by dividing (a) by (b), where (a) equals the Account Balance as of the Valuation Date and (b) equals the remaining number of installment payments.

 

For purposes of Section 6, installment payments will be treated as a single form of payment.

 

6.3.                            Acceleration of or Delay in Payments. The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7). If the Plan receives a domestic relations order (within the meaning of Code Section 414(p)(1)(B)) directing that all or a portion of a Participant’s Accounts be paid to an “alternate payee,” any amounts to be paid to the alternate payee(s) shall be paid in a single lump sum.

 

7.                                      Modifications to Payment Schedules

 

7.1.                            Participant’s Right to Modify.  A Participant may modify the mode of payment for any Termination Account, and/or the mode and/or timing of any Specified Date Account, consistent with the permissible Payment Schedules available under the Plan, provided such modification complies with the requirements of this Section 7.

 

7.2.                            Time of Election. The date on which a modification election is submitted to the Committee must be at least 12 months prior to the date on which payment is scheduled to commence under the Payment Schedule in effect prior to the modification.

 

7.3.                            Date of Payment under Modified Payment Schedule. Except with respect to modifications that relate to the payment of a Death Benefit, the date payments are to commence under the modified Payment Schedule must be no earlier than five years after the date payment would have commenced under the original Payment Schedule. Under no circumstances may a modification election result in an acceleration of payments in violation of Code Section 409A.

 

13

 

7.4.                            Effective Date. A modification election submitted in accordance with this Section 7 is irrevocable upon receipt by the Committee and becomes effective 12 months after such date.

 

7.5.                            Effect on Accounts. An election to modify a Payment Schedule is specific to the Account or payment event to which it applies, and shall not be construed to affect the Payment Schedules of any other Accounts.

 

8.                                      Valuation of Account Balances; Investments

 

8.1.                            Valuation. Deferrals shall be credited to appropriate Accounts, as soon as administratively possible following the date such Compensation would have been paid to the Participant absent the Compensation Deferral Agreement. Company Contributions shall be credited to a Termination Account at the times determined by the Committee. Valuation of Accounts shall be performed under procedures approved by the Committee.

 

8.2.                            Earnings Credit. Each Account will be adjusted for positive or negative Earnings as of each Valuation Date based upon the Participant’s investment allocation among a menu of investment options selected in advance by the Committee, in accordance with the provisions of this Section 8 (“investment allocation”). Notwithstanding the foregoing, Earnings will be credited to each Account of a Participant on the date the payment of any benefit is made from such Participant’s Account, and in the event such payment date is not a Valuation Date, Earnings will be credited on the first Valuation Date immediately preceding such payment date.

 

8.3.                            Investment Options. Investment options will be determined by the Committee. The Committee, in its sole discretion, shall be permitted to add or remove investment options from the Plan menu from time to time, provided that any such additions or removals of investment options shall not be effective with respect to any period prior to the effective date of such change.

 

8.4.                            Investment Allocations. A Participant’s investment allocation constitutes a deemed, not actual, investment among the investment options comprising the investment menu. At no time shall a Participant have any real or beneficial ownership in any investment option included in the investment menu, nor shall the Company or any trustee acting on its behalf have any obligation to purchase actual securities as a result of a Participant’s investment allocation. A Participant’s investment allocation shall be used solely for purposes of adjusting the value of a Participant’s Account Balances.

 

A Participant shall specify an investment allocation for each of his Accounts in accordance with procedures established by the Committee.  Allocation among the investment options must be designated in increments of at least 1%.

 

A Participant may change an investment allocation, both with respect to future credits to the Plan and with respect to existing Account Balances, in accordance with such rules and procedures as the Administrator may establish.

 

8.5.                            Unallocated Deferrals and Accounts. If the Participant fails to make an investment allocation with respect to an Account, such Account shall be invested in an

 

14

 

investment option, the primary objective of which is the preservation of capital, as determined by the Committee.

 

9.                                      Administration

 

9.1.                            Plan Administration. This Plan shall be administered by the Committee which shall have discretionary authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and to utilize its discretion to decide or resolve any and all questions, including but not limited to eligibility for benefits and interpretations of this Plan and its terms, as may arise in connection with the Plan. Claims for benefits shall be filed with the Committee and resolved in accordance with the claims procedures in Section 12.

 

9.2.                            Withholding. The Participating Employer shall have the right to withhold from any payment due under the Plan (or with respect to any amounts credited to the Plan) any taxes required by law to be withheld in respect of such payment (or credit). Withholdings with respect to amounts credited to the Plan shall be deducted from Compensation that has not been deferred to the Plan.

 

9.3.                            Indemnification. The Participating Employers shall indemnify and hold harmless each employee, officer, director, agent or organization, to whom or to which are delegated duties, responsibilities, and authority under the Plan or otherwise with respect to administration of the Plan, including, without limitation, the Committee and its agents, against all claims, liabilities, fines and penalties, and all expenses reasonably incurred by or imposed upon him or it (including but not limited to reasonable attorney fees) which arise as a result of his or its actions or failure to act in connection with the operation and administration of the Plan to the extent lawfully allowable. Notwithstanding the foregoing, the Participating Employer shall not indemnify any person or organization if his or its actions or failure to act are due to gross negligence or willful misconduct or for any such amount incurred through any settlement or compromise of any action unless the Participating Employer consents in writing to such settlement or compromise.

 

9.4.                            Delegation of Authority. In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with legal counsel who shall be legal counsel to the Company.

 

9.5.                            Binding Decisions or Actions. The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

 

10.                               Amendment and Termination

 

10.1.                     Amendment and Termination. The Company may at any time and from time to time amend the Plan or may terminate the Plan as provided in this Section 10.

 

15

 

10.2.                     Amendments. The Company, by action taken by its Board of Directors, may amend the Plan at any time and for any reason, provided that any such amendment shall not reduce the Account Balances of any Participant accrued as of the date of any such amendment or restatement (as if the Participant had incurred a voluntary Separation from Service on such date) or reduce any rights of a Participant under the Plan or other Plan features with respect to Deferrals made prior to the date of any such amendment or restatement without the consent of the Participant. The Board of Directors of the Company may delegate to the Committee the authority to amend the Plan without the consent of the Board of Directors for the purpose of: (i) conforming the Plan to the requirements of law; (ii) facilitating the administration of the Plan; (iii) clarifying provisions based on the Committee’s interpretation of the document; and (iv) making such other amendments as the Board of Directors may authorize.

 

10.3.                     Termination. The Company, by action taken by its Board of Directors, may terminate the Plan and pay Participants and Beneficiaries their Account Balances in a single lump sum at any time, to the extent and in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix).

 

10.4.                     Accounts Taxable Under Code Section 409A. The Plan is intended to constitute a plan of deferred compensation that meets the requirements for deferral of income taxation under Code Section 409A. The Committee, pursuant to its authority to interpret the Plan, may sever from the Plan or any Compensation Deferral Agreement any provision or exercise of a right that otherwise would result in a violation of Code Section 409A.

 

11.                               Informal Funding

 

11.1.                     General Assets. Obligations established under the terms of the Plan may be satisfied from the general funds of the Participating Employers, or a trust described in this Section 11. No Participant, spouse or Beneficiary shall have any right, title or interest whatever in assets of the Participating Employers. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Participating Employers and any Employee, spouse, or Beneficiary. To the extent that any person acquires a right to receive payments hereunder, such rights are no greater than the right of an unsecured general creditor of the Participating Employer.

 

11.2.                     Rabbi Trust. A Participating Employer may, in its sole discretion, establish a grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay benefits under the Plan. Payments under the Plan may be paid from the general assets of the Participating Employer or from the assets of any such rabbi trust. Payment from any such source shall reduce the obligation owed to the Participant or Beneficiary under the Plan.

 

12.                               Claims

 

12.1.                     Claims Procedure. Any person who believes that such person is being denied a benefit to which such person is entitled under this Plan (a “Claimant”) may file a written request for such benefit in the form of a notice with the Committee, setting forth the Claimant’s claim, no more than 60 days after such Claimant first believes that such a denial has taken place.

 

16

 

(a)                                 Time for Decision on a Claim.  A claim shall be filed in writing with the Committee and decided within 90 days by the Committee unless the Committee determines that special circumstances require an extension of time for processing the claim.  “Committee” means the person responsible for benefits administration under the Plan.  If the Committee determines that an extension of time for processing is required, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 90-day period. In no event shall such extension exceed a period of 90 days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefit determination.

 

(b)                                 Notification of Adverse Determination. Notice of the decision on such claim shall be furnished promptly to the Claimant.  Every notice of an adverse benefit determination will be provided in writing or electronically, and will include all of the following that pertain to the determination:  (i) the specific reason or reasons for the adverse determination; (ii) reference to the specific Plan provisions on which the determination is based; (iii) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) a description of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.

 

(c)                                  Right to Review. A Claimant may review all pertinent documents and may request a review by the Committee of such decision denying the claim.  Any such request must be filed in writing with the Committee within 60 days after receipt by the Claimant of written notice of the decision.  A failure to file a request for review within 60 days will constitute a waiver of the Claimant’s right to request a review of the denial of the claim.  Such written request for review shall contain all additional information that the Claimant wishes the Committee to consider.

 

(d)                                 Review Procedures. During the review process, the Committee will provide: (i)  the Claimant the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits; (ii) that a Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and (iii) for a review that takes into account all comments, documents, records, and other information

 

17

 

submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

(e)                                  Time for Decision on Review.  Written notice of the decision on review shall be furnished to the Claimant within 60 days unless the Committee determines that special circumstances require an extension of time for processing the claim. If the Committee determines that an extension of time for processing is required, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 60-day period. In no event shall such extension exceed a period of 60 days from the end of the initial period. The extension notice will describe the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review.

 

(f)                                   Notification of Determination on Review.  Notice of the decision on such claim shall be furnished promptly to the Claimant.  Every notice of an adverse benefit determination will be provided in writing or electronically, and will include all of the following that pertain to the determination: (i) the specific reason or reasons for the adverse determination; (ii) reference to the specific Plan provisions on which the benefit determination is based; (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and (iv) a statement describing any voluntary appeal procedures, if any, offered by the Plan and the Claimant’s right to obtain additional information about those voluntary review procedures, if any, and a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA.

 

(g)                                  Legal Remedies. Such suit may be filed only after the Plan’s review procedures have been exhausted and only if filed within 90 days after the final decision is provided.

 

12.2.                     Disability Claims.  Notwithstanding any provision of the Plan to the contrary, if a claim for benefits is based on Disability, the following claims procedures shall apply:  The Committee shall maintain a procedure under which Claimant can file a claim for benefits under this Plan based on Disability.

 

(a)                                 Time for Decision on a Claim. After receiving a claim for benefits, the Committee will notify the Claimant of its claim determination within 45 days of the receipt of the claim. This period may be extended by 30 days if an extension is necessary to process the claim due to matters beyond the control of the Committee. A written notice of the extension, the reason for the extension and

 

18

 

when the Committee expects to decide the claim, will be furnished to the Claimant within the initial 45-day period. This period may be extended for an additional 30 days beyond the original extension. A written notice of the additional extension, the reason for the additional extension and when the Committee expects to decide the claim, will be furnished to the Claimant within the first 30-day extension period if an additional extension of time is needed. However, if a period of time is extended due to a Claimant’s failure to submit information necessary to decide a claim, the period for making the benefit determination by the Committee will be tolled from the date on which the notification of the extension is sent to the Claimant until the date on which the Claimant responds to the request for additional information.

 

(b)                                 Notification of Adverse Determination.  If a claim for benefits is denied, in whole or in part, a Claimant or his or her authorized representative, will receive a written notice of the denial. The notice will follow the rules of 29 C.F.R. § 2560.503-1(o) for culturally and linguistically appropriate notices and will be written in a manner calculated to be understood by the Claimant. The notice will include:

 

1.                                      The specific reason(s) for the denial,

 

2.                                      References to the specific Plan provisions on which the benefit determination was based,

 

3.                                      A description of any additional material or information necessary to perfect a claim and an explanation of why such information is necessary,

 

4.                                      A description of the Committee’s appeals procedures and applicable time limits, including, to the extent applicable, a statement of the right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on review,

 

5.                                      A discussion of the decision, including an explanation of the basis for disagreeing with or not following: (i) the views presented by the Claimant to the Committee of health care professionals treating the Claimant and vocational professionals who evaluated the Claimant; (ii) the views of medical or vocational experts whose advice was obtained on behalf of the Committee in connection with a Claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (iii) a disability determination

 

19

 

regarding the Claimant presented by the Claimant to the Committee made by the Social Security Administration,

 

6.                                      If the determination is based on medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the relevant medical circumstances, or a statement that such explanation will be provided free of charge upon request,

 

7.                                      Either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse benefit determination, or a statement that such rules, guidelines, protocols, standards, or other similar criteria of the Plan do not exist, and

 

8.                                      A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to his or her claim for benefits.

 

(c)                                  Timing for Appealing Adverse Determination.  If a claim for benefits is denied, a Claimant, or his or her representative, may appeal the denied claim in writing within 180 days of receipt of the written notice of denial. The Claimant may submit any written comments, documents, records and any other information relating to the claim. Upon request, the Claimant will also have access to, and the right to obtain copies of, all documents, records and information relevant to his or her claim free of charge.

 

(d)                                 Right to Review.  A full review of the information in the claim file and any new information submitted to support the appeal will be conducted. The claim decision will be made by an appeals committee appointed by the Company. This committee will consist of individuals who were not involved in the initial benefit determination, nor will such individuals be subordinate to any person involved in the initial benefit determination. This review will not afford any deference to the initial benefit determination. If the initial adverse decision was based in whole or in part on a medical judgment, the appeals committee will consult with a healthcare professional who has appropriate training and experience in the field of medicine involved in the medical judgment, was not consulted in the initial adverse benefit determination and is not a subordinate of the healthcare professional who was consulted in the initial adverse benefit determination.

 

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(e)                                  Review Procedures.  Before an adverse benefit determination on review is issued, the appeals committee will provide the Claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the Committee or other person making the benefit determination (or at the direction of the Committee or such other person) in connection with the claim. Such evidence will be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the Claimant a reasonable opportunity to respond prior to that date.  Before the review appeals committee issues an adverse benefit determination on review based on a new or additional rationale, the committee will provide the Claimant, free of charge, with the rationale. The rationale will be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the Claimant a reasonable opportunity to respond prior to that date.

 

(f)                                   Time for Decision on Review.  The appeals committee will make a determination on an appealed claim within 45 days of the receipt of an appeal request. This period may be extended for an additional 45 days if the committee determines that special circumstances require an extension of time. A written notice of the extension, the reason for the extension and the date that the committee expects to render a decision will be furnished to the Claimant within the initial 45-day period. However, if the period of time is extended due to a Claimant’s failure to submit information necessary to decide the appeal, the period for making the benefit determination will be tolled from the date on which the notification of the extension is sent until the date on which the Claimant responds to the request for additional information.

 

(g)                                  Notification of Determination on Review.  If the claim on appeal is denied in whole or in part, a Claimant will receive a written notification of the denial. The notice will follow the rules of 29 C.F.R. § 2560.503-1(o) for culturally and linguistically appropriate notices and will be written in a manner calculated to be understood by the claimant.  The notice will identify the contractual limitations period that applies to the Claimant’s right to bring an action under section 502(a) of ERISA including the calendar date on which the contractual limitations period expires for the claim.  The notice will include:

 

1.                                      The specific reason(s) for the adverse determination,

 

2.                                      References to the specific Plan provisions on which the determination was based,

 

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3.                                      A statement regarding the right to receive upon request and free of charge reasonable access to, and copies of, all records, documents and other information relevant to the benefit claim,

 

4.                                      A description of the appeals committee’s review procedures and applicable time limits, including a statement of the right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on review,

 

5.                                      A discussion of the decision, including an explanation of the basis for disagreeing with or not following: (i) the views presented by the Claimant to the committee of health care professionals treating the claimant and vocational professionals who evaluated the Claimant; (ii) the views of medical or vocational experts whose advice was obtained by or on behalf of the committee in connection with a Claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; and (iii) a disability determination regarding the claimant presented by the Claimant to the committee made by the Social Security Administration,

 

6.                                      If the determination is based on medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the relevant medical circumstances, or a statement that such explanation will be provided free of charge upon request, and

 

7.                                      Either the specific internal rules, guidelines, protocols, standards or other similar criteria of the Plan relied upon in making the adverse benefit determination, or a statement that such rules, guidelines, protocols, standards, or other similar criteria of the Plan do not exist.

 

(h)                                 Legal Remedies.  A Claimant may not commence a judicial proceeding against any person, including the Committee, the Company or any Affiliate, the Board, the appeals committee, or any other person or committee, with respect to a claim for benefits without first exhausting the claims procedures set forth in the preceding paragraphs. No suit or legal action contesting in whole or in part any denial of benefits under the Plan shall be commenced later than the earlier of (i) the first anniversary of (A) the date of the notice of the committee’s final decision on appeal, or (B) if the

 

22

 

claimant fails to request any level of administrative review within the timeframe permitted under this Section 12, the deadline for requesting the next level of administrative review, and (ii) the last date on which such legal action could be commenced under the applicable statute of limitations under ERISA (including, for this purpose, any applicable state statute of limitations that applies under ERISA to such legal action).  A Claimant has the right to request a written explanation of any violation of these claims procedures. The Committee will provide an explanation within 10 days of the request.

 

13.                               Arbitration.

 

13.1.                     Mandatory Arbitration of Disputes.  If, any claim or controversy between a Participating Employer and a Participant or Beneficiary is not resolved through the claims procedure set forth in Section 12, such claim shall be submitted to and resolved exclusively by expedited binding arbitration by a single arbitrator.  Arbitration shall be conducted in accordance with the following procedures:

 

(a)                                 All disputes concerning this Plan will be submitted to binding arbitration; provided that the Participant has first exhausted all rights and remedies set forth in Section 12 hereof entitled “Claims Procedure.”  Within 15 days after commencement of arbitration, a single independent arbitrator who has substantial business or legal experience may be chosen from a list of independent arbitrators supplied by the American Arbitration Association (the “AAA”), with each the Company and the Participant entitled to an equal number of strikes to the list.  Prior to the commencement of hearings, the arbitrator appointed will take an oath of impartiality.  The arbitration will be conducted in accordance with the then prevailing rules and procedures of the AAA governing Commercial Arbitration.  A binding decision will be made by the arbitrator.  The arbitration will be held in Chicago, Illinois or at another place selected by mutual agreement of the parties to the dispute.  A judgment upon any award rendered by the arbitrator may be entered in and enforced by any court having jurisdiction thereof.

 

(b)                                 The fees and expenses associated with any arbitration conducted pursuant to this Plan will be borne one-half by the Company and one-half by the Participant.  However, if the arbitrator determines that any party to the arbitration has taken or refused to take or approve any action and was arbitrary or unreasonable in doing so, the arbitrator may charge such part or all of the costs of any mediation and/or arbitration against such individual party as the arbitrator deems appropriate in the circumstances.

 

23

 

(c)                                  The Plan will be governed and construed in accordance with the internal laws of the State of Illinois, without reference to principles relating to conflicts of law, except to the extent preempted by Federal law.

 

(d)                                 Should any one or more sections of this Plan be found to be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining sections contained herein will not in any way be impaired or affected thereby.  In addition, if any section hereof is found to be partially enforceable, then it will be enforced to that extent.  If any covenant is not enforceable to the full extent provided herein, it will be and remain enforceable to the fullest extent permitted by law.

 

(e)                                  The titles appearing herein are for convenience only, and will not be deemed to define, limit, construe or otherwise affect the other provisions of this Plan.

 

14.                               General Provisions

 

14.1.                     Assignment. No interest of any Participant, spouse or Beneficiary under this Plan and no benefit payable hereunder shall be assigned as security for a loan, and any such purported assignment shall be null, void and of no effect, nor shall any such interest or any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any Participant, spouse or Beneficiary. Notwithstanding anything to the contrary herein, however, the Committee has the discretion to make payments to an alternate payee in accordance with the terms of a domestic relations order (as defined in Code Section 414(p)(1)(B)).

 

The Company may assign any or all of its liabilities under this Plan in connection with any restructuring, recapitalization, sale of assets or other similar transactions affecting a Participating Employer without the consent of the Participant.

 

14.2.                     No Legal or Equitable Rights or Interest. No Participant or other person shall have any legal or equitable rights or interest in this Plan that are not expressly granted in this Plan. Participation in this Plan does not give any person any right to be retained in the service of the Participating Employer. The right and power of a Participating Employer to dismiss or discharge an Employee is expressly reserved. The Participating Employers make no representations or warranties as to the tax consequences to a Participant or a Participant’s beneficiaries resulting from a deferral of income pursuant to the Plan.

 

14.3.                     No Employment Contract. Nothing contained herein shall be construed to constitute a contract of employment between an Employee and a Participating Employer.

 

14.4.                     Notice. Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing, in person, or through such electronic means as is established by the Committee. Notice shall be deemed given as of the date of

 

24

 

delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Written transmission shall be sent by certified mail to:

 

CONTINENTAL MATERIALS CORPORATION

ATTN:                                                 

440 SOUTH LASALLE STREET

SUITE 3100

CHICAGO, IL 60605

 

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing or hand-delivered, or sent by mail to the last known address of  the Participant.

 

14.5.                     Headings. The headings of Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.

 

14.6.                     Invalid or Unenforceable Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Committee may elect in its sole discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been included.

 

14.7.                     Lost Participants or Beneficiaries. Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his or her current mailing address. If benefit payments are returned to the Plan or are not presented for payment after a reasonable amount of time, the Committee shall presume that the payee is missing. The Committee, after making such efforts as in its discretion it deems reasonable and appropriate to locate the payee, shall stop payment on any uncashed checks and may discontinue making future payments until contact with the payee is restored.

 

14.8.                     Facility of Payment to a Minor.  If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Committee may, in its discretion, make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence, or (ii) to the conservator or committee or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Committee, the Company, and the Plan from further liability on account thereof.

 

14.9.                     Governing Law. To the extent not preempted by ERISA, the laws of the State of Illinois shall govern the construction and administration of the Plan.

 

*  *  *  *  *

 

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IN WITNESS WHEREOF, the undersigned executed this Plan as of the 1st day of January, 2019, to be effective as of the Effective Date.

 

 

Continental Materials Corporation

 

	
By:
    	
 
    	
 (Print   Name)
    
	
 
    	
 
    	
 
    
	
Its:
    	
 
    	
 
    	
 (Title)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
(Signature)
    
					

 

26Exhibit 10.1

 

SALE OF GOODS AGREEMENT

 

This SALE OF GOODS
AGREEMENT (this “Agreement”), dated as of December 13, 2018, is entered into by and between Bionik Inc., a Massachusetts
corporation (“Seller”), and CHC Management Services, LLC, a Missouri Limited Liability Company on behalf of
the Facilities set forth on Exhibit A (“Buyer”, and together with Seller, the “Parties”,
and sometimes each, a “Party”).

 

Recitals

 

WHEREAS, Seller is
in the business of selling upper limb rehabilitation robots under the brand-name “InMotion”;

 

WHEREAS, Buyer is in
the business of owning and operating rehabilitation clinics and hospitals; and

 

WHEREAS, Buyer desires
to purchase from Seller, and Seller desires to sell to Buyer the Goods (as defined below).

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I 

Definitions

 

Capitalized terms not
otherwise defined herein have the meanings set forth or referred to in this ARTICLE I.

 

“Affiliate”
means, with respect to any specified Person, any other Person that directly or through one or more intermediaries Controls or is
Controlled by or is under common Control with the specified Person. For purposes of this Agreement, none of the following Persons
shall be considered an “Affiliate” of Kindred Hospital Rehabilitation Services or any of its Affiliates: (i) Kentucky
Homecare Parent Inc. or any of its subsidiaries, (ii) TPG Global, LLC or any of its Affiliates or any of their respective sponsored
or managed investment funds, accounts or other investment vehicles, (iii) WCAS XII Associates LLC or its Affiliates or any of their
respective sponsored or managed investment funds, accounts or other investment vehicles, and (iv) any portfolio company of any
Person referenced in clauses (ii) or (iii) (other than Kindred Healthcare, LLC and its subsidiaries), and no provision herein shall
be binding on any Person referenced in the foregoing clauses (i) to (iv).

 

“Basic Purchase
Order Terms” means, collectively, any one or more of the following terms specified by Buyer in a Purchase Order pursuant
to Section 4.01: (a) a list of the Goods to be purchased, including make/model number and SKU; (b) the quantity of each of the
Goods ordered; (c) the requested delivery date; (d) the per unit and aggregate Price for the Goods to be purchased; (e) the billing
address; and (f) the Delivery Location. For the avoidance of doubt, the term “Basic Purchase Order Terms” does not
include any general terms or conditions of any Purchase Order.

 

     

     

    

“Business
Day” means any day except Saturday, Sunday or any other day on which commercial banks located in the Commonwealth of
Massachusetts are authorized or required by Law to be closed for business.

 

“Control”
means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise, and “Controlled” has a correlative
meaning.

 

“Defective”
means not conforming to the limited warranties in Section 13.01.

 

“Defective
Goods” means goods shipped by Seller to Buyer pursuant to this Agreement that are Defective.

 

“Delivery
Location” means the street address specified in the applicable Purchase Order.

 

“Facilities”
means all inpatient rehabilitation hospitals and similar facilities listed on Exhibit A as well as that may be owned, managed and/or
operated by Buyer or another Affiliate of Buyer subsequent to the date hereof, and Exhibit A shall be deemed amended from time
to time to include any such additional facilities.

 

“Goods”
means the goods set forth on Exhibit B.

 

“Governmental
Authority” means any federal, state, local, or foreign government or political subdivision thereof, or any agency or
instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory
authority or quasi-governmental authority (to the extent that the rules, regulations, or orders of such organization or authority
have the force of Law), or any arbitrator, court, or tribunal of competent jurisdiction.

 

“Governmental
Order” means any order, writ, judgment, injunction, decree, stipulation, award or determination entered by or with any
Governmental Authority.

 

“Individual
Transaction” means any Purchase Order that has been deemed accepted by Seller pursuant to Section 4.01.

 

“Intellectual
Property Rights” means all industrial and other intellectual property rights comprising or relating to: (i) Patents;
(ii) Trademarks; (iii) internet domain names, whether or not Trademarks, registered by any authorized private registrar or Governmental
Authority, web addresses, web pages, websites, and URLs; (iv) works of authorship, expressions, designs, and design registrations,
whether or not copyrightable, including copyrights and copyrightable works, software, and firmware, application programming interfaces,
architecture, files, records, schematics, data, data files, and databases and other specifications and documentation; (v) Trade
Secrets; (vi) semiconductor chips, mask works, and the like; and (vii) all industrial and other intellectual property rights, and
all rights, interests, and protections that are associated with, equivalent or similar to, or required for the exercise of, any
of the foregoing, however arising, in each case whether registered or unregistered and including all registrations and applications
for, and renewals or extensions of, such rights or forms of protection pursuant to the Laws of any jurisdiction throughout in any
part of the world.

 

     

     

    

“Law”
means any statute, law, ordinance, regulation, rule, code, constitution, treaty, common law, Governmental Order, or other requirement
or rule of law of any Governmental Authority.

 

“Lead Time”
means the time period between delivery of a Purchase Order to Seller and the earliest date the Goods to be delivered thereunder
is available for shipment to Seller pursuant to the Purchase Order and this Agreement.

 

“Nonconforming
Goods” means any goods received by Buyer from Seller pursuant to a Purchase Order that do not conform to the Goods. Where
the context requires, Nonconforming Goods are deemed to be Goods for purposes of this Agreement.

 

“Patents”
means all patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations,
renewals, substitutions, and extensions thereof), patent applications, and other patent rights and any other Governmental Authority-issued
indicia of invention ownership (including inventor’s certificates, petty patents, and patent utility models).

 

“Person”
means any individual, partnership, corporation, trust, limited liability entity, unincorporated organization, association, Governmental
Authority, or any other entity.

 

“Purchase
Order” means Buyer’s purchase order issued to Seller hereunder, including all terms and conditions attached to,
or incorporated into, such purchase order.

 

“Representatives”
means a Party’s Affiliates, employees, officers, directors, partners, shareholders, agents, attorneys, third-party advisors,
successors, and permitted assigns.

 

“Seller’s
Intellectual Property Rights” means all Intellectual Property Rights owned by or licensed to Seller.

 

“Seller’s
Trademarks” means all Trademarks owned or licensed by Seller.

 

“Specifications”
means the specifications for the Goods attached hereto as Exhibit B.

 

“Trademarks”
means all rights in and to US and foreign trademarks, service marks, trade dress, trade names, brand names, logos, trade dress,
corporate names, and domain names, and other similar designations of source, sponsorship, association or origin, together with
the goodwill symbolized by any of the foregoing, in each case whether registered or unregistered and including all registrations
and applications for, and renewals and extensions of, such rights and all similar or equivalent rights or forms of protection in
any part of the world.

 

“Trade Secrets”
means all inventions, discoveries, trade secrets, business and technical information, and know-how, databases, data collections,
patent disclosures, and other confidential and proprietary information and all rights therein.

 

“Warranty
Period” has the meaning set forth in Section 13.01.

 

     

     

    

ARTICLE II 

Agreement
to Purchase and Sell Goods

 

Section
2.01       Purchase and Sale. Subject to the terms and conditions of this Agreement,
during the Term, Seller shall, on a non-exclusive basis (as limited pursuant to the last sentence of this Section 2.01), sell
to Buyer, and Buyer shall purchase from Seller, the Goods. In furtherance of the foregoing, (a) during the Term (as defined below),
Buyer, on behalf of itself and its Affiliates and Facilities, shall purchase its and their requirements for robotic rehabilitation
equipment to include a minimum of one (1) unit of Goods for each Facility, during the Term. In furtherance of the foregoing, as
of the date of this agreement, Buyer has nineteen (19) Facilities to purchase at this time, all of which are listed on Exhibit
A, and two (2) facilities expected to commence operations by June 2019, and accordingly Buyer shall purchase a minimum of no less
than twenty-one (21) units of Goods in the aggregate. Furthermore, this agreement shall also include the purchase of a minimum
of one InMotion robot for each new Kindred Inpatient Rehabilitation Hospital opened during the term, with pricing as set in Exhibit
C. Seller shall not sell Goods or any substantially similar goods to inpatient rehabilitation facilities, outpatient therapy clinics
and acute care hospitals (a) located within a 20 miles radius of: 1) Indianapolis, Indiana; 2) the Dallas/Fort Worth, Texas Metroplex
Area (but specifically excluding from such restrictions facilities located in Allen, Texas); 3) Austin, Texas (but specifically
excluding from such restriction facilities located in Round Rock, TX); 4) the St. Louis, Missouri Metropolitan area; or 5) the
Cleveland, Ohio Metropolitan area and (b) owned or managed by Encompass healthcare facilities in the Commonwealth of Pennsylvania,
in either case for a period of one year following the date of this Agreement.

 

ARTICLE III 

Terms
of Agreement Prevail Over Buyer’s Purchase Order

 

Section 3.01        This
Agreement is expressly limited to the terms of this Agreement and the Basic Purchase Order Terms contained in the applicable Purchase
Order. The terms of this Agreement prevail over any terms or conditions contained in any other documentation and expressly exclude
any of Buyer’s general terms and conditions contained in any Purchase Order or other document issued by Buyer. In the event
of any conflict between the terms of this Agreement and the terms of any Purchase Order or any other document issued by Buyer,
the terms of this Agreement prevail.

 

ARTICLE IV 

Order
Procedure

 

Section
4.01        Purchase Orders.
Upon Buyer’s request, Seller shall: 1) notify Buyer of installation requirements; and 2) provide an estimated
delivery date for the Goods ordered prior to initiating Purchase Orders. Buyer shall initiate all Purchase Orders in written form
via facsimile, e-mail, or US mail, and cause all Purchase Orders to contain the Basic Purchase Order Terms. By placing a Purchase
Order, Buyer makes an offer to purchase the Goods pursuant to the terms and conditions of this Agreement, including the Basic
Purchase Order Terms, and on no other terms. Except with respect to the Basic Purchase Order Terms, any variations made to the
terms and conditions of this Agreement by Buyer in any Purchase Order are void and have no effect. Each Purchase Order submitted
by Buyer in accordance with this Agreement shall be considered binding and accepted by Buyer. Notwithstanding anything to the
contrary in a Purchase Order or this Agreement, the minimum Lead Time shall be twenty one (21) days.

 

     

     

    

ARTICLE V 

Shipment
and Delivery

 

Section
5.01       Shipment
and Delivery. Unless expressly agreed to by the Parties in writing, Seller
shall select the method of shipment of, and the carrier for, the Goods to the Delivery Location. Seller may, in its sole discretion,
without liability or penalty, make partial shipments of Goods to Buyer. If
Seller makes partial shipments of Goods to Buyer, Buyer shall pay for the Purchase Order upon receipt of all Goods identified in
the Purchase Order. All prices are FOB origin, freight prepaid and charged back.

 

Section 5.02        Late Delivery.
Any time quoted by Seller for delivery is an estimate only. Seller is not liable for or in respect of any loss or damage arising
from any delay in filling any order, failure to deliver or delay in delivery. Except as provided in Section 16.16, unreasonable
delay in the shipment or delivery of any Goods relieves Buyer of its obligations under this Agreement, including without limitation
accepting delivery of any remaining installment(s) of Goods.

 

Section
5.03        Title.
Title to Goods ordered under any Individual Transaction in 2018 passes to Buyer upon shipment of such goods, and under any individual
Transaction in 2019 and beyond passes to Buyer upon delivery of such Goods to the Delivery Location.

 

Section 5.04        Risk of Loss.
Risk of loss to all Goods ordered under any Purchase Order passes to Buyer (a) with respect to Goods relating to Purchase Orders
in 2018, upon Seller’s tender of such units to the carrier for further delivery to the Delivery Location and (b) for all
other Purchase Orders upon Buyer’s receipt of such units at Delivery Location.

 

Section
5.05       Packaging
and Labeling. Seller shall properly pack, mark, and ship Goods and provide
Buyer with shipment documentation showing the Purchase Order number, Seller’s identification number for the subject Goods,
the quantity of pieces in shipment, the number of cartons or containers in shipment, Seller’s name, the bill of lading number,
and the country of origin.

 

Section 5.06        Inspection.
Buyer shall inspect the Goods within five (5) Business Days of installation (“Inspection Period”) of the Goods
and either accept or, if such Goods are Nonconforming Goods, reject such Goods. Buyer will be deemed to have accepted the Goods
unless it notifies Seller in writing of any Nonconforming Goods during the Inspection Period and furnishes such written evidence
or other documentation as reasonably required by Seller. If Buyer timely notifies Seller of any Nonconforming Goods, Seller shall
determine, in its reasonable discretion, whether the Goods are Nonconforming Goods. If Seller determines that the Goods are Nonconforming
Goods, it shall (i) replace such Nonconforming Goods with conforming Goods, or (ii) refund the Price for such Nonconforming Goods,
together with all shipping and handling expenses incurred by Buyer in connection therewith. Buyer shall ship, at Seller’s
expense and risk of loss, the Nonconforming Goods to Seller’s facility as provided by Seller. If Seller exercises its option
to replace Nonconforming Goods, Seller shall, after receiving Buyer’s shipment of Nonconforming Goods, ship to Buyer, at
Seller’s expense, the replaced Goods to the Delivery Location.

 

     

     

    

BUYER ACKNOWLEDGES
AND AGREES THAT THE REMEDIES SET FORTH IN THIS SECTION 5.06 ARE BUYER’S EXCLUSIVE REMEDIES FOR THE DELIVERY OF NONCONFORMING
GOODS, SUBJECT TO BUYER’S RIGHTS UNDER SECTION 13.03 WITH RESPECT TO ANY NONCONFORMING GOODS FOR WHICH BUYER HAS ACCEPTED
DELIVERY UNDER THIS SECTION 5.06.

 

Section
5.07        Limited
Right of Return. Except as provided under Section 5.06 and Section 13.03, Buyer
has no right to return Goods purchased under this Agreement to Seller.

 

ARTICLE VI 

PROJECT
MANAGER; ADDITIONAL DELIVERIES AND SERVICES

 

Section
6.01       Project
Manager. Seller shall promptly designate a Project Manager (who may be replaced from time
to time by Seller upon notice to Buyer) who shall have the required skills and capabilities to adequately perform the role, and
shall be fully authorized to make decisions and otherwise deal with Buyer in an effective and timely manner in respect of all matters
under this Agreement. The Project Manager shall: (a) be responsible for co-coordinating with Buyer the site preparation, delivery,
and installation of the Goods and provision of the related services; (b) oversee the various stages of the delivery and installation
of the Goods to ensure their effective and timely delivery; (c) ensure that Seller’s obligations are completed in an efficient
and timely manner; and (d) be reasonably available to Buyer by telephone and electronic communication during normal business hours,
including, without limitation, responding to requests, queries, and complaints from Buyer.

 

Section 6.02        Manuals, Bulletins, and Documentation.

 

(a)          The following materials shall be provided at no charge to Buyer and shipped with the Goods for each Purchase Order, unless
otherwise specified in this Agreement: (i) 1 complete set of operator/user manuals and any other printed media available for user
education, and the operator/user manual will include troubleshooting guides and preventative maintenance procedures; (ii) parts
lists, pricing lists or schedules, as applicable; and (iii) installation procedures and/or special test tools and/or components
related to installation. Buyer shall be notified of installation requirements before the Goods are shipped.

 

(b)          Seller shall, on a timely basis, forward to Buyer: (i) any service bulletins, user bulletins, or similar type of or related
bulletin including, but not limited to, on-line technical resources that relate to the Goods; and (ii) updates to the manuals/materials
referred to in this provision; provided that the Goods is still being used or Buyer still requires the Goods, at no additional
cost to Buyer.

 

(c)          Seller shall, on a timely basis, forward to Buyer: (i) any service bulletins, user bulletins, or similar type of or related
bulletin including, but not limited to, on-line technical resources that relate to the Goods; and (ii) updates to the manuals/materials
referred to in this provision; provided that the Goods is still being used or Buyer still requires the Goods, at no additional
cost to Buyer.

     

     

    

 

The materials mentioned
in this Section 6.02 will be provided upon completion of the training of a designated and qualified person affiliated with or retained
by Buyer by a Seller certified technician. Seller shall complete, on Buyer’s behalf and at no additional charge to Buyer,
all documentation required by Governmental Authorities in connection with the purchase of the Goods hereunder that must be provided
by Seller.

 

Section 6.03        Training. Seller shall provide to Buyer the training specified in Exhibit B. Training may be provided directly by Seller’s
personnel and/or any third party retained by Seller to provide such training, provided that applicable Seller obligations, included
but not limited to, confidentiality are passed on to such third party. The cost of all of the training, including travel and accommodation
for Buyer’s personnel to attend such training course(s) at Seller’s facilities, if necessary, shall be borne by Buyer,
except as specifically provided in Exhibit B. After the training has been completed, Buyer reserves the right to request, at Buyer’s
expense, additional follow-up training as reasonably required, and technical and consultative support which shall include support
for and assistance with the resolution of any problem or difficulty with the operations of the Goods.

 

Section 6.04        Service Support/Replacement Parts.

 

(a)          Seller shall: (i) ensure that full service support and parts are available for a period of five (5) years following the
last date of production of the Goods and its accessories; (ii) provide full access to telephone technical support, at no charge
to Buyer, provided that the Goods remains in use by Buyer; and (iii) without limiting the generality of clause (i) above, provide
Buyer with a one (1) year written notification prior to the Goods parts no longer being available, and failing such notification,
Seller shall provide Buyer sufficient notice to ensure that Buyer may purchase the parts that are no longer available.

 

(b)          Seller shall deliver satisfactory new replacement parts within five (5) Business Days from the time of order placement,
or if requested by Buyer, Seller shall deliver rush-order replacement parts within two (2) Business Days. All replacement parts
must be OEM specified or as otherwise agreed to in writing and documentation to that effect shall be provided to Buyer when the
parts are delivered or within 30 Days of delivery.

 

(c)          Seller shall supply and deliver spare parts to Buyer, at Seller’s own expense, where Buyer makes a request for such
spare parts within the Warranty Period as provided in this Agreement. The cost of parts and preventive maintenance kits outside
such Warranty Period shall be at Seller’s list price, and the cost of any part and labor outside such Warranty Period shall
be invoiced through a new Purchase Order. Buyer shall not be entitled to use for, or attach spare parts to, the Goods, if not obtained
from Seller; any such use or attachment of such spare parts shall invalidate the warranties set out in this Agreement or any other
warranty provided by Seller.

 

     

     

    

ARTICLE VII 

Price
and Payment

 

Section
7.01        Price.
Buyer shall purchase the Goods from Seller at the applicable prices set forth on Exhibit C (“Prices”).

 

Section
7.02       Shipping
Charges, Insurance, and Taxes. Buyer shall pay for, and shall hold Seller harmless
from, all shipping charges and insurance costs. In addition, all Prices are exclusive of, and Buyer is solely responsible for,
and shall pay, and shall hold Seller harmless from, all taxes, with respect to, or measured by, the manufacture, sale, shipment,
use or Price of the Goods (including interest and penalties thereon); provided, however, that Buyer shall not be responsible for
any taxes imposed on, or with respect to, Seller’s income, revenues, gross receipts, personnel or real or personal property
or other assets.

 

Section
7.03       Payment
Terms. Seller shall issue a monthly invoice for each Individual Transaction
entered into during the applicable monthly period. Buyer shall pay all invoiced amounts due to Seller within sixty (60) days from
the delivery date of the Goods, except for any amounts disputed by Buyer in good faith. Buyer shall make all payments in US dollars
by check or wire transfer.

 

Section
7.04       Invoice
Disputes. Buyer shall notify Seller in writing of any dispute with any invoice
(along with a reasonably detailed description of the dispute) within ten (10) Business Days from the date of delivery of the Goods.
Buyer will be deemed to have accepted all invoices for which Seller does not receive timely notification of disputes, and shall
pay all undisputed amounts due under such invoices within the period set forth in Section 7.03. The Parties shall seek to resolve
all such disputes expeditiously and in good faith. Notwithstanding anything to the contrary, Buyer shall continue performing its
obligations under this Agreement during any such dispute, including, without limitation, Buyer’s obligation to pay all due
and undisputed invoice amounts.

 

Section
7.05       Late
Payments. Except for invoiced payments that Buyer has successfully disputed,
Buyer shall pay interest on all late payments, at the lesser of the annual interest rate of eight percent (8%) or the highest rate
permissible under applicable Law. In addition to all other remedies available under this Agreement or at Law (which Seller does
not waive by the exercise of any rights under this Agreement), if Buyer fails to pay any amounts when due under this Agreement,
Seller may (a) suspend the delivery of any Goods, (b) reject Buyer’s Purchase Orders, (c) cancel accepted Purchase Orders
or (d) terminate this Agreement pursuant to the terms of Section 10.02.

 

ARTICLE VIII 

Compliance
with Laws

 

Section
8.01   General
Compliance With Laws.
Buyer shall at all times comply with all Laws applicable to this Agreement, Buyer’s performance of its obligations hereunder
and Buyer’s use or sale of the Goods.

 

     

     

    

ARTICLE IX 

Intellectual
Property Rights

 

Section
9.01        Ownership.
Buyer acknowledges and agrees that:

 

(a)          any and all Seller’s Intellectual Property Rights are the sole and exclusive property of Seller or its licensors;

 

(b)          Buyer shall not acquire any ownership interest in any of Seller’s Intellectual Property Rights under this Agreement;

 

(c)          any goodwill derived from the use by Buyer of Seller’s Intellectual Property Rights inures to the benefit of Seller
or its licensors, as the case may be; and

 

(d)          if Buyer acquires any Intellectual Property Rights, rights in or relating to any Goods (including any rights in any Trademarks,
derivative works, or patent improvements relating thereto) by operation of Law, or otherwise, such rights are deemed and are hereby
irrevocably assigned to Seller or its licensors, as the case may be, without further action by either of the Parties; and

 

(d)          Buyer
shall use Seller’s Intellectual Property Rights solely for purposes of using the Goods under this Agreement and only in accordance
with this Agreement and the instructions of Seller.

 

Section
9.02        Prohibited
Acts. Buyer shall not:

 

(a)          take any action that might interfere with any of Seller’s rights in or to Seller’s Intellectual Property Rights,
including Seller’s ownership or exercise thereof;

 

(b)          challenge any right, title, or interest of Seller in or to Seller’s Intellectual Property Rights;

 

(c)          make any claim or take any action adverse to Seller’s ownership of Seller’s Intellectual Property Rights;

 

(d)          register or apply for registrations, anywhere in the world, for Seller’s Trademarks or any other Trademark that is
similar to Seller’s Trademarks or that incorporates Seller’s Trademarks in whole or in confusingly similar part;

 

(e)          use any mark, anywhere that is confusingly similar to Seller’s Trademarks in whole or in confusingly similar part;

 

(f)           engage
in any action that tends to disparage, dilute the value of, or reflect negatively on the Goods or any Seller’s Trademarks;

 

(g)          misappropriate any of Seller’s Trademarks for use as a domain name without prior written consent from Seller; or

 

(h)          alter, obscure or remove any Seller’s Trademarks, or Trademark or copyright notices or any other proprietary rights
notices placed on the Goods, marketing materials or other materials that Seller may provide.

 

     

     

    

ARTICLE X 

Term;
Termination

 

Section
10.01      Term.
The initial term of this Agreement commences on the Effective Date and continues until December 31, 2022 (“Term”);
provided that both Parties may elect, upon no less than thirty (30) days advance written mutual agreement prior to the end of a
Term, to extend the Term for additional successive one (1) year terms (in which case, “Term” shall mean as so
extended).

 

Section 10.02      Seller’s Right
to Terminate.
 Seller may terminate this Agreement upon written notice to Buyer:

 

(a)          if Buyer fails to pay any amount when due under this Agreement (“Payment Failure”) and such failure continues
for ten (10) days after Buyer’s receipt of written notice of nonpayment;

 

(b)          if within any twelve (12) month period, two (2) or more Payment Failures occur;

 

(c)          if Buyer breaches any material provision of this Agreement or any Individual Transaction (other than a Payment Failure),
and either the breach cannot be cured or, if the breach can be cured, it is not cured by Buyer within thirty (30) days after Buyer’s
receipt of written notice of such breach; or

 

(d)          if Buyer (i) becomes insolvent or is generally unable to pay its debts as they become due, (ii) files or has filed against
it, a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding
under any domestic or foreign bankruptcy or insolvency Law, (iii) makes or seeks to make a general assignment for the benefit of
its creditors, or (iv) applies for or has appointed a receiver, trustee, custodian, or similar agent appointed by order of any
court of competent jurisdiction to take charge of or sell any material portion of its property or business.

 

Section 10.03      Buyer’s Right
to Terminate.
 Buyer may terminate this Agreement upon written notice to Seller:

 

(a)          if Seller breaches any material provision of this Agreement or any Individual Transaction and either the breach cannot be
cured or, if the breach can be cured, it is not cured by Seller within thirty (30) days after Seller’s receipt of written
notice of such breach;

 

(b)          if Seller (i) becomes insolvent or is generally unable to pay its debts as they become due, (ii) files or has filed against
it, a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding
under any domestic or foreign bankruptcy or insolvency Law, (iii) makes or seeks to make a general assignment for the benefit of
its creditors, or (iv) applies for or has appointed a receiver, trustee, custodian, or similar agent appointed by order of any
court of competent jurisdiction to take charge of or sell any material portion of its property or business; or

 

     

     

    

(c)          in the event of a Force Majeure Event affecting the Seller’s performance of this Agreement for more than ninety (90)
consecutive days.

 

Section
10.04      Effect of Termination.

 

(a)          Expiration or termination of the Term will not affect any rights or obligations of the Parties that:

 

(i)              come into effect upon or after expiration or termination of this Agreement; or

 

(ii)             otherwise survive the expiration or earlier termination of this Agreement in accordance with its terms or were incurred
by the Parties prior to such expiration or earlier termination.

 

(b)          Any notice of termination under this Agreement automatically operates as a cancellation of any deliveries of Goods to Buyer
that are scheduled to be made subsequent to the effective date of termination, provided, however if requested by Buyer, Seller
shall deliver any Goods that are the subject of an executed Purchase Order at the time of cancellation and provided further that
full payment for such Goods are made in advance of delivery. With respect to any Goods that are still in transit upon termination
of this Agreement, Seller may require, in its sole and absolute discretion, that all sales and deliveries of such Goods be made
on either a cash-only or certified check basis.

 

(c)          Upon the expiration or earlier termination of this Agreement, Buyer shall promptly:

 

(i)              return to Seller all documents and tangible materials (and any copies) containing, reflecting, incorporating or based on
Seller’s Confidential Information;

 

(ii)             permanently erase all of Seller’s Confidential Information from its computer systems, except for copies that are maintained
as archive copies on its disaster recovery and/or information technology backup systems. Buyer shall destroy any such copies upon
the normal expiration of its backup files; and

 

(iii)           
certify in writing to Seller that it has complied with the requirements of this clause.

 

(d)         Subject to Section 10.04(a), the Party terminating this Agreement, or in the case of the expiration of this Agreement, each
Party, shall not be liable to the other Party for any damage of any kind (whether direct or indirect) incurred by the other Party
by reason of the expiration or earlier termination of this Agreement. Termination of this Agreement will not constitute a waiver
of any of either Party’s rights, remedies or defenses under this Agreement, at law, in equity, or otherwise.

 

     

     

    

ARTICLE XI 

Confidentiality

 

Section
11.01     Scope of Confidential
Information. From time to time during the Term, either Party (as the “Disclosing
Party”) may disclose or make available to the other Party (as the “Receiving Party”) information about
its business affairs, goods and services, Forecasts, confidential information and materials comprising or relating to Intellectual
Property Rights, trade secrets, third-party confidential information, and other sensitive or proprietary information, whether orally
or in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as “confidential”
(collectively, “Confidential Information”). Confidential Information does not include information that, at the
time of disclosure and as established by documentary evidence:

 

(a)          is or becomes generally available to and known by the public other than as a result of, directly or indirectly, any breach
of this ARTICLE XI by the Receiving Party or any of its Representatives;

 

(b)          is or becomes available to the Receiving Party on a non-confidential basis from a third-party source, provided that such
third party is not and was not prohibited from disclosing such Confidential Information;

 

(c)          was known by or in the possession of the Receiving Party or its Representatives prior to being disclosed by or on behalf
of the Disclosing Party;

 

(d)          was or is independently developed by the Receiving Party without reference to or use of, in whole or in part, any of the
Disclosing Party’s Confidential Information; or

 

(e)          is required to be disclosed pursuant to applicable Law, including but not limited to the disclosure requirements under the
Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, or the rules of any stock exchange.

 

(f)           is contained in or is a part of any manual, bulletin, or documentation set forth in section 6.02 of this Agreement.

 

Section
11.02      Protection of Confidential
Information. The Receiving Party shall, during the Term and for three (3) years
from the expiration or earlier termination of this Agreement:

 

(a)          protect and safeguard the confidentiality of the Disclosing Party’s Confidential Information with at least the same
degree of care as the Receiving Party would protect its own Confidential Information, but in no event with less than a commercially
reasonable degree of care;

 

(b)          not use the Disclosing Party’s Confidential Information, or permit it to be accessed or used, for any purpose other
than to exercise its rights or perform its obligations under this Agreement; and

 

     

     

    

(c)          not disclose any such Confidential Information to any Person, except to the Receiving Party’s Representatives who
need to know the Confidential Information to assist the Receiving Party, or act on its behalf, to exercise its rights or perform
its obligations under this Agreement.

 

The Receiving Party
shall be responsible for any breach of this ARTICLE XI caused by any of its Representatives. At any time during or after the Term,
at the Disclosing Party’s written request, the Receiving Party and its Representatives shall, pursuant to Section 10.04(c),
promptly return all Confidential Information and copies thereof that it has received under this Agreement. This Article XI shall
survive the expiration or early termination of this Agreement.

 

ARTICLE XII 

Representations
and Warranties

 

Section
12.01      Buyer’s Representations
and Warranties. Buyer represents and warrants to Seller that:

 

(a)          CHC Management Services, LLC is a limited liability company it is a duly organized, validly existing, and in good standing
in the jurisdiction of its incorporation/organization/formation;

 

(b)          it is duly qualified to do business and is in good standing in every jurisdiction in which such qualification is required
for purposes of this Agreement, except where the failure to be so qualified, in the aggregate, would not reasonably be expected
to adversely affect its ability to perform its obligations under this Agreement;

 

(c)          it has the full right, corporate power and authority to enter into this Agreement, to grant the rights and licenses granted
under this Agreement and to perform its obligations under this Agreement;

 

(d)          the execution of this Agreement by its Representative whose signature is set forth at the end hereof has been duly authorized
by all necessary corporate action of the Buyer;

 

(e)          when executed and delivered by each of Seller and Buyer, this Agreement will constitute the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except as may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws and equitable principles related to or affecting creditors’ rights generally
or the effect of general principles of equity;

 

(f)           it is in compliance with all applicable Laws relating to this Agreement, the Goods and the operation of its business and
this Agreement does not and will not violate any Law relating to antitrust or anticompetitive behavior or business practices;

 

(g)          as of the date hereof, it is not insolvent and has met its obligations in the ordinary course of business; and

 

     

     

    

(h)          all financial information that it has provided to Seller is true and accurate in all material respects and fairly represents
Buyer’s financial condition.

 

Section
12.02      Seller’s Representations
and Warranties. Seller represents and warrants to Buyer that:

 

(a)          it is a corporation duly organized, validly existing and in good standing in the jurisdiction of its incorporation;

 

(b)          it is duly qualified to do business and is in good standing in every jurisdiction in which such qualification is required
for purposes of this Agreement, except where the failure to be so qualified, in the aggregate, would not reasonably be expected
to adversely affect its ability to perform its obligations under this Agreement;

 

(c)          it has the full right, power and authority to enter into this Agreement, to grant the rights and licenses granted under
this Agreement and to perform its obligations under this Agreement;

 

(d)          the execution of this Agreement by its Representative whose signature is set forth at the end hereof has been duly authorized
by all necessary corporate action of the Seller; and

 

(e)          when executed and delivered by each of Buyer and Seller, this Agreement will constitute the legal, valid and binding obligation
of Seller, enforceable against Seller in accordance with its terms, except as may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws and equitable principles related to or affecting creditors’ rights generally
or the effect of general principles of equity.

 

(f)           it is in compliance with all applicable Laws relating to this Agreement, the Goods and the operation of its business (except
that Seller does not represent or warrant as to any Law relating to antitrust or anticompetitive behavior or business practices);

 

(g)          as of the date hereof, it is not insolvent and has met its obligations in the ordinary course of business; and

 

(h)          all financial information that it has provided to Buyer is true and accurate in all material respects and fairly represents
Buyer’s financial condition.

 

ARTICLE XIII 

Product
Warranties

 

Section
13.01      Limited Warranty.
Seller warrants to Buyer that:

 

(a)          no Goods will be Nonconforming Goods.

 

(b)          for a period of twelve (12) months (or sixty (60) months in the event of Buyer purchasing an extended warranty pursuant
to Exhibit B) from the date of shipment of the Goods (the “Warranty Period”), that such Goods will conform to
the Specifications and will be free from significant defects in material and workmanship; and

 

     

     

    

(c)          Buyer will receive good and valid title to the Goods, free and clear of all encumbrances and liens of any kind. Neither
the Goods nor Buyer’s use of them including, but not limited to Intellectual Property Rights, infringe upon any trade secret,
patent, trademark, copyright or other intellectual property or proprietary right of any third party.

 

(d)          As of the date of shipment by Seller, the Goods are in accordance with the specifications and indications described in the
labeling, and have been properly manufactured, processed and labeled.

 

Section
13.02      Warranty Limitations.
The warranties under Section 13.01 (b) and the second sentence of Section 13.01(c) do not apply where the Goods are Defective Goods
as a result of having:

 

(a)          been subjected to abuse, misuse, neglect, negligence, improper testing, improper installation (but only if installation
was not by Seller or its authorized Representative), improper storage, improper handling, abnormal physical stress, abnormal environmental
conditions or use contrary to any instructions issued by Seller;

 

(b)          been reconstructed, repaired or altered by Persons other than Seller or its authorized Representative; or

 

(c)          been used with any Third-Party Product, hardware or product that has not been previously approved in writing by Seller.

 

Section
13.03     Buyer’s Exclusive
Remedy for Defective Goods. Notwithstanding any other provision of this Agreement,
this Section 13.03 contains Buyer’s sole and exclusive remedy and warranty for Defective Goods. Buyer’s remedy under
this Section 13.03 is conditioned upon Buyer’s compliance with its obligations under Section 13.03(a) and Section 13.03(b)
below. During the Warranty Period, with respect to any allegedly Defective Goods:

 

(a)          Buyer shall notify Seller, in writing, of any alleged claim or defect within a reasonable amount of time from the date Buyer
discovers, or upon reasonable inspection should have discovered, such alleged claim or defect (but in any event before the expiration
of the applicable Warranty Period);

 

(b)          Buyer shall ship, at Seller’s expense, such allegedly Defective Goods to Seller’s facility located at the address
set forth in Section 16.03 below for inspection and testing by Seller;

 

(c)          If Seller’s inspection and testing reveals that such Goods are Defective and any such defect has not been caused or
contributed to by any of the factors described under Section 13.02, Seller shall, at its expense (subject to Section 13.03(b) and
Section 13.03(d)), (i) repair or replace such Defective Goods within a reasonable amount of time, or (ii) credit or refund the
Price of such Defective Goods less any applicable discounts, rebates or credits within a reasonable amount of time;

 

     

     

    

(d)          Seller shall, after receiving Buyer’s shipment of such Defective Goods pursuant to Section 13.03(c)(1) above, ship
to Buyer, at Seller’s expense, the repaired or replaced Goods.

 

Buyer has no right
to return for repair, replacement, credit, or refund any Goods except as set forth in this Section 13.03 (or if otherwise applicable,
Section 5.06). In no event shall Buyer reconstruct, alter, or replace any Goods, in whole or in part, either itself or by or through
any third party.

 

Section
13.04      Disclaimer.
EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN SECTION 13.01, SELLER MAKES NO WARRANTY WHATSOEVER WITH RESPECT TO THE GOODS, INCLUDING
ANY (a) WARRANTY OF MERCHANTABILITY; (b) WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; OR (c) WARRANTY OF TITLE;; WHETHER ARISING
BY LAW, COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE, OR OTHERWISE. BUYER ACKNOWLEDGES THAT IT HAS NOT RELIED UPON
ANY REPRESENTATION OR WARRANTY MADE BY SELLER, OR ANY OTHER PERSON ON SELLER’S BEHALF, EXCEPT AS SPECIFICALLY PROVIDED IN
THIS AGREEMENT.

 

ARTICLE XIV 

Limitation
of Seller’s Liability

 

Section
14.01      NO LIABILITY FOR CONSEQUENTIAL
OR INDIRECT DAMAGES. EXCEPT FOR OBLIGATIONS TO MAKE PAYMENT UNDER THIS AGREEMENT,
LIABILITY FOR BREACH OF CONFIDENTIALITY, LIABILITY FOR INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL PROPERTY RIGHTS, OR LIABILITY
FOR THE BREACH OF ANY REPRESENTATIONS OR WARRANTIES IN ARTICLE XII, NEITHER PARTY NOR ITS REPRESENTATIVES IS LIABLE TO THE OTHER
PARTY FOR CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR ENHANCED DAMAGES, LOST PROFITS OR REVENUES OR DIMINUTION
IN VALUE, ARISING OUT OF OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF (A) WHETHER SUCH DAMAGES WERE FORESEEABLE,
(B) WHETHER OR NOT IT WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND (C) THE LEGAL OR EQUITABLE THEORY (CONTRACT, TORT, OR
OTHERWISE) UPON WHICH THE CLAIM IS BASED, AND NOTWITHSTANDING THE FAILURE OF ANY AGREED OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE.

 

Section
14.02        MAXIMUM LIABILITY.
EXCEPT FOR LIABILITIES ARISING FROM CLAIMS BROUGHT OR THREATENED AGAINST BUYER OR ITS AFFILIATES BY THIRD-PARTIES WITH RESPECT
TO THE GOODS, SELLER’S AGGREGATE LIABILITY TO BUYER ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER ARISING OUT OF OR
RELATED TO BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, SHALL NOT EXCEED THE TOTAL OF THE AMOUNTS PAID TO SELLER
PURSUANT TO THIS AGREEMENT.

 

     

     

    

 

Section
14.03        ASSUMPTION OF RISK.
SUBJECT TO THE EXPRESS COVENANTS AND LIMITATIONS IN THIS AGREEMENT, BUYER ASSUMES ALL RISK AND LIABILITY FOR THE RESULTS OBTAINED
BY THE USE OF ANY GOODS IN THE PRACTICE OF ANY PROCESS, WHETHER IN TERMS OF OPERATING COSTS, GENERAL EFFECTIVENESS, SUCCESS OR
FAILURE, AND REGARDLESS OF ANY ORAL OR WRITTEN STATEMENTS MADE BY SELLER, BY WAY OF TECHNICAL ADVICE OR OTHERWISE, RELATED TO THE
USE OF THE GOODS.

 

ARTICLE XV 

Insurance
And Indemnification Obligations

 

Section 15.01        Insurance. During the Term and for a period of four (4) years thereafter, Seller shall, at its own expense, maintain
and carry in full force and effect commercial general liability (including product liability) in a sum no less than $1,000,000
per occurrence and $3,000,000 in the aggregate with financially sound and reputable insurers, and upon the Buyer’s request,
shall provide Buyer with a certificate of insurance evidencing the insurance coverage specified in this Section. Seller shall provide
the Buyer with ten (10) Business Days’ advance written notice in the event of a cancellation or material change in such insurance
policy.

 

Section 15.02        Insurance. During the Term and for a period of four (4) years thereafter, Buyer shall, at its own expense, maintain
and carry in full force and effect commercial general liability in a sum no less than $1,000,000 per occurrence and $3,000,000
in the aggregate with financially sound and reputable insurers, and upon the Seller’s request, shall provide the Seller with
a certificate of insurance evidencing the insurance coverage specified in this Section. Buyer shall provide Seller with ten (10)
Business Days’ advance written notice in the event of a cancellation or material change in such insurance policy.

 

Section 15.03        Indemnification. Subject to Article XIV, each Party (as such, the “Indemnifying Party”) agrees to
defend, indemnify and hold harmless the other Party and its shareholders, affiliates, officers, directors, employees, and agents
for, from and against any claim, loss, liability, cost and expense (including, without limitation, costs of investigation and reasonable
attorney’s fees), directly or indirectly relating to, resulting from or arising out of any breach of a representation, warranty
or covenant or any action or failure to act arising out of this Agreement by the Indemnifying Party or its shareholders, Affiliates,
Representatives, officers, directors, employees, and agents.

 

ARTICLE XVI 

Miscellaneous

 

Section
16.01         Further Assurances.
Upon a Party’s reasonable request, the other Party shall, at its sole cost and expense, execute and deliver all such further
documents and instruments, and take all such further acts, necessary to give full effect to this Agreement.

 

Section
16.02         Entire Agreement.

 

Section 16.03         Subject to ARTICLE III, this Agreement, including all related exhibits, schedules, attachments and appendices, together
with the Basic Purchase Order Terms, constitutes the sole and entire agreement of the Parties with respect to the subject matter
contained herein and therein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties,
both written and oral, with respect to such subject matter.

 

     

     

    

Section
16.04         Notices.
All notices, requests, consents, claims, demands, waivers, and other communications under this Agreement (each, a “Notice”)
must be in writing and addressed to the other Party at its address set forth below (or to such other address that the receiving
Party may designate from time to time in accordance with this Section). All Notices must be delivered by personal delivery, nationally
recognized overnight courier or certified or registered mail (in each case, return receipt requested, postage prepaid). Except
as otherwise provided in this Agreement, a Notice is effective only (a) on receipt by the receiving Party, and (b) if the Party
giving the Notice has complied with the requirements of this Section.

 

	Notice to Buyer:	
        CHC Management Services, LLC

        680 South 4th Street

        Louisville, KY 40202

	 	 
	 	Attention: General Counsel
	Notice to Seller:	Bionik Inc.
	 	
        80 Coolidge Hill Road

        Watertown, MA 02472

         

	 	Attention: CEO

 

Section
16.05         Interpretation.
For purposes of this Agreement, (a) the words “include,” “includes,” and “including” are deemed
to be followed by the words “without limitation”; (b) the word “or” is not exclusive; (c) the words “herein,”
“hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole;
(d) words denoting the singular have a comparable meaning when used in the plural, and vice-versa; and (e) words denoting any gender
include all genders. Unless the context otherwise requires, references in this Agreement: (x) to sections, exhibits, schedules,
attachments, and appendices mean the sections of, and exhibits, schedules, attachments, and appendices attached to, this Agreement;
(y) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented
and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended
from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. The Parties drafted
this Agreement without regard to any presumption or rule requiring construction or interpretation against the Party drafting an
instrument or causing any instrument to be drafted. The exhibits, schedules, attachments and appendices referred to herein are
an integral part of this Agreement to the same extent as if they were set forth verbatim herein.

 

Section
16.06         Headings.
The headings in this Agreement are for reference only and do not affect the interpretation of this Agreement.

 

     

     

    

Section
16.07         Severability.
If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term
or provision in any other jurisdiction. Upon a determination that any term or provision is invalid, illegal, or unenforceable,
the court may modify this Agreement to effect the original intent of the Parties as closely as possible in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest extent possible.

 

Section
16.08         Amendment and Modification.
No amendment to or modification of or rescission, termination, or discharge of this Agreement is effective unless it is in writing
and signed by each Party.

 

Section 16.09         Waiver.
 No waiver under this Agreement is effective unless it is in writing and signed by the Party waiving its right. Any waiver
authorized on one occasion is effective only in that instance and only for the purpose stated, and does not operate as a waiver
on any future occasion. None of the following constitutes a waiver or estoppel of any right, remedy, power, privilege, or condition
arising from this Agreement: (i) any failure or delay in exercising any right, remedy, power, or privilege or in enforcing any
condition under this Agreement; or (ii) any act, omission, or course of dealing between the Parties.

 

Section 16.10         Cumulative Remedies.
All rights and remedies provided in this Agreement are cumulative and not exclusive, and the exercise by either Party of any right
or remedy does not preclude the exercise of any other rights or remedies that may now or subsequently be available at law, in equity,
by statute, in any other agreement between the Parties or otherwise, subject to the limitations provided elsewhere in this Agreement.

 

Section
16.11         Equitable Remedies.
Each Party acknowledges and agrees that (a) a breach or threatened breach by such Party of any of its obligations
under ARTICLE XI would give rise to irreparable harm to the other Party for which monetary damages would not be an adequate remedy
and (b) in the event of a breach or a threatened breach by such Party of any such obligations, the other Party shall, in addition
to any and all other rights and remedies that may be available to such Party at law, at equity, or otherwise in respect of such
breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance, and any
other relief that may be available from a court of competent jurisdiction, without any requirement to post a bond or other security,
and without any requirement to prove actual damages or that monetary damages will not afford an adequate remedy.

 

Section
16.12         Assignment.
Either party may assign any of its rights or delegate any of its obligations to any Affiliate or to any Person acquiring all or
substantially all of Seller’s assets. Any purported assignment or delegation in violation of this Section is null and void.
No assignment or delegation relieves the assigning or delegating Party of any of its obligations under this Agreement.

 

Section
16.13         Successors and Assigns.
This Agreement is binding on and inures to the benefit of the Parties to this Agreement and their respective permitted successors
and permitted assigns.

 

     

     

    

Section 16.14         No Third-Party Beneficiaries.
 This Agreement benefits solely the Parties to this Agreement and their respective permitted successors and assigns and nothing
in this Agreement, express or implied, confers on any other Person any legal or equitable right, benefit, or remedy of any nature
whatsoever under or by reason of this Agreement.

 

Section
16.15        Choice of Law.
This Agreement, including all Individual Transaction documents and exhibits, schedules, attachments and appendices
attached to this Agreement and thereto, and all matters arising out of or relating to this Agreement, are governed by, and construed
in accordance with, the Laws of the Commonwealth of Massachusetts, without regard to the conflict of laws provisions thereof to
the extent such principles or rules would require or permit the application of the Laws of any other jurisdiction.

 

Section 16.16         Choice
of Forum.
Each Party irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any
kind whatsoever against the other Party in any way arising from or relating to this Agreement, including all Individual Transaction
Documents and exhibits, schedules, attachments and appendices attached to this Agreement and thereto, and all contemplated transactions
in any forum other than the United States District Court for the Western District of Kentucky and any appellate court from any
thereof. Each Party irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees to bring any
such action, litigation, or proceeding only in the United States District Court for the Western District of Kentucky. Each Party
agrees that a final judgment in any such action, litigation, or proceeding is conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by Law.

 

Section
16.17          WAIVER OF JURY TRIAL.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT, INCLUDING ANY INDIVIDUAL TRANSACTION
DOCUMENTS OR EXHIBITS, SCHEDULES, ATTACHMENTS AND APPENDICES ATTACHED TO THIS AGREEMENT, IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, INCLUDING ANY INDIVIDUAL TRANSACTION DOCUMENTS, EXHIBITS, SCHEDULES,
ATTACHMENTS OR APPENDICES ATTACHED TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section
16.18          Counterparts.
This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together are deemed to be
one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission
is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

Section
16.19          Force Majeure.
Any delay of failure of either Party to perform its obligations will be excused if it is caused by an extraordinary event or occurrence
beyond the reasonable control and without the fault of negligence of such Party. Such causes shall include, without limitations:
(a) acts of God; (b) storms, flood, fire, earthquake or explosion; (c) war, invasion, hostilities, terrorist threats or acts, riot
of other civil unrest; (d) strikes, labor stoppages, or slowdowns or other industrial disturbances; and (e) national or regional
emergency (each a “Force Majeure Event”).

 

     

     

    

Section
16.20          Relationship of Parties.
Nothing in this Agreement creates any agency, joint venture, partnership or other form of joint enterprise, employment or fiduciary
relationship between the Parties. Buyer is an independent contractor pursuant to this Agreement. Neither Party has any express
or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the
other Party to any contract, agreement, or undertaking with any third party.

 

Section
16.21      No Public
Announcements.
Neither Party shall make any statement (whether oral or in writing) in any press release, external advertising, marketing or promotion
materials regarding the other Party or its business unless: (a) it has received the express written consent of the other Party;
or (b) it is required to do so by Law or under the rules of any stock exchange or interdealer quotation system to which it is subject.
Notwithstanding the foregoing, Buyer acknowledges and agrees that Seller may be required to publicly disclose this Agreement and
the terms thereof, pursuant to the Securities Act of 1933, as amended, and/or the Securities Exchange Act of 1934, as amended.

 

[Remainder
Of Page Intentionally Left Blank; Signature Page Follows]

 

     

     

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto
duly authorized.

 

	 	BIONIK INC.
	 	
         

        By:__/s/ Eric Dusseux_________

        Name: Eric Dusseux

        Title:   CEO

	 	
         

        CHC Management Services, LLC

	 	
         

        By:__/s/ Russ Bailey__________

        Name: Russ Bailey

        Title:   COO/SVP Operations

	 	 

 

     

     

    

 

Exhibit
A

 

BuyER AFFILIATES

 

 

Existing

 

	 	•	Texas Rehabilitation Hospital of Fort Worth, LLC 
	 	•	Texas Rehabilitation Hospital of
Arlington, LLC
	 	•	NHS-CHC I, LP dba Methodist Rehabilitation Hospital 
	 	•	CTRH, LLC dba Central Texas Rehabilitation Hospital
	 	•	Mercy Rehabilitation Hospital, LLC dba Mercy Rehabilitation Hospital Oklahoma City
	 	•	Baptist Memorial Rehabilitation Hospital, GP
	 	•	Franciscan Specialty Care, LLC dba CHI Franciscan Rehabilitation Hospital 
	 	•	Dignity-Kindred Rehabilitation Hospital East Valley, LLC dba Dignity Health East Valley Rehabilitation Hospital
	 	•	Mercy Rehabilitation Hospital, LLC dba Mercy Rehab Hospital of Des Moines
	 	•	Mercy Rehab Hospital- Saint Louis, LLC
	 	•	Mercy Rehab Hospital Springfield, LLC
	 	•	Community Health Network Rehabilitation Hospital, LLC dba Community Health Rehab Hospital 
	 	•	Community Health Network Rehabilitation Hospital, LLC dba Community Health Rehab Hospital South 
	 	•	Avon RH, LLC dba University Hospital Avon Rehabilitation Hospital 
	 	•	Beachwood RH, LLC dba University Hospitals Rehabilitation Hospital 
	 	•	Rehabilitation Hospital of Wisconsin, LLC dba Rehab Hospital of Wisconsin
	 	•	Madison Rehabilitation Hospital, LLC dba UW Health Rehabilitation Hospital 
	 	•	Lancaster Rehabilitation Hospital, LLP dba Lancaster Rehabilitation Hospital
	 	•	St. Mary Rehabilitation Hospital, LLP dba St. Mary Rehabilitation Hospital

 

     

     

    

 

Exhibit
B

 

Description
of Goods and specifications

 

 

 

InMotion ARM Interactive Therapy System comprised
of:

		•	InMotion EVAL software establishes a baseline and measures
progress

		•	Treatment protocols and therapeutic exercise games
software with progressively complex exercises allowing customized individual shoulder-elbow programs

		•	Shoulder/elbow actuator

		•	Patient workstation

		•	Monitor and keyboard with touchpad

		•	Printer

 

Crating and Shipping 

 

Clinical Education (Initial/Basic)-One day
onsite, one 2 hour webinar

Onsite
Clinical Education by a Bionik certified therapist. Basic instruction on clinical implementation of InMotion Therapy System.

 

Four Year Extended Warranty (if purchased
with equipment)

		•	Parts (and related shipping expenses) needed to keep
equipment functional

		•	Remote technical support to assist with diagnosis/repair.
Bionik requests contact with on-site Biomed technician

		•	Factory diagnosis and repair where necessary as determined
by Bionik

		•	Onsite diagnosis and repair by Bionik technician where
necessary as determined by Bionik.

		•	Shipping of parts to/from Bionik in the event factory
diagnosis and repair are required

		•	Annual comprehensive maintenance visit to cover inspection,
evaluation, cleaning and servicing of mechanical, electrical and software

		•	Software upgrades released during the term of the extended
warranty provided they are compatible with user’s equipment

 

 

     

     

    

 

Exhibit
C

 

prices

 

1. In the event Buyer enters into a Purchase Order for eight
(8) Goods being shipped on or before December 31, 2018 and an additional eleven (11) units of Goods on or before March 29, 2019,
the Price therefore shall be $119,700 per unit.

 

2. In the event paragraph 1 above does not apply and Buyer enters
into a Purchase Order on or before March 29, 2019 a minimum of nineteen (19) units of Goods, the Price therefore shall be $125,400
per unit.

 

3. It is expected that Buyer will open two additional sites
in May or June 2019. For these sites, provided that units of Goods will be subject to a valid Purchase Order no later than August
31, 2019, the Price per unit therefore shall be the same as the Price of the units purchased pursuant to paragraphs 1 or 2 above,
as applicable.

 

4. The Price of any units of Goods purchased during the Term
that are not contemplated by and pursuant to the terms of paragraphs 1-3 above shall be the same as the Price of the units purchased
pursuant to paragraph 3 above, or as otherwise determined by mutual agreement of the Parties.

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