Document:

widdersagreement.htm

EXHIBIT 10.6

AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of this 13th day of September, 2012 by and between Whirlaway Corporation, a Ohio Corporation with its principal place of business in Wellington, Ohio (the “Company”), and J.R. Widders (the “Executive”).

 

WITNESSETH:

 

WHEREAS, in recognition of the value of the Executive’s experience and expertise and desire to continue Executive's employment as Vice President and General Manager - Precision metal Components of the Company, the Company and Executive previously entered into an Executive Employment Agreement (the "Prior Agreement"); and

 

WHEREAS, the parties wish to revise the Prior Agreement; and

 

WHEREAS, the parties understand that certain payments hereunder may be deemed to be "deferred compensation" within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"); and

 

WHEREAS, the Company and the Executive mutually desire that their employment relationship be set forth under the terms of this written amended and restated Employment Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and of the promises, covenants and mutual agreements set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree that the Prior Agreement is null and void and that the terms of their employment relationship are as follows:

 

	
1.  

	
Employment.  The Company agrees to continue to employ the Executive, and the Executive agrees to continue to be employed by the Company, on the terms and conditions set forth herein.

 

	
2.  

	
Term of Employment.  The employment of the Executive by the Company as provided herein shall commence on September 13, 2012, and end on September 13, 2013 unless further extended or sooner terminated as hereinafter provided.  On September 13, 2013 and on September 13 of each year thereafter, the term of the Executive’s employment hereunder shall be extended automatically one (1) additional year, unless at least six (6) months prior to the date of such automatic extension the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive’s employment hereunder shall not be extended.  In the event that the Company provides at least six (6) months written notice that the term of Executive's employment hereunder shall not be extended at the end of the then current term, the Executive's separation at the expiration of the then current term shall be treated as a Separation From Service by Company not For Cause pursuant to Paragraph 6(b) of this Agreement.  Nothing in this Paragraph 2 will affect either party's ability to terminate the Executive's employment hereunder pursuant to Paragraph 6(b) or (c) of this Agreement during any notice period provided pursuant to this Paragraph 2 and, in such event, Executive will not be paid for the remainder of the notice period, and said separation shall be evaluated pursuant to the applicable provisions of Paragraph 6.

 

  

  

  

	
3.  

	
Position and Duties.  The Executive shall serve as the Vice President and General Manager - Precision metal Components of the Company with responsibilities and authority as may from time to time be assigned by the Chief Executive Officer and/or the Board of Directors of the Company.  Executive agrees to perform faithfully and industriously the duties which the Company may assign to him. The Executive shall devote substantially all of his working time and efforts to the business affairs of the Company, to the exclusion of all other employment or business interest other than passive personal investments, charitable, religious or civic activities.  Executive may not engage, directly or indirectly, in any other business or businesses, whether or not similar to that of the Company, except with the consent of the Chief Executive Officer and the Board of Directors of the Company.

 

	
4.  

	
Compensation and Benefits.  In consideration of the Executive’s performance of his duties hereunder, the Company shall provide the Executive with the following compensation and benefits during the term of his employment hereunder.

 

	
(a)  

	
Base Salary.  The Company shall pay to the Executive an aggregate base salary at a rate of Two Hundred Twenty Thousand Dollars ($220,000.00) per annum, payable in accordance with the Company’s normal payroll practices.  Such base salary may be increased from time to time by the Board of Directors in accordance with the normal business practices of the Company.

 

	
(b)  

	
Expenses.  The Company, as applicable, shall promptly reimburse the Executive for all reasonable out-of-pocket expenses incurred by the Executive in his performance of services hereunder, including all such expenses of travel and entertainment, provided that such expenses are incurred, accounted for and documented in accordance with the Company’s regular policies and in compliance with IRS Guidelines.  The Company reserves the right to establish limits on the types or amounts of business expenses that the Executive may incur.

 

	
(c)  

	
Employee Benefits.  The Executive shall be entitled to continue to participate in all Company employee benefit plans for which he is eligible, subject to the rules and regulations applicable thereto, which were in effect on the date hereof (including, but not limited to, life, disability, and health insurance plans and programs and savings plans and programs) as such plans may continue or be altered by the Company Board of Directors from time to time at the Board’s discretion.

 

	
(d)  

	
Vacation and Other Absences.  The Executive shall receive reasonable and customary vacation in each calendar year during the term of this Agreement, in accordance with the Company's present policies.  The Executive shall also receive all paid absences for holidays or illnesses in accordance with the Company's applicable plans, policies or provisions.

 

  

2

  

	
5.  

	
Termination.  Except for the provisions of Paragraphs 7, 8, 9, 10, and 11, which shall continue in full force and effect, this Agreement shall terminate upon the first to occur of the following:

 

	
(a)  

	
The death of Executive;

 

	
(b)  

	
The permanent Disability of Executive, as defined in Paragraph 6(a)(iv);

 

	
(c)  

	
Termination of Executive’s employment by Company "For Cause" as defined in Paragraph 6(a)(i);

 

	
(d)  

	
Separation From Service with the Company other than For Cause or Separation From Service with the Company by Executive with "Good Reason" as defined in Paragraph 6(a)(ii).  The Company reserves the right to terminate the Executive at any time, subject to the Company's obligation to pay the Executive compensation as otherwise provided for herein; or

 

	
(e)  

	
Separation From Service with the Company following a "Change in Control" as defined in Paragraph 6(a)(iii) and as provided in Paragraph 6(d)(i); or

 

	
(f)  

	
Termination of employment with the Company by Executive without Good Reason, provided that Executive shall give written notice of his voluntary termination in accordance with Paragraph 6(a)(v).  Upon receipt of notice of intended termination given by Executive, the Company reserves the right to terminate the Executive's employment, effective immediately.

 

	
6.  

	
Compensation and Benefits in the Event of Termination or Separation From Service.  In the event of the termination of the Executive’s employment or a Separation From Service, as applicable, during the term of this Agreement or any renewal thereof, compensation and benefits shall be paid as set forth below.

 

	
(a)  

	
Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated:

 

	
(i)  

	
The term "For Cause" shall include, but shall not be limited to (A) the failure of the Executive to perform the Executive's duties under this Agreement (other than as a result of physical or mental illness or injury), which failure, if correctable, and provided it does not constitute willful misconduct or gross negligence described in Subsection B below, remains uncorrected for 10 days following written notice to Executive by the President or the Board of Directors of the Company of such breach; (B) willful misconduct or gross negligence by the Executive, in either case that results in material damage to the business or reputation of the Company; (C) a material breach by Executive of this Agreement which, if correctable, remains uncorrected for 10 days following written notice to Executive by the Board of Directors of the Company of such breach; or (D) the Executive is convicted of a felony or any other crime involving moral turpitude (whether or not in connection with the performance by Executive of his duties under this Agreement).

 

  

3

  

	
(ii)  

	
The term "Good Reason" shall mean either:

 

	
  

	
(A)

	
assignment to the Executive of any duties inconsistent with Executive's position duties, responsibilities, title or office, or any other action by the Company that results in a material diminution in the Executive's position, authority, duties or responsibilities, excluding in each case any assignment or action that is remedied by the Company within 10 days after receipt of notice thereof from the Executive; or

 

	
  

	
(B)

	
any material failure by the Company to comply with this Agreement, other than a failure that is remedied by the Company within 10 days after receipt of notice thereof from the Executive.

 

	
(iii)  

	
The term “Change in Control” shall mean either:

 

 

	 	(A)	A person, corporation, entity or group (1) makes a tender or exchange offer for the issued and outstanding voting stock of the Company's parent, NN, Inc., ("NN") and beneficially owns fifty percent (50%) or more of the issued and outstanding voting stock of NN after such tender or exchange offer, or (2) acquires, directly or indirectly, the beneficial ownership of fifty percent (50%) or more of the issued and outstanding voting stock of NN in a single transaction or a series of transactions (other than any person, corporation, entity or group for which a Schedule 13G is on file with the Securities and Exchange Commission, so long as such person, corporation, entity or group has beneficial ownership of less than fifty percent (50%) of the issued and outstanding voting stock of NN); or
	 	 	 
	 	(B)	NN is a party to a merger, consolidation or similar transaction and following such transaction, fifty percent (50%) or more of the issued and outstanding voting stock of the resulting entity is not beneficially owned by those persons, corporations or entities that constituted the stockholders of NN immediately prior to the transaction; or
	 	 	 
	 	(C)	NN sells fifty percent (50%) or more of its assets to any other person or persons (other than an affiliate or affiliates of NN); or

 

	
  

	
(D)

	
Individuals  who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least seventy-five percent (75%) of the Board of Directors of NN; provided, however, that any individual becoming a director subsequent to the date hereof, whose election or nomination was approved by a majority of the directors than comprising the Incumbent Board, shall be considered a member of the Incumbent Board, but not including any individual whose initial board membership is a result of an actual or threatened election contest (as that term is used in Rule 14a-11 promulgated under the Securities Act of 1934, as amended) or an actual or threatened solicitation of proxies or consents by or on behalf of a party other than the Board.

 

  

4

  

It is not intended that a Change in Control will serve as an event which entitles Executive to any payment hereunder.

 

	
(iv)  

	
The term “Disability” shall mean the Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors of the Company.  Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees or directors of the Company provided that the definition of "disability" applied under such disability insurance program complies with the requirements of the preceding sentence.  Upon the request of the plan administrator, the Executive must submit proof to the plan administrator of the Social Security Administration’s or the provider’s determination.

 

	
(v)  

	
The term “Notice of Termination” shall mean a written notice which shall include the specific termination provision under this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment.  Any purported termination of the Executive’s employment hereunder by action of either party shall be communicated by delivery of a Notice of Termination to the other party.  Any termination by Executive of his employment without Good Reason shall be made on not less than 14 days' notice.

 

	
(vi)  

	
The term “Separation From Service” shall mean the termination of the Executive's employment with the Company for reasons other than death or Disability.  Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Employee’s employment and whether the Company and the Executive intended for the Executive to provide significant services for the Company following such termination.  A change in the Executive's employment status will not be considered a Separation from Service if:

 

  

5

  

	
(A)  

	
the Executive continues to provide services as an employee of the Company at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or

 

	
(B)  

	
the Executive continues to provide services to the Company in a capacity other than as an employee of the Company at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period).

 

	
  

	
(vii)

	
The term “Specified Employee” shall mean a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Company if any stock of the Company is publicly traded on an established securities market or otherwise.

 

	
(b)  

	
Separation From Service By Company Not For Cause Or By Executive With Good Reason Prior To A Change In Control.  In the event Executive incurs a termination of employment by action of the Company without Cause prior to a Change in Control, or by the Executive with Good Reason prior to a Change in Control, then upon a Separation From Service the Executive shall be entitled to receive:  (1) The annual salary due to him through the date of termination of his employment which occurs in connection with the Separation From Service.  In addition, if employed twelve (12) years or less, Executive shall be entitled to receive an amount equal to one year of his Annual Salary in effect on the date of termination of his employment which occurs in connection with the Separation From Service, payable (except as provided in Paragraph 6(e)) in accordance with the Company's regular payroll procedures over the 12-month period following the Executive's Separation From Service. For each full year of service Executive has completed over twelve (12) years of service, Executive shall additionally receive an amount equal to one month of such Annual Salary paid as indicated above, up to a maximum additional six (6) months if employed for eighteen (18) years or more.   (2) Any vested rights of Executive shall be paid to Executive in accordance with the Company's plans, programs or policies.  (3) The Company shall promptly reimburse Executive for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive's properly accounting for the same.  (4) The Company shall pay to Executive an additional amount of $12,000 payable in installments in accordance with the Company's normal payroll practices to assist with the Executive's transition from employment.

 

  

6

  

	
(c)  

	
Termination By The Company For Cause Or By The Executive Without Good Reason.  In the event the Executive’s employment hereunder is terminated (A) by action of the Company for Cause; (B) by action of the Executive without Good Reason; or (C) by reason of the Executive’s death, Disability or retirement, the following compensation and benefits shall be paid and provided the Executive (or his beneficiary):

 

	
(1)  

	
The Executive’s annual salary provided under Paragraph 5(a) through the date of termination, at the annual rate in effect at the time the Notice of Termination is given (or death occurs), to the extent unpaid prior to such Date of Termination;

 

	
(2)  

	
Any vested rights of Executive shall be paid to Executive or in accordance with the Company's plans, programs or policies.  Without limiting the foregoing, in the event of the termination of Executive's employment due to death or disability, the rights and benefits of Executive (or his designated beneficiary or representatives, as applicable) under any Company life, health and long-term disability plans and policies shall be determined in accordance with the terms and provisions of such plans and policies; and

 

	
(3)  

	
The Company shall promptly reimburse Executive for any and all reimbursable business expenses (to the extent not already reimbursed) upon Executive's properly accounting for the same.

 

	
(d)  

	
Separation From Service Following a Change in Control

 

	
  

	
(i)

	
Severance Benefits.  In the event that Executive incurs a termination of employment coincident with or followed by a Separation From Service, in either event within two (2) years following a "Change in Control" (as defined in Paragraph 6(a)(iii)) and such termination or Separation From Service is either (i) Without Cause (as defined below), or (ii) is a Constructive Termination (as defined below), Executive shall receive, in addition to all compensation due and payable to or accrued for the benefit of Executive:

 

	
  

	
(A)

	
a lump sum payment equal to an amount set forth on Schedule A to this Agreement ("Severance Payment").  The Severance payment shall be made by wire transfer or immediately available funds to an account designated by Executive within seven (7) business days following the date of the Separation From Service, except as provided in Paragraph 6(e) with respect to payments to Specified Employees;

 

  

7

  

	
  

	
(B)

	
a payment equal to the annual bonus to which Executive would have been entitled but for Executive's termination of employment in connection with the Separation From Service, for the year of Executive's termination; pro-rated for the portion of the year during which he was employed by the Company (“Pro-rated Bonus”).  The Pro-rated Bonus shall be payable to Executive within seventy-five (75) days following Executive's Separation From Service, except as provided in Paragraph 6(e); and

 

	
  

	
(C)

	
an additional lump sum amount of $12,000 to assist with the Executive's transition from employment.

 

The Severance Payment, Pro-rated Bonus and Insurance Benefits are collectively referred to in this Agreement as the "Severance Benefit."

 

(ii)           Termination or Separation From Service Without Cause.  For purposes of this subparagraph 6(d), "Without Cause" shall mean termination of Executive by the Company for reasons other than: (i) the willful, persistent failure of Executive (after ten (10) days written notice and a reasonable opportunity to cure) to perform his material duties for reasons other than death or disability; (ii) the breach by Executive of any material provision of this Agreement; or (iii) Executive's conviction of a felony involving dishonesty, deceit or moral turpitude by a trial court of competent jurisdiction, whether or not appeal is taken.

 

(iii)           Constructive Termination.  For purposes of this subparagraph 6(d) "Constructive Termination" shall mean: (1) a material, adverse change of Executive's responsibilities, authority, status, position, offices, titles, duties or reporting requirements (including directorships); (2) an adverse change in Executive's annual compensation and benefits; (3) a requirement to relocate in excess of fifty (50) miles from the Executive's then current place of employment; or (4) the breach by the Company of any material provision of this Agreement, other than a breach that is remedied by the Company within 10 days after receipt of notice thereof from Executive.  For purposes of this definition, Executive's responsibilities, authority, status, position, offices, titles, duties and reporting requirements are to be determined as of the date of this Agreement.

 

(iv)           Other Severance Benefits.  The Severance Benefit payable to Executive pursuant to this subparagraph 6(d) shall be reduced by any severance benefits to which Executive is entitled under the Company's severance policies for terminated employees generally or any termination payments otherwise payable under this Agreement.

 

(v)           Excise Tax.

 

	
  

	
(A)

	
Notwithstanding anything to the contrary set forth in this Agreement, in no event shall a Severance Benefit payable pursuant to this Paragraph 6(d) exceed an amount equal to the lesser of (i) 2.99 times the "base amount" (as defined in Section 280G(b)(3) of the Internal Revenue Code) of Executive's compensation, or (ii) 

 

  

8

  

 

 

	 	such other amount which would constitute a "parachute payment" (as defined in Section 280G of the Code).  In the event that it shall be determined that any Severance Benefit to Executive (whether paid or payable or distributed or distributable) would be subject to the excise tax imposed by Section 4999 of the Code, or any successor provision thereto (the "Excise Tax"), then Executive shall be entitled to receive from the Company an additional payment (the "Gross-Up Payment”) in an amount such that the net amount of the Severance Benefit and the Gross-Up Payment retained by the Executive after calculation and deduction of all Excise Taxes (including any interest or penalties imposed with respect to such taxes) or the Gross-Up Payment provided for in this Section, and taking into account any lost or reduced tax deductions on account of the Gross-Up payment, shall be equal to the Severance Benefit.

 

 

	
  

	
(B)

	
Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment.  Such notification shall be given as soon as practicable after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes, interest and/or penalties with respect to such claim is due).  If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

 

	
  

	
(1)

	
give the Company any information reasonably requested by the Company relating to such claim;

 

	
  

	
(2)

	
take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;

 

	
  

	
(3)

	
cooperate with the Company in good faith in order to effectively contest such claim; and

 

	
  

	
(4)

	
permit the Company to participate in any proceedings relating to such claims;

 

  

9

  

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify Executive for and hold Executive harmless from, on an after-tax basis, any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of all related costs and expenses.  Without limiting the foregoing provisions of this section, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify Executive for and hold Executive harmless from, on an after-tax basis, any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance (including as a result of any forgiveness by the Company of such advance); provided, further, that any extension of the statute of limitations relating to the payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

 

	
(e)  

	
Payments to Specified Employees.   Notwithstanding the foregoing provisions which normally require payment of certain elements of compensation within a stated period after a Separation From Service, in no event shall any payment to a Specified Employee of compensation which is subject to Internal Revenue Code Section 409A be made prior to the date which is six (6) months and one (1) day after the date of such Separation From Service.  Any amount otherwise required to be paid within such payment suspension period shall be paid in a lump sum on the date the suspension period lapses or, if such date is not a regular business day of the Company, on the first regular business day of the Company which follows the expiration of the payment suspension period.

 

	
(f)  

	
Continuation of Benefits.  Following the termination of Executive’s employment hereunder, the Executive shall have the right to continue in the Company’s group health insurance plan or other Company benefit program as may be required by COBRA or any other federal or state law or regulation.

 

  

10

  

	
  

	
(g)

	
Limit on Company Liability.  Except as expressly set forth in this Paragraph 6, the Company shall have no obligation to Executive under this Agreement following a termination of Executive's employment with the Company.  Without limiting the generality of the provision of the foregoing sentence, the Company shall not, following a termination of Executive's employment with the Company, have any obligation to provide any further benefit to Executive or make any further contribution for Executive's benefit except as provided in this paragraph 6.

 

	
7.  

	
Disclosure of Confidential Information.  The Company has developed confidential information, strategies and programs, which include customer lists, prospects, lists, expansion and acquisition plans, market research, sales systems, marketing programs, computer systems and programs, product development strategies, manufacturing strategies and techniques, budgets, pricing strategies, identity and requirements of national accounts, customer lists, methods of operating, service systems, training programs and methods, other trade secrets and information about the business in which the Company is engaged that is not known to the public and gives the Company an opportunity to obtain an advantage over competitors who do not know of such information (collectively, "Confidential Information").  In performing duties for the Company, Executive regularly will be exposed to and work with Confidential Information.  Executive acknowledges that such Confidential Information is critical to the Company's success and that the Company has invested substantial sums of money in developing the Confidential Information.  While Executive is employed by the Company and after such employment ends for any reason, Executive will never reproduce, publish, disclose, use, reveal, show or otherwise communicate to any person or entity any Confidential Information unless specifically directed by the Company to do so in writing.  Executive agrees that whenever Executive's employment with the Company ends for any reason, all documents containing or referring to Confidential Information as may be in Executive's possession or control will be delivered by Executive to the Company immediately, with no request being required.

 

	
8.  

	
Non-Interference with Personnel Relations.  While Executive is employed by the Company and for twenty-four (24) months after such employment ends for any reason, Executive acting either directly or indirectly, or through any other person, firm, or corporation, will not hire contract with or employ any employee of the Company or induce or attempt to induce or influence any employee of the Company to terminate employment with the Company.  However, this provision shall not apply to Executive in the case of the solicitation of his or her immediate family members.

 

	
9.  

	
Non-Competition.  While Executive is employed by the Company and for twenty-four (24) months after such employment ends for any reason, Executive will not, directly or indirectly, or through any other person, firm or corporation (i) be employed by, consult for, have any ownership interest in or engage in any activity on behalf of any competing business, or (ii) call on, solicit or communicate with any of the Company's customers (whether actual or potential) for the purpose of selling precision steel balls and rollers or other precision metal components and other related items to such customer other than for the benefit of the Company.  As used in this Agreement, the term "competing business" means a business that is a manufacturer and supplier of precision metal components and 

 

  

11

  

 

 

	 	subassemblies for the automotive, HVAC, fluid power and diesel engine markets (excluding any manufacturers who manufacture such products for use in their business or the business of their affiliates and do not supply such products to third parties) and the term "customer" means any customer (whether actual or potential) with whom Executive or any other employee of the Company had business contact on behalf of the Company during the eighteen (18) months immediately before Executive's employment with the Company ended.  Notwithstanding the foregoing, this paragraph shall not be construed to prohibit Executive from owning less than five percent (5%) of the outstanding securities of a corporation which is publicly traded on a securities exchange or over-the-counter.

 

 

	
10.  

	
Notification to Subsequent Employers.  Executive grants the Company the right to notify any future employer or prospective employer of Executive concerning the existence of and terms of this Agreement and grants the Company the right to provide a copy of this Agreement to any such subsequent employer or prospective employer.

 

	
11.  

	
Company Proprietary Rights.

 

	
  

	
(a)

	
Company to Retain Rights.  Executive agrees that all right, title and interest of every kind and nature whatsoever in and to copyrights, patents, ideas, business or strategic plans and concepts, studies, presentations, creations, inventions, writings, properties, discoveries and all other intellectual property conceived by Executive during the term of this Agreement and pertaining to or useful in or to (directly or indirectly) the activities of the Company (collectively, "Company Intellectual Property") shall become and remain the exclusive property of the Company, and Executive shall have no interest therein.

 

	
  

	
(b)

	
Further Assurances.  At the request of the Company, Executive shall, at the Company's expense but without additional consideration, execute such documents and perform such other acts as the Company may deem necessary or appropriate to vest in the Company or its designee such title as Executive may have to all Company Intellectual Property in which Executive may be able to claim any rights by virtue of his employment under this Agreement.

 

	
  

	
(c)

	
Return of Material.  Upon the termination of the Executive's employment under this Agreement, the Executive will promptly return to the Company all copies of information protected by Paragraph 11(a) hereof which are in his possession, custody or control, whether prepared by him or others, and the Executive agrees that he shall not retain any of same.

 

	
12.  

	
Representation and Warranty of Executive.  Executive represents and warrants to the Company that he is not now under any obligation, of a contractual nature or otherwise, to any person, partnership, company or corporation that is inconsistent or in conflict with this Agreement or which would prevent, limit or impair in any way the performance by him of his obligations hereunder.

 

	
13.  

	
Withholding.  Any provision of this Agreement to the contrary notwithstanding, all payments made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine should be withheld pursuant to any applicable law or regulation.  In lieu of withholding such amounts, the Company may accept other provisions, provided that it has sufficient funds to pay all taxes required by law to be withheld in respect of any or all such payments.

 

  

12

  

	
14.  

	
Mitigation.  The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others.  In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this agreement and such amounts shall not be reduced whether or not Executive obtains other employment.

 

	
15.  

	
Notices.  All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail, or personally delivered to the party entitled thereto, at the address stated below or to such changed address as the addressee may have given by a similar notice:

 

	
To the Company:

	  	
Whirlaway Corporation

	  	  	
Attn: William C. Kelly, Jr.

	  	  	
2000 Waters Edge Drive

	  	  	
Johnson City, TN  37604

	
To the Executive:

	  	
J.R. Widders

	  	  	
720 Shiloh Ave

	  	  	
Wellington, OH 44090

	  	  	  

	
16.  

	
Successors:  Binding Agreement.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in the form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement.  For purposes of this Agreement, “Company” shall include any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

 

This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, except to the extent otherwise provided under this Agreement, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee, or if there be no such designee, to the Executive’s estate.

 

  

13

  

	
17.  

	
Modification, Waiver or Discharge.  No provision of this Agreement may be modified or discharged unless such modification or discharge is authorized by the Board of Directors of the Company and is agreed to in writing, signed by the Executive and by an officer of the Company duly authorized by the Board.  However, the Company may unilaterally revise the provisions of this Agreement governed by the provisions of Internal Revenue Code Section 409A in order to make the Agreement compliant therewith, and as necessary under any provision of the Internal Revenue Code or any other federal or state statute or regulation to prevent the imposition of any federal or state fine, tax, or penalty upon Company or Executive that would result from the performance of any provisions of this Agreement.  No waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the time or at any time or at any prior or subsequent time.

 

	
18.  

	
Entire Agreement.  This Agreement constitutes the entire understanding of the parties hereto with respect to its subject matter and supersedes all prior agreements between the parties hereto with respect to its subject matter, including, but not limited to, all employment agreements, change of control agreements, non-competition agreements or any other agreement related to Executive's employment with the Company; provided, however, nothing herein shall affect the terms of the Indemnification Agreement entered into between the Company and Executive dated July 21, 2011, which shall continue and remain in full force and effect.

 

	
19.  

	
Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Tennessee to the extent federal law does not apply.

 

	
20.  

	
Resolution of Disputes.  Any dispute or claim arising out of or relating to this Agreement shall be settled by final and binding arbitration in Johnson City, Tennessee in accordance with the Commercial Arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.  The fees and expenses of the arbitration panel shall be equally borne by the Company and Executive.  Each party shall be liable for its own costs and expenses as a result of any dispute related to this Agreement.

 

	
21.  

	
Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which latter provisions shall remain in full force and effect.

 

	
22.  

	
Compliance with Internal Revenue Code and Section 409A.  This Agreement shall at all times be administered and the provisions of this Agreement shall be interpreted consistent with the requirements of the Internal Revenue Code, including but not limited to Section 409A of the Code, and any and all regulations thereunder, including such regulations as may be promulgated after the effective date of this Agreement.

 

  

14

  

	
23.  

	
No Adequate Remedy At Law; Costs to Prevailing Party.  The Company and the Executive recognize that each party may have no adequate remedy at law for breach by the other of any of the agreements contained herein, and particularly a breach of Paragraphs 7, 8, 9, or 11, and, in the event of any such breach, the Company and the Executive hereby agree and consent that the other shall be entitled to injunctive relief or other appropriate remedy to enforce performance of such agreements.

 

	
24.  

	
Non-Assignability.  This Agreement, and the rights and obligations of the parties hereunder, are personal and neither this Agreement, nor any right, benefit or obligation of either party hereto, shall be subject to voluntary or involuntary assignment, alienation  or transfer, whether by operation of law or otherwise, without the prior written consent of the other party; provided, however, that the Company may assign this Agreement in connection with a merger or consolidation involving the Company or a sale of substantially all of its assets to the surviving corporation or purchaser, as the case may be, so long as such assignee assumes the Company's obligations hereunder.

 

	
25.  

	
Headings.  The section headings contained in this Agreement are for convenience of reference only and will not be deemed to control or affect the meaning or construction of any provision of this Agreement.  Reference to Paragraphs are to Paragraphs in this Agreement.

 

	
26.  

	
Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but of which together will constitute one and the same instrument.

 

 

IN WITNESS WHEREOF, the Executive and the Company (by action of its duly authorized officers) have executed this Agreement as of the date first above written.

 

	  	  	  	
 

 

 

Whirlaway Corporation

	  	  	  	  
	  	  	  	  
	  	  	  	
By:

	  
	  	  	  	  	
William C. Kelly, Jr.

 

	
Attest:

	  	  	  
	  	  	  	  
	  	  	  	
EXECUTIVE:

	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	
  J.R. Widders

	  	  	  	  

 

  

15  

  

Schedule A

 

 

Executive's Severance Payment subsequent to a Change in Control as provided in Paragraph 6(d)(i) shall be a lump sum payment equal to:

 

1.           2.0 times Executive's base salary (as of the date of Executive's termination); plus

 

2.           1.0 times Executive's median bonus available at the following bonus target percentage:  45%.

 

 

16TruVal Schedules: Exhibit 10.1

  EXHIBIT A: COMMERCIAL LEASE
 THIS COMMERCIAL LEASE, (hereinafter referred to as the “Lease” or “Commercial Lease”), made as of this 1st day of January, 2011, by and between BRYAN PROPERTIES. LLC, a Virginia limited liability company (“Landlord”), with an address of 2 Hamilton Circle, Poquoson, VA 23662, and YORK RIVER ELECTRIC, INC., a Virginia corporation (“Tenant”), with an address of 108 Production Drive, Yorktown, Virginia 23692.
 W I T N E S S E T H:
 In consideration of the mutual promises contained herein, and of other consideration, the Landlord and Tenant do hereby covenant and agree as follows:
 1.
 Premises (hereinafter called “Demised Premises”). Landlord hereby leases and demises unto Tenant, and Tenant hereby takes and leases from Landlord, that certain property known by the current system of street numbering as 112 Production Drive, Yorktown, Virginia 23693, together with the improvements thereon.
 2
 Term/Renewal Option.
 (a)
 The term of this lease shall be for a period of Ten (10) years, commencing on the 1st day of January, 2011, and ending on the 31st day of December, 2020 (the “Initial Term”).
 (b)
 If Tenant is not in default in the performance of any of the terms and conditions of this Lease, Tenant shall have the option to extend the Term of this Lease for two (2) additional periods of five(5) years each, (each, an “Additional Term”) by giving notice of the Tenant’s intent to renew, in writing, to Landlord not less than one hundred twenty (120) days prior to the end of the Initial Term or and Additional Term. The Minimum Rent for the Demised Premises shall be payable on the basis of the annual Minimum Rent set forth below for the Lease Year in question, with the monthly payments of the Minimum Rent also to be set forth below:
 

 

 

 

 

 1
 

 

 	 	 	
	 Lease Year
	 Annual Minimum Rent
	 Monthly Minimum Rent

	   Initial Term:
	  
	  

	   Lease Year 1-2 (Commences 1/1/11)
	 $42,000.00 
	 $3,500.00 

	   Lease Year 3-4 (Commences 1/1/13)
	 $42,840.00 
	 $3,570.00 

	   Lease Year 5-6 (Commences 1/1/15)
	 $43,696.80 
	 $3,641.40 

	   Lease Year 7-8 (Commences 1/1/17)
	 $44,570.74 
	 $3,714.23 

	   Lease Year 9-10 (Commences 1/1/19)
	 $45,462.16 
	 $3,788.52 

	   Renewal Terms:
	  
	  

	   Lease Years 11-15
	 $46, 371.39 in Year 11, adjusted every two (2) years by 2%
	  

	   Lease Years 16-20
	 $49,209.70 in Year 15, adjusted every two (2) years by 2%
	  

 

 In the event that Tenant exercises any renewal option, all terms of this Lease shall remain the same except that the Annual Rent shall increase as provided for herein.
 3.
 Purpose. The Demised Premises shall be used for the purpose of conducting the business operations of the Tenant as an electric company and such other lawful purposes as may be approved in writing by the Landlord. Any change in type of use or of any or all of the Demised Premises by Tenant must be approved in advance by Landlord in writing.
 4.
 Rent.
 (a) Tenant covenants to make all rental payments to Landlord at 2 Hamilton Circle, Poquoson, VA 23662 or to other such location as requested by Landlord, in writing, without prior demand therefore being made.
 (b) Wherever it is provided in this Lease that Tenant is requested to make any payment to Landlord other than minimum rent, such payment shall be deemed to be additional rent and all remedies applicable to the nonpayment of rent shall be applicable thereto. Minimum rent and additional rent shall be paid without counterclaim, setoff, deduction or defense.
 2
 

 5,
 Late Payments. Rent is due on the first (1st) day of each month. Tenant covenants and agrees to pay a late charge of five percent (5%) or one hundred dollars ($100.00), whichever is greater, if payment is not received by close of business on the fifth (5th) day of the month. Any sum not paid by close of business on the fifth (5th) day of the month shall be past due, and interest shall accrue at the rate of EIGHTEEN PERCENT (18%) per annum, payable monthly, on all rents (including minimum rent and additional rent) and all other sums due under this Lease from the time said rents or sums accrue if they become past due, Landlord expressly reserving all other rights and remedies provided herein or by law in respect thereto. Tenant further agrees to pay (or to reimburse Landlord promptly if Landlord elects to pay) any and all attorney’s fees, in an amount of twenty-five percent (25%) of the total balance in arrears, or the actual amount as incurred by Landlord, whichever if greater, and court costs incurred in connection with the collection of delinquent rents and/or any enforcement of any Lease provisions due Landlord under this Lease, whether or not affirmative legal action is commenced.
 6.
 Payments by Tenant. In addition to the Rent, Tenant shall pay to the parties respectively entitled thereto all taxes, impositions, insurance premiums, operating charges, maintenance charges, construction costs (except as set forth herein) capital repairs and improvements (except as forth herein), utilities and any other charges, costs and expenses which arise or may be contemplated under any provisions of this Lease, involving or related to the interior of the Demised Premises during the term hereof. Notwithstanding the aforesaid, Tenant shall not be responsible for charges, costs and expenses which may arise or may be contemplated under any provisions of this Lease, except as otherwise specifically stated in this Lease, as to the exterior of the building, other than cosmetic maintenance of the façade. All such charges, costs and expenses shall constitute additional rent, and upon failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant, and that Tenant shall in no event be entitled to abatement of or reduction in rent payable under this Lease, except as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties.
 7.
 Trade Fixtures. Tenant agrees, at its own cost and expense, to fixture the Demised Premises with new or existing trade fixtures or required equipment and furnishings. All trade fixtures installed in the Demised Premises by Tenant shall remain Tenant’s property, except as otherwise specifically stated in this Lease, provided however, that nothing herein shall be deemed to affect Landlord’s remedy of distraint. Tenant agrees to repair (or to reimburse Landlord for the cost of repairing) any damage to the Demised Premises occasioned by the installation or removal of said trade fixtures or required equipment and furnishings.
 3
 

 8.
 Tenant’s Personal Property Taxes. Tenant shall pay before delinquency, as additional rent, all taxes levied or assessed on Tenant’s fixtures, equipment and personal property in and on the Demised Premises, whether or not affixed to the real property.
 9.
 Tenant’s Repairs. Tenant covenants that it will, at all times during the term and at its own cost and expense, keep the Demised Premises (including, the heating system and air conditioning system insofar as they are within the Demised Premises, toilets, pipes, plumbing, wires, and conduits, electric lines, windows, fixtures, equipment, gutter, downspouts, walls (inside), all glass windows and doors, signs, and any and all interior components or parts of the Demised Premises) in a good and safe condition or repair and in good working order (making such renewals and replacements as may be necessary), unless the need therefore is occasioned by fire or other casualty covered by Tenant’s fire and extended coverage insurance policy, in which event such repair and replacement shall be a expense of Landlord to the extent of such coverage. Tenant understands and agrees that it (not Landlord) shall be responsible for any damage caused by condensation in or around the duct work within the Demised Premises used for heating and/or air conditioning.
 10.
 Landlord’s Repairs and Right of Entry. Upon not less than twenty four (24) hours prior notice, except in the event of emergencies, Landlord, its agents, employees and contractors, shall have the right, from time to time, to enter and use insofar as may be necessary the Premises for the purpose of making repairs, accompanied by a Tenant representative. Tenant shall not be entitled to any reduction in rent or to any claim for damages by reason of any inconvenience, annoyance, and/or injury to business arising out of any repairs made by Landlord pursuant to this Section.
 11.
 Tenant’s Care of Building, Land, etc. Tenant covenants and agrees that it will, at all times, during the term hereof, keep the Demised Premises, including sidewalks, clean and free from obstruction, rubbish, dirt, snow and ice. This duty and covenant of the Tenant to keep sidewalks clean and free from obstruction shall extend to and include not only sidewalks connected or adjacent to the Demised Premises, but also sidewalks connected to or adjacent to buildings or structures adjacent to the Demised Premises, to the extent that Tenant can lawfully access the aforesaid sidewalks. Tenant shall sweep and clean all such sidewalks on a nightly basis. Tenant covenants and agrees that it will not allow any person to smoke or loiter on the Demised Premises or aforesaid sidewalks, and will take all lawful steps necessary to prevent smoking or loitering on the Demised Premises or the aforesaid sidewalks. Tenant shall place all trash, rubbish and garbage in a proper closed receptacle and shall pay all costs incident to the removal thereof. Notwithstanding anything to the contrary, Tenant shall take premises “as is” and will be responsible for all maintenance of the interior of the Demised Premises, as well as any signs. 
 4
 

 12.
 Miscellaneous Covenants of Tenant. Tenant covenants that: i) it will comply with all Federal, State and/or municipal laws, ordinances and regulations relating to its business conducted in the Demised Premises; ii) it will promptly pay for all electricity, gas, water and other utilities consumed on, and all sewage disposal charges assessed against, the Demised Premises; iii) it will not use, or permit to be used, the Demised Premises for any illegal or immoral purpose; iv) it will not, without the prior written consent of Landlord (which shall not be unreasonable withheld), cause or allow any advertising sign to be erected, installed, painted, displayed or maintained on the exterior of the building of which the Demised Premises constitute a part; v) it will keep all signs installed (with the consent of Landlord) on the exterior of the building of which the Demised Premises constitute a part, freshly painted, in good repair and operating condition at all times; vi)it will not without the prior written consent of Landlord: (a) make any improvements to the Demised Premises, and (b) hold a fire, bankruptcy, going-out-of-business or auction sale; vii)it will permit Landlord or its representatives (a) to enter the Demised Premises during the last six (6) months of the term for the purpose of exhibiting the Demised Premises to prospective Tenants, and (b) to place a “For Rent” sign on the Demised Premises during such period of time.
 13.
 Insects and Rodents. Tenant covenants that it will, at its own expense, take such steps as shall be necessary to keep the Demised Premises free of termites, roaches, rodents, insects and other pests and that it will save Landlord harmless from any damage caused thereby.
 14.
 Damage by Vandals. If the doors, window frames, glass or any part of the exterior of the Demised Premises are damaged by persons breaking, or attempting to break, into the Demised Premises, or by vandals, Tenants covenants to repair immediately at its own expense, any and all such damage. If any portion of the Demised Premises are damaged by Tenant or any third party, including, without limitation, guests, clients, or invitees of the Tenant, Tenant covenants to repair such damages immediately at its own expense.
 15.
 Tenant’s Failure to Comply. Tenant agrees that if it fails to perform any obligation required by this Lease, Landlord, in addition to other remedies provided by law and/or this Lease, may correct (or have corrected) the default at the cost and expense of Tenant.
 16.
 Fire Hazard.  Tenant covenants that, without the prior written consent of Landlord, it will not do anything which will increase the rate of fire insurance on the building of which the Demised Premises constitutes a part, and that if such consent is given, Tenant will pay Landlord the amount of the increase in the cost of such insurance, as and when the premiums become due.
 5
 

 17.
 Care of Roof. Tenant agrees that it will not (directly or by sufferance) place any debris on the roof of the building of which the Demised Premises constitute a part or cut, drive nails into or otherwise manipulate the roof or penetrate roof in anyway without prior consent of Landlord.
 18
 Condition on Termination. Tenant covenants that it will upon the expiration or earlier termination of this Lease, (a) deliver up to Landlord, peaceably and quietly, the Demised Premises in the same good condition they are now in or shall hereafter be placed, ordinary wear and tear and damage by casualty within the coverage of a standard fire insurance policy with extended coverage, excepted, and (b) remove its trade fixtures or required equipment and furnishings from the Demised Premises (unless it is then in default hereunder in which event it will not be permitted to effect such removal, or unless removal of the trade fixture will damage any portion of the Demised Premises) and to repair promptly any damage caused by such removal.
 19
 Alterations. Tenant shall not make any exterior or structural alterations to the Premises without Landlord’s prior written approval in its sole discretion. Tenant may make interior, non-structural alterations and improvements to the Premises after Tenant has obtained Landlord’s prior written approval (which approval shall not be unreasonably withheld or delayed) of the plans and specifications of the work to be performed and has satisfied Landlord’s requirements for bonding, insurance and other contractor requirements. All alterations and improvements shall be performed in a first-class manner. In no even shall Tenant make any change to the Premises that alters the character of the Premises, lessens the value of the Premises or violates any laws or other legal requirements or the provisions of any mortgage on the Demised Premises.
 20.
  Improvements to Become Landlord’s. Tenant agrees that all additions and other improvements presently installed in the Demised Premises or installed by Tenant, including, without limitation, all electric wiring, electric fixtures, light fixtures, air conditioning systems, screens, doors, awnings, awning frames, canopies, bartops, stove/oven hoods, pylons, and floor coverings shall immediately become the property of Landlord, and shall not be removed by Tenant at the expiration or earlier termination of this Lease, unless Tenant is requested to do so by Landlord, in which event Tenant agrees to do so and to repair promptly any damage caused by an such removal.
 21.
 Tenant’s Liability Insurance.
 (a) Tenant agrees that it shall defend, indemnify and hold harmless Landlord from and against any and all manner of claims, demands, actions, suits, costs, losses and Expenses, liability, damages, settlements and claims for damages, debts, liens, charges (including 
 6
 

 reasonable attorney’s fees and the cost of defending any claim, action or suit), whether for bodily injury, sickness, disease, death, property damage or otherwise, arising from the use and occupancy of the Demised Premises or the operation of Tenant’s business thereon; provided, however, that this clause shall not apply to injury or damage caused Landlord has herein agreed to make) within a reasonable time after Tenant’s written notice of th need therefore. It is agreed that the above hold harmless and indemnification includes, but is not limited to, any liability of Landlord arising from any leakage, seepage or contamination from aboveground or underground tanks, lines and appurtenant facilities. Tenant will, at all times commencing on the date of delivery of possession of the Demised Premises to Tenant, at its own cost and expense, carry with a company or companies, satisfactory to Landlord, public liability insurance (in form and amounts of coverage reasonably satisfactory to Landlord) on the Demised Premises, with limits of not less than One Million Dollars ($1,000,000.00) for injury or death to one person and Two Million Dollars ($2,000,000.00) for injury or death to more than one person, and property damage of Five Hundred Thousand Dollars ($500,000.00) for each accident, which insurance shall be written or endorsed so as to protect Landlord and Tenant, as their respective interests may appear. Every policy r policies shal contain a provision insuring Tenant against all liability which Tenant might have under the foregoing indemnity provision.  Tenant covenants that certificates of all such insurance policies shall be delivered to Landlord promptly without demand. Such policy shall also contain a provision that it may not be terminate without thirty (30) days paid written notice to Landlord. If Tenant fails to provide such insurance, Landlord may, but shall not e required to, obtain such insurance and collect the cost thereof as a part of the rent herein reserved. Landlord shall have the right to increase the amount of minimum coverages required hereunder upon ninety (90) days written notice to Tenant.
 (b)Tenant and all those claiming by, through or under Tenant, shall store their property in, and shall occupy and use the Demised Premises solely at their own risk, and Tenant and all those claiming by, through or under Tenant hereby release Landlord, to the full extent permitted by law, from all claims of every kind, including loss of life, personal or bodily injury, damage to merchandise, equipment, fixtures or other property, or damage to business or for business interruption, arising directly or indirectly, out of or from or on account of Tenant’s occupancy and be responsible or liable at any time to Tenant, or to those Claiming by, through or under Tenant, for any loss of life, bodily or personal injury or damage to property or business, or for business interruption, that may be occasioned by the acts, omissions or negligence of any other persons. Landlord shall not be responsible at any time for any defects, latent or otherwise in the Demised Premises or any of the equipment, machinery, utilities, appliances, or apparatus therein, nor shall Landlord be responsible or liable at any time for loss of life, or injury or damage to any person or to any property or business of Tenant, or those claiming by, through or under Tenant, or any other person caused by or resulting from the bursting, breaking, leak 
 7
 

 running, seeping, overflowing or backing up of water, steam, gas, petroleum products of any kind, sewage, snow or ice from or in any part of the Demised Premises or caused by or resulting from acts of God or the elements, or resulting from an defect or negligence in the occupancy, construction, operation or use of the building or improvements in the Demised Premises and the equipment, fixtures, machinery, appliance or apparatus thereon, unless caused by Landlord’s own negligence.
 22.
 Fire Insurance.  Tenant covenants that it will keep the Demised Premises insured against damage by fire and other hazard with “all risk” coverage in an amount not less than one hundred percent (100%) of the replacement cost thereof.
 23.
 Mechanic’s Liens  Tenant shall not permit any mechanic’s, materialman’s or similar lien to stand against any portion of the Demised Premises for any labor performed or material furnished in connection with any work performed or caused to be performed by tenant. If any such lien is filed against the Demised Premises, Tenant shall discharge such lien by paying the amount secured thereby or providing a bond within twenty (20) days after is was filed and if Tenant fails to do so Landlord may discharge the lien without inquiring into the validity thereof and Tenant shall promptly reimburse Landlord for any amount so expended.
 24. 
 Damage By Fire or Other Casualty. In the event the Demised Premises, or any part thereof, shall be damaged by fire or other casualty during the term, Tenant agrees that t will restore the Demised Premises with reasonable dispatch, to substantially the same condition they were in prior to such damage and Tenant shall be entitled to receive insurance proceeds covering such casualty, for purposes of making restoration, and if the Demised Premises are rendered wholly or partially untenable as a result of such damage, the minimum rental payable hereunder shall be equitably abated (according to the loss of use) during the period intervening between the date of such damage and the date the Demised Premises are restored. Anything in the foregoing to the contrary notwithstanding, if such damage occurs during the last two (2) years of the term, and if such damage exceeds fifty percent (50%) of the then insurable value fo the Demised Premises, either Landlord or Tenant may terminate this Lease as of the date of such damage, by giving to the other written notice of its intention so to do within thirty (30) days after the date such damage occurs. If this Lease is so terminated, the rental payable hereunder shall be abated as of the date of such damage, and Tenant shall remove all of its property from the Demised Premises within thirty (30) days after the notice of termination is given.
 25.
 Condemnation.  In the event that the whole of the Demised Premises are taken by the exercise of powers of eminent domain (or sold to the holder or such power, pursuant to a threatened taking) this Lease shall terminate as of the date of such taking. 
 8
 

 In the event any material portion of the Demised Premises is taken by the exercise of the power of eminent domain (or sold to the holder of such power pursuant to a threatened taking), this Lease may, at the option of the Landlord or Tenant be terminated by written notice given to the other within sixty (60) days after such taking or sale occurs. If this Lease is not so terminated, Landlord covenants that it will at its own expense, promptly after the lapse of said sixty (60) days, repair such damage and do such work as may be required to repair and rebuild the Demised Premises as nearly as may be to the condition it was in immediately prior to such taking; provided, however, that whether or not this Lease is so terminated, the minimum reantal payable hereunder shall be equitably abated, (according to the loss of use) from the date of such taking. Tenant shall have no right in or to the proceeds of any award made in any such condemnation.
 26.
 No Representations by Landlord.  Tenant agrees that Landlord has not made any representation, express or implied, with respect to Federal, State or municipal laws or ordinances applicable to the Demised Premises r the propert of which the Demised Premises constitute a part (including, without limitation, laws or ordinances relating to Zoning or fire walls), and Tenant shall not have the right to terminate this Lease, nor shall it be entitled to any abatement of rent payable hereunder or any claim for damages, in the even the Demised Premises cannot be used by Tenant, in whole or in part, for the purpose for which Tenant intends to use the same.
 27.
 Assignment and Subletting.  Tenant covenants that it will not assign this Lease, or sublet or permit any other person to occupy part or all of the Demised Premises, without Landlord’s prior written consent shall not be unreasonably withheld. 
 28.
 Default and Remedies.  (a) Defaults.  The occurrence of any one or more of the following events (“Defaults”) shall constitute  a default and breach of this Lease by Tenant: (i) Tenant fails to pay any Minimum Rent or any other Rent payments owed under this Lease within ten (10) calendar days of the date on which such payment was due; (ii) Tenant fails to observe and perform any of the other terms, covenants and /or conditions of this Lease, and such default shall continue for more than fiftenn (15) days after written notice from Landlord to Tenant (however, if a default under this item (ii) cannot reasonably be cured within fifteen (15) days, and Tenant has promptly commenced the cure within such time and is diligently proceeding to complete the cure, then Tenant shall have such reasonable extra time (not to exceed sixty (60) days) to complete the cure; (iii) Tenant fails to pay when due Minimum Rent or any other Rent owed under this Lease three (3) or more times in any period of twelve (12) consecutive months; (iv) the Premises is abandoned, vacated or closed for business to the public (ther than for fire, casualty or condemnation), or Tenant fails to open for business to the public in the Premises within (60) days after the Commencement Date; or (v) a case is commenced or a 
 9
 

 petition is filed by or against Tenant under any chapter of the federal Bankruptcy Code, or there is filed by or against Tenant, or any successor tenant then in possession, in any court pursuant to any statute or law, a petition for appointment of a trustee or receiver, an assignment for the benefit of creditors, or reorganization (unless the petition is filed or case commenced by a party other than Tenant and is withdrawn or dismissed within thirty (30) days after the date of its filing).
 (b)
 Remedies.  Upon the occurrence and continuance of a Default, Landlord, without notice to Tenant in any instance (except where expressly provided for below) may do any one or more of the following: (i) apply the Security Deposit (if any) toward the satisfaction and cure of such Default; (ii) reenter the Premises, by any suitable action or proceeding at law, or without judicial process if Landlord so elects, without being liable for any prosecution therefor or damages therefrom, and repossess and enjoy the Premises; (iii) elect to terminate this Lease upon not less than ten (10) days written notice to Tenant, at which time the term of this Lease shall expire, but Tenant’s liability under all of the provisions of this Lease to continue; or (iv) exercise any other legal or equitable rights or remedies available to Landlord, including those additional rights set forth in this Lease. In exercising any of the above remedies, Landlord may remove Tenant’s property from the Premises and store the same at Tenant’s expense without resort to legal process and without Landlord being deemed guilty or trespass or becoming liable for any loss or damage occasioned thereby, and Landlord may also sell such property at public or private sale, with the proceeds being applied to costs of sale and storage (including reasonable attorney’s fees) and amounts owed to Landlord under this Lease. Tenant waives any rights to re-enter the Premises and any rights of redemption.
 Tenant understands that Landlord may re-let, in one or more leases, all or part of the Premises (or a premises including space in addition to the Premises), either in Landlord’s own right or as agent for Tenant, accepting any rents then obtainable, for a term or terms that may be greater or less than the balance of the Term of this Lease, and Landlord may grant concessions or free rent without in any way affecting Tenant’s liability for the Rent payable under this Lease. However, Tenant understands that Landlord shall be under no duty to re-let the Premises and that Tenant’s liability under this Lease shall not be affected or diminished in any way whatsoever, for Landlord’s failure to re-let the Premises, or if the Premises are re-let, for Landlord’s failure to collect rentals under such re-letting. In connection with any re-letting, Landlord may make or do any alterations, repairs, painting and decorations (“Re-letting Preparations”) to the Premises which Landlord considers advisable and necessary in its sole judgment, and such Re-letting Preparations shall not release Tenant from any liability under this Lease.
 10
 

 

 (c)
 Damages.  If a Default occurs, Tenant shall remain liable for (i) all Rent and damages that may be due or sustained by Landlord up to the time this Lease terminates or Landlord takes possession of the Premises, whichever occurs later, and the performance of all other obligations of Tenant accruing under this Lease through such date (collectively “Accrued Damages”); (ii) all reasonable costs, fees and expenses (including without limitation attorney’s fees and expenses, brokerage commissions and fees) incurred by Landlord in pursuit of its remedies under this Lease and in renting the Premises to others from time to time (including Re-letting Preparations) (all such Accrued Damages , costs, fees, and expenses being referred to collectively as the “Default Damages”); and (iii) Future Damages, which, at the election of Landlord, shall be either: (i) the amount (the “Deficiency”) by which (A) the Rent reserved under this Lease until the expiration date of the Term exceeds (B) the amount of rent, if any, that Landlord shall receive during the same period from others to whom the Premises may be rented, from which Landlord may deduct all Default Damages owing to Landlord; such Deficiency to be paid in monthly installments by Tenant on the first day of each calendar month; or (ii) an amount equal to the present value of the sum of the Rent reserved under this Lease until the expiration date of the Term plus the Default Damages owed by Tenant, from which sum there shall be deducted the present value of the fair market rental value of the Premises as determined by an independent real estate appraiser designated by Landlord; Future Damages under this item (ii) shall be payable to Landlord in one lump sum on demand and shall bear interest at the Default Rate until paid. For the above purposes “present value” shall be computed using a discount rate equal to one percentage point above the discount rate then in effect at the Federal Reserve Bank nearest to the location of the Facility.
 (d)
 Remedies Cumulative.  All remedies of Landlord shall be cumulative Acceptance by Landlord of delinquent rent after Default shall not sure such Default nor entitle Tenant to possession of the Premises.
 (e)
 Attorney’s Fees  Tenant agrees to pay all costs incurred by Landlord on account of Tenant’s default hereunder including, but not limited to, collection costs, court costs, and reasonable attorney’s fees.
 29.
  Estoppel Certificate.  Within ten (10) days after written request of Landlord, Tenant shall certify by a duly executed and acknowledged written instrument to any mortgagee or purchaser, or proposed mortgagee or proposed purchaser, or in any other person, firm or corporation specified by the Landlord, as to the validity in force and effect of this Lease, as to the counterclaims, or defenses thereto on the part of party thereunder, as to the existence of any offsets, counterclaims, or defenses thereto on the part of Tenant, and as to any other matters as may be reasonably requested by Landlord, all without charge and as frequently as Landlord deems necessary. Tenant’s failure or refusal to deliver such statement within such time 
 11
 

 shall be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord’s performance or obligations hereunder, and (iii) that not more than one month’s installment of minimum rent has been paid in advance of the due date.
 30.
 Notices.  Any notice herein provided for to be given to Landlord shall be deemed to be given if and when posted in United States registered or certified mail, postage prepaid, or standard overnight delivery addressed to Landlord, attn: Mark Bryan, 2 Hamilton Circle Poquoson, VA 23662, with copy to Landlord’s attorney, H. Alexander Johnson, Esquire, at Pender & Coward, P.C., 222 Central Park Avenue, Suite 400, Virginia Beach, VA 23462, and any notice herein provided for to be given to Tenant shall be deemed to be given if and when posted in United States registered or certified mail, or standard overnight delivery addressed to Tenant at Demised Premises.
 31.
 Quiet Enjoyment.  Subject to the terms, covenants and conditions set forth in this Lease, and further subject to any ground lease, mortgage or deed of trust to which this Lease is or shall be subordinate, Landlord covenants that Tenant shall have and enjoy quiet and peaceable possession of the Demised Premises during the term hereof.
 32.
 Entire Agreement.  This Lease contains the entire agreement between the parties hereto, and it cannot be altered or modified in any way except in writing signed by the parties hereto.
 33.
  No Waivers.  Any failure of either party hereto to insist upon strict observance of any covenant, provision or condition of this Lease in any one or more instances shall not constitute or be deemed a waiver, at the time or thereafter, of such or any other covenant, provision or condition of this Lease
 34.
 Successors and Assigns.  This Lease and all terms, covenants, conditions and provisions herein contained, shall be binding upon and shall inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and (if and when assigned in accordance with the provisions hereof) assigns.
 

 

 12
 

 

 

 IN WITNESS WHEREOF the Landlord and Tenant hereto have caused this Lease to be executed in their names below.
 LANDLORD
 BRYAN PROPERTIES, LLC
 By/s/Mark Bryan
 MARK BRYAN, MANAGER
 TENANT
 YORK RIVER ELECTRIC, INC.
 By /s/ Mark A Bryan
 Treasurer
 STATE OF VIRGINIA
 CITY OF YORK
 The foregoing instrument was acknowledged before me this 1st day of January, 2011, by MARK BRYAN, Manager, BRYAN PROPERTIES, LLC on behalf of the limited liability company.
 /s/Carlotta Raye Manring
   Notary Public
 My commission expires: 10/31/15
 My registration No.:   714061
 STATE OF VIRGINIA
 CITY OF YORK
 The foregoing instrument was acknowledged before me this 1st day of January, 2011, by Mark A Bryan, Treasurer of York River Electric, Inc., who is personally known to me or has presented sufficient identification.
 /s/ Carlotta Ray Manring
     Notary Public
 My commission expires:   10/31/15 
 My Registration No.:   7140671
 

 

 13
 

 

 EXHIBIT A: COMMERCIAL LEASE
 THIS COMMERCIAL LEASE, (hereinafter referred to as the “Lease” or “Commercial Lease”), made as of this 1st day of January, 2011, by and between CHARTERS. LLC, a Virginia limited liability company (“Landlord”), with an address of 108 Production Drive, Yorktown, VA 23693, and YORK RIVER ELECTRIC, INC., a Virginia corporation (“Tenant”), with an address of 108 Production Drive, Yorktown, Virginia 23693.
 W I T N E S S E T H:
 In consideration of the mutual promises contained herein, and of other consideration, the Landlord and Tenant do herby covenant and agree as follows:
 1.
 Premises. (hereinafter called the “Demised Premises”). Landlord herby leases and demises unto Tenant, and Tenant herby takes and leases from Landlord, that certain property known by the current system of street numbering as 108 Production Drive, Yorktown, Virginia 23693, together with the improvements thereon.
 2.
 Term/Renewal Option.
 (a) The term of this lease shall be for a period of Ten (10) years, commencing on the 1st day of January, 2011, and ending on the 31st day of December, 2020 (the “Initial Term”).
 (b) If Tenant is not in default in the performance of any of the terms and conditions of this Lease, Tenant shall have the option to extend the Term of this Lease for two (2) additional periods of five (5) years each (each, an “Additional Term”) by giving notice of Tenant’s intent to renew, in writing, to Landlord not less than one hundred twenty (120) days prior to the end of the Initial Term or any Additional Term. The Minimum Rent for the Demised Premises shall be payable on the basis of the annual Minimum rent set forth below for the Lease Year in question, with the monthly payments of the Minimum Rent also to be as set forth below:
 

 

 

 

 1
 

 

 	 	 	
	 Lease Year
	 Annual Minimum Rent
	 Monthly Minimum Rent

	 Initial Term:
	 

	 

	 Lease Years 1-2 (Commences 1/1/11)
	 $30,000.00
	 $2,500.00

	 Lease Year 3-4 (Commences 1/1/13)
	 $30,600.00
	 $2,550.00

	 Lease Year 5-6 (Commences 1/1/15)
	 $31,212.00
	 $2,601.00

	 Lease Year 7-8 (Commences 1/1/17)
	 $31,826.24
	 $2,653.02

	 Lease Year 9-19
	 $32,472.96
	 $2,706.08

	 Renewal Terms:
	 

	 

	 Lease Year 11-15
	 $33,122.42 in Year 11, adjusted every two (2) years by 2%
	 

	 Lease Years 16-20
	 $34, 460.57 in Year 15, adjusted every two (2) years by 2%
	 

  

 In the event that Tenant exercises any renewal option, all terms of this Lease shall remain the same except that the Annual Rent shall increase as provided for herein.
 3.
 Purpose. The Demised Premises shall be used for the purpose of conducting the business operations of the Tenant as an electric company and such other lawful purposes as may be approved in writing by the Landlord. Any change in type of use or of any or all of the Demised Premises by Tenant must be approved in advance by Landlord in writing.
 4.
 Rent.
 (a) Tenant covenants to make all rental payments to Landlord at 324 Brentmeade Drive, Yorktown, VA 23693, or to other such location as requested by Landlord, in writing, without prior demand therefore being made.
 (b) Wherever it is provided in this Lease that Tenant is requested to make any payment to Landlord other than minimum rent, such payment shall be deemed to be additional rent and all remedies applicable to the nonpayment of rent shall be applicable thereto. Minimum rent and additional rent shall be paid without counterclaim, setoff, deduction or defense.
 2
 

 

 5.
 Late Payments. Rent is due on the first (1st) day of each month. Tenant covenants and agrees to pay a late charge of five percent (5%) or one hundred dollars ($100.00), whichever is greater, if payment is not received by close of business on the fifth (5th) day of the month. Any sum not paid by close of business on the fifth (5th) day of the month shall be past due, and interest shall accrue at the rate of EIGHTEEN PERCENT (18%) per annum, payable monthly, on all rents (including minimum rent and additional rent) and all other sums due under this Lease from the time said rents or sums accrue if they become past due, Landlord expressly reserving all other rights and remedies provided herein or by law in respect thereto. Tenant further agrees to pay (or to reimburse Landlord promptly if Landlord elects to pay) any and all attorney’s fees, in an amount of twenty-five percent (25%) of the total balance in arrears, or the actual amount as incurred by Landlord, whichever is greater, and court costs incurred in connection with the collection of delinquent rents and/or any enforcement of any Lease provisions due Landlord under this Lease, whether or not affirmative legal action is commenced.
 6.
 Payments by Tenant. In addition to the Rent, Tenant shall pay to the parties respectively entitled thereto all taxes, impositions, insurance premiums, operating charges, maintenance charges, construction costs (except as set forth herein), capital repairs and improvements (except as set forth herein), utilities and any other charges, costs and expenses which arise or may be contemplated under any provisions of this Lease, involving or related to the interior of the Demised Premises during the term hereof. Notwithstanding the aforesaid, Tenant shall not be responsible for charges, costs and expenses which may arise or may be contemplated under any provisions of this lease, except as otherwise specifically stated in this Lease, as to the exterior of the building, other than cosmetic maintenance of the façade. All such charges, costs, and expenses shall constitute additional rent, and upon failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant, and that Tenant shall in no event be entitled to abatement of or reduction in rent payable under this Lease, except as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties. 
 7.
 Trade Fixtures. Tenant agrees, at its own cost and expense, to fixture the Demised Premises with new or existing trade fixtures or required equipment and furnishings. All trade fixtures installed in the Demised Premises by Tenant shall remain Tenant’s property, except as otherwise specifically stated in this Lease, provided 
 3
 

 however, that nothing herein shall be deemed to affect Landlord’s remedy of distraint. Tenant agrees to repair (or to reimburse Landlord for the cost of repairing) any damage to the Demised Premises occasioned by the installation or removal of said trade fixtures or required equipment and furnishings.
 8.
 Tenant’s Personal Property Taxes. Tenant shall pay before delinquency, as additional rent, all taxes levied or assess on Tenant’s fixtures, equipment and personal property in and on the Demised Premises, whether or not affixed to the real property.
 9.
 Tenant’s Repairs. Tenant covenants that it will, at all times during the term and at its own cost and expense, keep the Demised Premises (including, the heating system and air conditioning system insofar as they are within the Demised Premises, toilets, pipes, plumbing, wires and conduits, electric lines, windows, fixtures, equipment, gutter, downspouts, walls (inside), all glass windows and doors, signs, and any and all interior components or parts of the Demised Premises) in a good and safe condition of repair and in good working order (making such renewals and replacements as may be necessary), unless the need therefore is occasioned by fire or other casualty covered by Tenant’s fire and extended coverage insurance policy, in which event such repair and replacement shall be an expense of Landlord to the extent of such coverage. Tenant understands and agrees that it (not Landlord) shall be responsible for any damage caused by condensation in or around the duct work within the Demised Premises used for heating and/or air conditioning.
 10.
 Landlord’s Repairs and Right of Entry. Upon not less than twenty four (24) hours prior notice, except in the event of emergencies, Landlord, its agents, employees and contractors, shall have the right, from time to time, to enter and use insofar as may be necessary the Premises for the purpose of making repairs, accompanied by a Tenant representative. Tenant shall not be entitled to any reduction in rent or to any claim for damages by reason of any inconvenience, annoyance, and/or injury to business arising out of any repairs made by Landlord pursuant to this Section.
 11.
 Tenant’s Care of Building, Land, etc. Tenant covenants and agrees that it will, at all times during the term hereof, keep the Demised Premises, including sidewalks, clean from obstruction, rubbish, dirt, snow and ice. This duty and covenant of the Tenant to keep sidewalks clean and free from obstruction shall extend to and include not only sidewalks connected or adjacent to the Demised Premises, but also sidewalks connected to or adjacent to buildings or structures adjacent to the Demised Premises, to the extent that Tenant can lawfully access the aforesaid sidewalks. 
 4
 

 Tenant shall sweep and clean all such sidewalks on a nightly basis. Tenant covenants and agrees that it will not allow any person to smoke or loiter on the Demised Premises or the aforesaid sidewalks, and will take all lawful steps necessary to prevent smoking or loitering on the Demised Premises or the aforesaid sidewalks. Tenant shall place all trash, rubbish and garbage in a proper closed receptacle and shall pay all costs incident to the removal thereof. Notwithstanding anything to the contrary, Tenant shall take premises “as is” and will be responsible for all maintenance of the interior of the Demised Premises, as well as any signs.
 12.
 Miscellaneous Covenants of Tenant. Tenant covenants that: i) it will comply with all Federal, State and/or municipal laws, ordinances and regulations relating to its business conducted in the Demised Premises; ii) it will promptly pay for all electricity, gas, water and other utilities consumed on, and all sewage disposal charges assessed against, the Demised Premises; iii) it will not use, or permit to be used, the Demised Premises for any illegal or immoral purpose; iv) it will not, without the prior written consent of Landlord (which shall not be unreasonably withheld), cause or allow any advertising sign to be erected, installed, painted, displayed or maintained on the exterior of the building of which the Demised Premises constitute a part; v) it will keep all signs installed (with the consent of Landlord) on the exterior of the building of which the Demised Premises constitute a part, freshly painted, in good repair and operating condition at all times; vi) it will not without the prior written consent of Landlord: (a) make any improvements to the Demised Premises, and (b) hold a fire, bankruptcy, going-out-of-business or auction sale; vii) it will permit Landlord or its representatives (a) to enter the Demised Premises during the last six (6) months of the term for the purpose of exhibiting the Demised Premises to prospective Tenants, and (b) to place a “For Rent” sign on the Demised Premises during such period of time.
 13.
 Insects and Rodents. Tenant covenants that it will, at its own expense, take such steps as shall be necessary to keep the Demised Premises free of termites, roaches, rodents, insects and other pests and that it will save Landlord harmless from any damage caused thereby.
 14.
 Damage by Vandals. If the doors, window frames, glass or any part of the exterior of the Demised Premises are damaged by persons breaking, or attempting to break, into the Demised Premises, or by vandals, Tenant covenants to repair immediately at its own expense, any and all such damage. If any portions of the Demised Premises are damaged by Tenant or any third party, including, without limitation, guests, clients or invitees of the Tenant, Tenant covenants to repair such damages immediately at its own expense.
 5
 

 15.
 Tenant’s Failure to Comply. Tenant agrees that if it fails to perform any obligation required by this Lease, Landlord, in addition to other remedies provided by law and/or this Lease, may correct (or have corrected) the default at the cost and expense of Tenant.
 16.
 Fire Hazard. Tenant covenants that, without the prior written consent of Landlord, it will not do anything which will increase the rate of fire insurance on the building of which the Demised Premises constitutes a part, and that if such consent is given, Tenant will pay Landlord the amount of the increase in the cost of such insurance, as and when the premiums become due.
 17.
 Care of Roof. Tenant agrees that it will not (directly or by sufferance) place any debris on the roof of the building of which the Demised Premises constitutes a part or cut, drive nails into or otherwise manipulate the roof in anyway without prior consent of Landlord.
 18.
 Condition on Termination. Tenant covenants that it will upon the expiration or earlier termination of this Lease, (a) deliver up to Landlord, peaceably and quietly, the Demised Premises in the same good condition they are now in or shall hereafter be placed, ordinary wear and tear damage by casualty within the coverage of a standard fire insurance policy with extended coverage, excepted, and (b) remove its trade fixture or required equipment and furnishings from the Demised Premises (unless it is then in default hereunder in which event it will not be permitted to effect such removal, or unless removal of the trade fixture will damage any portion of the Demised Premises) and to repair promptly any damage caused by such removal.
 19.
 Alterations. Tenant shall not make any exterior or structural alterations to the Premises without Landlord’s prior written approval in its sole discretion. Tenant may make interior, non-structural alterations and improvements to the Premises after Tenant has obtained Landlord’s prior written approval (which approval shall not be unreasonably withheld or delayed) of the plans and specifications of the work to be performed and has satisfied Landlord’s requirements for bonding, insurance and other contractor requirements. All alterations and improvements shall be performed in a first-class manner. In no event shall Tenant make any change to the Premises that alters the character of the Premises, lessens the value of the Premises or violates any laws or other legal requirements or the provisions of any mortgage on the Demised Premises.
 20.
 Improvements to Become Landlord’s. Tenant agrees that all additions and other improvements presently installed in the Demised Premises or installed by 
 6
 

 Tenant, including, without limitation, all electric wiring, electric fixtures, light fixtures, air conditioning systems, screens, doors, awnings, awning frames, canopies, bar tops, stove/oven hoods, pylons, and floor coverings shall immediately become the property of Landlord, and shall not be removed by Tenant at the expiration or earlier termination of this Lease, unless Tenant is requested to do so by Landlord, in which event Tenant agrees to do so and to repair promptly any damage caused by any such removal.
 21.
 Tenant’s Liability Insurance.
 (a) Tenant agrees that it shall defend, indemnify and hold harmless Landlord from and against any and all manner of claims, demands, actions, suits, costs, losses and expenses, liability, damages, settlements and claims for damages, debts, liens, charges (including reasonable attorney’s fees and the cost of defending any claim, action or suit), whether for bodily injury, sickness, disease, death, property damage or otherwise, arising from the use and occupancy of the Demised Premises or the operation of Tenant’s business thereon; provided, however, that this clause shall not apply to injury or damage caused by Landlord’s own willful act or omission, negligence or Landlord’s failure to make any repair (which Landlord has herein agreed to make) within a reasonable time after Tenant’s written notice of the need therefore. It is agreed that the above hold harmless and indemnification includes, but is not limited to, any liability of Landlord arising from any leakage, seepage or contamination from aboveground or underground tanks, lines and appurtenant facilities. Tenant will, at all times commencing on the date of delivery of possession of the Demised Premises to Tenant, at its own cost and expense, carry with a company or companies, satisfactory to Landlord, public liability insurance (in form and amounts of coverage reasonably satisfactory to Landlord) on the Demised Premises, with limits of not less than One Million Dollars ($1,000,000.00) for injury or death to one person and Two Million Dollars ($2,000,000.00) for injury or death to more than one person, and property damage of Five Hundred Thousand Dollars ($500,000.00) for each accident, which insurance shall be written or endorsed so as to protect Landlord and Tenant, as their respective interests may appear. Every policy or policies shall contain a provision insuring Tenant against all liability which Tenant might have under the foregoing indemnity provision. Tenant covenants that certificates of all such insurance policies shall be delivered to Landlord promptly without demand. Such policy shall also contain a provision that it may not be terminated without thirty (30) days paid written notice to Landlord. If Tenant fails to provide such insurance, Landlord may, but shall not be required to, obtain such insurance and collect the cost thereof as a part of the rent herein reserved. Landlord shall have the right to increase the amount of minimum coverages required hereunder upon ninety (90) days written notice to Tenant.
 7
 

 

 (b) Tenant and all those claiming by, through or under Tenant, shall store their property in, and shall occupy and use the Demised Premises solely at their own risk, and Tenant and all those claiming by, through or under Tenant hereby release Landlord, to the full extent permitted by law, from all claims of every kind, including loss of life, personal or bodily injury, damage to merchandise, equipment, fixtures or other property, or damage to business for business interruption, arising directly or indirectly, out of or from or on account of Tenant’s occupancy and use, or resulting from any present or future condition or state of repair thereof. Landlord shall not be responsible or liable at any time to Tenant, or to those claiming by, through or under Tenant, for any loss of life, bodily or personal injury or damage to property or business, or for business interruption, that may be occasioned by the acts, omissions or negligence of any other persons. Landlord shall not be responsible at any time for any defects, latent or otherwise in the Demised Premises or any of the equipment, machinery, utilities, appliances or apparatus therein, nor shall Landlord be responsible or liable at any time for loss of life, or injury or damage to any person or to any property or business of Tenant, or those claiming by, through or under Tenant, or any other person caused by or resulting from the bursting, breaking, leak running, seeping, overflowing or backing up of water, steam, gas, petroleum products of any kid, sewage, snow or ice from or in any part of the Demised Premises or caused by or resulting from acts of God or the elements, or resulting from any defect or negligence in the occupancy, construction, operation or use of the building or improvements in the Demised Premises and the equipment, fixtures, machinery, appliance or apparatus thereon, unless caused by Landlord’s own negligence.
 22.
 Fire Insurance. Tenant covenants that it will keep the Demised Premises insured against damaged by fire and other hazard with “all risk” coverage in an amount not less than one hundred percent (100%) of the replacement cost thereof.
 23.
 Mechanic’s Liens. Tenant shall not permit any mechanic’s, materialman’s or similar lien to stand against any portion of the Demised Premises for any labor performed or material furnished in connection with any work performed or caused to be performed by Tenant. If any such lien is filed against the Demised Premises, Tenant shall discharged such lien by paying the amount secured thereby or providing a bond within twenty (20) days after it was filed and if Tenant fails to do so Landlord may discharge the lien without inquiring into the validity thereof and Tenant shall promptly reimburse Landlord for any amount so expended.
 

 8
 

 

 24.
 Damage By Fire or Other Casualty. In the event the Demised Premises, or any part thereof, shall be damaged by fire or other casualty during the term, Tenant agrees that it will restore the Demised Premises with reasonable dispatch, to substantially the same condition they were in prior to such damage and Tenant shall be entitled to receive insurance proceeds covering such casualty, for purposes of making restoration, and if the Demised Premises are rendered wholly or partially untenable as a result of such damage, the minimum rental payable hereunder shall be equitably abated (according to the loss of use) during the period intervening between the date of such damage and the date the Demised Premises are restored. Anything in the foregoing to the contrary notwithstanding, if such damage occurs during the last two (2) years of the term, and if such damage exceeds fifty percent (50%) of the then insurable value of the Demised Premises, either Landlord or Tenant may terminate this Lease as of the date of such damage, by giving to the other written notice of its intention so to do within thirty (30) days after the date such damage occurs. If this Lease is so terminated, the rental payable hereunder shall be abated as of the date of such damage, and Tenant shall remove all of its property from the Demised Premises within thirty (30) days after the notice of termination is given.
 25.
 Condemnation. In the event that the whole of the Demised Premises are taken by the exercise of powers of eminent domain (or sold to the holder of such power, pursuant to a threatened taking) this Lease shall terminate as of the date of such taking. In the event any material portion of the Demised Premises is taken by the exercise of the power of eminent domain (or sold to the holder of such power pursuant to a threated taking), this Lease may, at the option of the Landlord or Tenant be terminated by written notice given to the other within sixty (60) days after such taking or sale occurs. If this Lease is not so terminated, Landlord covenants that it will at its own expense, promptly after the lapse of said sixty (60) days, repair such damage and do such work as may be required to repair and rebuild the Demised Premises as nearly as may be to the condition it was in immediately prior to such taking; provided, however, that whether or not this Lease is so terminated, the minimum rental payable hereunder shall be equitably abated, (according to the loss of use) from the date of such taking. Tenant shall have no right in or to the proceeds of any award made in such condemnation.
 26.
 No Representations by Landlord. Tenant agrees that Landlord has not made any representations, express or implied, with respect to Federal, State or municipal laws or ordinances applicable to the Demised Premises or the property of which the Demised Premises constitute a part (including, without limitation, laws or ordinances 
 9
 

 relating to Zoning or fire walls), and Tenant shall not have the right to terminate this Lease, nor shall it be entitled to any abatement of rent payable hereunder or any claim for damages, in the event the Demised Premises cannot be used by Tenant, in whole or in part, for the purpose for which Tenant intends to use the same.
 27.
 Assignment and Subletting. Tenant covenants that it will not assign this Lease, or sublet or permit any other person to occupy part or all of the Demised Premises, without Landlord’s prior written consent, which consent shall not be unreasonably withheld.
 28.
 Default and Remedies. (a) Defaults. The occurrence of any one or more of the following events (“Defaults”) shall constitute a default and breach of this Lease by Tenant: (i) Tenant fails to pay any Minimum Rent or any other Rent payments owed under this Lease within ten (10) calendar days of the date on which such payment was due; (ii) Tenant fails to observe and perform any of the other terms, covenants and/or conditions of this Lease, and such default shall continue for more than fifteen (15) days after written notice from Landlord to Tenant (however, if a default under this item (ii) cannot reasonably be cured within fifteen (15) days, and Tenant has promptly commenced the cure within such time and is diligently proceeding to complete the cure, then Tenant shall have reasonable extra time (not to exceed sixty (60) days to complete the cure); (iii) Tenant fails to pay when due Minimum Rent or any other Rent owed under this Lease three (3) or more times in any period of twelve (12) consecutive months; (iv) the Premises is abandoned, vacated or closed for business to the public (other than for fire, casualty or condemnation), or Tenant fails to open for business to the public in the Premises within sixty (60) days after the Commencement Date; or (v) a case is commenced or a petition is filed by or against Tenant under any chapter of the federal Bankruptcy Code, or there is filed by or against Tenant, or any successor tenant then in possession, in any court pursuant to any statute or law, a petition for appointment of a trustee or receiver, an assignment for the benefit of creditors, or reorganization (unless the petition is filed or case commenced by a party other than Tenant and is withdrawn or dismissed within thirty (30) days after the date of its filing).
 (b)
 Remedies. Upon the occurrence and continuance of a Default, Landlord, without notice to Tenant in any instance (except where expressly provided for below) may do any one or more of the following: (i) apply the Security Deposit (if any) toward the satisfaction and cure of such Default; (ii) reenter the Premises, by any suitable action or proceeding at law, or without judicial process if Landlord so elects, without being liable for any prosecution therefor or damages therefrom, and repossess and enjoy the Premises; (iii) elect to terminate this Lease upon not less than ten (10) days written notice to Tenant, at which time the term of this Lease shall expire, but with Tenant’s liability 
 10
 

 under all of the provisions of this Lease to continue; or (iv) exercise any other legal or equitable rights or remedies available to Landlord, including those additional rights set forth in this Lease. In exercising any of the above remedies, Landlord may remove Tenant’s property from the Premises and store the same at Tenant’s expense without resort to legal process and without Landlord being deemed guilty of trespass or becoming liable for any loss or damage occasioned thereby, and Landlord may also sell such property at public or private sale, with the proceeds being applied to costs of sale and storage (including reasonable attorney’s fees) and amounts owed to Landlord under this Lease. Tenant waives any rights to re-enter the Premises and any rights of redemption.
 Tenant understands that Landlord may re-let, in one or more leases, all or part of the Premises (or a premises including space in addition to the Premises), either in Landlord’s own right or as agent for Tenant, accepting any rents then obtainable, for a term or terms that may be greater or less than the balance of the Term of this Lease, and Landlord may grant concessions or free rent without in any way affecting Tenant’s liability for the Rent payable under this Lease. However, Tenant understands that Landlord shall be under no duty to re-let the Premises and that Tenant’s liability under this Lease shall not be affected or diminished in any way whatsoever, for Landlord’s failure to re-let the Premises, or if the Premises are re-let, for Landlord’s failure to collect the rentals under such re-letting. In connection with any re-letting, Landlord may make or do any alterations, repairs, painting and decorations (“Re-letting Preparations”) to the Premises which Landlord considers advisable and necessary in its sole judgment, and such Re-letting Preparations shall not release Tenant from any liability under this Lease. 
 (c)
 Damages. If a Default occurs, Tenant shall remain liable for (i) all Rent and damages that may be or sustained by Landlord up to the time this Lease terminates or Landlord takes possession of the Premises, whichever occurs later, and the performance of all other obligations of Tenant accruing under this Lease through such date (collectively “Accrued Damages”); (ii) all reasonable costs, fees and expenses (including without limitation attorney’s fees and expenses, brokerage commissions and fees) incurred by Landlord in pursuit of its remedies under this Lease and in renting the Premises to others from time to time (including Re-letting Preparations) (all such Accrued Damages, costs, fees and expenses being referred to collectively as the “Default Damages”); and (iii) Future Damages, which, at the election of Landlord, shall be either: (i) the amount (the “Deficiency”) by which (A) the Rent reserved under this Lease until the expiration date of the Term exceeds (B) the amount of rent, if any, that Landlord shall receive during the same period from others to whom the Premises may be rented, from 
 11
 

 which Landlord may deduct all Default Damages owing to Landlord; such Deficiency to be paid in monthly installments by Tenant on the first day of each calendar month; or (ii) an amount equal to the present value of the sum of the Rent reserved under this Lease until the expiration date of the Term plus the Default Damages owed by Tenant, from which sum there shall be deducted the present value of the fair market rental value of the Premises as determined by an independent real estate appraiser designated by Landlord; Future Damages under this item (ii) shall be payable to Landlord in one lump sum on demand and shall bear interest at the Default Rate until paid. For the above purposes “present value” shall be computed using a discount rate equal to one percentage point above the discount rate then in effect at the Federal Reserve Bank nearest to the location of the Facility.
 (d)
 Remedies Cumulative. All remedies of Landlord shall be cumulative. Acceptance by Landlord of delinquent rent after Default shall not cure such Default nor entitle Tenant to possession of the Premises.
 (e)
 Attorney’s Fees. Tenant agrees to pay all costs incurred by Landlord on account of Tenant’s default hereunder including, but not limited to, collection costs, court costs, and reasonable attorney’s fees.
 29.
 Estoppel Certificate. Within ten (10) days after written request of Landlord, Tenant shall certify by a duly executed and acknowledged written instrument to any mortgagee or purchaser, or proposed mortgagee or proposed purchaser, or any other person, firm or corporation specified by Landlord, as to the validity in force and effect of this Lease, as to the existence of any default on the part of any party thereunder, as to the existence of any offsets, counterclaims, or defenses thereto on the part of Tenant, and as to any other matters as may be reasonably requested by Landlord, all without charge and as frequently as Landlord deems necessary. Tenant’s failure or refusal to deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in full force and effect without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord’s performance or obligations hereunder, and (iii) that not more than one month’s installment of minimum rent has been paid in advance of the due date.
 30.
 Notices. Any notice herein provided for to be given to Landlord shall be deemed to be given if and when posted in United States registered or certified mail, postage prepaid, or standard overnight delivery addressed to Landlord, attn.: Cathy McQuade, 324 Brentmeade Drive, Yorktown, VA 23693, with copy to Landlord’s 
 12
 

 attorney, H. Alexander Johnson, Esquire, at Pender & Coward, P.C., 222 Central Park Avenue, Suite 400, Virginia Beach, VA 23462, and any notice herein provided for to be given to Tenant shall be deemed to be given if and when posted in United States registered or certified mail, or standard overnight delivery addressed to Tenant at the Demised Premises.
 31.
 Quiet Enjoyment. Subject to the terms, covenants and conditions set forth in this Lease, and further subject to any ground lease, mortgage or deed of trust to which this Lease is or shall be subordinate, Landlord covenants that Tenant shall have and enjoy quiet and peaceable possession of the Demised Premises during the term hereof.
 32.
 Entire Agreement. This Lease contains the entire agreement between parties hereto, and it cannot be altered or modified in any way except in writing signed by parties hereto.
 33.
 No Waivers. Any failure of either party hereto to insist upon strict observance of any covenant, provision or condition of this Lease in any one or more instances shall not constitute or be deemed a waiver, at the time or thereafter, of such or any other covenant, provision or condition of this Lease.
 34.
 Successors and Assigns. This Lease and all the terms, covenants, conditions, and provisions herein contained, shall be binding upon and shall inure to the benefits of the parties hereto and their respective personal representatives, heirs, successors and (if and when assigned in accordance with the provisions hereof) assigns.
 

 

 

 

 

 13
 

 

 

 IN WITNESS WHEREOF the Landlord and Tenant hereto have caused this Lease to be executed in their names below.
 LANDLORD
 Charters, LLC
 By /s/ Catherine McQuade,
 CATHERINE MCQUADE, MANAGER
 By /s/ Mark Bryan
 MARK BRYAN, MANAGER
 TENANT:
 YORK RIVER ELECTRIC, INC.
 By /s/
     President
 STATE OF VIRGINIA
 CITY OF YORK
 The foregoing instrument was acknowledged before me this 1st day of January, 2011 by CATHERINE MCQUADE, manager CHARTERS, LLC on behalf of the limited liability company.
 /s/Carlotto Raye Manring
 Notary Public
 My commission expires 10/31/15
 My Registration No: 7140671
 The foregoing instrument was acknowledged before me this 1st day of January, 2011 by CATHERINE MCQUADE, President of York river Electric, Inc., who is personally known to me or has presented sufficient identification.
 /s/Carlotto Raye Manring
 Notary Public
 My commission expires 10/31/15
 My Registration No: 7140671
 14
 

 

 EXHIBIT B: COMMERCIAL LEASE
 THIS COMMERCIAL LEASE, (hereinafter referred to as the “Lease” or “Commercial Lease”), made as of this 1st day of January, 2011, by and between CHARTERS. LLC, a Virginia limited liability company (“Landlord”), with an address of 108 Production Drive, Yorktown, VA 23693, and YORK RIVER ELECTRIC, INC., a Virginia corporation (“Tenant”), with an address of 108 Production Drive, Yorktown, Virginia 23693.
 W I T N E S S E T H:
 In consideration of the mutual promises contained herein, and of other consideration, the Landlord and Tenant do herby covenant and agree as follows:
 1.
 Premises. (hereinafter called the “Demised Premises”). Landlord herby leases and demises unto Tenant, and Tenant herby takes and leases from Landlord, that certain property known by the current system of street numbering as 108 Production Drive, Yorktown, Virginia 23693, together with the improvements thereon.
 2.
 Term/Renewal Option.
 (a) The term of this lease shall be for a period of Ten (10) years, commencing on the 1st day of January, 2011, and ending on the 31st day of December, 2020 (the “Initial Term”).
 (b) If Tenant is not in default in the performance of any of the terms and conditions of this Lease, Tenant shall have the option to extend the Term of this Lease for two (2) additional periods of five (5) years each (each, an “Additional Term”) by giving notice of Tenant’s intent to renew, in writing, to Landlord not less than one hundred twenty (120) days prior to the end of the Initial Term or any Additional Term. The Minimum Rent for the Demised Premises shall be payable on the basis of the annual Minimum rent set forth below for the Lease Year in question, with the monthly payments of the Minimum Rent also to be as set forth below:
 

 

 

 

 1
 

 

 	 	 	
	 Lease Year
	 Annual Minimum Rent
	 Monthly Minimum Rent

	 Initial Term:
	 

	 

	 Lease Years 1-2 (Commences 1/1/11)
	 $30,000.00
	 $2,500.00

	 Lease Year 3-4 (Commences 1/1/13)
	 $30,600.00
	 $2,550.00

	 Lease Year 5-6 (Commences 1/1/15)
	 $31,212.00
	 $2,601.00

	 Lease Year 7-8 (Commences 1/1/17)
	 $31,826.24
	 $2,653.02

	 Lease Year 9-19
	 $32,472.96
	 $2,706.08

	 Renewal Terms:
	 

	 

	 Lease Year 11-15
	 $33,122.42 in Year 11, adjusted every two (2) years by 2%
	 

	 Lease Years 16-20
	 $34, 460.57 in Year 15, adjusted every two (2) years by 2%
	 

  

 In the event that Tenant exercises any renewal option, all terms of this Lease shall remain the same except that the Annual Rent shall increase as provided for herein.
 3.
 Purpose. The Demised Premises shall be used for the purpose of conducting the business operations of the Tenant as an electric company and such other lawful purposes as may be approved in writing by the Landlord. Any change in type of use or of any or all of the Demised Premises by Tenant must be approved in advance by Landlord in writing.
 4.
 Rent.
 (a) Tenant covenants to make all rental payments to Landlord at 324 Brentmeade Drive, Yorktown, VA 23693, or to other such location as requested by Landlord, in writing, without prior demand therefore being made.
 (b) Wherever it is provided in this Lease that Tenant is requested to make any payment to Landlord other than minimum rent, such payment shall be deemed to be additional rent and all remedies applicable to the nonpayment of rent shall be applicable thereto. Minimum rent and additional rent shall be paid without counterclaim, setoff, deduction or defense.
 2
 

 

 5.
 Late Payments. Rent is due on the first (1st) day of each month. Tenant covenants and agrees to pay a late charge of five percent (5%) or one hundred dollars ($100.00), whichever is greater, if payment is not received by close of business on the fifth (5th) day of the month. Any sum not paid by close of business on the fifth (5th) day of the month shall be past due, and interest shall accrue at the rate of EIGHTEEN PERCENT (18%) per annum, payable monthly, on all rents (including minimum rent and additional rent) and all other sums due under this Lease from the time said rents or sums accrue if they become past due, Landlord expressly reserving all other rights and remedies provided herein or by law in respect thereto. Tenant further agrees to pay (or to reimburse Landlord promptly if Landlord elects to pay) any and all attorney’s fees, in an amount of twenty-five percent (25%) of the total balance in arrears, or the actual amount as incurred by Landlord, whichever is greater, and court costs incurred in connection with the collection of delinquent rents and/or any enforcement of any Lease provisions due Landlord under this Lease, whether or not affirmative legal action is commenced.
 6.
 Payments by Tenant. In addition to the Rent, Tenant shall pay to the parties respectively entitled thereto all taxes, impositions, insurance premiums, operating charges, maintenance charges, construction costs (except as set forth herein), capital repairs and improvements (except as set forth herein), utilities and any other charges, costs and expenses which arise or may be contemplated under any provisions of this Lease, involving or related to the interior of the Demised Premises during the term hereof. Notwithstanding the aforesaid, Tenant shall not be responsible for charges, costs and expenses which may arise or may be contemplated under any provisions of this lease, except as otherwise specifically stated in this Lease, as to the exterior of the building, other than cosmetic maintenance of the façade. All such charges, costs, and expenses shall constitute additional rent, and upon failure of Tenant to pay any of such costs, charges or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of Tenant to pay rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant, and that Tenant shall in no event be entitled to abatement of or reduction in rent payable under this Lease, except as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties. 
 7.
 Trade Fixtures. Tenant agrees, at its own cost and expense, to fixture the Demised Premises with new or existing trade fixtures or required equipment and furnishings. All trade fixtures installed in the Demised Premises by Tenant shall remain Tenant’s property, except as otherwise specifically stated in this Lease, provided 
 3
 

 however, that nothing herein shall be deemed to affect Landlord’s remedy of distraint. Tenant agrees to repair (or to reimburse Landlord for the cost of repairing) any damage to the Demised Premises occasioned by the installation or removal of said trade fixtures or required equipment and furnishings.
 8.
 Tenant’s Personal Property Taxes. Tenant shall pay before delinquency, as additional rent, all taxes levied or assess on Tenant’s fixtures, equipment and personal property in and on the Demised Premises, whether or not affixed to the real property.
 9.
 Tenant’s Repairs. Tenant covenants that it will, at all times during the term and at its own cost and expense, keep the Demised Premises (including, the heating system and air conditioning system insofar as they are within the Demised Premises, toilets, pipes, plumbing, wires and conduits, electric lines, windows, fixtures, equipment, gutter, downspouts, walls (inside), all glass windows and doors, signs, and any and all interior components or parts of the Demised Premises) in a good and safe condition of repair and in good working order (making such renewals and replacements as may be necessary), unless the need therefore is occasioned by fire or other casualty covered by Tenant’s fire and extended coverage insurance policy, in which event such repair and replacement shall be an expense of Landlord to the extent of such coverage. Tenant understands and agrees that it (not Landlord) shall be responsible for any damage caused by condensation in or around the duct work within the Demised Premises used for heating and/or air conditioning.
 10.
 Landlord’s Repairs and Right of Entry. Upon not less than twenty four (24) hours prior notice, except in the event of emergencies, Landlord, its agents, employees and contractors, shall have the right, from time to time, to enter and use insofar as may be necessary the Premises for the purpose of making repairs, accompanied by a Tenant representative. Tenant shall not be entitled to any reduction in rent or to any claim for damages by reason of any inconvenience, annoyance, and/or injury to business arising out of any repairs made by Landlord pursuant to this Section.
 11.
 Tenant’s Care of Building, Land, etc. Tenant covenants and agrees that it will, at all times during the term hereof, keep the Demised Premises, including sidewalks, clean from obstruction, rubbish, dirt, snow and ice. This duty and covenant of the Tenant to keep sidewalks clean and free from obstruction shall extend to and include not only sidewalks connected or adjacent to the Demised Premises, but also sidewalks connected to or adjacent to buildings or structures adjacent to the Demised Premises, to the extent that Tenant can lawfully access the aforesaid sidewalks. 
 4
 

 Tenant shall sweep and clean all such sidewalks on a nightly basis. Tenant covenants and agrees that it will not allow any person to smoke or loiter on the Demised Premises or the aforesaid sidewalks, and will take all lawful steps necessary to prevent smoking or loitering on the Demised Premises or the aforesaid sidewalks. Tenant shall place all trash, rubbish and garbage in a proper closed receptacle and shall pay all costs incident to the removal thereof. Notwithstanding anything to the contrary, Tenant shall take premises “as is” and will be responsible for all maintenance of the interior of the Demised Premises, as well as any signs.
 12.
 Miscellaneous Covenants of Tenant. Tenant covenants that: i) it will comply with all Federal, State and/or municipal laws, ordinances and regulations relating to its business conducted in the Demised Premises; ii) it will promptly pay for all electricity, gas, water and other utilities consumed on, and all sewage disposal charges assessed against, the Demised Premises; iii) it will not use, or permit to be used, the Demised Premises for any illegal or immoral purpose; iv) it will not, without the prior written consent of Landlord (which shall not be unreasonably withheld), cause or allow any advertising sign to be erected, installed, painted, displayed or maintained on the exterior of the building of which the Demised Premises constitute a part; v) it will keep all signs installed (with the consent of Landlord) on the exterior of the building of which the Demised Premises constitute a part, freshly painted, in good repair and operating condition at all times; vi) it will not without the prior written consent of Landlord: (a) make any improvements to the Demised Premises, and (b) hold a fire, bankruptcy, going-out-of-business or auction sale; vii) it will permit Landlord or its representatives (a) to enter the Demised Premises during the last six (6) months of the term for the purpose of exhibiting the Demised Premises to prospective Tenants, and (b) to place a “For Rent” sign on the Demised Premises during such period of time.
 13.
 Insects and Rodents. Tenant covenants that it will, at its own expense, take such steps as shall be necessary to keep the Demised Premises free of termites, roaches, rodents, insects and other pests and that it will save Landlord harmless from any damage caused thereby.
 14.
 Damage by Vandals. If the doors, window frames, glass or any part of the exterior of the Demised Premises are damaged by persons breaking, or attempting to break, into the Demised Premises, or by vandals, Tenant covenants to repair immediately at its own expense, any and all such damage. If any portions of the Demised Premises are damaged by Tenant or any third party, including, without limitation, guests, clients or invitees of the Tenant, Tenant covenants to repair such damages immediately at its own expense.
 5
 

 15.
 Tenant’s Failure to Comply. Tenant agrees that if it fails to perform any obligation required by this Lease, Landlord, in addition to other remedies provided by law and/or this Lease, may correct (or have corrected) the default at the cost and expense of Tenant.
 16.
 Fire Hazard. Tenant covenants that, without the prior written consent of Landlord, it will not do anything which will increase the rate of fire insurance on the building of which the Demised Premises constitutes a part, and that if such consent is given, Tenant will pay Landlord the amount of the increase in the cost of such insurance, as and when the premiums become due.
 17.
 Care of Roof. Tenant agrees that it will not (directly or by sufferance) place any debris on the roof of the building of which the Demised Premises constitutes a part or cut, drive nails into or otherwise manipulate the roof in anyway without prior consent of Landlord.
 18.
 Condition on Termination. Tenant covenants that it will upon the expiration or earlier termination of this Lease, (a) deliver up to Landlord, peaceably and quietly, the Demised Premises in the same good condition they are now in or shall hereafter be placed, ordinary wear and tear damage by casualty within the coverage of a standard fire insurance policy with extended coverage, excepted, and (b) remove its trade fixture or required equipment and furnishings from the Demised Premises (unless it is then in default hereunder in which event it will not be permitted to effect such removal, or unless removal of the trade fixture will damage any portion of the Demised Premises) and to repair promptly any damage caused by such removal.
 19.
 Alterations. Tenant shall not make any exterior or structural alterations to the Premises without Landlord’s prior written approval in its sole discretion. Tenant may make interior, non-structural alterations and improvements to the Premises after Tenant has obtained Landlord’s prior written approval (which approval shall not be unreasonably withheld or delayed) of the plans and specifications of the work to be performed and has satisfied Landlord’s requirements for bonding, insurance and other contractor requirements. All alterations and improvements shall be performed in a first-class manner. In no event shall Tenant make any change to the Premises that alters the character of the Premises, lessens the value of the Premises or violates any laws or other legal requirements or the provisions of any mortgage on the Demised Premises.
 20.
 Improvements to Become Landlord’s. Tenant agrees that all additions and other improvements presently installed in the Demised Premises or installed by 
 6
 

 Tenant, including, without limitation, all electric wiring, electric fixtures, light fixtures, air conditioning systems, screens, doors, awnings, awning frames, canopies, bar tops, stove/oven hoods, pylons, and floor coverings shall immediately become the property of Landlord, and shall not be removed by Tenant at the expiration or earlier termination of this Lease, unless Tenant is requested to do so by Landlord, in which event Tenant agrees to do so and to repair promptly any damage caused by any such removal.
 21.
 Tenant’s Liability Insurance.
 (a) Tenant agrees that it shall defend, indemnify and hold harmless Landlord from and against any and all manner of claims, demands, actions, suits, costs, losses and expenses, liability, damages, settlements and claims for damages, debts, liens, charges (including reasonable attorney’s fees and the cost of defending any claim, action or suit), whether for bodily injury, sickness, disease, death, property damage or otherwise, arising from the use and occupancy of the Demised Premises or the operation of Tenant’s business thereon; provided, however, that this clause shall not apply to injury or damage caused by Landlord’s own willful act or omission, negligence or Landlord’s failure to make any repair (which Landlord has herein agreed to make) within a reasonable time after Tenant’s written notice of the need therefore. It is agreed that the above hold harmless and indemnification includes, but is not limited to, any liability of Landlord arising from any leakage, seepage or contamination from aboveground or underground tanks, lines and appurtenant facilities. Tenant will, at all times commencing on the date of delivery of possession of the Demised Premises to Tenant, at its own cost and expense, carry with a company or companies, satisfactory to Landlord, public liability insurance (in form and amounts of coverage reasonably satisfactory to Landlord) on the Demised Premises, with limits of not less than One Million Dollars ($1,000,000.00) for injury or death to one person and Two Million Dollars ($2,000,000.00) for injury or death to more than one person, and property damage of Five Hundred Thousand Dollars ($500,000.00) for each accident, which insurance shall be written or endorsed so as to protect Landlord and Tenant, as their respective interests may appear. Every policy or policies shall contain a provision insuring Tenant against all liability which Tenant might have under the foregoing indemnity provision. Tenant covenants that certificates of all such insurance policies shall be delivered to Landlord promptly without demand. Such policy shall also contain a provision that it may not be terminated without thirty (30) days paid written notice to Landlord. If Tenant fails to provide such insurance, Landlord may, but shall not be required to, obtain such insurance and collect the cost thereof as a part of the rent herein reserved. Landlord shall have the right to increase the amount of minimum coverages required hereunder upon ninety (90) days written notice to Tenant.
 7
 

 

 (b) Tenant and all those claiming by, through or under Tenant, shall store their property in, and shall occupy and use the Demised Premises solely at their own risk, and Tenant and all those claiming by, through or under Tenant hereby release Landlord, to the full extent permitted by law, from all claims of every kind, including loss of life, personal or bodily injury, damage to merchandise, equipment, fixtures or other property, or damage to business for business interruption, arising directly or indirectly, out of or from or on account of Tenant’s occupancy and use, or resulting from any present or future condition or state of repair thereof. Landlord shall not be responsible or liable at any time to Tenant, or to those claiming by, through or under Tenant, for any loss of life, bodily or personal injury or damage to property or business, or for business interruption, that may be occasioned by the acts, omissions or negligence of any other persons. Landlord shall not be responsible at any time for any defects, latent or otherwise in the Demised Premises or any of the equipment, machinery, utilities, appliances or apparatus therein, nor shall Landlord be responsible or liable at any time for loss of life, or injury or damage to any person or to any property or business of Tenant, or those claiming by, through or under Tenant, or any other person caused by or resulting from the bursting, breaking, leak running, seeping, overflowing or backing up of water, steam, gas, petroleum products of any kid, sewage, snow or ice from or in any part of the Demised Premises or caused by or resulting from acts of God or the elements, or resulting from any defect or negligence in the occupancy, construction, operation or use of the building or improvements in the Demised Premises and the equipment, fixtures, machinery, appliance or apparatus thereon, unless caused by Landlord’s own negligence.
 22.
 Fire Insurance. Tenant covenants that it will keep the Demised Premises insured against damaged by fire and other hazard with “all risk” coverage in an amount not less than one hundred percent (100%) of the replacement cost thereof.
 23.
 Mechanic’s Liens. Tenant shall not permit any mechanic’s, materialman’s or similar lien to stand against any portion of the Demised Premises for any labor performed or material furnished in connection with any work performed or caused to be performed by Tenant. If any such lien is filed against the Demised Premises, Tenant shall discharged such lien by paying the amount secured thereby or providing a bond within twenty (20) days after it was filed and if Tenant fails to do so Landlord may discharge the lien without inquiring into the validity thereof and Tenant shall promptly reimburse Landlord for any amount so expended.
 

 8
 

 

 24.
 Damage By Fire or Other Casualty. In the event the Demised Premises, or any part thereof, shall be damaged by fire or other casualty during the term, Tenant agrees that it will restore the Demised Premises with reasonable dispatch, to substantially the same condition they were in prior to such damage and Tenant shall be entitled to receive insurance proceeds covering such casualty, for purposes of making restoration, and if the Demised Premises are rendered wholly or partially untenable as a result of such damage, the minimum rental payable hereunder shall be equitably abated (according to the loss of use) during the period intervening between the date of such damage and the date the Demised Premises are restored. Anything in the foregoing to the contrary notwithstanding, if such damage occurs during the last two (2) years of the term, and if such damage exceeds fifty percent (50%) of the then insurable value of the Demised Premises, either Landlord or Tenant may terminate this Lease as of the date of such damage, by giving to the other written notice of its intention so to do within thirty (30) days after the date such damage occurs. If this Lease is so terminated, the rental payable hereunder shall be abated as of the date of such damage, and Tenant shall remove all of its property from the Demised Premises within thirty (30) days after the notice of termination is given.
 25.
 Condemnation. In the event that the whole of the Demised Premises are taken by the exercise of powers of eminent domain (or sold to the holder of such power, pursuant to a threatened taking) this Lease shall terminate as of the date of such taking. In the event any material portion of the Demised Premises is taken by the exercise of the power of eminent domain (or sold to the holder of such power pursuant to a threated taking), this Lease may, at the option of the Landlord or Tenant be terminated by written notice given to the other within sixty (60) days after such taking or sale occurs. If this Lease is not so terminated, Landlord covenants that it will at its own expense, promptly after the lapse of said sixty (60) days, repair such damage and do such work as may be required to repair and rebuild the Demised Premises as nearly as may be to the condition it was in immediately prior to such taking; provided, however, that whether or not this Lease is so terminated, the minimum rental payable hereunder shall be equitably abated, (according to the loss of use) from the date of such taking. Tenant shall have no right in or to the proceeds of any award made in such condemnation.
 26.
 No Representations by Landlord. Tenant agrees that Landlord has not made any representations, express or implied, with respect to Federal, State or municipal laws or ordinances applicable to the Demised Premises or the property of which the Demised Premises constitute a part (including, without limitation, laws or ordinances 
 9
 

 relating to Zoning or fire walls), and Tenant shall not have the right to terminate this Lease, nor shall it be entitled to any abatement of rent payable hereunder or any claim for damages, in the event the Demised Premises cannot be used by Tenant, in whole or in part, for the purpose for which Tenant intends to use the same.
 27.
 Assignment and Subletting. Tenant covenants that it will not assign this Lease, or sublet or permit any other person to occupy part or all of the Demised Premises, without Landlord’s prior written consent, which consent shall not be unreasonably withheld.
 28.
 Default and Remedies. (a) Defaults. The occurrence of any one or more of the following events (“Defaults”) shall constitute a default and breach of this Lease by Tenant: (i) Tenant fails to pay any Minimum Rent or any other Rent payments owed under this Lease within ten (10) calendar days of the date on which such payment was due; (ii) Tenant fails to observe and perform any of the other terms, covenants and/or conditions of this Lease, and such default shall continue for more than fifteen (15) days after written notice from Landlord to Tenant (however, if a default under this item (ii) cannot reasonably be cured within fifteen (15) days, and Tenant has promptly commenced the cure within such time and is diligently proceeding to complete the cure, then Tenant shall have reasonable extra time (not to exceed sixty (60) days to complete the cure); (iii) Tenant fails to pay when due Minimum Rent or any other Rent owed under this Lease three (3) or more times in any period of twelve (12) consecutive months; (iv) the Premises is abandoned, vacated or closed for business to the public (other than for fire, casualty or condemnation), or Tenant fails to open for business to the public in the Premises within sixty (60) days after the Commencement Date; or (v) a case is commenced or a petition is filed by or against Tenant under any chapter of the federal Bankruptcy Code, or there is filed by or against Tenant, or any successor tenant then in possession, in any court pursuant to any statute or law, a petition for appointment of a trustee or receiver, an assignment for the benefit of creditors, or reorganization (unless the petition is filed or case commenced by a party other than Tenant and is withdrawn or dismissed within thirty (30) days after the date of its filing).
 (b)
 Remedies. Upon the occurrence and continuance of a Default, Landlord, without notice to Tenant in any instance (except where expressly provided for below) may do any one or more of the following: (i) apply the Security Deposit (if any) toward the satisfaction and cure of such Default; (ii) reenter the Premises, by any suitable action or proceeding at law, or without judicial process if Landlord so elects, without being liable for any prosecution therefor or damages therefrom, and repossess and enjoy the Premises; (iii) elect to terminate this Lease upon not less than ten (10) days written notice to Tenant, at which time the term of this Lease shall expire, but with Tenant’s liability 
 10
 

 under all of the provisions of this Lease to continue; or (iv) exercise any other legal or equitable rights or remedies available to Landlord, including those additional rights set forth in this Lease. In exercising any of the above remedies, Landlord may remove Tenant’s property from the Premises and store the same at Tenant’s expense without resort to legal process and without Landlord being deemed guilty of trespass or becoming liable for any loss or damage occasioned thereby, and Landlord may also sell such property at public or private sale, with the proceeds being applied to costs of sale and storage (including reasonable attorney’s fees) and amounts owed to Landlord under this Lease. Tenant waives any rights to re-enter the Premises and any rights of redemption.
 Tenant understands that Landlord may re-let, in one or more leases, all or part of the Premises (or a premises including space in addition to the Premises), either in Landlord’s own right or as agent for Tenant, accepting any rents then obtainable, for a term or terms that may be greater or less than the balance of the Term of this Lease, and Landlord may grant concessions or free rent without in any way affecting Tenant’s liability for the Rent payable under this Lease. However, Tenant understands that Landlord shall be under no duty to re-let the Premises and that Tenant’s liability under this Lease shall not be affected or diminished in any way whatsoever, for Landlord’s failure to re-let the Premises, or if the Premises are re-let, for Landlord’s failure to collect the rentals under such re-letting. In connection with any re-letting, Landlord may make or do any alterations, repairs, painting and decorations (“Re-letting Preparations”) to the Premises which Landlord considers advisable and necessary in its sole judgment, and such Re-letting Preparations shall not release Tenant from any liability under this Lease. 
 (c)
 Damages. If a Default occurs, Tenant shall remain liable for (i) all Rent and damages that may be or sustained by Landlord up to the time this Lease terminates or Landlord takes possession of the Premises, whichever occurs later, and the performance of all other obligations of Tenant accruing under this Lease through such date (collectively “Accrued Damages”); (ii) all reasonable costs, fees and expenses (including without limitation attorney’s fees and expenses, brokerage commissions and fees) incurred by Landlord in pursuit of its remedies under this Lease and in renting the Premises to others from time to time (including Re-letting Preparations) (all such Accrued Damages, costs, fees and expenses being referred to collectively as the “Default Damages”); and (iii) Future Damages, which, at the election of Landlord, shall be either: (i) the amount (the “Deficiency”) by which (A) the Rent reserved under this Lease until the expiration date of the Term exceeds (B) the amount of rent, if any, that Landlord shall receive during the same period from others to whom the Premises may be rented, from 
 11
 

 which Landlord may deduct all Default Damages owing to Landlord; such Deficiency to be paid in monthly installments by Tenant on the first day of each calendar month; or (ii) an amount equal to the present value of the sum of the Rent reserved under this Lease until the expiration date of the Term plus the Default Damages owed by Tenant, from which sum there shall be deducted the present value of the fair market rental value of the Premises as determined by an independent real estate appraiser designated by Landlord; Future Damages under this item (ii) shall be payable to Landlord in one lump sum on demand and shall bear interest at the Default Rate until paid. For the above purposes “present value” shall be computed using a discount rate equal to one percentage point above the discount rate then in effect at the Federal Reserve Bank nearest to the location of the Facility.
 (d)
 Remedies Cumulative. All remedies of Landlord shall be cumulative. Acceptance by Landlord of delinquent rent after Default shall not cure such Default nor entitle Tenant to possession of the Premises.
 (e)
 Attorney’s Fees. Tenant agrees to pay all costs incurred by Landlord on account of Tenant’s default hereunder including, but not limited to, collection costs, court costs, and reasonable attorney’s fees.
 29.
 Estoppel Certificate. Within ten (10) days after written request of Landlord, Tenant shall certify by a duly executed and acknowledged written instrument to any mortgagee or purchaser, or proposed mortgagee or proposed purchaser, or any other person, firm or corporation specified by Landlord, as to the validity in force and effect of this Lease, as to the existence of any default on the part of any party thereunder, as to the existence of any offsets, counterclaims, or defenses thereto on the part of Tenant, and as to any other matters as may be reasonably requested by Landlord, all without charge and as frequently as Landlord deems necessary. Tenant’s failure or refusal to deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in full force and effect without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord’s performance or obligations hereunder, and (iii) that not more than one month’s installment of minimum rent has been paid in advance of the due date.
 30.
 Notices. Any notice herein provided for to be given to Landlord shall be deemed to be given if and when posted in United States registered or certified mail, postage prepaid, or standard overnight delivery addressed to Landlord, attn.: Cathy McQuade, 324 Brentmeade Drive, Yorktown, VA 23693, with copy to Landlord’s 
 12
 

 attorney, H. Alexander Johnson, Esquire, at Pender & Coward, P.C., 222 Central Park Avenue, Suite 400, Virginia Beach, VA 23462, and any notice herein provided for to be given to Tenant shall be deemed to be given if and when posted in United States registered or certified mail, or standard overnight delivery addressed to Tenant at the Demised Premises.
 31.
 Quiet Enjoyment. Subject to the terms, covenants and conditions set forth in this Lease, and further subject to any ground lease, mortgage or deed of trust to which this Lease is or shall be subordinate, Landlord covenants that Tenant shall have and enjoy quiet and peaceable possession of the Demised Premises during the term hereof.
 32.
 Entire Agreement. This Lease contains the entire agreement between parties hereto, and it cannot be altered or modified in any way except in writing signed by parties hereto.
 33.
 No Waivers. Any failure of either party hereto to insist upon strict observance of any covenant, provision or condition of this Lease in any one or more instances shall not constitute or be deemed a waiver, at the time or thereafter, of such or any other covenant, provision or condition of this Lease.
 34.
 Successors and Assigns. This Lease and all the terms, covenants, conditions, and provisions herein contained, shall be binding upon and shall inure to the benefits of the parties hereto and their respective personal representatives, heirs, successors and (if and when assigned in accordance with the provisions hereof) assigns.
 

 

 

 

 

 13
 

 

 

 IN WITNESS WHEREOF the Landlord and Tenant hereto have caused this Lease to be executed in their names below.
 LANDLORD
 Charters, LLC
 By /s/ Catherine McQuade,
 CATHERINE MCQUADE, MANAGER
 By /s/ Mark Bryan
 MARK BRYAN, MANAGER
 TENANT:
 YORK RIVER ELECTRIC, INC.
 By /s/
     President
 STATE OF VIRGINIA
 CITY OF YORK
 The foregoing instrument was acknowledged before me this 1st day of January, 2011 by CATHERINE MCQUADE, manager CHARTERS, LLC on behalf of the limited liability company.
 /s/Carlotto Raye Manring
 Notary Public
 My commission expires 10/31/15
 My Registration No: 7140671
 The foregoing instrument was acknowledged before me this 1st day of January, 2011 by CATHERINE MCQUADE, President of York river Electric, Inc., who is personally known to me or has presented sufficient identification.
 /s/Carlotto Raye Manring
 Notary Public
 My commission expires 10/31/15
 My Registration No: 7140671
 14
 

 

 EXHIBIT D: [York River Electric, Inc. Letterhead]
 November 3, 2004
 Ms. Florine Duncan
 U.S. Small Business Administration
 Federal Building, Suite 11 50
 400 North 8th St.
 P.O. Box 10126
 Richmond, VA 23240-0126
 

 RE:
 Approval of Purchase of minority interest in York River Electric, Inc.
 

 Dear Ms. Duncan
 

 I am the President and majority stockholder of York River Electric, Inc. (YRE), an 8(a) certified business since February 14, 2001. I am writing SBA approval for the company to repurchase the outstanding stock of my business partner, George Martin. In accordance with provisions of the SBA 8(a) program, I am seeking SBA Approval prior to any changes in the ownership of the company.
 Last year in June 2003, my long time business partner, George Martin expressed a desire to retire at the end of 2003. At the time, Mr. Martin owned 980 shares (49%) of York River Electric, Inc. and he initially intended to sell all of his stock to Mark Bryan, a long time employee of YRE. At the time, YRE requested SBA approval of the transaction. Effective January 1, 2004, Mr. Martin sold 480 shares of his stock, which represented a 24% interest in the company to Mr. Bryan for $600,000 in the form of a cash payment and a promissory note. This transaction was approved by the SBA as evidenced by the SBA letter, dated May 5, 2004. Unfortunately, the transaction was delayed due to the length of time it took to get the SBA’s approval. A copy of the Stock Purchase Agreement, dated April 30, 2004 effective January 1, 2004 is enclosed.
 Mr Martin has still not retired from the company, but fully intends to retire by December 31, 2004. As such, he wishes to sell his remaining 25% interest in the company. The shareholders (McQuade, Martin and Bryan) met recently to discuss how best to buy Mr. Martin’s remaining interest in the company. The shareholders have all agreed in principle that the best course of action for the company and all parties involved is for YRE to repurchase Mr. Martin’s interest in the company. Currently, the company’s law firm and accounting firm are assisting with the valuation and draft legal documents to establish the price and the payment terms. We anticipate that YRE will repurchase Mr. Martin’s minority interest in the company for Fair Market Value with payment in the form of cash and the balance in a note payable.
 

 1
 

 The current and anticipated ownership of the stock stands as follows:

 	 	 	 	 	
	 Owner
	 Current # of shares held
	 Current % of interest in YRE
	 Anticipated # of shares held after repurchase
	 Anticipated % of interest in YRE after repurchase

	 MCQUADE
	 1,020
	 51%
	 1,020
	 68%

	 MARTIN
	 500
	 25%
	 0
	 0%

	 BRYAN
	 480
	 24%
	 480
	 32%

	  
	  
	  
	  
	  

	 TOTAL OUTSTANDING
	 2000
	 100%
	 1500
	 100%

  

 Other than the retirement of Mr. Martin, there are no other management changes planned. I have and will remain as the President of YRE with sole responsibility for all day to day management and oversight of the company. YRE requests SBA’s approval of this proposed transaction. Mr. Martin is anxious to retire and we would greatly appreciate SBA’s prompt approval of this change in ownership to effect Mr. Martin’s retirement.
 Please sign and date in the acceptance space provided at the bottom of this letter or send a letter indicating approval of this transaction as soon as possible. If you have any questions, or require additional information, please do not hesitate to contact me directly to discuss. I can be reached at 757-369-3673 or cmmcquade@yre.hrcoxmail.com. Thank you for your consideration.
 Sincerely
 /s/Catherine McQuade
 Cathy Mcquade
 President
 Cc:
  Tammy Proffitt
 SBA File
 SBA Approval of York River Electric, Inc. repurchase of Mr. George Martin’s 500 shares of stock
 Authorized Signature
 SBA Official Name and Title
 Date
 

 2
 

 

 EXHIBIT D: [Letterhead of McDermott, Roe & Walter]
 February 26, 2007
 Hugh J. Barlow, Senior Partner 
 GOODMAN & COMPANY, LLP 
 701 Town Center Drive, Suite 700 
 Newport News, VA 23606-4295
 VIA PRIORITY MAIL
 Re: Stock Purchase Effective January 1, 2006 -York River Electric, Inc. ("Corporation") 
 Dear Hugh: 
 As promised, enclosed please find copies of documents executed by Cathy and Mark whereby 
 the Corporation has repurchased 433 shares owned by Cathy. 
 I will provide you with a draft of the Buy-Sell Agreement for your review. 
 Very truly yours,
 McDERMOTT, ROE & WALTER
 /s/Patrick B. McDermott, Esq. 
 PBM/mes 
 enclosures 
 

 C: C. McQuade (wI enclosures) 
  
 

 

 

 

 YORK RIVER ELECTRIC. INC.
 RESOLUTION
 

 

 Came this day Catherine G. McQuade and Mark Bryan, Shareholders and Directors of the York River Electric, Inc. (the Corporation), upon Waiver of Notice, and resolved as follows: 
 

 WHEREAS, Catherine G. McQuade is the owner of 68% of the outstanding shares of common stock of the Corporation, to-wit, 1020 shares evidenced by Certificate No. 3 for 1020 shares of common stock of the Corporation; and, 
 

 WHEREAS, Mark Bryan is the owner of32% of the outstanding shares of common stock of the Corporation, to-wit, 480 shares evidenced by Certificate No. 9; and, 
 

 WHEREAS, the Directors of the Corporation have determined that it is in the best interest of the Corporation to purchase from Catherine G. McQuade as treasury stock 433 shares of common stock of the Corporation at Seven Hundred Fifty and 00/1 00 Dollars ($750.00) per share, a total sum of Three Hundred Twenty-Four Thousand Seven Hundred Fifty and 00/1 00 Dollars ($324,750.00); and, 
 

 WHEREAS, Catherine G. McQuade has agreed to accept said offer, 
 

 NOW, THEREFORE, it is RESOLVED as follows: 
 

 1.
 Catherine G. McQuade shall sell to the Corporation, and the Corporation shall purchase from Catherine G. McQuade, 433 shares of common stock of the Corporation for the sum of Three Hundred Twenty-Four Thousand Seven Hundred Fifty and 00/100 Dollars ($324,750.00), thus bringing her interest in the Corporation to 55% [see Attachment “A” to this Resolution]. 
 2.
 The purchase price for said stock purchase shall be payable as following: 
 1
 

 
 (i)
 A Promissory Note from York River Electric, Inc. to Catherine G. McQuade in the original principal amount of Three Hundred Twenty-Four Thousand Seven Hundred Fifty and 00/1 00 Dollars ($324,750.00), as described in the attached sample Promissory Note [see Attachment “B”]. 
 (ii)
 A Demand Promissory Note from York River Electric, Inc. to Catherine G. McQuade in the original principal amount of NINETEEN THOUSAND FIVE HUNDRED EIGHTY-FOUR and 43/100 DOLLARS ($19,584.43) as described in the attached sample Promissory Note [see Attachment “C” to this Resolution]. This Promissory Note represents interest calculated from January 1, 2006 to January 1, 2007 at the rate of 6% on a principal balance of $324,750.00. 
 3.
 Said purchased stock shall be retained as treasury stock of the Corporation until further action of the Board of Directors. 
 4.
 The foregoing shall be accomplished simultaneously with the adoption of this Resolution by the redemption of Certificate No. 3 by Catherine G McQuade. Further; the Corporation shall issue to Catherine G. McQuade Certificate No. 12 for 587 shares of common stock of the Corporation. 
 Notwithstanding the date of signing of this Resolution, the resolution and the transaction herein described are effective January 1, 2006. 
 

 Date: 2/21/07
 /s/Catherine G. McQuade, Director 
 

 Date: 2/21/07
 /s/Mark Bryan, Direct 
 

 

 

 

 

 2
 

 

 ATTACHMENT "A" TO RESOLUTION
 

 Catherine G. McQuade 
 Current Shares Owned (Redemption of Certificate No. 3)                1020 
 Shares sold to Corporation per Resolution and 
     Promissory Note in the amount of $324750.00                               -433 
 Total Retained Shares (Certificate No. 12)                                              587 
 

 Mark Bryan 
 Current Shares Owned (Certificate No. 9)                                              480 
 

 OUTSTANDING SHARES OF COMMON STOCK
 Effective January 1, 2006
 

 Catherine G. McQuade 
 587 
 .5501% 
 (55%) 
 Mark Bryan 
 480 
 .4499% 
 (45%) 
 1067 
 

 

 

 

 

 

 

 

 

 

 3
 

 

 ATTACHMENT "B" TO RESOLUTION
 SAMPLE PROMISSORY NOTE
 

 $324,750.00        Hampton, Virginia 
 February 21, 2007 
 

 FOR VALUE RECEIVED, the undersigned promises to pay CATHERINE G. McQUADE, or Order, the principal sum of THREE HUNDRED TWENTY-FOUR THOUSAND SEVEN HUNDRED FIFTY and 00/100 DOLLARS ($324,750.00), with interest commencing on January 1, 2007, at a rate 6.00% per annum on the unpaid balance until paid. The said principal and interest shall be payable at such place as the holder may designate in writing, as follows: 
 

 Principal and interest in quarterly installments of FORTY-THREE THOUSAND THREE HUNDRED NTNETY-FIVE AND 61/100 DOLLARS ($43,395.61) commencing on April 1, 2007, and continuing on the first day of each quarter thereafter until the principal and interest are fully paid, except that the entire indebtedness evidenced hereby, if not sooner paid, shall be due and payable on January 1, 2009, except as otherwise stated herein. 
 

 The right is reserved to prepay all or any part of the principal of this Note at any time without penalty. The amount of any partial payment shall be applied to the reduction of the principal, but shall not relieve the maker of the obligation to make consecutive installment payments as provided herein, as if such prepayment had not been made, until all amounts owing under this Note have been paid in full. 
 The noteholder may collect a "late charge" not to exceed any amount equal to five percent (5%) of any installment which i not paid within fifteen (15) days of the due date hereof. The failure to exercise this right at any time or times shall not be deemed a waiver of the right to collect such late charge at other time or times. 
 If default be made in the payment of any installment under this Note, and if such default is not made good prior to the due date of the next installment, the entire principal sum shall at once become due and payable without notice at the option of the holder of this Note. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. 
 The term "holder' as used in this Note refers to the named payee and successors and assigns of the named payee. 
 4
 

 

 Whenever used herein, the singular shall include the plural and vice versa, and the use of any gender shall include all others. 
 WITNESS the following signature and seal: 
 YORK RIVER ELECTRIC, INC. 
 By: /s/ Catherine G McQuade (SEAL) 
 CATHERINE G. McQUADE, President 
 By:/s/ Mark Bryan (SEAL) 
 MARK BRYAN, Secretary/Treasurer 
 

 STATE OF VIRGINTA 
 CITY OF HAMPTON, 
 I, the undersigned, a Notary Public in and for the City and State aforesaid, do certify that Catherine G. McQuade, President, on behalf of York River Electric, Inc., whose name is signed to the foregoing Promissory Note dated February 21, 2007, has acknowledged the same before me in my City and State aforesaid. 
 Given under my hand on ,_____________________ 2007. 
 __________________________
 Notary Public 
 My commission expires: _________________________
 STATE OF VIRGINA 
 CITY OF HAMPTON, 
 I, the undersigned, a Notary Public in and for the City and State aforesaid, do certify that Mark Bryan, Secretary/Treasurer, on behalf of York River Electric, Inc., whose name is signed to the foregoing Promissory Note dated February 21, 2007, has acknowledged the same before me in my City and State aforesaid. 
 Given under my hand on __________________________, 2007. 
 ______________________________
 Notary Public 
 My commission expires: __________________
 5
 

 ATTACHMENT "C" TO RESOLUTION
 

 SAMPLE PROMISSORY NOTE
 

 $19,584.43 
 Hampton, Virginia 
 February 21, 2007 
 FOR VALUE RECEIVED, the undersigned promises to pay CATHERINE G. McQUADE, or Order, the principal sum of NINETEEN THOUSAND FIVE HUNDRED EIGHTY-FOUR and 43/1 00 DOLLARS ($19,584.43), with interest commencing on April 1, 2007, at the rate of 6% per annum on the unpaid balance until paid. The said principal and interest shall be payable at such place as the holder may designate in writing, as follows: 
 ON DEMAND -PRINCIPAL AND INTEREST IN FULL
 The right is reserved to prepay all or any part of the principal of this Note at any time without penalty. The amount of any partial payment shall be applied to the reduction of the principal. 
 The term "holder" as used in this Note refers to the named payee and successors and assigns of the named payee. 
 Whenever used herein, the singular shall include the plural and vice versa, and the use of any gender shall include all others. 
 WITNESS the following signature and seal: 
 YORK RIVER ELECTRIC, INC 
 By: /s/ Catherine G. McQuade (SEAL) 
 CATHERINE G. McQUADE, President 
 By: /s/ Mark Bryan (SEAL) 
 MARK BRYAN, Secretary/Treasurer 
 

 

 

 

 6
 

 

 STATE OF VIRGINIA 
 CITY OF HAMPTON, 
 I, the undersigned, a Notary Public in and for the City and State aforesaid, do certify that Catherine G. McQuade, President, on behalf of York River Electric, Inc., whose name is signed to the foregoing Promissory Note dated February 21, 2007, has acknowledged the same before me in my City and State aforesaid. 
 Given under my hand on ___________________, 2007. 
 ___________________________
 Notary Public 
 My commission expires: _________________________
 

 STATE OF VIRGIIINIA 
 CITY OF HAMPTON, 
 I, the undersigned, a Notary Public in and for the City and State aforesaid, do certify that Mark Bryan, Secretary/Treasurer, on behalf of York River Electric, Inc., whose name is signed to the foregoing Promissory Note dated February 21, 2007, has acknowledged the same before me in my City and State aforesaid. 
 Given under my hand on _______________________,2007. 
 _____________________________
 Notary Public 
 

 My commission expires: ___________________________________
 

 

 

 

 

 7
 

 

 PROMISSORY NOTE
 $19,584.43
  Hampton, Virginia 
 February 21, 2007 
 FOR VALUE RECEIVED, the undersigned promises to pay CATHERINE G. McQUADE, or Order, the principal sum of NINETEEN THOUSAND FIVE HUNDRED EIGHTY-FOUR and 43/100 DOLLARS ($19,584.43), with interest commencing on April 1, 2007, at the rate of 6% per annum on the unpaid balance until paid. The said principal and interest shall be payable at such place as the holder may designate in writing, as follows: 
 ON DEMAND -PRINCIPAL AND INTEREST IN FULL
 The right is reserved to prepay all or any part of the principal of this Note at any time without penalty. The amount of any partial payment shall be applied to the reduction of the principal. 
 The term "holder" as used in this Note refers to the named payee and successors and assigns of the named payee. 
 Whenever used herein, the singular shall include the plural and vice versa, and the use of any gender shall include all others. 
 WITNESS the following signature and seal: 
 YORK RIVER ELECTRIC, INC. 
 By: /s/ Catherine G McQuade (SEAL) 
 CATHERINE G. McQUADE, President 
 By: /s/ Mark Bryan  (SEAL)
 MARK BRYAN, Secretary/Treasurer 
 

 STATE OF VIRGINIA 
 CITY OF HAMPTON, 
 I, the undersigned, a Notary Public in and for the City and State aforesaid, do certify that Catherine G. McQuade, President, on behalf of York River Electric, Inc., whose name is signed to the foregoing Promissory Note dated February 21, 2007, has acknowledged the same before me in my City and State aforesaid. 
 

 8
 

 Given under my hand on February 21, 2007. 
 _________________________
 Notary Public
 My commission expires:9/30/2007 
 

 STATE OF VIRGINIA 
 CITY OF HAMPTON, 
 I, the undersigned, a Notary Public in and for the City and State aforesaid, do certify that Mark Bryan, Secretary/Treasurer, on behalf of York River Electric, Inc., whose name is signed to the foregoing Promissory Note dated February 21, 2007, has acknowledged th same before me in my City and State aforesaid. 
 Given under my hand on February 21, 2007
 ______________________
 Notary Public
 My commission expires: 9/30/2007 
 

 

 

 

 

 

 

 

 

 

 9
 

 

 PROMISSORY NOTE
 

 $324,750.00 
 Hampton, Virginia 
 February 21, 2007 
 

 FOR VALUE RECEIVED, the undersigned promises to pay CATHERINE G. McQUADE, or Order, the principal sum of THREE HUNDRED TWENTY-FOUR THOUSAND SEVEN HUNDRED FIFTY and 00/100 DOLLARS ($324,750.00), with interest commencing on January 1, 2007, at a rate 6.00% per annum on the unpaid balance until paid. The said principal and interest shall be payable at such place as the holder may designate in writing, as follows: 
 Principal and interest in quarterly installments of FORTY-THREE THOUSAND THREE HUNDRED NINETY-FIVE AND 61 /100 DOLLARS ($43,395.61) commencing on April 1, 2007, and continuing on the first day of each quarter thereafter until the principal and interest are fully paid, except that the entire indebtedness evidenced hereby, if not sooner paid, shall be due and payable on January 1, 2009, except as otherwise stated herein. 
 The right is reserved to prepay all or any part of the principal of this Note at any time without penalty. The amount of any partial payment shall be applied to the reduction of the principal, but shall not relieve the maker of the obligation to make consecutive installment payments as provided herein, as if such prepayment had not been made, until all amounts owing under this Note have been paid in full. 
 The noteholder may collect a "late charge" not to exceed any amount equal to five percent (5%) of any installment which is not paid within fifteen (15) days of the due date hereof. The failure to exercise this right at any time or times shall not be deemed a waiver of the right to collect such late charge at other time or times. 
 If default be made in the payment of an)7 installment under This Note, and if such default is not made good prior to the due date of the next installment, the entire principal sum shall at once become due and payable without notice at the option of the holder of this Note. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. 
 The term 'holder' as used in this Note refers to the named payee and successors and assigns of the named payee. 
 Whenever used herein, the singular shall include the plural and vice versa, and the use of any gender shall include all others. 
 10
 

 WITNESS the following signature and seal: 
 YORK RIVER ELECTRIC, INC. 
 By: /s/ Catherine G McQuade (SEAL) 
 CATHERINE G. McQUADE, President 
 By. /s/ Mark Bryan (SEAL) 
 MARK BRYAN, Secretary/Treasurer 
 

 STATE OF VIRGINIA 
 CITY OF HAMPTON, 
 I, the undersigned, a Notary Public in and for the City and State aforesaid, do certify that Catherine U. McQuade, President, on behalf of York River Electric, Inc., whose name is signed to the foregoing Promissory Note dated February 21, 2007, has acknowledged the same before me in my City and State aforesaid. 
 Given under my hand on February 21, 2007. 
 _______________________
 Notary Public
 My commission expires: 9/30/2007
 STATE OF VIRGINIA 
 CITY OF HAMPTON, 
 I, the undersigned, a Notary Public in and for the City and state aforesaid, do certify that Mark Bryan, Secretary/Treasurer, on behalf of York River Electric, Inc., whose name is signed to the foregoing Promissory Note dated February 21, 2007, has acknowledged the same before me in my City and State aforesaid. 
 Given under my hand on February 21, 2007. 
 ______________________
 Notary Public
 My commission expires: 9/30/2007
 

 11
 

 

 SCHEDULE 2.02(A) 
 

 

 

 Financial Statements
 Ten Month Period Ended
 October 31, 2011
 

 

 

 

 

 

 

 York River Electric, Inc.
 

 

 

 

 

 

 

 

 

 

 

 York River Electric, Inc.
 Contents
 

 	 	
	 

	 Page

	 Independent Accountants' Review Report
	 3

	 

 Financial Statements
	 

	 

 Balance Sheets
	 4

	 

 Statement of Income
	 6

	 

 Statement of Changes in Equity
	 7

	 

 Statement of Cash Flows
	 8

	 

 Notes To Financial Statements
	 10

	 

 Supplementary Information
	 

	 

 Schedule of Cost of Revenue Earned
	 20

	 

 Schedules of General and Administrative Expenses
	 21

	 

 Schedule of Contracts in Progress
	 22

	 

 Schedule of Gross Profit by Contract
	 24

	 

 Schedule of Gross Profit by Contract Estimated
	 28

 

 

 

 Independents Accountants’ Review Report
 Board of Directors
 York River Electric, Inc.
 

 We have reviews the accompanying balance sheet of York River Electric, Inc. as of October 31, 2011, and the related statements of income, changes in equity and cash flows for the ten month period then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion
 Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
 Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report.
 Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
 Our review was made primarily for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. The supplementary information included on pages 12 through 23 is presented for purposes of addition analysis and is not a required part of the basic financial statements. Such information has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, and we are not aware of any material modifications that should be made to such information.
 Newport News, Virginia
 January 4, 2012
 

 3
 

 York River Electric, Inc.
 Balance Sheet

 	 	
	 October 31, 2011
	  

	 

	 

	 Assets

	 Current assets
	 

	 Cash and cash equivalents
	 $2,399,341 

	 Accounts receivable
	 

	 Trade
	 3,509,010

	 Other
	 2,062

	 Notes receivable - current
	 150,000

	 Prepaid expenses
	 24,891

	 Cost and estimated earnings in excess of billings
	 1,726,226

	 

	 

	 Total current assets
	 7,811,530

	 

	 

	 Property and equipment - net
	 713,632

	 

	 

	 Other assets
	 

	 Due from related party
	 64,984

	 Due from stockholder
	 189,346

	 Cash surrender value of life insurance
	 90,503

	 Notes receivable - less current portion
	 125,000

	 

	 

	 Total other assets
	 $469,833 

	 

	 

	 

	 $8,994,995 

	 

	 

	 Liabilities and Stockholders' Equity

	 

	 

	 Current liabilities
	 

	 Current portion of long-term debt
	 $53,097 

	 Accounts payable
	 1,263,038

	 Accrued expenses
	 170,600

	 Distributions payable
	 272,000

	 Billings in excess of costs and estimated earnings
	 1,069,757

	 

	 

	 Total current liabilities
	 2,828,492

	 

	 

  

 

 4
 

 York River Electric, Inc.
 Balance Sheet (continued)
 

 	 	
	 Long-term debt - net of current portion
	 76,724

	 

	 

	 Total liabilities
	 2,905,216

	 

	 

	 Stockholders' equity
	 6,089,779

	 

	 

	 

	 $8,994,995 

  

 

 5
 

 

 York River Electric, Inc.
 Statement of Income
 

 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	  

	 

	 

	 

	  

	 Contract revenue earned
	 

	 Government contracts - 8(a)
	 $15,377,697 

	 Other governments contracts
	 1,008,062

	 Commercial contracts
	 3,921,103

	 

	 

	 

	  

	 Total contract revenue
	 20,306,862

	 

	 

	 

	  

	 Cost of revenue earned
	 17,480,262

	 

	 

	 

	  

	 Gross profit
	 2,826,600

	 

	 

	 

	  

	 General and administrative expenses
	 702,840

	 

	 

	 

	  

	 Income from operations
	 2,123,760

	 

	 

	 

	  

	 Other income (expense)
	 

	 Gain on sale of property and equipment
	 4,100

	 Interest expense
	 (6,307)

	 Other income
	 4,133

	 

	 

	 

	  

	 Total other income
	 1,926

	 

	 

	 

	  

	 Net income
	 $2,125,686 

  

 

 

 

 6
 

 

 York River Electric, Inc.
 Statement of Changes in Equity
 

 	 	 	 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	  

	 

	 Common Stock
	 Additional Paid-In Capital
	 Retained Earnings
	 Accumulated Other Comprehensive Income (Loss)
	 Total
	  

	 

	 

	 

	 

	 

	 

	  

	 Balance - December 31, 2010
	 $1,067 
	 $4,800 
	 $10,881,451 
	 $115,448 
	 $11,002,766 
	  

	 

	 

	 

	 

	 

	 

	  

	 Comprehensive  income
	 

	 

	 

	 

	 

	  

	 Net income
	 -
	 -
	 2,125,686
	 -
	 2,125,686
	  

	 Reclassification     adjustment for gains   realized during the year
	 -
	 -
	 

	 (115,448)
	 (115,448)
	  

	    Total comprehensive
 income
	   
	 

	 

	 2,010,238
	  

	 

	 

	 

	 

	 

	 

	    Distributions
	 -
	 -
	 (6,923,225)
	 -
	 (6,923,225)

	 

	 

	 

	 

	 

	 

	 Balance - October 31, 2011
	 $1,067 
	 $4,800 
	 $6,083,912 
	 $                -
	 $6,089,779 

  

 

 

 7
 

 

 York River Electric, Inc.
 Statement of Cash Flows
 

 	 	
	 Ten Month Period Ended October 31, 2011
	  

	 Cash flows from operating activities
	 

	 Net income
	 $2,125,686 

	 Adjustments to reconcile to net cash from operating activities:
	 

	 Bad debt
	 9,544

	 Depreciation
	 205,000

	 Gain on sale of property and equipment
	 (4,100)

	 Change in:
	 

	 Accounts receivable
	 

	 Trade
	 (25,082)

	 Other
	 2,974

	 Prepaid expenses
	 (5,036)

	 Costs and estimated earnings in excess of    billings
	 (955,294)

	 Accounts payable
	 (1,295,150)

	 Accrued expenses
	 (76,052)

	 Billing in excess of cost and estimated earnings
	 97,709

	 Net cash from operating activities
	 80,199

	 

	 

	 Cash flows from investing activities
	 

	 Increase in notes receivable
	 (25,000)

	 Advances to stockholder
	 (629)

	 Purchases of property and equipment
	 (68,067)

	 Purchases of investments
	 (157,769)

	 Proceeds from sale of property and equipment
	 4,100

	 Proceeds received from cash surrender value of life insurance
	 96,750

	 Net cash from investing activities
	 (150,615)

	 

	 

	 Cash flows from financing activities
	 

	 Principal payments of long-term debt
	 (58,977)

	 Distributions to stockholders
	 (3,426,701)

	 Net cash from financing activities
	 (3,485,678)

	 

	 

 8
 

 York River Electric, Inc.
 Statement of Cash Flows
 

 	 	
	 Net change
	 (3,556,094)

	 

	 

	 Cash and cash equivalents - beginning of year
	 5,955,435

	 

	 

	 Cash and cash equivalents - end of year
	 $2,399,341 

	 

	 

	 Supplemental disclosure of noncash investing and financing activities

	 Property acquired from proceeds of long-term debt
	 $35,662 

	 

	 

	 Distributions accrued and unpaid
	 $272,000 

	 

	 

	 Interest paid
	 $6,307 

 

 

 

 

 9
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 1. 
 Organization and Nature of Business
 York River Electric, Inc. (Company) is a general contractor engaged in electrical and general contract activities for both commercial and government customers primarily in the Hampton Roads area of Virginia.
 In 2001, the Company was approved for participation in the section 8(a) program of the U.S. government Small Business Administration (SBA). The purpose of this program is to make available certain government contracts to small disadvantaged businesses. Under this program, there are specific requirements that must be met by the Company. The Company’s section 8(a) participation expires in 2010. To minimize the impact of a potential on revenue, the Company is focusing on an increased pursuit of non 8(a) government and commercial contracts.
 

 2.
 Summary of Significant Account Policies
 Cash and Cash Equivalents
 Cash and cash equivalents consist of highly liquid investments with an initial purchased maturity of three months or less.
 Accounts Receivable
 Accounts receivable are generated from prime and subcontracting agreements with U.S. governmental agencies and various commercial entities and are stated at amounts billed less an allowance for doubtful accounts. Credit is extended to customers after an evaluation of the customer’s financial condition. Management considers accounts over 30 days past due. Management’s determination of the allowance for doubtful accounts is based on an evaluation of the accounts receivable, past experience, current economic conditions, and other risks inherent in the accounts receivable portfolio. There is no allowance for doubtful accounts at October 31, 2011.
 

 10
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 2.
 Summary of Significant Accounting Policies (continued)
 Property and Equipment
 Property and equipment are recorded at cost and depreciation is calculated by using the straight-line method for financial statement purposes based on the following estimated useful lives:
 	 	
	 Software
	 3 years

	 Tools and equipment
	 5 - 7 years

	 Transportation equipment
	 5 years

	 Office furniture and equipment
	 3 - 7 years

	 Leasehold improvements
	 5 - 39 years

 

 Revenue Recognition
 Revenues on fixed-price contracts are recognized on the percentage-of-completion method of accounting based upon costs to date compared to total estimated costs. Cost and profit estimates are reviewed periodically as the work progresses, and adjustments, if needed, are reflected in the period in which the estimates are revised. Anticipated losses are recognized as soon as they become known. Revenues from time-and-materials contracts are recognized on the basis of direct labor hours incurred, at negotiated contract billing rates, plus reimbursable costs incurred.
 Contract costs include all direct material, labor costs, and those indirect costs related to contract performance. General and administrative costs are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenues and would be recognized in the period in which the revisions are determined.
 The current asset “costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed.
 The current liability “billings in excess of costs and estimated earnings” represents amounts billed in excess of revenues recognized.
 

 11
 

 York River Electric, Inc.
 Notes to Financial Statements
 2.
 Summary of Significant Accounting Policies (continued)
 Use of Estimates
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.
 

 Certain Significant Estimates
 The Company has calculated and determined its revenue earned for 2011, and the effect on several asset and liability amounts based on the common industry standard revenue determination formula of actual costs to date compared to total estimated job costs. Due to uncertainties inherent in the estimation process, and uncertainties relating to future performance as the contracts are completed, it is at least reasonably possible that estimated job costs, in total or on individual contracts, will be revised.
 Income Taxes
 The Company, with the consent of its stockholders, elected to be taxed under the Internal Service Revenue Code as a Subchapter S corporation, which provides that, in lieu of corporate income taxes, the stockholders separately account for the Company’s items of income, deductions, losses and credits. Therefore, no provision or liability for income taxes has been included in these financial statements. The Company has determined that it does not have any material unrecognized tax benefits or obligations as of October 31, 2011. Fiscal years ending on or after December 31, 2007, remain subject to examination by federal and state tax authorities.
 Advertising
 The Company expenses advertising costs as incurred. For the ten month period ended October 31, 2011, advertising expense was $13,610.
 

 12
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 2.
 Summary of Significant Accounting Policies (continued)
 Subsequent Events
 In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through January 4, 2012, the date the financial statements were available to be issued.
 

 3.
 Accounts Receivable
 Accounts receivable consists of the following:
 	 	
	      Government contracts
	 $2,532,501

	      Commercial contracts
	 976,509

	 

	 

	 

	    $3,509,010 

 

 

 

 4.
 Notes Receivable
 The Company has advanced $250,000 to a third-party contractor. The note was issued on September 30, 2010, and is a noninterest bearing note. The agreement requires repayments of $100,000 due on September 5, 2011, $50,000 due on November 4, 2011, and a final payment of $100,000 due by March 31, 2012. The outstanding balance at October 31, 2011, is $150,000.
 The Company has also advanced $125,000 to an additional third-party contractor. The note was issued on January 11, 2011, and accrues interest at prime plus 2.00%. At October 31, 2011, the rate was 5.25%. All unpaid principal and interest is due on December 31, 2013. The outstanding balance at October 31, 2011, is $125,000.
 

 

 13
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 5.
 Property and Equipment
 Property and equipment consists of the following:
 	 	
	 Software
	 $120,912 

	 Tools and equipment
	 624,070

	 Transportation equipment
	 1,254,732

	 Office furniture and equipment
	 293,395

	 Leasehold improvements
	 242,596

	 

	 2,535,705

	 Less - allowance for depreciation
	 (1,822,073)

	 

	 

	 

	 $713,632 

 Depreciation expense for the ten month period ended October 31, 2011, was $250,000.
 

 6.
 Cash Surrender Value of Life Insurance
 The Company maintains life insurance policies on each of its stockholders. The cash value of the policies was $90,503 at October 31, 2011.
 

 7.
 Costs and Estimated Earnings on Uncompleted Contracts
 Information with respect to contracts in progress is as follows:
 	 	
	 Costs on uncompleted contracts
	 $18,759,507 

	 Estimated earnings
	 1,924,635

	 

	 20,684,142

	 Less - billings to date
	 (20,027,673)

	 

	 

	 

	 $656,469

 Included in the accompanying balance sheet as follows:
 	 	
	 Costs and estimated earnings in excess of billings
	 $1,726,226 

	 Billings in excess of costs and estimated earnings
	 (1,069,757)

	 

	 

	 

	 $656,469

 14
 

 York River Electric, Inc.
 Notes to Financial Statements
 8.
 Contract Backlog
 The following schedule shows a reconciliation of the backlog of signed contracts in existence:
 	 	
	    Balance - beginning of year
	 $18,452,386 

	    New contracts and contract adjustments
	 28,084,988 

	    
	 46,537,374

	    Less - contract revenue earned
	 (20,306,862)

	    
	 

	    Balance - end of year
	 $26,230,512 

 

 9.
 Long-Term Debt
 Long-term debt is summarized as follows:
 	 	
	 $384 monthly, including interest at 0.9% through 2011, secured by 2006 Ford E250 van.
	 $288 

	 $368 monthly, including interest at 0.0% through 2012, secured by 2006 Ford Freestyle.
	 3,219

	 $363 monthly, including interest at 0.0% through 2012, secured by 2006 Ford Freestyle.
	 3,612

	 $430 monthly, including interest at 0.0% through 2012, secured by 2006 Ford F-250.
	 837

	 $450 monthly, including interest at 0.0% through 2012, secured by 2007 Ford F-150.
	 1,777

	 $478 monthly, including interest at 6.3% through 2012, secured by 2009 Ford Escape.
	 12,944

	 $422 monthly, including interest at 0.0% through 2013, secured by 2007 Ford F150.
	 6,332

	 $780 monthly, including interest at 6.0% through 2013, secured by 2008 Dodge Sprinter.
	 20,970

	 $1,112 monthly, including interest at 4.9% through 2015, secured by 2011 Ford F350.
	 45,369

	 $594 monthly, including interest at 0.0% through 2015, secured by 2011 Ford F150.
	 34,473

	 

	 129,821

	 Less -current portion
	 (53,097)

	 

	 76,724

 15
 

 York River Electric, Inc.
 Notes to Financial Statements
 9. Long Term Debt (continued)
 

 Future maturities of long-term debt for succeeding years are as follows:
 	 	
	 2012
	 $53,097 

	 2013
	 31,118

	 2014
	 23,076

	 2015
	 16,586

	 2016
	 5,944

	 

	 $129,821 

 

 Interest paid during the ten month period ended October 31, 2011, was $6,307.
 As discussed in Note 12, the Company has guaranteed the debt of a related party. No liability has been recorded on York River Electric, Inc. financial statements for this guarantee.
 

 10.
 Common Stock
 Common stock consists of 50,000 authorized shares at $1 par value. At October 31, 2011, there were 1,067 shares of issued and outstanding.
 

 11.
 Employee Benefit Plan
 The Company contributes to a multi-employer pension plan on behalf of substantially all of its union employees under a collective bargaining agreement. The Company also has a 401(k) safe harbor plan for all eligible nonunion employees that allows for pre-tax salary deferrals and discretionary profit sharing. For the ten month period ended October 31, 2011, the Company contributed $26,741 to the 401(k) safe harbor plan.
 ‘
 16
 

 York River Electric, Inc.
 Notes to Financial Statements
 12.
 Related Party Transactions
 The Company leases three facilities from related entities owned by the Company’s two stockholders on a month-to-month basis. Under two of the leases, the Company paid $3,500 per month for each location in 2010. In January 2011, one of these two leases reduced the payment to $1,000 per month. For the third lease, the Company paid $2,500 per month. Rent expense for the ten month period ended October 31, 2011, was $78,500.
 Over time, the Company has advanced money to one of its stockholders. At October 31, 2011, the stockholder’s balance was $189,346, including interest accrued at a short-term applicable federal rate. At October 31, 2011, the interest rate was 0.37%, in addition interest income was $629. No specific repayment terms have been set.
 Due from related party consists of funds advanced to Charters, LLC, a limited liability company, whose members are stockholders of the Company. No specific repayment terms have been set and is noninterest bearing. In addition, the Company and its stockholders unconditionally guarantee a $275,000 note obtained by Charters, LLC, which the outstanding balance was approximately $244,000 at October 31, 2011.
 

 13.
 Concentrations of Credit Risk
 The cash and cash equivalent balances are maintained at several financial institutions with high credit quality ratings. For 2011, noninterest bearing cash accounts were fully insured by the Federal Deposit Insurance Corporation (FDIC), and interest-bearing funds held in these accounts were insured by the FDIC up to $250,000. At October 31, 2011, bank cash deposits and certain investments exceeded the FDIC limit by approximately $265,000.
 For the ten month period ended October 31, 2011, contracts with the federal government produced approximately 81% of total revenue. Additionally, approximately 73% of trade accounts receivable at October 31, 2011, was due from government entities.
 

 17
 

 York River Electric, Inc.
 Notes to Financial Statements
 13.
 Concentrations of Credit Risk (continued)
 The Company may be subject to a concentration of credit risk due to high dollar value of its contract receivables. The credit risk with respect to accounts receivable is mitigated because the majority of the Company’s receivables are due from agencies of the U.S. government.
 

 14.
 Contingencies
 Certain contracts provide for warranty against defects in materials and workmanship for periods beyond the date of completion. Annually, management of the Company considers the need to establish accruals for anticipated future costs to be incurred for these warranties. No such accruals were considered necessary at October 31, 2011.
 Substantially all of the Company’s revenues have been derived from prime or subcontracts with the federal government. These contract revenues are subject to adjustment upon audit by various government agencies. Management does not expect the results of such audits to have a material effect on the Company’s financial position or results of future operations since most contracts are fixed-price or time-and-materials contracts. Although management believes no material findings will result from these actions, these proceedings involve uncertainties that may cause actual results to vary from expectations. Final indirect cost rates have been established by audit for all years through 2007.
 

 

 

 

 

 

 18
 

 

 

 

 

 

 

 

 

 

 

 York River Electric, Inc.
 Supplementary Information
 October 31, 2011
 

 

 York River Electric, Inc.
 Schedule of Cost of Revenue Earned
 

 	 	
	 Ten Month Period Ended October 31, 2011
	  

	 

	 

	 Direct labor
	 $2,553,377 

	 Subcontractors
	 8,633,090

	 Materials
	 3,330,841

	 Labor burden
	 882,753

	 Other direct expenses
	 354,764

	 Equipment rental
	 48,819

	 Overhead allocation
	 1,571,216

	 Equipment allocation
	 105,402

	 

	 

	 

	 $17,480,262 

  

 

 

 20
 

 

 York River Electric, Inc.
 Schedule of General and Administrative Expenses

 	 	
	 Ten Month Period Ended October 31, 2011
	  

	 

	 

	 Advertising
	 $13,610 

	 Auto and truck
	 192,750

	 Bad debt
	 9,544

	 Bank service charges
	 10,687

	 Commissions
	 23,928

	 Consultants
	 86,715

	 Contributions
	 9,181

	 Depreciation
	 205,000

	 Dues and subscriptions
	 27,124

	 Education
	 3,907

	 Employee morale
	 16,158

	 Fringe benefits
	 32,061

	 Insurance
	 151,075

	 Legal and accounting
	 24,220

	 Marketing
	 519

	 Meals and entertainment
	 6,251

	 Miscellaneous
	 15,262

	 Office supplies
	 44,232

	 Officer salaries
	 299,720

	 Other salaries
	 757,113

	 Payroll taxes
	 96,058

	 Penalties
	 56

	 Profit sharing plans
	 26,741

	 Rent
	 78,500

	 Repairs and maintenance
	 45,134

	 Supplies and materials
	 27,968

	 Taxes and licenses
	 76,597

	 Telephone and utilities
	 65,453

	 Tools and small equipment
	 20,170

	 Travel
	 13,724

	 Overhead allocation
	 (1,676,618)

	 

	 $702,840 

  21
 

 York River Electric, Inc.
 Schedule of Contracts in Progress
 

 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Total Contract
	 From Inception to October 31, 2011
	 At October 31, 2011

	 Contract Number
	 Contract Amount
	 Estimated Gross Profit (Loss)
	 Contract Revenues Earned
	 Cost of Revenues Earned
	 Earned Gross Profit (Loss)
	 Billed to Date
	 Estimated Cost to Complete
	 Costs and Estimated Earnings in Excess of Billings
	 Billings in Excess of Costs and Estimated Earnings

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 07-101
	 $2,118,611
	 $69,353 
	 $2,043,663 
	 $1,976,763 
	 $66,900 
	 $2,109,139 
	 $72,495 
	 $0
	 $65,476 

	 09-059
	 3,382,814
	 229,531
	 3,056,392 
	 2,849,009 
	 207,383 
	 2,963,181 
	 304,274 
	 93,271 
	 0

	 10-017
	 1,291,986
	 79,987
	 1,256,490 
	 1,178,701 
	 77,789 
	 1,290,749 
	 33,298 
	 0
	 64,256 

	 10-018
	 1,457,731
	 187,895
	 1,455,751 
	 1,268,111 
	 187,640 
	 1,452,731 
	 1,725 
	 3,020 
	 0

	 10-051
	 3,309,044
	 480,692
	 2,859,481 
	 2,444,095 
	 415,386 
	 3,130,486 
	 384,257 
	 0
	 271,005 

	 10-072
	 6,706,365
	 373,432
	 3,617,215 
	 3,415,797 
	 201,418 
	 2,952,145 
	 2,917,136 
	 665,070 
	 0

	 10-087
	 694,613
	 11,598
	 691,240 
	 679,698 
	 11,542 
	 688,793 
	 3,317 
	 2,447 
	 0

	 10-097
	 393,087
	 38,966
	 156,768 
	 141,228 
	 15,540 
	 232,276 
	 212,893 
	 0
	 75,508 

	 10-099
	 311,180
	 110,323
	 279,106 
	 180,154 
	 98,952 
	 300,905 
	 20,703 
	 0
	 21,799 

	 10-112
	 1,445,000
	 148,600
	 869,179 
	 779,795 
	 89,384 
	 750,375 
	 516,605 
	 118,804 
	 0

	 10-123
	 788,891
	 139,727
	 734,695 
	 604,567 
	 130,128 
	 781,891 
	 44,597 
	 0
	 47,196 

	 11-022
	 2,250,342
	 651,104
	 1,609,961 
	 1,144,142 
	 465,819 
	 1,624,747 
	 455,096 
	 0
	 14,786 

	 11-029
	 1,698,953
	 438,976
	 170,668 
	 126,571 
	 44,097 
	 695,485 
	 1,133,406 
	 0
	 524,817 

	 11-048
	 161,328
	 7,383
	 143,448 
	 136,883 
	 6,565 
	 135,917 
	 17,062 
	 7,531 
	 0

	 11-049
	 69,166
	 33,680
	 30,965 
	 15,887 
	 15,078 
	 45,876 
	 19,599 
	 0
	 14,911 

	 11-057
	 68,662
	 8,730
	 611 
	 533 
	 78 
	 0
	 59,399 
	 611 
	 0

	 11-061
	 1,469,864
	 (131,246)
	 1,469,378 
	 1,600,581 
	 (131,203)
	 818,595 
	 592 
	 650,783 
	 0

	 11-064
	 600
	 112
	 647 
	 526 
	 121 
	 0
	 (38)
	 647 
	 0

	 11-066
	 582,126
	 144,389
	 7,772 
	 5,844 
	 1,928 
	 5,157 
	 431,893 
	 2,615 
	 0

	 11-067
	 758,901
	 183,523
	 9,285 
	 7,040 
	 2,245 
	 6,493 
	 568,338 
	 2,792 
	 0

	 11-068
	 72,918
	 8,904
	 21,394 
	 18,782 
	 2,612 
	 20,598 
	 45,232 
	 796 
	 0

	 11-069
	 1,661,000
	 108,362
	 52,214 
	 48,808 
	 3,406 
	 16,000 
	 1,503,830 
	 36,214 
	 0

	 11-070
	 3,375
	 154
	 1,456 
	 1,390 
	 66 
	 0
	 1,831 
	 1,456 
	 0

  

 

 22
 

 

 York River Electric, Inc.
 Schedule of Contracts in Progress (continued)
 

 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Total Contract
	 From Inception to October 31, 2011
	 At October 31, 2011

	 Contract Number
	 Contract Amount
	 Estimated Gross Profit (Loss)
	 Contract Revenues Earned
	 Cost of Revenues Earned
	 Earned Gross Profit (Loss)
	 Billed to Date
	 Estimated Cost to Complete
	 Costs and Estimated Earnings in Excess of Billings
	 Billings in Excess of Costs and Estimated Earnings

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 11-072
	 $180,347
	 $31,138 
	 $2,740 
	 $2,267 
	 $473 
	 $1,774 
	 $146,942 
	 966
	 0

	 11-073
	 109,120
	 15,760
	 1,479 
	 1,265 
	 214 
	 1,159 
	 92,095 
	 320 
	 0

	 11-074
	 212,847
	 34,789
	 2,663 
	 2,228 
	 435 
	 1,774 
	 175,830 
	 889
	 0

	 11-075
	 51,011
	 13,012
	 364 
	 472 
	 162 
	 0
	 37,527 
	 634 
	 0

	 11-081
	 147,072
	 27,178
	 1,952 
	 1,591 
	 361 
	 1,487 
	 118,303 
	 465
	 0

	 11-082
	 5,240
	 1,006
	 3,947 
	 3,189 
	 758 
	 0
	 1,045 
	 3,947 
	 0

	 11-083
	 297,274
	 35,536
	 2,408 
	 2,120 
	 288 
	 0
	 259,618 
	 2,408 
	 0

	 11-088
	 606,231
	 25,051
	 5,958 
	 5,712 
	 246 
	 0
	 575,468 
	 5958
	 0

	 11-089
	 4,905,456
	 235,683
	 41,023 
	 39,052 
	 1,971 
	 0
	 4,630,721 
	 41023
	 0

	 11-090
	 3,479,501
	 238,912
	 17,731 
	 16,514 
	 1,217 
	 0
	 3,224,075 
	 17,731 
	 0

	 11-091
	 5,748,327
	 408,047
	 50,829 
	 47,221 
	 3,608 
	 0
	 5,293,059 
	 50,829 
	 0

	 11-092
	 2,288
	 982
	 0
	 0
	 0
	 0
	 1,306 
	 0
	 0

	 11-093
	 291,993
	 88,953
	 2,307 
	 1,604 
	 703 
	 0
	 201,436 
	 2,307 
	 0

	 11-094
	 45,122
	 3,081
	 9,861 
	 9,188 
	 673 
	 0
	 32,853 
	 9,861 
	 0

	 11-096
	 31,499
	 7,254
	 2,831 
	 2,179 
	 652 
	 0
	 22,066 
	 2,831 
	 0

	 11-099
	 3,984
	 1,655
	 0
	 0
	 0
	 0
	 2,329 
	 0
	 0

	 11-102
	 14,001
	 3,403 
	 0
	 0
	 0
	 0
	 10,598 
	 0
	 0

	 11-103
	 5,756
	 1,943
	 0
	 0
	 0
	 0
	 3,813 
	 0
	 0

	 11-104
	 38,866
	 456
	 0
	 0
	 0
	 0
	 38,410 
	 0
	 0

	 11-106
	 42,162
	 6,650
	  0
	 0 
	  0
	  0
	 35,512 
	 0 
	 0 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 $46,914,654 
	 $4,504,664 
	 $20,684,142 
	 $18,759,507 
	 $1,924,635 
	 $20,027,673 
	 $23,650,483 
	 $1,726,226 
	 $1,609,757 

  

 

 

 

 23
 

 

 York River Electric, Inc.
 Schedule of Gross Profit by Contract
 

 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Contracts completed in 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Recognized in 2010 and prior
	 Recognized in 2011

	 Contract Number
	 Total Contract Revenue
	 Total Contract Costs
	 Contract Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 08-127
	 $876,821
	 $577,621 
	 $299,200 
	 $788,402 
	 $528,115 
	 $260,287 
	 $88,419 
	 $49,506 
	 $38,913 

	 09-052
	 80,335
	 39,052
	 41,283 
	 71,106 
	 38,583 
	 32,523 
	 9,229 
	 469 
	 8,760 

	 09-072
	 858,206
	 512,777
	 345,429 
	 800,425 
	 511,303 
	 289,122 
	 57,781 
	 1,474 
	 56,307 

	 10-012
	 58,705
	 55,465
	 3,240 
	 10,922 
	 38,234 
	 (27,312)
	 47,783 
	 17,231 
	 30,552 

	 10-021
	 8,006,346
	 4,949,487
	 56,859 
	 3,782,234 
	 3,716,988 
	 65,246 
	 1,224,112 
	 1,232,499 
	 (8,387)

	 10-035
	 130,362
	 60,253
	 70,109 
	 93,580 
	 24,046 
	 51,534 
	 36,782 
	 18,207 
	 18,575 

	 10-048
	 254,764
	 193,294
	 61,470 
	 142,169 
	 116,332 
	 25,837 
	 112,595 
	 76,962 
	 35,633 

	 10-052
	 99,500
	 88,885
	 10,615 
	 28,337 
	 27,782 
	 555 
	 71,163 
	 61,103 
	 10,060 

	 10-063
	 178,587
	 157,596
	 20,991 
	 156,173 
	 137,140 
	 19,033 
	 22,414 
	 20,456 
	 1,958 

	 10-074
	 80,282
	 76,292
	 3,990 
	 40,084 
	 37,733 
	 2,351 
	 40,198 
	 38,559 
	 1,639 

	 10-076
	 26,950
	 16,356
	 10,594 
	 376 
	 302 
	 74 
	 26,574 
	 16,054 
	 10,520 

	 10-081
	 11,897
	 4,642
	 7,255 
	 468 
	 302 
	 166 
	 11,429 
	 4,340 
	 7,089 

	 10-084
	 327,515
	 243,086
	 84,429 
	 132,691 
	 97,619 
	 35,072 
	 194,824 
	 145,467 
	 49,357 

	 10-088
	 74,207
	 62,082
	 12,125 
	 2,443 
	 1,952 
	 491 
	 71,764 
	 60,130 
	 11,634 

	 10-089
	 103,720
	 50,504
	 53,216 
	 22,136 
	 19,398 
	 2,738 
	 81,584 
	 31,106 
	 50,478 

	 10-091
	 216,745
	 61,065
	 155,680 
	 64,717 
	 57,719 
	 6,998 
	 152,028 
	 3,346 
	 148,682 

	 10-092
	 239,940
	 137,541 
	 102,399 
	 46,751 
	 30,334 
	 16,417 
	 193,189 
	 107,207 
	 85,982 

	 10-096
	 1,975,214
	 1,619,163
	 356,051 
	 974,140 
	 816,694 
	 157,446 
	 1,001,074 
	 952,469 
	 48,605 

	 10-098
	 67,554
	 54,803
	 12,751 
	 6,159 
	 4,862 
	 1,297 
	 61,395 
	 49,941 
	 11,454 

	 10-100
	 320,072
	 267,116
	 52,956 
	 39,777 
	 26,526 
	 13,251 
	 280,295 
	 240,590 
	 39,705 

	 10-101
	 314,882
	 177,774
	 137,108 
	 117,525 
	 93,265 
	 24,260 
	 197,357 
	 84,509 
	 112,848 

	 10-102
	 58,513
	 23,779
	 34,734 
	 12,571 
	 6,079 
	 6,492 
	 45,942 
	 17,700 
	 28,242 

	 10-103
	 84,042
	 42,800 
	 41,242 
	 2,071 
	 1,766 
	 305 
	 81,971 
	 41,304 
	 40,937 

	 10-105
	 19,682
	 13,266
	 6,416 
	 878 
	 832 
	 46 
	 18,804 
	 12,434 
	 6,370 

	 10-106
	 42,102
	 38,784
	 3,318 
	 18,404 
	 16,412 
	 1,992 
	 23,698 
	 22,372 
	 1,326 

	 10-107
	 236,632
	 200,484
	 36,148 
	 57,317 
	 46,975 
	 10,342 
	 179,315 
	 153,509 
	 25,806 

	 10-109
	 5,775
	 2,258
	 3,517 
	 201 
	 113 
	 88 
	 5,574 
	 2,145 
	 3,429 

	 10-110
	 836,896
	 605,674
	 231,222 
	 114,251 
	 91,076 
	 23,175 
	 722,645 
	 664,598 
	 58,047 

  

 24
 

 York River Electric, Inc.
 Schedule of Gross Profit by Contract (continued)

 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Contracts completed in 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Recognized in 2010 and prior
	 Recognized in 2011

	 Contract Number
	 Total Contract Revenue
	 Total Contract Costs
	 Contract Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 10-115
	 $8,225
	 $4,576
	 $3,649 
	 $6,405 
	 $3,332 
	 $3,073 
	 $1,820 
	 $1,244 
	 $576 

	 10-116
	 13,568
	 15,166
	 (1,598)
	 12,000 
	 13,642 
	 (1,642)
	 1,568 
	 1,524 
	 44 

	 10-118
	 1,925
	 1,177
	 748 
	 0
	 1,177 
	 (1,777)
	 1,925 
	 0 
	 1,925 

	 10-120
	 7,172
	 6,047
	 1,125 
	 0 
	 0 
	 0 
	 7,172 
	 6,047 
	 1,125 

	 10-121
	 80,949
	 65,140
	 15,809 
	 0 
	 0 
	 0 
	 80,949 
	 65,140 
	 15,809 

	 10-122
	 208,829
	 221,065
	 (12,236)
	 0 
	 0 
	 0 
	 208,829 
	 221,065 
	 (12,236)

	 11-003
	 2,272
	 929
	 1,343 
	 0 
	 0 
	 0 
	 2,272 
	 929 
	 1,343 

	 11-004
	 341,863
	 290,184
	 51,679 
	 0 
	 0 
	 0 
	 341,863 
	 290,184 
	 51,679 

	 11-005
	 928
	 863
	 65 
	 0 
	 0 
	 0 
	 928 
	 863 
	 65 

	 11-006
	 1,925
	 878
	 1,047 
	 0 
	 0 
	 0 
	 1,925 
	 878 
	 1,047 

	 11-007
	 293
	 274 
	 19 
	 0 
	 0 
	 0 
	 293 
	 274 
	 19 

	 11-008
	 525
	 354
	 171 
	 0 
	 0 
	 0 
	 525 
	 354 
	 171 

	 11-009
	 127,445
	 106,056
	 21,389 
	 0 
	 0 
	 0 
	 127,445 
	 103,056 
	 21,389 

	 11-010
	 315
	 461
	 (146)
	 0 
	 0 
	 0 
	 315 
	 461 
	 (146)

	 11-011
	 315
	 -
	 315 
	 0 
	 0 
	 0 
	 315 
	 -
	 315 

	 11-012
	 1,373
	 624
	 749 
	 0 
	 0 
	 0 
	 1,373 
	 624 
	 749 

	 11-013
	 390
	 0 
	 390 
	 0 
	 0 
	 0 
	 390
	 0 
	 390 

	 11-014
	 2,199
	 2,500
	 (301)
	 0 
	 0 
	 0 
	 2,199
	 2,500
	 (301)

	 11-015
	 700
	 853
	 (153)
	 0 
	 0 
	 0 
	 700
	 853
	 (153)

	 11-016
	 20,701
	 10,313
	 10,388 
	 0 
	 0 
	 0 
	 20,701
	 10,313
	 10,388 

	 11-017
	 2,699
	 2,566
	 133 
	 0 
	 0 
	 0 
	 2,699
	 2,566
	 133 

	 11-018
	 10,900
	 1,855
	 9,045 
	 0 
	 0 
	 0 
	 10,900
	 1,855
	 9,045 

	 11-019
	 54,745
	 42,481
	 12,264 
	 0 
	 0 
	 0 
	 54,745
	 42,481
	 12,264 

	 11-020
	 7,994
	 7,824
	 170 
	 0 
	 0 
	 0 
	 7,994
	 7,824
	 170 

	 11-021
	 1,316
	 691
	 625 
	 0 
	 0 
	 0 
	 1,316
	 691
	 625 

	 11-023
	 9,433
	 6,983
	 2,450 
	 0 
	 0 
	 0 
	 9,433
	 6,983
	 2,450 

	 11-024
	 28,599
	 9,544
	 19,055 
	 0 
	 0 
	 0 
	 28,599
	 9,544
	 19,055 

	 11-026
	 208,758
	 218,535
	 (9,777)
	 0 
	 0 
	 0 
	 208,758
	 218,535
	 (9,777)

  

 

 25
 

 York River Electric, Inc.
 Schedule of Gross Profit by Contract (continued)
 

 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Contracts completed in 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Recognized in 2010 and prior
	 Recognized in 2011

	 Contract Number
	 Total Contract Revenue
	 Total Contract Costs
	 Contract Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 11-027
	 $23,599
	 $8,193
	 $15,406 
	 $0 
	 $0 
	 $0 
	 $23,599
	 $8,193
	 $15,406 

	 11-028
	 1,745
	 1,693
	 52 
	 0 
	 0 
	 0 
	 1,745
	 1,693
	 52 

	 11-030
	 13,014
	 9,278
	 3,736 
	 0 
	 0 
	 0 
	 13,014
	 9,278
	 3,736 

	 11-031
	 245
	 77
	 168 
	 0 
	 0 
	 0 
	 245
	 77
	 168 

	 11-032
	 19,350
	 18,446
	 904 
	 0 
	 0 
	 0 
	 19,350
	 18,446
	 904 

	 11-033
	 13,544
	 14,609
	 (1,065)
	 0 
	 0 
	 0 
	 13,544
	 14,609
	 (1,065)

	 11-034
	 920
	 542
	 378 
	 0 
	 0 
	 0 
	 920
	 542
	 378 

	 11-035
	 910
	 848
	 62 
	 0 
	 0 
	 0 
	 910
	 848
	 62 

	 11-036
	 320
	 229
	 91
	 0 
	 0 
	 0 
	 320
	 229
	 91

	 11-037
	 775
	 619
	 156 
	 0 
	 0 
	 0 
	 775
	 619
	 156 

	 11-038
	 1,225
	 584 
	 641 
	 0 
	 0 
	 0 
	 1,225
	 584 
	 641 

	 11-039
	 7,805
	 6,729
	 1,076 
	 0 
	 0 
	 0 
	 7,805
	 6,729
	 1,076 

	 11-041
	 3,185
	 1,305
	 1,880 
	 0 
	 0 
	 0 
	 3,185
	 1,305
	 1,880 

	 11-042
	 1,995
	 1,137
	 858 
	 0 
	 0 
	 0 
	 1,995
	 1,137
	 858 

	 11-043
	 3,962
	 3,358
	 604 
	 0 
	 0 
	 0 
	 3,962
	 3,358
	 604 

	 11-044
	 6,510
	 7,112
	 (602)
	 0 
	 0 
	 0 
	 6,510
	 7,112
	 (602)

	 11-045
	 786
	 284
	 502 
	 0 
	 0 
	 0 
	 786
	 284
	 502 

	 11-046
	 2,310
	 2,905
	 (595)
	 0 
	 0 
	 0 
	 2,310
	 2,905
	 (595)

	 11-047
	 33,844
	 26,851
	 6,993 
	 0 
	 0 
	 0 
	 33,844
	 26,851
	 6,993 

	 11-050
	 6,564
	 2,379
	 3,825 
	 0 
	 0 
	 0 
	 6,564
	 2,379
	 3,825 

	 11-051
	 5,265
	 2,410
	 2,855 
	 0 
	 0 
	 0 
	 5,265
	 2,410
	 2,855 

	 11-052
	 3,962
	 3,024
	 938 
	 0 
	 0 
	 0 
	 3,962
	 3,024
	 938 

	 11-053
	 34,458
	 31,830
	 2,628 
	 0 
	 0 
	 0 
	 34,458
	 31,830
	 2,628 

	 11-054
	 207,418
	 174,796
	 32,622 
	 0 
	 0 
	 0 
	 207,418
	 174,796
	 32,622 

  

 

 

 26
 

 

 York River Electric, Inc.
 Schedule of Gross Profit by Contract (continued)
 

 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Contracts completed in 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Recognized in 2010 and prior
	 Recognized in 2011

	 Contract Number
	 Total Contract Revenue
	 Total Contract Costs
	 Contract Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 11-055
	 $3,310
	 $2,575
	 $735 
	 $0 
	 $0 
	 $0 
	 $3,310
	 $2,575
	 $735 

	 11-056
	 8,780
	 6,954
	 1,826 
	 0 
	 0 
	 0 
	 8,780
	 6,954
	 1,826 

	 11-058
	 449
	 1,262
	 (813)
	 0 
	 0 
	 0 
	 449
	 1,262
	 (813)

	 11-059
	 37,859
	 12,384
	 25,475 
	 0 
	 0 
	 0 
	 37,859
	 12,384
	 25,475 

	 11-060
	 160
	 1,084
	 (924)
	 0 
	 0 
	 0 
	 160
	 1,084
	 (924)

	 11-062
	 3,670
	 2,739
	 931 
	 0 
	 0 
	 0 
	 3,670
	 2,739
	 931 

	 11-063
	 25,665
	 12,044
	 13,621
	 0 
	 0 
	 0 
	 25,665
	 12,044
	 13,621

	 11-065
	 90,832
	 72,635
	 18,197 
	 0 
	 0 
	 0 
	 90,832
	 72,635
	 18,197 

	 11-071
	 $2,288
	 $601 
	 $187 
	 0 
	 0 
	 0 
	 $2,288
	 $601 
	 $187 

	 11-076
	 56,952
	 10,083
	 46,869 
	 0 
	 0 
	 0 
	 56,952
	 10,083
	 46,869 

	 11-077
	 1,151
	 383
	 768 
	 0 
	 0 
	 0 
	 1,151
	 383
	 768 

	 11-078
	 15,399
	 11,357
	 4,042 
	 0 
	 0 
	 0 
	 15,399
	 11,357
	 4,042 

	 11-079
	 478
	 572
	 (94)
	 0 
	 0 
	 0 
	 478
	 572
	 (94)

	 11-080
	 440
	 149
	 291 
	 0 
	 0 
	 0 
	 440
	 149
	 291 

	 11-084
	 10,117
	 6,263
	 3,854 
	 0 
	 0 
	 0 
	 10,117
	 6,263
	 3,854 

	 11-085
	 4,898
	 2,453
	 2,445 
	 0 
	 0 
	 0 
	 4,898
	 2,453
	 2,445 

	 11-086
	 6,750
	 2,618
	 4,132 
	 0 
	 0 
	 0 
	 6,750
	 2,618
	 4,132 

	 11-087
	 894
	 151
	 743 
	 0 
	 0 
	 0 
	 894
	 151
	 743 

	 11-095
	 2,417
	 194
	 2,223 
	 0 
	 0 
	 0 
	 2,417
	 194
	 2,223 

	 11-097
	 1,934
	 2,547
	 (613)
	 0 
	 0 
	 0 
	 1,934
	 2,547
	 (613)

	 Service Time
	 414,647
	 366,362
	 48,285 
	 0 
	 0 
	 0 
	 414,647
	 366,362
	 48,285 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 $14,815,403
	 $12,184,846
	 $2,630,557
	 $7,544,713 
	 $6,524,633 
	 $1,020,080 
	 $7,270,690 
	 $5,960,213 
	 $1,310,447 

  

 

 27
 

 

 York River Electric, Inc.
 Schedule of Gross Profit by Contract Estimated
 

 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Contracts in progress at October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 Recognized in 2010 and prior
	 Recognized in 2011

	 Contract Number
	 Estimated Total Contract Revenue
	 Estimated Total Contract Costs
	 Estimated Contract Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 07-101
	 $2,118,611
	 $2,049,258 
	 $69,353 
	 $2,029,953 
	 $1,969,071 
	 $60,882 
	 $13,710 
	 $7,692 
	 $6,018 

	 09-059
	 3,382,814
	 3,153,283
	 229,531 
	 2,734,241 
	 2,648,013 
	 86,228 
	 322,151 
	 200,996 
	 121,155 

	 10-017
	 1,291,986
	 1,211,999
	 79,987 
	 944,590 
	 863,521 
	 81,069 
	 311,900 
	 315,180 
	 (3,280)

	 10-018
	 1,457,731
	 1,269,836
	 187,895 
	 1,285,948 
	 1,178,433 
	 107,515 
	 169,803 
	 89,678 
	 80,125 

	 10-051
	 3,309,044
	 2,828,352
	 480,692 
	 323,494 
	 276,890 
	 46,604 
	 2,535,987 
	 2,167,205 
	 368,782 

	 10-072
	 6,706,365
	 6,332,933
	 373,432 
	 188,487 
	 182,999 
	 5,488 
	 3,428,728 
	 3,232,798 
	 195,930 

	 10-087
	 694,613
	 683,015
	 11,598 
	 61,000 
	 60,543 
	 457 
	 630,240 
	 619,155 
	 11,085 

	 10-097
	 393,087
	 354,121
	 38,966 
	 24,636 
	 21,013 
	 3,623 
	 132,132 
	 120,215 
	 11,917 

	 10-099
	 311,180
	 200,857
	 110,323 
	 45,516 
	 30,614 
	 14,902 
	 233,590 
	 149,540 
	 84,050 

	 10-112
	 1,445,000
	 1,296,400
	 148,600 
	 0 
	 0 
	 0 
	 869,179 
	 779,795 
	 89,384 

	 10-123
	 788,891
	 649,164
	 139,727 
	 10,105 
	 8,361 
	 1,744 
	 724,590 
	 596,206 
	 128,384 

	 11-022
	 2,250,342
	 1,599,238
	 651,104 
	 0 
	 0 
	 0 
	 1,609,961 
	 1,144,142 
	 465,819 

	 11-029
	 1,698,953
	 1,259,977
	 438,976 
	 0 
	 0 
	 0 
	 170,668 
	 126,571 
	 44,097 

	 11-048
	 161,328
	 153,945
	 7,383 
	 0 
	 0 
	 0 
	 143,448 
	 136,883 
	 6,565 

	 11-049
	 69,166
	 35,486
	 33,680 
	 0 
	 0 
	 0 
	 30,965 
	 15,887 
	 15,078 

	 11-057
	 68,662
	 59,932
	 8,730 
	 0 
	 0 
	 0 
	 611 
	 533 
	 78 

	 11-061
	 1,469,864
	 1,601,110 
	 (131,246)
	 0 
	 0 
	 0 
	 1,469,378 
	 1,600,581 
	 (131,203)

	 11-064
	 600
	 488
	 112 
	 0 
	 0 
	 0 
	 647 
	 526 
	 121 

	 11-066
	 582,126
	 437,737
	 144,389 
	 0 
	 0 
	 0 
	 7,772 
	 5,844 
	 1,928 

	 11-067
	 758,901
	 575,378
	 183,523 
	 0 
	 0 
	 0 
	 9,285 
	 7,040 
	 2,245 

	 11-068
	 72,918
	 64,014
	 8,904 
	 0 
	 0 
	 0 
	 21,394 
	 18,782 
	 2,612 

	 11-069
	 $1,661,000
	 $1,552,638 
	 $108,362 
	 $0 
	 $0 
	 $0 
	 $52,214 
	 $48,808 
	 $3,406 

	 11-070
	 3,375
	 3,221
	 154 
	 0 
	 0 
	 0 
	 1,456 
	 1,390 
	 66 

	 11-072
	 180,347
	 149,209
	 31,138 
	 0 
	 0 
	 0 
	 2,740 
	 2,267 
	 473 

	 11-073
	 109,120
	 93,360
	 15,760 
	 0 
	 0 
	 0 
	 1,479 
	 1,265 
	 214 

	 11-074
	 212,847
	 178,058
	 34,789 
	 0 
	 0 
	 0 
	 2,663 
	 2,228 
	 435 

	 11-075
	 51,011
	 37,999
	 13,012 
	 0 
	 0 
	 0 
	 634 
	 472 
	 162 

  

 28
 

 York River Electric, Inc.
 Schedule of Gross Profit by Contract Estimated (continued)
 

 	 	 	 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 Contracts in progress at October 31, 2011
	 

	 

	 

	 

	 

	 

	 

	 

	 Recognized in 2010 and prior
	 Recognized in 2011

	 Contract Number
	 Estimated Total Contract Revenue
	 Estimated Total Contract Costs
	 Estimated Contract Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)
	 Contract Revenue
	 Contract Costs
	 Profit (Loss)

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 11-069
	 $1,661,000
	 $1,552,638 
	 $108,362 
	 $0 
	 $0 
	 $0 
	 $52,214 
	 $48,808 
	 $3,406 

	 11-081
	 147,072
	 119,894
	 27,178 
	 0 
	 0 
	 0 
	 1,952 
	 1,591 
	 361 

	 11-082
	 5,240
	 4,234
	 1,006 
	 0 
	 0 
	 0 
	 3,947 
	 3,189 
	 758 

	 11-083
	 297,274
	 261,738
	 35,536 
	 0 
	 0 
	 0 
	 2,408 
	 2,120 
	 288 

	 11-088
	 606,231
	 581,180
	 25,051 
	 0 
	 0 
	 0 
	 5,958 
	 5,712 
	 246 

	 11-089
	 4,905,456
	 4,669,773
	 235,683 
	 0 
	 0 
	 0 
	 41,023 
	 39,052 
	 1,971 

	 11-090
	 3,479,501
	 3,240,586
	 238,912 
	 0 
	 0 
	 0 
	 17,731 
	 16,514 
	 1,217 

	 11-091
	 5,748,327
	 5,340,280
	 408,047 
	 0 
	 0 
	 0 
	 50,829 
	 47,221 
	 3,609 

	 11-092
	 2,288
	 1,306
	 982 
	 0 
	 0 
	 0 
	 0 
	 0 
	 0 

	 11-093
	 291,993
	 203,040
	 88,953 
	 0 
	 0 
	 0 
	 2,307 
	 1,604 
	 703 

	 11-094
	 45,122
	 42,041
	 3,081 
	 0 
	 0 
	 0 
	 9,861 
	 9,188 
	 673 

	 11-096
	 31,499
	 24,245 
	 7,254 
	 0 
	 0 
	 0 
	 2,831 
	 2,179 
	 652 

	 11-099
	 3,984
	 2,329
	 1,655 
	 0 
	 0 
	 0 
	 0 
	 0 
	 0 

	 11-102
	 14,001
	 10,598
	 3,403 
	 0 
	 0 
	 0 
	 0 
	 0 
	 0 

	 11-103
	 5,756
	 3,813
	 1,943 
	 0 
	 0 
	 0 
	 0 
	 0 
	 0 

	 11-104
	 $38,866
	 $38,410 
	 $456 
	 $0 
	 $0 
	 $0 
	 $0 
	 $0 
	 $0 

	 11-106
	 42,162
	 35,512
	 6,650 
	 0 
	 0 
	 0 
	 0 
	 0 
	 0 

	 Contacts in progress
	 46,914,654
	 42,409,990
	 4,504,664 
	 7,647,970 
	 7,239,458 
	 408,512 
	 13,036,172 
	 11,520,049 
	 1,516,123 

	 Contracts completed
	 14,815,403
	 12,184,846
	 2,630,557 
	 7,544,713 
	 6,524,633 
	 1,020,080 
	 7,270,690 
	 5,960,213 
	 1,310,477 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 $61,730,357
	 $54,594,836
	 $7,135,221
	 $15,192,683 
	 $13,764,091 
	 $1,428,592 
	 $20,306,862 
	 $17,480,262 
	 $2,826,600 

  

 

 29
 

 

 SCHEDULE 4.01(b) [Letterhead York River Electric]
 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.01(B) - ORGANIZATION
 

 

 The Company is organized and qualified to conduct business in the states of: Virginia, North Carolina, Tennessee, and Pennsylvania 
 

 The Company’s (i) chief executive office, (ii) principal place of business, and (iii) location at which it maintains all records relating to its account receivable is: 
 

 108 Production Drive 
 Yorktown, VA 23693
 

 Other locations where the Company has offices or other places of business, maintains stocks of inventory, records, equipment or other assets are:
 

 112 Production Drive
 Yorktown, VA 23693
 

 

 

 

 SCHEDULE 4.01(c) [Letterhead York River Electric]
 

 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.01(C) – LIST OF OFFICERS, DIRECTORS, AND EMPLOYEES
 

 

 The complete list of all the officers, directors, and employees of the Company is:
 

 OFFICERS:
 

 Catherine E. McQuade - President
 

 Mark A. Bryan – Treasurer/Secretary
 

 DIRECTORS:
 

 None
 

 EMPLOYEES:
 

 See attached file.
 

 

 

 Employees
 York River Electric, Inc. 
 02-15-2012  
 	 	 	 	
	 Employee
	 Name
	 Social Security #
	 Pay Group

	 ANDWIL
	 William T. Anderson
	 274-80-2403
	 FIELD

	 

 ARNWAL
	 Walter E. Arnemann
	 149-36-4805
	 FIELD

	 

 ARRTIM
	 Timothy H. Arrington
	 266-19-1620
	 FIELD

	 

 BABLOU
	 Louis J. Babilino
	 147-72-6008
	 OFFICE

	 

 BIECLY
	 Clyde E. Diers
	 227-21-3910
	 FIELD

	 

 BOYGRE
	 Gregory D. Boyters
	 227-41-0778
	 FIELD

	 

 BRADAN
	 Daniel R. Brault
	 229-47-1461
	 FIELD

	 

 BRIBIL
	 Billy M. Bridges
	 229-02-8306
	 FIELD

	 

 BROCAR
	 Carey A. Brown
	 237-23-1559
	 FIELD

	 

 BRODAV
	 David J. Brown Jr.
	 224-70-1489
	 FIELD

	 

 BROMIC
	 Michael R. Broshears
	 087-60-3211
	 FIELD

	 

 BRYMAR
	 Mark A. Bryan
	 228-06-7060
	 OFFICE

	 

 BRYPAU
	 Paul R. Bryan 
	 225-90-1139
	 OFFICE

	 

 BRYPJR
	 Paul R. Bryan Jr.
	 225-51-2201
	 FIELD

	 

 BURJAS
	 Jason D. Burton
	 229-55-1147
	 OFFICE

	 

 BUTAMA
	 Amanda G. Butts
	 208-66-1271
	 OFFICE

	 

 CAMBRA
	 Brandon C. Campbell
	 229-63-7858
	 FIELD

 

 1
 

 

 Employees
 	 	 	 	
	 COLTOM
	 Tommy D. Collins
	 233-08-2693
	 OFFICE

	 

 COTCLY
	 Clyde A. Cottrill
	 227-82-0253
	 OFFICE

	 

 CREPAT
	 Patricia E. Crenshaw
	 226-47-9041
	 OFFICE

	 

 CURMAT
	 Matthew A. Curtis
	 620-07-4985
	 FIELD

	 

 DAIRIC
	 Richard T. Dailey
	 224-80-9876
	 FIELD

	 

 DAVMAR
	 Marlon V. Davis
	 230-11-4905
	 OFFICE

	 

 DYKMAR
	 Mary L. Dykas
	 391-90-8945
	 OFFICE

	 

 ELLCHR
	 Christoper S. Ellis
	 233-19-0902
	 OFFICE

	 

 EVADAV
	 David L. Evans
	 229-25-9044
	 FIELD

	 

 FARJOH
	 John J. Farmar
	 158-46-3733
	 FIELD

	 

 FLOCHA
	 Charles W. Floyd
	 306-92-6087
	 FIELD

	 

 FLOJAM
	 James O. Flowers Jr.
	 224-80-8635
	 FIELD

	 

 GILKEL
	 Kellen C. Gill-Mash
	 185-72-0529
	 FIELD

	 

 GIRMAR
	 Mark A. Girard
	 094-62-1520
	 FIELD

	 

 GLOGAR
	 Gary E. Glover
	 228-94-8473
	 OFFICE

	 

 GORTIM
	 Timothy J. Gorde
	 226-15-4841
	 OFFICE

	 

 GRAMAR
	 Mark T. Grat
	 226-43-3024
	 FIELD

	 

 GRERON
	 Ron C. Gregory
	 230-41-7848
	 FIELD

	 

 GRILIN
	 Linwood L. Griffin 
	 227-52-5035
	 OFFICE

	 

 HARDEE
	 Jason A. Hardee
	 230-49-7195
	 OFFICE

	 

 HINART
	 Arthur G. Hinckle
	 224-64-8998
	 OFFICE

 

 2
 

 Employees
 	 	 	 	
	 HINNIC
	 Nicholas D. Hinson
	 228-63-9174
	 FIELD

	 

 HUGBRI
	 Birckey J. Hughes
	 225-08-7418
	 OFFICE

	 

 HUGCHA
	 Charles Boyd Hughes
	 230-45-3503
	 FIELD

	 

 HUTTRA
	 Tracy B. Hutson
	 227-33-6447
	 OFFICE

	 

 INGLEW
	 Lewis Inge
	 229-21-2312
	 OFFICE

	 

 JAEWIL
	 William B. Jaeger
	 228-06-7735
	 FIELD

	 

 KIMDYL
	 Dylan L. Kim
	 229-65-6106
	 FIELD

	 

 MADCHR
	 Christoper Madsen
	 231-57-1366
	 FIELD

	 

 MANCAR
	 Carlotta R. Manring
	 215-68-5840
	 OFFICE

	 

 MARMIC
	 Michael D. Martin
	 227-86-9622
	 FIELD

	 

 MATJOH
	 John M. Matzeder
	 231-25-4948
	 FIELD

	 

 MCCMIC
	 Michael C. McCay
	 223-78-1383
	 OFFICE

	 

 MCPBRI
	 Brian A. McPherson
	 226-17-4546
	 FIELD

	 

 MCQAND
	 Andrew J McQuade
	 226-55-7737
	 OFFICE

	 

 MCQCAT
	 Catherine E. McQuade
	 223-04-0221
	 OFFICE

	 

 MEENIC
	 Nicholas G. Meek
	 568-57-7816
	 FIELD

	 

 MILCRA
	 Craig A. Miller
	 193-46-4193
	 OFFICE

	 

 MORSJO
	 John E. Morse
	 224-76-4091
	 FIELD

	 

 NAVWIL
	 William J. Navarro
	 435-51-7337
	 FIELD

	 

 PACRAL
	 Ralph Pacheco
	 077-54-7982
	 FIELD

 

 3
 

 

 Employees
 	 	 	 	
	 PALANT
	 Anthony P. Palcioz
	 231-66-7327
	 OFFICE

	 

 PAYPAT
	 Patrick L. Payton
	 223-72-0017
	 FIELD

	 

 PONRIC
	 Richard S. Pond
	 231-82-4786
	 OFFICE

	 

 RAGCAT
	 Catherine B. Ragans
	 231-17-5602
	 FIELD

	 

 RATBOB
	 Bobby L. Ratliff
	 229-88-6944
	 FIELD

	 

 REAADA
	 Adam B. Reaves
	 225-45-3662
	 FIELD

	 

 ROBJAC
	 Jackie E. Roberts
	 236-62-1270
	 FIELD

	 

 SARPAT
	 Patrick J. Sartwell
	 219-64-0257
	 OFFICE

	 

 SEEERI
	 Eric I. Seeger
	 223-51-3865
	 FIELD

	 

 SHANAT
	 Nathan J. Shannon
	 224-55-3007
	 FIELD

	 

 STOJOH
	 John D. Storm
	 225-37-5461
	 FIELD

	 

 TOOJAS
	 Jason W. Tootle
	 258-77-8075
	 FIELD

	 

 TYEJES
	 Jesse B. Tyer
	 223-59-5254
	 FIELD

	 

 VERKYL
	 Kyle Verkuilen
	 231-35-0712
	 FIELD

	 

 WATRAN 
	 Ransone W. Watterton 
	 226-50-1161
	 FIELD

	 

 WILMIC
	 Michael A. Williams
	 227-98-4407
	 FIELD

	 

 WILROB
	 Robert H. Williams
	 237-96-8905 
	 FIELD

 

 

 4
 

 

 SCHEDULE 4.03  [Letterhead York River Electric]
 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.03 – SUBSIDIARIES AND AFFILIATES
 

 

 The Company does not own, directly or indirectly, any capital stock, shares or equity securities of any Person or have any direct or indirect equity or ownership interest in any business other than those below:
 

 YORK RIVER ELECTRIC, INC. – FEI# 54-1351537
 

 CHARTERS, LLC – FEI# 26-2097576
 

 BRYAN PROPERTIES – FEI# 
 

 

 Financial Statements
 Years Ended
 December 31, 2010 and 2009
 

 

 York River Electric, Inc.
 

 

 

 York River Electric, Inc.
 Contents
 

 

 

 

 	 	
	 

	 Page

	 Report of Independent Auditors
	 1

	 

	 

	 Financial Statements
	 

	 

	 

	 Balance Sheets
	 2

	 

	 

	 Statement of Income
	 3

	 

	 

	 Statements of Changes in Equity
	 4

	 

	 

	 Statements of Cash Flows
	 5

	 

	 

	 Notes to Financial Statements
	 6--14

	 

	 

	 Supplementary Information
	 

	 Schedules of Cost of Revenue Earned
	 15

	 

	 

	 Schedules of General and Administrative Expenses
	 16

	 

	 

	 Schedule of Contracts in Progress
	 17--19

	 

	 

	 Schedule of Gross Profit By Contract
	 20--28

 

 

 

 

 

 

 Report of Independent Auditors 
 Board of Directors 
 York River Electric, Inc. 
 

 We have audited the accompanying balance sheet of York River Electric, Inc. as of December 31, 2010, and the related statements of income, changes in equity, and cash flows for the year then ended. These financial statements are the responsibility of York River Electric, Inc.’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements as of December 31, 2009, were audited by Goodman & Company, LLP, who merged into Dixon Hughes Goodman LLP as of April 1, 2011, and whose report dated April 8, 2010, expressed an unqualified opinion on those statements. 
 We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the York River Electric, Inc.’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 
 In our opinion, the 2010 financial statements referred to above present fairly, in all material respects, the financial position of York River Electric, Inc., as of December 31, 2010, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. 
 Our audit was conducted for the purpose of forming an opinion on the basic 2010 financial statements taken as a whole. The supplementary information on pages 15 through 28 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information for the year ended December 31, 2010, has been subjected to the auditing procedures applied in the audit of the basic 2010 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic 2010 financial statements taken as a whole. Such information for the year ended December 31, 2009, was subjected to the auditing procedures applied in the audit by Goodman and Company, LLP, whose report dated April 8, 2010, expressed an opinion 
 

 that such information was fairly stated in relation to the basic 2009 financial statements taken as a whole. 
 Newport News, Virginia 
 December 12, 2011 
 1
 

 York River Electric, Inc. 
 Balance Sheets 
 	 	 	
	 

	  December 31, 2010
	  December 31, 2009

	 Assets
	 

	 

	   Current Assets
	 

	 

	     Cash and cash equivalents
	 $5,955,435 
	 $6,321,494 

	     Investments
	 3,264,749
	 646,129

	    Accounts receivable:
	 

	 

	      Trade- net
	 3,483,928
	 4,712,944

	      Other
	 5036
	 2,558

	      Stockholder
	 188,717
	 187,573

	     Note receivable - current
	 150,000
	 0

	     Prepaid expenses
	 19,855
	 41,192

	     Cost and estimated earnings in excess of billings
	 770,932
	 560,756

	       Total current assets
	 13,838,652
	 12,472,646

	 

	 

	 

	    Property and Equipment, net
	 814,901
	 758,675

	 

	 

	 

	    Other assets
	 

	 

	      Due from related party
	 64,984
	 64,984

	      Cash surrender value of life insurance
	 187,253
	 132,438

	      Note receivable – noncurrent
	 100,000
	 0

	         Total other assets
	 352,237
	 13,989,499

	 Total Assets
	 15,005,790
	 13,428,743

	 

	 

	 

	 Liabilities and Stockholders' Equity
	 

	 

	   Current liabilities
	 

	 

	     Current portion of long term debt
	 $66,388 
	 $66,988 

	     Accounts payable
	 2,558,188
	 1,649,398

	     Accrued expenses
	 246,652
	 269,485

	     Distributions payable
	 73,000
	 263,600

	     Billings in excess of costs and estimated earnings
	 972,048
	 1,739,391

	            Total current liabilities
	 3,916,276
	 3,988,862

	 

	 

	 

 

 3
 

 

 York River Electric, Inc. 
 Balance Sheets 
 

 	 	 	
	 Long-term debt - net of current portion
	 86,748
	 111,199

	 

	 

	 

	 Total Liabilities
	 4,003,024
	 4,100,061

	 

	 

	 

	   Stockholders' equity
	 11,002,766
	 9,328,682

	 

	 

	 

	 Total Liabilities and Stockholders' Equity
	 $15,005,790 
	 $13,428,743 

 

 

 The accompanying notes are an integral part of these financial statements 
 

 4
 

 

 

 

 York River Electric, Inc. 
 Statements of Income Statements of Income 
 

 	 	 	
	 

	 Year Ended December 31, 2010
	 Year Ended December 31, 2009

	 

	 

	 

	  Contract revenue earned:
	 

	 

	     Government contracts - 8(a)
	 $26,911,310 
	 $27,351,339 

	     Other government contracts
	 157,535
	 860,108

	     Commercial Contracts
	 6,676,270
	 1,782,631

	   Total contract revenue earned
	 33,745,115
	 29,994,078

	 

	 

	 

	   Cost of revenue earned
	 27,688,700
	 22,771,835

	   Gross profit
	 6,056,415
	 7,222,243

	 

	 

	 

	   General and administrative expenses
	 1,572,991
	 1,460,794

	   Income from operations
	 4,482,424
	 5,761,449

	 

	 

	 

	    Other income (expense)
	 

	 

	      Gain on sale of property and equipment
	 11,401
	 200

	       Gain on sale of investments
	 20,245
	 0

	       Interest expense
	 -7,818
	 -9,179

	       Interest income
	 85,423
	 19,038

	     Other income
	 17,410
	 11,053

	 

	 

	 

	     State franchise and excise taxes
	 -6,131
	 -5,845

	   Total other income
	 120,530
	 15,267

	          Net Income
	 $4,602,954 
	 $5,776,716 

 

 The accompanying notes are an integral part of these financial statements 
 

 5
 

 

 York River Electric, Inc. 
 Statements of Changes in Equity Statements of Changes in Equity 
 

 	 	 	 	 	 	
	 Years Ended December 31, 2010 and 2009

	 

	 Common Stock
	 Additional Paid-In Capital
	 Retained Earnings
	 Accumulated Other Comprehensive Income (Loss)
	 Total

	 

	 

	 

	 

	 

	 

	 Balance- December 31, 2008
	 $1,067 
	 $4,800 
	 $4,444,789 
	 $0 
	 $4,450,656 

	    Comprehensive income
	 

	 

	 

	 

	 

	         Net Income
	 0
	 0
	 5,776,716
	 0
	 5,776,716

	          Net unrealized loss on investments
	 0
	 0
	 0
	 -1,088
	 -1,088

	     Total comprehensive income
	 

	 

	 

	 

	 5,775,628

	 

	 

	 

	 

	 

	 

	      Distributions
	 0
	 0
	 -897,602
	 0
	 -897,602

	 

	 

	 

	 

	 

	 

	 Balance- December 31, 2009
	 1,067
	 4,800
	 9,323,903
	 -1,088
	 9,328,682

	    Comprehensive income
	 

	 

	 

	 

	 

	         Net income
	 0
	 0
	 4,602,954
	 0
	 4,602,954

	         Net unrealized gain on investments
	 0
	 0
	 0
	 116,536
	 116,536

	    Total comprehensive income
	 

	 

	 

	 

	 4,719,490

	 

	 

	 

	 

	 

	 

	     Distributions
	 0
	 0
	 -3,045,406
	 0
	 -3,045,406

	 

	 

	 

	 

	 

	 

	 Balance- December 31, 2010
	 $1,067
	 $4,800
	 $10,881,451 
	 $115,448 
	 $11,002,766 

  

 The accompanying notes are an integral part of these financial statements 
 

 6
 

 

 

 York River Electric, Inc. 
 Statements of Cash Flows 
 

 	 	 	
	 

	 Year Ended December 31, 2010
	 Year Ended December 31, 2009

	  Cash flows from operating activities
	 

	 

	   Net income
	 $4,602,954 
	 $5,776,716 

	 

	 

	 

	 Adjustments to reconcile net cash from operating activities:
	 

	 

	   Bad debts
	 128,159
	 5,503

	   Depreciation
	 236,847
	 255,840

	   Gain on sale of property and equipment
	 (11,401)
	 (200)

	   Gain on sale of investments
	 (20,245)
	 0

	   Increase in cash surrender value of life insurance
	 (54,815)
	 (27,001)

	    Changes in:
	 

	 

	        Accounts receivable
	 

	 

	             Trade
	 1,100,857
	 (2,268,362)

	             Other
	 (2,478)
	 14,865

	       Prepaid expenses
	 21,337
	 -34,656

	       Costs and estimated earnings in excess of billings
	 (210,176)
	 1,365,028

	       Accounts payable
	 908,790
	 121,224

	       Accrued expenses
	 (22,833)
	 127,450

	       Billings in excess of cost and estimated earnings
	 (767,343)
	 770,017

	             Net cash from operating activities
	 5,909,653
	 6,106,424

	 

	 

	 

	  Cash flows from investing activities
	 

	 

	     Increase in notes receivable
	 (150,000)
	 0

	     Advances to stockholder
	 (1,144)
	 (1,526)

	     Purchases of property and equipment
	 (248,356)
	 (83,003)

	     Purchases of investments
	 (2,481,840)
	 (647,217)

	     Proceeds from sale of property and equipment
	 25,753
	 200

	         Net cash from investing activities
	 (2,855,587)
	 (731,546)

	 

	 

	 

 7
 

 York River Electric, Inc. 
 Statements of Cash Flows  (continued
 

 	 	 	
	 Cash flows from financing activities
	 

	 

	     Principal payments of long term debt
	 (84,119)
	 (158,943)

	     Distributions to stockholders
	 (3,236,006)
	 (803,477)

	         Net cash from financing activities
	 (3,320,125)
	 (962,420)

	 

	 

	 

	  Net change
	 -266,059
	 4,412,458

	 

	 

	 

	 Cash and cash equivalents - beginning of year
	 6,321,494
	 1,909,036

	 

	 

	 

	 Cash and cash equivalents -  end of year
	 $6,055,435 
	 $6,321,494 

	 

	 

	 

	 Supplemental disclosure of noncash investing and financing activities

	     Property acquired from proceeds of long-term debt
	 $ 59,068
	   $  0

	 

	 

	 

	 Distributions accrued and unpaid
	 $73,000 
	 $263,600 

 

 The accompanying notes are an integral part of these financial statements 
 

 8
 

 

 

 

 York River Electric, Inc. 
 Notes to Financial Statements 
 December 31, 2010 and 2009 
 

 1. Organization and Nature of Business 
 York River Electric, Inc. (Company) is a general contractor engaged in electrical and general contract activities for both commercial and government customers primarily in the Hampton Roads area of Virginia. 
 In 2001, the Company was approved for participation in the section 8(a) program of the U.S. government Small Business Administration (SBA). The purpose of this program is to make available certain government contracts to small disadvantaged businesses. Under this program, there are specific requirements that must be met by the Company. The Company’s section 8(a) participation graduated in 2010. To minimize the impact of a potential reduction in revenue, the Company is focusing on an increased pursuit of non 8(a) government and commercial contracts. 
 2. Summary of Significant Accounting Policies 
 Cash and Cash Equivalents 
 Cash and cash equivalents consist of highly liquid investments with an initial purchased maturity of three months or less. 
 Accounts Receivable 
 Accounts receivable are generated from prime and subcontracting agreements with U.S. governmental agencies and various commercial entities and are stated at amounts billed less an allowance for doubtful accounts. Credit is extended to customers after an evaluation of the customer’s financial condition. Management considers accounts over 30 days past due. Management’s determination of the allowance for doubtful accounts is based on an evaluation of the accounts receivable, past experience, current economic conditions, and other risks inherent in the accounts receivable portfolio. Allowances of $122,511 and $-0-were determined at December 31, 2010 and 2009, respectively. 
 Investments and Fair Value Measurements 
 Investments in securities and mutual funds with readily determinable fair values are measured at fair value on the balance sheet. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date 
 9
 

 See Note 4 for discussion of fair value measurements.
 Property and Equipment 
 Property and equipment are recorded at cost and depreciation is calculated by using the straight-line method for financial statement purposes based on the following estimated useful lives: 
 	 	
	 Software
	 3 years

	 Tools and equipment
	 5-7 years

	 Transportation equipment
	 5 years

	 Office furniture and equipment
	 3-7 years

	 Leasehold improvements
	 5-39 years

 

 Revenue Recognition 
 Revenues on fixed-price contracts are recognized on the percentage-of-completion method of accounting based upon costs to date compared to total estimated costs. Cost and profit estimates are reviewed periodically as the work progresses, and adjustments, if needed, are reflected in the period in which the estimates are revised. Anticipated losses are recognized as soon as they become known. Revenues from time-and-materials contracts are recognized on the basis of direct labor hours incurred, at negotiated contract billing rates, plus reimbursable costs incurred. 
 Contract costs include all direct material, labor costs, and those indirect costs related to contract performance. General and administrative costs are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenues and would be recognized in the period in which the revisions are determined. 
 The current asset “costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed. 
 The current liability “billings in excess of costs and estimated earnings” represents amounts billed in excess of revenues recognized. 
 Use of Estimates 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 
 10
 

 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. 
 Certain Significant Estimates 
 The Company has calculated and determined its revenue earned for 2010 and 2009, and the effect on several asset and liability amounts based on the common industry standard revenue determination formula of actual costs to date compared to total estimated job costs. Due to uncertainties inherent in the estimation process, and uncertainties relating to future performance as the contracts are completed, it is at least reasonably possible that estimated job costs, in total or on individual contracts, will be revised. 
 Income Taxes 
 The Company, with the consent of its stockholders, elected to be taxed under the Internal Service Revenue Code as a Subchapter S corporation, which provides that, in lieu of corporate income taxes, the stockholders separately account for the Company’s items of income, deductions, losses and credits. Therefore, no provision or liability for income taxes has been included in these financial statements. The Company has determined that it does not have any material unrecognized tax benefits or obligations as of December 31, 2010. Fiscal years ending on or after December 31, 2007, remain subject to examination by federal and state tax authorities. 
 Advertising 
 The Company expenses advertising costs as incurred. For 2010 and 2009, advertising expense was $33,156 and $70,452, respectively. 
 Reclassifications 
 Certain amounts in the 2009 financial statements have been reclassified to conform to the 2010 financial statement presentation. Such reclassifications do not affect the previously reported net income. 
 Subsequent Events 
 In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through December 12, 2011, the date the financial statements were available to be issued. 
 11
 

 3. Accounts Receivable 
 Accounts receivable consists of the following: 
 	 	 	
	 

	 2010
	 2009

	 Government contracts
	 $2,695,091 
	 $4,305,465 

	 Commercial contracts
	 911,348
	 407,479

	 

	 3,606,439
	 4,712,944

	 Less- allowance for doubtful accounts
	 -122,511
	 0

	 

	 $3,483,928 
	 $4,712,944 

 

 4. Fair Value Measurements 
 Fair value as defined under generally accepted accounting principles (GAAP) is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: 
 Level 1: Observable inputs such as quoted prices in active markets. 
 Level 2: Inputs other than quoted prices in active markets that are either directly or indirectly observable. 
 Level 3: Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions. 
 Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. 
 The following description of the valuation methodologies are used for assets measured at fair value. There have been no changes in methodologies used at December 31, 2010 and 2009. 
 12
 

 

 When quoted prices are available in active markets for identical instruments, investment securities are classified within level 1 of the fair value hierarchy. Level 1 investments include mutual funds, money market fund, and equities. 
 Level 2 investment securities include limited partnerships and fixed income securities for which quoted prices are not available in active markets for identical instruments. The Company utilizes a third party pricing service to determine fair value of each of these investment securities. Because quoted prices in active markets for identical assets are not available, these prices are determined using observable market information such as quotes from less active markets and/or quoted prices of securities with similar characteristics. 
 The following tables set forth by level within the fair value hierarchy the Company’s assets accounted for at fair value on a recurring basis as of December 31, 2010 and 2009. 

 	 	 	 	 	 	 	 	 	
	 

	 Fair Value as of December 31, 2010
	  

	 

	 Level 1
	 Level 2
	 Level 3
	 Total
	  

	 Mutual Funds
	 

	 

	 

	 

	  

	    Intermediate bond
	 $259,983 
	 $ -
	 $ -
	 $259,983 

	    Large blend
	 481,275
	 -
	 -
	 481,275

	    Large growth
	 152,193
	 -
	 -
	 152,193

	    Municipal bond
	 591,159
	 -
	 -
	 591,159

	    Nontraditional bond
	 153,595
	 -
	 -
	 153,595

	    World bond
	 240,689
	 -
	 -
	 240,689

	    World stock
	 197,391
	 -
	 -
	 197,391

	 Money market fund
	 42,106
	 -
	 -
	 42,106

	 Corporate notes
	 -
	 310,931
	 -
	 310,931

	 Limited partnerships
	 -
	 20,837
	 -
	 20,837

	 Equities
	 

	 

	 

	 

	    Common stok
	 732,286
	 -
	 -
	 732,286

	    Preferred stock
	 82,304
	 -
	 -
	 82,304

	 

	 

	 

	 

	 

	 

	 $2,118,391 
	 $331,768 
	 $ -
	 $ 3, 264,749

	 

	 

	 

	 

	 

	  

  

 13
 

 	 	 	 	 	 	 	 	
	 

	 Fair Value as of December 31, 2009
	  

	 

	 Level 1
	 Level 2
	 Level 3
	 Total
	  

	 Mutual Funds
	 

	 

	 

	 

	  

	    Intermediate bonds
	 $99,183 
	 $-
	 $-
	 $99,183 

	    Large blend
	 51,073
	 -
	 -
	 51,073

	    World bond
	 48,934
	 -
	 -
	 48,934

	 Corporate notes
	 -
	 99,639
	 -
	 99,639

	 Limited partnerships
	 -
	 7,734
	 -
	 7,734

	 Equities- common stock
	 339,566
	 -
	 -
	 339,566

	 

	 

	 

	 

	 

	 

	 $538,756 
	 $107,373 
	 -
	 $646,129 

  

 The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. 
 5. Investments 
 Fair values and unrealized gains (losses) are summarized as follows: 
 	 	 	 	 	
	 December 31, 2010
	 

	 Cost
	 Fair Value
	 Unrealized Gain

	 Scott and Stringfellow
	 

	 $1,629,115 
	 $1,742,063 
	 $112,948 

	 Fidelity Investments
	 

	 1,520,186
	 1,522,686
	 2,500

	 

	 

	 $3,149,301 
	 $3,264,749 
	 $115,448 

	  December 31, 2009
	 

	 Cost
	 Fair Value
	 Unrealized Loss

	 Scott and Stringfellow
	 

	 $647,217 
	 $646,129 
	 -1,088

 

 6. Note Receivable 
 The Company has advanced $250,000 to a third-party contractor. The note was issued on September 30, 2010, and accrues interest at prime plus 2.00%. At December 31, 2010, the rate was 5.25%. All unpaid principal and interest are due upon job completion. 
 14
 

 Subsequent to December 31, 2010, the Company agreed to a change in repayment terms. The $250,000 note receivable is a noninterest bearing note. The agreement requires repayments of $100,000 due on September 5, 2011, $50,000 due November 14, 2011, and a final payment of $100,000 due by March 31, 2012. As of the date of this report repayments have all been made accordingly. 
 7. Property and Equipment 
 Property and equipment consists of the following: 
 	 	 	
	 

	 2010
	 2009

	 Software
	 $114,956 
	 $114,956 

	 Tools and equipment
	 606,434
	 583,945

	 Transportation equipment
	 1,274,572
	 1,259,254

	 Office furniture and equipment
	 265,919
	 155,407

	 Leasehold improvements
	 229,590
	 152,271

	 

	 2,491,271
	 2,265,833

	 Less - allowance for depreciation
	 -1,676,570
	 -1,507,158

	 

	 $814,901 
	 $758,675 

 

 Depreciation expense for 2010 and 2009 was $236,847 and $255,840, respectively. 
 8. Cash Surrender Value of Life Insurance 
 The Company maintains life insurance policies on each of its stockholders. The cash value of the policies was $187,253 and $132,438 at December 31, 2010 and 2009, respectively. 
 9. Costs and Estimated Earnings on Uncompleted Contracts 
 Information with respect to contracts in progress is as follows: 
 	 	 	
	 

	 2010
	 2009

	 Cost on uncompleted contracts
	 $13,764,100 
	 $13,332,513 

	 Estimated earnings
	 1,428,583
	 2,170,443

	 

	 15,192,683
	 15,502,956

	 Less - billings to date
	 (15,393,799)
	 (16,681,591)

	 

	 ($201,116)
	 ($1,178,635)

 

 15
 

 Included in the accompanying balance sheets as follows: 
 	 	 	
	 

	 2010
	 2009

	 Costs and estimated earnings in excess of billings
	 $770,932 
	 $560,756 

	 Billings in excess of costs and estimated earnings
	 (972,048)
	 (1,739,391)

	 

	 ($201,116)
	 ($1,178,635)

 

 10. Contract Backlog 
 The following schedule shows a reconciliation of the backlog of signed contracts in existence: 
 	 	 	
	 

	 2010
	 2009

	 Balance - beginning of year
	 $18,319,664 
	 $23,782,828 

	 New contracts and contract adjustments
	 33,877,837
	 24,530,894

	 

	 52,197,501
	 48,313,722

	 Less - contract revenue earned
	 -33,745,115
	 -29,994,078

	 Balance - end of year
	 $18,452,386 
	 $18,319,644 

 

 

 16
 

 

 

 11. Long-Term Debt 
 Long-term debt is summarized as follows: 
 	 	 	
	 

	 2010
	 2009

	 $384 monthly, including interest at 0.0% through 2011, secured by 2006 Ford F250 truck
	 $4,186 
	 $8,412 

	 $384 monthly, including interest at 0.9% through 2011, secured by 2006 Ford E250 van
	 3,803
	 8,412

	 $758 monthly, including interest at 7.63% through 2011, secured by 2006 Dodge Sprinter van.
	 8,026
	 16,168

	 $368 monthly, including interest 0.0% through 2012, secured by 2006 Ford Freestyle.
	 6,895
	 11,689

	 $363 monthly, including interest at 0.0% through 2012, secured by 2006 Ford Freestyle.
	 7,243
	 11,600

	 $430 monthly, including interest at 0..0% through 2012,  Ford F-250.
	 5,558
	 10,280

	 $450 monthly, including interest at 0.0% through 2012, secured by 2007 Ford F-150.
	 6,297
	 11,695

	 $478 monthly, including interest at 6.3% through 2012, secured by 2009 Ford Escape.
	 17,308
	 21,790

	 $767 monthly, including interest at 7.6% through 2012, secured by 2008 Ford F250.
	 -
	 26,946

	 $422 monthly, including interest at 0.0% through 2013, secured by 2007 Ford F150.
	 10,975
	 15,616

	 $780 monthly, including interest at 6% through 2013, secured by 2008 Dodge Sprinter. 
	 28,167
	 35,579

	 $1,112 monthly, including interest at 4.9% through 2015, secured by 2011 Ford F350.
	 54,678
	 -

	 

	 153,136
	 178,187

	  Less - current portion
	 -66,388
	 -66,988

	 

	 $86,748 
	 $111,199 

 

 17
 

 

 

 

 Future maturities of long-term debt for succeeding years are as follows: 
 

 	 	
	 2011
	 $66,388 

	 2012
	 44,133

	 2013
	 22,326

	 2014
	 12,631

	 2015
	 7,658

	 

	 $153,136 

 

 Interest paid during 2010 and 2009 was $7,818 and $9,179, respectively. 
 As discussed in Note 14, the Company has guaranteed the debt of a related party. No liability has been recorded on the York River Electric, Inc. financial statements for this guarantee. 
 12. Common Stock 
 Common stock consists of 50,000 authorized shares at $1 par value. At December 31, 2010 and 2009, there were 1,067 shares issued and outstanding. 
 13. Employee Benefit Plan 
 The Company contributes to a multi-employer pension plan on behalf of substantially all of its union employees under a collective bargaining agreement. The Company also has a 401(k) safe harbor plan for all eligible nonunion employees that allows for pre-tax salary deferrals and discretionary profit sharing. 
 For 2010 and 2009, the Company contributed $168,820 and $173,957, respectively, to the 401(k) safe harbor plan. 
 14. Related Party Transactions 
 The Company leases three facilities from related entities owned by the Company’s two stockholders on a month-to-month basis. Under two of the leases, the Company paid $3,500 per month for each location in 2010 and 2009. The third lease which originated in May 2008, the Company paid $2,500 per month. Rent expense for 2010 and 2009 was $114,000. 
 

 18
 

 

 For one of the related parties noted above, the Company is exposed to risk by the guarantee of related party debt. At December 31, 2010 and 2009, the carrying amount of the assets of the related party, which consisted primarily of the real estate leased, was approximately $110,000 and $113,000, respectively, and the carrying amount of its debt, which matures in 2017, was approximately $56,000 and $63,000, respectively. The maximum exposure for the Company would be the carrying amount of the mortgage of the related party. The related party incurred the indebtedness in connection with the purchase, in 2002, of the real property which is rented to the Company. The related party is primarily liable for the indebtedness and has pledged the real property as collateral for the debt. During the remaining seven years until maturity of the indebtedness, the Company would be required to repay the then outstanding amount in the event of default by the related party. In accordance with accounting principles generally accepted in the United States of America, the Company has not recorded a liability for this guarantee. 
 Over time, the Company has advanced money to one of its stockholders. At December 31, 2010 and 2009, the stockholder’s balance was $188,717 and $187,573, respectively, including interest accrued at a short-term applicable federal rate. At December 31, 2010 and 2009, the interest rate was 0.61% and 0.82%, respectively, and in addition interest income was $1,144 and $1,526, respectively. No specific repayment terms have been set. 
 Due from related party consists of funds advanced to Charters, LLC, a limited liability company, whose members are the stockholders of the Company. No specific repayment terms have been set and is noninterest bearing. In addition, the Company and its stockholders unconditionally guarantee a $275,000 note obtained by Charters, LLC, which the outstanding balance was approximately $244,000 and $257,000, respectively, at December 31, 2010 and 2009. 
 15. Concentrations of Credit Risk 
 The cash and cash equivalent balances are maintained at several financial institutions with high credit quality ratings. For 2010, noninterest bearing cash accounts were fully insured by the Federal Deposit Insurance Corporation (FDIC), and interest bearing funds held in these accounts were insured by the FDIC up to $250,000. At December 31, 2010 and 2009, bank cash deposits and certain investments exceeded the FDIC limit by approximately $2,970,000 and $7,228,000, respectively. Certain other investments are insured separately by the Securities Investors Protection Corporation (SIPC). This coverage is up to $500,000, inclusive of up to $100,000 cash. At December 31, 2010 and 2009, accounts with brokerage firms of $3,264,748 and $646,129, respectively, were all invested in various markets and funds. 
 19
 

 

 In 2010 and 2009, contracts with the federal government produced approximately 80% and 94% of total revenue, respectively. Additionally, approximately 75% and 91% of trade accounts receivable at December 31, 2010 and 2009, were due from government entities, respectively. 
 The Company may be subject to a concentration of credit risk due to high dollar value of its contract receivables. The credit risk with respect to accounts receivable is mitigated because the majority of the Company’s receivables are due from agencies of the U.S. government. 
 16. Contingencies 
 Certain contracts provide for warranty against defects in materials and workmanship for periods beyond the date of completion. Annually, management of the Company considers the need to establish accruals for anticipated future costs to be incurred for these warranties. No such accruals were considered necessary at December 31, 2010 and 2009. 
 Substantially all of the Company’s revenues have been derived from prime or subcontracts with the federal government. These contract revenues are subject to adjustment upon audit by various government agencies. Management does not expect the results of such audits to have a material effect on the Company’s financial position or results of future operations since most contracts are fixed-price or time and-materials contracts. Although management believes no material findings will result from these actions, these proceedings involve uncertainties that may cause actual results to vary from expectations. Final indirect cost rates have been established by audit for all years through 2007.
 

 20
 

 

 

 

 Financial Statements
 Years Ended
 December 31, 2009 and 2008
 

 

 

 

 

 

 

 York River Electric, Inc.
 

 

 

 

 

 

 

 

 

 

 York River Electric, Inc.
 Contents
 

 	 	
	 

	 Page

	 Report of Independent Auditors
	 3

	 Financial Statements
	 

	 

 Balance Sheets
	 4

	 

 Statements of Income
	 5

	 

 Statements of Change in Equity
	 6

	 

 Statements of Cash Flows
	 7

	 

 Notes to Financial Statements
	 9

 

 

 

 

 Report of Independent Auditors
 Board of Directors
 York River Electric, Inc.
 

 We have audited the accompanying balance sheets of York River Electric Inc. as of December 31, 2009 and 2008, and the related statements of income, changes in equity and cash flows for the years then ended. These financial statements are the responsibility of the management of York River Electric, Inc. Our responsibility is to express an opinion on these financial statements based on our audits.
 We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts of disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the York River Electric, Inc. as of December 31, 2009 and 2008, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
 

 

 

 Newport News, Virginia
 April 8, 2010
 

 3
 

 

 York River Electric, Inc.
 Balance Sheets
 	 	 	
	 December 31,
	 2009
	 2008

	 Assets

	 Current assets
	 

	 

	 Cash and cash equivalents
	 $1,208,482 
	 $1,909,036 

	 Investments
	 5,759,141
	 -

	 Accounts receivable
	 

	 

	 Trade
	 4,712,944
	 2,450,085

	 Other
	 2,558
	 17,423

	 Stockholder
	 187,573
	 186,047

	 Due from related party
	 64,984
	 64,984

	 Prepaid expenses
	 41,192
	 6,536

	 Cost and estimated earnings in excess of billings
	 560,756
	 1,925,784

	 Total current assets
	 12,537,630
	 6,559,895

	 

	 

	 

	 Property and equipment - net
	 758,675
	 931,512

	 

	 

	 

	 Other assets
	 

	 

	 Cash surrender value of life insurance
	 132,438
	 105,437

	 

	 

	 

	 

	 $13,428,743 
	 $7,596,844 

	 Liabilities and Stockholders' Equity

	 

	 

	 

	 Current Liabilities
	 

	 

	 Current portion of long-term debt
	 $66,988 
	 $159,981 

	 Accounts payable
	 1,649,398
	 1,528,174

	 Accrued expenses
	 269,485
	 142,035

	 Distributions payable
	 263,600
	 169,475

	 Billings in excess of costs and estimated earnings
	 1,739,391
	 969,374

	 Total current liabilities
	 3,988,862
	 2,969,039

	 

	 

	 

	 Long-term debt - net of current portion
	 111,199
	 177,149

	 Total liabilities
	 4,100,061
	 3,146,188

 

 	 	 	
	 Stockholders' equity
	 9,328,682
	 4,450,656

	 Total Liabilities and Stockholders’ Equity
	 $13,428,743 
	 $7,596,844 

 

 4
 

 York River Electric, Inc.
 Statements of Income

 	 	 	
	 Years Ended December 31,
	 2009
	 2008

	 

	 

	 

	 Contract revenue earned
	 

	 

	 Government contracts - 8(a)
	 $27,351,339 
	 $13,672,572 

	 Other government contracts
	 860,108
	 5,329,437

	 Commercial contracts
	 1,782,631
	 6,034,790

	 

	 

	 

	 Total contract revenue earned
	 29,994,078
	 25,036,799

	 

	 

	 

	 Cost of revenues earned
	 22,771,835
	 22,237,129

	 

	 

	 

	 Gross profit
	 7,222,243
	 2,799,670

	 

	 

	 

	 General and administrative expenses
	 1,460,794
	 1,137,071

	 

	 

	 

	 Income from operations
	 5,761,449
	 1,662,599

	 

	 

	 

	 Other income (expense)
	 

	 

	 Gain on sale of property and equipment
	 200
	 11,574

	 Interest expense
	 (9,179)
	 (23,110)

	 Interest income
	 19,038
	 30,905

	 Other income
	 11,053
	 50,285

	 State franchise and excise taxes
	 (5,845)
	 -

	 

	 

	 

	 Total other income
	 15,267
	 69,654

	 Net Income
	 $5,776,716 
	 $1,732,253 

  

 

 

 

 

 5
 

 

 York River Electric, Inc.
 Statements of Changes in Equity

 	 	 	 	 	 	
	 Years Ended December 31, 2009 and 2008
	  
	  
	  
	  
	  

	 

	 Common Stock
	 Additional Paid-In Capital
	 Retained Earnings
	 Accumulated Other Comprehensive Loss
	 Total

	 Balance - December 31, 2007
	 $1,067 
	 $,4800
	 $3,937,567 
	 $         -                                                               
	 $3,943,434 

	 

	 

	 

	 

	 

	 

	 Net income
	 -
	 -
	 1,732,253
	 -
	 1,732,253

	 

	 

	 

	 

	 

	 

	 Distributions
	 -
	 -
	 (1,225,031)
	 -
	 (1,225,031)

	 

	 

	 

	 

	 

	 

	 Balance - December 31, 2008
	 1,067
	 4,800
	 4,444,789
	 -
	 4,450,656

	 

	 

	 

	 

	 

	 

	 Comprehensive income
	 

	 

	 

	 

	 

	 Net income
	 -
	 -
	 5,776,716
	 -
	 5,776,716

	 Net unrealized loss on investments
	 -
	 -
	 -
	 (1,088)
	 (1,088)

	 Total comprehensive income
	 

	 

	 

	 

	 5,775,628

	 

	 

	 

	 

	 

	 

	 Distributions
	 -
	 -
	 (897,602)
	 -
	 (897,602)

	 

	 

	 

	 

	 

	 

	 Balance - December 31, 2009
	 $1,607 
	 $4,800 
	 $9,323,903 
	 ($1,088)
	 $9,328,682 

  

 

 

 

 6
 

 

 York River Electric, Inc.
 Statement of Cash Flows

 	 	 	
	 Years Ended December 31,
	 2009
	 2008

	 

	 

	 

	 Cash flows from operating activities
	 

	 

	 Net income
	 $5,776,716 
	 $1,732,253 

	 Adjustments to reconcile to net cash from operating activities:
         Bad Debt
	 5,503
	 2,306

	 Depreciation
	 255,840
	 297,300

	 Gain on sale of property and equipment
	 (200)
	 (11,574)

	 Increase in cash surrender value of life insurance
	 (27,001)
	 (52,817)

	 Change in:
	 

	 

	 Accounts receivable
	 

	 

	 Trade
	 (2,268,362)
	 385,677

	 Other
	 14,865
	 629

	 Due from related party
	 -
	 (64,984)

	 Prepaid expenses
	 (34,656)
	 (6,536)

	 Costs and estimated earnings in excess of         billings
	 1,365,028
	 516,838

	 Accounts payable
	 121,224
	 (923,095)

	 Accrued expenses
	 127,450
	 (144,667)

	 Billing in excess of cost and estimated earnings
	 770,017
	 (528,493)

	 Net cash from operating activities
	 6,106,424
	 1,202,837

	 

	 

	 

	 Cash flows from investing activities
	 

	 

	 Advances to stockholder
	 (1,526)
	 (5,067)

	 Purchases of property and equipment
	 (83,003)
	 (139,051)

	 Purchases of investments
	 (5,760,229)
	 -

	 Proceeds from sale of property and equipment
	 200
	 13,688

	 Net cash from investing activities
	 ($5,844,558)
	 ($130,430)

	 Cash flows from financing activities
	 

	 

	 Repayment of long-term debt
	 (158,943)
	 (404,862)

	 Distributions to stockholders
	 (803,447)
	 (1,268,443)

	 Net cash from financing activities
	 (962,420)
	 (1,673,305)

	 

	 

	 

  7
 

 York River Electric, Inc.
 Statement of Cash Flows (continued)
 

 	 	 	
	 Net change
	 -700,554
	 -600,898

	 

	 

	 

	 Cash and cash equivalents - beginning of year
	 1,909,036
	 2,509,934

	 

	 

	 

	 Cash and cash equivalents - end of year
	 $1,208,482 
	 $1,909,036 

	 

	 

	 

	 Supplemental disclosure of noncash investing and financing activities
	 

	 Property acquired from proceeds of long-term debt
	 $                    -
	 $94,784 

	 

	 

	 

	 Distributions accrued and unpaid
	 $263,600 
	 $169,475 

  

 

 8
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 1. 
 Organization and Nature of Business
 York River Electric, Inc. (Company) is a general contractor engaged in electrical and general contract activities for both commercial and government customers primarily in the Hampton Roads area of Virginia.
 In 2001, the Company was approved for participation in the section 8(a) program of the U.S. government Small Business Administration (SBA). The purpose of this program is to make available certain government contracts to small disadvantaged businesses. Under this program, there are specific requirements that must be met by the Company. The Company’s section 8(a) participation expires in 2010.
 2.
 Summary of Significant Account Policies
 Cash and Cash Equivalents
 Cash and cash equivalents consist of highly liquid investments with an initial purchased maturity of three months or less.
 Accounts Receivable
 Accounts receivable are generated from prime and subcontracting agreements with U.S. governmental agencies and various commercial entities and are stated at amounts billed less an allowance for doubtful accounts. Credit is extended to customers after an evaluation of the customer’s financial condition. Management considers accounts over 30 days past due. Management’s determination of the allowance for doubtful accounts is based on an evaluation of the accounts receivable, past experience, current economic conditions, and other risks inherent in the accounts receivable portfolio. At December 31, 2009 and 2008, management considered all accounts receivable to be collectible.
 Investments and Fair Value Measurements
 Investments in securities and mutual funds with readily determinable fair values are measured at fair value on the balance sheet. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 8 for discussion of fair value measurements.
 

 9
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 2.
 Summary of Significant Account Policies (continued)
 Property and Equipment
 Property and equipment are recorded at cost and depreciation is calculated by using the straight-line method for financial statement purposes based on the following estimated useful lives:
 	 	
	 Software
	 3 years

	 Tools and equipment
	 5 - 7 years

	 Transportation equipment
	 5 years

	 Office furniture and equipment
	 3 - 7 years

	 Leasehold improvements
	 5 years

 

 Revenue Recognition
 Revenues on fixed-price contracts are recognized on the percentage-of-completion method of accounting based upon costs to date compared to total estimated costs. Cost and profit estimates are reviewed periodically as the work progresses, and adjustments, if needed, are reflected in the period in which the estimates are revised. Anticipated losses are recognized as soon as they become known. Revenues from time and materials contracts are recognized on the basis of direct labor hours incurred, at negotiated contract billing rates, plus reimbursable costs incurred.
 Contract costs include all direct material, labor costs, and those indirect costs related to contract performance. General and administrative costs are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenues and would be recognized in the period in which the revisions are determined.
 The current asset “Costs and estimated earnings in excess of billings” represents revenues recognized in excess of amounts billed.
 The current liability “Billings in excess of costs and estimated earnings” represents amounts billed in excess of revenues recognized.
 

 10
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 2.
 Summary of Significant Account Policies (continued)
 Use of Estimates
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.
 

 Certain Significant Estimates
 The Company has calculated and determined its revenue earned for 2009 and 2008, and the effect on several asset and liability amounts based on the common industry standard revenue determination formula of actual costs to date compared to total estimated job costs. Due to uncertainties inherent in the estimation process, and uncertainties relating to future performance as the contracts are completed, it is at least reasonably possible that estimated job costs, in total or on individual contracts, will be revised.
 Income Taxes
 The Company, with the consent of its stockholders, elected to be taxed under the Internal Service Revenue Code as a Subchapter S corporation, which provides that, in lieu of corporate income taxes, the stockholders separately account for the Company’s items of income, deductions, losses and credits. Therefore, no provision or liability for income taxes has been included in these financial statements.
 Advertising
 The Company expenses advertising costs as incurred. For 2009 and 2008, advertising expense was $70,452 and $63,180, respectively
 Subsequent Events
 In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through April 8, 2010, the date the financial statements were available to be issued.
 

 11
 

 York River Electric, Inc.
 Notes to Financial Statements
 3.
 Accounts Receivable
 Accounts receivable consists of the following:
 	 	 	
	 

	       2009
	           2008

	   Government contracts
	 $4,305,465
	 $1,575,255

	   Commercial contracts
	 407,479
	 874,830

	 

	 

	 

	 

	    $4,712,944 
	      $2,450,085 

 

 4.
 Property and Equipment
 Property and equipment consists of the following:
 	 	 	
	 

	              2009
	              2008

	 Software
	 $114,956 
	 $105,978 

	 Tools and equipment
	 583,945
	 517,047

	 Transportation equipment
	 1,259,254
	 1,354,659

	 Office furniture and equipment
	 155,407
	 148,272

	 Leasehold improvements
	 152,271
	 152,271

	 

	 2,265,833
	 2,278,227

	 Less - allowance for depreciation
	 (1,507,158)
	 (1,346,715)

	 

	 

	 

	 

	 $758,675 
	 $931,512 

 

 Depreciation expense for 2009 and 2008 was $255,840 and $297,300 respectively.
 

 5.
 Cash Surrender Value of Life Insurance
 The Company maintains life insurance policies on each of its stockholders. The cash value of the policies is $132,438 and $105,437 at December 31, 2009 and 2008, respectively.
 

 12
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 6.
 Costs and Estimated Earnings on Uncompleted Contracts
 Information with respect to contracts in progress is as follows:
 	 	 	
	 

	         2009
	          2008

	 Costs on uncompleted contracts
	 $13,332,513 
	 $28,535,745 

	 Estimated earnings
	 2,170,443
	 1,129,297

	 

	 15,502,956
	 29,665,042

	 Less - billings to date
	 (16,681,591)
	 (28,708,632)

	 

	 

	 

	 

	 ($1,178,635)
	 $956,410 

 

 Included in the accompanying balance sheets as follows:
 	 	 	
	 

	 2009
	 2008

	 Costs and estimated earnings in excess of billings
	 $560,756 
	 $1,925,784 

	 Billings in excess of costs and estimated earnings
	 (1,739,391)
	 (969,374)

	 

	 

	 

	 

	 ($1,178,635)
	 $956,410 

 

 7.
 Contract Backlog
 The following schedule shows a reconciliation of the backlog of signed contracts in existence:
 	 	 	
	    
	   2009
	    2008

	    Balance - beginning of year
	 $23,782,828 
	 $14,707,242 

	    New contracts and contract adjustments
	 24,530,894 
	 34,112,385 

	    
	 48,313,722
	 48,819,627

	    Less - contract revenue earned
	 (29,994,078)
	 (25,036,799)

	    
	 

	 

	    Balance - end of year
	 $18,319,644 
	 $23,782,828 

 

 

 

 13
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 8.
 Investments
 In 2009, the Company acquired several types of investments. Investments are presented at fair value and consist of the following:
 	 	
	   Money market funds
	 5,113,012

	   Mutual funds
	 199,190

	   Fixed income securities
	 99,639 

	   Limited partnerships
	 7,734

	   Equities
	 339,566 

	 

	 

	 

	 $5,759,141 

 

 The investments are under the management of Scott & Stringfellow and Wachovia Securities, Inc., who also maintain custody of the securities. The Company’s investment income is reported in the accompanying statement of income, net of investment management fees. Unrealized losses are reported in the accompanying statements of changes in equity as a component of other comprehensive income.
 

 Fair Value Measurements
 Accounting standards establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:
 Level 1
 Inputs to the valuation methodology are unadjusted quoted market prices for identical assets in active markets that the Company has the ability to access.
 Level 2
 Inputs to the valuation methodology include:
 ·
 Quoted prices for similar assets or liabilities in active markets;
 ·
 Quoted prices for identical or similar assets or liabilities in inactive markets;
 

 14
 

 York River Electric, Inc.
 Notes to Financial Statements
 8.
 Investments (continued)
 ·
 Inputs other than quoted prices that are observable for the asset or liability;
 ·
 Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 If the assets or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
 Level 3
 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 The assets or liability’s fair value measurement within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
 Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2009.
 Money market funds: Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value.
 Equities and fixed income securities, limited partnerships and mutual funds: Valued at the official closing price of, or the last reported sale price on, the exchange or market on which such investments are traded, as of the close of business on the day the investments are being valued or, lacking any sales, at the last available bid price. Prices for each investment are taken from the principal exchange or market in which the investment trades.
 The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
 

 15
 

 York River Electric, Inc.
 Notes to Financial Statements
 8.
 Investments (continued)
 The following sets forth by level, within the fair value hierarchy, the Company’s assets at fair value:
 	 	 	 	 	
	 

	 Assets at Fair Value as of December 31,2009

	 

	 Level 1
	 Level 2
	 Level 3
	 Total

	 Money market funds
	 $        -
	 $5,113,012 
	 $          -
	 $5,113,012 

	 Mutual funds
	 199,190
	                    -
	             -
	 199,190

	 Fixed income securities
	           -
	 99,639
	             -
	 99,639

	 Limited partnerships
	           -
	 7,734
	             -
	 7,734

	 Equities
	 339,566
	                    -
	             -
	 339,566

	 

	 $538,756 
	 $5,220,385 
	 $          -
	 $5,759,141 

 

 Fair values and unrealized gains losses are summarized as follows:
 	 	 	 	 	
	 December 31, 2009
	 

	 Cost
	     Fair Value
	 Unrealized Loss

	 Scott and Stringfellow
	 

	 $2,506,076 
	 $2,504,988 
	 ($1,088)

	 Wachovia Securities, Inc.
	 

	 3,254,153
	 3,254,153
	  

	 

	 

	 

	 

	 

	 

	 

	 $5,760,229 
	 $5,759,141 
	 ($1,088)

 

 9.
 Long-Term Debt
 Long-term debt is summarized as follows:
 	 	 	
	 

	 2009
	 2008

	 $357 monthly, including interest at 0.0% through 2009, secured by 2003 Ford E250 van.
	 $       -
	 $715 

	 $357 monthly, including interest at 0.0% through 2009, secured by 2003 Ford E250 van.
	           -
	 715

	 $367 monthly, including interest at 0.0% through 2009, secured by 2004 Ford F150 truck.
	           -
	 715

 

 16
 

 York River Electric, Inc.
 Notes to Financial Statements
 9.
 Long Term Debt (continued)
 	 	 	
	 $908 monthly, including interest at 0.0% through 2009, secured by 2006 Ford Explorer.
	           -
	 2,723

	 $2,308 monthly, including interest at 0.0% through 2009, secured by John Deere 80c Excavator.
	           -
	 22,000

	 $384 monthly, including interest at 0.0% through 2011, secured by 2006 Ford F250 truck.
	 8,412
	 13,021

	 $384 monthly, including interest at 0.9% through 2011, secured by 2006 Ford E250 van.
	 8,412
	 13,021

	 $758 monthly, including interest at 7.63% through 2011, secured by 2006 Dodge Sprinter van.
	 16,168
	 23,711

	 $368 monthly, including interest at 0.0% through 2012, secured by 2006 Ford Freestyle.
	 11,689
	 16,175

	 $363 monthly, including interest at 0.0% through 2012, secured by 2006 Ford Freestyle.
	 11,600
	 15,973

	 $430 monthly, including interest at 0.0% through 2012, secured by 2006 Ford F-250.
	 10,280
	 15,430

	 $450 monthly, including interest at 0.0% through 2012, secured by 2007 Ford F-150.
	 11,695
	 17,093

	 $478 monthly, including interest at 6.3% through 2012, secured by 2009 Ford Escape.
	 21,790
	 25,998

	 $767 monthly, including interest at 7.6% through 2012, secured by 2008 Ford F250.
	 26,946
	 33,830

	 $422 monthly, including interest at 0.0% through 2013, secured by 2007 Ford F150.
	 15,616
	 21,102

	 $780 monthly, including interest at 6% through 2013, secured by 2008 Dodge Sprinter.
	 35,579
	 42,557

 

 

 17
 

 York River Electric, Inc.
 Notes to Financial Statements
 9.
 Long Term Debt (continued)
 

 	 	 	
	 $29,896 quarterly, including interest at 4% through 2009, secured by a security interest in 263 shares of common stock of York River Electric, Inc., payable to former stockholder.
	           -
	 29,600

	 $43,396 quarterly, including interest at 6% through 2009, secured by a security interest in 433 shares of common stock of York River Electric, Inc., payable to a stockholder.
	           -
	 42,751

	 

	 178,187
	 337,130

	 Less -current portion
	 (66,988)
	 (159,981)

	 

	 

	 

	 

	 $111,199 
	 $177,149 

 

 Future maturities of long-term debt for succeeding years are as follows:
 	 	
	 2010
	 $66,988 

	 2011
	 63,336

	 2012
	 39,934

	 2013
	 7,929

	 

	 

	 

	 $178,187 

 

 Interest paid during 2009 and 2008 was 9,179 and 23,110, respectively.
 As discussed in Note 13, the Company has guaranteed the debt of a related party. No liability has been recorded on York River Electric, Inc. financial statements for this guarantee.
 

 

 

 18
 

 

 York River Electric, Inc.
 Notes to Financial Statements
 10.
 Line of Credit
 The Company has a line of credit arrangement with a bank for $750,000, with a blanket lien on all assets of the Company. Borrowings against the line bear interest at prime plus .25% per annum through October 14, 2010. The line of credit is personally guaranteed by the stockholders of the Company. There was $750,000 available on this line at December 31, 2009.
 

 11.
 Common Stock
 During 2005, York River Electric, Inc. redeemed 500 shares of common stock for $843,000. Of this amount, $443,000 was financed with a promissory note; the remaining $400,000 was paid in cash. The liability was paid in full 2009.
 During 2006, York River Electric, Inc. redeemed 433 shares of common stock for $324,750, financed with a promissory note. The liability was paid in full in 2009.
 Common Stock consists of 50,000 authorized shares at $1 par value. At December 31, 2009 and 2008, there were 1,067 shares issued and outstanding.
 

 12.
 Employee Benefit Plan
 The Company contributes to a multi-employer pension plan on behalf of substantially all of its union employees under a collective bargaining agreement. The Company has a 401(k) safe harbor plan for all eligible nonunion employees that allows for pre-tax salary deferrals and discretionary profit sharing. For 2009 and 2008, the Company contributed $173,956 and $50,487 respectively, to the 401(k) safe harbor plan.
 

 13.
 Related Party Transactions
 The Company leases three facilities from two related parties on a month-to-month basis. Under two of the leases, the Company paid $3,500 per month for each location in 2009. The third lease which originated in May 2008, the Company paid $2,500 per month. Rent expense for 2009 and 2008, was $114,000 and $105,173, respectively.
 

 19
 

 York River Electric, Inc.
 Notes to Financial Statements
 13.
 Related Party Transactions (continued)
 Primarily because of the common control between the Company, the related party mentioned above and the guarantee of the related party’s debt, the Company is exposed to the risk that it may be required to subsidize the losses of the related party. At December 31, 2009, the carrying amount of the assets of the related party, which consisted primarily of the real estate leased, was approximately $113,000, and the carrying amount of its debt, which matures in 2017, was approximately $63,000. The maximum exposure for the Company would be the carrying amount of the mortgage of the related party. The related party incurred the indebtedness in connection with the purchase, in 2002, of the real property which is rented to the Company. The related party is primarily liable for the indebtedness and has pledged the real property as collateral for the debt. During the remaining eight years until maturity of the indebtedness, the Company would be required to repay the then outstanding amount in the event of default by the related party. In accordance with accounting principles generally accepted in the United States of America, the Company has not recorded a liability for this guarantee.
 Over time, the Company has advanced money to one of its stockholders. At December 31, 2009 and 2008, the stockholder’s balance was $187,573 and $186,047 respectively, including interest accrued at a short-term applicable federal rate. No specific repayment terms have been set.
 Due from related party consists of funds advanced to Charters, LLC, a limited liability company, whose members are the owners of the Company. No specific repayment terms have been set and is noninterest bearing. The Company and its owners unconditionally guarantee a $275,000 note obtained by Charters, LLC.
 

 14.
 Concentrations of Credit Risk
 The cash and cash equivalent balances are maintained at several financial institutions with high credit quality ratings. For 2009 and 2008, noninterest bearing cash accounts were fully insured by the Federal Deposit Insurance Corporation (FDIC), and interest bearing funds held in these accounts were insured by the FDIC up to $250,000. At December 31, 2009 and 2008, bank cash deposits and certain investments exceeded the FDIC limit by approximately $2,118,000 and $759,000, respectively. Certain other investments are insured separately by the Securities Investors Protection Corporation (SIPC). 
 

 20
 

 York River Electric, Inc.
 Notes to Financial Statements
 14. 
 Concentrations of Credit Risk
 This coverage is up to $500,000 inclusive of up to $100,000 cash. At December 31, 2009 and 2008, accounts with brokerage firms of $5,759,141 were all invested in various markets and funds.
 In 2009 and 2008, contracts with the federal government produced approximately 94% and 76% of total revenue, respectively. Additionally, approximately 91% and 64% of trade accounts receivable at December 31, 2009 and 2007, were due from government entities, respectively.
 The Company may be subject to a concentration of credit risk due to high dollar value of its contract receivables. The credit risk with respect to accounts receivable is mitigated because the majority of the Company’s receivables are due from agencies of the U.S government.
 

 15.
 Contingencies
 Certain contracts provide for warranty against defects in materials and workmanship for periods beyond the date of completion. Annually, management of the Company considers the need to establish accruals for anticipated future costs to be incurred for these warranties. No such accruals were considered necessary at December 31, 2009 and 2008.
 

 

 

 21
 

 

 

 

 

 Financial Statements
 Ten Month Period Ended
 October 31, 2011
 

 

 

 

 

 

 

 York River Electric, Inc.
 

 

 

 

 

 

 

 

 

 

 

 York River Electric, Inc.
 Contents
 

 

 	 	
	 

	 Page

	 Report of Independent Auditors
	 3

	 

 Financial Statements
	 

	 

 Balance Sheets
	 4

	 

 Statements of Income
	 5

	 

 Statements of Change in Equity
	 6

	 

 Statements of Cash Flows
	 7

	 

 Notes to Financial Statements
	 

 

 

 

 Independents Accountants’ Review Report
 Board of Directors
 York River Electric, Inc.
 

 We have reviews the accompanying balance sheet of York River Electric, Inc. as of October 31, 2011, and the related statements of income, changes in equity and cash flows for the ten month period then ended. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion
 Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
 Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report.
 Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
 Our review was made primarily for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. The supplementary information included on pages 12 through 23 is presented for purposes of addition analysis and is not a required part of the basic financial statements. Such information has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, and we are not aware of any material modifications that should be made to such information.
 

 3
 

 

 York River Electric, Inc.
 Balance Sheet

 	 	
	 October 31, 2011
	  

	 Assets

	 Current assets
	 

	 Cash and cash equivalents
	 $2,399,341 

	 Accounts receivable
	 

	 Trade
	 3,509,010

	 Other
	 2,062

	 Notes receivable - current
	 150,000

	 Prepaid expenses
	 24,891

	 Cost and estimated earnings in excess of billings
	 1,726,226

	 Total current assets
	 7,811,530

	 

	 

	 Property and equipment - net
	 713,632

	 

	 

	 Other assets
	 

	 Due from related party
	 64,984

	 Due from stockholder
	 189,346

	 Cash surrender value of life insurance
	 90,503

	 Notes receivable - less current portion
	 125,000

	 

	 

	 Total other assets
	 $469,833 

	 

	 $8,994,995 

	 

	 

	 Liabilities and Stockholders' Equity

	 Current liabilities
	 

	 Current portion of long-term debt
	 $53,097 

	 Accounts payable
	 1,263,038

	 Accrued expenses
	 170,600

	 Distributions payable
	 272,000

	 Billings in excess of costs and estimated earnings
	 1,069,757

	 Total current liabilities
	 2,828,492

	 Long-term debt - net of current portion
	 76,724

	 

	 

	 Total liabilities
	 2,905,216

	 

	 

	 Stockholders' equity
	 6,089,779

	 

	 

	 

	 $8,994,995 

  4
 

 York River Electric, Inc.
 Statement of Income
 

 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011
	  

	 

	 

	 

	  

	 Contract revenue earned
	 

	 Government contracts - 8(a)
	 $15,377,697 

	 Other governments contracts
	 1,008,062

	 Commercial contracts
	 3,921,103

	 

	 

	 

	  

	 Total contract revenue
	 20,306,862

	 

	 

	 

	  

	 Cost of revenue earned
	 17,480,262

	 

	 

	 

	  

	 Gross profit
	 2,826,600

	 

	 

	 

	  

	 General and administrative expenses
	 702,840

	 

	 

	 

	  

	 Income from operations
	 2,123,760

	 

	 

	 

	  

	 Other income (expense)
	 

	 Gain on sale of property and equipment
	 4,100

	 Interest expense
	 (6,307)

	 Other income
	 4,133

	 

	 

	 

	  

	 Total other income
	 1,926

	 

	 

	 

	  

	 Net income
	 $2,125,686 

  

 

 

 

 5
 

 

 York River Electric, Inc.
 Statement of Changes in Equity
 

 	 	 	 	 	 	 	
	 Ten Month Period Ended October 31, 2011

	 

	 Common Stock
	 Additional Paid-In Capital
	 Retained Earnings
	 Accumulated Other Comprehensive Income (Loss)
	 Total

	 

	 

	 

	 

	 

	 

	 Balance - December 31, 2010
	 $1,067 
	 $4,800 
	 $10,881,451 
	 $115,448 
	 $11,002,766 

	 

	 

	 

	 

	 

	 

	  Comprehensive  income
	 

	 

	 

	 

	 

	    Net income
	 -
	 -
	 2,125,686
	 -
	 2,125,686

	    Reclassification     adjustment for gains   realized during the year
	 -
	 -
	 

	 (115,448)
	 (115,448)

	                                  Total comprehensive       income
	   
	 

	 

	 2,010,238

	 

	 

	 

	 

	 

	 

	    Distributions
	 -
	 -
	 (6,923,225)
	 -
	 (6,923,225)

	 

	 

	 

	 

	 

	 

	 Balance - October 31, 2011
	 $1,067 
	 $4,800 
	 $6,083,912 
	 $                -
	 $6,089,779 

  

 

 

 6
 

 

 York River Electric, Inc.
 Statement of Cash Flows
 

 	 	
	 Ten Month Period Ended October 31, 2011
	  

	 Cash flows from operating activities
	 

	 Net income
	 $2,125,686 

	 Adjustments to reconcilable to net cash from operating activities:
	 

	 Bad debt
	 9,544

	 Depreciation
	 205,000

	 Gain on sale of property and equipment
	 (4,100)

	 Change in:
	 

	 Accounts receivable
	 

	 Trade
	 (25,082)

	 Other
	 2,974

	 Prepaid expenses
	 (5,036)

	 Costs and estimated earnings in excess of billings
	 (955,294)

	 Accounts payable
	 (1,295,150)

	 Accrued expenses
	 (76,052)

	 Billing in excess of cost and estimated earnings
	 97,709

	 Net cash from operating activities
	 80,199

	 

	 

	 Cash flows from investing activities
	 

	 Increase in notes receivable
	 (25,000)

	 Advances to stockholder
	 (629)

	 Purchases of property and equipment
	 (68,067)

	 Purchases of investments
	 (157,769)

	 Proceeds from sale of property and equipment
	 4,100

	 Proceeds received from cash surrender value of life insurance
	 96,750

	 Net cash from investing activities
	 (150,615)

	 

	 

	 Cash flows from financing activities
	 

	 Principal payments of long-term debt
	 (58,977)

	 Distributions to stockholders
	 (3,426,701)

	 Net cash from financing activities
	 (3,485,678)

	 

	 

 7
 

 York River Electric, Inc.
 Statement of Cash Flows (continued)
 

 	 	
	 Net change
	 (3,556,094)

	 

	 

	 Cash and cash equivalents - beginning of year
	 5,955,435

	 

	 

	 Cash and cash equivalents - end of year
	 $2,399,341 

	 

	 

	 Supplemental disclosure of noncash investing and financing activities

	 Property acquired from proceeds of long-term debt
	 $35,662 

	 

	 

	 Distributions accrued and unpaid
	 $272,000 

	 

	 

	 Interest paid
	 $6,307 

 

 

 

 

 8
 

 

 SCHEDULE 4.05   [Letterhead York River Electric]
 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.05 – UNDISCLOSED LIABILITIES
 

 

 Except to the extent reflected or reserved against in the Financial Statements or as set forth in Schedule 4.04 hereto, the Company does not have, as of the date of such Financial Statements and as of the date hereof, any material Liabilities of any nature, whether accrued, absolute, contingent or otherwise, and whether due or to become due other than liabilities which have arisen in the Ordinary Course of Business. Except as set forth below, no basis exists for assertion against the Company as of the date of the Financial Statements, or as of the date hereof, of any material Liability of any nature not fully reflected or reserved against in the Financial Statements or otherwise set forth in a schedule to this SPA, or of any other Liability of any nature arising since the date of the Financial Statements, other than Liabilities which have been incurred in the Ordinary Course of Business and which are not Material (individually or in the aggregate) to the Business.
 

 NO UNDISCLOSED LIABILITIES
 

 

 [Letterhead York River Electric]
 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.06 – MATERIAL ADVERSE CHANGE STATEMENT
 

 

 The Company states that there has NOT been any “Material Adverse Change” in (i) its financial condition which has adversely affected or impaired, or which does or which the Company can reasonably foresee may adversely affect or impair, the ability of the Company to conduct the Business as heretofore conducted and as now proposed to be conducted; or (ii) any material damage, destruction or loss to any of the properties or assets of the Company, whether or not covered by insurance, which has adversely affected or impaired, or which does or which the Company can reasonably foresee may adversely affect or impair, the ability of the Company to conduct its Business as heretofore conducted and as now proposed to be conducted; or (iii) any labor dispute, strike, walkout or negotiation, or request for negotiation, for any representation or any labor contract; or (iv) any event or condition of any character which has materially and adversely affected or which does or which the Company can reasonably foresee may materially and adversely affect or impair the Business; or (v) any material adverse change in business prospects of the Company.
 

 

 

 

 SCHEDULE 4.08
 York County, Virginia
 	 	 	 	
	 Property:
	 112 PRODUCTION DR
	 

	 

	 Map #
	 037B 2 5
	 

	 

	 GPIN
	 S03d-3223-0624
	 

	 

	 Owner
	 CHARTERS LLC
	 

	 

	 Owner Address
	 108 PRODUCTION DR
	 

	 

	 Owner City/State/Zip
	 YORKTOWN VA 23693
	 

	 

	 

 

	 

	 

	 

	 Site Details
	 

	 Election Information

	 Deeded Lot Size
	 0.36
	 Voting Precinct
	 KILN CREEK

	 Deed Reference: 
	 080006748
	 Polling Place
	 TABB LIBRARY

	 Legal Description:
	 BETHEL INDUSTRIAL PARK LOT 3
	 House District
	 93

	 Zoning Code:
	 IL: Limited Industrial
	 Senate District
	 2

	 Government District
	 BETHEL  
	 

	 

	 Census Tract:
	 503.05
	 

	 

	 

 

	 

	 

	 

	 School District
	 

	 Waste Management

	 Elementary School District
	 GRAFTON BETHEL
	 Garbage Day:
	 TUESDAY

	 High/Middle School District
	 GRAFTON  
	 Recycle Day:
	 No Data

 

 	 	 	 	
	 Assessment Information
	  
	  

	  
	 Current Assessment
	 Previous Assessment

	 Land Value
	 $109,000 
	 

	 NaN

	 Improvement Value
	 $147,600 
	 

	 NaN

	 Total Value
	 $256,600 
	  
	 NaN

 

 1
 

 Site Information
 	 	 	 	 	
	 Environmental Considerations
	 

	 Utilities
	 

	 Waterfront:
	 N
	 

	 Public Water:
	 Y

	 Flood Zone(s):
	 X
	 

	 Public Sewer:
	 Y

	 Flood Map
	 51199C0280C
	 Well Water
	 No Data

	 Base Flood Elevation:
	 NONE
	 

	 Septic Tank
	 N 

	 Resource Protection Area:
	 NO 
	 

	 

	 

	 Resource Management Area
	 NO
	 

	 

	 

	 200' Watershed Mgt Prot Area
	 No
	 

	 

	 

	 500' Watershed Mgt Prot Area:
	 No
	 

	 

	 

 

 Improvements
 	 	 	 	 	 	 	 	 	 	
	 Year Built
	 1985
	 

	 Construction

	 Square Footage
	 3,000
	 

	 Foundation Type
	 SLAB

	 Stories
	 1
	 

	 Roof Type
	 METAL

	 Total Rooms
	 0
	 

	 Exterior Type:
	 ALUMINUM

	 Bedrooms
	 0
	 

	 Basement
	 NONE

	 Bathrooms
	 Half Baths 3
	 

	 

	 

	 Fireplaces
	 0
	 

	 

	 

	 Central Heat
	 Y
	 

	 

	 

	 Central Air
	 Y
	 

	 

	 

	 Fuel Type
	 GAS-FA
	 

	 

	 

	 

	 

	 

	 

	 

	 Additional Details
	 

	 Other Details
	 

	  

	 Building
	 Size/Quantity
	 Building
	 Size/Quantity
	  

	 OFFICE
	 900
	 

	 ASPHALT 2"
	 6,600
	  

	 REAR OFFICE
	 1,200
	 

	 

	 

	  

	 GARAGE BAY
	 900
	 

	 

	 

	  

 

 2
 

 

 Ownership History
 	 	 	 	 	 	
	 Owner Name
	 Date Of Transfer
	 Consideration
	 Deed
	 Fair Market Sale
	  

	 CHARTERS LLC
	 07-04-2008
	 $325,000 
	 080006748
	 Y

	 JONES DAVID M JR
	 04-11-1997
	 $113,000
	 976 822
	 

	 BETHEL LAND COMPANY
	 01-10-1983
	 $15,566
	 386 536
	 

 

 

 

 

 3
 

 

 SCHEDULE 4.08  York County, Virginia
 	 	 	 	
	 Property:
	 112 PRODUCTION DR
	 

	 

	 Map #
	 037B 2 5
	 

	 

	 GPIN
	 S03d-3223-0624
	 

	 

	 Owner
	 BRYAN PROPERTIES LLC
	 

	 

	 Owner Address
	 2 HAMILTON CIRCLE
	 

	 

	 Owner City/State/Zip
	 POQUOSON VA 23662
	 

	 

	 

 

	 

	 

	 

	 Site Details
	 

	 Election Information

	 Deeded Lot Size
	 0.37
	 Voting Precinct
	 KILN CREEK

	 Deed Reference: 
	 050006470
	 Polling Place
	 TABB LIBRARY

	 Legal Description:
	 BETHEL INDUSTRIAL PARK LOT 5
	 House District
	 93

	 Zoning Code:
	 IL: Limited Industrial
	 Senate District
	 2

	 Government District
	 BETHEL  
	 

	 

	 Census Tract:
	 503.05
	 

	 

	 

 

	 

	 

	 

	 School District
	 

	 Waste Management

	 Elementary School District
	 GRAFTON BETHEL
	 Garbage Day:
	 TUESDAY

	 High/Middle School District
	 GRAFTON  
	 Recycle Day:
	 No Data

 

 	 	 	 	
	 Assessment Information
	  
	  

	  
	 Current Assessment
	 Previous Assessment

	 Land Value
	 $111,600 
	 

	 NaN

	 Improvement Value
	 $114,700 
	 

	 NaN

	 Total Value
	 $226,300 
	  
	 NaN

 

 1
 

 Site Information
 	 	 	 	 	
	 Environmental Considerations
	 

	 Utilities
	 

	 Waterfront:
	 N
	 

	 Public Water:
	 Y

	 Flood Zone(s):
	 X
	 

	 Public Sewer:
	 Y

	 Flood Map
	 51199C0280C
	 Well Water
	 No Data

	 Base Flood Elevation:
	 NONE
	 

	 Septic Tank
	 N 

	 Resource Protection Area:
	 NO 
	 

	 

	 

	 Resource Management Area
	 NO
	 

	 

	 

	 200' Watershed Mgt Prot Area
	 No
	 

	 

	 

	 500' Watershed Mgt Prot Area:
	 No
	 

	 

	 

 

 Improvements
 	 	 	 	 	
	 Year Built
	 1985
	 

	 Construction

	 Square Footage
	 2,645
	 

	 Foundation Type
	 SLAB

	 Stories
	 1
	 

	 Roof Type
	 COMP SHNG

	 Total Rooms
	 0
	 

	 Exterior Type:
	 BRICK/BLOCK

	 Bedrooms
	 0
	 

	 Basement
	 NONE

	 Bathrooms
	 Full Baths 1
	 

	 

	 

	 Fireplaces
	 0
	 

	 

	 

	 Central Heat
	 Y
	 

	 

	 

	 Central Air
	 No Data
	 

	 

	 

	 Fuel Type
	 GAS-FA
	 

	 

	 

	 

	 

	 

	 

	 

	 Additional Details
	 

	 Other Details
	 

	 Building
	 Size/Quantity
	 Building
	 Size/Quantity

	 OFFICE
	 1,109
	 

	 ASPHALT 2"
	 3,225

	 GARAGE
	 1,536
	 

	 

	 

 

 

 2
 

 

 Ownership History
 	 	 	 	 	 	
	 Owner Name
	 Date Of Transfer
	 Consideration
	 Deed
	 Fair Market Sale
	  

	 BRYAN PROPERTIES LLC
	 08-04-2005
	 $212,500 
	 050006470
	 Y

	 TONEY SPURGEON PETALS TRS
	 22-11-2004
	 $0 
	 040024399
	 

	 TONEY SPURGEON P &
	 24-06-2003
	 $0 
	 030018612
	 

 

 

 

 

 3
 

 

 [Letterhead York River Electric]
 

 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.09 – TITLE TO ASSETS
 

 Except as set forth below, the Company has good and marketable title to all of its properties and assets used in its Business or reflected in the Financial Statements, subject in each case to no Lien other than Liens listed on below. The exceptions set forth here do not severally or in the aggregate, have a Material Adverse Effect.  The Company has furnished to the Buyer true and correct documentation relating to any Lien set forth below.
 

 G/L# 10-00-2235 - 2006 Ford Freestyle VIN# 48523 
 G/L# 10-00-2237 - 2006 Ford Freestyle VIN# 09154
 G/L# 10-00-2244 - 2007 Ford F150 VIN# 84799
 G/L# 10-00-2245 - 2008 Ford F150 VIN# 5642
 G/L# 10-00-2246 - 2009 Ford Escape 
 G/L# 10-00-2247 - 2008 Dodge Sprinter
 G/L# 10-00-2249 - 2011 Ford F350 VIN# 73035
 G/L# 10-00-2250 - 2011 Ford F150 
 

 

 

 SCHEDULE 4.11  Westchester Fire Insurance Company 
 

 ACE EXPRESS Private Company 
 Management Indemnity Package 
 

 Declarations 
 This Policy is issued by the stock insurance company listed above (“Insurer”). 
 THE EMPLOYMENT PRACTICES, DIRECTORS & OFFICERS AND COMPANY, AND FIDUCIARY COVERAGE SECTIONS OF THIS POLICY, WHICHEVER ARE APPLICABLE, COVER ONLY CLAIMS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD OR, IF ELECTED, THE EXTENDED PERIOD AND REPORTED TO THE INSURER PURSUANT TO THE TERMS OF THE RELEVANT COVERAGE SECTION. THE CRIME COVERAGE SECTION, IF APPLICABLE, APPLIES ONLY TO LOSS DISCOVERED DURING THE POLICY PERIOD. PLEASE READ THIS POLICY CAREFULLY. 
 THE LIMITS OF LIABILITY AVAILABLE TO PAY INSURED LOSS SHALL BE REDUCED BY AMOUNTS INCURRED FOR COSTS, CHARGES AND EXPENSES UNLESS OTHERWISE PROVIDED HEREIN. AMOUNTS INCURRED FOR COSTS, CHARGES AND EXPENSES AND LOSS SHALL ALSO BE APPLIED AGAINST THE RETENTION AND DEDUCTIBLE AMOUNTS. 
 TERMS THAT APPEAR IN BOLD FACE TYPE HAVE SPECIAL MEANING. PLEASE REFER TO THE APPROPRIATE DEFINITIONS SECTIONS OF THIS POLICY. 
 

 Policy Number:     G24223450 001 
 Renewal of: 
 Item A.
        Parent Company:
  York River Electric, Inc. 
        Principal Address: 
  108 Production Drive 
  Yorktown, VA 23693 
 

 

 1
 

 Item B.
        Policy Period:
  From 08/20/2011 to 08/20/2012 
        12:01 a.m. local time at the Principal Address shown in Item A. 
 

 Item C.
         Coverage Section(s): 
        EMPLOYMENT PRACTICES 
 1. Limit of Liability 
     a. $1,000,000 aggregate for all Loss, subject to 1b and 1c immediately below, 
     b. $1,000,000 additional aggregate for all Costs, Charges and Expenses, subject to 1c immediately below, 
     c. $2,000,000 maximum aggregate for this Coverage Section. 
 2. Retention: 
 $10,000 each Employment Practices Claim 
 $10,000 each Third Party Claim 
 3. Continuity Date: 
 08/20/2008 
 4 Third Party Coverage 
 X  Yes 
 No
 

 DIRECTORS & OFFICERS AND COMPANY 
 1. Limit of Liability 
     a. $1,000,000 aggregate for all Loss, subject to 1b and 1c immediately below, 
     b. $1,000,000 additional aggregate for all Loss under Insuring Clause A1, subject to 1c immediately below, 
     c. $2,000,000 maximum aggregate for this Coverage Section. 
 2. Retention: 
 $0 each Claim under Insuring Clause 1 
 $10,000 each Claim under Insuring Clause 2 
 $10,000 each Claim under Insuring Clause 3 
 3. Continuity Date: 
 08/20/2008 
 

 2
 

 FIDUCIARY 
 1. Limit of Liability    $1,000,000 maximum aggregate for this Coverage Section 
 2. Retention: 
 $0 each Claim 
 3. Continuity Date: 
 08/20/2008 
 

 CRIME 
 1. Limit of Liability 
 $1,000,000 maximum aggregate for this Coverage Section 
 2 Deductibles: 
 each Single Loss 
 each Single Loss for Employees Benefit Plan Coverage 
 3 Employee Benefit Plan Coverage         __Yes     __No 
 

 Item D.
 Premium: $8,323 
 Total Amount Due: $8,323 
 

 Item E.
 Discovery Period 
 1. One (1) year
  @100.00% of the premium 
 2. Two (2) years
  @125.00% of the premium 
 3. Three (3) years 
  @150.00% of the premium 
 

 As provided in subsection H of the General Terms and Conditions, only one of the above Discovery Period options may be elected and purchased. 
 

 Item F.
 Run-Off Period 
 3
 

 1. One (1) year 
 @110.00% of the premium 
 2. Two (2) years 
 @112.00% of the premium 
 3. Three (3) years 
 @115.00% of the premium 
 4. Four (4) Years
 @120.00% of the premium 
 5. Five (5) Years 
 @122.00% of the premium 
 6. Six (6) Years 
 @125.00% of the premium 
 As provided in subsection I of the General Terms and Conditions, only one of the above Run-Off Period options may be elected and purchased. 
 

 Item G.
 Notice under this Policy shall be given to: 
 A. Notice of Claim or Wrongful Act 
 PO Box 5119 
 Scranton, PA 18505-0549 
 First Notices Fax: 
 215.640.5040 or 1.877.746.4671 
 General Correspondence Fax: 
 1.866.635.5688 
 First Notices Email: 
 WSGPROFRISKCLAIMS@ACEGROUP.COM 
 

 B. All Other Notices: 
 Professional Risk Division 
 ACE Westchester Specialty Group 
 500 Colonial Center Parkway Suite 200 
 Roswell, GA 30076 
 Item H. 
 Forms attached at Policy issuance: 
    CC-1K11g (01/11) - Signatures 
    PF-15191 (12-08) - ACE EXPRESS Private Company Management Indemnity Package -General Terms and Conditions 
    PF-15192 (12-08) - ACE EXPRESS Private Company Management Indemnity Package -Employment Practices Coverage Section 
  PF-15193 (12-08) - ACE EXPRESS Private Company Management Indemnity Package -Directors and Officers Coverage Section 
 

 4
 

    PF-15194 (12-08) - ACE EXPRESS Private Company Management Indemnity Policy -Fiduciary Coverage Section 
    PF-15026c (01-08) - Cap On Losses From Certified Acts of Terrorism 
    PF-23278 (11-07) - Professional Securities Exclusion - Contractor Or Construction Manager (Securities Holder Carve-Out) 
    PF-25696 (10/09) - Definition Of Wrongful Act Amended Pension Protection Act of 2006 
 PF-28393 (03/11) - Settlement And Defense Clause Amended Waiver of Retention 
 PF-28394 (03/11) - Definition of Director and Officer Amended Managers of Limited Liability Companies 
    PF-28420 (05/11) - Difference in Conditions Endorsement 
    PF-30321 (08/10) - Amendatory Endorsement - Virginia 
    PF-31211 (11/10) - Special Event - Workplace Incident - EPL 
    PF-31213 (11/10) - Special Event Management Coverage - D&O 
    PF-31214 (11/10) - General Terms and Conditions Miscellaneous Amendments 
    PF-31215 (11/10) - Fiduciary Miscellaneous Amendments 
    PF-31216 (11/10) - Employment Practices Miscellaneous Amendments 
    PF-31217 (11/10) - Directors and Officers and Company Miscellaneous Amendments 
 PF-31218 (11/10) - EPL Coverage Section Amended to Include Wage and Hour Claims 
    Costs, Charges and Expenses Sublimit Coverage Only 
    TRIA12b (01-08) - Disclosure Pursuant To Terrorism Risk Insurance Act 
    All-20887 (10-06) - ACE Producer Compensation Practices & Policies 
    All-21101 (11-06) - Trade or Economic Sanctions Endorsement 
    All-7X47a (02-06) - Important Information 
    ILP 001 01 04 - U.S. Treasury Departments' Office of Foreign Assets Control ("OFAC") Advisory Notice to Policyholders 
 IN WITNESS WHEREOF, the Insurer has caused this Policy to be signed by its President and Secretary, and countersigned by a duly authorized representative of the Insurer. 
 DATE: 08/20/2011 
 Authorized Representative 
 5
 

 SIGNATURES
 

 Named Insured:  York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol:   DON 
 Policy Number:   G24223450 001 
 Policy Period:   08/20/2011 to 08/20/2012 
 Effective Date of Endorsement:   08/20/2011 
 Issued By (Name of Insurance Company):   Westchester Fire Insurance Company 
 THE ONLY SIGNATURES APPLICABLE TO THIS POLICY ARE THOSE REPRESENTING THE COMPANY NAMED ON THE FIRST PAGE OF THE DECLARATIONS. 
 By signing and delivering the policy to you, we state that it is a valid contract.
 

 INDEMNITY INSURANCE COMPANY OF NORTH AMERICA (A stock company)
 BANKERS STANDARD FIRE AND MARINE COMPANY (A stock company)
 BANKERS STANDARD INSURANCE COMPANY (A stock company)
 ACE AMERICAN INSURANCE COMPANY (A stock company)
 ACE PROPERTY AND CASUALTY INSURANCE COMPANY (A stock company)
 INSURANCE COMPANY OF NORTH AMERICA (A stock company)
 PACIFIC EMPLOYERS INSURANCE COMPANY (A stock company)
 ACE FIRE UNDERWRITERS INSURANCE COMPANY (A stock company)
 WESTCHESTER FIRE INSURANCE COMPANY (A stock company)
 

 436 Walnut Street, P.O. Box 1000, Philadelphia, Pennsylvania 19106-3703
 

 /s/Carmine A Giganti,
 /s/John J. Lupica
     Secretary
 President
 

 Authorized Representative 
 6
 

 ACE EXPRESS Private Company 
 Management Indemnity Package 
 General Terms and Conditions 
 In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows: 
 A. SEVERABILITY OF GENERAL TERMS AND CONDITIONS 
 These General Terms and Conditions apply to each and every Coverage Section of this Policy. The terms and conditions of each Coverage Section apply only to that Coverage Section and shall not be construed to apply to any other Coverage Section. 
 B. DEFINITIONS 
 Whenever used in this Policy, the terms that appear below in boldface type shall have the meanings set forth in this Definitions subsection of the General Terms and Conditions. However, if a term also appears in boldface type in a particular Coverage Section and is defined in that Coverage Section, that definition shall apply for purposes of that particular Coverage Section. Terms that appear in boldface in the General Terms and Conditions but are not defined in this Definitions subsection and are defined in other Coverage Sections of the Policy shall have the meanings ascribed to them in those Coverage Sections. 
 1. Application means all applications, including any attachments thereto, and all other information and materials submitted by or on behalf of the Insureds to the Insurer in connection with the Insurer underwriting this Policy or any policy with an inception date within thirty-six months prior to the inception date of this Policy, of which this Policy is a renewal or replacement. All such applications, attachments, information, materials and documents are deemed attached to and incorporated into this Policy. 
 2. Company means: 
 a) the Parent Company; and 
 b) any Subsidiary, 
 and includes any such organization as a debtor-in-possession or the bankruptcy estate of such entity under United States bankruptcy law or an equivalent status under the law of any other jurisdiction. 
 7
 

 3. Discovery Period means one of the periods described in Item E of the Declarations which is elected and purchased pursuant to subsection H below. 
 4. Domestic Partner means any natural person qualifying as a domestic partner under the provisions of any applicable federal, state or local law or under the provisions of any formal program established by the Company. 
 5. Extended Period means the Discovery Period or the Run-Off Period, if such provision is elected and purchased pursuant to subsections H or I, respectively, below. 
 6. Insurer means the insurance company providing this insurance. 
 7. Parent Company means the entity first named in Item A of the Declarations. 
 8. Policy means, collectively, the Declarations, the Application, this policy form and any endorsements. 
 9. Policy Period means the period from the effective date and hour of the inception of this Policy to the Policy expiration date and hour as set forth in Item B of the Declarations, or its earlier cancellation date and hour, if any. 
 10. Run-Off Period means one of the periods described in Item F of the Declarations, which is elected and purchased pursuant to subsection I below. 
 11. Subsidiary means: 
 a)  any entity of which the Parent Company owns more than 50% of the outstanding securities representing the present right to vote for the election of such entity's directors or managers, or has the right, pursuant to written contract or the by-laws, charter, operating agreement or similar documents of the Company, to elect, appoint or designate a majority of the board of directors or managers, directly or indirectly, if such entity: 
 (i) 
 was so owned on or prior to the inception date of this Policy; or 
 (ii)
  becomes so owned after the inception date of this Policy; and 
 b) any joint venture entity in which the Parent Company, or an entity described in a) above, has an exact fifty percent (50%) ownership of the interests of such joint venture entity and where, pursuant to a written joint venture agreement, the Parent Company or entity described in a) above solely controls the management and operations of such joint venture entity. 
 8
 

 12. Takeover means: 
 a) the acquisition by any person or entity of all or substantially all of the Parent Company’s assets, or of more than 50% of the outstanding securities of the Parent Company representing the present right to vote for the election of directors; or 
 b) the merger or consolidation of the Parent Company into another entity such that the Parent Company is not the surviving entity. 
 All definitions shall apply equally to the singular and plural forms of the respective words. 
 

 C. LIMITS OF LIABILITY, RETENTIONS AND DEDUCTIBLES 
 1. The Limits of Liability, Retentions and Deductibles for each Coverage Section are separate Limits of Liability, Retentions and Deductibles pertaining only to the Coverage Section for which they are shown. The application of a Retention or Deductible to Loss under one Coverage Section shall not reduce the Retention or Deductible under any other Coverage Section, and no reduction in the Limit of Liability applicable to one Coverage Section shall reduce the Limit of Liability under any other Coverage Section. 
 2. In the event that any Claim is covered, in whole or in part, under two or more Insuring Clauses or more than one Coverage Section, the total applicable Retention or Deductible shall not exceed the single largest applicable Retention or Deductible. The largest applicable Retention or Deductible shall apply only once to such Claim. 
 D. WARRANTY AND NON-RESCINDABILITY 
 It is warranted that the particulars and statements contained in the Application are the basis of this Policy and are to be considered as incorporated into and constituting a part of this Policy and each Coverage Section. By acceptance of this Policy, the Insureds agree that the statements in the Application are their representations, that such representations shall be deemed material to the acceptance of the risk or the hazard assumed by Insurer under this Policy, and that this Policy and each Coverage Section are issued in reliance upon the truth of such representations. 
 

 9
 

 This Policy and any Coverage Sections shall not be rescinded by the Insurer in whole or in part for any reason. 
 E. CANCELLATION 
 1. By acceptance of this Policy, the Insureds hereby confer to the Parent Company the exclusive power and authority to cancel this Policy on their behalf. The Parent Company may cancel this Policy in its entirety or any of the applicable Coverage Sections individually by surrender thereof to the Insurer, or by mailing written notice to the Insurer stating when thereafter such cancellation shall be effective. The mailing of such notice shall be sufficient notice and the effective date of cancellation shall be the date the Insurer received such notice or any later date specified in the notice, and such effective date shall become the end of the Policy Period or applicable Coverage Section. Delivery of such written notice shall be equivalent to mailing. 
 2. This Policy may be cancelled by the Insurer only for nonpayment of premium, by mailing written notice to the Parent Company stating when such cancellation shall be effective, such date to be not less than thirty (30) days from the date of the written notice. The mailing of such notice shall be sufficient notice and the effective date of cancellation stated in the notice shall become the end of the Policy Period. Delivery of such written notice by the Insurer shall be equivalent to mailing. If the foregoing notice period is in conflict with any governing law or regulation, then the notice period shall be deemed to be the minimum notice period permitted under the governing law or regulation. 
 3. If this Policy or any Coverage Section is cancelled, the Insurer shall retain the pro rata proportion of the premium therefore. Payment or tender of any unearned premium by Insurer shall not be a condition precedent to the effectiveness of cancellation. 
 F. ESTATES, LEGAL REPRESENTATIVES, AND SPOUSES 
 The estates, heirs, legal representatives, assigns, spouses and Domestic Partners of natural persons who are Insureds shall be considered Insureds under this Policy; provided, however, coverage is afforded to such estates, heirs, legal representatives, assigns, spouses and Domestic Partners only for a Claim arising solely out of their status as such and, in the case of a spouse or Domestic Partner, where the Claim seeks damages from marital community property, jointly held property or property transferred from the natural person who is an Insured to the spouse or Domestic 
 10
 

 Partner. No coverage is provided for any Wrongful Act of an estate, heir, legal representative, assign, spouse or Domestic Partner. All of the terms and conditions of this Policy including, without limitation, the Retentions and Deductibles applicable to Loss incurred by natural persons who are Insureds shall also apply to Loss incurred by such estates, heirs, legal representatives, assigns, spouses and Domestic Partners. 
 

 G. AUTHORIZATION CLAUSE 
 By acceptance of this Policy, the Parent Company agrees to act on behalf of all Insureds, and the Insureds agree that the Parent Company will act on their behalf, with respect to the giving of all notices to Insurer, the receiving of notices from Insurer, the agreement to and acceptance of endorsements, the payment of the premium and the receipt of any return premium. 
 H. DISCOVERY PERIOD 
 1. If this Policy or any Coverage Section is cancelled or is not renewed by the Insurer, for reasons other than non-payment of premium or if the Parent Company elects to cancel or not to renew this Policy or a Coverage Section, then the Parent Company shall have the right, upon payment of an additional premium calculated at that percentage shown in Item E of the Declarations of the total premium for this Policy, or the total premium for the cancelled or not renewed Coverage Section, whichever is applicable, to purchase an extension of the coverage granted by this Policy or the applicable cancelled or not renewed Coverage Section with respect to any Claim first made during the period of time set forth in Item E of the Declarations after the effective date of such cancellation or, in the event of a refusal to renew, after the Policy expiration date, but only with respect to any Wrongful Act committed before such date. The Parent Company shall have the right to elect only one of the Discovery Periods set forth in Item E of the Declarations. 
 2. As a condition precedent to the right to purchase the Discovery Period set forth in subsection H1 above, the total premium for the Policy must have been paid. Such right to purchase the Discovery Period shall terminate unless written notice, together with full payment of the premium for the Discovery Period, is received by Insurer within 30 days after the effective date of cancellation, or, in the event of a refusal to renew, within 30 days after the Policy expiration date. If such notice and premium payment is not so given to Insurer, there shall be no right to purchase the Discovery Period. 
 11
 

 3. In the event of the purchase of the Discovery Period, the entire premium therefore shall be deemed earned at the commencement of the Discovery Period. 
 4. The exercise of the Discovery Period shall not in any way increase or reinstate the limit of Insurer's liability under any Coverage Section. 
 I. RUN-OFF COVERAGE AND TERMINATION OF A SUBSIDIARY 
    1. In the event of a Takeover: 
 a) The Parent Company shall have the right, upon payment of an additional premium calculated at the percentage of the total premium for this Policy set forth in Item F of the Declarations, to an extension of the coverage granted by this Policy with respect to any Claim first made during the Run-Off Period, as set forth in Item F of the Declarations, but only with respect to any Wrongful Act committed before the effective date of the Takeover (herein defined as Run-Off Coverage”); provided, however, such additional premium shall be reduced by the amount of the unearned premium from the date of the Takeover or the date of notice of the election of the Run-Off Coverage, whichever is later, through the expiration date set forth in Item B of the Declarations. 
 b) The Parent Company shall have the right to elect only one of the periods designated in Item F of the Declarations. The election must be made prior to the expiration of the Policy Period. The right to purchase a Run-Off Period shall terminate on the expiration of the Policy Period. 
 c) If a Run-off Period is elected and purchased: 
 (i) Subsection E, above, is deleted in its entirety and neither the Insureds nor the Insurer may cancel this Policy or any Coverage Section thereof; 
 (ii) Subsection H, above, is deleted in its entirety; and 
 (iii) the maximum aggregate Limit of Liability of the Insurer for each Coverage Section purchased and set forth on the Declarations shall be twice the otherwise applicable maximum aggregate Limit of Liability set forth in Item C of the Declarations for such Coverage Section; provided, however, the maximum aggregate Limit of Liability of the Insurer in connection with any one Claim shall be amount originally shown as the maximum aggregate Limit of Liability for each Coverage Section purchased and set forth on the Declaration. 
 12
 

 2. If before or during the Policy Period an organization ceases to be a Subsidiary, coverage with respect to the Subsidiary and its natural person Insureds shall continue until termination of this Policy. Such coverage continuation shall apply only with respect to Claims for Wrongful Acts, or Employment Practices Wrongful Acts, taking place prior to the date such organization ceased to be a Subsidiary. 
 J. ALTERNATIVE DISPUTE RESOLUTION 
 The Insureds and the Insurer shall submit any dispute or controversy arising out of or relating to this Policy or the breach, termination or invalidity thereof to the alternative dispute resolution (“ADR”) process described in this subsection. Either an Insured or the Insurer may elect the type of ADR process discussed below; provided, however, that the Insured shall have the right to reject the choice by the Insurer of the type of ADR process at any time prior to its commencement, in which case the choice by the Insured of ADR process shall control. 
 There shall be two choices of ADR process: (1) non-binding mediation administered by any mediation facility to which the Insurer and the Insured mutually agree, in which the Insured and the Insurer shall try in good faith to settle the dispute by mediation in accordance with the then-prevailing commercial mediation rules of the mediation facility; or (2) arbitration submitted to any arbitration facility to which the Insured and the Insurer mutually agree, in which the arbitration panel shall consist of three disinterested individuals. In either mediation or arbitration, the mediator or arbitrators shall have knowledge of the legal, corporate management, and insurance issues relevant to the matters in dispute. In the event of arbitration, the decision of the arbitrators shall be final and binding and provided to both parties, and the award of the arbitrators shall not include attorneys’ fees or other costs. In the event of mediation, either party shall have the right to commence arbitration in accordance with this section; provided, however, that no such arbitration shall be commenced until at least 60 days after the date the mediation shall be deemed concluded or terminated. In all events, each party shall share equally the expenses of the ADR process. 
 Either ADR process may be commenced in New York, New York or in the state indicated in Item A of the Declarations as the principal address of the Parent Company. The Parent Company shall act on behalf of each and every Insured in connection with any ADR process under this section. 
 

 

 13
 

 K. TERRITORY 
 Coverage under this Policy shall extend to Wrongful Acts taking place or Claims made anywhere in the world. 
 L. ASSISTANCE, COOPERATION AND SUBROGATION 
 The Insureds agree to provide Insurer with such information, assistance and cooperation as Insurer reasonably may request, and they further agree that they shall not take any action which in any way increases Insurer's exposure under this Policy. In the event of any payments under this Policy, Insurer shall be subrogated to the extent of such payment to all of the Insureds' rights of recovery against any person or entity. The Insureds shall execute all papers required and shall do everything that may be necessary to secure and preserve such rights, including the execution of such documents as are necessary to enable Insurer effectively to bring suit or otherwise pursue subrogation in the name of the Insureds, and shall provide all other assistance and cooperation which Insurer may reasonably require. 
 M. ACTION AGAINST INSURER, ALTERATION AND ASSIGNMENT 
 Except as provided in subsection J above, Alternative Dispute Resolution, no action shall lie against Insurer unless, as a condition precedent thereto, there shall have been compliance with all of the terms of this Policy. No person or organization shall have any right under this Policy to join Insurer as a party to any action against the Insureds to determine their liability, nor shall Insurer be impleaded by the Insureds or their legal representative. No change in, modification of, or assignment of interest under this Policy shall be effective except when made by a written endorsement to this Policy which is signed by an authorized representative of the Insurer. 
 N. BANKRUPTCY 
 Bankruptcy or insolvency of any Insured or of the estate of any Insured shall not relieve the Insurer of its obligations nor deprive the Insurer of its rights or defenses under this Policy. The insurance provided by this Policy is intended as a matter of priority to protect and benefit the natural person Insureds such that, in the event of bankruptcy of the Company, the Insurer shall first pay Loss covered under Insuring Clause A.1 of the Directors & Officers and Company Coverage Section, and under the Employment Practices Coverage Section for which the Company is not permitted or required to indemnify the natural person Insured, prior to paying Loss under any other Insuring Clause. 
 

 14
 

 If a liquidation or reorganization proceeding is commenced by the Parent Company or any other Company (whether voluntary or involuntary) under Title 11 of the United States Code (as amended), or any similar state, local or foreign law (collectively, “Bankruptcy Law”) then, in regard to a covered Claim under this Policy, the Insureds hereby waive and release any automatic stay or injunction (“Stay”) to the extent such Stay may apply to the proceeds of this Policy under such Bankruptcy Law, and agree not to oppose or object to any efforts by the Insurer or any Insured to obtain relief from the Stay applicable to the proceeds of this Policy as a result of such Bankruptcy Law. 
 O. ENTIRE AGREEMENT 
 By acceptance of this Policy, the Insureds agree that this Policy embodies all agreements existing between them and Insurer or any of their agents relating to this insurance. Notice to any agent or knowledge possessed by any agent or other person acting on behalf of Insurer shall not affect a waiver or a change in any part of this Policy or estop Insurer from asserting any right under the terms of this Policy or otherwise, nor shall the terms be deemed waived or changed except by written endorsement or rider issued by Insurer to form part of this Policy. 
 

 

 

 

 

 

 

 

 

 

 

 15
 

 ACE EXPRESS Private Company 
 Management Indemnity Package 
 Employment Practices
 Coverage Section 
 In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows. 
     A. INSURING CLAUSES 
 1. Employee Insuring Clause 
 Insurer shall pay the Loss of the Insureds which the Insureds have become legally obligated to pay by reason of an Employment Practices Claim first made against the Insureds during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E1 herein, for an Employment Practices Wrongful Act taking place prior to the end of the Policy Period. 
 2. Third Party Insuring Clause 
 In the event Third Party Coverage is affirmatively designated in Item C of the Declarations relating to this Coverage Section, the Insurer shall pay the Loss of the Insureds which the Insureds have become legally obligated to pay by reason of a Third Party Claim first made against the Insureds during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E1 herein, for a Third Party Wrongful Act taking place prior to the end of the Policy Period. 
     B. DEFINITIONS 
 1. Claim means any: 
 a) Employment Practices Claim; or 
 b) Third Party Claim. 
 2. Continuity Date means the Continuity Date set forth in Item C of the Declarations relating to this Coverage Section. 
 3. Costs, Charges and Expenses means reasonable and necessary legal costs, charges, fees and expenses incurred by the Insurer, or by any Insured with the 
 16
 

 Insurer’s consent, in defending Claims and the premium for appeal, attachment or similar bonds arising out of covered judgments, but with no obligation to furnish such bonds and only for the amount of such judgment that is up to the applicable Limit of Liability. Costs, Charges and Expenses do not include salaries, wages, fees, overhead or benefit expenses of or associated with officers or employees of the Company.
 4. Employee means any person who was, now is or shall become: 
 a) a full-time or part-time employee of the Company, including voluntary, seasonal, and temporary employees; 
 b) any individual who applies for employment with the Company; and 
 c) any natural person who is a leased employee or is contracted to perform work for the Company, or is an independent contractor for the Company, but only to the extent such individual performs work or services for or on behalf of the Company. 
 5. Employment Practices Claim means: 
 a) a written demand against an Insured for damages or other relief; 
 b) a civil, judicial, administrative, regulatory or arbitration proceeding against an Insured seeking damages or other relief, commenced by the service of a complaint or similar pleading, including any appeal therefrom; 
 c) a civil proceeding against an Insured before the Equal Employment Opportunity Commission or any similar federal, state or local governmental body, commenced by the filing of a notice of charges, investigative order or similar document; 
 d) a criminal proceeding brought for an Employment Practices Wrongful Act against any Insured, commenced by a return of an indictment or similar document, or receipt or filing of a notice of charges; 
 e) a civil, criminal, administrative or regulatory investigation commenced by: 
 (i) the service upon or other receipt by any natural person Insured of a written notice, investigative order, or subpoena; or 
 

 17
 

 

 (ii) the service upon or other receipt by any Company of a written notice or investigative order; from the investigating authority identifying such natural person Insured as an individual, or such Company as an entity, respectively, against whom a proceeding described in paragraphs b, c or d immediately above may be commenced; or 
 f) a written request of the Insured to toll or waive a statute of limitations relating to a Claim described in paragraphs a through e immediately above; brought by or on behalf of an Employee in their capacity as such. Employment Practices Claim does not include a labor or grievance proceeding, which is pursuant to a collective bargaining agreement. 
 6. Employment Practices Wrongful Act means any actual or alleged: 
 a)  violation of any common or statutory federal, state, or local law prohibiting any kind of employment related discrimination; 
 b) harassment, including any type of sexual or gender harassment as well as racial, religious, sexual orientation, pregnancy, disability, age, or national origin-based harassment, or unlawful workplace harassment, including workplace harassment by any non-employee; 
 c) abusive or hostile work environment; 
 d) wrongful discharge or termination of employment, whether actual or constructive; 
 e) breach of an actual or implied employment contract; 
 f) wrongful deprivation of a career opportunity, wrongful failure or refusal to employ, promote, or grant tenure, or wrongful demotion; 
 g) employment-related defamation, libel, slander, disparagement, false imprisonment, misrepresentation, malicious prosecution, or invasion of privacy, or the giving of negative or defamatory statements in connection with an Employee reference; 
 h) wrongful failure or refusal to adopt or enforce workplace or employment practices, policies or procedures; 
 i) wrongful discipline; 
 18
 

 j) employment-related wrongful infliction of emotional distress, mental anguish, or humiliation; 
 k) Retaliation; 
 l) negligent evaluation; or 
 m) negligent hiring, supervision, retention or training of others, but only if employment-related and claimed by or on behalf of any Employee and only if committed or allegedly committed by any of the Insureds in their capacity as such. 
 7. Insured Persons means all persons who were, now are or shall become: 
 a) a director or officer of the Company; 
 b) any Employee; and 
 c) the functional equivalent of a director, officer or Employee in the event the Company is incorporated or domiciled outside the United States. 
 8. Insureds means the Company and any Insured Persons. 
 9. Interrelated Wrongful Acts means all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of facts, circumstances, situations, events, transactions or causes. 
 10. Loss means the damages, judgments, settlements, front pay and back pay, pre-judgment or post-judgment interest awarded by a court, and Costs, Charges and Expenses incurred by any of the Insureds. Loss does not include: 
 a) taxes, fines or penalties; 
 b) matters uninsurable under the laws pursuant to which this Policy is construed; 
 c) punitive or exemplary damages, liquidated damages awarded by a court pursuant to a violation of the Equal Pay Act, the Age Discrimination in Employment Act or the Family Medical Leave Act, all as amended, or any rules or regulations promulgated thereunder, or similar provisions of any common or statutory federal, state or local law, or the multiple portion of any multiplied damage award, except to the extent that such punitive, exemplary, or liquidated damages or the multiple portion of any multiplied 
 19
 

 damage award are insurable under the internal laws of any jurisdiction which most favors coverage for such damages and which has a substantial relationship to the Insureds, Insurer, this Policy or the Claim giving rise to such damages;
 d) the cost of any remedial, preventative or other non-monetary relief, including without limitation any costs associated with compliance with any such relief of any kind or nature imposed by any judgment, settlement or governmental authority; 
 e) amounts owed under any employment contract, partnership, stock or other ownership agreement, or any other type of contract; 
 f) disability, social security, workers compensation, medical insurance, retirement or pension benefit payments, or settlement amounts representing benefit payments; 
 g) the costs to modify or adapt any building or property to be accessible or accommodating, or to be more accessible or accommodating, to any disabled person; 
 h) any amount owed as wages to any Employee, other than front pay or back pay; or 
 i) any amount for which the Insured is not financially liable or legally obligated to pay. 
 11. Retaliation means any actual or alleged response of any of the Insureds to: 
 a) the disclosure or threat of disclosure by an Employee to a superior or to any governmental agency of any act by any of the Insureds where such act is alleged to be a violation of any federal, state local or foreign law, whether common or statutory, or any rule or regulation promulgated thereunder; 
 b) the actual or attempted exercise by an Employee of any right that such Employee has under law, including rights under any worker's compensation law, the Family and Medical Leave Act, the Americans with Disabilities Act or any other law relating to employee rights; 
 c) the filing of any claim under the Federal False Claims Act or any similar federal, state, local or foreign "whistleblower" law or “whistleblower” provision of any law; 
 20
 

 d) any legally-protected Employee work stoppage or slowdown; or 
 e) an Employee assisting, cooperating or testifying in any proceeding or investigation into whether an Insured violated any federal, state, local or foreign law, common or statutory, or any rule or regulation promulgated thereunder. 
 12. Third Party means any natural person who is a customer, vendor, service provider, client, or other business invitee of the Company, or any other natural person or group of natural persons, provided, however, Third Party shall not include any Employee. 
 13. Third Party Claim means: 
 a) any written demand for damages or other relief against an Insured; 
 b) a civil judicial, administrative or arbitration proceeding against an Insured seeking damages or other relief, including any appeal therefrom; or 
 c) a criminal proceeding brought for an Employment Practices Wrongful Act in a court outside of the United States against any Insured, commenced by a return of an indictment or similar document, or receipt or filing of a notice of charges; brought by or on behalf of a Third Party in their capacity as such. 
 14. Third Party Wrongful Act means any actual or alleged: 
 a) harassment of a Third Party , including but not limited to any type of sexual or gender harassment as well as racial, religious, sexual orientation, pregnancy, disability, age, or national origin-based harassment; or 
 b) discrimination against a Third Party, including but not limited to any such discrimination on account of race, color, religion, age, disability or national origin. 
 15. Wrongful Act means: 
 a) Employment Practices Wrongful Act; or 
 b) Third Party Wrongful Act. 
 

 

 21
 

     C. EXCLUSIONS 
 Insurer shall not be liable for Loss under this Coverage Section on account of any Claim: 
 1. for actual or alleged bodily injury, sickness, disease or death of any person, or damage to or destruction of any tangible or intangible property including loss of use thereof, whether or not such property is physically injured; provided, however, this exclusion shall not apply to mental anguish, emotional distress or humiliation; 
 2. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 a) any Wrongful Act, fact circumstance or situation which has been the subject of any written notice given under any other policy of which this Policy is a renewal or replacement or which it succeeds in time; or 
 b) any other Wrongful Act whenever occurring which, together with a Wrongful Act which has been the subject of such notice, would constitute Interrelated Wrongful Acts; 
 3. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 a) the actual, alleged or threatened discharge, dispersal, release, escape, seepage, migration or disposal of Pollutants; or 
 b) any direction or request that any Insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants, or any voluntary decision to do so;
  including without limitation any such Claim by or on behalf of the Company, its securities holders or creditors based upon, arising out of, or attributable to the matters described in this exclusion. Provided, however, this exclusion shall not apply to that part of any Claim under this Coverage Section where such Claim is for Retaliation, or, except as to Clean Up Costs, to any Non-Indemnifiable Loss of an Insured Person or Loss of an Insured Person for which the Company does not indemnify such Insured Person because of either the appointment by any state or federal official, agency or court of any receiver, conservator, liquidator, trustee, rehabilitator or similar official to take 
 22
 

 

 control of, supervise, manage or liquidate the Company, or because of the Company becoming a debtor-in-possession. 
 For purposes of this exclusion: 
 Clean Up Costs means expenses, including but not limited to legal and professional fees, incurred in testing for, monitoring, cleaning up, removing, containing, treating, neutralizing, detoxifying or assessing the effects of Pollutants; 
 Non-Indemnifiable Loss means Loss for which a Company has not indemnified, and is not permitted or required to indemnify, an Insured Person pursuant to law or contract or the charter, bylaws, operating agreement or similar documents of a Company; 
 Pollutants means any substance exhibiting any hazardous characteristics as defined by, or identified on, a list of hazardous substances issued by the United States Environmental Protection Agency or any federal, state, county, municipal or local counterpart thereof or any foreign equivalent. Such substances shall include, without limitation, solids, liquids, gaseous, biological, bacterial or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials (including materials to be reconditioned, recycled or reclaimed). Pollutants shall also mean any other air emission or particulate, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products, noise, fungus (including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi, but does not include any fungi intended by the Insured for consumption) and electric or magnetic or electromagnetic field; 
 4. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: (i) improper payroll deductions, unpaid wages, misclassification of exempt or nonexempt employee status, compensation earned by or due to the claimant but not paid by the Insured (including but not limited to commission, vacation and sick days, retirement benefits, and severance pay), overtime pay for hours actually worked or labor actually performed by any Employee of a Company, or any violation of any federal, state, local or foreign statutory law or common law that governs the same topic or subject, or any rules, regulations or amendments thereto; or 
 23
 

 (ii) any violation of the responsibilities, obligations or duties imposed by the Fair Labor Standards Act (except the Equal Pay Act), as amended, or any rules or regulations promulgated thereunder, or similar provisions of any common or statutory federal, state, local or foreign law. Provided, however, this exclusion does not apply to any back pay or front pay allegedly due as the result of discrimination, or that part of any such Claim alleging Retaliation; 
 5. for any actual or alleged violation of the responsibilities, obligations or duties imposed by the Employee Retirement Income Security Act of 1974, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Occupational Safety and Health Act, all as amended, or any rules or regulations promulgated thereunder, or similar provisions of any common or statutory federal, state or local law. Provided, however, this exclusion does not apply to that part of any such Claim alleging violations of the Equal Pay Act or Retaliation; 
 6. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any deliberately fraudulent or criminal act; provided, however this exclusion shall not apply unless and until there is a final judgment against such Insured as to such conduct. If such excluded conduct is established through a final judgment, the Insured shall reimburse the Insurer for any Costs, Charges and Expenses; 
 7. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act actually or allegedly committed subsequent to a Takeover; 
 8. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 a) any prior or pending litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry, including without limitation any investigation by the U.S. Department of Labor or the U.S. Equal Employment Opportunity Commission, filed or pending on or before the Continuity Date; or 
 b) any fact, circumstance, situation, transaction or event underlying or alleged in such litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry, including any investigation by the U.S. Department of Labor or the U.S. Equal Employment Opportunity Commission; 
 24
 

 9. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act, fact, circumstance, or situation which any of the Insured Persons who were, now are, or shall be directors, officers, managers or supervisory employees, had knowledge of prior to the Continuity Date where such Insured Persons had reason to believe at the time that such known Wrongful Act could reasonably be expected to give rise to such Claim; 
 10. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any actual or alleged responsibility, obligation or duty of any Insured pursuant to any workers compensation, unemployment insurance, social security, disability benefits or pension benefits or similar law; provided, however, this exclusion shall not apply to that part of any such Claim alleging Retaliation; or 
 11. for that portion of Loss which is covered under any other Coverage Section of this Policy. 
 No Wrongful Act of one or more Insureds shall be imputed to any other Insureds for the purpose of determining the applicability of any of the above exclusions. 
     D. LIMIT OF LIABILITY AND RETENTIONS 
 1. The liability of the Insurer shall apply only to that part of Loss which is excess of the Retention amount applicable to this Coverage Section, as shown in Item C of the Declarations. Such Retention shall be borne uninsured by the Insureds and at their own risk. If different parts of a single Claim are subject to different applicable Retentions under this Coverage Section, the applicable Retentions will be applied separately to each part of such Loss, but the sum of such Retentions shall not exceed the largest applicable Retention. 
 2. As shown in Item C1 of the Declarations relating to this Coverage Section, the following Limits of Liability of the Insurer shall apply: 
 a) The amount set forth in Item C1a relating to this Coverage Section shall be the aggregate limit of liability for the payment of Loss, subject to additional payments for Costs, Charges and Expenses as further described in subsection b) immediately below. 
 b) The amount set forth in Item C1b relating to this Coverage Section shall be the aggregate limit of liability for the payment of Costs, Charges and 
 25
 

 Expenses in addition to the limit described in subsection a) immediately above; provided, all payments for Costs, Charges and Expenses under the additional limits described in this subsection b) shall be excess of the limit described in subsection a) above, and excess of any other available insurance that is specifically excess to this Policy. Such excess insurance must be completely and fully exhausted through the payment of loss, including but not limited to defense costs thereunder, before the Insurer shall have any obligations to make any payments under the additional limits described in this subsection b). 
 c) The amount set forth in Item C1c of the Declarations relating to this Coverage Section shall be the maximum aggregate limit of liability under this Coverage Section and the limit of liability set forth in C1a and C1b relating to this Coverage Section shall be a part of and not in addition to the maximum aggregate limit of liability set forth in Item C1c for this Coverage Section. 
 3. All Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts shall be deemed to be a single Claim, and such Claim shall be deemed to have been made at the earliest of the following times, regardless of whether such date is before or during the Policy Period: 
 a) the time at which the earliest Claim involving the same Wrongful Act or Interrelated Wrongful Acts is first made; or 
 b) the time at which the Claim involving the same Wrongful Act or Interrelated Wrongful Acts shall be deemed to have been made pursuant to subsection E2 below. 
 4. Payments of Loss by Insurer shall reduce the Limit(s) of Liability under this Coverage Section. Costs, Charges and Expenses are part of, and not in addition to, the Limit(s) of Liability, and payment of Costs, Charges and Expenses reduce the Limit(s) of Liability. If such Limit(s) of Liability are exhausted by payment of Loss, the obligations of the Insurer under this Coverage Section are completely fulfilled and extinguished. 
     E. NOTIFICATION 
 

 26
 

 1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give to Insurer written notice of any Claim made against the Insureds as soon as practicable after the Company’s general counsel, risk manager, human resources director, chief executive officer or chief financial officer (or equivalent positions) first becomes aware of such Claim, but in no event later than: (a) sixty (60) days after such individual first becomes aware of such Claim; or (b) the expiration of the Policy Period or Extended Period, if purchased, whichever is later. 
 2. If, during the Policy Period or the Discovery Period, any of the Insureds first becomes aware of facts or circumstances which may reasonably give rise to a future Claim covered under this Policy, and if the Insureds, during the Policy Period or the Discovery Period, if purchased, give written notice to Insurer as soon as practicable of: 
 a) a description of the Wrongful Act allegations anticipated; 
 b) the identity of the potential claimants; 
 c) the circumstances by which the Insureds first became aware of the Wrongful Act; 
 d) the identity of the Insureds allegedly involved; 
 e) the consequences which have resulted or may result; and 
 f) the nature of the potential monetary damages and non-monetary relief; 
 then any Claim made subsequently arising out of such Wrongful Act shall be deemed for the purposes of this Coverage Section to have been made at the time such written notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such Wrongful Act results in a Claim. 
 3. Notice to Insurer shall be given to the address specified in Item G of the Declarations for this Policy. 
 F. SETTLEMENT AND DEFENSE 
 

 

 27
 

 

 1. It shall be the duty of the Insurer and not the duty of the Insureds to defend any Claim. Such duty shall exist even if any of the allegations are groundless, false or fraudulent. The Insurer’s duty to defend any Claim shall cease when the Limits of Liability have been exhausted by the payment of Loss including Costs, Charges and Expenses. 
 2. The Insurer may make any investigation it deems necessary. and shall have the right to settle any Claim; provided, however, no settlement shall be made without the consent of the Parent Company, such consent not to be unreasonably withheld. 
 3. The Insureds agree not to settle or offer to settle any Claim, incur any Costs, Charges and Expenses or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be liable for any settlement, Costs, Charges and Expenses, assumed obligation or admission to which it has not consented. The Insureds shall promptly send to the Insurer all settlement demands or offers received by any Insured from the claimant(s). 
 4. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agree that, in the event of a Claim, the Insureds will do nothing that shall prejudice the position of the Insurer or its potential or actual rights of recovery. 
 5. If the Insurer recommends a settlement within the Policy Limit of Liability which is agreed to by the claimant (“Settlement Opportunity”), and: 
 a) the Insureds consent to such settlement within thirty (30) days of the date the Insureds are first made aware of the Settlement Opportunity; and 
 b) such consent occurs within the first ninety (90) days after the Claim is first reported; and 
 c) such Claim is reported within the first thirty (30) days after it is made, then, in the event the Claim settles as a result of such Settlement Opportunity, the Retention applicable to such Claim shall be waived, and any amounts paid by the Insureds towards the Retention shall be reimbursed by the Insurer. 
 

 

 28
 

     G. OTHER INSURANCE 
 1. For any Employment Practices Claim, if any Loss covered under this Coverage Section is covered under any other valid and collectible insurance, then this Policy shall be primary insurance; provided that with respect to that portion of an Employment Practice Claim made against any leased, temporary or independently contracted Employee, Loss, including Costs, Charges and Expenses, payable on behalf of such Employee under this Coverage Section will be specifically excess of and will not contribute with such other insurance, including but not limited to any such other insurance under which there is a duty to defend, unless such insurance is specifically stated to be in excess over the Limit of Liability of this Coverage Section. 
 2. For any Third Party Claim, if any Loss covered under this Coverage Section is covered under any other valid and collectable insurance, then this Policy shall be specifically excess of and will not contribute with such other insurance, including but not limited to any such other insurance under which there is a duty to defend, unless such other insurance is specifically stated to be excess over the Limit of Liability of this Coverage Section. 
 H. ALLOCATION 
 If a Claim includes both Loss that is covered under this Policy and loss that is not covered under this Policy, either because the Claim is made against both Insureds and others, or the Claim includes both covered allegations and allegations that are not covered, the Insureds and the Insurer shall allocate such amount between covered Loss (except for Costs, Charges and Expenses) and loss that is not covered based upon the relative legal and financial exposures and the relative benefits obtained by the parties. The Insurer shall not be liable under this Policy for the portion of such amount allocated to non-covered Loss. 
 

 

 

 

 

 29
 

 

 ACE EXPRESS Private Company 
 Management Indemnity Package 
 Directors & Officers and Company 
 Coverage Section 
 In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows. 
     A. INSURING CLAUSES 
 1. The Insurer shall pay the Loss of the Directors and Officers for which the Directors and Officers are not indemnified by the Company and which the Directors and Officers have become legally obligated to pay by reason of a Claim first made against the Directors and Officers during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E1 herein, for any Wrongful Act taking place prior to the end of the Policy Period. 
 2. The Insurer shall pay the Loss of the Company for which the Company has indemnified the Directors and Officers and which the Directors and Officers have become legally obligated to pay by reason of a Claim first made against the Directors and Officers during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E1 herein, for any Wrongful Act taking place prior to the end of the Policy Period. 
 3. The Insurer shall pay the Loss of the Company which the Company becomes legally obligated to pay by reason of a Claim first made against the Company during the Policy Period or, if applicable, the Extended Period, and reported to the Insurer pursuant to subsection E1 herein, for any Wrongful Act taking place prior to the end of the Policy Period. 
     B. DEFINITIONS 
 1. Claim means: 
 a) a written demand against any Insured for monetary damages or non-monetary or injunctive relief; 
 

 30
 

 b) a written demand by one or more of the securities holders of the Company upon the board of directors orthe management board of the Company to bring a civil proceeding against any of the Directors and Officers on behalf of the Company; 
 c) a civil proceeding against any Insured seeking monetary damages or non-monetary or injunctive relief, commenced by the service of a complaint or similar pleading; 
 d) a criminal proceeding against any Insured, commenced by a return of an indictment or similar document, or receipt or filing of a notice of charges; 
 e) an arbitration proceeding against any Insured seeking monetary damages or non-monetary or injunctive relief; 
 f) a civil, administrative or regulatory proceeding against any Insured commenced by the filing of a notice of charges or similar document; 
 g) a civil, criminal, administrative or regulatory investigation commenced by: 
 (i) the service upon or other receipt by any natural person Insured of a written notice, investigative order, or subpoena; or 
 (ii) the service upon or other receipt by any Company of a written notice or investigative order; from the investigating authority identifying such natural person Insured as an individual, or such Company as an entity, respectively, against whom a proceeding described in paragraphs c, d or f immediately above may be commenced; or 
 h) a written request of the Insured to toll or waive a statute of limitations relating to a Claim described in paragraphs a through g immediately above. 
 2. Continuity Date  means the date set forth in Item C of the Declarations relating to this Coverage Section. 
 3. Costs, Charges and Expenses means: 
 a) reasonable and necessary legal costs, charges, fees and expenses incurred by the Insurer, or by any Insured with the Insurer’s consent, in defending Claims and the premium for appeal, attachment or similar bonds arising out of covered judgments, but with no obligation to furnish such bonds and only for the amount of such judgment that is up to the applicable Limit of Liability; and 
 31
 

 b) reasonable and necessary legal costs, charges, fees and expenses incurred by any of the Insureds in investigating a written demand, by one or more of the securities holders of the Company upon the board of directors or the management board of the Company, to bring a civil proceeding against any of the Directors and Officers on behalf of the Company. 
 Costs, Charges and Expenses do not include salaries, wages, fees, overhead or benefit expenses of or associated with officers or employees of the Company. 
 4. Directors and Officers means any person who was, now is, or shall become: 
 a) a duly elected or appointed director, officer, or similar executive of the Company, or any member of the management board of the Company; 
 b) a person who was, is or shall become a full-time or part-time employee of the Company; and 
 c) the functional equivalent of directors or officers of a Company incorporated or domiciled outside the United States of America. 
 5. Insureds mean the Company and the Directors and Officers. 
 6. Interrelated Wrongful Acts means all Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of facts, circumstances, situations, events, transactions or causes. 
 7. Loss means damages, judgments, settlements, pre-judgment or post-judgment interest awarded by a court, and Costs, Charges and Expenses incurred by Directors and Officers under Insuring Clauses 1 or 2, or the Company under Insuring Clause 3. Loss does not include: 
 a) taxes, fines or penalties; 
 b) matters uninsurable under the laws pursuant to which this Policy is construed; 
 c) punitive or exemplary damages, or the multiple portion of any multiplied damage award, except to the extent that such punitive or exemplary damages, or multiplied portion of any multiplied damage award are insurable under the internal laws of any jurisdiction which most favors coverage for such damages and which has a substantial relationship to the Insureds, Insurer, this Policy or the Claim giving rise to such damages; 
 32
 

 d) the cost of any remedial, preventative or other non-monetary relief, including without limitation any costs associated with compliance with any such relief of any kind or nature imposed by any judgment, settlement or governmental authority; 
 e) any amount for which the Insured is not financially liable or legally obligated to pay; or 
 f) the costs to modify or adapt any building or property to be accessible or accommodating, or more accessible or accommodating, to any person. 
 8. Outside Entity means: 
 a) any non-profit company in which any of the Directors and Officers is a director, officer, trustee, governor, executive director or similar position of such non-profit company; and 
 b) any other company specifically identified by endorsement to this Policy. 
 9. Wrongful Act means any actual or alleged error, omission, misleading statement, misstatement, neglect, breach of duty or act allegedly committed or attempted by: 
 a) any of the Directors and Officers, while acting in their capacity as such, or any matter claimed against any Director and Officer solely by reason of his or her serving in such capacity; 
 b) any of the Directors and Officers, while acting in their capacity as a director, officer, trustee, governor, executive director or similar position of any Outside Entity where such service is with the knowledge and consent of the Company; and 
 c) the Company, but only with respect to Insuring Clause 3 of this Coverage Section. 
     C. EXCLUSIONS 
 1. Exclusions Applicable to All Insuring Clauses 
 Insurer shall not be liable for Loss under this Coverage Section on account of any Claim: 
 

 33
 

 a) for actual or alleged bodily injury, sickness, disease, death, false imprisonment, mental anguish, emotional distress, invasion of privacy of any person, or damage to or destruction of any tangible or intangible property including loss of use thereof, whether or not such property is physically injured; 
 b) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice given under any other policy of which this Policy is a renewal or replacement or which it succeeds in time; or 
 (ii) any other Wrongful Act, whenever occurring, which together with a Wrongful Act which has been the subject of such prior notice, would constitute Interrelated Wrongful Acts; 
 c) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) the actual, alleged or threatened discharge, dispersal, release, escape, seepage, migration or disposal of Pollutants; or 
 (ii) any direction or request that any Insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants, or any voluntary decision to do so;
  provided, however, this exclusion shall not apply to any Claim brought directly, derivatively or otherwise by one or more securities holders of the Company in their capacity as such, or, except as to Clean Up Costs, to any Non-Indemnifiable Loss of a Director and Officer, or Loss of a Director and Officer for which the Company does not indemnify such Director and Officer because of either the appointment by any state or federal official, agency or court of any receiver, conservator, liquidator, trustee, rehabilitator or similar official to take control of, supervise, manage or liquidate the Company, or because of the Company becoming a debtor-in-possession. 
 For purposes of this exclusion: 
 Clean Up Costs means expenses, including but not limited to legal and professional fees, incurred in testing for, monitoring, cleaning up, removing, containing, treating, neutralizing, detoxifying or assessing the effects of Pollutants;
 34
 

 Non-Indemnifiable Loss means Loss for which a Company has not indemnified, and is not permitted or required to indemnify, a Director and Officer pursuant to law or contract or the charter, bylaws, operating agreement or similar documents of a Company; 
 Pollutants means any substance exhibiting any hazardous characteristics as defined by, or identified on, a list of hazardous substances issued by the United States Environmental Protection Agency or any federal, state, county, municipal or local counterpart thereof or any foreign equivalent. Such substances shall include, without limitation, solids, liquids, gaseous, biological, bacterial or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials (including materials to be reconditioned, recycled or reclaimed). Pollutants shall also mean any other air emission or particulate, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products, noise, fungus (including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi, but does not include any fungi intended by the Insured for consumption) and electric or magnetic or electromagnetic field; 
 d) for any actual or alleged violation of the responsibilities, obligations or duties imposed by Employee Retirement Income Security Act of 1974, as amended, or any rules or regulations promulgated thereunder, or similar provisions of any federal, state or local statutory or common law; 
 e) brought or maintained by, on behalf of, in the right of, or at the direction of any Insured in any capacity, or any Outside Entity, in any respect and whether or not collusive, or which is brought by any securities holder or member of the Company, whether directly or derivatively, unless the Claim of such securities holder or member is instigated and continued totally independent of, and totally without the solicitation, assistance, active participation, or intervention of, any Director and Officer or the Company; provided, however, that Whistleblower Conduct by a Director and Officer, other than a Director and Officer as that term is defined in subparagraphs a or c of definition 4, shall not be considered solicitation, assistance, active participation, or intervention of a Director and Officer; 
 and provided further that this exclusion shall not apply to any Claim that: 
 (i) is brought or maintained by any Insured in the form of a cross claim, third party claim or other proceeding for contribution or indemnity which is part 
 

 35
 

 of, and directly results from a Claim that is covered by this Coverage Section; 
 

 (ii) is brought or maintained by an employee of the Company who is not or was not a director or officer of the Company, including any Claim brought by such employee for any actual or alleged violation of the provisions of 31 U.S.C. 3729 of the Federal False Claims Act, or any similar provision of any federal, state, local or foreign statutory law; 
 (iii) is brought or maintained by any former director or officer of the Company and where such Claim is solely based upon and arising out of Wrongful Acts committed subsequent to the date such director or officer ceased to be a director or officer of the Company and where such Claim is first made two (2) years subsequent to the date such director or officer ceased to be a director or officer of the Company; 
 (iv) is brought or maintained by any bankruptcy or insolvency trustee or bankruptcy appointed representative of the Company, or receiver, examiner, liquidator or similar official for the Company; or 
 (v) any Claim brought and maintained by a Director and Officer, as that term is defined in subparagraphs a or c of definition 4, of a Company formed and operating solely in a country other than the United States of America, Canada, or any other common law country. 
 For purposes of this exclusion, Whistleblower Conduct means any of the activity set forth in 18 U.S.C. Sec. 1514A(a), engaged in by a whistleblower with a federal regulatory or law enforcement agency, Member of Congress or any committee of Congress, or person with supervisory authority over the whistleblower, or an enforcement action by the whistleblower set forth in 18 U.S.C. Sec. 1514A (b); 
 f) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any deliberately fraudulent or criminal act of an Insured; provided, however this exclusion f)(i) shall not apply unless and until there is a final judgment against such Insured as to such conduct; or 
 (ii) the gaining of any profit, remuneration or financial advantage to which any Directors and Officers were not legally entitled; provided, however 
 36
 

 this exclusion f)(ii) shall not apply unless and until there is a final judgment against such Directors and Officers as to such conduct. 
 When f) (i) or (ii) apply, the Insured shall reimburse the Insurer for any Costs, Charges or Expenses; 
 g) for the return by any of the Directors and Officers of any remuneration paid to them without the previous approval of the appropriate governing body of the Company or Outside Entity, which payment without such previous approval shall be held to be in violation of law; 
 h) against any of the Directors and Officers of any Subsidiary or against any Subsidiary alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act actually or allegedly committed or attempted by a Subsidiary or Directors and Officers thereof before the date such entity became a Subsidiary or after the date such entity ceased to be a Subsidiary; 
 i) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act actually or allegedly committed subsequent to a Takeover; 
 j) for a Wrongful Act actually or allegedly committed or attempted by any of the Directors and Officers in his or her capacity as a director, officer, trustee, manager, member of the board of managers or equivalent executive of a limited liability company or employee of, or independent contractor for or in any other capacity or position with any entity other than the Company; provided, however, that this exclusion shall not apply to Loss resulting from any such Claim to the extent that: 
 (i) such Claim is based on the service of any of the Directors and Officers as a director, officer, trustee, governor, executive director or similar position of any Outside Entity where such service is with the knowledge and consent of the Company; and 
 (ii) such Outside Entity is not permitted or required by law to provide indemnification to such Directors and Officers; and
  (iii) such Loss is not covered by insurance provided by any of the Outside Entity's insurer(s);
 37
 

 

 k) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any prior or pending litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry filed or pending on or before the Continuity Date; or 
 (ii) any fact, circumstance, situation, transaction or event underlying or alleged in such litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry; 
 l) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any Wrongful Act, fact, circumstance or situation which any of the Insureds had knowledge of prior to the Continuity Date where such Insureds had reason to believe at the time that such known Wrongful Act could reasonably be expected to give rise to such Claim; 
 m) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) improper payroll deductions, unpaid wages or other compensation, misclassification of employee status, or any violation of any law, rule or regulation, or amendments thereto, that governs the same topic or subject; or 
  (ii) any other employment or employment–related matters brought by or on behalf of or in the right of an applicant for employment with the Company, or any of the Directors and Officers, including any voluntary, seasonal, temporary, leased or independently-contracted employee of the Company; 
 n) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any public offering of Securities undertaken or consummated by or on behalf of the Company (“Public Offering”), or the solicitation, sale, purchase, distribution, or issuance of any such Securities, whether any such activity occurs or allegedly occurs prior to, during, or after such Public Offering; or 
 38
 

 

 (ii) any Wrongful Act, including without limitation any actual or alleged violation of any Securities Law, relating in any way to a Public Offering or to any Securities issued, sold or distributed pursuant to a Public Offering, whether any such Wrongful Act occurs or allegedly occurs prior to, during, or after such Public Offering, 
 provided that this exclusion shall not apply to Claims arising from an offer, sale or purchase of Securities in a transaction that is exempt from registration under the Securities Act of 1933, or any amendments thereto or any rules and regulations promulgated thereunder. 
 For purposes of this exclusion: 
 Securities means common or preferred stock or rights, warrants or options in such stock representing an ownership interest in the Company or a right to acquire or dispose of such interest; or notes, bonds or debentures representing a debt owed by the Company to the extent such instruments would be deemed securities under the federal or state laws of the United States; 
 Securities Law means the Securities Act of 1933, the Securities Exchange Act of 1934, or any rules or regulations of the Securities Exchange Commission adopted pursuant thereto, or any federal, state, provincial or foreign statute or common law regulating securities similar to the foregoing; or any amendments to the foregoing or any rules or regulations adopted pursuant to the foregoing; or any other federal, state, provincial or foreign law or common law relating to liability in connection with an offering of Securities of a Company, including without limitation the solicitation, sale, purchase, distribution or issuance of such Securities; 
 o) for that portion of Loss which is covered under any other Coverage Section of this Policy. 
 2. Exclusions Applicable Only to Insuring Clause A3 
 Insurer shall not be liable for Loss on account of any Claim: 
 a) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving the actual or alleged breach of any contract or agreement; except and to the extent the Company would have been liable in the absence of such contract or agreement; or 
 39
 

 b) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any actual or alleged infringement, misappropriation, or violation of copyright, patent, service marks, trademarks, trade secrets, title or other proprietary or licensing rights or intellectual property of any products, technologies or services; or 
 (ii) any goods or products manufactured, produced, processed, packaged, sold, marketed, distributed, advertised or developed by the Company. 
 Provided, however, the exclusions in 2a) and 2b) above shall not apply to any such Claim brought or maintained, directly or indirectly, by one or more securities holders of the Company in their capacity as such. 
 No Wrongful Act of one or more Insureds shall be imputed to any other Insureds for the purpose of determining the applicability of any of the above exclusions. 
     D. LIMIT OF LIABILITY AND RETENTIONS 
 1. The liability of the Insurer shall apply only to that part of Loss which is excess of the Retention amounts applicable to this Coverage Section, as shown in Item C of the Declarations. Such Retentions shall be borne uninsured by the Insureds and at their own risk. If different parts of a single Claim are subject to different applicable Retentions under this Coverage Section, the applicable Retentions will be applied separately to each part of such Loss, but the sum of such Retentions shall not exceed the largest applicable Retention. 
 2. As shown in Item C1 of the Declarations relating to this Coverage Section, the following Limits of Liability of the Insurer shall apply: 
 a) The amount set forth in Item C1a relating to this Coverage Section shall be the aggregate limit of liability for the payment of Loss under all Insuring Clauses for this Coverage Section, subject to additional payments for Loss under Insuring Clause A1 as further described in subsection b) immediately below. 
 b) The amount set forth in Item C1b relating to this Coverage Section shall be an aggregate limit of liability for the payment of Loss under Insuring Clause A1 in addition to the limit described in subsection a) immediately above; provided, all payments for Loss under the additional limits described in this subsection b) shall be excess of the limit described in subsection a) above, and excess of any other available insurance that is specifically excess to this 
 40
 

 Policy. Such excess insurance must be completely and fully exhausted through the payment of loss, including but not limited to defense costs thereunder, before the Insurer shall have any obligations to make any payments under the additional limits described in this subsection b). 
 c) The amount set forth in Item C1c of the Declarations relating to this Coverage Section shall be the maximum aggregate limit of liability for the payment of Loss under all Insuring Clauses for this Coverage Section. The limit of liability set forth in C1a and C1b relating to this Coverage Section shall be a part of and not in addition to the maximum aggregate limit of liability set forth in Item C1c for this Coverage Section. 
 3. All Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts shall be deemed to constitute a single Claim and shall be deemed to have been made at the earliest of the following times, regardless of whether such date is before or during the Policy Period: 
 a) the time at which the earliest Claim involving the same Wrongful Act or Interrelated Wrongful Act is first made; or 
 b) the time at which the Claim involving the same Wrongful Act or Interrelated Wrongful Acts shall be deemed to have been made pursuant to subsection E2, below. 
 4. The Retention applicable to Insuring Clause 2 shall apply to Loss resulting from any Claim if indemnification for the Claim by the Company is required or permitted by applicable law, to the fullest extent so required or permitted, regardless of whether or not such actual indemnification by the Company is made, except and to the extent such indemnification is not made by the Company solely by reason of the Company’s financial insolvency. 
 5. Payments of Loss by Insurer shall reduce the Limit(s) of Liability under this Coverage Section. Costs, Charges and Expenses are part of, and not in addition to, the Limits of Liability and payment of Costs, Charges and Expenses reduce the Limits of Liability. If such Limit(s) of Liability are exhausted by payment of Loss, the obligations of the Insurer under this Coverage Section are completely fulfilled and extinguished. 
 E. NOTIFICATION 
 1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give Insurer written notice of any Claim as soon as 
 41
 

 practicable after the Company’s general counsel, risk manager, chief executive officer or chief financial officer (or equivalent positions) first becomes aware of such Claim, but in no event later than sixty (60) days after the end of the Policy Period, or respecting any Claim first made against the Insureds during the Extended Period, if purchased, sixty (60) days after the end of the Extended Period. 
 2. If, during the Policy Period or the Discovery Period, if purchased, any of the Insureds first becomes aware of facts or circumstances which may reasonably give rise to a future Claim covered under this Policy, and if the Insureds, during the Policy Period or the Discovery Period, if purchased, give written notice to Insurer as soon as practicable of: 
 a) a description of the Wrongful Act allegations anticipated; 
 b) the identity of the potential claimants; 
 c) the circumstances by which the Insureds first became aware of the Wrongful Act; 
 d) the identity of the Insureds allegedly involved; 
 e) the consequences which have resulted or may result; and 
 f) the nature of the potential monetary damages and non-monetary relief; 
 then any Claim made subsequently arising out of such Wrongful Act shall be deemed for the purposes of this Coverage Section to have been made at the time such notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such Wrongful Act results in a Claim. 
 3. Notice to Insurer shall be given to the address shown under Item G of the Declarations for this Policy. 
     F. SETTLEMENT AND DEFENSE 
 1. It shall be the duty of the Insurer and not the duty of the Insureds to defend any Claim. Such duty shall exist even if any of the allegations are groundless, false or fraudulent. The Insurer’s duty to defend any Claim shall cease when the Limits of Liability have been exhausted by the payment of Loss including Costs, Charges and Expenses. 
 42
 

 2. The Insurer may make any investigation it deems necessary, and shall have the right to settle any Claim; provided, however, no settlement shall be made without the consent of the Parent Company, such consent not to be unreasonably withheld. 
 3. The Insureds agree not to settle or offer to settle any Claim, incur any Costs, Charges and Expenses or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be liable for any settlement, Costs, Charges and Expenses, assumed obligation or admission to which it has not consented. The Insureds shall promptly send to the Insurer all settlement demands or offers received by any Insured from the claimant(s). 
 4. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agree that, in the event of a Claim, the Insureds will do nothing that shall prejudice the position of the Insurer or its potential or actual rights of recovery. 
 5. If the Insurer recommends a settlement within the Policy Limit of Liability which is agreed to by the claimant (“Settlement Opportunity”) and: 
 a) the Insureds consent to such settlement within thirty (30) days of the date the Insureds are first made aware of the Settlement Opportunity; and 
 b) such consent occurs within the first ninety (90) days after the Claim is first reported; and 
 c) such Claim is reported within the first thirty (30) days after it is made, 
 then, in the event the Claim settles as a result of such Settlement Opportunity, the Retention applicable to such Claim shall be waived, and any amounts paid by the Insureds towards the Retention shall be reimbursed by the Insurer. 
 G. OTHER INSURANCE 
 If any Loss covered under this Coverage Section is covered under any other valid and collectible insurance, then this Policy shall cover the Loss, subject to its terms and conditions, only to the extent that the amount of the Loss is in excess of the amount of such other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the Limit of Liability for this Coverage Section. 
 43
 

     H. PAYMENT PRIORITY 
 1. If the amount of any Loss which is otherwise due and owing by the Insurer exceeds the then-remaining Limit of Liability applicable to the Loss, the Insurer shall pay the Loss, subject to such Limit of Liability, in the following priority: 
 a) first, the Insurer shall pay any Loss covered under Insuring Clause A1, in excess of any applicable Retention shown in Item C of the Declarations; and 
 b) second, only if and to the extent the payment under subsection 1.a above does not exhaust the applicable Limit of Liability, the Insurer shall pay any Loss in excess of the Retention shown in Item C of the Declarations covered under any other applicable Insuring Clause. 
 c) Subject to the foregoing subsection, the Insurer shall, upon receipt of a written request from the Chief Executive Officer of the Parent Company, delay any payment of Loss otherwise due and owing to or on behalf of the Company until such time as the Chief Executive Officer of the Parent Company designates, provided the liability of the Insurer with respect to any such delayed Loss payment shall not be increased, and shall not include any interest, on account of such delay. 
     I. ALLOCATION 
 If a Claim includes both Loss that is covered under this Policy and loss that is not covered under this Policy, either because the Claim is made against both Insureds and others, or the Claim includes both covered allegations and allegations that are not covered, the Insureds and the Insurer shall allocate such amount between covered Loss (except for Costs, Charges and Expenses) and loss that is not covered based upon the relative legal and financial exposures and the relative benefits obtained by the parties. The Insurer shall not be liable under this Policy for the portion of such amount allocated to non-covered Loss. 
 

 

 

 

 44
 

 

 ACE EXPRESS Private Company 
 Management Indemnity Package 
 Fiduciary Coverage Section 
 

 In consideration of the payment of premium, in reliance on the Application and subject to the Declarations, and terms and conditions of this Policy, the Insurer and the Insureds agree as follows. 
     A. INSURING CLAUSE 
 Insurer shall pay the Loss of the Insureds which the Insureds have become legally obligated to pay by reason of a Claim first made against the Insureds during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E1 herein, for any Wrongful Act taking place prior to the end of the Policy Period. 
 B. DEFINITIONS 
 1. Administration means: 
 a) counseling employees, beneficiaries or Plan participants with respect to any Plan; 
 b) providing interpretations with respect to any Plan; 
 c) handling records in connection with any Plan; or 
 d) enrolling, terminating, or canceling employees under any Plan. 
 2. Claim means: 
 a) a written demand for damages or other relief against an Insured; 
 b) a civil, administrative, regulatory or arbitration proceeding against any Insured seeking damages or other relief, commenced by the service of a complaint or similar pleading, including any appeal therefrom; or 
 c) a civil proceeding or formal investigation brought by the U.S. Department of Labor, the U.S. Pension Benefit Guaranty Corporation or any similar federal, state or local governmental body, including any appeal therefrom. 
 3. Continuity Date means the date set forth in Item C of the Declarations relating to this Coverage Section. 
 45
 

 4. Costs, Charges and Expenses means reasonable and necessary legal costs, charges. fees and expenses incurred by any of the Insureds in defending Claims and the premium for appeal, attachment or similar bonds arising out of covered judgments, but with no obligation to furnish such bonds and only for the amount of such judgment that is up to the applicable Limit of Liability. Costs, Charges and Expenses do not include salaries, wages, overhead or benefit expenses associated with officers or employees of any of the Insureds. 
 5. Employee Benefit Plan means any plan so defined by the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, or any rules and regulations promulgated thereunder. 
 6. Insured Persons means: 
 a) any natural persons who were, now are, or shall become a trustee, director, officer or employee of the Sponsor Company or Plan, 
 b) any natural persons who were, now are, or shall become a fiduciary of any Plan; and 
 c) any natural persons for whose Wrongful Acts any of the Insureds are legally responsible. 
 7. Insured Plan means any government-mandated insurance for workers' compensation, unemployment, social security or disability benefits for employees of the Sponsor Company. 
 8. Insureds means: 
 a) the Sponsor Company, 
 b) any Plan, 
 c) any Insured Persons; and 
 d) any other natural person or entity who was, now are, or shall be acting as a plan administrator of any of the Plans at the written request and consent of the Sponsor Company. 
 9. Interrelated Wrongful Acts means all Wrongful Acts which have as a common nexus any fact, circumstance, situation, event, cause, transaction or series of facts, circumstances, situations, causes, events or transactions. 
 46
 

 10. Loss means monetary damages, judgments, settlements, pre-judgment or post-judgment interest awarded by a court, and Costs, Charges and Expenses incurred by any of the Insureds. Loss does not include: 
 a) taxes, fines or penalties; 
 b) matters uninsurable under the laws pursuant to which this Policy is construed; or 
 c) punitive or exemplary damages, or the multiple portion of any multiplied damage award, except to the extent that such punitive or exemplary damages or the multiple portion of any multiplied damage award are insurable under the internal laws of any jurisdiction which most favors coverage for such damages and which has a substantial relationship to the Insureds, Insurer, this Policy or the Claim giving rise to such damages; 
 11. Pension Benefit Plan means any plan so defined in the Employee Retirement Income Security Act of 1974, as amended. 
 12. Plan means: 
 a) any Sponsored Plan, and 
 b) any Insured Plan, established before or after the inception of this Policy. 
 13. Plan Termination means the termination, suspension, merger or dissolution of any Plan. 
 14. Sponsor Company means the Company. 
 15. Sponsored Plan means: 
 a) any Employee Benefit Plan, Pension Benefit Plan, or Welfare Benefit Plan which is operated by the Sponsor Company for the benefit of the employees of the Sponsor Company; 
 b) any other plan, fund or program specifically included as a Sponsored Plan by endorsement to this Policy; and 
 c) any other employee benefit plan or program not subject to Title 1 of the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder, sponsored by the Sponsor Company for the benefit of the employees of the Sponsor Company, including any employee stock ownership plan; 
 47
 

 provided, however, that the Sponsored Plan shall not include any multi-employer plan, as defined in the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder. 
 16. Welfare Benefit Plan means any employee welfare benefit plan so defined in the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder. 
 17. Wrongful Act means: 
 a) with respect to a Sponsored Plan: 
 (i) any actual or alleged breach of the responsibilities, obligations or duties imposed upon fiduciaries of the Sponsored Plan by the Employee Retirement Income Security Act of 1974, as amended, or by the Health Insurance Portability and Accountability Act of 1996, or any similar state or local common or statutory law, and any rules and regulations promulgated under either of these Acts; 
 (ii) any other matter claimed against the Sponsor Company or any of the Insured Persons solely because of the service of the Sponsor Company or any of the Insured Persons as a fiduciary of any Sponsored Plan, including any actual or alleged violation of the Health Insurance Portability and Accountability Act of 1996 or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder; or 
 (iii) any actual or alleged act, error or omission in the Administration of any Sponsored Plan, including any actual or alleged violation of the Health Insurance Portability and Accountability Act of 1996 or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder; and 
 b) with respect to an Insured Plan, any actual or alleged act, error or omission in the Administration of such Insured Plan. 
 C. EXCLUSIONS 
 

 48
 

 1. Insurer shall not be liable for Loss under this Coverage Section on account of any Claim: 
 a) for actual or alleged bodily injury, sickness, disease, death, false imprisonment, assault, battery, mental anguish, emotional distress, invasion of privacy of any person, or damage to or destruction of any tangible or intangible property including loss of use thereof, whether or not such property is physically injured. 
 b) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice given under any other policy of which this Policy is a renewal or replacement or which it succeeds in time; or 
 (ii) any other Wrongful Act, whenever occurring, which together with a Wrongful Act which has been the subject of such prior notice, would constitute Interrelated Wrongful Acts; 
 c) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) the actual, alleged or threatened discharge, dispersal, release, escape, seepage, migration or disposal of Pollutants; or 
 (ii) any direction or request that any Insured test for, monitor, clean up, remove, contain, treat, detoxify or neutralize Pollutants, or any voluntary decision to do so;
  including without limitation any Claim by or on behalf of the Company, its securities holders or creditors based upon, arising out of, or attributable to the matters described in this exclusion. 
 For purposes of this exclusion, Pollutants means any substance exhibiting any hazardous characteristics as defined by, or identified on, a list of hazardous substances issued by the United States Environmental Protection Agency or any federal, state, county, municipal or local counterpart thereof or any foreign equivalent. Such substances shall include, without limitation, solids, liquids, gaseous, biological, bacterial or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials (including materials to be reconditioned, recycled or reclaimed). Pollutants shall also mean any other air emission or particulate, odor, waste water, oil or oil products, infectious or 
 49
 

 medical waste, asbestos or asbestos products, noise, fungus (including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi, but does not include any fungi intended by the Insured for consumption) and electric or magnetic or electromagnetic field; 
 d) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, the failure to comply with any statutory or common law governing workers' compensation, unemployment, social security or disability benefits or any similar law; provided, however, this exclusion shall not apply to any actual or alleged obligation of any Insured pursuant to the: 
 (i) Consolidated Omnibus Budget Reconciliation Act of 1985, as amended; or 
 (ii) Health Insurance Portability and Accountability Act of 1996, as amended; 
 e) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any dishonest, deliberately fraudulent or criminal act of an Insured; provided, however this exclusion e)(i)  shall not apply unless and until there is a final judgment against such Insured as to such conduct; or 
 (ii) the gaining of any profit, remuneration or financial advantage to which any Insured Person was not legally entitled; provided, however this exclusion e)(ii) shall not apply unless and until there is a final judgment against such Insured Person as to such conduct; 
 When e)(i) or (ii) apply, the Insured shall reimburse the Insurer for any Costs, Charges or Expenses; 
 f) against any Subsidiary or any of the Insured Persons of a Subsidiary alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act actually or allegedly committed or attempted by a Subsidiary or any of the Insured Persons of a Subsidiary: 
 (i) before the date such entity became a Subsidiary or after the date such entity ceased to be a Subsidiary; or 
 

 50
 

  (ii) occurring while such entity was a Subsidiary which, together with a Wrongful Act occurring before the date such entity became a Subsidiary, would constitute Interrelated Wrongful Acts; 
 g) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any Wrongful Act actually or allegedly committed subsequent to a Takeover; 
 h) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any prior or pending litigation, arbitration, or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry filed or pending on or before of the Continuity Date; or 
 (ii) any fact, circumstance, situation, transaction, cause or event underlying or alleged in such litigation, arbitration, administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry; 
 i) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any Wrongful Act actually or allegedly committed subsequent to a Plan Termination; provided, however, that this exclusion shall only apply to those Plans which were the subjects of the Plan Termination; 
 j) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any employment or employment–related matters; provided, however, this exclusion shall not apply to any Claim where such employment or employment-related matters involve actual or alleged violations of the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder; 
 k) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Wrongful Act, fact, circumstance or situation which any of the Insureds had knowledge of prior to the Continuity Date where such Insureds had reason to believe at the time that such known Wrongful Act could reasonably be expected to give rise to such Claim; or 
 51
 

 l) for that portion of Loss which is covered under any other Coverage Section of this Policy.
 2. Insurer shall not be liable to make any payment under this Coverage Section, other than Costs, Charges and Expenses, on account of any Claim:
 a) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving the actual or alleged breach of any contract or agreement; except to the extent that liability would have attached to the Sponsor Company in the absence of such contract or agreement, or where the liability was assumed in accordance with or under the trust agreement or equivalent document pursuant to which any of the Plans was established;
 b) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, any actual or attempted reversion or payment of assets of any of the Plans to the Sponsor Company, or to any successor or assign of the Sponsor Company;
 c) for or which seeks or constitutes fines or penalties or the multiple portion of any multiplied damage award, other than the five percent (5%) or less, or the twenty percent (20%) or less, civil penalties imposed upon any of the Insureds as a fiduciary under Section 502(i) or (l), respectively, of the Employee Retirement Income Security Act of 1974, as amended;
 d) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving, the failure to collect from the Sponsor Company contributions owed to any of the Plans, or the failure to fund a Plan in accordance with the Employee Retirement Income Security Act of 1974, as amended, or any similar state or local common or statutory law, and any rules and regulations promulgated thereunder, unless the failure is solely due to the negligence of any of the Insureds; or
 e) which constitutes benefits due to or to become due under the terms of any Plan if such Plan complied with all applicable law, unless and to the extent that:
 (i) the Insured is a natural person and the benefits are payable by such Insured as a personal obligation; and
 (ii) recovery for the benefits is based upon a covered Wrongful Act.
 No Wrongful Act of one or more Insureds shall be imputed to any other Insureds for the purpose of determining the applicability of any of the above exclusions.
 52
 

     D. LIMIT OF LIABILITY AND RETENTION 
 1. The liability of the Insurer shall apply only to that part of Loss which is excess of the Retention amount applicable to this Coverage Section, as shown in Item C of the Declarations. Such Retention shall be borne uninsured by the Insureds and at their own risk. 
 2. The amount shown in Item C of the Declarations relating to this Coverage Section shall be the maximum aggregate Limit of Liability of Insurer under this Coverage Section. 
 3. All Claims arising out of the same Wrongful Act and all Interrelated Wrongful Acts shall be deemed to be a single Claim and shall be deemed to have been made at the earliest of the following times, regardless of whether such date is before or during the Policy Period: 
 a) the time at which the earliest Claim involving the same Wrongful Act or Interrelated Wrongful Act is first made; or 
 b) the time at which the Claim involving the same Wrongful Act or Interrelated Wrongful Acts shall be deemed to have been made pursuant to subsection E2, below. 
 4. Payments of Loss, other than Costs, Charges and Expenses, by Insurer shall reduce the Limit(s) of Liability under this Coverage Section. Costs, Charges and Expenses are not part of, and are in addition to, the Limit(s) of Liability and payment of Costs, Charges and Expenses shall not reduce the Limit(s) of Liability. If such Limit(s) of Liability are exhausted, the obligations of the Insurer under this Coverage Section are completely fulfilled and extinguished. 
     E. NOTIFICATION 
 1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give Insurer written notice of any Claim as soon as practicable, but in no event later than sixty (60) days after the end of the Policy Period. If any Claim is first made against the Insureds during the Extended Period, if purchased, written notice to Insurer must be given as soon as practicable, but in no event later than sixty (60) days after the end of the Extended Period. 
 2. If, during the Policy Period or the Discovery Period, if purchased, any of the Insureds first becomes aware of a specific Wrongful Act which may reasonably
 53
 

  give rise to a future Claim covered under this Policy, and if the Insureds, during the Policy Period or the Discovery Period, if purchased, give written notice to Insurer as soon as practicable of: 
 a) a description of the Wrongful Act allegations anticipated; 
 b) the identity of the potential claimants; 
 c) the circumstances by which the Insureds first became aware of the Wrongful Act; 
 d) the identity of the Insureds allegedly involved; 
 e) the consequences which have resulted or may result; and 
 f) the nature of the potential monetary damages and non-monetary relief; 
 then any Claim made subsequently arising out of such Wrongful Act shall be deemed for the purposes of this Coverage Section to have been made at the time such notice was received by the Insurer. No coverage is provided for fees, expenses and other costs incurred prior to the time such Wrongful Act results in a Claim. 
 3. Notice to Insurer shall be given to the address shown under Item G of the Declarations for this Policy. 
     F. SETTLEMENT AND DEFENSE 
 1. It shall be the duty of the Insurer and not the duty of the Insureds to defend any Claim. Such duty shall exist even if any of the allegations are groundless, false or fraudulent. The Insurer’s duty to defend any Claim shall cease when the Limits of Liability have been exhausted. 
 2. The Insurer may make any investigation it deems necessary. and shall have the right to settle any Claim; provided, however, no settlement shall be made without the consent of the Parent Company, such consent not to be unreasonably withheld. 
 3. The Insureds agree not to settle or offer to settle any Claim, incur any Costs, Charges and Expenses or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the prior written consent of the Insurer, such consent not to be unreasonably withheld. The Insurer shall not be
 54
 

 liable for any settlement, Costs, Charges and Expenses, assumed obligation or admission to which it has not consented. The Insureds shall promptly send to the Insurer all settlement demands or offers received by any Insured from the claimant(s). 
 4. The Insureds agree to provide the Insurer with all information, assistance and cooperation which the Insurer reasonably requests and agree that, in the event of a Claim, the Insureds will do nothing that shall prejudice the position of the Insurer or its potential or actual rights of recovery. 
 G. OTHER INSURANCE 
 If any Loss covered under this Coverage Section is covered under any other valid and collectible insurance, then this Policy shall cover the Loss, subject to its terms and conditions, only to the extent that the amount of the Loss is in excess of the amount of such other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the Limit of Liability for this Coverage Section. 
 H. WAIVER OF RECOURSE 
 Insurer shall have no right of recourse, including but not limited to rights of contribution and subrogation, against any Insureds with respect to any Claim if this Coverage Section has been purchased by that Insured, with the exception of any of the Plans. 
 

 

 

 

 

 

 

 

 

 55
 

 

 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 

 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 Cap On Losses From Certified Acts Of Terrorism
 It is agreed that the Limit(s) of Liability section is amended by adding the following: 
 Notwithstanding anything in this Policy to the contrary, if aggregate insured losses attributable to terrorist acts certified under the federal Terrorism Risk Insurance Act exceed $100 billion in a Program Year (January 1 through December 31) and the Insurer has met its deductible under the Terrorism Risk Insurance Act, the Insurer shall not be liable for the payment of any portion of the amount of such losses that exceeds $100 billion, and in such case insured losses up to that amount are subject to pro rata allocation in accordance with procedures established by the Secretary of the Treasury. 
 “Certified act of terrorism” means an act that is certified by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General of the United States, to be an act of terrorism pursuant to the federal Terrorism Risk Insurance Act. The criteria contained in the Terrorism Risk Insurance Act for a “certified act of terrorism” include the following: 
 1. The act resulted in insured losses in excess of $5 million in the aggregate, attributable to all types of insurance subject to the Terrorism Risk Insurance Act; and 
 2. The act is a violent act or an act that is dangerous to human life, property or infrastructure and is committed by an individual or individuals as part of an effort
 56
 

 to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. 
 All other terms and conditions of this Policy remain unchanged. 
 

 Authorized Representative 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 57
 

 

 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 

 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 PROFESSIONAL SERVICES EXCLUSION – CONTRACTOR OR CONSTRUCTION MANAGER SECURITIES HOLDER CARVE-OUT
 It is agreed that Section C., Exclusions, subsection 1. of the Directors & Officers and Company Coverage Section is amended by adding the following: 
 alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving the rendering or failure to render Professional Services. Provided, however, this exclusion shall not apply to any Claim(s) brought by a securities holder of the Company in his, her or its capacity as such alleging failure to supervise those who performed or failed to perform such Professional Services, provided that such securities holder action is instigated and continued totally independent of, and totally without the solicitation, assistance, active participation of, or intervention of, any Insured. 
 Solely for purposes of this exclusion, Professional Services means services as a contractor or construction manager. 
 

 All other terms and conditions of this Policy remain unchanged. 
 

 58
 

 

 DEFINITION OF WRONGFUL ACT AMENDED
 PENSION PROTECTION ACT OF 2006
 

 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 It is agreed that Section B, Definitions, subsection 17, Wrongful Act, of the Fiduciary Coverage Section is amended by deleting paragraph (a)(i) in its entirety and replacing it with the following: 
 (i) any actual or alleged breach of the responsibilities, obligations or duties imposed upon fiduciaries of the Sponsored Plan by the Employee Retirement Income Security Act of 1974, as amended (including as amended by the Pension Protection Act of 2006), or by the Health Insurance Portability and Accountability Act of 1996, or any similar state or local common or statutory law, and any rules and regulations promulgated under either of these Acts; 
 All other terms and conditions of this Policy remain unchanged. 
 

 

 59
 

 

 SETTLEMENT AND DEFENSE CLAUSE AMENDED
 WAIVER OF RETENTION
 

 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY PACKAGE
 It is agreed that Section F, Settlement and Defense, of the Fiduciary Coverage Section is amended by adding the following at the end thereof: 
 5. If the Insurer recommends a settlement within the Policy Limit of Liability which is agreed to by the claimant (“Settlement Opportunity”) and: 
 a) the Insureds consent to such settlement within thirty (30) days of the date the Insureds are first made aware of the Settlement Opportunity; and 
 b) such consent occurs within the first ninety (90) days after the Claim is first reported; and 
 c) such Claim is reported within the first thirty (30) days after it is made, 
 then, in the event the Claim settles as a result of such Settlement Opportunity, the Retention applicable to such Claim shall be waived, and any amounts paid by the Insureds towards the Retention shall be reimbursed by the Insurer. 
 All other terms and conditions of the Policy remain unchanged. 
 60
 

 DEFINITION OF DIRECTOR AND OFFICER AMENDED
 MANAGERS OF LIMITED LIABILITY COMPANIES
 

 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDMENITY PACKAGE
 

 It is agreed that Section B, Definitions, subsection 4, Directors and Officers, of the Directors & Officers and Company Coverage Section is amended by deleting paragraph a) in its entirety and replacing it with the following: 
 a) a duly elected or appointed director, officer, or similar executive of the Company, or any manager or member of the management board or equivalent executive of the Company if it is a limited liability company; 
 

 All other terms and conditions of the Policy remain unchanged. 
 

 

 

 61
 

 

 DIFFERENCE IN CONDITIONS ENDORSEMENT
 

 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 It is agreed as follows: 
 1. The Policy has been issued by the Insurer to the Parent Company in replacement of a management liability policy, including all endorsements to that policy (such policy and endorsements hereinafter collectively referred to as “Prior Policy”). If and to the extent that: 
 (a) any Claim first made against the Insureds on or after the inception date of the Policy and during the Policy Period or, if applicable, during the Extended Period; or 
 (b) respecting the Crime Coverage Section, if purchased, any loss of the Insured discovered during the Policy, 
 and reported to the Insurer pursuant to the terms and conditions of the Policy is not covered, in whole or in part, under the Policy and would have been covered, in whole or in part, under the Prior Policy, the Policy shall provide coverage, in whole or in such part, for such Claim or loss in conformance with, and subject to, all of the terms, conditions, limitations, and exclusions contained in the Prior Policy and endorsements thereto. 
 62
 

 2. Notwithstanding anything stated in paragraph 1 above, this endorsement shall not apply to: 
 (a) Section C, Exclusions, subsection 1(m), of the Directors & Officers and Company Coverage Section, or any amendment by endorsement to such exclusion; or 
 (b) Any Claim or loss not covered under the Policy as a result of the exhaustion of any applicable limit or sub-limit. 
 Accordingly, if any of the provisions referred to in paragraph 2(a) or 2(b) above applies to a Claim or loss, then the terms, conditions, limitations, and exclusions contained in the Policy and endorsements thereto, and not the Prior Policy, shall govern coverage for such Claim or loss. 
 3. This endorsement shall be in effect solely for the first policy issued by the Insurer to the Parent Company with an inception date after March 1, 2011. This endorsement shall not apply to any policy issued or renewed by the Insurer to the Parent Company after such first policy. 
 All other terms and conditions of this Policy remain unchanged. 
 

 

 

 

 

 

 

 

 

 

 

 63
 

 

 AMENDATORY ENDORSEMENT – VIRGINIA
 Named Insured: York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY PACKAGE
 IF THERE IS ANY CONFLICT BETWEEN THE POLICY, OTHER ENDORSEMENTS TO THE POLICY AND THIS ENDORSEMENT, THE TERMS PROVIDING THE BROADEST COVERAGE INSURABLE UNDER APPLICABLE LAW SHALL PREVAIL. 
 It is agreed that: 
 1. If form PF-15192, Employment Practices Liability Coverage Section, PF-15194, Fiduciary Coverage Section, or PF15193, Directors & Officers and Company Coverage Section, is included in this Policy, the phrase “or post-judgment” is deleted from the first paragraph of the definition of Loss. 
 2. If form PF-15192, Employment Practices Liability Coverage Section or PF-15194, Fiduciary Coverage Section, is included in this Policy, the following is added to paragraph 4 of Section D. LIMIT OF LIABILITY AND RETENTIONS:
 “except as otherwise provided in Section E. CANCELLATION and Section H. DISCOVERY PERIOD of the General Terms and Conditions.” 
 

 64
 

 

 3. If PF-15193, Directors & Officer and Company Coverage Section, is included in this Policy, the following is added to paragraph 5 of Section D. LIMIT OF LIABILITY AND RETENTIONS:
 “except as otherwise provided in Section E. CANCELLATION and Section H. DISCOVERY PERIOD of the General Terms and Conditions.” 
 4. The definition of Parent Company in Section B, DEFINITIONS, of the General Terms and Conditions, is deleting in its entirety and the following is inserted: 
 Parent Company means the entity named in Item A of the Declarations. 
 5. The definition of Run-Off Period in Section B, DEFINITIONS, of the General Terms and Conditions, is deleted in its entirety. 
 6. Section D. WARRANTY AND NON-RESCINDABILITY, of the General Terms and Conditions, is amended by deleting the first paragraph in its entirety and replacing it with the following: 
 It is agreed that the particulars and statements contained in the Application are the basis of this Policy and are to be considered as incorporated into and constituting a part of this Policy and each Coverage Section. By acceptance of this Policy, the Insureds agree that the statements in the Application are their representations, and that this Policy and each Coverage Section are issued in reliance upon the truth of such representations. 
 7. Section E. CANCELLATION, of the General Terms and Conditions, is amended as follows: 
 i. The first sentence of paragraph 2. is deleted and the following is inserted: 
 2. This Policy may be cancelled by the Insurer only for nonpayment of premium, by mailing written notice to the Parent Company stating when such cancellation shall be effective, such date not less than 45 days from the date of the written notice. 
 ii. The following is added: · 
 Notice of cancellation from the Insurer will state the effective date of cancellation and the reason(s) for cancellation, and will be mailed by certified mail to the Parent Company, and by first-class mail to the agent or broker of record, at the last mailing addresses known to the Insurer. Proof of mailing will be sufficient proof of notice. 
 65
 

 8. Section H. DISCOVERY PERIOD, of the General Terms and Conditions, is deleted in its entirety and the following is inserted: 
 H. DISCOVERY PERIOD 
 The Parent Company shall have the right, upon payment of the additional premium described below, to a continuation of the coverage granted by this Policy for at least one Discovery Period as described below, if: 
 i. the Parent Company or the Insurer cancels or does not renew this Policy; or 
 ii. this Policy is renewed on other than a claims-made basis. 
 However, Discovery Periods will not apply if the Insurer cancels or does not renew this Policy for failure to pay a premium when due, the Parent Company fails to comply with the terms and conditions of this Policy, or the Parent Company commits fraud. 
 If existing coverage is excluded from this Policy and the Policy remains in effect or is renewed, the Insurer shall offer a Discovery Period for such coverage on the same basis that the Discovery Period would be offered if the entire Policy were being cancelled. For purposes of this paragraph, the exclusion of any existing coverage shall not include a change in the Limit of Liability or Retention. 
 A. Automatic Discovery Period 
 The Parent Company shall have continued coverage granted by this Policy for a period of 60 days following the effective date of the cancellation, nonrenewal, renewal on other than a claims-made basis, or if the Insurer excludes any existing coverage from this Policy and the Policy remains in effect or is renewed, but only for Claims first made during such 60 days and arising from Wrongful Acts taking place prior to the effective date of the cancellation, nonrenewal, renewal on other than a claims-made basis, or exclusion of coverage. This Automatic Discovery Period shall immediately expire upon the purchase of replacement coverage by the Parent Company. 
 B. Optional Discovery Period 
 The Parent Company shall have the right, upon payment of the Discovery Period premium described below, to an Optional Discovery Period, with a term of either one, two or three years (and, at the Parent Company’s option, either with or without a reinstatement of the Limit of Liability) following the 
 66
 

 effective date of the cancellation, nonrenewal, renewal on other than a claims-made basis, or if the Insurer excludes any existing coverage from this Policy and the Policy remains in effect or is renewed, but only with respect to Claims first made during the Optional Discovery Period and arising from Wrongful Acts taking place prior to the effective date of the cancellation, nonrenewal, renewal on other than a claims-made basis, or exclusion of coverage.
 The additional premium for the Optional Discovery Period without reinstatement of the Limit of Liability is set forth in Item E of the Declarations. 
 This right to continue coverage shall lapse unless written notice of such election is given by the Parent Company to the Insurer, and the Insurer receives payment of the additional premium, within 60 days following the effective date of the cancellation, nonrenewal, renewal on other than a claims-made basis, or exclusion of coverage. 
 The first 60 days of the Optional Discovery Period, if it becomes effective, shall run concurrently with the Automatic Discovery Period. 
 C. The Insurer shall give the Parent Company notice of the premium due for the Optional Discovery Period as soon as practicable following the date the Parent Company gives such notice of such election, and such premium shall be paid by the Parent Company to the Insurer within 30 days following the effective date of cancellation, nonrenewal, renewal on other than a claims-made basis, or if the Insurer excludes any existing coverage from this Policy and the Policy remains in effect or is renewed. The Optional Discovery Period is not cancelable, except for failure to pay a premium when due or fraud, and the entire premium for the Optional Discovery Period shall be deemed fully earned and non-refundable upon payment. 
 D. The Automatic Discovery Period shall be part of and not in addition to the Limit of Liability for the immediately preceding Policy Period. The Automatic Discovery Period shall not increase or reinstate the Limit of Liability, which shall be the maximum liability of the Insurer for the Policy Period and the Automatic Discovery Period, combined. 
 If the Parent Company elects an Optional Discovery Period without reinstatement, the Limit of Liability applicable to the Optional Discovery Period shall be part of and not in addition to the Aggregate Limit of Liability shown in Item C of the Declarations for the immediately preceding Policy 
 67
 

 Period. The purchase of the Optional Discovery Period shall not increase or reinstate the Limit of Liability, which shall be the maximum liability of the Insurer for the Policy Period and the Optional Discovery Period, combined. 
 If the Parent Company elects an Optional Discovery Period with reinstatement, the full amount of the Aggregate Limit of Liability shown in Item C of the Declarations at the inception of the immediately preceding Policy Period shall be reinstated, for the additional period of time purchased (hereinafter referred to as “Reinstated Discovery Period Limit of Liability). The Reinstated Discovery Period Limit of Liability shall only be available to pay Loss for Claims first made and reported during such Optional Discovery Period and arising from Wrongful Acts taking place prior to the effective date of cancellation, nonrenewal, renewal on other than a claims-made basis, or exclusion of coverage (hereinafter referred to as “Reinstated Discovery Period Loss”). The maximum liability for all Reinstated Discovery Period Loss is the Reinstated Discovery Period Limit of Liability. 
 If any Claim is covered, in whole or in part, under both the Automatic Discovery Period and the Optional Discovery Period with reinstatement, if elected, only the Reinstated Discovery Period Limit of Liability shall apply. 
 E. A change in Policy terms, conditions and/or premiums shall not be considered a nonrenewal for purposes of triggering the rights to the Automatic or Optional Discovery Period. 
 9. Section I. RUN-OFF COVERAGE AND TERMINATION OF A SUBSIDIARY, of the General Terms and Conditions, is deleted in its entirety and following is inserted: 
 I. TERMINATION OF A SUBSIDIARY 
 If before or during the Policy Period an organization ceases to be a Subsidiary, coverage with respect to the Subsidiary and its natural person Insureds shall continue until termination of this Policy. Such coverage continuation shall apply only with respect to Claims for Wrongful Acts, or Employment Practices Wrongful Acts, taking place prior to the date such organization ceased to be a Subsidiary. 
 68
 

 

 10. Section M. ACTION AGAINST INSURER, ALTERATION AND ASSIGNMENT, of the General Terms and Conditions, is amended by adding the following: 
 Notwithstanding anything to the contrary in this subsection, if execution on a judgment against any Insured or its legal representative is returned unsatisfied in an action brought to recover Loss or Costs, Charges and Expenses for a Claim made and reported during the Policy Period, or if applicable, Extended Reporting Period, then an action may be maintained against the Insurer under the terms of this Policy for the amount of the judgment not exceeding the Limit of Liability shown in Item C of the Declarations. 
 11. The following section is added to the Policy: 
 NONRENEWAL 
 If the Insurer elects not to renew this Policy, it will mail written notice of nonrenewal by certified mail to the Parent Company, and by first-class mail to the agent or broker of record, at the last mailing addresses known to the Insurer. Notice of nonrenewal will state the reason(s) for nonrenewal and will be mailed at least 45 days before the end of the Policy Period. Proof of mailing will be sufficient proof of notice. 
 All other terms and conditions of this Policy remain unchanged. 
 

 Authorized Representative 
 

 

 

 

 

 

 

 69
 

 

 SPECIAL EVENT – WORKPLACE INCIDENT – EPL
 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 

 It is agreed that the Employment Practices Coverage Section is amended as follows: 
 1. Item C of the Declarations, of the portion entitled Employment Practices, is amended to add the following: 
 5. Workplace Incident Fund: $250,000 
 2. Section A, Insuring Clauses, is amended to add the following: 
 3. Workplace Incident Coverage 
 The Insurer shall pay the Workplace Incident Expense for which the Company becomes legally obligated to pay by reason of a Workplace Incident first occurring during the Policy Period, but only up to the limit of liability for the Workplace Incident Fund. 
 3. Section B, Definitions, is amended as follows: 
 a. Subsection 3, Costs, Charges and Expenses, is amended to add the following: 
 Costs, Charges and Expenses do not include Workplace Incident Expenses. 
 70
 

 b. Solely with respect to coverage under Insuring Clause 3, Workplace Incident Coverage, Subsection 4, Employee, paragraph c, is deleted in its entirety. 
 c. Subsection 10, Loss, is amended to add the following: 
 Loss does not include Workplace Incident Expenses. 
 d. The following is added: 
 Workplace Incident means an intentional and unlawful: 
 (i) act of deadly force involving the use of a lethal weapon; or 
 (ii) threat of deadly force involving the display of a lethal weapon, 
 committed by an Insured Person on the Premises and which resulted in or could reasonably have resulted in bodily injury or death to another Insured Person. 
 Provided, however, Workplace Incident shall not include anything based upon, arising out of, or in any way involving: 
 (i) a demand for money, securities or other property; 
 (ii) declared or undeclared war, civil war, insurrection, rebellion or revolution, terrorism, military, naval or usurped power, governmental intervention or authority, expropriation, nationalization or any act or incident related to any of the foregoing. 
 Solely for the purposes of this definition, Premises means the buildings, facilities or properties regularly used by the Company to conduct its business. 
 Workplace Incident Expense means the reasonable fees and expenses incurred by the Company, in response to a Workplace Incident and with the Insurer’s prior written consent, for: 
 (i) independent security guard services for up to fifteen (15) days following the date of the Workplace Incident; 
 (ii) an independent security consultant for up to ninety (90) days following the date of the Workplace Incident; 
 71
 

 

 (iii) an independent public relations company for up to ninety (90) days following the date of the Workplace Incident to counsel or assist the Company in reducing or minimizing the potential harm to the Company caused by the public disclosure of a Workplace Incident; and 
 (iv) a group counseling seminar for all Employees within thirty (30) days of the date of the Workplace Incident. 
 Provided, however, Workplace Incident Expense shall not include those amounts which otherwise would constitute attorneys fees, expenses, settlements, judgments, penalties or other amounts incurred in defending or prosecuting any legal proceeding or claim involving any Workplace Incident, or any compensation, benefits, fees, overhead, charges or expenses of an Insured; and 
 Workplace Incident Fund means the amount set forth in Item C of the Declarations, section 5, of the portion entitled Employment Practices. 
 4. Section D, Limit Of Liability And Retentions, is amended to add the following: 
 The Workplace Incident Fund is the Insurer’s maximum liability for all Workplace Incident Expenses arising from any and all Workplace Incidents occurring during the Policy Period. This limit shall be the Insurer’s maximum liability under this Policy regardless of the number of Workplace Incidents reported during the Policy Period. The Insurer’s obligation to pay Workplace Incident Expenses terminates and ends upon the exhaustion of the Workplace Incident Fund. The Workplace Incident Fund shall be part of and not in addition to the aggregate Limit of Liability stated Item C.1.c. of the Declarations for this Coverage Section. 
 5. The following section is added: 
 Workplace Incident Coverage Provisions 
 1. There shall be no retention applicable to Workplace Incident Expenses and the Insurer shall pay such Workplace Incident Expenses from the first dollar subject to all other terms and conditions of this Policy, including the Policy limit. 
 72
 

 

 2. An actual or anticipated Workplace Incident shall be reported to the Insurer as soon as practicable, but in no event later than thirty (30) days after such Workplace Incident. 
 3. Except as limited under Insuring Clause 3, Workplace Incident Coverage, the Insurer shall not be liable for Loss under this Coverage Section on account of any Claim excluded under Section C, Exclusions. 
 6. Solely with respect to coverage under Insuring Clause 3, Workplace Incident Coverage, Section E, Notification, shall not apply. 
 All other terms and conditions of this Policy remain unchanged. 
 

 Authorized Representative 
 

 

 

 

 

 

 

 

 

 

 

 

 73
 

 

 SPECIAL EVENT MANAGEMENT COVERAGE – D&O
 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 

 It is agreed that the Directors & Officers and Company Coverage Section is amended as follows: 
 1. Item C of the Declarations, of the portion entitled Directors & Officers and Company, is amended to add the following: 
 4. Special Event Management Fund: $25,000 
 2. Section A, Insuring Clauses, is amended to add the following: 
 6. Special Event Management Coverage 
 The Insurer shall pay the Special Event Management Expense for which the Company becomes legally obligated to pay by reason of a Special Event first occurring during the Policy Period, but only up to the limit of liability for the Special Event Management Fund. 
 3. Section B, Definitions, is amended as follows: 
 a. Subsection 3, Costs, Charges and Expenses, is amended to add the following: 
 74
 

 

 Costs, Charges and Expenses do not include Special Event Management Expenses. 
 b. Subsection 7, Loss, is amended to add the following: 
 Loss does not include Special Event Management Expenses. 
 c. The following is added: 
 Adverse Publicity means the publication of unfavorable information regarding the Company which can reasonably be considered to materially reduce public confidence in the competence, integrity or viability of the Company to conduct business. Such publication must occur in a report about an Insured appearing in: 
 a) a daily newspaper of general circulation; or 
 b) a radio or television news program. 
 Special Event means one of the following, except where coverage is otherwise excluded under Exclusions 1(b) or (k) of this Coverage Section: 
 a) The incapacity, death or state or federal criminal indictment of any of the Directors and Officers for whom the Company has purchased and continues to maintain key individual life insurance; 
 b) The disclosure by the Company of (1) its intention to file or its actual filing for protection under federal bankruptcy laws; or, (2) a third-party’s intention to file or its actual filing of an involuntary bankruptcy petition under federal bankruptcy laws with respect to the Company; 
 c) The disclosure by the Company of the threatened or actual commencement by a third-party of an action, audit or investigation alleging a Employment Practices Wrongful Act (as defined in the Employment Practices Coverage Section) by the Company which has caused or is reasonably likely to cause Adverse Publicity; 
 d) The commencement or threat of litigation or other proceedings by any governmental or regulatory agency against the Company; 
 e) An accusation that any of the Directors and Officers has intentionally caused bodily injury to, or death of, or has sexually abused any person in the performance of his or her duties with the Company; 
 75
 

 f) A Director or Officer of the Company was the victim of a violent crime while on the premises of the Company; 
 g) A child was abducted or kidnapped while under the care or supervision of the Company; or 
 h) Any other material event which, in the good faith opinion of the Company, has caused or is reasonably likely to result in Adverse Publicity, but only if such material event is scheduled for coverage by written endorsement to this Policy. 
 Special Event Management Expense means the following expenses incurred by the Company commencing on the inception date of the Special Event and ending ninety (90) days after the inception date of the Special Event, irrespective of whether a Claim is actually made with respect to the subject Special Event; provided, however, that the Insurer must have been notified of the Special Event Management Expense within 30 days of the date the Company first incurs the subject Special Event Management Expense: 
 a) The reasonable and necessary expenses directly resulting from a Special Event which the Company incurs for Special Event Management Services provided to the Company by a Special Event Management Firm, and 
 b) The reasonable and necessary expenses directly resulting from a Special Event which the Company incurs for: (a) advertising, printing, or the mailing of matter relevant to the Special Event, and (b) out of pocket travel expenses incurred by or on behalf of the Company or the Special Event Management Firm; provided, however, Special Event Management Expense does not include those amounts which otherwise would constitute compensation, benefits, fees, overhead, charges or expenses of an Insured. 
 Special Event Management Firm means a marketing firm, public relations firm, law firm, or other professional services entity retained by the Insurer, or by the Company with the Insurer’s prior written consent, to perform Special Event Management Services arising from a Special Event. 
 Special Event Management Fund means the amount set forth in Item C of the Declarations, section 4, of the portion entitled Directors & Officers and Company. 
 76
 

 Special Event Management Services means the professional services provided by a Special Event Management Firm in counseling or assisting the Company in reducing or minimizing the potential harm to the Company caused by the public disclosure of a Special Event. 
 4. Section D, Limit Of Liability And Retentions, is amended to add the following: 
 The Special Event Management Fund is the Insurer’s maximum liability for all Special Event Management Expenses arising from any and all Special Events occurring during the Policy Period. This limit shall be the Insurer’s maximum liability under this Policy regardless of the number of Special Events reported during the Policy Period. The Insurer’s obligation to pay Special Event Management Expenses terminates and ends upon the exhaustion of the Special Event Management Fund. The Special Event Management Fund shall be part of and not in addition to the aggregate Limit of Liability set forth in Item C of the Declarations, section 1.c, of the portion entitled Directors & Officers and Company, which shall be the maximum liability of the Insurer for all Loss under this Policy. 
 5. The following section is added: 
 Special Event Management Coverage Provisions 
 1. There shall be no retention applicable to Special Event Management Expenses and the Insurer shall pay such Special Event Management Expenses from the first dollar subject to all other terms and conditions of this Policy, including the Policy limit. 
 2. An actual or anticipated Special Event shall be reported to the Insurer as soon as practicable, but in no event later than 30 days after the Company first incurs Special Event Management Expenses for which coverage will be requested under this Policy. 
 3. Except as limited under Insuring Clause 6, Special Event Management Coverage, the Insurer shall not be liable for Loss under this Coverage Section on account of any Claim excluded under Section C, Exclusions 
 6. Solely with respect to coverage under Insuring Clause 6, Special Event Management Coverage, Section E, Notification, shall not apply. 
 All other terms and conditions of this Policy remain unchanged. 
 Authorized Representative 
 77
 

 GENERAL TERMS AND CONDITIONS MISCELLANEOUS AMENDMENTS
 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 

 It is agreed that the General Terms and Conditions are amended as follows: 
 1. The following sections are added: · 
 Recoveries 
 Notwithstanding any subrogation provisions or other provisions of the Policy, any recoveries of payments made by the Insurer shall be the sole property of the Insurer, but an amount equal to the amount of such recoveries, minus all costs incurred by the Insurer to obtain such recoveries, shall reinstate, in such amount, as of the date each recovery is received by the Insurer, the limits of liability of this Policy that were eroded or exhausted by any payment under this Policy. 
 Foreign Liberalization 
 Where legally permissible, in regard to Claims brought and maintained solely in a Foreign Jurisdiction against a Company formed and operating in such Foreign Jurisdiction or an Insured Person thereof for Wrongful Acts committed in such Foreign Jurisdiction, the Insurer shall apply to such Claim(s) those terms and conditions (and related provisions) of the Foreign Policy registered with the appropriate regulatory body in such Foreign Jurisdiction that are more favorable to 
 78
 

 such Insured than the terms and conditions of this Policy. However, this paragraph shall apply only to: 
 1.the following provisions of the General Terms And Conditions: 
 a. Section E, Cancellation, 
 b. Section F, Estates, Legal Representatives, And Spouses, 
 c. Section G, Authorization Clause, 
 d. Section H, Discovery Period, 
 e. Section I, Run-Off Coverage And Termination Of A Subsidiary, 
 f. Section K, Territory of the General Terms And Conditions, 
 g. Section L, Assistance, Cooperation And Subrogation, 
 h. Section M, Action Against Insurer, Alteration And Assignment, 
 2. and the following provisions of any applicable Coverage Section: 
 a. Insuring Clauses, 
 b. Definitions, 
 c. Exclusions, 
 and the comparable provisions of the Foreign Policy. In addition, this paragraph shall not apply to the non-renewal or claims made and reported provisions of any policy. 
 State Amendatory Inconsistency 
 If there is an inconsistency between a state amendatory endorsement attached to this Policy and any other term or condition of this Policy, the Insurer shall, where permitted by law, apply either those terms and conditions of the state amendatory endorsement or the Policy form which are more favorable to the Insured’s coverage. 
 2. The first sentence of Section B, Definitions, subsection 1, Application, is deleted in its entirety and the following is inserted: 
 1. Application means all applications, including any attachments thereto, and all other information and 
 79
 

 materials submitted by or on behalf of the Insureds to the Insurer in connection with the Insurer underwriting this Policy or any policy with an inception date within twelve (12) months prior to the inception date of this Policy, of which this Policy is a renewal or replacement. 
 3. Section B, Definitions, is amended to add the following: 
 “Foreign Jurisdiction” means any jurisdiction, other than the United States or any of its territories or possessions. 
 “Foreign Policy” means the Insurer’s or any other member company of the ACE Group of Companies’ (“ACE”) standard directors’ and officers’ liability policy (including all mandatory endorsements, if any) approved by ACE to be sold within a Foreign Jurisdiction that provides coverage substantially similar to the coverage afforded under this Policy. If more than one such policy exists, then “Foreign Policy” means the standard policy most recently registered in the local language of the Foreign Jurisdiction, or if no such policy has been registered, then the policy most recently registered in that Foreign Jurisdiction. The term “Foreign Policy” shall not include any partnership managerial, pension trust or professional liability coverage. 
 4. Section D, Warranty And Non-Rescindability, is deleted in its entirety and the following is inserted: 
 D. WARRANTY AND NON-RESCINDABILITY 
 It is warranted that the particulars and statements contained in the Application are the basis of this Policy and are to be considered as incorporated into and constituting a part of this Policy and each Coverage Section. By acceptance of this Policy, the Insureds agree that the statements in the Application are their representations, and that this Policy and each Coverage Section are issued in reliance upon the truth of such representations. 
 For purposes of this Section, the knowledge of a natural person Insured shall not be imputed to any other natural person Insured, and the knowledge of only the chief executive officer and chief financial officer (and additionally, with respect to the Fiduciary Coverage Section, the Application signatory) shall be imputed to an entity Insured. 
 This Policy and any Coverage Sections shall not be rescinded by the Insurer in whole or in part for any reason. 
 80
 

 5. Section H, Discovery Period, paragraphs 1 and 2, are deleted in their entirety and the following is inserted: 
 1. If this Policy or any Coverage Section is not renewed by the Insurer, for reasons other than non-payment of premium, or if the Parent Company elects to cancel or not to renew this Policy or a Coverage Section, then the Parent Company shall have the right, upon payment of an additional premium calculated at that percentage shown in Item E of the Declarations of the total premium for this Policy, or the total premium for the cancelled or not renewed Coverage Section, whichever is applicable, to purchase an extension of the coverage granted by this Policy or the applicable cancelled or not renewed Coverage Section with respect to any Claim first made during the period of time set forth in Item E of the Declarations after the effective date of such cancellation or, in the event of a refusal to renew, after the Policy expiration date, but only with respect to any Wrongful Act committed before such date. The Parent Company shall have the right to elect only one of the Discovery Periods set forth in Item E of the Declarations. 
 2. As a condition precedent to the right to purchase the Discovery Period set forth in subsection H1 above, the total premium for the Policy must have been paid. Such right to purchase the Discovery Period shall terminate unless written notice, together with full payment of the premium for the Discovery Period, is received by Insurer within 60 days after the effective date of cancellation, or, in the event of a refusal to renew, within 60 days after the Policy expiration date. If such notice and premium payment is not so given to Insurer, there shall be no right to purchase the Discovery Period. 
 6. The second sentence of Section I, Run-Off Coverage And Termination Of A Subsidiary, subsection 1(b), is deleted in its entirety and the following is inserted: 
 The election must be made within 30 days following the effective date of cancellation or non-renewal. 
 7. Section I, Run-Off Coverage and Termination of a Subsidiary, subsection 1, is amended to add the following: 
 d) If a Run-off Period is not elected and purchased, then coverage under this Policy will continue in full force and effect until termination of this Policy, but only with respect to Claims for Wrongful Acts taking place before such Takeover. Coverage under this Policy will cease as of the effective date of such Takeover with respect to Claims for Wrongful Acts taking place after such 
 81
 

 Takeover. This Policy may not be canceled after the effective time of the Takeover, and the entire premium for this Policy shall be deemed earned as of such time. 
 8. Section J, Alternative Dispute Resolution, is deleted in its entirety and the following is inserted: 
 J. ALTERNATIVE DISPUTE RESOLUTION 
 In the event of a dispute or controversy arising out of or relating to this Policy or the breach, termination or invalidity thereof, the Insured may commence a judicial proceeding or elect the alternative dispute resolution proceeding process (“ADR”) described below. 
 The Insurer shall submit any dispute or controversy arising out of or relating to this Policy or the breach, termination or invalidity thereof to the ADR process described below. 
 Either an Insured or the Insurer may elect the type of ADR process discussed below; provided, however, that the Insured shall have the right to reject the choice by the Insurer of the type of ADR process at any time prior to its commencement, in which case the choice by the Insured of ADR process shall control. 
 There shall be two choices of ADR process: (1) non-binding mediation administered by any mediation facility to which the Insurer and the Insured mutually agree, in which the Insured and the Insurer shall try in good faith to settle the dispute by mediation in accordance with the then-prevailing commercial mediation rules of the mediation facility; or (2) non-binding arbitration submitted to any arbitration facility to which the Insured and the Insurer mutually agree, in which the arbitration panel shall consist of three disinterested individuals. In either mediation or arbitration, the mediator or arbitrators shall have knowledge of the legal, corporate management, or insurance issues relevant to the matters in dispute. In the event of arbitration, the decision of the arbitrators shall be provided to both parties, and the award of the arbitrators shall not include attorneys’ fees or other costs. In the event of either mediation or arbitration, either party shall have the right to commence a judicial proceeding; provided, however, that no such judicial proceeding shall be commenced by the Insurer until the conclusion of the arbitration, or in the event of mediation, at least 60 days after the date the mediation shall be deemed concluded or terminated. In all events, each party shall share equally 
 82
 

 the expenses of the ADR process. 
 Either ADR process may be commenced in New York, New York or in the state indicated in Item A of the Declarations as the principal address of the Parent Company. The Parent Company shall act on behalf of each and every Insured in connection with any ADR process under this section. 
 Should the Insured elect to commence a judicial proceeding, the Insurer may pursue all of its rights and remedies available in such judicial proceeding, and any requirement that the Insurer pursue an ADR process shall no longer exist, regardless of whether the Insured maintains a judicial proceeding or not. 
 9. Section L, Assistance, Cooperation and Subrogation, is amended to add the following: 
 In no event, however, shall the Insurer exercise its rights of subrogation against a natural person Insured under this Policy unless there is a final and non-appealable adjudication against a natural person Insured establishing (i) the gaining of any profit, remuneration or financial advantage to which a natural person Insured was not legally entitled, or (ii) any dishonest, deliberately fraudulent or criminal act. 
 All other terms and conditions of this Policy remain unchanged. 
 

 Authorized Representative 
 

 

 

 

 

 

 

 

 83
 

 

 FIDUCIARY MISCELLANEOUS AMENDMENTS
 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 

 It is agreed that the Fiduciary Coverage Section is amended as follows: 
 1. Item C of the Declarations, for the portion entitled Fiduciary, is amended to add the following: 
 Voluntary Compliance Loss: 
 i. Sublimit of Liability: $100,000 
 ii. Retention: $0 
 

 2. Section A, Insuring Clause, is amended to add the following: 
 Voluntary Compliance Program 
 Insurer shall pay Voluntary Compliance Loss of the Insureds relating to a Voluntary Compliance Notice first given to the Insurer during the Policy Period or, if elected, the Extended Period, or within 30 days after the end of the Policy Period or, if elected, the Extended Period, provided the Voluntary Compliance Loss is incurred after such Voluntary Compliance Notice is first given to the Insurer. 
 3. Section B, Definitions, subsection 2, Claim, is deleted in its entirety and the following is inserted: 
 84
 

 2. Claim means: 
 a) a written demand for monetary damages or non-monetary or injunctive relief against an Insured. 
 b) a civil, criminal, administrative, regulatory, arbitration or mediation proceeding against any Insured seeking monetary damages or non-monetary or injunctive relief, commenced by the service of a complaint or other similar pleading, including any appeal therefrom; 
 c) a civil proceeding or formal investigation brought by the U.S Department of Labor, the U.S. Pension Benefit Guaranty Corporation or any similar federal state or local governmental body, or the Pensions Ombudsman appointed by the United Kingdom Secretary of State for Social Services or the United Kingdom Occupational Pensions Regulatory Authority, commenced by the service upon or other receipt by the Insured of a written notice or subpoena from the investigating authority identifying the Insured as an individual or entity against whom a civil, administrative or regulatory proceeding may be commenced, including any appeal therefrom; 
 d) a Voluntary Compliance Notice; or 
 e) a written request of the Insured to toll or waive a statute of limitations relating to a Claim described in paragraph b immediately above. 
 4. Section B, Definitions, subsection 10, Loss, paragraph (a), is deleted in its entirety and the following is inserted: 
 a) taxes, fines or penalties, except: 
 (i) the five percent (5%) or less, or the twenty percent (20%) or less, civil penalties imposed upon an Insured under section 502(i) or (l), respectively, of the Employment Retirement Income Security Act of 1974, as amended; 
 (ii) civil money penalties imposed upon an Insured for violation of the privacy provisions of the Health Insurance Portability and Accountability Act, as amended (“HIPAA”);. 
 (iii) civil fines or penalties imposed upon an Insured by the Pension Ombudsman appointed by the United Kingdom Secretary of State for Social Services or by the United Kingdom Occupational Pensions Regulatory Authority, pursuant to the English Pension Scheme Act 1993, the English 
 85
 

 Pensions Act 1995, or rules or regulations thereunder; provided any coverage for such civil penalties applies only if the funds or assets of the subject Plan are not used to fund, pay or reimburse the premium for this Policy; 
 (iv) civil money penalties imposed upon an Insured for pursuant to Section 507 of Title V of the Pension Protection Act of 2006 for inadvertent failures described in Section 507 (“PPA Claim”); provided, however, the maximum limit of the Insurer’s liability for all Loss in the aggregate arising from all such PPA Claims shall be $25,000 (“PPA Sub-Limit of Liability”). The PPA Sub-Limit of Liability shall be part of and not in addition to the applicable aggregate Limit of Liability stated in Item C of the Declarations and in no way shall be deemed to increase such Limit of Liability as set forth therein. 
 (v) civil money penalties imposed upon an Insured pursuant to Section 502(c) of ERISA for inadvertent failures described in 502(c) (“502(c) Claim”); provided, however, the maximum limit of the Insurer’s liability for all Loss in the aggregate arising from all such 502(c) Claims shall be $25,000 (“502(c) Sub-Limit of Liability”). The 502(c) Sub-Limit of Liability shall be part of and not in addition to the applicable aggregate Limit of Liability stated in Item C of the Declarations and in no way shall be deemed to increase such Limit of Liability as set forth therein; and 
 (vi) Voluntary Compliance Loss; 
 5. Section B, Definitions, is amended to add the following definitions: 
 Non-Indemnifiable Loss means Loss for which a Company has not indemnified, and is not permitted or required to indemnify, an Insured Person pursuant to law or contract or the charter, bylaws, operating agreement or similar documents of a Company. 
 Voluntary Compliance Loss means fines, penalties, sanctions, voluntary correction fees, compliance fees or user fees assessed against or collected from an Insured by the Internal Revenue Service pursuant to a Voluntary Compliance Program for the actual or alleged inadvertent noncompliance by a Plan with any statute, rule or regulation if participation by the Insured in such Voluntary Compliance Program results in the Insured obtaining a “No Action” letter from the governmental authority; provided that Voluntary Compliance Loss shall not include: (i) any costs to correct the non-compliance, or any other charges, expenses, taxes or damages; or (ii) any fees, fines, penalties, sanctions or Costs, Charges or Expenses relating to a Plan which, as of the earlier of inception of this Policy or inception of the first 
 86
 

 policy in an uninterrupted series of policies issued by the Insurer of which this Policy is a direct or indirect renewal or replacement, any Insured Person knew to be actually or allegedly non-compliant. 
 Voluntary Compliance Notice means prior written notice to the Insurer by the Insured of the Insured’s intent to enter into a Voluntary Compliance Program. 
 Voluntary Compliance Program means a written agreement to correct an inadvertent Plan defect under a voluntary compliance resolution program or similar voluntary settlement program administered by the U.S. Internal Revenue Service, the U.S. Department of Labor or other similar governmental authority, including without limitation the Employee Plans Compliance Resolution System, the Audit Closing Agreement Program, the Voluntary Compliance Resolution Program, the Walk-in Closing Agreement Program, the Administrative Policy Regarding Self-Correction, the Tax Sheltered Annuity Voluntary Correction Program, the Delinquent Filer Voluntary Compliance Program, and the Voluntary Fiduciary Correction Program, provided that such agreement to correct such Plan defect was entered into in writing by the Insured with the U.S. Internal Revenue Service during the Policy Period, or during the policy period of a policy issued by the Insurer of which this Policy is a continuous renewal. 
 6. Section C, Exclusions, subsection 1, paragraph (b)(i), is deleted in its entirety and the following is inserted: 
 (i) any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice of a Claim or notice of circumstances, given under any other management liability policy of which this Policy is a renewal or replacement or which it succeeds in time; However, regarding notice of circumstances, this exclusion only applies if, prior to the effective date, the insurer of the earlier policy has accepted the notice of circumstances. 
 7. Section C, Exclusions, subsection 1, paragraph (c), is amended to add the following: 
 Provided, however, this exclusion shall not apply to Non-Indemnifiable Loss arising from the diminution in value of securities owned by a Plan, other than securities of the Sponsor Company. 
 8. Section C, Exclusions, subsection 1, paragraph (e), is deleted in its entirety and the following is inserted: 
 e) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 87
 

  (i) any deliberately fraudulent or criminal act of an Insured; provided, however this exclusion f)(i) shall not apply unless and until there is a final, non-appealable adjudication in any action or proceeding against such Insured as to such conduct, other than in an action or proceeding initiated by the Insurer to determine coverage under the Policy, or 
 (ii) the gaining of any profit, remuneration or financial advantage to which any Insured Person was not legally entitled; provided, however this exclusion f)(ii) shall not apply unless and until there is a final, non-appealable adjudication in any action or proceeding against such Insured Person as to such conduct, other than in an action or proceeding initiated by the Insurer to determine coverage under the Policy. 
 9. Section C, Exclusions, subsection 1, paragraph (h), is deleted in its entirety and the following is inserted: 
 h) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any prior or pending litigation or administrative or regulatory proceeding, demand letter or formal governmental investigation filed or pending on or before the Continuity Date; or 
 (ii) any fact, circumstance, situation, transaction or event underlying or alleged in such litigation or administrative or regulatory proceeding, demand letter or formal governmental investigation; 
 10. Section C, Exclusions, subsection 1, paragraph (k), is deleted in its entirety. 
 11. Section C, Exclusions, subsection 2, paragraph (b), is deleted in its entirety. 
 12. Section C, Exclusions, subsection 2, paragraph (e), is amended to add the following: 
 Additionally, this exclusion shall not apply to, and Loss shall include, damages, judgments (including pre/post judgment interest on a covered judgment) and settlements of a Claim against an Insured alleging a violation of any or the responsibilities or duties imposed upon a fiduciary under the Employee Retirement Income Security Act of 1974, as amended, resulting in a loss to a Plan or loss in the actual accounts of participants in a Plan by reason of a decrease in value of the investments held by that Plan, including, but not limited to, the securities of 
 88
 

 the Sponsor Company, regardless of whether the amounts sought in such Claim have been characterized by plaintiffs as “benefits” or held by a court to be “benefits”. 
 13. Section D, Limit Of Liability And Retention, is amended to add the following: 
 Notwithstanding any of the terms of this Policy which might be construed otherwise, the maximum aggregate liability of the Insurer and any of its affiliates under this coverage section for Loss on account of civil money penalties imposed upon an Insured for violation of the privacy provisions of HIPAA shall be $100,000 (“HIPAA Penalties Sub-Limit of Liability”). The HIPAA Penalties Sub-Limit of Liability shall be part of and not in addition to the Insurer’s aggregate Limit of Liability set forth in the Declarations. 
 Notwithstanding any terms or conditions of this Policy which might be construed otherwise, the maximum aggregate liability of the Insurer and any of its affiliates under this coverage section, and under the Employment Practices Coverage Section, combined, on account of civil money penalties imposed upon an Insured for violation of the privacy provisions of HIPAA, shall be $100,000. Any Loss paid under the Employment Practices Coverage Section for such civil money penalties shall reduce by such amount the Limit of Liability under this coverage section for such civil money penalties, and any Loss under this coverage section for such civil money penalties shall reduce by such amount the Limit of Liability under the Employment Practices Coverage Section for such civil money penalties. Nothing in this Section D shall serve to increase the Limit of Liability of this coverage section or the Employment Practices Coverage Section, which shall be the maximum liability of the Insurer under the applicable coverage section. 
 The Voluntary Compliance Loss Sub-Limit of Liability set forth in Item C of the Declarations is the maximum aggregate limit of the Insurer’s liability for each Policy Period and, if elected, Extended Period, for all Voluntary Compliance Loss. The Voluntary Compliance Loss Sub-Limit of Liability shall be part of and not in addition to the applicable aggregate Limit of Liability stated in Item C of the Declarations and in no way shall be deemed to increase such Limit of Liability as set forth therein. 
 14. Section E, Notification, paragraph 1, is deleted in its entirety and the following is inserted: 
 89
 

 

 1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give Insurer written notice of any Claim as soon as practicable after the Company’s general counsel or risk manager (or equivalent positions) first becomes aware of such Claim, but in no event later than ninety (90) days after the end of the Policy Period, or respecting any Claim first made against the Insureds during the Extended Period, if purchased, ninety (90) days after the end of the Extended Period. 
 15. The following sections are added: 
 PAYMENT PRIORITY 
 If the amount of any Loss which is otherwise due and owing by the Insurer exceeds the then-remaining Limit of Liability applicable to the Loss, the Insurer shall pay the Loss, subject to such Limit of Liability, in the following priority: 
 a) first, the Insurer shall pay any covered Non-Indemnifiable Loss, in excess of any applicable Retention shown in Item C of the Declarations; and 
 b) second, only if and to the extent the payment under subsection a above does not exhaust the applicable Limit of Liability, the Insurer shall pay any other applicable Loss in excess of the Retention shown in Item C of the Declarations. 
 ALLOCATION 
 If a Claim includes both Loss that is covered under this Policy and loss that is not covered under this Policy, either because the Claim is made against both Insureds and others, or the Claim includes both covered allegations and allegations that are not covered, the Insureds and the Insurer shall allocate such amount between covered Loss (except for Costs, Charges and Expenses) and loss that is not covered based upon the relative legal and financial exposures and the relative benefits obtained by the parties. The Insurer shall not be liable under this Policy for the portion of such amount allocated to non-covered Loss. 
 The above paragraph shall not apply to Costs, Charges and Expenses, and the Insurer shall pay 100% of Costs, Charges and Expenses arising out of a covered Allocated Claim, subject to all terms, conditions, limitations and exclusions contained in the Policy and all endorsements thereto (whether preceding or following this endorsement). 
 All other terms and conditions of this Policy remain unchanged. 
 Authorized Representative 
 90
 

 EMPLOYMENT PRACTICES MISCELLANEOUS AMENDMENTS
 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 

 It is agreed that the Employment Practices Coverage Section is amended as follows: 
 1. Section B, Definitions, subsection 5, Employment Practices Claim, paragraphs (a), (b) and (c), are each deleted in their entirety and the following is inserted: 
 a) a written demand against an Insured for monetary damages or non-monetary or injunctive relief; 
 b) a civil, judicial, administrative, regulatory, arbitration or mediation proceeding against an Insured seeking monetary damages or non-monetary or injunctive relief, commenced by the service of a complaint or similar pleading, including any appeal therefrom; 
 c) a civil proceeding against an Insured before the Equal Employment Opportunity Commission or any similar federal, state or local governmental body, commenced by the receipt of a notice of charges, investigative order or similar document; 
 2. Section B, Definitions, subsection 6, Employment Practices Wrongful Act, paragraphs (c) and (g), are each deleted in their entirety and the following is inserted: 
 c) abusive or hostile work environment, including workplace bullying; 
 91
 

 g) employment-related defamation, libel, slander, disparagement, false imprisonment, misrepresentation, malicious prosecution, or invasion of privacy (including Unauthorized Access of Employee Information), or the giving of negative or defamatory statements in connection with an Employee reference; 
 3. Section B, Definitions, subsection 7, Insured Persons, paragraph (a), is deleted in its entirety and the following is inserted: 
 a) a director, officer or similar executive of the Company, or any member of the management board of the Company; 
 4. Section B, Definitions, subsection 10, Loss, is amended as follows: 
 A. Paragraph (a), is amended to add the following: 
 Provided, however, this paragraph (a) shall not apply, and this definition of Loss shall include, subject to the HIPAA Penalties Sub-Limit of Liability set forth in Section D, Limit Of Liability And Retentions, civil money penalties imposed upon an Insured for violation of the privacy provisions of the Health Insurance Portability and Accountability Act (“HIPAA”). 
 B. Paragraph (c), is deleted in its entirety and the following is inserted: 
 c) punitive or exemplary damages, liquidated damages awarded by a court pursuant to a violation of the Equal Pay Act, the Age Discrimination in Employment Act or the Family Medical Leave Act, all as amended, or any rules or regulations promulgated thereunder, or similar provisions of any common or statutory federal, state or local law, or the multiple portion of any multiplied damage award, except to the extent that such punitive, exemplary, or liquidated damages or the multiple portion of any multiplied damage award are insurable under the internal laws of any applicable jurisdiction which most favors coverage for such damages; 
 C. Solely with respect to any Claim alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any Unauthorized Access of Employee Information, the following is added: 
 Loss shall also not include any expenses incurred: 
 (i) to retain third party computer forensics services; 
 (ii) to notify any Employees of an Unauthorized Access of Employee Information; 
 92
 

 

 (iii) to retain the services of a law firm to determine the Insured’s indemnification rights under a written agreement with an independent contractor or to determine the Insured’s obligations under any privacy regulations; 
 (iv) for credit monitoring services; or 
 (v) to retain a public relations firm, crisis management firm or law firm for advertising or related communications for the purpose of protecting or restoring the Insured’s reputation. 
 5. Section B, Definitions, subsection 13, Third Party Claim, paragraphs (a) and (b), are each deleted in their entirety and the following is inserted: 
 a) any written demand for monetary damages or non-monetary or injunctive relief against an Insured; 
 b) a civil, judicial, administrative or arbitration or mediation proceeding against an Insured seeking monetary damages or non-monetary or injunctive relief, including any appeal therefrom; or 
 6. Section B, Definitions, is amended to add the following: 
 Unauthorized Access of Employee Information means: 
 a) the failure to prevent unauthorized access to, or the unauthorized use of, Confidential Employment Information, or 
 b) the failure to notify an Employee of any actual or potential unauthorized access to, or the use of, such Employee’s Confidential Employment Information, if such notification is required by any state or federal regulation or statute. 
 For the purpose of this definition, Confidential Employment Information means any information regarding an Employee, collected or stored by the Company for the purpose of establishing, maintaining or terminating the employment relationship. 
 7. Section C, Exclusions, subsection 2, paragraph (a), is deleted in its entirety and the following is inserted: 
 a) any Wrongful Act, fact, circumstance or situation which has been the subject of any written notice of a Claim or notice of circumstances, given under any other management liability policy of which this Policy is a renewal or replacement or
 93
 

  which it succeeds in time; However, regarding notice of circumstances, this exclusion only applies if, prior to the effective date, the insurer of the earlier policy has accepted the notice of circumstances. 
 8. Section C, Exclusions, subsection 3, is deleted in its entirety. 
 9. Section C, Exclusions, subsection 6, is deleted in its entirety. 
 10. Section C, Exclusions, subsection 8, is deleted in its entirety and the following is inserted: 
 8. alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any prior or pending litigation or administrative or regulatory proceeding, demand letter or formal governmental investigation filed or pending against an Insured on or before the Continuity Date; or 
 (ii) any fact, circumstance, situation, transaction or event underlying or alleged in such litigation or administrative or regulatory proceeding, demand letter or formal or informal governmental investigation or inquiry against an Insured; 
 11. Section C, Exclusions, subsection 9, is deleted in its entirety. 
 12. Section D, Limit Of Liability And Retentions, is amended to add the following: 
 No Retention shall apply to Non-Indemnifiable Loss. 
 For the purpose of this subsection: 
 (i) Indemnifiable Loss means Loss of an Insured Person resulting from any Claim which the Company is required or permitted by applicable law to indemnify, to the fullest extent so required or permitted, regardless of whether or not such actual indemnification by the Company is made, except and to the extent such indemnification is not made by the Company solely by reason of the Company’s financial insolvency. 
 (ii) Non-Indemnifiable Loss means Loss of an Insured Person which is not Indemnifiable Loss. 
 Notwithstanding any of the terms of this Policy which might be construed otherwise, the maximum aggregate liability of the Insurer and any of its affiliates under this
 94
 

 Policy for Loss on account of civil money penalties imposed upon an Insured for violation of the privacy provisions of HIPAA shall be $25,000 (“HIPAA Penalties Sub-Limit of Liability”). The HIPAA Penalties Sub-Limit of Liability shall be part of and not in addition to the Insurer’s aggregate Limit of Liability set forth in the Declarations. 
 Notwithstanding any terms or conditions of this Policy which might be construed otherwise, the maximum aggregate liability of the Insurer and any of its affiliates under this coverage section, and under the Fiduciary Coverage Section, combined, on account of civil money penalties imposed upon an Insured for violation of the privacy provisions of HIPAA, shall be $25,000. Any Loss paid under the Fiduciary Coverage Section for such civil money penalties shall reduce by such amount the Limit of Liability under this coverage section for such civil money penalties, and any Loss under this coverage section for such civil money penalties shall reduce by such amount the Limit of Liability under the Fiduciary Coverage Section for such civil money penalties. Nothing in this Section D shall serve to increase the Limit of Liability of this coverage section or the Fiduciary Coverage Section, which shall be the maximum liability of the Insurer under the applicable coverage section. 
 13. Section E, Notification, paragraph 1, is deleted in its entirety and the following is inserted: 
 1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give to Insurer written notice of any Claim made against the Insureds as soon as practicable after the Company’s general counsel or risk manager (or equivalent positions) first becomes aware of such Claim, but in no event later than ninety (90) days after the end of the Policy Period, or respecting any Claim first made against the Insureds during the Extended Period, if purchased, ninety (90) days after the end of the Extended Period. 
 14. Section H, Allocation, is deleted in its entirety and the following is inserted: 
 H. ALLOCATION 
 If a Claim includes both Loss that is covered under this Policy and loss that is not covered under this Policy, either because the Claim is made against both Insureds and others, or the Claim includes both covered allegations and allegations that are not covered (hereinafter, “Allocated Claim”), the Insureds and the Insurer shall allocate such amount between covered Loss (except for Costs, Charges and Expenses) and loss that is not covered based upon the relative legal and financial exposures and the relative benefits obtained by the parties. The Insurer shall not be 
 95
 

 liable under this Policy for the portion of such amount allocated to non-covered Loss. 
 The above paragraph shall not apply to Costs, Charges and Expenses, and the Insurer shall pay 100% of Costs, Charges and Expenses arising out of a covered Allocated Claim, subject to all terms, conditions, limitations and exclusions contained in the Policy and all endorsements thereto (whether preceding or following this endorsement). 
 15. The following section is added: 
 PAYMENT PRIORITY 
 If the amount of any Loss which is otherwise due and owing by the Insurer exceeds the then-remaining Limit of Liability applicable to the Loss, the Insurer shall pay the Loss, subject to such Limit of Liability, in the following priority: 
 a) first, the Insurer shall pay any covered Non-Indemnifiable Loss, in excess of any applicable Retention shown in Item C of the Declarations; and 
 b) second, only if and to the extent the payment under subsection a above does not exhaust the applicable Limit of Liability, the Insurer shall pay any other applicable Loss in excess of the Retention shown in Item C of the Declarations. 
 Non-Indemnifiable Loss means Loss for which a Company has not indemnified, and is not permitted or required to indemnify, an Insured Person pursuant to law or contract or the charter, bylaws, operating agreement or similar documents of a Company. 
 All other terms and conditions of this Policy remain unchanged. 
 

 

 

 

 

 

 96
 

 

 DIRECTORS AND OFFICERS AND COMPANY MISCELLANEOUS AMENDMENTS
 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 

 It is agreed that the Directors & Officers And Company Coverage Section is amended as follows: 
 1. Item C of the Declarations, section 2, Retentions, of the portion entitled Directors & Officers and Company, is amended to add the following: 
 $10,000 each Claim under Insuring Clause 4 
 2. The following section are added: 
 Failure Or Refusal Of Company To Indemnify 
 If the Company: 
 1. refuses in writing to indemnify, advance or pay covered Loss of any of the Directors and Officers; or, 
 2. fails to indemnify, advance or pay covered Loss of any of the Directors and Officers, within 60 days after the Directors and Officers requests in writing such indemnification, advancement or payment, 
 97
 

 and such covered Loss is within the Retention, then the Insurer shall advance such amounts on behalf of the Directors and Officers until either (i) a Company has agreed to make such payments, or (ii) the Retention has been satisfied. In no event shall any such advancement by the Insurer relieve any Company of any duty it may have to provide advancement, payment or indemnification to any of the Directors and Officers. Any payment or advancement by the Insurer within an applicable Retention shall apply towards the exhaustion of the Limit of Liability. 
 If the Insurer pays under this Policy any indemnification, advancement or payment owed to any of the Directors and Officers by any Company within an applicable Retention, then that Company shall reimburse the Insurer for such amounts and such amounts shall become immediately due and payable as a direct obligation of the Company to the Insurer. 
 3. Section A, Insuring Clauses, is amended to add the following: 
 4. Corporate Homicide Investigation Costs Coverage 
 The Insurer shall pay on behalf of a Private UK Company up to $100,000 in Corporate Homicide Investigation Costs incurred by the Private UK Company as a result of commencement and notice of a Corporate Homicide Investigation first received by the Private UK Company during the Policy Period or any applicable Extended Period. 
 4. Section B, Definitions, subsection 1, Claim, paragraphs e and g, are deleted in their entirety and the following is inserted: 
 e) an arbitration or mediation proceeding against any Insured seeking monetary damages or non-monetary or injunctive relief; 
 g) a civil, criminal, administrative or regulatory investigation commenced by: 
 (i) the service upon or other receipt by any natural person Insured of a written notice, including a Wells Notice, investigative order, or subpoena; or 
 (ii) the service upon or other receipt by any Company of a written notice, including a Wells Notice, or investigative order; from the investigating authority identifying such natural person Insured as an individual, or such Company as an entity, respectively, against whom a proceeding described in paragraphs c, d or f immediately above may be commenced; or 
 i) Extradition Proceeding. 
 98
 

 5. Section B, Definitions, subsection 3, Costs, Charges and Expenses, is amended to add the following: 
 c) the reasonable and necessary costs, charges, fees and expenses incurred by any of the Directors and Officers to oppose any efforts by (i) any federal, state, local or foreign law enforcement authority or other governmental investigative authority (including, but not limited to, the U.S. Department of Justice, the U.S. Securities and Exchange Commission and any attorney general); or, (ii) the enforcement organization of any securities or commodities exchange or other self-regulatory entity, to seize, attach or otherwise enjoin the personal assets or real property of any of the Directors and Officers or to obtain the discharge or revocation of a court order entered during the Policy Period in any way impairing the use thereof. 
 6. Section B, Definitions, subsection 4, Directors and Officers, paragraph (b), is deleted in its entirety and the following is inserted: 
 (b) an Employee of the Company; and 
 (d) members of the Advisory Committee of the Company, or the General Counsel of the Company;; 
 (e) any Employee of the Company while acting in their capacity as a Shadow Director or a Defacto Director, but only if the Company provides indemnification to such natural person in the same manner as that provided to Employees. 
 7. Section B, Definitions, subsection 7, Loss, is deleted in its entirety and the following is inserted: 
 7. Loss means damages, judgments, settlements, pre-judgment or post-judgment interest awarded by a court, and Costs, Charges and Expenses incurred by Directors and Officers under Insuring Clauses 1 or 2, or the Company under Insuring Clause 3. Loss does not include: 
 a) taxes, fines or penalties, except: civil penalties assessed against any of the Directors and Officers pursuant to the Foreign Corrupt Practices Act at 15 U.S.C. § 78dd-2(g)(2)(B) (“FCPA Claim”); provided, however, the maximum limit of the Insurer’s liability for all Loss in the aggregate arising from all such FCPA Claims shall be $50,000 (“FCPA Sub-Limit of 
 99
 

 Liability”). The FCPA Sub-Limit of Liability shall be part of the aggregate Limit of Liability stated Item C.1.c. of the Declarations for this Coverage Section. 
 b) matters uninsurable under the laws pursuant to which this Policy is construed. Provided, however, that the Insurer shall not assert that the portion of any amounts representing a settlement, judgment or Costs, Charges and Expenses in a Claim alleging violations of Section 11 or 12 of the Securities Act of 1933, where such Claim is arising from an offer, sale or purchase of Securities in a transaction that is exempt from registration under the Securities Act of 1933, or any amendments thereto or any rules and regulations promulgated thereunder, constitutes uninsurable loss, and shall treat such amounts as Loss under the Policy. 
 c) punitive or exemplary damages, or the multiple portion of any multiplied damage award, except to the extent that such punitive or exemplary damages, or multiplied portion of any multiplied damage award are insurable under the internal laws of any applicable jurisdiction which most favors coverage for such damages; 
 d) the cost of any remedial, preventative or other non-monetary relief, including without limitation any costs associated with compliance with any such relief of any kind or nature imposed by any judgment, settlement or governmental authority; 
 e) any amount for which the Insured is not financially liable or legally obligated to pay; 
 f) the costs to modify or adapt any building or property to be accessible or accommodating, or more accessible or accommodating, to any person; or 
 g) Clean Up Costs. 
 Provided, however, Loss shall also include, where permissible by law: (i) Costs, Charges and Expenses incurred by a Director and Officer in connection with the defense or appeal of an Extradition Proceeding; and, (ii) the premium for a bail bond, if bail is available for an Extradition Proceeding in the country at issue, but the Insurer shall be under no obligation to provide such bail bond; 
 100
 

 

 and Subject to the other terms, conditions and exclusions of this Policy, Loss shall also include Costs, Charges and Expenses for items specifically excluded from Loss pursuant to paragraphs (a) through (g) above. 
 8. Section B, Definitions, is amended to add the following: 
 Clean Up Costs means expenses, including but not limited to legal and professional fees, incurred in testing for, monitoring, cleaning up, removing, containing, treating, neutralizing, detoxifying or assessing the effects of Pollutants; 
 Corporate Homicide Investigation means a criminal investigation under the Corporate Manslaughter and Corporate Homicide Act, United Kingdom Statutes 2007, c. 19, sec. 1 et seq., (“Act”) against a Private UK Company, commenced by the service upon or other receipt by such Private UK Company of a written notice or subpoena from the investigating authority of the United Kingdom identifying such Private UK Company as an entity whom a criminal proceeding under the Act may be commenced. 
 Corporate Homicide Investigation Costs means: 
 1. Costs, Charges and Expenses incurred by the Private UK Company in defending the Corporate Homicide Investigation; and 
 2. Corporate Homicide Investigation Public Relation Expenses. 
 Corporate Homicide Investigation Public Relation Expenses means the reasonable fees and related expenses of a public relations firm or consultant, crisis management firm or law firm, which the Private UK Company may, in the reasonable exercise of its discretion, engage with the written consent of the Insurer, not to be unreasonably withheld or delayed, in order to prevent or limit adverse effects or negative publicity which it is anticipated may arise from a Corporate Homicide Investigation. 
 Employee means: (i) any person who was, now is or shall become a full-time or part-time employee of the Company, including voluntary, seasonal, and temporary employees; (ii) any leased employee working for the Company, but only if the Company provides indemnification to such leased employee in the same manner as that provided to Employees who are not leased employees or independent contractors; and (iii) any natural person independent contractor (or natural person provided by an entity independent contractor) working for the Company pursuant to an express contract or agreement between the independent contractor and the Company, which sets forth the nature of the retention of the independent contractor,
 101
 

 but only if the Company provides indemnification to such natural person in the same manner as that provided to Employees who are not leased employees or independent contractors. 
 Extradition Proceeding means a formal written request, pursuant to an applicable treaty, from one country (the “Requesting Country”) to another country (the “Requested Country”) to have a Director and Officer extradited from the Requested Country to the Requesting Country. 
 Pollutants mean any substance exhibiting any hazardous characteristics as defined by, or identified on a list of hazardous substances issued by the United States Environmental Protection Agency or any federal, state, county, municipal or local counterpart thereof or any foreign equivalent. Such substances shall include, without limitation, solids, liquids, gaseous or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials. Pollutants shall also mean any other air emission, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products, noise, fungus (including mold or mildew and any mycotoxins, spores, scents or byproducts produced or released by fungi, but does not include any fungi intended by the Insured for consumption) and electric or magnetic or electromagnetic field. 
 Private UK Company is a Subsidiary of the Parent Company, where such Subsidiary (1) is organized under the laws of the United Kingdom, and (2) is comprised of securities that have not been the subject of a public offering, solicitation, sale, distribution or issuance, and are not publicly traded. 
 9. Section C, Exclusions, subsection 1, Exclusions Applicable to All Insuring Clauses, paragraph (a), is deleted in its entirety and the following is inserted: 
 a) for actual or alleged bodily injury, sickness, disease, death, false imprisonment, mental anguish, emotional distress, invasion of privacy of any person, or damage to or destruction of any tangible or intangible property including loss of use thereof, whether or not such property is physically injured; provided, however, this exclusion shall not apply to any Claim brought directly, derivatively or otherwise by one or more securities holders of the Company in their capacity as such. 
 10. Section C, Exclusions, subsection 1, Exclusions Applicable to All Insuring Clauses, paragraph (b)(i), is deleted in its entirety and the following is inserted: 
 (i) any Wrongful Act, fact, circumstance or situation which has been the subject of
 102
 

 any written notice of a Claim or notice of circumstances, given under any other management liability policy of which this Policy is a renewal or replacement or which it succeeds in time; However, regarding notice of circumstances, this exclusion only applies if, prior to the effective date, the insurer of the earlier policy has accepted the notice of circumstances. 
 11. Section C, Exclusions, subsection 1, Exclusions Applicable to All Insuring Clauses, paragraph (c), is deleted in its entirety. 
 12. Section C, Exclusions, subsection (e), is deleted in its entirety and the following is inserted: 
 (e) brought or maintained by, on behalf of, in the right of, or at the direction of any Insured in any capacity, or any Outside Entity, in any respect and whether or not collusive, or which is brought by any securities holder or member of the Company, whether directly or derivatively, unless the Claim of such securities holder or member is instigated and continued totally independent of, and totally without the solicitation, assistance, active participation, or intervention of, any Director and Officer or the Company; provided, however, that Whistleblower Conduct by a Director and Officer, other than a director, shall not be considered solicitation, assistance, active participation, or intervention of a Director and Officer; 
 and provided further that this exclusion shall not apply to any Claim that: 
 (i) is brought or maintained by any Insured in the form of a cross claim, third party claim or other proceeding for contribution or indemnity which is part of, and directly results from a Claim that is covered by this Coverage Section; 
 (ii) is brought or maintained by an employee of the Company who is not or was not a director or officer of the Company, including any Claim brought by such employee for any actual or alleged violation of the provisions of 31 U.S.C. 3729 of the Federal False Claims Act, or any similar provision of any federal, state, local or foreign statutory law; 
 (iii) is brought or maintained by any former director or officer of the Company and where such Claim is first made two (2) years subsequent to the date such director or officer ceased to be a director or officer of the Company; 
 (iv) is brought or maintained by any bankruptcy or insolvency trustee or bankruptcy appointed representative of the Company, or receiver, examiner,
 103
 

 liquidator or similar official for the Company; or 
 (v) any Claim brought and maintained by a Director and Officer, as that term is defined in subparagraphs a or c of definition 4, of a Company formed and operating solely in a country other than the United States of America, Canada, or any other common law country. 
 For purposes of this exclusion, Whistleblower Conduct means any of the activity set forth in 18 U.S.C. Sec. 1514A(a), engaged in by a whistleblower with a federal regulatory or law enforcement agency, Member of Congress or any committee of Congress, or person with supervisory authority over the whistleblower, or an enforcement action by the whistleblower set forth in 18 U.S.C. Sec. 1514A (b); 
 13. Section C, Exclusions, subsection 1, Exclusions Applicable to All Insuring Clauses, paragraph (f), is deleted in its entirety and the following is inserted: 
 f) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any deliberately fraudulent or criminal act of an Insured; provided, however this exclusion f)(i) shall not apply unless and until there is a final, non-appealable adjudication in any action or proceeding against such Insured as to such conduct, other than in an action or proceeding initiated by the Insurer to determine coverage under the Policy, or 
 (ii) the gaining of any profit, remuneration or financial advantage to which any Directors and Officers were not legally entitled; provided, however this exclusion f)(ii) shall not apply unless and until there is a final, non-appealable adjudication in any action or proceeding against such Directors and Officers as to such conduct, other than in an action or proceeding initiated by the Insurer to determine coverage under the Policy. 
 14. Section C, Exclusions, subsection 1, Exclusions Applicable to All Insuring Clauses, paragraph (k), is deleted in its entirety and the following is inserted: 
 k) alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving: 
 (i) any prior or pending litigation or administrative or regulatory proceeding, demand letter or formal governmental investigation filed or pending on or before the Continuity Date; or 
 104
 

 (ii) any fact, circumstance, situation, transaction or event underlying or alleged in such litigation or administrative or regulatory proceeding, demand letter or formal governmental investigation; 
 15. Section C, Exclusions, subsection 1, Exclusions Applicable to All Insuring Clauses, paragraph (l), is deleted in its entirety. 
 16. Section C, Exclusions, subsection 1, Exclusions Applicable to All Insuring Clauses, paragraph (n), is amended to add the following: 
 This exclusion shall also not apply to: 
 (i) any Claim for Loss alleging a Wrongful Act which occurred during the Insured’s preparations to commence an initial public offering (“IPO”) and which occurred at any time prior to 12:01 a.m. on the date the IPO commences (“IPO Effective Time”), including any Claim for Loss alleging a Wrongful Act which occurred during the road show; provided, however that the coverage otherwise afforded under this paragraph shall be deemed to be void ab initio effective the IPO Effective Time; provided, further, however, that coverage shall not be deemed void ab initio if (1) the Claim is first made and reported pursuant to Section E, Notification, paragraph 1 of this coverage part prior to the IPO Effective Time, and (2) a public company D&O policy is not applicable to such Claim; 
 (ii) any Claim for Loss alleging a Wrongful Act arising out of the Insured’s failure to commence an IPO; and 
 (iii) any Claim arising from an offer, sale or purchase of the Company’s own securities if those securities are notes, bonds or debentures or any other instrument representing a debt owed by the Company to the extent such instruments would be deemed securities under the federal, state, local or foreign regulation, rule or statute, or any common law, regulating securities. 
 17. Section C, Exclusions, subsection 1, Exclusions Applicable to All Insuring Clauses, is amended to add the following: 
 alleging, based upon, arising out of, or attributable to the rendering or failure to render professional services. Provided, however, this exclusion shall not apply to any Claim(s) brought by a shareholder of the Company in the form of a shareholder class, direct or derivative action alleging failure to supervise those who performed or failed to perform such professional services, provided that such shareholder 
 105
 

 action is instigated and continued totally independent of, and totally without the solicitation of, or assistance of, or active participation of, or intervention of, the Company and/or any Insureds. 
 with respect to Insuring Clause 4, any amounts incurred for compliance with a Publicity Order pursuant to Section 10 of the Act. 
 18. Section C, Exclusions, subsection 2, Exclusions Applicable Only Insuring Clause A3, paragraph (a), is deleted in its entirety and the following is inserted: 
 a) for the actual or alleged breach of any contract or agreement; except and to the extent the Company would have been liable in the absence of such contract or agreement; or 
 19. Section C, Exclusions, subsection 2, Exclusions Applicable Only Insuring Clause A3, paragraph (b), subparagraph (ii), is deleted in its entirety. 
 20. Section D, Limit Of Liability And Retention, is amended to add the following: 
 The Insurer’s maximum limit of liability for all Corporate Homicide Investigation Costs shall be $100,000 (“Corporate Homicide Investigation Costs Sub-Limit Of Liability”). The Corporate Homicide Investigation Costs Sub-Limit Of Liability shall be part of and not in addition to the aggregate Limit of Liability stated Item C.1.c. of the Declarations for this Coverage Section. 
 21. Section E, Notification, paragraph 1, is deleted in its entirety and the following is inserted: 
 1. The Insureds shall, as a condition precedent to their rights to payment under this Coverage Section only, give Insurer written notice of any Claim as soon as practicable after the Company’s general counsel or risk manager (or equivalent positions) first becomes aware of such Claim, but in no event later than ninety (90) days after the end of the Policy Period, or respecting any Claim first made against the Insureds during the Extended Period, if purchased, ninety (90) days after the end of the Extended Period. 
 22. Section I, Allocation, is deleted in its entirety and the following is inserted: 
 I. ALLOCATION 
 If a Claim includes both Loss that is covered under this Policy and loss that is not covered under this Policy, either because the Claim is made against both Insureds and others, or the Claim includes both covered allegations and
 106
 

  allegations that are not covered (hereinafter, “Allocated Claim”), the Insureds and the Insurer shall allocate such amount between covered Loss (except for Costs, Charges and Expenses) and loss that is not covered based upon the relative legal and financial exposures and the relative benefits obtained by the parties. The Insurer shall not be liable under this Policy for the portion of such amount allocated to non-covered Loss. 
 The above paragraph shall not apply to Costs, Charges and Expenses, and the Insurer shall pay 100% of Costs, Charges and Expenses arising out of a covered Allocated Claim, subject to all terms, conditions, limitations and exclusions contained in the Policy and all endorsements thereto (whether preceding or following this endorsement). 
 

 All other terms and conditions of this Policy remain unchanged. 
 

 Authorized Representative 
 

 

 

 

 

 

 

 

 

 

 107
 

 

 EPL COVERAGE SECTION AMENDED TO INCLUDE WAGE AND HOUR CLAIMS
 COSTS, CHARGES AND EXPENSES SUBLIMIT COVERAGE ONLY
 

 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 THIS ENDORSEMENT MODIFIES INSURANCE PROVIDED UNDER THE FOLLOWING:
 ACE EXPRESS PRIVATE COMPANY MANAGEMENT INDEMNITY POLICY
 

 It is agreed that the Employment Practices Coverage Section is amended as follows: 
 1. Section A, Insuring Clauses, subsection 1, Employee Insuring Clause, is amended to add the following: 
 The Insurer shall pay on behalf of the Insureds all Costs, Charges and Expenses which the Insureds have become legally obligated to pay by reason of a Wage and Hour Claim first made against the Insureds during the Policy Period or, if elected, the Extended Period, and reported to the Insurer pursuant to subsection E1 herein, for any Employment Practices Wrongful Act taking place prior to the end of the Policy Period. The maximum limit of the Insurer’s liability for all Costs, Charges and Expenses in the aggregate arising from all such Wage and Hour Claims shall be $150,000 (hereinafter known as the Wage and Hour Claim Sub-Limit of Liability). The Wage and Hour Claim Sub-Limit of Liability shall be part of and not in addition to the otherwise applicable aggregate Limit of Liability stated in the Declarations, and will in no way serve to increase such Limit of Liability. 
 This Policy shall not afford any coverage for Loss arising out of any Wage and Hour Claim, or attributable solely to any actual or alleged violation of any Wage and Hour 
 108
 

 Law(s), other than Costs, Charges and Expenses. 
 2. Section B, Definitions, subsection 6, Employment Practices Wrongful Act, is amended to add the following: 
 n) Solely with respect to the coverage provided for a Wage and Hour Claim, (i) violation of any Wage and Hour Law; or (ii) improper payroll deductions, failure to pay wages, misclassification of exempt or non-exempt employee status, failure to pay compensation earned by or due to the claimant (including but not limited to commission, vacation and sick days, retirement benefits, and severance pay), failure to pay overtime pay for hours actually worked or labor actually performed, or any violation of any law, rule or regulation, or amendments thereto (whether statutory or common law, or otherwise), that governs the same topic or subject. 
 3. The last sentence of Section C, Exclusions, subsection 4, is deleted in its entirety and the following is inserted: 
 Provided, however, this exclusion does not apply to: 
 1. any back-pay or front-pay allegedly due as the result of discrimination, or 
 2. that part of any such Claim alleging Retaliation, or, 
 3. Costs, Charges and Expenses arising from a Wage and Hour Claim, subject to the Wage and Hour Claim Sub-Limit of Liability, except for: (i) any Claim alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any violation of any California state or local Wage and Hour Law; or (ii) any Claim which is brought or made in California alleging, based upon, arising out of, attributable to, directly or indirectly resulting from, in consequence of, or in any way involving any violation of any Wage and Hour Law. 
 4. Section B, Definitions, is amended to add the following: 
 Wage and Hour Claim means any Claim, or that portion of any Claim, alleging, based upon, arising out of, or attributable to: (i) any violation of any Wage and Hour Law; and/or (ii) improper payroll deductions, unpaid wages, misclassification of exempt or non-exempt employee status, compensation earned by or due to the claimant but not paid (including but not limited to commission, vacation and sick days, retirement benefits, and severance pay), overtime pay for hours actually worked or labor actually performed, or any violation of any law, rule or regulation, or amendments thereto (whether statutory or common law, or otherwise), that governs the same topic or subject. 
 109
 

 Wage and Hour Law means: (i) the Fair Labor Standards Act (except the Equal Pay Act), as amended, or any rules or regulations promulgated thereunder, or similar provisions of any common or statutory federal, state, local or foreign law, or amendments thereto; and/or (ii) any law, rule or regulation, or amendments thereto (whether statutory or common law, or otherwise) governing or relating to: (a) the payment of wages, including payment of unpaid salary, hourly pay, on-call time and overtime pay; and/or (b) the classification of employees for purposes of determining employees’ eligibility for compensation under such law, rules or regulations. 
 

 All other terms and conditions of this Policy remain unchanged. 
 

 Authorized Representative 
 

 

 

 

 

 

 

 

 

 

 

 

 

 110
 

 

 DISCLOSURE PURSUANT TO TERRORISM RISK
 INSURANCE ACT
 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 Disclosure Of Premium 
 In accordance with the federal Terrorism Risk Insurance Act, we are required to provide you with a notice disclosing the portion of your premium, if any, attributable to coverage for terrorist acts certified under the Terrorism Risk Insurance Act. The portion of your premium attributable to such coverage is shown in this endorsement or in the policy Declarations. 
 Disclosure Of Federal Participation In Payment Of Terrorism Losses 
 The United States Government, Department of the Treasury, will pay a share of terrorism losses insured under the federal program. The federal share equals 85% of that portion of the amount of such insured losses that exceeds the applicable insurer retention. However, if aggregate insured losses attributable to terrorist acts certified under the Terrorism Risk Insurance Act exceed $100 billion in a Program Year (January 1 through December 31), the Treasury shall not make any payment for any portion of the amount of such losses that exceeds $100 billion. 
 Cap On Insurer Participation In Payment Of Terrorism Losses 
 If aggregate insured losses attributable to terrorist acts certified under the Terrorism Risk Insurance Act exceed $100 billion in a Program Year (January 1 through December 31) and we have met our insurer deductible under the Terrorism Risk Insurance Act, we shall not be liable for the payment of any portion of the amount of such losses that exceeds $100 billion, and in such case insured losses up to that amount are subject to pro rata 
 111
 

 allocation in accordance with procedures established by the Secretary of the Treasury. 
 We are providing you with the terrorism coverage required by the Act. We have not established a separate price for this coverage; however the portion of your annual premium that is reasonably attributable to such coverage is: $0. 
 

 Authorized Agent 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 112
 

 

 ACE Producer Compensation
 Practices & Policies
 

 ACE believes that policyholders should have access to information about ACE's practices and policies related to the payment of compensation to brokers and independent agents. You can obtain that information by accessing our website at http://www.aceproducercompensation.com or by calling the following toll-free telephone number: 1-866-512-2862. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 113
 

 

 

 TRADE OR ECONOMIC SANCTIONS ENDORSEMENT
 Named Insured York River Electric, Inc. 
 Endorsement Number 
 Policy Symbol DON 
 Policy Number G24223450 001 
 Policy Period 08/20/2011 to 08/20/2012 
 Effective Date of Endorsement 08/20/2011 
 Issued By (Name of Insurance Company) Westchester Fire Insurance Company 
 

 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
 This insurance does not apply to the extent that trade or economic sanctions or other laws or regulations prohibit us from providing insurance, but not limited to, the payment of claims. All other terms and conditions of policy remain unchanged. 
 

 Authorized Agent 
 

 

 

 

 

 

 

 

 114
 

 

 Important Information
  toVirginia Policyholders
 Regarding Your Insurance
 

 In the event you need to contact someone about this insurance for any reason please contact your agent. If no agent was involved in the sale of this insurance, or if you have additional questions you may contact the insurance company issuing this insurance at the following address and telephone number 
 

 ACE USA Companies 
 Customer Support Service Department 
 436 Walnut Street 
 PO Box 1000 
 Philadelphia, PA 19106-3703 
 1-800-352-4462 
 

 If you have been unable to contact or obtain satisfaction from the company or the agent, you may contact the Virginia State Corporation Commission’s Bureau of Insurance at: 
 

 1300 East Main Street 
 Tyler Building 
 Richmond, VA 23219 
 Consumer Hot Line: 1-800-552-7945 
 Bureau of Insurance: 804-371-9185 
 

 Written correspondence is preferable so that a record of your inquiry is maintained. When contacting your agent, company or the Bureau of Insurance, have your policy number available. 
 

 

 115
 

 

 U. S. TREASURY DEPARTMENT'S OFFICE OF FOREIGN
 ASSETS CONTROL ("OFAC")
 ADVISORY NOTICE TO POLICYHOLDERS
 

 No coverage is provided by this Policyholder Notice nor can it be construed to replace any provisions of your policy. You should read your policy and review your Declarations page for complete information on the coverages you are provided. 
 This Notice provides information concerning possible impact on your insurance coverage due to directives issued by OFAC. Please read this Notice carefully. 
 The Office of Foreign Assets Control (OFAC) administers and enforces sanctions policy, based on Presidential declarations of "national emergency". OFAC has identified and listed numerous: 
  Foreign agents; 
  Front organizations; 
  Terrorists; 
  Terrorist organizations; and 
  Narcotics traffickers; 
 as "Specially Designated Nationals and Blocked Persons". This list can be located on the United States Treasury's web site – http//www.treas.gov/ofac. 
 In accordance with OFAC regulations, if it is determined that you or any other insured, or any person or entity claiming the benefits of this insurance has violated U.S. sanctions law or is a Specially Designated National and Blocked Person, as identified by OFAC, this insurance will be considered a blocked or frozen contract and all provisions of this insurance are immediately subject to OFAC. When an insurance policy is considered to be such a blocked or frozen contract, no payments nor premium refunds may be made without authorization from OFAC. Other limitations on the premiums and payments also apply. 
 

 

 116
 

 

 [Letterhead York river Electric]
 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.12 – INTELLECTUAL PROPERTY
 

 Please see individual files of employees of YRE previously shown to Iron Eagle who hold Master Electrician licenses. Except as set forth here, the Company owns the entire, unencumbered right, title and interest to all such Intellectual Property indicated as owned by it, and, except as set forth here, no Contracts, Permits or other rights or licenses have been granted to others with respect to any of such Intellectual Properties.  Except as set forth here, the Company owns or possesses the right to use all the Intellectual Property necessary for the conduct of the Business as now conducted and as proposed to be conducted by the Buyer, without any known conflict with the rights of others, or any known use by others which conflicts in any respect with the rights of the Company.  The Company has not received any notice, and neither the Company nor the Seller have any Knowledge, of any claimed conflict with respect to any of the foregoing, nor are they aware of any claim or assertion that any of the foregoing Intellectual Properties are invalid or defective in any way, nor are they aware of any facts or prior act upon which such a claim or assertion could be based. Neither the Company nor the Seller has any Knowledge of any default or claimed or purported or alleged default or state of facts which, with notice or lapse of time or both, would constitute a default on the part of any party in the performance of any obligation to be performed or paid by any party under any Contract or Permit referred to in, or submitted as a part of this package.  The Company and the Seller represent and warrant to the Buyer that they have provided the Buyer complete access to copies of all Intellectual Property set forth here.
 

 NO EXCEPTIONS 
 

 

 

 

 [Letterhead York River Electric]
 

 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.13 – LITIGATION
 

 Except as set forth here, there is no action, litigation, administrative proceeding, arbitration, proceeding or governmental investigation affecting the Business, property, assets and/or business operations of the Company. None of the matters set forth in this schedule either severally or in the aggregate, materially and adversely affect the financial condition, Business, property or assets of the Company.  There are no investigations pending or threatened by any federal, state, local or foreign government or by any agency or instrumentality thereof, the effect of which would impair or affect the Business.
 

 NO LITIGATION, ADMINISTRATIVE PROCEEDING, ARBITRATION, PROCEEDING OR GOVERNMENTAL INVESTIGATION EXISTS.
 

 

 

 

 [Letterhead York River Electric]
 

 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.14 – GOVERNMENTAL AND OTHER CONSENTS
 

 Except as set forth in here, no Consent or Permit is required by the Company or the Seller to complete the Transaction or take any action necessary to transfer the Shares to the Buyer.  The Company and the Seller have, or prior to the Closing will have, furnished to the Buyer true and complete copies of any such Consents or Permits required by this SPA.
 

 NO EXCEPTIONS
 

 

 

 

 [Letterhead York River Electric]
 

 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.15 – PERMITS 
 Please see the permits previously presented to Iron Eagle
 

 

 

 

 

 

 

 Schedule 4.19  Volume Submitter 401(k) Profit Sharing Plan 
 ADOPTION AGREEMENT FOR
 GOODMAN & COMPANY, L.L.P.
 VOLUME SUBMITTER 401(K) PROFIT SHARING PLAN
 

 CAUTION: Failure to properly fill out this Adoption Agreement may result in disqualification of the Plan. 
 

 EMPLOYER INFORMATION 
 (An amendment to the Adoption Agreement is not needed solely to reflect a change in the information in this Employer Information Section.) 
 

 1.
 EMPLOYER'S NAME, ADDRESS, TELEPHONE NUMBER AND TIN 
 

 Name: York River Electric, Inc. 
 

 Address: 3201 Old Williamsburg Road Street
 

     Yorktown 
 Virginia 
 23690 
 City           
 State
  Zip 
 

 Telephone:  (757) 369-3673 
 

 Taxpayer Identification Number (TIN):  54-1361537 
 

 2. 
 TYPE OF ENTITY 
 a. [ ] Corporation (including Tax-exempt or Non-profit Corporation) 
 b. [ ] Professional Service Corporation 
 c. [X] S Corporation 
 d. [ ] Limited Liability Company that is taxed as: 
 1. [ ] a partnership or sole proprietorship 
 2. [ ] a Corporation 
 3. [ ] an S Corporation 
 e. [ ] Sole Proprietorship 
 f. [ ] Partnership (including Limited Liability) 
 g. [ ] Other: (must be a legal entity recognized under federal income tax laws) 
 1
 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 3. 
 EMPLOYER'S FISCAL YEAR means the 12 consecutive month period: 
 

 a. [X] Beginning on January 1st                (e.g., January 1st) 
 month      day 
 

 and ending on December 31st           . 
 month     day 
 

 b. [ ] Other: (must be the period used for IRS reporting purposes) 
 

 4. 
 AFFILIATED EMPLOYERS/PARTICIPATING EMPLOYERS.
  Is the Employer a member of a controlled group or an affiliated service group (within the meaning of Code Section 414(b), (c), or (o))? 
 a. [X]  No. 
 b. [ ] Yes, Employer is a member of (select all that apply): 
 1. [ ] a controlled group 
 2. [ ] an affiliated service group 
 AND, will any other Employers adopt the Plan as Participating Employers? 
 c. [ ] Yes. (Complete a Participation Agreement for each Participating Employer.) 
 d. [X] No. (The Plan could fail to satisfy the Code Section 410(b) coverage rules.) 
 

 NOTE: If this is a Professional Employer Organization or another multiple employer arrangement in which different employers will have different conditions for eligibility, etc., then the Multiple Employer Participation Agreement must be completed for each employer. 
 

 PLAN INFORMATION 
 (An amendment to the Adoption Agreement is not needed solely to reflect a change in the information in Questions 9. through 11.) 
 

 5. 
 PLAN NAME: 
 York River Electric, Inc. 401(k) Safe Harbor Plan 
 

 6. 
 EFFECTIVE DATE 
 a. [ ] This is a new Plan effective as of (hereinafter called the "Effective Date"). 
 

 2
 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 b. [X] This is an amendment and restatement of a plan which was originally effective January 1, 1990 . The effective date of this amendment and restatement is January 1, 2010 (hereinafter called the "Effective Date"). 
 c. [ ] FOR EGTRRA RESTATEMENTS: This is an amendment and restatement to bring a plan into compliance with the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") and other legislative and regulatory changes. The Plan's original effective date was . Except as specifically provided in the Plan, the effective date of this amendment and restatement is (hereinafter called the "Effective Date"). (May enter a restatement date that is the first day of the current Plan Year. The Plan contains appropriate retroactive effective dates with respect to provisions for the appropriate laws.) 
 

 7. 
 PLAN YEAR means the 12 consecutive month period: 
 

 Beginning on January 1st                   (e.g., January 1st) 
 month            day 
 

 and ending on December 31st              .  
    month          day 
 

 EXCEPT that there will be a Short Plan Year (if the effective date of participation is based on a Plan Year, then coordinate with Question 16.): 
 a. [X] N/A 
 b. [ ] beginning on                                                         (e.g., July 1, 2007) 
 month      day,         year 
 and ending on                                                             .
 month         day,           year 
 

 8.
  VALUATION DATE means: 
 a. [X] Every day that the Trustee (or Insurer), any transfer agent appointed by the Trustee (or Insurer) or the Employer, and any stock exchange used by such agent are open for business (daily valuation). 
 b. [ ] The last day of each Plan Year. 
 c. [ ] The last day of each Plan Year half (semi-annual). 
 d. [ ] The last day of each Plan Year quarter. 
 e. [ ] Other (specify day or days): (must be at least once each Plan Year). 
 3
 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 9. 
 PLAN NUMBER assigned by the Employer 
 a. [X] 001 
 b. [ ] 002 
 c. [ ] Other: 
 

 10. 
 TRUSTEE(S) OR INSURER(S): 
 a. [ } This Plan is funded exclusively with Contracts and the name of the Insurer(s) is: 
 (1)                                              (2)                                                  (if more than 2, add names to signature page). 
 

 b. [X] Individual Trustee(s) who serve as Trustee(s) over assets not subject to control by a corporate Trustee. (Add additional Trustees as necessary.) 
 

 	 	 	
	 Name(s)
	 

	 Title(s)

	 

	 

	 

	 Catherine McQuade
	 

	  

	 

	 

	 

	 Mark Bryan
	 

	  

 

 Address and Telephone number: 
 1. [X] Use Employer address and telephone number. 
 2. [ ] Use address and telephone number below: 
 

 	 	 	 	 	 	 	 	
	 Address:
	  

	 

	 Street

	 

	  
	 

	  
	 

	 

	 

	 

	 City
	 

	 State
	 

	 Zip
	 

	 Telephone:
	  
	  

 

 

 4
 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 

 c. [ ] Corporate Trustee 
 	 	 	 	 	 	 	
	 Name:
	  

	 

	 

	 

	 

	 

	 

	 

	 Address:
	  

	 

	 Street

	 

	  
	 

	  
	 

	 

	 

	 

	 City
	 

	 State
	 

	 Zip
	 

	 

	 

	 

	 

	 

	 

	 

	 Telephone:
	  

 

 AND, the Trustee shall serve as: 
 d. [X] a Directed (nondiscretionary) Trustee over-all Plan assets except for the following: 
 

 e. [ ] a Discretionary Trustee over-all Plan assets except for the following: 
 

 AND, shall a separate trust agreement that is approved by the IRS for use with this Volume Submitter Plan be used with this Plan? 
 f. [X] No. 
 g. [ ] Yes. 
 

 NOTE: If Yes is selected, an executed copy of the trust agreement between the Trustee and the Employer must be attached to this Plan. The Plan and trust agreement will be read and construed together. The responsibilities, rights and powers of the Trustee shall be those specified in the trust agreement. 
 

 11.
 PLAN ADMINISTRATOR'S NAME, ADDRESS AND TELEPHONE NUMBER: 
 (If none is named, the Employer will be the Plan Administrator.) 
 a. [X] Employer (Use Employer address and telephone number). 
 b. [ ] Use name, address and telephone number below: 
 

 

 

 

 

 5
 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 

 	 	 	 	 	 	 	
	 Name:
	  

	 

	 

	 

	 

	 

	 

	 

	 Address:
	  

	 

	 Street

	 

	  
	 

	  
	 

	 

	 

	 

	 City
	 

	 State
	 

	 Zip
	 

	 

	 

	 

	 

	 

	 

	 

	 Telephone:
	  

 

 12.
  CONSTRUCTION OF PLAN 
 This Plan shall be governed by the laws of the state or commonwealth where the Employer's (or, in the case of a corporate Trustee (or Insurer), such Trustee's (or Insurer's)) principal place of business is located unless another state or commonwealth is specified:                                                                     .
 

 

 13.
  CONTRIBUTION TYPES 
 The following contributions are authorized under this Plan. The selections made below should correspond with the selections made under the Contributions and Allocations section of this Adoption Agreement. 
 a. [X] Elective Deferrals (Section 401(k) Salary Reductions including Roth Contributions, if selected, at Question 27.) 
 b. [ ] SIMPLE 401(k) Contributions (Question 28.) 
 c. [X] 401(k) Safe Harbor Contributions (Match/Nonelective) (Question 29.) 
 d. [X] Employer Matching Contributions (Question 30.) 
 e. [X] Employer Nonelective Profit Sharing Contributions (includes Prevailing Wage Contributions) (Question 31.) 
 f. [X] Rollover Contributions (Question 45.) 
 g. [ ] After-tax Voluntary Employee Contributions (Question 46.) 
 h. [ ] This is a frozen Plan effective: .
  
 ELIGIBILITY REQUIREMENTS 
 

 14. ELIGIBLE EMPLOYEES (Plan Section 1.25) means all Employees (including Leased Employees) EXCEPT for the following Employees: (select all that apply below) 
 

 6
 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 NOTE: Unless otherwise specified in this Section, Elective Deferrals include Roth Elective Deferrals, after-tax voluntary Employee contributions, and Rollover Contributions; Matching includes QMACs; and Nonelective Profit Sharing includes QNECs. ADP/ACP safe harbor contributions and SIMPLE 401(k) contributions are subject to the exclusions for Elective Deferrals except as provided in Question 29. 

 	 	 	 	 	 	
	 

	 All Contributions
	 

	 Elective Deferrals
	 Matching
	 Nonelective Profit Sharing

	 a. No Exclusions
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ] 
	 4. [ ]

	 b. Union Employees (as defined in Plan Section 1.25)
	 1. [X]
	 OR
	 2. [ ] 
	 3. [ ] 
	 4. [ ]

	 c. Nonresident Aliens (as defined in Plan Section 1.25)
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

	 d. Highly Compensated Employees
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

	 e. Leased Employees
	 1. [X]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

	 f. Part-time/Temporary/Seasonal Employees. A part-time, temporary or seasonal Employee in an Employee whose regularly scheduled Service is less than [   ] Hours of Service in the relevant eligibility computation period.
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

	 g. Other: [                                         ] (must be definitely determinable, may not be based on age or length of service (except as provided in f. above) or level of compensation and, if using the average benefits test to satisfy Code Section 401(b) coverage testing, must be a reasonable classification)
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

  

 15. CONDITIONS OF ELIGIBILITY (Plan Section 3.1) 
 Any Eligible Employee will be eligible to participate in the Plan upon satisfaction of the following (select a. or all that apply in b. – l.): 
 

 NOTE: Unless otherwise specified in this Section, Elective Deferrals include Roth Elective Deferrals, after-tax voluntary Employee contributions, and Rollover 
 

 7
 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 Contributions; Matching includes QMACs; and Nonelective Profit Sharing includes QNECs. ADP/ACP safe harbor contributions and SIMPLE 401(k) contributions are subject to the conditions for Elective Deferrals except as provided in Question 29. 

 	 	 	 	 	 	
	 

	 All Contributions
	 

	 Elective Deferrals
	 Matching
	 Nonelective Profit Sharing

	 a. No age or service required
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ] 
	 4. [ ]

	 b. Age 20 1/2
	 1. [ ]
	 OR
	 2. [ ] 
	 3. [ ] 
	 4. [ ]

	 c. Age 21
	 1. [ X]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

	 D. Age [     ] (may not exceed 21)
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

	 e. 6 months of service
	 1. [ ]
	 OR
	 2. [X ]
	 3. [ ]
	 4. [ ]

	 f. 1 Year of service
	 1. [ ]
	 OR
	 2. [ ]
	 3. [X ]
	 4. [X ]

	 g. 2 Years of Service
	 N/A
	 OR
	 N/A
	 3. [ ]
	 4. [ ]

	 h. [             ] (not to exceed 1,000) Hours of Service within [                                  ] (not to exceed 12) consecutive months from the Eligible Employee's employment commencement date. If an Employee does not complete the state Hours of Service during the specified time period, the Employee is subject to the 1 Year of Service requirement in f. above
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

	 i. [               ] (not to exceed 12) consecutive months of employment from the Eligible Employee's employment commencement date. If an Employee does not complete the stated number of months, the Employee is subject to the 1 Year of Servive requirement in f. above.
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

	 j. Other: [                        ] (must be an age or service requirement that is definitely determinable and may not exceed age 21 and for Elective Deferrals, 1 Year of Service; for Employer natching and.or profit sharing contributions; may not exceed 2 Years of Service).
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ]
	 4. [ ]

  

 8
 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 NOTE: For Employer matching and/or profit sharing contributions, if more than 1 Year of Service is selected, 100% immediate vesting is required. 
 

 NOTE: If the service requirement is or includes a fractional year, then an Employee will not be required to complete any specified number of Hours of Service to receive credit for such fractional year. If expressed in months of service, then an Employee will not be required to complete any specified number of Hours of Service in a particular month, unless selected in h. above. In both cases, the Plan must use the Elapsed Time method to determine service. 
 

 NOTE: Year of Service means Period of Service if Elapsed Time method is chosen. 
 

 AND, the service and/or age requirements specified above shall be waived in accordance with the following (leave blank if there are no waivers of conditions): 

 	 	 	 	 	 	
	 

	 All Contributions
	 

	 Elective Deferrals
	 Matching
	 Nonelective Profit Sharing

	 k. If employed on [                  ] the following requirements will be waived. The waiver applies to any Eligible Employee unless c. selected below. Such Employees shall enter the Plan as of such date (select a. and/ or b. AND c. if applicable
	 1. [ ]
	 OR
	 2. [ ]
	 3. [ ] 
	 4. [ ]

	 a. [ ]  Service requirement (will let part-time Eligible Employees into the Plan)
	 

	 

	 b. [ ] age requirement
	 

	 

	 

	 

	 

	 c. waiver is for [        ]  (e.g., employees of a specific division or employees covered by a Code Section 410(b)(6)©
	 

	 

	 l. if employed on [        ] the following requirements will be waived. The waiver applies to any Eligible Employee unless c. selected below. Such Employees shall enter the Plan as of such date (select a. and/or b. AND c. if applicable)
	 1. [ ]
	 OR
	 2. [X ]
	 3. [ ]
	 4. [ ]

	 a [ ] service requirement (will let part-time Eligible Employees into the Plan
	 

	 

	 b. [ ] age requirement
	 

	 

	 

	 

	 

	 c. waiver is for [        ]  (e.g., employees of a specific division or employees covered by a Code Section 410(b)(6)©
	 

	 

  

 Volume Submitter 401(k) Profit Sharing Plan 
 16. 
 EFFECTIVE DATE OF PARTICIPATION (ENTRY DATE) (Plan Section 3.2) 
 An Eligible Employee who has satisfied the eligibility requirements will become a Participant in the Plan as of the date selected 
 below: 
 NOTE: 
 Option e. below can only be selected when eligibility is six months of service or less and age is 20 1/2 or less. 
 However, options e.3 and e.4 may be selected when eligibility is 1 1/2 Years of Service or less and age is 20 1/2 or less 
 and the Plan provides for 100% vesting. 
 

 NOTE: 
 Unless otherwise specified in this Section, Elective Deferrals include Roth Elective Deferrals, after-tax voluntary 
 Employee contributions, and Rollover Contributions; Matching includes QMACs; and Nonelective Profit Sharing 
 includes QNECs. ADP/ACP safe harbor contributions and SIMPLE 401(k) contributions are subject to the provisions 
 for Elective Deferrals except as provided in Question 29. 
 

 All 
 Contributions 
 ElectiveDeferrals Matching 
 NonelectiveProfit Sharing 
 a. Date requirements met 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 
 b. First day of the month coinciding 
 with or next following date requirements met 
 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 
 c. First day of the quarter coinciding 
 with or next following date requirements met 
 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 
 d. First day of Plan Year or first day 
 of 7th month of Plan Year coinciding 
 with or next following date requirements 
 

 met 
 1. [X] OR 2. [ ] 3. [ ] 4. [ ] 
 e. First day of Plan Year coinciding 
 with or next following date requirements met 
 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 
 f. First day of Plan Year in which 
 requirements met 
 N/A OR N/A 3. [ ] 4. [ ] 
 g. First day of Plan Year nearest date 
 requirements met 
 N/A OR N/A 3. [ ] 4. [ ] 
 

 h. Other: 
 , 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 
 provided that an Eligible Employee who has satisfied the maximum age (21) and service requirements (1 Year (or Period) 
 of Service (or more than 1 year if full and immediate vesting)) and who is otherwise entitled to participate, shall commence 
 participation no later than the earlier of (a) 6 months after such requirements are satisfied, or (b) the first day of the first Plan 
 Year after such requirements are satisfied, unless the Employee separates from service before such participation date. 
 SERVICE 
 

 17. 
 RECOGNITION OF SERVICE WITH OTHER EMPLOYERS (Plan Sections 1.60 and 1.85) 
 a. 
 [X] No service with other Employers shall be recognized. 
 OR, service with the designated employers and purposes is recognized as follows (attach an addendum to the Adoption 
 Agreement if more than 3 employers): 
 

 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 6 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 Contribution 
 Eligibility Vesting Allocation 
 

 b. [ ] 
 Employer name: [ ] [ ] [ ] 
 c. [ ] 
 Employer name: [ ] [ ] [ ] 
 d. [ ] 
 Employer name: [ ] [ ] [ ] 
 e. 
 [ ] Limitations: [ ] [ ] [ ] 
 (e.g., credit service with X only on/following 1/1/07 or credit all service with entities the Employer acquires after 
 12/31/06). 
 NOTE: 
 If the other Employer(s) maintained this qualified Plan, then Years (and/or Periods) of Service with such Employer(s) 
 must be recognized pursuant to Plan Sections 1.60 and 1.85 regardless of any selections above. 
 

 18. 
 SERVICE CREDITING METHOD (Plan Sections 1.60 and 1.85) 
 NOTE: 
 If no selections are made in this Section, then the Hours of Service method will be used (with actual Hours of Service) 
 and the provisions set forth in the definition of Year of Service in Plan Section 1.85 will apply. 
 

 a. 
 [ ] Elapsed Time Method (Period of Service applies instead of Year of Service) shall be used for the following purposes 
 (select all that apply): 
 1. [ ] 
 all purposes. (If selected, skip to Question 19.) 
 2. [ ] 
 eligibility to participate. 
 3. [ ] 
 vesting. 
 

 4. [ ] 
 sharing in allocations or contributions. 
 b. [ ] 
 Hours of Service Method shall be used for the following purposes (select all that apply): 
 1. 
 [ ] eligibility to participate in the Plan. The eligibility computation period after the initial eligibility computation 
 period shall: 
 a. [ ] 
 shift to the Plan Year. 
 b. [ ] 
 be based on each anniversary of the date the Employee first completes an Hour of Service. 
 2. [ ] 
 vesting. The vesting computation period shall be: 
 a. [ ] 
 the Plan Year. 
 b. [ ] 
 the date an Employee first performs an Hour of Service and each anniversary thereof. 
 3. [ ] 
 sharing in allocations or contributions (the computation period shall be the Plan Year). 
 AND, the following Hour of Service alternatives will apply (select all that apply): 
 

 4. 
 [ ] Equivalency Method. Instead of using actual Hours of Service, Hours of Service will be determined using 
 the method selected below. Such method will apply to: 
 a. [ ] 
 all Employees. 
 b. 
 [ ] Employees for whom records of actual Hours of Service are not maintained or available 
 (e.g., salaried employees). 
 ON THE BASIS OF: 
 

 c. [ ] 
 days worked (10 hours per day). 
 d. [ ] 
 weeks worked (45 hours per week). 
 e. [ ] 
 

 semi-monthly payroll periods worked (95 hours per semi-monthly pay period). 
 f. [ ] 
 months worked (190 hours per month). 
 g. [ ] 
 bi-weekly payroll periods worked (90 hours per bi-weekly pay period). 
 5. 
 [ ] Number of Hours of Service Required. Year of Service means the applicable computation period during 
 which an Employee has completed at least (not to exceed 1,000) Hours of Service. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 7 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 VESTING 
 

 19. 
 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b)) 
 a. [ ] 
 N/A. No Employer profit sharing or matching contributions are subject to a vesting schedule. (skip to Question 23.) 
 b. 
 [ ] 100% for those Participants employed on (enter date). For those Participants hired after such date, the vesting 
 provisions selected below apply. 
 c. [X] 
 The vesting provisions selected below apply. 
 Vesting for Employer Nonelective Profit Sharing Contributions. 
 

 d. [ ] 
 N/A. No Employer profit sharing contributions are subject to a vesting schedule (skip to g.). 
 e. 
 [ ] 100% vesting. Participants are 100% vested in Employer profit sharing contributions upon entering Plan. (Required if 
 eligibility requirement is greater than 1 Year (or Period) of Service.) 
 f. 
 [X] The following vesting schedule, based on a Participant's Years of Service (or Periods of Service if the Elapsed Time 
 method is selected), applies to Employer profit sharing contributions: 
 1. [X] 
 6 Year Graded: 0-1 year-0%; 2 years-20%; 3 years-40%; 4 years-60%; 5 years-80%; 6 years-100% 
 2. [ ] 
 4 Year Graded: 1 year-25%; 2 years-50%; 3 years-75%; 4 years-100% 
 3. [ ] 
 5 Year Graded: 1 year-20%; 2 years-40%; 3 years-60%; 4 years-80%; 5 years-100% 
 4. [ ] 
 3 Year Cliff: 0-2 years-0%; 3 years-100% 
 5. [ ] 
 7 Year Graded: 0-2 years-0%; 3 years-20%; 4 years-40%; 5 years-60%; 6 years-80%; 7 years-100% 
 

 6. [ ] 
 5 Year Cliff: 0-4 years-0%; 5 years-100% 
 7. 
 [ ] Other - Must be at least as liberal as either 5. or 6. above in each year without switching between the two 
 schedules; or, if the following applies to any Employer matching contributions, as liberal as either 1. or 4. 
 above in each year without switching between the two schedules: 
 Service 
 Percentage 
 

 % 
 % 
 % 
 % 
 % 
 % 
 % 
 

 Vesting for Employer Matching Contributions. 
 

 g. [ ] 
 N/A. There are no Employer matching contributions subject to a vesting schedule. 
 h. [ ] 
 The schedule in e. or f.1 - f.4 above shall also apply to Employer matching contributions. 
 i. 
 [ ] 100% vesting. Participants are 100% vested in Employer matching contributions upon entering Plan. (Required if 
 eligibility requirement is greater than 1 Year (or Period) of Service.) 
 j. 
 [X] The following vesting schedule, based on a Participant's Years of Service (or Periods of Service if the Elapsed Time 
 method is selected), applies to Employer matching contributions: 
 1. [X] 
 6 Year Graded: 0-1 year-0%; 2 years-20%; 3 years-40%; 4 years-60%; 5 years-80%; 6 years-100% 
 2. [ ] 
 4 Year Graded: 1 year-25%; 2 years-50%; 3 years-75%; 4 years-100% 
 3. [ ] 
 5 Year Graded: 1 year-20%; 2 years-40%; 3 years-60%; 4 years-80%; 5 years-100% 
 

 4. [ ] 
 3 Year Cliff: 0-2 years-0%; 3 years-100% 
 5. 
 [ ] Other - Must be at least as liberal as either 1. or 4. above in each year without switching between the two 
 schedules: 
 Service 
 Percentage 
 

 % 
 % 
 % 
 % 
 % 
 % 
 % 
 

 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 8 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 20. 
 TOP-HEAVY VESTING (Plan Section 6.4(d)) 
 If this Plan becomes a Top-Heavy Plan, the following vesting schedule, based on a Participant's Years of Service (or Periods of 
 Service if the Elapsed Time method is selected) shall be as follows: 
 a. [X] 
 N/A (the regular vesting schedule already satisfies one of the minimum top-heavy schedules). 
 b. [ ] 
 6 Year Graded: 0-1 year-0%; 2 years-20%; 3 years-40%; 4 years-60%; 5 years-80%; 6 years-100% 
 c. [ ] 
 3 Year Cliff: 0-2 years-0%; 3 years-100% 
 d. 
 [ ] Other - Must be at least as liberal as either b. or c. above in each year without switching between the two schedules. (If 
 a different top-heavy schedule applies to different contribution sources, attach an addendum specifying the schedule 
 that applies to each source): 
 Service 
 Percentage 
 

 % 
 % 
 % 
 % 
 % 
 % 
 % 
 

 21. 
 EXCLUDED VESTING SERVICE 
 a. [X] 
 No exclusions. 
 b. [ ] 
 Service prior to the initial Effective Date of the Plan or a predecessor plan. 
 c. [ ] 
 Service prior to the computation period in which an Employee attains age 18. 
 

 22. 
 VESTING FOR DEATH AND TOTAL AND PERMANENT DISABILITY 
 Regardless of the vesting schedule, Participants shall become fully Vested upon (select a. or all that apply of b. and c.): 
 a. [ ] 
 N/A. Apply vesting schedule, or all contributions to the Plan are fully Vested. 
 b. [X] 
 Death. 
 c. [X] 
 Total and Permanent Disability. 
 RETIREMENT AGES 
 

 23. 
 NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.52) means the: 
 a. [X] 
 date of a Participant's 65th birthday (not to exceed 65th). 
 b. 
 [ ] later of a Participant's birthday (not to exceed 65th) or the (not to exceed 5th) anniversary of the 
 first day of the Plan Year in which participation in the Plan commenced. 
 24. 
 NORMAL RETIREMENT DATE (Plan Section 1.53) means the: 
 a. [X] Participant's NRA. 
 OR (select one) 
 b. [ ] 
 first day of the month coinciding with or next following the Participant's NRA. 
 c. [ ] 
 first day of the month nearest the Participant's NRA. 
 d. [ ] 
 Anniversary Date coinciding with or next following the Participant's NRA. 
 e. [ ] 
 Anniversary Date nearest the Participant's NRA. 
 25. 
 EARLY RETIREMENT DATE (Plan Section 1.21) 
 a. [ ] 
 N/A. No Early Retirement provision provided. 
 b. [X] 
 Early Retirement Date means the: 
 1. [X] 
 date on which a Participant satisfies the Early Retirement requirements. 
 

 2. 
 [ ] first day of the month coinciding with or next following the date on which a Participant satisfies the Early 
 Retirement requirements. 
 3. 
 [ ] Anniversary Date coinciding with or next following the date on which a Participant satisfies the Early 
 Retirement requirements. 
 AND, the Early Retirement requirements are: 
 

 4. 
 [X] Participant attains age 59 1/2 . 
 AND, completes.... (leave blank if not applicable) 
 a. [X] at least 5 Years (or Periods) of Service for vesting purposes. 
 b. [ ] at least Years (or Periods) of Service for eligibility purposes. 
 AND, shall a Participant become fully Vested upon attainment of the Early Retirement Date? 
 

 5. [X] 
 Yes. 
 6.[ ] 
 No. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 9 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 COMPENSATION 
 

 26. COMPENSATION (Plan Section 1.14) with respect to any Participant means: 
 a. [X] Wages, tips and other compensation on Form W-2. 
 b. [ ] Section 3401(a) wages (wages for withholding purposes). 
 c. [ ] 415 safe harbor compensation. 
 COMPENSATION shall be based on the following determination period: 
 

 d. [X] the Plan Year. 
 e. [ ] the Fiscal Year coinciding with or ending within the Plan Year. 
 f. [ ] the calendar year coinciding with or ending within the Plan Year. 
 NOTE: The Limitation Year for Code Section 415 purposes shall be the same as the determination period for Compensation 
 unless an alternative period is specified: (must be a consecutive twelve month period). 
 

 ADJUSTMENTS TO COMPENSATION. Compensation shall be adjusted by (select all that apply): 
 

 NOTE: 
 Elective Deferrals include Roth Elective Deferrals, Matching includes QMACs, and Nonelective Profit Sharing 
 includes QNECs unless specified otherwise. ADP safe harbor matching contributions are subject to the provisions for 
 

 Employer matching contributions. 
 C 
 All 
 ontributionsElective 
 Deferrals Matching 
 Nonelective 
 Profit 
 Sharing 
 ADPSafe Harbor 
 Nonelective 
 g. No Adjustments 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 5. [ ] 
 h. including Salary Deferrals (401(k), 125, 1. [X] 
 132(f), 403(b), SEP, 414(h) pickup, & 457) 
 OR 2. [ ] 3. [ ] 4. [ ] 5. [ ] 
 

 i. excluding reimbursements or other expense 
 allowances, fringe benefits (cash or 
 non-cash), moving expenses, deferred 
 compensation (other than deferrals 
 specified in h. above) and welfare 
 benefits. 
 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 5. [ ] 
 j. excluding Compensation paid during the 
 determination period while not a 
 Participant in the component of the Plan 
 for which the definition applies. 
 1. [X] OR 2. [ ] 3. [ ] 4. [ ] 5. [ ] 
 k. excluding Compensation paid during the 
 determination period while not a 
 Participant in any component of the Plan 
 for which the definition applies. 
 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 5. [ ] 
 l. excluding overtime 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 5. [ ] 
 m. excluding bonuses 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 5. [ ] 
 n. excluding commissions 1. [ ] OR 2. [ ] 3. [ ] 4. [ ] 5. [ ] 
 o. Other: 
 

 (e.g., describe Compensation from the elections available above or a combination thereof as to a Participant group (e.g., no 
 exclusions as to Division A Employees and exclude bonuses as to Division B Employees); and/or describe another exclusion 
 (e.g., exclude shift differential pay)). 
 

 NOTE: If l., m., n., or o. is selected, the definition of Compensation could violate the nondiscrimination rules. 
 NOTE: If the post-severance compensation provisions of the proposed Code Section 415 regulations were used, complete 
 Appendix A (Special Effective Dates and Other Permitted Elections). 
 

 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 10 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 CONTRIBUTIONS AND ALLOCATIONS 
 

 27. 
 SALARY REDUCTION ARRANGEMENT - ELECTIVE DEFERRALS (Plan Section 12.2) 
 A. 
 Deferral Limit. Each Participant may elect to have Compensation deferred by: 
 a. [ ] 
 up to %. 
 b.[ ] 
 from % to %. 
 c. [X] 
 up to the maximum amount allowed by law (i.e., Code Sections 402(g) and 415). 
 B. 
 Additional deferral limits. Regardless of the above limits, the following apply (select all that apply): 
 d. [ ] 
 No additional limits. 
 e. [X] 
 A Participant may make a separate election to defer up to 100 % of any bonus. 
 f. 
 [ ] For Participants who are Highly Compensated Employees determined as of the beginning of a Plan Year, then 
 instead of 27.A applying, the deferral limit is (must be equal to or lower than limit selected in 27.A): 
 1. [ ] % of Compensation. 
 2. 
 [ ] the percentage equal to the deferral limit in effect under Code Section 402(g)(3) for the calendar year 
 that begins with or within the Plan Year divided by the annual compensation limit in effect for the Plan 
 Year under Code Section 401(a)(17). 
 3. [ ] 
 other: (e.g., must be a specific limit that only applies to some or all HCEs). 
 C. 
 Catch-Up Contributions. May eligible Participants make Catch-Up Contributions? 
 g. [ ] 
 No (skip to D. below) 
 

 h. [X] 
 Yes 
 AND, Catch-Up Contributions 
 1. [X] 
 will be taken into account in applying any matching contribution under the Plan. 
 2. [ ] 
 will not be taken into account in applying any matching contribution under the Plan (may not be selected 
 if this Plan provides for ADP safe harbor contributions). 
 Special Effective Date. Is there a special effective date for the Catch-Up Contribution provisions? 
 

 3.[ ] 
 No. 
 4. 
 [X] Yes, the effective date of the Catch-Up Contribution provisions is January 1, 2002 (enter special 
 effective date or, if this is an EGTRRA restatement, enter the date (not earlier than January 1, 2002) 
 when Catch-Up Contributions were first permitted). 
 AND, if the amount of Elective Deferrals that may be made to the Plan is limited in A. and/or B. above, are 
 Catch-Up Contributions aggregated with other Elective Deferrals in applying such limits? 
 

 5. 
 [X] No or N/A. There are no limits or Catch-Up Contributions may be made in addition to any imposed 
 limits. 
 6. [ ] 
 Yes. (If selected, the limits in A. and/or B. must not be less than 75% of Compensation.) 
 D. Roth Contributions. May Participants designate all or a portion of their Elective Deferrals as Roth Elective Deferrals? 
 i. [ ] 
 No. 
 j. 
 [X] Yes. 
 Special Effective Date. Is there a special effective date for the Roth Elective Deferral provisions? 
 1.[ ] 
 No. 
 

 2. 
 [X] Yes, the effective date of the Roth Elective Deferral provisions is July 7, 2010 (enter special effective 
 date or, if this is an EGTRRA restatement, enter the date (not earlier than January 1, 2006) when Roth 
 Elective Deferrals were first permitted). 
 E. 
 Special Effective Date. Is there a special effective date for the salary deferral component of the Plan? 
 k. [X] 
 No. 
 l. 
 [ ] Yes, the effective date of the salary deferral component of the Plan is (enter month day, year; may not be 
 earlier than the date on which the Employer first adopts the salary deferral component of the Plan). 
 F. 
 Deferral Modifications. (Optional: the Administrator may adopt procedures that override any elections in this section 
 without a formal Plan amendment.) 
 m. 
 [X] PARTICIPANTS MAY commence salary deferrals on the effective date of participation and on the first day of 
 each Plan Year quarter (must be at least once each calendar year). 
 Participants may modify salary deferral elections: 
 

 n. [ ] 
 As of each payroll period 
 o. [ ] 
 On the first day of each month 
 p. [X] 
 On the first day of each Plan Year quarter 
 q. [ ] 
 On the first day of the Plan Year or the first day of the 7th month of the Plan Year 
 r. [ ] 
 Other: (must be at least once each calendar year) 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 11 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 G. 
 Automatic Deferral Provisions. Shall Participants who do not affirmatively elect to receive cash or have a specified 
 amount of Compensation contributed to the Plan automatically have Compensation deferred? 
 s. [X] 
 No 
 t. [ ] 
 Yes, subject to the following provisions: 
 Special Effective date of the automatic deferral provisions: 
 

 1. [ ] 
 N/A. New Plan or provisions were in effect prior to this restatement (skip to 3. below). 
 2. [ ] 
 The provisions are first effective as of: 
 a. [ ] 
 the date of this restatement. 
 b. [ ] 
 Other: 
 Application to new Participants. The automatic deferral provisions apply to: 
 

 c. 
 [ ] Employees who become Participants on or after the effective date of the automatic deferral 
 provisions. 
 d. [ ] 
 Participants who were hired on or after the effective date of the automatic deferral provisions. 
 Application to existing Participants. The automatic deferral provisions apply to those Participants in 
 the Plan as of the effective date of the automatic deferral provisions in accordance with the following 
 (select one): 
 

 e. [ ] 
 All Participants. All Participants, regardless of any prior Salary Reduction Agreement. 
 f. 
 

 [ ] Election of at least automatic deferral amount. All Participants, except those who have a 
 Salary Reduction Agreement in effect on the automatic deferral provisions effective date, 
 provided the Elective Deferral amount under the Agreement is at least equal to the automatic 
 deferral amount. 
 g. 
 [ ] No existing Salary Reduction Agreement. All Participants, except those who have a Salary 
 Reduction Agreement in effect on the automatic deferral provisions effective date (regardless 
 of the Elective Deferral amount under that Agreement). 
 Type of Elective Deferral. The automatic deferral shall be a Pre-Tax Elective Deferral unless selected below: 
 

 3. 
 [ ] The automatic deferral shall be a Roth Elective Deferral (may only be selected if Roth Elective Deferrals 
 are permitted at 27.D above). 
 Initial automatic deferral amount. Each Participant who is subject to the automatic deferral provisions will have 
 Compensation deferred by the following amount unless otherwise elected by the Participant: 
 

 4. [ ] % of Compensation for each payroll period. 
 5. [ ] 
 $ for each payroll period. 
 Escalation of deferral amount. 
 

 6. [ ] 
 N/A (no escalation) 
 7. [ ] 
 The initial automatic deferral amount shall increase as elected below: 
 a. [ ] % of Compensation per year up to a maximum of % of Compensation. 
 b. [ ] 
 $ per yearup to a maximum of $ . 
 c. [ ] 
 in accordance with the following schedule: 
 Plan Year of application to a Participant 
 Automatic Deferral Amount 
 

 1 - 2 3% 
 3 4% 
 4 5% 
 5 and thereafter 6% 
 

 d. [ ] 
 Other: 
 Timing of escalation. The escalation provision above shall apply as of: 
 

 e. [ ] 
 N/A (7.c. selected or entry at 7.d. includes timing provision). 
 f. [ ] 
 Each anniversary of the Participant's date of hire. 
 g. [ ] 
 Each anniversary of the Participant's Entry Date. 
 h. [ ] 
 The first day of each Plan Year. 
 i. [ ] 
 The first day of each calendar year. 
 j. [ ] 
 Other: 
 28. 
 SIMPLE 401(k) PLAN ELECTION (Plan Section 13.1) 
 Shall the SIMPLE 401(k) provisions of Article XIII apply? 
 a. [X] 
 No. 
 b. 
 [ ] Yes, the SIMPLE 401(k) provisions will apply. The Plan Year must be the calendar year and the Employer must be an 
 "eligible employer" as defined in Plan Section 13.1(b)(1). (If selected, then skip to 34). 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 12 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 29. 
 401(k) SAFE HARBOR PROVISIONS (Plan Section 12.8) 
 Will the ADP and/or ACP test safe harbor provisions be used? (select a., b., or c.) 
 NOTE: If the Employer wants the discretion to determine whether the provisions will apply on a year-by-year basis, then the 
 Employer may either select 29.a. (No) OR 29.b. or 29.c. and option 29.e.2. 
 

 a. [ ] 
 No. (If selected, skip to Question 30.) 
 b. [ ] 
 Yes, but only the ADP (and NOT the ACP) test safe harbor provisions will be used. 
 c. [X] 
 Yes, both the ADP and ACP test safe harbor provisions will be used. 
 IF c. is selected, does the Plan permit Employer matching contributions in addition to any safe harbor contributions 
 selected in d. or e. below? 
 

 1. 
 [ ] No or N/A. Any Employer matching contributions, other than any safe harbor matching contributions 
 selected in d. below, will be suspended in any Plan Year in which the safe harbor provisions are used. 
 2. 
 [X] Yes, the Employer may make Employer matching contributions in addition to any ADP test safe harbor 
 matching contributions selected in d. below. (If selected, complete the provisions of the Adoption Agreement 
 relating to Employer matching contributions (i.e., Question 30.) that will apply in addition to any selections 
 made in d. below. Also, no allocation conditions may be imposed at 30.F.) 
 THE EMPLOYER WILL MAKE THE FOLLOWING ADP TEST SAFE HARBOR CONTRIBUTION FOR THE PLAN 
 YEAR: 
 NOTE: The ACP test safe harbor is automatically satisfied if the only matching contribution made to the Plan is either (1) a 
 

 Basic Matching Contribution or (2) an Enhanced Matching Contribution that does not provide a match on Elective 
 

 Deferrals in excess of 6% of Compensation. 
 

 d. [X] 
 Safe Harbor Matching Contribution (select 1. or 2. AND one from 3. - 6.) 
 1. 
 [ ] Basic Matching Contribution. The Employer will make matching contributions to the account of each 
 "eligible Participant" in an amount equal to the sum of 100% of the amount of the Participant's Elective 
 Deferrals that do not exceed 3% of the Participant's Compensation, plus 50% of the amount of the 
 Participant's Elective Deferrals that exceed 3% of the Participant's Compensation but do not exceed 5% of the 
 Participant's Compensation. 
 2. [X] 
 Enhanced Matching Contribution. The Employer will make matching contributions to the account of each 
 "eligible Participant" in an amount equal to the sum of: 
 a. [X] 100 % (may not be less than 100%) of the Participant's Elective Deferrals that do not exceed 
 4 % (may not be less than 3%; if over 6% or if left blank, the ACP test will still apply) of the 
 Participant's Compensation, plus 
 

 b. 
 [ ] % of the Participant's Elective Deferrals that exceed % of the Participant's 
 Compensation but do not exceed % (if over 6% or if left blank, the ACP test will still apply) 
 of the Participant's Compensation. 
 NOTE: 
 a. and b. must be completed so that, at any rate of Elective Deferrals, the matching contribution is 
 at least equal to what the matching contribution would be if the Employer were making Basic 
 Matching Contributions (as defined in 29.d.1. above), but the rate of match cannot increase as 
 deferrals increase. For example, if a. is completed to provide a match equal to 100% of deferrals up 
 to 4% of Compensation, then b. need not be completed. 
 

 

 AND, the safe harbor matching contribution will be determined on the following basis (and Compensation for such 
 purpose will be based on the applicable period): 
 

 3. [ ] 
 the entire Plan Year. 
 4. [X] 
 each payroll period. 
 5. [ ] 
 all payroll periods ending with or within each month. 
 6. [ ] 
 all payroll periods ending with or within each Plan Year quarter. 
 e. [ ] 
 Safe Harbor Nonelective Contributions. (select one) 
 1. 
 [ ] Fixed. The Employer will make a Safe Harbor Nonelective Contribution to the account of each "eligible 
 Participant" in an amount equal to % (may not be less than 3%) of the Employee's Compensation for 
 the Plan Year. 
 2. 
 [ ] Discretionary ("maybe"). The Employer may elect to make a Safe Harbor Nonelective Contribution after a 
 Plan Year has commenced in accordance with the provisions of Plan Section 12.8(h). If this option e.2. is 
 selected, the Safe Harbor Nonelective Contribution will be required only for a Plan Year for which the Plan is 
 amended to provide for such contribution and the appropriate supplemental notice is provided to Participants. 
 3. 
 [ ] Other Plan. The Employer will make a Safe Harbor Nonelective Contribution to another defined 
 contribution plan maintained by the Employer (specify the name of the other plan): . 
 FOR PURPOSES OF THE ADP test safe harbor contribution, the term "eligible Participant" means any Participant who is 
 eligible to make Elective Deferrals with the following exclusions: 
 

 f. [X] 
 N/A. No exclusions. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 13 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 g. [ ] 
 Exclusions (select all that apply, if any): 
 1. [ ] 
 Highly Compensated Employees. 
 2. 
 [ ] Employees who have not satisfied the greatest minimum age and service conditions permitted under Code 
 Section 410(a) (i.e., age 21 and 1 Year of Service), with the following deemed effective date of participation: 
 a. [ ] 
 The first day of the Plan Year in which the requirements are met. 
 b. 
 [ ] Other: (no later than the earlier of (a) 6 months after such requirements are satisfied, or (b) 
 the first day of the first Plan Year after such requirements are satisfied). 
 3. 
 [ ] Other: (must be a Highly Compensated Employee or an Employee who can be excluded under the 
 permissive or mandatory disaggregation rules of Regulations Sections 1.401(k)-1(b)(4) and 
 1.401(m)-1(b)(4)). 
 SPECIAL EFFECTIVE DATE OF ADP AND ACP TEST SAFE HARBOR PROVISIONS 
 

 h. [X] 
 N/A. 
 i. 
 [ ] The ADP and ACP test safe harbor provisions are effective for Plan Years beginning on or after: (enter the first 
 day of the Plan Year for which the provisions are effective and, if necessary, enter any other special effective dates that 
 apply with respect to the provisions). 
 30. 
 EMPLOYER MATCHING CONTRIBUTIONS (Plan Section 12.1(a)(2)) 
 NOTE: 
 Regardless of any selection below, if the ACP test safe harbor is being used (i.e., Question 29.c. is selected), then the 
 

 Plan automatically provides that only Elective Deferrals up to 6% of Compensation are taken into account in applying 
 the match set forth below and that the maximum discretionary matching contribution that may be made on behalf of 
 any Participant is 4% of Compensation. 
 

 A. Matching Formula. 
 a. [ ] 
 N/A. There will not be any Employer matching contributions (skip to Question 31.). 
 b. [X] 
 The Employer ... (select 1. or 2.) 
 1. 
 [X] may make matching contributions equal to a discretionary percentage, to be determined by the 
 Employer, of the Participant's Elective Deferrals. 
 2. 
 [ ] will make matching contributions equal to % (e.g., 50) of the Participant's Elective Deferrals, 
 plus: 
 a. [ ] 
 N/A. 
 b. 
 [ ] an additional matching contribution of a discretionary percentage, to be determined by the 
 Employer, but not to exceed % (leave blank if not applicable) of Compensation. 
 AND, in determining the Employer matching contribution above, only Elective Deferrals up to the percentage or 
 dollar amount specified below will be matched: (select 3. and/or 4. OR 5.) 
 

 3. [ ] % of a Participant's Compensation. 
 4. [ ] 
 $ . 
 5. 
 [X] a discretionary percentage of a Participant's Compensation or a discretionary dollar amount, the 
 percentage or dollar amount to be determined by the Employer on a uniform basis for all Participants. 
 c. 
 [ ] The Employer may make matching contributions equal to a discretionary percentage, to be determined by the 
 

 Employer, of each tier, to be determined by the Employer, of the Participant's Elective Deferrals. 
 d. 
 [ ] The Employer will make matching contributions equal to a uniform percentage of each tier of each Participant's 
 Elective Deferrals, determined as follows: 
 NOTE: 
 Fill in only percentages or dollar amounts, but not both. If percentages are used, each tier represents the 
 amount of the Participant's applicable contributions that equals the specified percentage of the 
 Participant's Compensation (add additional tiers if necessary): 
 

 Tiers of Contributions Matching Percentage 
 (indicate $ or %) 
 

 First 
 % 
 

 Next 
 % 
 

 Next 
 % 
 

 Next 
 % 
 

 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 14 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 e. 
 [ ] The Employer will make matching contributions equal to a uniform percentage of each Participant's Elective 
 Deferrals based on the Participant's Years of Service (or Periods of Service if the Elapsed Time method is 
 selected), determined as follows (add additional tiers if necessary): 
 Service 
 Matching Percentage 
 

 % 
 

 % 
 

 % 
 

 For purposes of the above matching contribution formula, a Year (or Period) of Service means a Year (or Period) 
 of Service for: 
 

 1. [ ] 
 vesting purposes. 
 2. [ ] 
 eligibility purposes. 
 NOTE: 
 If c., d., or e. above is selected, the Plan may violate the Code Section 401(a)(4) nondiscrimination requirements if 
 the rate of Employer matching contributions increases as a Participant's Elective Deferrals or Years (or Periods) of 
 Service increase. 
 

 B. 
 Matching Limit. The Employer matching contribution made on behalf of any Participant for any Plan Year will not exceed: 
 f. [X] 
 N/A. No limit on the amount of matching contribution. 
 g. [ ] 
 $ . 
 h. [ ] % of Compensation. 
 

 C. 
 Period of Determination. The matching contribution formula will be applied on the following basis (and any 
 Compensation or dollar limitation used in determining the match will be based on the applicable period): 
 i. [ ] 
 the Plan Year. 
 j. [X] 
 each payroll period. 
 k. [ ] 
 all payroll periods ending within each month. 
 l. [ ] 
 all payroll periods ending with or within each Plan Year quarter. 
 m. [ ] 
 N/A, the Plan only provides for discretionary matching contributions (i.e., b.1. or c. is selected above). 
 NOTE: 
 For any discretionary match, the Employer shall determine the calculation methodology at the time the matching 
 contribution formula is determined. 
 

 D. 
 QMACs. Shall the Employer matching contributions be Qualified Matching Contributions? 
 n. 
 [ ] Yes, ALL Employer matching contributions will be fully Vested, subject to restrictions on withdrawals as set forth 
 in the Plan and may be used in either the ADP or ACP test. 
 o. [X] 
 No. 
 E. 
 Additional Matching Contributions. Will there be matching contributions in addition to the above (e.g., if there is a match 
 made on a periodic basis as well as a match based on the end of the Plan Year)? 
 p. [X] 
 No. 
 q. 
 [ ] Yes. Specify the additional matching contribution by attaching an addendum to the Adoption Agreement that 
 duplicates this entire Question 30. 
 

 F. 
 Allocation Conditions. Select r. OR s. and all that apply of t., u., or v. Note: If the ACP test safe harbor provision is used 
 (Question 29.c.), no conditions (option r. below) must be selected. 
 r. 
 [X] No conditions. All Participants share in the allocations regardless of service completed during the Plan Year or 
 employment status at the end of the Plan Year. (skip to next Question.) 
 s. [ ] 
 Conditions for Participants NOT employed at the end of the Plan Year. 
 1. 
 [ ] A Participant must complete more than (not to exceed 500) Hours of Service (or (not to 
 exceed 3) months of service if the Elapsed Time method is selected). 
 2. 
 [ ] A Participant must complete a Year of Service (or Period of Service if the Elapsed Time method is 
 selected). (Could cause the Plan to violate coverage requirements under Code Section 410(b).) 
 3. 
 [ ] Participants will NOT share in the allocations, regardless of service. (Could cause the Plan to violate 
 coverage requirements under Code Section 410(b).) 
 4. [ ] 
 Participants will share in the allocations, regardless of service. 
 5. 
 [ ] Other: (must be definitely determinable, not subject to Employer discretion and may not require 
 more than one Year of Service (or Period of Service if the Elapsed Time method is elected)). 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 15 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 t. 
 [ ] AND, Waiver of conditions for Participants NOT employed at the end of the Plan Year. Participants who are 
 not employed at the end of the Plan Year due to the following shall be eligible to share in the allocations 
 regardless of the above conditions (select all that apply): 
 1. [ ] 
 Death. 
 2. [ ] 
 Total and Permanent Disability. 
 3. [ ] 
 Early or Normal Retirement. 
 u. 
 [ ] Conditions for Participants employed at the end of the Plan Year. (Options 2. and 3. could cause the Plan to 
 violate coverage requirements under Code Section 410(b).) 
 1. [ ] 
 No service requirement. 
 2. 
 [ ] A Participant must complete a Year of Service (or Period of Service if the Elapsed Time method is 
 selected). 
 3. 
 [ ] A Participant must complete at least (not to exceed 1,000) Hours of Service during the Plan 
 Year. 
 v. 
 [ ] Code Section 410(b) fail-safe. If s.2. or 3. and/or u.2. or 3. is selected, shall the Code Section 410(b) ratio 
 percentage fail-safe provisions apply (Plan Section 12.3(f))? 
 1. [ ] 
 No or N/A. 
 2. [ ] 
 Yes, the Plan must satisfy the ratio percentage test of Code Section 410(b). 
 31. 
 FORMULA FOR DETERMINING EMPLOYER PROFIT SHARING CONTRIBUTION (Plan Section 12.1(a)(3)) (d. may be 
 selected in addition to b. or c.) 
 

 a. 
 [ ] N/A. No Employer Profit Sharing Contributions may be made (other than top-heavy minimum contributions) (skip to 
 Question 33.) 
 b. [X] 
 Discretionary contribution, to be determined by the Employer. 
 c. [ ] 
 Fixed contribution equal to % of Compensation of Participants eligible to share in allocations. 
 d. 
 [ ] Prevailing Wage Contribution. The Employer will make a Prevailing Wage Contribution on behalf of each Participant 
 who performs services subject to the Service Contract Act, Davis-Bacon Act or similar Federal, State, or Municipal 
 Prevailing Wage statutes. The Prevailing Wage Contribution shall be an amount equal to the balance of the fringe 
 benefit payment for health and welfare for each Participant (after deducting the cost of cash differential payments for 
 the Participant) based on the hourly contribution rate for the Participant's employment classification, as designated on 
 Schedule A as attached to this Adoption Agreement. The Prevailing Wage Contribution shall not be subject to any age 
 or service requirements set forth in Question 15. nor to any service or employment conditions set forth in Question 32. 
 and will be 100% Vested. 
 AND, is the Prevailing Wage Contribution considered a Qualified Nonelective Contribution? 
 

 1. [ ] 
 Yes. 
 2.[ ] 
 No. 
 AND, shall the Prevailing Wage Contribution made on behalf of a Participant for a Plan Year reduce (offset) other 
 Employer contributions allocated or contributed on behalf of such Participant for the Plan Year? 
 

 3. [ ] 
 No, the Prevailing Wage Contribution will be in addition to other Employer contributions. 
 

 4. 
 [ ] Yes, in accordance with the following: (1) if the Prevailing Wage Contribution is a Qualified Nonelective 
 Contribution as selected above, then it will offset any ADP test safe harbor contribution, and (2) if the 
 Prevailing Wage Contribution is not a Qualified Nonelective Contribution as selected above, then it will 
 offset any other Employer contributions under the Plan (other than any ADP test safe harbor contributions). 
 AND, shall Highly Compensated Employees be excluded from receiving a Prevailing Wage Contribution? 
 

 5. [ ] 
 Yes. 
 6.[ ] 
 No. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 16 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 CONTRIBUTION ALLOCATIONS 
 

 If b. or c. above is selected, the Employer profit sharing contribution for a Plan Year will be allocated as follows: 
 

 e. [ ] 
 NON-INTEGRATED ALLOCATION 
 1. 
 [ ] In the same ratio as each Participant's Compensation bears to the total of such Compensation of all 
 Participants. 
 2. [ ] 
 In the same dollar amount to all Participants (per capita). 
 3. [ ] 
 In the same dollar amount per Hour of Service completed by each Participant. 
 4. 
 [ ] In the same proportion that each Participant's points bears to the total of such points of all Participants. A 
 Participant's points with respect to any Plan Year shall be computed as follows (select all that apply): 
 a. 
 [ ] point(s) shall be allocated for each Year of Service (or Period of Service if the Elapsed Time 
 method is selected). However, the maximum Years (or Periods) of Service taken into account shall 
 not exceed (leave blank if no limit on service applies). 
 b. [ ] point(s) shall be allocated for each full $ (may not exceed $200) of Compensation. 
 c. [ ] point(s) shall be allocated for each year of age as of the end of the Plan Year. 
 AND, if 31.e.4.a. above is selected, Year of Service (or Period of Service if applicable), means: 
 

 d. [ ] 
 Service for eligibility purposes. 
 e. [ ] 
 Service for vesting purposes. 
 f. 
 [ ] INTEGRATED (PERMITTED DISPARITY) ALLOCATION 
 

 In accordance with Plan Section 4.3(b)(2) based on a Participant's Compensation in excess of: 
 1. [ ] 
 The Taxable Wage Base. 
 2. [ ] % (not to exceed 100%) of the Taxable Wage Base. (see Note below) 
 3. [ ] 
 80% of the Taxable Wage Base plus $1.00. 
 4. [ ] 
 $ (not greater than the Taxable Wage Base). (see Note below) 
 NOTE: 
 The integration percentage of 5.7% shall be reduced to: 
 

 1. 4.3% if 2. or 4. above is more than 20% and less than or equal to 80% of the Taxable Wage Base. 
 2. 5.4% if 3. is selected or if 2. or 4. above is more than 80% of the Taxable Wage Base. 
 g. [X] 
 NON-SAFE HARBOR ALLOCATION METHODS 
 1. [X] Grouping Method. Pursuant to Plan Section 4.3(b)(3)(vi), the classifications are (select a. or b.): 
 a. [X] 
 Each Participant constitutes a separate classification. 
 b. 
 [ ] Define each classification and specify the method of allocating the contribution among the 
 members of each classification. (NOTE: The classifications specified below must be clearly 
 defined in a manner that will not violate the definitely determinable allocation requirement. The 
 design of the groups cannot be such that the only NHCEs benefiting under the Plan are those with 
 the lowest amount of compensation and/or the shortest periods of service and who may represent 
 the minimum number of these employees necessary to satisfy coverage under Code Section 
 410(b)): 
 Classification A shall consist of: . The allocation method will be: [ ] pro-rata based on 
 Compensation or [ ] equal dollar amounts (per capita). 
 

 Classification B shall consist of: . The allocation method will be: [ ] pro-rata based on 
 Compensation or [ ] equal dollar amounts (per capita). 
 

 Classification C shall consist of: . The allocation method will be: [ ] pro-rata based on 
 Compensation or [ ] equal dollar amounts (per capita). 
 

 Classification D shall consist of: . The allocation method will be: [ ] pro-rata based on 
 Compensation or [ ] equal dollar amounts (per capita). 
 

 Additional Classifications: (specify the classifications and which of the above allocation 
 methods (pro-rata or per capita) will be used for each classification). 
 

 NOTE: 
 In the case of Self-Employed Individuals (i.e., sole proprietors or partners), the allocation method 
 should not be such that a cash or deferred election is created for a Self-Employed Individual as a 
 result of application of the allocation method. 
 

 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 17 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 2. 
 [ ] Age-Weighted Method. The Schedule of Age-Weighted Allocation Factors is set forth in attached Exhibit A 
 (which is hereby incorporated by reference and made a part of the Plan) and shall be based on the following 
 interest rate (if no selection is made, c. shall be deemed to have been selected): 
 a. [ ] 
 7.5% interest 
 b. [ ] 
 8.0% interest 
 c. [ ] 
 8.5% interest 
 32. 
 REQUIREMENTS TO SHARE IN ALLOCATIONS OF EMPLOYER PROFIT SHARING CONTRIBUTION AND 
 FORFEITURES (select a. OR b. and all that apply of c., d., or e.) 
 a. 
 [ ] No conditions. All Participants share in the allocations regardless of service completed during the Plan Year or 
 employment status at the end of the Plan Year. (skip to next Question.) 
 b. [X] 
 Conditions for Participants NOT employed at the end of the Plan Year. 
 1. 
 [ ] A Participant must complete more than (not to exceed 500) Hours of Service (or (not to 
 exceed 3) months of service if the Elapsed Time method is selected). 
 2. 
 [ ] A Participant must complete a Year of Service (or Period of Service if the Elapsed Time method is selected). 
 (Could cause the Plan to violate coverage requirements under Code Section 410(b).) 
 3. 
 [X] Participants will NOT share in the allocations, regardless of service. (Could cause the Plan to violate 
 coverage requirements under Code Section 410(b).) 
 4. [ ] 
 Participants will share in the allocations, regardless of service. 
 5. 
 

 [ ] Other: (must be definitely determinable, not subject to Employer discretion and may not require more 
 than one Year of Service (or Period of Service if the Elapsed Time method is elected)). 
 c. [X] 
 AND, Waiver of conditions for Participants NOT employed at the end of the Plan Year. Participants who are not 
 employed at the end of the Plan Year due to the following shall be eligible to share in the allocations regardless of the 
 above conditions (select all that apply): 
 1. [X] 
 Death. 
 2. [X] 
 Total and Permanent Disability. 
 3. [X] 
 Early or Normal Retirement. 
 d. [X] 
 Conditions for Participants employed at the end of the Plan Year. (Options 2. and 3. could cause the Plan to violate 
 coverage requirements under Code Section 410(b).) 
 1. [ ] 
 No service requirement. 
 2. [ ] 
 A Participant must complete a Year of Service (or Period of Service if the Elapsed Time method is selected). 
 3. [X] 
 A Participant must complete at least 1,000 (not to exceed 1,000) Hours of Service during the Plan Year. 
 e. [X] 
 Code Section 410(b) fail-safe. If b.2. or 3. and/or d.2. or 3. is selected, shall the Code Section 410(b) ratio percentage 
 fail-safe provisions apply (Plan Section 4.3(m))? 
 1. [ ] 
 No or N/A. 
 2. [X] 
 Yes, the Plan must satisfy the ratio percentage test of Code Section 410(b). 
 33. 
 FORFEITURES (Plan Sections 1.34 and 4.3(e)) 
 A. 
 Timing of Forfeiture. Except as provided in Plan Section 1.34, a Forfeiture will occur (if no selection is made, b. will 
 

 apply): 
 a. [ ] 
 N/A. (May only be selected if all contributions are fully Vested; skip to Question 34.). 
 b. 
 [X] As of the earlier of (1) the last day of the Plan Year in which the Former Participant incurs five (5) consecutive 
 1-Year Breaks in Service, or (2) the distribution of the entire Vested portion of the Participant's Account. 
 c. 
 [ ] As of the last day of the Plan Year in which the Former Participant incurs five (5) consecutive 1-Year Breaks in 
 Service. 
 AND, the Forfeiture will be disposed of in: 
 

 d. [X] 
 The Plan Year in which the Forfeiture occurs. 
 e. [ ] 
 The Plan Year following the Plan Year in which the Forfeiture occurs. 
 B. 
 Plan Expenses. May Forfeitures first be used to pay any administrative expenses? 
 f. [X] 
 Yes. 
 g.[ ] 
 No. 
 C. 
 Use of Forfeitures. 
 Forfeitures attributable to amounts other than Employer matching contributions will be: 
 h. 
 [ ] added to any Employer discretionary contribution (e.g., matching or profit sharing) and allocated in the same 
 manner. 
 i. [X] 
 used to reduce any Employer contribution (e.g., matching, profit sharing or ADP test safe harbor contribution). 
 j. [ ] 
 added to any Employer matching contribution and allocated as an additional matching contribution. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 18 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 k. 
 [ ] allocated to all Participants eligible to share in the allocations of profit sharing contributions or Forfeitures in the 
 same proportion that each Participant's Compensation for the Plan Year bears to the Compensation of all 
 Participants for such year. 
 l. 
 [ ] other: (describe the treatment of Forfeitures in a manner that is definitely determinable and not subject to 
 Employer discretion; e.g., Forfeitures attributable to transferred balances from Plan X are allocated as additional 
 discretionary contributions only to former Plan X Participants). 
 Forfeitures of Employer matching contributions will be: 
 

 m. [ ] 
 N/A. Same as above or no Employer matching contributions. 
 n. [ ] 
 used to reduce the Employer matching contribution. 
 o. [ ] 
 added to any Employer matching contribution and allocated as an additional matching contribution. 
 p. [ ] 
 added to any Employer discretionary profit sharing contribution. 
 q. [X] 
 used to reduce any Employer contribution (e.g., matching, profit sharing or ADP test safe harbor contribution). 
 r. 
 [ ] other: (describe the treatment of Forfeitures in a manner that is definitely determinable and not subject to 
 Employer discretion; e.g., Forfeitures attributable to transferred balances from Plan X are allocated as additional 
 discretionary contributions only to former Plan X Participants). 
 34. 
 ALLOCATION OF EARNINGS (Plan Section 4.3(c)) 
 Allocation of earnings with respect to amounts which are not subject to Participant investment direction and which are 
 contributed to the Plan after the previous Valuation Date will be determined: 
 a. [X] 
 

 N/A. All assets in the Plan are subject to Participant investment direction. 
 b. 
 [ ] by using a weighted average based on the amount of time that has passed between the date a contribution or distribution 
 is made and the prior Valuation Date. 
 c. 
 [ ] by treating one-half of all such contributions as being a part of the Participant's nonsegregated account balance as of the 
 previous Valuation Date. 
 d. [ ] 
 by using the method specified in Plan Section 4.3(c) (balance forward method). 
 e. 
 [ ] other: (must be a definite predetermined formula that is not based on Compensation, that 
 satisfies the nondiscrimination requirements of Regulation Section 1.401(a)(4)-4, and that is applied uniformly to all 
 Participants). 
 35. 
 TOP-HEAVY MINIMUM ALLOCATION 
 The minimum allocation requirements for any Top-Heavy Plan Year shall be applied (select one): 
 a. [ ] 
 Only to Non-Key Employee Participants. 
 b. [X] 
 To both Non-Key and Key Employee Participants. 
 DISTRIBUTIONS 
 

 36. 
 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6) 
 Distributions under the Plan may be made in (select all that apply) 
 a. [X] 
 Lump-sums. 
 b. [ ] 
 Substantially equal installments. 
 c. [X] 
 Partial withdrawals, provided the minimum withdrawal is $ 1,000 (leave blank if no minimum). 
 d. 
 [ ] Partial withdrawals or installments are only permitted for required minimum distributions under Code Section 
 

 401(a)(9). 
 e. [ ] 
 Other: (must be definitely determinable and not subject to Employer discretion). 
 AND, pursuant to Plan Section 6.13, the Qualified Joint and Survivor Annuity and Qualified Pre-Retirement Survivor Annuity 
 provisions: 
 

 f. 
 [X] Do not apply. No annuities are allowed (Plan Section 6.13(b) will apply and the joint and survivor rules of Code 
 Sections 401(a)(11) and 417 will not apply to the Plan). (skip to m. and n.) 
 g. 
 [ ] Apply. Annuities are the normal form of distribution. Plan Section 6.13 will not apply and the joint and survivor rules 
 of Code Sections 401(a)(11) and 417 will automatically apply. The Pre-Retirement Survivor Annuity (minimum 
 spouse's death benefit) will be equal to: 
 1. [ ] 
 100% of a Participant's interest in the Plan. 
 2. [ ] 
 50% of a Participant's interest in the Plan. 
 3. [ ] % (may not be less than 50%) of a Participant's interest in the Plan. 
 h. 
 [ ] Apply if annuity is selected by Participant. Annuities are allowed but are not the normal form of distribution. Plan 
 Section 6.13(c) will apply and the joint and survivor rules of Code Sections 401(a)(11) and 417 will apply only if an 
 annuity form of distribution is selected by a Participant. 
 AND, if g. or h. is selected, the normal form of the Qualified Joint and Survivor Annuity will be a joint and 50% survivor annuity 
 unless otherwise selected below: 
 

 i. [ ] 
 N/A. 
 j. [ ] 
 Joint and 100% survivor annuity. 
 k. [ ] 
 Joint and 75% survivor annuity. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 

 19 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 l. [ ] 
 Joint and 66 2/3% survivor annuity. 
 NOTE: 
 If only a portion of the Plan assets may be distributed in an annuity form of payment, then select both f. AND g. and 
 specify the assets that are subject to the joint and survivor annuity provisions: (e.g., the money purchase 
 pension plan that was merged into this Plan). 
 

 AND, distributions may be made in: 
 

 m. [ ] 
 Cash only. 
 n. [ ] 
 Cash only (except for insurance contracts, annuity contracts or Participant loans). 
 o. 
 [X] Cash or property, except that the following limitation(s) apply: (leave blank if there are no limitations on 
 property distributions). 
 37. 
 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT. Distributions upon termination of 
 employment pursuant to Plan Section 6.4(a) will not be made unless the following conditions have been satisfied: 
 A. 
 Accounts in excess of $5,000. 
 a. [X] 
 Distributions may be made as soon as administratively feasible following termination of employment. 
 b. 
 [ ] Distributions may be made as soon as administratively feasible after the Participant has incurred 1-Year 
 Break(s) in Service (or Period(s) of Severance if the Elapsed Time method is selected). 
 c. 
 [ ] Distributions may be made as soon as administratively feasible after the last day of the Plan Year coincident with 
 or next following termination of employment. 
 d. 
 

 [ ] Distributions may be made as soon as administratively feasible after the last day of the Plan Year quarter 
 coincident with or next following termination of employment. 
 e. 
 [ ] Distributions may be made as soon as administratively feasible after the Valuation Date coincident with or next 
 following termination of employment. 
 f. 
 [ ] Distributions may be made as soon as administratively feasible after months have elapsed 
 following termination of employment. 
 g. [ ] 
 No distributions may be made until a Participant has reached Early or Normal Retirement Date. 
 h. 
 [ ] Other: (must be objective conditions which are ascertainable and are not subject to Employer 
 discretion except as otherwise permitted in Regulation Section 1.411(d)-4 and may not exceed the limits of Code 
 Section 401(a)(14) as set forth in Plan Section 6.7). 
 B. 
 Accounts of $5,000 or less. 
 i. [X] 
 Same as above. 
 j. [ ] 
 Distributions may be made as soon as administratively feasible following termination of employment. 
 k. 
 [ ] Distributions may be made as soon as administratively feasible after the Participant has incurred 1-Year 
 Break(s) in Service (or Period(s) of Severance if the Elapsed Time method is selected). 
 l. 
 [ ] Distributions may be made as soon as administratively feasible after the last day of the Plan Year coincident with 
 or next following termination of employment. 
 m. [ 
 ] Other: (must be objective conditions which are ascertainable and are not subject to Employer 
 discretion except as otherwise permitted in Regulation Section 1.411(d)-4 and may not exceed the limits of Code 
 

 Section 401(a)(14) as set forth in Plan Section 6.7). 
 C. 
 Participant consent (i.e., involuntary cash-outs). Should vested account balances less than a certain dollar threshold be 
 automatically distributed without Participant consent (mandatory distributions)? 
 NOTE: 
 The Plan provides that distributions of amounts of $5,000 or less do not require spousal consent and are only paid 
 as lump-sums. 
 

 NOTE: 
 If this is an EGTRRA restatement and there are special effective dates for the Participant consent provisions, 
 complete n. or o. based on the current Plan provisions and complete q. or r. below. 
 

 n. [ ] 
 No, Participant consent is required for all distributions. 
 o. [X] 
 Yes, Participant consent is required only if the distribution is over: 
 1. [ ] 
 $5,000 
 2. [X] 
 $1,000 
 3. [ ] 
 $ (less than $1,000) 
 NOTE: 
 If 2. or 3. is selected, rollovers will be included in determining the threshold for Participant consent. 
 

 AND, if this is an EGTRRA restatement, the following apply: 
 

 p. [ ] 
 N/A. Not an EGTRRA restatement. 
 q. [ ] 
 Provisions above at n. or o. apply to distributions made on or after March 28, 2005. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 20 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 r. 
 [ ] Provisions above at n. or o. are effective for distributions made on or after (enter a date later 
 than March 28, 2005). The following applies to distributions prior to such date but after March 28, 2005: 
 1. [ ] 
 No mandatory distributions. 
 2. [ ] 
 Participant consent is required only if the distribution is over: 
 a. [ ] 
 $5,000 
 b. [ ] 
 $1,000 
 c. [ ] 
 $ (less than $1,000) 
 D. 
 Exclusion of rollovers in determination of $5,000 threshold. In determining the $5,000 threshold (or other dollar 
 threshold in C. above) for the timing of distributions, form of distributions, or consent rules, effective for distributions made 
 after December 31, 2001, rollover contributions will be: 
 s. [X] 
 included. 
 t. [ ] 
 excluded. 
 38. 
 DISTRIBUTIONS UPON DEATH (Plan Section 6.8(b)(2)) 
 Distributions upon the death of a Participant prior to receiving any benefits shall: 
 a. [X] 
 be made pursuant to the election of the Participant or Beneficiary. 
 b. 
 [ ] begin within 1 year of death for a designated Beneficiary and be payable over the life (or over a period not exceeding 
 the life expectancy) of such Beneficiary, except that if the Beneficiary is the Participant's spouse, begin prior to 
 December 31st of the year in which the Participant would have attained age 70 1/2. 
 c. [ ] 
 be made within 5 (or if lesser ) years of death for all Beneficiaries. 
 

 d. 
 [ ] be made within 5 (or if lesser ) years of death for all Beneficiaries, except that if the Beneficiary is the 
 Participant's spouse, begin prior to December 31st of the year in which the Participant would have attained age 70 1/2 
 and be payable over the life (or over a period not exceeding the life expectancy) of such surviving spouse. 
 39. 
 HARDSHIP DISTRIBUTIONS (Plan Sections 6.12 and/or 12.9) 
 a. [ ] 
 Hardship distributions are NOT permitted. 
 b. [X] 
 Hardship distributions are permitted from the following Participant Accounts: 
 1. [ ] 
 All Accounts. 
 2. [X] 
 Only from the following Accounts (select all that apply): 
 a. [X] 
 Pre-Tax Elective Deferral Account. 
 b. [ ] 
 Roth Elective Deferral Account. 
 c. [X] 
 Account(s) attributable to Employer matching contributions. 
 d. [X] 
 Account attributable to Employer profit sharing contributions. 
 e. [X] 
 Rollover Account. 
 f. [ ] 
 Transfer Account. 
 g. 
 [ ] Other: (specify account(s) and conditions in a manner that is definitely determinable and 
 not subject to Employer discretion). 
 NOTE: 
 Distributions from a Participant's Elective Deferral Account are limited to the portion of such account 
 attributable to such Participant's Elective Deferrals (and earnings attributable thereto up to December 31, 
 1988). Hardship distributions are NOT permitted from a Participant's Qualified Nonelective Contribution 
 

 Account (including any 401(k) Safe Harbor Contributions) or Qualified Matching Contribution Account. 
 

 AND, shall the safe harbor hardship rules of Plan Section 12.9 apply to hardship distributions from all Accounts? 
 

 3. [ ] 
 No, the provisions of Plan Section 6.12 apply to all hardship distributions. 
 4. 
 [ ] No, the provisions of Plan Section 6.12 apply to hardship distributions from all Accounts other than a 
 Participant's Elective Deferral Account. 
 5. [X] 
 Yes. The provisions of Plan Section 12.9 apply to all hardship distributions. 
 AND, the following limitations apply to hardship distributions: 
 

 6. [ ] 
 N/A. No additional limitations. 
 7. [X] 
 Additional limitations (select all that apply): 
 a. [X] 
 The minimum amount of a distribution is $ 500 (may not exceed $1,000). 
 b. [ ] 
 No more than distribution(s) may be made to a Participant during a Plan Year. 
 c. [X] 
 Distributions may only be made from accounts which are fully Vested. 
 d. [X] 
 A Participant does not include a former Employee at the time of the hardship distribution. 
 e. 
 [ ] Hardship distributions may be made subject to the following provisions: (must be definitely 
 determinable and not subject to Employer discretion). 
 40. 
 IN-SERVICE DISTRIBUTIONS (Plan Section 6.11) 
 a. [ ] 
 In-service distributions are NOT permitted (except as otherwise selected for Hardship Distributions). 
 b. 
 [X] In-service distributions may be made to a Participant who has not separated from service provided any of the following 
 

 conditions have been satisfied (select all that apply): 
 1. [X] 
 the Participant has attained age 59 1/2 . 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 21 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 2. [ ] 
 the Participant has reached Normal Retirement Age. 
 3. [ ] 
 the Participant has been a Participant in the Plan for at least years (may not be less than five (5)). 
 4. [ ] 
 the amounts being distributed have accumulated in the Plan for at least 2 years. 
 NOTE: 
 Distributions from a Participant's Elective Deferral Account, Qualified Matching Contribution Account and Qualified 
 Nonelective Contribution Account (including 401(k) safe harbor contributions) are subject to restrictions and generally 
 may not be distributed prior to age 59 1/2. 
 

 AND, in-service distributions are permitted from the following Participant Accounts: 
 

 5. [ ] 
 All Accounts. 
 6. [X] 
 Only from the following Accounts (select all that apply): 
 a. [X] 
 Pre-Tax Elective Deferral Account. 
 b. [ ] 
 Roth Elective Deferral Account. 
 c. [X] 
 Account(s) attributable to Employer matching contributions (includes safe harbor match). 
 d. [X] 
 Account attributable to Employer profit sharing contributions. 
 e. [X] 
 Qualified Nonelective Contribution Account (includes safe harbor nonelective). 
 f. [X] 
 Rollover Account. 
 g. [ ] 
 Transfer Account. 
 h. 
 [ ] Other: (specify account(s) and conditions in a manner that is definitely determinable and 
 not subject to Employer discretion). 
 

 AND, the following limitations apply to in-service distributions: 
 

 7. [ ] 
 N/A. No additional limitations. 
 8. [X] 
 Additional limitations (select all that apply): 
 a. [X] 
 The minimum amount of a distribution is $ 1,000 (may not exceed $1,000). 
 b. [ ] 
 No more than distribution(s) may be made to a Participant during a Plan Year. 
 c. [X] 
 Distributions may only be made from accounts which are fully Vested. 
 d. 
 [ ] Distributions from the Roth Elective Deferral Account (40.b.5. or b.6.b. selected), may only be 
 made if the distribution is a "qualified distribution." 
 e. 
 [ ] In-service distributions may be made subject to the following provisions: (must be 
 definitely determinable and not subject to discretion). 
 NONDISCRIMINATION TESTING 
 

 41. 
 HIGHLY COMPENSATED EMPLOYEE (Plan Section 1.38) 
 The top-paid group election and the calendar year data election are not used unless selected below (the selections made for the 
 latest year will continue to apply to subsequent Plan Years unless the Plan is amended): 
 a. [ ] 
 The Top-Paid Group Election will be used for Plan Years beginning on or after . 
 b. [ ] 
 The Calendar Year Data Election will be used for Plan Years beginning on or after . 
 42. 
 ADP AND ACP TESTS (Plan Sections 12.4 and 12.6) 
 NOTE: 
 The selections made below for the latest year will continue to apply to subsequent Plan Years unless the Plan is 
 amended. 
 

 A. ADP Test. The ADP ratio for Nonhighly Compensated Employees will be based on the following: 
 a. 
 

 [X] N/A. This Plan satisfies the ADP test safe harbor rules for all Participants for all Plan Years to which this Plan 
 applies. 
 b. 
 [ ] Prior Year Testing Method. The prior year ratio will be used for Plan Years beginning on or after . If this 
 selection is made for the first year the Code Section 401(k) feature is added to this Plan (unless this Plan is a 
 successor plan), then for the first Plan Year only, the amount taken into account as the ADP of Nonhighly 
 Compensated Employees for the preceding Plan Year will be: 
 1. [ ] 
 N/A. (Effective date of prior year testing is after effective date of Code Section 401(k) feature.) 
 2. [ ] 
 3%. 
 3. [ ] 
 the actual percentage for the initial Plan Year. 
 c. [ ] 
 Current Year Testing Method. The current year ratio will be used for Plan Years beginning on or after . 
 B. ACP Test. The ACP ratio for Nonhighly Compensated Employees will be based on the following: 
 d. 
 [X] N/A. This Plan satisfies the ACP test safe harbor rules for all Participants for all Plan Years to which this Plan 
 applies. 
 e. 
 [ ] Prior Year Testing Method. The prior year ratio will be used for Plan Years beginning on or after . If this 
 selection is made for the first year the Code Section 401(m) feature is added to this Plan (unless this Plan is a 
 successor plan), then for the first Plan Year only, the amount taken into account as the ACP of Nonhighly 
 Compensated Employees for the preceding Plan Year will be: 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 22 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 1. [ ] 
 N/A. (Effective date of prior year testing is after effective date of Code Section 401(m) feature.) 
 2. [ ] 
 3%. 
 3. [ ] 
 the actual percentage for the initial Plan Year. 
 f. [ ] 
 Current Year Testing Method. The current year ratio will be used for Plan Years beginning on or after . 
 MISCELLANEOUS 
 

 43. 
 LOANS TO PARTICIPANTS (Plan Section 7.6) 
 a. [X] 
 Loans are NOT permitted. 
 b. [ ] 
 Loans are permitted. 
 44. 
 DIRECTED INVESTMENTS (Plan Section 4.10) 
 a. [ ] 
 Participant directed investments are NOT permitted. 
 b. [X] 
 Participant directed investments are permitted for: 
 1. [ ] 
 All Accounts. 
 2. [X] 
 The following Participant Accounts (select all that apply): 
 a. [ ] 
 Pre-Tax Elective Deferral Account. 
 b. [ ] 
 Roth Elective Deferral Account. 
 c. [ ] 
 Account(s) attributable to Employer matching contributions (includes safe harbor match). 
 d. [ ] 
 Account attributable to Employer profit sharing contributions. 
 e. [ ] 
 Qualified Nonelective Contribution Account (includes safe harbor nonelective). 
 

 f. [X] 
 Rollover Account. 
 g. [ ] 
 Transfer Account. 
 h. [ ] 
 Voluntary Contribution Account. 
 i. 
 [ ] Other: (specify account(s) and conditions in a manner that is definitely determinable and 
 not subject to Employer discretion). 
 AND, is it intended that the Plan comply with ERISA Section 404(c) with respect to the accounts subject to Participant 
 investment direction? 
 

 3.[ ] 
 No. 
 4. [X] 
 Yes. 
 45. 
 ROLLOVERS (Plan Section 4.6) 
 a. [ ] 
 Rollovers will NOT be accepted by this Plan. 
 b. [X] 
 Rollovers will be accepted by this Plan, subject to approval by the Administrator. 
 AND, if b. is selected, rollovers may be accepted from all Participants who are Employees as well as the following 
 (select all that apply): 
 

 1. [X] 
 Eligible Employees who are not Participants. 
 2. [ ] 
 Participants who are Former Employees. 
 AND, distributions from a Participant's Rollover Account may be made: 
 

 3. [X] 
 at any time. 
 4. [ ] 
 only when the Participant is otherwise entitled to a distribution under the Plan. 
 46. 
 AFTER-TAX VOLUNTARY EMPLOYEE CONTRIBUTIONS (Plan Section 4.8) 
 

 a. [X] 
 After-tax voluntary Employee contributions are NOT permitted. 
 b. [ ] 
 After-tax voluntary Employee contributions are permitted. 
 EGTRRA TRANSITION RULES 
 

 The following questions only apply if this is an EGTRRA restatement (i.e., Question 6.c. is selected). If this is not an EGTRRA 
 restatement, then this Plan will not be considered an individually designed plan merely because the following questions are 
 deleted from the Adoption Agreement. 
 

 NOTE: 
 The following provisions are designed to be left unanswered if the selections do not apply to the Plan. 
 

 47. 
 MINIMUM DISTRIBUTIONS. The Code Section 401(a)(9) Final and Temporary Treasury Regulations apply for purposes of 
 determining required minimum distributions for calendar years beginning with the 2002 calendar year unless otherwise selected 
 below (leave blank if not applicable): 
 a. 
 [ ] Apply the 2001 Proposed Code Section 401(a)(9) Regulations to all minimum distributions for the 2002 distribution 
 calendar year. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 23 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 b. 
 [ ] Apply the 1987 Proposed Code Section 401(a)(9) Regulations to all minimum distributions for the 2002 distribution 
 calendar year. 
 c. 
 [ ] Other: (specify the date the Final and Temporary Regulations were first applied; e.g., the Final 
 and Temporary Regulations only apply to distributions for the 2002 distribution calendar year that are made on or after 
 a specified date within 2002 or the Plan's initial Effective Date if later). 
 Required minimum distributions for calendar year 2001 were made in accordance with Code Section 401(a)(9) and the 1987 
 Proposed Regulations, unless selected below: 
 

 d. 
 [ ] Required minimum distributions for 2001 were made pursuant to the proposed Regulations under Code Section 
 401(a)(9) published in the Federal Register on January 17, 2001 (the "2001 Proposed Regulations"). 
 48. 
 EXCLUSION OF ROLLOVERS. If rollovers are excluded in determining whether the mandatory distribution threshold (e.g., 
 $5,000) is met for the timing of distributions, form of distributions, or consent rules, then such provision is effective for 
 distributions made after December 31, 2001, unless an alternative effective date is selected below (leave blank if not applicable): 
 a. 
 [ ] Rollover contributions will be excluded only with respect to distributions made after . (Enter a 
 date no earlier than December 31, 2001 or the Plan's initial Effective Date if later.) 
 b. 
 [ ] Rollover contributions will only be excluded with respect to Participants who separated from service after 
 . (Enter a date. The date may be earlier than December 31, 2001.) 
 49. 
 VESTING SCHEDULE FOR EMPLOYER MATCHING CONTRIBUTIONS. The vesting schedule set forth herein for 
 

 Employer matching contributions will apply to all Employer matching contributions subject to a vesting schedule unless selected 
 below (leave blank if not applicable): 
 a. 
 [ ] The vesting schedule will only apply to Employer matching contributions made in Plan Years beginning after 
 December 31, 2001 (the prior schedule will apply to Employer matching contributions made in prior Plan Years). The 
 prior vesting schedule is (enter the vesting schedule that applied prior to January 1, 2002; such schedule must 
 satisfy 5-year cliff or 7-year graded and must provide for a top-heavy minimum schedule). 
 50. 
 SUSPENSION PERIOD DUE TO HARDSHIP DISTRIBUTIONS. If the Plan provides for hardship distributions upon 
 satisfaction of the safe harbor standards, then the reduction from 12 months to 6 months following a hardship distribution applies 
 to hardship distributions made after December 31, 2001 unless otherwise selected below (leave blank if not applicable). 
 a. 
 [ ] With regard to hardship distributions made during 2001, a Participant was prohibited from making Elective Deferrals 
 and employee contributions under this and all other plans until the later of January 1, 2002, or 6 months after receipt of 
 the distribution. 
 51. 
 FINAL 401(k)/401(m) REGULATIONS. The provisions of the final Regulations under Code Sections 401(k) and 401(m) apply 
 to the Plan with respect to the first Plan Year beginning after December 31, 2005 unless an earlier Plan Year is otherwise selected 
 below (leave blank if not applicable). 
 a. 
 [ ] The final Regulations are effective for Plan Years beginning on or after (may not be earlier than the first day of 
 the Plan Year that ends after December 29, 2004). 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 24 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 The adopting Employer may rely on an advisory letter issued by the Internal Revenue Service as evidence that the Plan is qualified under 
 Code Section 401 only to the extent provided in Rev. Proc. 2005-16. 
 

 The Employer may not rely on the advisory letter in certain other circumstances or with respect to certain qualification requirements, which 
 are specified in the advisory letter issued with respect to the Plan and in Rev. Proc. 2005-16. In order to have reliance in such 
 circumstances or with respect to such qualification requirements, application for a determination letter must be made to Employee Plans 
 Determinations of the Internal Revenue Service. 
 

 This Adoption Agreement may be used only in conjunction with the Volume Submitter basic Plan document #92589. This Adoption 
 Agreement and the basic Plan document shall together be known as GOODMAN & COMPANY, L.L.P. Volume Submitter 401(k) Profit 
 Sharing Plan #91706. 
 

 The adoption of this Plan, its qualification by the IRS, and the related tax consequences are the responsibility of the Employer and its 
 independent tax and legal advisors. 
 

 GOODMAN & COMPANY, L.L.P. will notify the Employer of any amendments made to the Plan or of the discontinuance or 
 abandonment of the Plan. Furthermore, in order to be eligible to receive such notification, the Employer agrees to notify GOODMAN & 
 COMPANY, L.L.P. of any change in address. 
 

 This Plan may not be used, and shall not be deemed to be a Volume Submitter Plan, unless an authorized representative of GOODMAN & 
 COMPANY, L.L.P. has acknowledged the use of the Plan. Such acknowledgment is for administerial purposes only. It acknowledges that 
 the Employer is using the Plan but does not represent that this Plan, including the choices selected on the Adoption Agreement, has been 
 reviewed by a representative of the sponsor or constitutes a qualified retirement plan. 
 

 GOODMAN & COMPANY, L.L.P. 
 

 

 By: Iris R. Dodson, Partner 
 

 With regard to any questions regarding the provisions of the Plan, adoption of the Plan, or the effect of an advisory letter from the IRS, call 
 or write (this information must be completed by the sponsor of this Plan or its designated representative): 
 

 Name: Goodman & Company, LLP 
 Address: 272 Bendix Road, Suite 500 
 Virginia Beach Virginia 23452 
 Telephone: (757) 457-8440 
 

 The Employer and Trustee (or Insurer) hereby cause this Plan to be executed on the date(s) specified below: 
 EMPLOYER: York River Electric, Inc. 
 By: 
 

 

  Catherine McQuade DATE SIGNED 
 TRUSTEE (OR INSURER): 
 [ ] The signature of the Trustee or Insurer appears on a separate agreement or Contract, 
 OR 
 Catherine McQuade 
 

 TRUSTEE OR INSURER DATE SIGNED 
 Mark Bryan 
 TRUSTEE OR INSURER DATE SIGNED 
 

 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 25 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 APPENDIX A 
 SPECIAL EFFECTIVE DATES AND OTHER PERMITTED ELECTIONS 
 

 

 A. Special effective dates. The following special effective dates apply: (Select a. or all that apply at b. - f.) 
 a. [X] 
 N/A. No special effective dates selected below. 
 b. 
 [ ] Employer Matching Contributions. The Employer Matching Contribution provisions under Question 30. are effective: 
 . 
 c. [ ] 
 Employer Profit Sharing Contributions. The Employer Profit Sharing Contribution provisions under Questions 31. and 
 32. are effective: . 
 d. 
 [ ] Distribution elections. The distribution elections under Questions (Choose 36. - 40. as applicable) are effective: 
 . 
 e. [ ] 
 401(k) current/prior year testing. The current/prior year testing elections under Question 42. are effective: . 
 f. 
 [ ] Other special effective date(s): . For periods prior to the above-specified special effective date(s), the Plan terms in 
 effect prior to its restatement under this Adoption Agreement will control for purposes of the designated provisions. A 
 special effective date may not result in the delay of a Plan provision beyond the permissible effective date under any 
 applicable law. 
 B. Other Permitted Elections. Select a. or any of the following elections that apply at b. - p.: 
 a. [X] 
 N/A. No other elections selected below. 
 b. 
 [ ] Deemed 125 compensation (Plan Sections 1.14 and 1.37). Deemed 125 compensation shall be included in Compensation 
 

 and 415 Compensation effective as of Plan Years and Limitation Years beginning on or after (insert the later of 
 January 1, 1998, or the first day of the first Plan Year the Plan used this definition). 
 c. 
 [ ] Reemployed after 1-Year Break in Service ("rule of parity" provisions) (Plan Section 3.5(d)). The "rule of parity" 
 provisions in Plan Section 3.5(d) shall not apply for (select one or both): 
 1. [ ] 
 Eligibility purposes. 
 2. [ ] 
 Vesting purposes. 
 d. 
 [ ] Matching contributions not used to satisfy top-heavy contribution (Plan Section 4.3(j)). Employer matching 
 contributions shall not be taken into account for purposes of satisfying the minimum contribution requirements of Code 
 Section 416(c)(2) and the Plan. 
 e. 
 [ ] Beneficiary if no beneficiary elected by Participant (Plan Section 6.2(e)). In the event no valid designation of Beneficiary 
 exists, then in lieu of the order set forth in Plan Section 6.2(e), the following order of priority will be used: (specify 
 an order of beneficiaries; e.g., children per stirpes, parents, and then step-children). 
 f. 
 [ ] Distribution from partially Vested account (Plan Section 6.5(h)). In lieu of the formula set forth in Plan Section 6.5(h), a 
 separate account shall be established for the Participant's interest in the Plan as of the time of the distribution, and at any 
 relevant time the Participant's Vested portion of the separate account will be equal to an amount determined as follows: P 
 (AB plus (R x D)) - (R x D) where R is the ratio of the account balance at the relevant time to the account balance after 
 distribution and the other terms have the same meaning as in Plan Section 6.5(h). 
 g. 
 [ ] Common, collective or pooled trust funds (Plan Sections 7.2(c)(5) and/or 7.3(b)(6)). The name(s) of the common, 
 collective or pooled trust funds available under the Plan is (are): . 
 h. 
 [ ] 411(d)(6) protected benefits (Plan Section 8.1(b)). The following are Code Section 411(d)(6) protected benefits that are 
 

 preserved under this Plan: (specify the protected benefits and the accrued benefits that are subject to the protected 
 benefits). 
 i. 
 [ ] 415 Limits when 2 defined contribution plans are maintained (Plan Section 4.4). If any Participant is covered under 
 another qualified defined contribution plan maintained by the Employer, or if the Employer maintains a welfare benefit 
 fund, as defined in Code Section 419(e), or an individual medical account, as defined in Code Section 415(l)(2), under 
 which amounts are treated as "annual additions" with respect to any Participant in this Plan, then the provisions of Plan 
 Section 4.4(b) will apply unless otherwise specified below: 
 1. [ ] 
 Specify, in a manner that precludes Employer discretion, the method under which the plans will limit total "annual 
 additions" to the "maximum permissible amount" and will properly reduce any "excess amounts": 
 . 
 

 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 1 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 j. 
 [ ] Top-heavy duplications when 2 defined contribution plans are maintained (Plan Section 4.3(f)). When a Non-Key 
 Employee is a Participant in this Plan and another defined contribution plan maintained by the Employer, indicate which 
 method shall be utilized to avoid duplication of top-heavy minimum benefits: 
 1. [ ] 
 N/A. The Employer does not maintain another qualified defined contribution plan. 
 2. [ ] 
 The full top-heavy minimum will be provided in each plan. 
 3. 
 [ ] A minimum, non-integrated contribution of 3% of each Non-Key Employee's 415 Compensation shall be provided 
 in the Money Purchase Plan (or other plan subject to Code Section 412). 
 4. 
 [ ] Specify the method under which the Plans will provide top-heavy minimum benefits for Non-Key Employees that 
 will preclude Employer discretion and avoid inadvertent omissions, including any adjustments required under 
 Code Section 415: . 
 NOTE: 
 If 3. or 4. is selected and both plans do not benefit the same Participants, then the uniformity requirement of the 
 Regulations under Code Section 401(a)(4) may be violated. 
 

 k. 
 [ ] Top-heavy duplications when a defined benefit plan is maintained (Plan Section 4.3(i)). When a Non-Key Employee is a 
 Participant in this Plan and a non-frozen defined benefit plan maintained by the Employer, indicate which method shall be 
 utilized to avoid duplication of top-heavy minimum benefits: (If 2., 3., 4., or 5. is selected, 6. must be completed.) 
 1. [ ] 
 N/A. 
 2. [ ] 
 The full top-heavy minimum will be provided in each plan (if selected, Plan Section 4.3(i) shall not apply). 
 3. [ ] 
 

 5% defined contribution minimum. 
 4. [ ] 
 2% defined benefit minimum. 
 5. 
 [ ] Specify the method under which the Plans will provide top-heavy minimum benefits for Non-Key Employees that 
 will preclude Employer discretion and avoid inadvertent omissions: . 
 NOTE: 
 If 3., 4., or 5. is selected and the defined benefit plan and this Plan do not benefit the same Participants, the 
 uniformity requirement of the Regulations under Code Section 401(a)(4) may be violated. 
 

 AND, the "present value" (Plan Section 9.2) for top-heavy purposes shall be based on: 
 

 6. [ ] 
 Interest Rate: 
 Mortality Table: 
 

 7. 
 [ ] The interest rate and mortality table specified to determine "present value" for top-heavy purposes in the defined 
 benefit plan. 
 l. 
 [ ] Recognition of Service with other employers (Plan Sections 1.60 and 1.85). Service with the following employers (in 
 addition to those specified at Question 17.) will be recognized as follows: 
 Contribution 
 Eligibility Vesting Allocation 
 

 1. [ ] 
 Employer name: [ ] [ ] [ ] 
 2. [ ] 
 Employer name: [ ] [ ] [ ] 
 3. [ ] 
 Employer name: [ ] [ ] [ ] 
 4. 
 [ ] Limitations: [ ] [ ] [ ] 
 (e.g., credit service with X only on/following 1/1/07 or credit all service with entities the Employer acquires 
 after 12/31/06). 
 

 m.[ 
 ] Post-severance Compensation (Code Section 415) (Plan Section 1.14(e)). The post-severance Compensation provisions of 
 the Proposed 415 Regulations shall apply to this Plan for Limitation Years and Plan Years beginning prior to July 1, 2007 
 and on or after (may not be earlier than 2005). Specify any special rules that apply to the application of 
 the Proposed 415 Regulations (e.g., whether the Regulations apply solely for 415 Compensation or for Compensation used 
 for benefit or allocation purposes) . 
 n. 
 [ ] Pre-amendment vesting schedule (Plan Section 6.4(g)). The vesting schedule has been amended to a less favorable 
 schedule and the following schedule applies to Participants who elected, pursuant to Plan Section 6.4(g), to continue vesting 
 under the pre-amendment schedule (may only enter the vesting schedule in the Plan prior to the amendment): 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 2 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

  Service 
 Percentage 
 

 % 
 % 
 % 
 % 
 % 
 % 
 % 
 o. 
 [ ] Offset if contributions to leasing organization plan (Plan Section 1.46). The Employer will reduce allocations to this Plan 
 for any Leased Employee to the extent that the leasing organization contributes to or provides benefits under a leasing 
 organization plan to or for the Leased Employee and which are attributable to the Leased Employee's services for the 
 Employer. 
 p. [ ] Minimum distribution transitional rules (Plan Section 6.8(e)(5)) 
 NOTE: This Section does not apply to (1) a new Plan or (2) an amendment or restatement of an existing Plan that never 
 contained the provisions of Code Section 401(a)(9) as in effect prior to the amendments made by the Small 
 Business Job Protection Act of 1996 (SBJPA). 
 

 The "required beginning date" for a Participant who is not a "five percent (5%) owner" is: 
 

 1. 
 [ ] April 1st of the calendar year following the year in which the Participant attains age 70 1/2. (The pre-SBJPA rules 
 continue to apply.) 
 2. 
 [ ] April 1st of the calendar year following the later of the year in which the Participant attains age 70 1/2 or retires 
 (the post-SBJPA rules), with the following exceptions (select one or both and if no election is made, both will 
 apply effective as of January 1, 1996): 
 a. 
 

 [ ] A Participant who was already receiving required minimum distributions under the pre-SBJPA rules as 
 of (not earlier than January 1, 1996) was allowed to stop receiving distributions and have them 
 recommence in accordance with the post-SBJPA rules. Upon the recommencement of distributions, if 
 the Plan permits annuities as a form of distribution then the following apply: 
 1. [ ] 
 N/A. Annuity distributions are not permitted. 
 2. 
 [ ] Upon the recommencement of distributions, the original Annuity Starting Date will be 
 retained. 
 3. [ ] 
 Upon the recommencement of distributions, a new Annuity Starting Date is created. 
 b. 
 [ ] A Participant who had not begun receiving required minimum distributions as of (not earlier 
 than January 1, 1996) was allowed to defer commencement of distributions until retirement. The option 
 to defer the commencement of distributions applied to all such Participants unless elected below: 
 1. 
 [ ] The in-service distribution option was eliminated with respect to Participants who attained age 
 70 1/2 in or after the calendar year that began after the later of (1) December 31, 1998, or (2) 
 the adoption date of the amendment and restatement to bring the Plan into compliance with 
 SBJPA. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 3 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 APPENDIX B 
 ADMINISTRATIVE ELECTIONS 
 

 

 The following are optional administrative provisions. The Administrator may implement procedures that override any elections in this 
 section without a formal Plan amendment. In addition, modifications to this Appendix B will not affect an Employer's reliance on an IRS 
 advisory letter or determination letter. 
 

 A. 
 Loan Limitations. Note: the separate loan program required by the DOL will override any inconsistent selections made below. 
 (complete only if loans to Participants are permitted) 
 a. [ ] 
 N/A. No loan limitations selected below. 
 b. [ ] 
 Limitations (select all that apply): 
 1. [ ] 
 Loans will be treated as Participant directed investments. 
 2. [ ] 
 Loans will only be made for hardship or financial necessity (as defined in the loan program). 
 3. [ ] 
 The minimum loan will be $ (may not exceed $1,000). 
 4. [ ] 
 A Participant may only have (e.g., one (1)) loan(s) outstanding at any time. 
 5. 
 [ ] All outstanding loan balances will become due and payable in their entirety upon the occurrence of a 
 distributable event (other than satisfaction of the conditions for an in-service distribution (including a 
 hardship distribution), if applicable). 
 6. [ ] 
 Loans are repaid by (if left blank, then payroll deduction applies): 
 a. [ ] 
 payroll deduction 
 b. [ ] 
 

 ACH (Automated Clearing House) 
 c.[ ] 
 check 
 1. [ ] Only for prepayment 
 7. 
 [ ] Loans will only be permitted from the following Participant Accounts: (select all that apply or leave blank if 
 no limitations apply): 
 a. [ ] 
 Pre-Tax Elective Deferral Account. 
 b. [ ] 
 Roth Elective Deferral Account. 
 c. [ ] 
 Account(s) attributable to Employer matching contributions (includes safe harbor match). 
 d. [ ] 
 Account attributable to Employer profit sharing contributions. 
 e. [ ] 
 Qualified Nonelective Contribution Account (includes safe harbor nonelective). 
 f. [ ] 
 Rollover Account. 
 g. [ ] 
 Transfer Account. 
 h. [ ] 
 Voluntary Contribution Account. 
 i. [ ] 
 Other: 
 AND, if loans are restricted to certain accounts, the limitations of Code Section 72(p) and the adequate 
 security requirement of the DOL Regulations will be applied: 
 

 j. [ ] 
 by determining the limits by only considering the restricted accounts. 
 k. [ ] 
 by determining the limits taking into account a Participant's entire interest in the Plan. 
 8. [ ] Loans will be granted at the following interest rate (if left blank, then c. below applies): 
 a. [ ] % over the prime interest rate 
 b.[ ] % 
 c. [ ] 
 the Plan Administrator establishes the rate in a nondiscriminatory manner 
 

 B. 
 Life Insurance. (Plan Section 7.5) 
 a. [X] 
 Life insurance may not be purchased. 
 b. [ ] 
 Life insurance may be purchased... 
 1. [ ] 
 at the option of the Administrator. 
 2. [ ] 
 at the option of the Participant. 
 AND, the purchase of initial or additional life insurance will be subject to the following limitations: 
 

 3. [ ] 
 N/A. No limitations. 
 4. [ ] 
 Limitations (select all that apply): 
 a. [ ] 
 Each initial Contract will have a minimum face amount of $ . 
 b. [ ] 
 Each additional Contract will have a minimum face amount of $ . 
 c. [ ] 
 The Participant has completed Years (or Periods) of Service. 
 d. 
 [ ] The Participant has completed Years (or Periods) of Service while a Participant in the 
 Plan. 
 e. [ ] 
 The Participant is under age on the Contract issue date. 
 f. 
 [ ] The maximum amount of all Contracts on behalf of a Participant may not exceed $ 
 . 
 g. [ ] 
 The maximum face amount of any life insurance Contract will be $ . 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 1 
 

 

 

 Volume Submitter 401(k) Profit Sharing Plan 
 

 C. 
 Plan Expenses. Will the Plan assess against an individual Participant's account certain Plan expenses that are incurred by, or are 
 attributable to, a particular Participant based on use of a particular Plan feature? 
 a.[ ] 
 No. 
 b. [X] 
 Yes. 
 D. 
 Rollover Limitations. Will the Plan accept rollover contributions and/or direct rollovers of distributions from the sources 
 specified below? 
 a.[ ] 
 No. 
 b. [X] 
 Yes. 
 AND, indicate the sources of rollovers that will be accepted (select all that apply) 
 1. [X] 
 Direct Rollovers. The Plan will accept a direct rollover of an eligible rollover distribution from: (Check each 
 that applies or none.) 
 a. 
 [X] a qualified plan described in Code Section 401(a) (including a 401(k) plan, profit sharing plan, 
 defined benefit plan, stock bonus plan and money purchase plan), excluding after-tax employee 
 contributions. 
 b. 
 [ ] a qualified plan described in Code Section 401(a) (including a 401(k) plan, profit sharing plan, 
 defined benefit plan, stock bonus plan and money purchase plan), including after-tax employee 
 contributions. 
 c. 
 [ ] a plan described in Code Section 403(a) (an annuity plan), excluding after-tax employee 
 contributions. 
 d. 
 

 [ ] a plan described in Code Section 403(a) (an annuity plan), including after-tax employee 
 contributions. 
 e. 
 [X] a plan described in Code Section 403(b) (a tax-sheltered annuity), excluding after-tax employee 
 contributions. 
 f. 
 [ ] a plan described in Code Section 403(b) (a tax-sheltered annuity), including after-tax employee 
 contributions. 
 g. [ ] 
 a plan described in Code Section 457(b) (eligible deferred compensation plan). 
 h. 
 [ ] if this Plan permits Roth Elective Deferrals, a Roth elective deferral account from (select all that 
 apply): 
 1. [ ] a qualified plan described in Code Section 401(a). 
 2. [ ] a plan described in Code Section 403(b) (a tax-sheltered annuity). 
 2. [X] 
 Participant Rollover Contributions from Other Plans (i.e., not via a direct plan-to-plan transfer). The 
 Plan will accept a contribution of an eligible rollover distribution: (Check each that applies or none.) 
 a. 
 [X] a qualified plan described in Code Section 401(a) (including a 401(k) plan, profit sharing plan, 
 defined benefit plan, stock bonus plan and money purchase plan). 
 b. [ ] 
 a plan described in Code Section 403(a) (an annuity plan). 
 c. [X] 
 a plan described in Code Section 403(b) (a tax-sheltered annuity). 
 d. [ ] 
 a plan described in Code Section 457(b) (eligible deferred compensation plan). 
 3. [X] 
 Participant Rollover Contributions from IRAs: The Plan will accept a rollover contribution of the portion 
 of a distribution from a traditional IRA that is eligible to be rolled over and would otherwise be includible in 
 

 gross income. Rollovers from Roth IRAs or a Coverdell Education Savings Account (formerly known as an 
 Education IRA) are not permitted because they are not traditional IRAs. A rollover from a SIMPLE IRA is 
 allowed if the amounts are rolled over after the individual has been in the SIMPLE IRA for at least two years. 
 © 2008 GOODMAN & COMPANY, L.L.P. 
 

 2 
 

 

 

 [Letterhead York River Electric]
 

 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 4.20 – ENVIRONMENTAL FACTORS
 

 Except as disclosed here:
 

 (a)
 The Company and each Affiliate has conducted its business in compliance with all applicable Environmental Laws, including having all Permits necessary under applicable Environmental Laws for the operation of its business as presently conducted;
 (b)
 None of the real properties owned or leased by the Company or any Affiliate contain any Hazardous Substance in amounts exceeding the levels permitted by Environmental Laws;
 (c)
 Neither the Company nor any of the Affiliates have received any notices, demand letters or requests for information from any Governmental Authority or third party indicating that the Company or any of the Affiliates may be in violation of, or liable under, any Environmental Law in connection with the ownership or operation of its Business, nor does the Company or the Seller have any Knowledge of any facts which could give rise to any such notice, demand letter or request for information from any Governmental Authority;
 (d)
 There are no civil, criminal or administrative actions, suits, demands, claims, hearings, investigations or Proceedings pending or threatened against the Company or any Affiliate relating to any violation, or alleged violation, of any applicable Environmental Law;
 (e)
 No reports have been filed, or are required to be filed, by the Company or any Affiliate concerning the release of any Hazardous Substance or the threatened or actual violation of any Environmental Law;
 (f)
 

 No Hazardous Substance has been disposed of, released or transported in violation of any applicable Environmental Law from any real properties owned or leased by the Company or any Affiliate;
 1
 

 (g)
 

 There have been no environmental investigations, studies, audits, tests, reviews or other analyses regarding compliance or noncompliance with any applicable Environmental Law conducted by or which are in the possession of the Company or any Affiliate which have not been delivered to the Buyer prior to the date hereof;
 (h)
 There are no underground storage tanks on, in or under any real properties owned or leased by the Company or any Affiliate and no underground storage tanks have been closed or removed by the Company or any Affiliate from any of such properties;
 (i)
 There is no asbestos or asbestos-containing material present in any of the assets owned or leased by the Company or any Affiliate, and no asbestos has been removed by the Company or any Affiliate from any of such properties; and
 (j)
  Company, nor any Affiliates, nor any of their properties are subject to any material Liabilities or expenditures (fixed or contingent) relating to any suit, settlement, Law or claim asserted or arising under any Environmental Law.
 

 NO EXCEPTIONS
 

 

 

 2
 

 

 Schedule 4.21  Schedule 4.21
 2011 Top Customers
 1.
 NAVFACENGCOM
 2.
 JS Rome Group
 3.
 NRCC ID
 4.
 ENVIVA Biomass
 5.
 National Park
 6.
 Casas Electric
 7.
 School Board
 8.
 William & Ma
 9.
 VAMC-Salem
 10.
 TJNAF
 2011 Top Suppliers
 1.
 Mayer Electric Supply Co., Inc
 2.
 Warwick Plumbing & Heating
 3.
 Adams Construction Co.
 4.
 Northwest Contractors
 5.
 Richmond Tree Experts, Inc.
 6.
 Cascade Contracting, Inc.
 7.
 Graybar
 8.
 Myers Power Products, Inc.
 9.
 Harbor Mechanical, Inc.
 10.
 W.F. Magann Corporation
 

 

 Schedule 4.22
 	 	 	
	 2009 New Fixed Assets
	 

	 

	 

	 

	 10-00-1500
	 Furniture & Fixtures
	 Life

	 

	 

	 

	 3,337.27
	 HP NoteBook 8530p + HP DeskTop dc5800
	 5

	 839.95
	 HP LaserJet CP3525DN (Lackey Office)
	 5

	 944.95
	 HP LaserJet CP3525DN (Production Office)
	 5

	 1,477.00
	 HP EliteBook 8530p Core 2 Duo
	 5

	 533.98
	 Dell NoteBook Vostro 1320 (Travis)
	 5

	 

	 

	 

	 10-00-1510
	 Tools & Equipment
	 

	 

	 

	 

	 6,184.50
	 Fluke Thermal Imaging Meter
	 5

	 3,478.83
	 Duct Rodder
	 5

	 3,500.00
	 Positive Displacement Blower
	 5

	 1,254.72
	 Shelving Units (Service Van)
	 5

	 18,237.80
	 JobClock System (50+ Units)
	 5

	 4,993.38
	 Hanson EGX-350 Engraver
	 5

	 3,802.83
	 Amprobe Three Phase Power Recorder
	 5

	 3,045.00
	 60HP Mercury OB Motor (AFA Marine)
	 5

	 18,900.00
	 RCH Forlift (Gradall Model 524-3s) Serial #0277588
	 5

	 3,500.00
	 2004 Haulmakr Trailer (vin#16HPB16294G059270)
	 5

	 

	 

	 

	 10-00-1535
	 Software
	 

	 

	 

	 

	 8,975.00
	 Electrical Estimating Software
	 3

 

 1
 

 	 	 	
	 2010 New Fixed Assets
	 

	 

	 

	 

	 10-00-1500
	 Furniture & Fixtures
	 Life

	 

	 

	 

	 2,752.00
	 6000 PRO SFF C2D 2GB 160GB DVDR
	 5

	 971.00
	 Security Camera
	 5

	 1,763.00
	 J.Burton Computer System
	 5

	 1,282.00
	 J.Burton Computer System
	 5

	 74,754.00
	 Network Server
	 5

	 1,884.00
	 I-Pads (2)
	 5

	 2,944.00
	 Barracuda Firewall
	 5

	 11,663.00
	 Xerox Copier WC7435P Color 
	 5

	 12,500.00
	 Carpet 108 Production Drive
	 7

	 

	 

	 

	 10-00-1530
	 Leasehold Improvements
	 

	 

	 

	 

	 11,048.00
	 HVAC 108 Production Drive
	 39

	 66,271.00
	 Renovation 108 Production Drive
	 39

	 

	 

	 

	 10-00-1510
	 Tools & Equipment
	 

	 

	 

	 

	 6,184.50
	 2008 Tracker Marine Boat
	 5

	 6,295.00
	 12000 Pound Post Lift
	 5

	 3,261.00
	 Nitto Kohki HS11-1624 Punch
	 5

	 6,524.00
	 Nitto Kohki HPD-05 + 10 AMP Micro-Ohmmeter
	 5

	 

	 

	 

	 10-00-1520
	 Transportation Equipment
	 

	 

	 

	 

	 59,068.00
	 2011 Ford F350
	 5

	 38,034.00
	 2011 Ford Edge
	 5

 

 

 2
 

 	 	 	
	 2011 New Fixed Assets
	 

	 

	 

	 

	 10-00-1500
	 Furniture & Fixtures
	 Life

	 

	 

	 

	 4,396.10
	 Toshiba Telephone Systems (5)
	 7

	 1,264.16
	 Ebook Notebook 8540P HP
	 5

	 1,131.20
	 Cisco SV Smartnet SV CON AS1C10K9
	 5

	 1,539.79
	 Service Dept Computer CF-52
	 5

	 1,600.00
	 Cherry Conference Table & CM/MB Office Furniture
	 7

	 2,676.15
	 Office Furniture 108 Production Drive
	 7

	 10,575.22
	 (4) HP Z200 TWR 15-600 3.33G Systems
	 5

	 1,577.00
	 HP Notebook Elitebook AH 8560P 
	 5

	 4,827.92
	 (2) HP Z200 TWR 15-600 3.33G Systems
	 5

	 11,663.40
	 W7545P WorkCentre Copier
	 7

	 8,933.71
	 (4) HP Notebook Elitebook 8560P XU061UT# ABA
	 5

	 

	 

	 

	 10-00-1530
	 Leasehold Improvements
	 

	 

	 

	 

	 7,036.96
	 108 Production Drive Building Improvements
	 39

	 5,969.00
	 108 Production Drive Building Improvements
	 39

	 

	 

	 

	 10-00-1510
	 Tools & Equipment
	 

	 

	 

	 

	 6,761.20
	 Ditch Witch Line Locating Model 910R
	 5

	 2,999.99
	 4" Trash Waterpump
	 5

	 3,261.00
	 Western Branch Model 100DGDBL31761A Generator
	 5

	 3,995.00
	 John Deere Gator TX Turf Utility Cart
	 5

	 14,247.50
	 2004 JP60LP Serial# 9L2201 Forklift
	 5

	 14,300.00
	 2007 Kubota RTV 1100
	 5

	 21,157.50
	 Art Boom Lift 45-49' 4WD Genie Model Z45/25-DSL Serial# Z452519546
	 7

	 

	 

	 

	 10-00-1520
	 Transportation Equipment
	 

	 

	 

	 

	 35,662.20
	 2011 Ford F150 AH Sterling Gray
	 5

	 

	 

	 

	 10-00-1535
	 Software
	 

	 

	 

	 

	 1,295.00
	 Electrical Estimating Software
	 3

	 4,660.25
	 Sage Means Commercial Estimating Software
	 3

  

 

 3
 

 

 Schedule 4.19 summary  
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 YORK RIVER ELECTRIC, INC. 401(K) SAFE HARBOR PLAN
 SUMMARY PLAN DESCRIPTION
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 TABLE OF CONTENTS
 INTRODUCTION TO YOUR PLAN
 

 What kind of Plan is this?
           1
 What information does this Summary provide?
           1
 

 ARTICLE I
 PARTICIPATION IN THE PLAN
 

 How do I participate in the Plan?
           1
 How is my service determined for purposes of Plan eligibility?
           2
 What service is counted for purposes of Plan eligibility?
           3
 What happens if I'm a participant, terminate employment and then I'm rehired?
           3
 

 ARTICLE II
 EMPLOYEE CONTRIBUTIONS
 

 What are salary deferrals and how do I contribute them to the Plan?
           3
 What are rollover contributions?
           4
 

 ARTICLE III
 EMPLOYER CONTRIBUTIONS
 

 What is the safe harbor contribution?
           5
 What is the Employer matching contribution and how is it allocated?
           5
 What is the Employer profit sharing contribution and how is it allocated?                         5
 How is my service determined for allocation purposes?
           5
 What are forfeitures and how are they allocated?
           6
 

 ARTICLE IV
 COMPENSATION AND ACCOUNT BALANCE
 

 What compensation is used to determine my Plan benefits?
           6
 Is there a limit on the amount of compensation which can be considered?
           6
 Is there a limit on how much can be contributed to my account each year?
           6
 How is the money in the Plan invested?
           7
 Will Plan expenses be deducted from my account balance?
           7
 

 ARTICLE V
 VESTING
 

 What is my vested interest in my account?
           7
 How is my service determined for vesting purposes?
           8
 What service is counted for vesting purposes?
           8
 What happens to my non-vested account balance if I'm rehired? 
           9
 What happens if the Plan becomes a "top-heavy plan"?
           9
 

 ARTICLE VI
 DISTRIBUTIONS PRIOR TO TERMINATION AND HARDSHIP DISTRIBUTIONS
 

 Can I withdraw money from my account while working?
           9
 Can I withdraw money from my account in the event of financial hardship?
         10
 ARTICLE VII
 BENEFITS AND DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
 

 When can I get money out of the Plan?
         11
 What happens if I terminate employment before death, disability or retirement?
         11
 What happens if I terminate employment at Normal Retirement Date?
         11
 What happens if I terminate employment at Early Retirement Date?
         11
 What happens if I terminate employment due to disability?
         12
 How will my benefits be paid to me?
         12
 

 ARTICLE VIII
 BENEFITS AND DISTRIBUTIONS UPON DEATH
 

 What happens if I die while working for the Employer?
         12
 Who is the beneficiary of my death benefit?
         12
 How will the death benefit be paid to my beneficiary?
         13
 When must the last payment be made to my beneficiary?
         13
 What happens if I'm a participant, terminate employment and die before receiving all my benefits?
         13
 

 ARTICLE IX
 TAX TREATMENT OF DISTRIBUTIONS
 

 What are my tax consequences when I receive a distribution from the Plan?                   13
 Can I elect a rollover to reduce or defer tax on my distribution?
         14
 

 ARTICLE X
 PROTECTED BENEFITS AND CLAIMS PROCEDURES
 

 Are my benefits protected?
         14
 Are there any exceptions to the general rule?
         14
 Can the Plan be amended?
         14
 What happens if the Plan is discontinued or terminated?
         15
 How do I submit a claim for Plan benefits?
         15
 What if my benefits are denied?
         15
 What is the Claims Review Procedure?
         16
 What are my rights as a Plan participant?
         17
 What can I do if I have questions or my rights are violated?
         17
 

 

 ARTICLE XI
 GENERAL INFORMATION ABOUT THE PLAN
 

 Plan Name
         17
 Plan Number
         18
 Plan Effective Dates
         18
 Other Plan Information
         18
 Employer Information
         18
 Plan Administrator Information
         18
 Plan Trustee Information and Plan Funding Medium
         18
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 YORK RIVER ELECTRIC, INC. 401(K) SAFE HARBOR PLAN
 

 SUMMARY PLAN DESCRIPTION
 

 INTRODUCTION TO YOUR PLAN
 

 What kind of Plan is this?
 

 York River Electric, Inc. 401(k) Safe Harbor Plan ("Plan") has been adopted to provide you with the opportunity to save for retirement on a tax-advantaged basis. This Plan is a type of qualified retirement plan commonly referred to as a 401(k) Plan. As a participant in the Plan, you may elect to contribute a portion of your compensation to the Plan.
 

 What information does this Summary provide?
 

 This Summary Plan Description ("SPD") contains information regarding when you may become eligible to participate in the Plan, your Plan benefits, your distribution options, and many other features of the Plan. You should take the time to read this SPD to get a better understanding of your rights and obligations under the Plan. 
 

 In this summary, your Employer has addressed the most common questions you may have regarding the Plan. If this SPD does not answer all of your questions, please contact the Administrator or other plan representative. The Administrator is responsible for responding to questions and making determinations related to the administration, interpretation, and application of the Plan. The name and address of the Administrator can be found at the end of this SPD in the Article entitled "General Information About the Plan."
 

 This SPD describes the Plan's benefits and obligations as contained in the legal Plan document, which governs the operation of the Plan. The Plan document is written in much more technical and precise language and is designed to comply with applicable legal requirements. If the non-technical language in this SPD and the technical, legal language of the Plan document conflict, the Plan document always governs. If you wish to receive a copy of the legal Plan document, please contact the Administrator.
 

 The Plan and your rights under the Plan are subject to federal laws, such as the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code, as well as some state laws. The provisions of the Plan are subject to revision due to a change in laws or due to pronouncements by the Internal Revenue Service (IRS) or Department of Labor (DOL). Your Employer may also amend or terminate this Plan. If the provisions of the Plan that are described in this SPD change, your Employer will notify you.
 

 

 

 

 Types of Contributions. The following types of contributions may be made under this plan:
 ·
 employee salary deferrals including Roth 401(k) deferrals
 ·
 employee rollover contributions
 ·
 employer safe harbor contributions
 ·
 employer matching contributions
 ·
 employer profit sharing contributions
 

 ARTICLE I
 PARTICIPATION IN THE PLAN
 How do I participate in the Plan?
 

 Provided you are not an Excluded Employee, you may begin participating under the Plan once you have satisfied the eligibility requirements and reached your "Entry Date." The following describes the eligibility requirements and Entry Dates that apply. You should contact the Administrator if you have questions about the timing of your Plan participation.
 

 Salary Deferrals
 

 Participants who are eligible to make salary deferrals to the Plan are eligible for the safe harbor contribution described in Article III of this SPD.
 

 Excluded Employees. If you are a member of a class of employees identified below, you are an Excluded Employee and you are not entitled to participate in the Plan for purposes of salary deferrals and rollover contributions. The Excluded Employees are:
 

 ·
 union employees whose employment is governed by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining.
 ·
 leased employees
 

 Eligibility Conditions. You will be eligible to participate for purposes of salary deferrals when you have satisfied the following eligibility condition(s). However, you will actually enter the Plan once you reach the Entry Date as described below.
 

 ·
 attainment of age 21.
 ·
 completion of six (6) months of service.
 

 Entry Date. For purposes of salary deferrals, your Entry Date will be the first day of the Plan Year or the first day of the seventh month of the Plan Year coinciding with or next following the date you satisfy the eligibility requirements.
 

 

 Matching Contributions
 

 Excluded Employees. If you are a member of a class of employees identified below, you are an Excluded Employee and you are not entitled to participate in the Plan for purposes of matching contributions. The Excluded Employees are:
 

 ·
 union employees whose employment is governed by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining.
 ·
 leased employees
 

 Eligibility Conditions. You will be eligible to participate for purposes of matching contributions when you have satisfied the following eligibility condition(s). However, you will actually enter the Plan once you reach the Entry Date as described below.
 

 ·
 attainment of age 21.
 ·
 completion of one (1) Year of service.
 

 Entry Date. For purposes of matching contributions, your Entry Date will be the first day of the Plan Year or the first day of the seventh month of the Plan Year coinciding with or next following the date you satisfy the eligibility requirements.
 

 Profit Sharing Contributions
 

 Excluded Employees. If you are a member of a class of employees identified below, you are an Excluded Employee and you are not entitled to participate in the Plan for purposes of profit sharing contributions. The Excluded Employees are:
 

 ·
 union employees whose employment is governed by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining.
 ·
 leased employees
 

 Eligibility Conditions. You will be eligible to participate for purposes of profit sharing contributions when you have satisfied the following eligibility condition(s). However, you will actually enter the Plan once you reach the Entry Date as described below.
 

 ·
 attainment of age 21.
 ·
 completion of one (1) Year of service.
 

 

 

 

 Entry Date. For purposes of profit sharing contributions, your Entry Date will be the first day of the Plan Year or the first day of the seventh month of the Plan Year coinciding with or next following the date you satisfy the eligibility requirements.
 

 How is my service determined for purposes of Plan eligibility?
 

 Year of Service. You will be credited with a Year of Service at the end of the twelve month period beginning on your date of hire if you have been credited with at least 1,000 Hours of Service during such period. If you have not been credited with 1,000 Hours of Service by the end of such period, you will have completed a Year of Service at the end of any following Plan Year during which you were credited with 1,000 Hours of Service.
 

 Hour of Service. You will be credited with your actual Hours of Service for:
 

 (a)
 each hour for which you are directly or indirectly compensated by the Employer for the performance of duties during the Plan Year;
 

 (b) each hour for which you are directly or indirectly compensated by the Employer for reasons other than the performance of duties (such as vacation, holidays, sickness, disability, lay-off, military duty, jury duty or leave of absence during the Plan Year); and
 

 (c) each hour for back pay awarded or agreed to by the Employer.
 

 You will not be credited for the same Hours of Service both under (a) or (b), as the case may be, and under (c).
 

 Months of Service. You will have completed the required number of months if you are employed by the Employer at any time after you have completed that number of months, measured from your initial employment commencement date.
 

 What service is counted for purposes of Plan eligibility?
 

 Service with the Employer. In determining whether you satisfy the minimum service requirements to participate under the Plan, all service you perform for the Employer will generally be counted. However, there are some exceptions to this general rule.
 

 Break in Service rules. If you terminate employment and are rehired, you may lose credit for prior service under the Plan's Break in Service rules.
 

 For eligibility purposes, you will have a Break in Service if you complete less than 501 Hours of Service during the computation period used to determine whether you have a Year of Service. However, if you are absent from work for certain leaves of absence such as a maternity or paternity leave, you may be credited with enough Hours of Service to prevent a Break in Service.
 

 For eligibility purposes, you will have a Break in Service if you are not employed with the Employer for a period of at least twelve consecutive months. However, if you are absent from work for certain leaves of absence such as a maternity or paternity leave, the twelve consecutive month period beginning on the first anniversary of your first day of such absence will not constitute a Break in Service.
 

 Five-year eligibility Break in Service rule. The five-year Break in Service rule applies only to participants who had no vested interest in the Plan when employment had terminated. If you were not vested in any amounts when you terminated employment and you have five 1-Year Breaks in Service (as defined above), all the service you earned before the 5-year period no longer counts for eligibility purposes. Thus, if you were to return to employment, you would have to resatisfy any minimum service requirements under the Plan.
 

 Military Service. If you are a veteran and are reemployed under the Uniformed Services Employment and Reemployment Rights Act of 1994, your qualified military service may be considered service with the Employer. If you may be affected by this law, ask the Administrator for further details.
 

 What happens if I'm a participant, terminate employment and then I'm rehired?
 

 If you are no longer a participant because you terminated employment, and you are rehired, then you will be able to participate in the Plan on your date of rehire provided your prior service had not been disregarded under the Break in Service rules and you are otherwise eligible to participate in the Plan.
 

 ARTICLE II
 EMPLOYEE CONTRIBUTIONS
 

 What are salary deferrals and how do I contribute them to the Plan?
 

 Salary Deferrals. As a participant under the Plan, you may elect to reduce your compensation by a specific percentage or dollar amount and have that amount contributed to the Plan as a salary deferral. Effective July 7, 2010, there are two types of salary deferrals: Pre-Tax 401(k) deferrals and Roth 401(k) deferrals. For purposes of this SPD, "salary deferrals" generally means both Pre-Tax 401(k) deferrals and Roth 401(k) deferrals. Regardless of the type of deferral you make, the amount you defer is counted as compensation for purposes of Social Security taxes.
 

 Pre-Tax 401(k) Deferrals. If you elect to make Pre-Tax 401(k) deferrals, then your taxable income is reduced by the deferral contributions so you pay less in federal income taxes. Later, when the Plan distributes the deferrals and earnings, you will pay the taxes on those deferrals and the earnings. Therefore, with a Regular 401(k) deferral, federal income taxes on the deferral contributions and on 
 

 the earnings are only postponed. Eventually, you will have to pay taxes on these amounts.
 

 Roth 401(k) Deferrals. If you elect to make Roth 401(k) deferrals, the deferrals are subject to federal income taxes in the year of deferral. However, the deferrals and, in most cases, the earnings on the deferrals are not subject to federal income taxes when distributed to you. In order for the earnings to be tax free, you must meet certain conditions. See "What are my tax consequences when I receive a distribution from the Plan?" below.
 

 Deferral procedure. The amount you elect to defer will be deducted from your pay in accordance with a procedure established by the Administrator. The procedure will require that you enter into a salary deferral agreement after you satisfy the Plan's eligibility requirements. You may elect to defer a portion of your salary as of your Entry Date or on the first day of each Plan Year quarter. Such election will become effective as soon as administratively feasible after it is received by the Administrator. Your election will remain in effect until you modify or terminate it.
 

 Deferral modifications. You are permitted to revoke your salary deferral election at any time during the Plan Year. You may make any other modification on the first day of each Plan Year quarter or in accordance with any other procedure that your Employer provides. Any modification will become effective as soon as administratively feasible after it is received by the Administrator.
 

 Deferral Limit. As a participant, you may elect to defer a percentage of your compensation each year instead of receiving that amount in cash. In addition, you may separately elect to defer up to 100% of any bonuses paid to you during the year. Your total deferrals in any taxable year may not exceed a dollar limit which is set by law. The limit for 2010 is $16,500. After 2010, the dollar limit may increase for cost-of-living adjustments. See the paragraph below on Annual dollar limit. The Administrator will notify you of the maximum percentage you may defer.
 

 Catch-up contributions. Effective January 1, 2002, if you are at least age 50 or will attain age 50 before the end of a calendar year, then you may elect to defer additional amounts (called "catch-up contributions") to the Plan as of the January 1st of that year. The additional amounts may be deferred regardless of any other limitations on the amount that you may defer to the Plan. The maximum "catch-up contribution" that you can make in 2010 is $5,500. After 2010, the maximum may increase for cost-of-living adjustments.
 

 Annual dollar limit. You should also be aware that each separately stated annual dollar limit on the amount you may defer (the annual deferral limit and the "catch-up contribution" limit) is a separate aggregate limit that applies to all such similar salary deferral amounts and "catch-up contributions" you may make under this Plan and any other cash or deferred arrangements (including tax-sheltered 403(b) annuity contracts, simplified employee pensions or other 401(k) plans) in which you may be participating. 
 

 Generally, if an annual dollar limit is exceeded, then the excess must be returned to you in order to avoid adverse tax consequences. For this reason, it is desirable to request in writing that any such excess salary deferral amounts and "catch-up contributions" be returned to you.
 

 If you are in more than one plan, you must decide which plan or arrangement you would like to return the excess. If you decide that the excess should be distributed from this Plan, you must communicate this in writing to the Administrator no later than the March 1st following the close of the calendar year in which such excess deferrals were made. However, if the entire dollar limit is exceeded in this Plan or any other plan your Employer maintains, then you will be deemed to have notified the Administrator of the excess. The Administrator will then return the excess deferrals and any earnings to you by April 15th.
 

 Allocation of deferrals. The Administrator will allocate the amount you elect to defer to an account maintained on your behalf. You will always be 100% vested in this account (see the Article in this SPD entitled "Vesting"). This means that you will always be entitled to all amounts that you defer. This money will, however, be affected by any investment gains or losses. If there is an investment gain, then the balance in your account will increase. If there is an investment loss, then the balance in your account will decrease.
 

 Distribution of deferrals. The rules regarding distributions of amounts attributable to your salary deferrals are explained later in this SPD.
 

 What are rollover contributions?
 

 Rollover contributions. At the discretion of the Administrator, if you are a Participant who is currently employed or an Eligible Employee, you may be permitted to deposit into the Plan distributions you have received from other retirement plans and certain IRAs. Such a deposit is called a "rollover" and may result in tax savings to you. You may ask the Administrator or Trustee of the other plan or IRA to directly transfer (a "direct rollover") to this Plan all or a portion of any amount that you are entitled to receive as a distribution from such plan. Alternatively, if you received a distribution from a prior plan, you may elect to deposit any amount eligible to be rolled over within 60 days of your receipt of the distribution. You should consult qualified counsel to determine if a rollover is permitted and in your best interest.
 

 Rollover account. Your rollover will be accounted for in a "rollover account." You will always be 100% vested in your "rollover account" (see the Article in this SPD entitled "Vesting"). This means that you will always be entitled to all amounts in your rollover account. Rollover contributions will be affected by any investment gains or losses.
 

 Withdrawal of rollover contributions. You may withdraw the amounts in your "rollover account" at any time.
 

 

 ARTICLE III
 EMPLOYER CONTRIBUTIONS
 

 In addition to any deferrals you elect to make, your Employer will make additional contributions to the Plan. This Article describes Employer contributions that will be made to the Plan and how your share of the contribution is determined.
 

 What is the safe harbor contribution?
 

 Safe harbor 401(k) plan. This Plan is referred to as a "safe harbor 401(k) plan." If your Employer elects to satisfy the "safe harbor" rules, then before the beginning of each Plan Year, you will be provided with a comprehensive notice of your rights and obligations under the Plan. However, if you become eligible to participate in the Plan after the beginning of the Plan Year, then the notice will be provided to you on or before the date you are eligible. A safe harbor 401(k) plan is a plan design where your Employer commits to making certain contributions described below. This commitment to make contributions enables your Employer to simplify the administration of the Plan by ensuring that nondiscrimination regulations are met, which is why it is called a "safe harbor" plan.
 

 Safe Harbor Matching Contribution. In order to maintain "safe harbor" status, your Employer will make a safe harbor matching contribution equal to 100% of your salary deferrals that do not exceed 4% of your compensation. This safe harbor matching contribution is 100% vested (see the Article in this SPD entitled "Vesting").
 

 For purposes of calculating the safe harbor matching contribution, your compensation and deferrals will be determined on a payroll period basis.
 

 What is the Employer matching contribution and how is it allocated?
 

 Matching Contribution. Your Employer may make a discretionary matching contribution equal to a uniform percentage of your salary deferrals. Each year, your Employer will determine the amount of the discretionary percentage.
 

 Limit on matching percentage. In applying this matching percentage, however, your Employer has the option to disregard salary deferrals made each payroll period that exceed a certain dollar amount or a certain percentage of your compensation for such period. The Plan Administrator will inform you of this limit.
 

 Allocation conditions. You will always share in the matching contribution regardless of the amount of service you complete during the Plan Year.
 

 What is the Employer profit sharing contribution and how is it allocated?
 

 

 Profit sharing contribution. Each year, your Employer may make a discretionary profit sharing contribution to your account.
 Allocation conditions. In order to share in the profit sharing contribution for a Plan Year, you must satisfy the following conditions:
 

 ·
 If you are employed on the last day of the Plan Year, you will share if you completed at least 1,000 Hours of Service during the Plan Year.
 ·
 If you terminate employment (not employed on the last day of the Plan Year), you will not receive a profit sharing contribution regardless of the amount of service you complete during the Plan Year.
 ·
 You will share in the profit sharing contribution for the year regardless of the amount of service you complete during the Plan Year in the year of your death, disability or retirement.
 How is my service determined for allocation purposes?
 

 Hour of Service. You will be credited with your actual Hours of Service for:
 

 (a)
 each hour for which you are directly or indirectly compensated by the Employer for the performance of duties during the Plan Year;
 

 (b) each hour for which you are directly or indirectly compensated by the Employer for reasons other than the performance of duties (such as vacation, holidays, sickness, disability, lay-off, military duty, jury duty or leave of absence during the Plan Year); and
 

 (c) each hour for back pay awarded or agreed to by the Employer.
 

 You will not be credited for the same Hours of Service both under (a) or (b), as the case may be, and under (c).
 

 What are forfeitures and how are they allocated?
 

 Definition of forfeitures. In order to reward employees who remain employed with the Employer for a long period of time, the law permits a "vesting schedule" to be applied to certain contributions that your Employer makes to the Plan. This means that you will not be "vested" in (entitled to) all of the contributions until you have been employed with the Employer for a specified period of time (see the Article entitled "Vesting"). If a participant terminates employment before being fully vested, then the non-vested portion of the terminated participant's account balance remains in the Plan and is called a forfeiture.
 

 Allocation of forfeitures. Forfeitures will be allocated as follows:
 ·
 Forfeitures may first be used to pay any administrative expenses.
 ·
 Any remaining forfeitures attributable to amounts other than Employer matching contributions will be used to reduce any Employer contribution.
 ·
 

 Any remaining forfeitures attributable to matching contributions will be used to reduce any Employer contribution.
 ARTICLE IV
 COMPENSATION AND ACCOUNT BALANCE
 

 What compensation is used to determine my Plan benefits?
 

 Definition of compensation. For the purposes of the Plan, compensation has a special meaning. Compensation is generally defined as your total compensation that is subject to income tax and paid to you by your Employer during the Plan Year. Amounts paid to you after you terminate employment are generally not treated as compensation. If you are a self-employed individual, your compensation will be equal to your earned income. The following describes the adjustments to compensation that may apply for the different types of contributions provided under the Plan.
 

 All Contributions
 

 Adjustments to compensation. The following adjustments to compensation will be made:
 ·
 salary deferrals to this Plan and to any other plan or arrangement (such as a cafeteria plan) will be included.
 ·
 compensation paid while not a participant in the component of the Plan for which compensation is being used will be excluded.
 

 Is there a limit on the amount of compensation which can be considered?
 

 The Plan, by law, cannot recognize annual compensation in excess of a certain dollar limit. The limit for the Plan Year beginning in 2010 is $245,000. After 2010, the dollar limit may increase for cost-of-living adjustments.
 

 Is there a limit on how much can be contributed to my account each year?
 

 Generally, the law imposes a maximum limit on the amount of contributions (excluding catch-up contributions) that may be made to your account and any other amounts allocated to any of your accounts during the Plan Year, excluding earnings. Beginning in 2010, this total cannot exceed the lesser of $49,000 or 100% of your annual compensation. After 2010, the dollar limit may increase for cost-of-living adjustments.
 

 How is the money in the Plan invested?
 

 The Trustee of the Plan has been designated to hold the assets of the Plan for the benefit of Plan participants and their beneficiaries in accordance with the terms of this Plan. The trust fund established by the Plan's Trustee will be the funding medium used for the accumulation of assets from which Plan benefits will be distributed.
 

 

 Participant directed investments. You will be able to direct the investment of certain portions of your interest in the Plan. The Administrator will provide you with information on the investment choices available to you, the procedures for making investment elections, the frequency with which you can change your investment choices and other important information. You need to follow the procedures for making investment elections and you should carefully review the information provided to you before you give investment directions. If you do not direct the investment of your applicable Plan accounts, then your accounts will be invested in accordance with the default investment alternatives established under the Plan.
 

 The Plan is intended to comply with Section 404(c) of ERISA (the Employee Retirement Income Security Act). If the Plan complies with this Section, then the fiduciaries of the Plan, including your Employer, the Trustee and the Administrator, will be relieved of any legal liability for any losses which are the direct and necessary result of the investment directions that you give.
 

 Earnings or losses. When you direct investments, your accounts are segregated for purposes of determining the earnings or losses on these investments. Your account does not share in the investment performance of other participants who have directed their own investments. You should remember that the amount of your benefits under the Plan will depend in part upon your choice of investments. Gains as well as losses can occur and your Employer, the Administrator, and the Trustee will not provide investment advice or guarantee the performance of any investment you choose.
 

 Account limitations. You may only direct the investment of amounts in the following accounts:
 

 ·
 rollover account
 

 Will Plan expenses be deducted from my account balance?
 

 Expenses allocated to all accounts. The Plan permits the payment of Plan expenses to be made from the Plan's assets. If expenses are paid using the Plan's assets, then the expenses will generally be allocated among the accounts of all participants in the Plan. These expenses will be allocated either proportionately based on the value of the account balances or as an equal dollar amount based on the number of participants in the Plan. The method of allocating the expenses depends on the nature of the expense itself. For example, certain administrative (or recordkeeping) expenses would typically be allocated proportionately to each participant. If the Plan pays $1,000 in expenses and there are 100 participants, your account balance would be charged $10 ($1,000/100) of the expense.
 

 Terminated employee. After you terminate employment, your Employer reserves the right to charge your account for your pro rata share of the Plan's administration expenses, regardless of whether your Employer pays some of these expenses on behalf of current employees.
 

 

 Expenses allocated to individual accounts. There are certain other expenses that may be paid just from your account. These are expenses that are specifically incurred by, or attributable to, you. For example, if you are married and get divorced, the Plan may incur additional expenses if a court mandates that a portion of your account be paid to your ex-spouse. These additional expenses may be paid directly from your account (and not the accounts of other participants) because they are directly attributable to you under the Plan. The Administrator will inform you when there will be a charge (or charges) directly to your account.
 

 Your Employer may, from time to time, change the manner in which expenses are allocated.
 

 ARTICLE V
 VESTING
 

 What is my vested interest in my account?
 

 In order to reward employees who remain employed with the Employer for a long period of time, the law permits a "vesting schedule" to be applied to certain contributions that your Employer makes to the Plan. This means that you will not be entitled ("vested") in all of the contributions until you have been employed with the Employer for a specified period of time.
 

 100% vested contributions. You are always 100% vested (which means that you are entitled to all of the amounts) in your accounts attributable to the following contributions:
 

 ·
 salary deferrals including Roth 401(k) deferrals and catch-up contributions
 ·
 rollover contributions
 ·
 safe harbor contributions
 

 Vesting schedules. Your "vested percentage" for certain Employer contributions is based on vesting Years of Service. This means at the time you stop working, your account balance attributable to contributions subject to a vesting schedule is multiplied by your vested percentage. The result, when added to the amounts that are always 100% vested as shown above, is your vested interest in the Plan, which is what you will actually receive from the Plan.
 

 Profit Sharing Contributions
 

 Your "vested percentage" in your account attributable to profit sharing contributions is determined under the following schedule. You will always, however, be 100% vested in your profit sharing contributions if you are employed on or after your Early or Normal Retirement Age or if you die or become disabled.
 

 

 

 

 Vesting Schedule
    Profit Sharing Contributions
                               Years of Service 
     Percentage
 

 

 Matching Contributions
 

 Your "vested percentage" in your account attributable to matching contributions is determined under the following schedule. You will always, however, be 100% vested in your matching contributions if you are employed on or after your Early or Normal Retirement Age or if you die or become disabled.
 

 Vesting Schedule
    Profit Sharing Contributions
                                Years of Service 
     Percentage
 

 Less than 2
 0%
         2
           20%
         3
           40%
         4
           60%
         5
           80%
         6
         100%
 

 How is my service determined for vesting purposes?
 

 Year of Service. To earn a Year of Service, you must be credited with at least 1,000 Hours of Service during a Plan Year. The Plan contains specific rules for crediting Hours of Service for vesting purposes. The Administrator will track your service and will credit you with a Year of Service for each Plan Year in which you are credited with the required Hours of Service, in accordance with the terms of the Plan. If you have any questions regarding your vesting service, you should contact the Administrator.
 

 Hour of Service. You will be credited with your actual Hours of Service for:
 

 (a) each hour for which you are directly or indirectly compensated by the Employer for the performance of duties during the Plan Year;
 

 (b) each hour for which you are directly or indirectly compensated by the Employer for reasons other than the performance of duties (such as vacation, holidays, sickness, disability, lay-off, military duty, jury duty or leave of absence during the Plan Year); and
 

 (a)
 each hour for back pay awarded or agreed to by the Employer. You will not be credited for the same Hours of Service both under (a) or (b), as the case may be, and under (c).
 

 

 What service is counted for vesting purposes?
 

 Service with the Employer. In calculating your vested percentage, all service you perform for the Employer will generally be counted. However, there are some exceptions to this general rule.
 Break in Service rules. If you terminate employment and are rehired, you may lose credit for prior service under the Plan's Break in Service rules.
 

 For vesting purposes, you will have a Break in Service if you complete less than 501 Hours of Service during the computation period used to determine whether you have a Year of Service. However, if you are absent from work for certain leaves of absence such as a maternity or paternity leave, you may be credited with enough Hours of Service to prevent a Break in Service.
 

 Five-year Break in Service rule. The five-year Break in Service rule applies only to participants who had no vested interest in the Plan when employment had terminated. If you were not vested in any amounts when you terminated employment and you have five 1-Year Breaks in Service (as defined above), all the service you earned before the 5-year period no longer counts for vesting purposes. Thus, if you return to employment after incurring five 1-Year Breaks in Service, you will be treated as a new employee (with no service) for purposes of determining your vested percentage under the Plan.
 

 Military Service. If you are a veteran and are reemployed under the Uniformed Services Employment and Reemployment Rights Act of 1994, your qualified military service may be considered service with the Employer. If you may be affected by this law, ask the Administrator for further details.
 

 What happens to my non-vested account balance if I'm rehired?
 

 If you have no vested interest in the Plan when you leave, your account balance will be forfeited. However, if you are rehired before incurring five 1-Year Breaks in Service, your account balance as of your termination date will be restored, unadjusted for any gains or losses.
 

 If you are partially vested in your account balance when you leave, the non-vested portion of your account balance will be forfeited on the earlier of the date:
 

 (a)
 of the distribution of your vested account balance, or
 

 (b)
 when you incur five consecutive 1-year Breaks in Service.
 

 If you received a distribution of your vested account balance and are rehired, you may have the right to repay this distribution. If you repay the entire amount of the distribution, your Employer will restore your account balance with your forfeited amount. You must repay this distribution within five years from your date of reemployment, or, if earlier, 
 

 before you incur five 1-Year Breaks in Service. If you were 100% vested when you left, you do not have the opportunity to repay your distribution.
 

 

 What happens if the Plan becomes a "top-heavy plan"?
 

 Top-heavy plan. A retirement plan that primarily benefits "key employees" is called a "top-heavy plan." Key employees are certain owners or officers of your Employer. A plan is generally a "top-heavy plan" when more than 60% of the plan assets are attributable to key employees. Each year, the Administrator is responsible for determining whether the Plan is a "top-heavy plan."
 

 Top-heavy rules. If the Plan becomes top-heavy in any Plan Year, then you may be entitled to certain "top-heavy minimum benefits," and other special rules will apply. These top-heavy rules include the following:
 

 ·
 Your Employer may be required to make a contribution on your behalf in order to provide you with at least "top-heavy minimum benefits."
 ·
 If you are a participant in more than one Plan, you may not be entitled to "top-heavy minimum benefits" under both Plans.
 

 ARTICLE VI
 DISTRIBUTIONS PRIOR TO TERMINATION AND HARDSHIP DISTRIBUTIONS
 

 Can I withdraw money from my account while working?
 

 In-service distributions. You may be entitled to receive an in-service distribution. However, this distribution is not in addition to your other benefits and will therefore reduce the value of the benefits you will receive at retirement. This distribution is made at your election and will be made in accordance with the forms of distributions available under the Plan.
 

 Conditions and Limitations. Generally you may receive a distribution from the Plan from certain accounts prior to your termination of employment provided you satisfy any of the following conditions:
 

 ·
 you have attained age 59 1⁄2
 

 The following limitations apply to in-service distributions from certain accounts:
 

 ·
 The minimum amount you can receive as an in-service distribution is $1,000.
 ·
 In-service distributions can only be made from accounts which are 100% vested.
 

 Account restrictions. You may request an in-service distribution only from the following accounts provided the account is 100% vested:
 

 ·
 pre-tax 401(k) deferral accounts
 ·
 account(s) attributable to Employer matching contributions, including any safe harbor matching contributions
 ·
 accounts attributable to Employer profit sharing contributions
 ·
 qualified nonelective contribution accounts
 ·
 rollover accounts (distributions may be made at any time)
 

 Also, the law restricts any in-service distributions from certain accounts which are maintained for you under the Plan before you reach age 59 1/2. These accounts are the ones set up to receive your salary deferral contributions and other Employer contributions which are used to satisfy special rules for 401(k) plans (such as safe harbor contributions). Ask the Administrator if you need more details.
 

 Can I withdraw money from my account in the event of financial hardship?
 

 Hardship distributions. You may withdraw money for financial hardship if you satisfy certain conditions. This hardship distribution is not in addition to your other benefits and will therefore reduce the value of the benefits you will receive at retirement.
 

 Qualifying expenses. A hardship distribution may be made to satisfy certain immediate and heavy financial needs that you have. A hardship distribution may only be made for payment of the following:
 

 ·
 Expenses for medical care (described in Section 213(d) of the Internal Revenue Code) previously incurred by you, your spouse or your dependents or necessary for you, your spouse or your dependents to obtain medical care.
 ·
 Costs directly related to the purchase of your principal residence (excluding mortgage payments).
 ·
 Tuition, related educational fees, and room and board expenses for the next twelve (12) months of post-secondary education for yourself, your spouse or your dependents.
 ·
 Amounts necessary to prevent your eviction from your principal residence or foreclosure on the mortgage of your principal residence.
 ·
 Payments for burial or funeral expenses for your deceased parent, spouse, children or other dependents.
 ·
 Expenses for the repair of damage to your principal residence that would qualify for the casualty deduction under the Internal Revenue Code.
 

 Conditions. If you have any of the above expenses, a hardship distribution can only be made if you certify and agree that all of the following conditions are satisfied:
 

 (a)
 The distribution is not in excess of the amount of your immediate and heavy financial need. The amount of your immediate and heavy financial need may include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution;
 

 (b)
 You have obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans that your Employer maintains; and
 (c)
 That you will not make any salary deferrals for at least six (6) months after your receipt of the hardship distribution.
 

 Limitations. The following limitations apply to hardship distributions:
 

 ·
 The minimum amount you can request as a hardship distribution is $500.
 ·
 Hardship distributions can only be made from accounts which are 100% vested.
 ·
 You must be employed with the Employer at the time of the hardship distribution.
 

 Account restrictions. You may request a hardship distribution only from the following accounts provided the account is 100% vested:
 

 ·
 pre-tax 401(k) deferral accounts
 ·
 account(s) attributable to Employer matching contributions
 ·
 accounts attributable to Employer profit sharing contributions
 ·
 rollover accounts
 

 In addition, there are restrictions placed on hardship distributions which are made from certain accounts. These accounts are the ones set up to receive your salary deferral contributions and other Employer contributions which are used to satisfy special rules that apply to 401(k) plans (such as safe harbor contributions). Generally, the only amounts that can be distributed to you on account of a hardship from these accounts are your salary deferrals. The earnings on your salary deferrals and special Employer contributions may not be distributed to you on account of a hardship. Ask the Administrator if you need further details.
 

 ARTICLE VII
 BENEFITS AND DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
 

 When can I get money out of the Plan?
 

 You may receive a distribution of the vested portion of some or all of your accounts in the Plan for the following reasons:
 

 ·
 termination of employment for reasons other than death, disability or retirement
 ·
 early retirement
 ·
 normal retirement
 ·
 disability
 ·
 death
 

 This Plan is designed to provide you with retirement benefits. However, distributions are permitted if you die or become disabled. In addition, certain payments are permitted 
 

 when you terminate employment for any other reason. The rules under which you can receive a distribution are described in this Article. The rules regarding the payment of death benefits to your beneficiary are described in "Benefits and Distributions Upon Death."
 You may also receive distributions while you are still employed with the Employer. (See the Article entitled "Distributions Prior to Termination" for a further explanation.)
 

 Military Service. If you are a veteran and are reemployed under the Uniformed Services Employment and Reemployment Rights Act of 1994, your qualified military service may be considered service with the Employer. There may also be benefits for employees who die or become disabled while on active duty. Employees who receive wage continuation payments while in the military may benefit from law changes effective in 2009. If you think you may be affected by these rules, ask the Plan Administrator for further details.
 

 What happens if I terminate employment before death, disability or retirement?
 

 If your employment terminates for reasons other than death, disability or early or normal retirement, you will be entitled to receive only the "vested percentage" of your account balance.
 

 You may elect to have your vested account balance distributed to you as soon as administratively feasible following your termination of employment. However, if the value of your vested account balance does not exceed $1,000, then a distribution will be made to you regardless of whether you consent to receive it. (See the question entitled "How will my benefits be paid to me?" for additional information.)
 

 Treatment of rollovers for consent to distribution. In determining if the value of your vested account balance exceeds the $1,000 threshold described above used to determine whether you must consent to a distribution, your rollover account will be considered as part of your benefit.
 

 What happens if I terminate employment at Normal Retirement Date?
 

 Normal Retirement Date. You will attain your Normal Retirement Age when you reach your 65th birthday. Your Normal Retirement Date is the date on which you attain your Normal Retirement Age.
 

 Payment of benefits. You will become 100% vested in all of your accounts under the Plan if you retire on or after your Normal Retirement Age. However, the actual payment of benefits generally will not begin until you have terminated employment and reached your Normal Retirement Date. In such event, a distribution will be made, at your election, as soon as administratively feasible. If you remain employed past your Normal Retirement Date, you may generally defer the receipt of benefits until you actually terminate employment. In such event, benefit payments will begin as soon as feasible at your request, but generally not later than age 70 1/2. (See the question entitled "How will my benefits be paid to me?" for an explanation of how these benefits will be paid.)
 

 

 

 

 What happens if I terminate employment at Early Retirement Date?
 

 Early Retirement Date. Your Early Retirement Date is the date you have attained age 59 1/2 and completed 5 Years of Service with your Employer. Your Years of Service will be determined using Years of Service for vesting. You may elect to retire when you reach your Early Retirement Date.
 

 Payment of benefits. You will become 100% vested in all of your accounts under the Plan if you retire on or after your Early Retirement Date. However, the payment of benefits generally will not begin until you actually retire after reaching your Early Retirement Date. In such event, a distribution will be made, at your election, as soon as administratively feasible. However, if you retire after reaching your Early
 Retirement Date but prior to your Normal Retirement Date and the value of your account balance does not exceed $1,000, then a distribution of your account balance will be made to you, regardless of whether you consent to receive it. (See the question entitled "How will my benefits be paid to me?" for an explanation of how these benefits will be paid.)
 

 What happens if I terminate employment due to disability?
 

 Definition of disability. Under the Plan, disability is defined as a physical or mental condition resulting from bodily injury, disease, or mental disorder which renders you incapable of continuing any gainful occupation and which has lasted or can be expected to last for a continuous period of at least twelve (12) months. Your disability must be determined by a licensed physician. However, if your condition constitutes total disability under the federal Social Security Act, then the Administrator may deem that you are disabled for purposes of the Plan.
 

 Payment of benefits. If you become disabled while an employee, you will become 100% vested in all of your accounts under the Plan. Payment of your disability benefits will be made to you as if you had retired. However, if the value of your account balance does not exceed $1,000, then a distribution of your account balance will be made to you, regardless of whether you consent to receive it. (See the question entitled "How will my benefits be paid to me?" for an explanation of how these benefits will be paid.)
 

 How will my benefits be paid to me?
 

 Forms of distribution. If your vested account balance does not exceed $5,000, then your vested account balance may only be distributed to you in a single lump-sum payment. In determining whether your vested account balance exceeds the $5,000 threshold, "rollovers" (and any earnings allocable to "rollover" contributions) will be taken into account.
 

 

 

 

 In addition, if your vested account balance exceeds $1,000, you must consent to any distribution before it may be made. If your vested account balance exceeds $5,000, you 
 may elect to receive a distribution of your vested account balance in:
 

 ·
 a single lump-sum payment
 ·
 partial withdrawals of at least $1,000
 

 Delaying distributions. You may delay the distribution of your vested account balance unless a distribution is required to be made, as explained earlier, because your vested account balance does not exceed $1,000. However, if you elect to delay the distribution of your vested account balance, there are rules that require that certain minimum distributions be made from the Plan. If you are a 5% owner, distributions are required to begin not later than the April 1st following the end of the year in which you reach age 70 1/2. If you are not a 5% owner, distributions are required to begin not later than the April 1st following the later of the end of the year in which you reach age 70 1/2 or retire. You should see the Administrator if you think you may be affected by these rules.
 

 Medium of payment. Benefits under the Plan will generally be paid to you in cash or in property.
 

 ARTICLE VIII
 BENEFITS AND DISTRIBUTIONS UPON DEATH
 

 What happens if I die while working for the Employer?
 If you die while still employed by the Employer, then 100% of your account balance will be used to provide your beneficiary with a death benefit.
 

 Who is the beneficiary of my death benefit?
 

 Married Participant. If you are married at the time of your death, your spouse will be the beneficiary of the entire death benefit unless an election is made to change the beneficiary. IF YOU WISH TO DESIGNATE A BENEFICIARY OTHER THAN YOUR SPOUSE, YOUR SPOUSE MUST IRREVOCABLY CONSENT TO WAIVE ANY RIGHT TO THE DEATH BENEFIT. YOUR SPOUSE'S CONSENT MUST BE IN WRITING, BE WITNESSED BY A NOTARY OR A PLAN REPRESENTATIVE AND ACKNOWLEDGE THE SPECIFIC NONSPOUSE BENEFICIARY.
 

 If you are married and you change your designation, then your spouse must again consent to the change. In addition, you may elect a beneficiary other than your spouse without your spouse's consent if your spouse cannot be located.
 

 Unmarried Participant. If you are not married, you may designate a beneficiary on a form to be supplied to you by the Administrator.
 

 

 No beneficiary designation. At the time of your death, if you have not designated a beneficiary or your beneficiary is also not alive, the death benefit will be paid in the following order of priority to:
 

 (a)
 your surviving spouse
 

 (b)
 your children, including adopted children in equal shares (and if a child is not living, that child's share will be distributed to that child's heirs)
 

 (c)
 your surviving parents, in equal shares
 

 (d)
 your estate
 

 How will the death benefit be paid to my beneficiary?
 

 Form of distribution. If the death benefit payable to a beneficiary does not exceed $5,000, then the benefit may only be paid as a lump-sum. If the death benefit exceeds $5,000, your beneficiary may elect to have the death benefit paid in:
 

 ·
 a single lump-sum payment
 ·
 partial withdrawals of at least $1,000
 

 When must the last payment be made to my beneficiary?
 

 The law generally restricts the ability of a retirement plan to be used as a method of retaining money for purposes of your death estate. Thus, there are rules that are designed to ensure that death benefits are distributable to beneficiaries within certain time periods.
 

 Regardless of the method of distribution selected, if your designated beneficiary is a person (rather than your estate or some trusts) then minimum distributions of your death benefit will begin by the end of the year following the year of your death ("1-year rule") and must be paid over a period not extending beyond your beneficiary's life expectancy. If your spouse is the beneficiary, then under the "1-year rule," the start of payments will be delayed until the year in which you would have attained age 70 1/2 unless your spouse elects to begin distributions over his or her life expectancy before then. However, instead of the "1-year rule" your beneficiary may elect to have the entire death benefit paid by the end of the fifth year following the year of your death (the "5-year rule"). Generally, if your beneficiary is not a person, your entire death benefit must be paid under the "5-year rule."
 

 Since your spouse has certain rights to the death benefit, you should immediately report any change in your marital status to the Administrator.
 

 

 

 What happens if I'm a participant, terminate employment and die before receiving all my benefits?
 

 If you terminate employment with the Employer and subsequently die, your beneficiary will be entitled to your remaining interest in the Plan at the time of your death. The provision in the Plan providing for full vesting of your benefit upon death does not apply if you die after terminating employment.
 

 ARTICLE IX
 TAX TREATMENT OF DISTRIBUTIONS
 

 What are my tax consequences when I receive a distribution from the Plan?
 

 Generally, you must include any Plan distribution in your taxable income in the year in which you receive the distribution. The tax treatment may also depend on your age when you receive the distribution. Certain distributions made to you when you are under age 59 1/2 could be subject to an additional 10% tax.
 

 You will not be taxed on distributions of your Roth 401(k) deferrals. In addition, a distribution of the earnings on the Roth 401(k) deferrals will not be subject to tax if the distribution is a "qualified" distribution. A "qualified" distribution is one that is made after you have attained age 59 1/2 or is made on account of your death or disability. In addition, in order to be a "qualified" distribution, the distribution cannot be made prior to the expiration of a 5-year participation period. The 5-year participation period is the 5-year period beginning on the calendar year in which you first make a Roth 401(k) deferral to our Plan (or to another 401(k) plan or 403(b) plan if such amount was rolled over into our Plan) and ending on the last day of the calendar year that is 5 years later. For example, if you make your first Roth 401(k) deferral under this Plan on November 30, 2006, your participation period will end on December 31, 2010. It is not necessary that you make a Roth 401(k) deferral in each of the five years.
 

 Can I elect a rollover to reduce or defer tax on my distribution?
 

 Rollover or Direct Transfer. You may reduce, or defer entirely, the tax due on your distribution through use of one of the following methods:
 

 (a)
 60-day rollover. The rollover of all or a portion of the distribution to an Individual Retirement Account or Annuity (IRA) or another employer retirement plan willing to accept the rollover. This will result in no tax being due until you begin withdrawing funds from the IRA or other qualified employer plan. The rollover of the distribution, however, MUST be made within strict time frames (normally, within 60 days after you receive your distribution). Under certain circumstances, all or a portion of a distribution (such as a hardship distribution) may not qualify for this rollover treatment. In addition, most distributions will be subject to mandatory federal income tax withholding at a rate of 20%. This will 
 

 reduce the amount you actually receive. For this reason, if you wish to roll over all or a portion of your distribution amount, then the direct transfer option described in paragraph (b) below would be the better choice.
 (b)
 Direct rollover. For most distributions, you may request that a direct transfer (sometimes referred to as a direct rollover) of all or a portion of a distribution be made to either an Individual Retirement Account or Annuity (IRA) or another employer retirement plan willing to accept the transfer. A direct transfer will result in no tax being due until you withdraw funds from the IRA or other employer plan. Like the rollover, under certain circumstances all or a portion of the amount to be distributed may not qualify for this direct transfer. If you elect to actually receive the distribution rather than request a direct transfer, then in most cases 20% of the distribution amount will be withheld for federal income tax purposes.
 

 Tax Notice. WHENEVER YOU RECEIVE A DISTRIBUTION, THE ADMINISTRATOR WILL DELIVER TO YOU A MORE DETAILED EXPLANATION OF THESE OPTIONS. HOWEVER, THE RULES WHICH DETERMINE WHETHER YOU QUALIFY FOR FAVORABLE TAX TREATMENT ARE VERY COMPLEX. YOU SHOULD CONSULT WITH QUALIFIED TAX COUNSEL BEFORE MAKING A CHOICE.
 

 ARTICLE X
 PROTECTED BENEFITS AND CLAIMS PROCEDURES
 

 Are my benefits protected?
 As a general rule, your interest in your account, including your "vested interest," may not be alienated. This means that your interest may not be sold, used as collateral for a loan, given away or otherwise transferred. In addition, your creditors may not attach, garnish or otherwise interfere with your account.
 

 Are there any exceptions to the general rule?
 

 There are three exceptions to this general rule. The Administrator must honor a "qualified domestic relations order." A "qualified domestic relations order" is defined as a decree or order issued by a court that obligates you to pay child support or alimony, or otherwise allocates a portion of your assets in the Plan to your spouse, former spouse, children or other dependents. If a qualified domestic relations order is received by the Administrator, all or a portion of your benefits may be used to satisfy that obligation. The Administrator will determine the validity of any domestic relations order received. You and your beneficiaries can obtain, without charge, a copy of the QUALIFIED DOMESTIC RELATIONS ORDER PROCEDURE from the Administrator.
 

 The second exception applies if you are involved with the Plan's operation. If you are found liable for any action that adversely affects the Plan, the Administrator can offset your benefits by the amount that you are ordered or required by a court to pay the Plan. All or a portion of your benefits may be used to satisfy any such obligation to the Plan.
 

 The last exception applies to Federal tax levies and judgments. The Federal government is able to use your interest in the Plan to enforce a Federal tax levy and to collect a judgment resulting from an unpaid tax assessment.
 

 Can the Plan be amended?
 

 Your Employer has the right to amend the Plan at any time. In no event, however, will any amendment authorize or permit any part of the Plan assets to be used for purposes other than the exclusive benefit of participants or their beneficiaries. Additionally, no amendment will cause any reduction in the amount credited to your account.
 

 What happens if the Plan is discontinued or terminated?
 

 Although your Employer intends to maintain the Plan indefinitely, your Employer reserves the right to terminate the Plan at any time. Upon termination, no further contributions will be made to the Plan and all amounts credited to your accounts will become 100% vested. Your Employer will direct the distribution of your accounts in a manner permitted by the Plan as soon as practicable. (See the question entitled
 "How will my benefits be paid to me?" for a further explanation.) You will be notified if the Plan is terminated.
 

 How do I submit a claim for Plan benefits?
 

 Benefits will be paid to you and your beneficiaries without the necessity for formal claims. However, if you think an error has been made in determining your benefits, then you or your beneficiaries may make a request for any Plan benefits to which you believe you are entitled. Any such request should be in writing and should be made to the Administrator.
 

 If the Administrator determines the claim is valid, then you will receive a statement describing the amount of benefit, the method or methods of payment, the timing of distributions and other information relevant to the payment of the benefit.
 

 What if my benefits are denied?
 

 Your request for Plan benefits will be considered a claim for Plan benefits, and it will be subject to a full and fair review. If your claim is wholly or partially denied, the Administrator will provide you with a written or electronic notification of the Plan's adverse determination. This written or electronic notification must be provided to you within a reasonable period of time, but not later than 90 days after the receipt of your claim by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing your claim. If the Administrator determines that an extension of time for processing is required, written notice of the extension will be furnished to you prior to the termination of the initial 90-day period. In no event will such extension exceed a period of 90 days from the end of 
 

 such initial period. The extension notice will indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefit determination.
 

 In the case of a claim for disability benefits, if disability is determined by a physician (rather than relying upon a determination of disability for Social Security purposes), then instead of the above, the Administrator will provide you with written or electronic notification of the Plan's adverse benefit determination within a reasonable period of time, but not later than 45 days after receipt of the claim by the Plan. This period may be extended by the Plan for up to 30 days, provided that the Administrator both determines that such an extension is necessary due to matters beyond the control of the Plan and notifies you, prior to the expiration of the initial 45-day period, of the circumstances requiring the extension of time and the date by which the Plan expects to render a decision. If, prior to the end of the first 30-day extension period, the Administrator determines that, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for up to an additional 30 days, provided that the Administrator notifies you, prior to the expiration of the first 30-day extension period, of the circumstances requiring the extension and the date as of which the plan expects to render a decision. In the case of any such extension, the notice of extension will specifically explain the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and you will be afforded at least 45 days within which to provide the specified information.
 

 The Administrator's written or electronic notification of any adverse benefit determination must contain the following information:
 

 (a)
 The specific reason or reasons for the adverse determination.
 

 (b)
 Reference to the specific Plan provisions on which the determination is based.
 

 (c)
 A description of any additional material or information necessary for you to perfect the claim and an explanation of why such material or information is necessary.
 

 (d)
 Appropriate information as to the steps to be taken if you or your beneficiary want to submit your claim for review.
 

 (e)
 In the case of disability benefits where disability is determined by a physician:
 

 (i)
 If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of the rule, guideline, protocol, 
 

 or other similar criterion will be provided to you free of charge upon request.
 (ii)
 If the adverse benefit determination is based on a 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 your medical circumstances, or a statement that such explanation will be provided to you free of charge upon request.
 

 If your claim has been denied, and you want to submit your claim for review, you must follow the Claims Review Procedure in the next question.
 

 What is the Claims Review Procedure?
 

 Upon the denial of your claim for benefits, you may file your claim for review, in writing, with the Administrator.
 

 (a)
 YOU MUST FILE THE CLAIM FOR REVIEW NO LATER THAN 60 DAYS AFTER YOU HAVE RECEIVED WRITTEN NOTIFICATION OF THE DENIAL OF YOUR CLAIM FOR BENEFITS.
 

 HOWEVER, IF YOUR CLAIM IS FOR DISABILITY BENEFITS AND DISABILITY IS DETERMINED BY A PHYSICIAN, THEN INSTEAD OF THE ABOVE, YOU MUST FILE THE CLAIM FOR REVIEW NO LATER THAN 180 DAYS FOLLOWING RECEIPT OF NOTIFICATION OF AN ADVERSE BENEFIT DETERMINATION.
 

 (b)
 You may submit written comments, documents, records, and other information relating to your claim for benefits.
 

 (c)
 You may review all pertinent documents relating to the denial of your claim and submit any issues and comments, in writing, to the Administrator.
 

 (d)
 You will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits.
 

 (e)
 Your claim for review must be given a full and fair review. This review will take into account all comments, documents, records, and other information submitted by you relating to your claim, without regard to whether such information was submitted or considered in the initial benefit determination.
 

 In addition to the Claims Review Procedure above, if your claim is for disability benefits and disability is determined by a physician, then the Claims Review Procedure provides that:
 

 (a)
 

 Your claim will be reviewed without deference to the initial adverse benefit determination and the review will be conducted by an appropriate named fiduciary of the Plan who is neither the individual who made the adverse benefit determination that is the subject of the appeal, nor the subordinate of such individual.
 

 (b)
 In deciding an appeal of any adverse benefit determination that is based in whole or part on medical judgment, the appropriate named fiduciary will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment.
 

 (c)
 Any medical or vocational experts whose advice was obtained on behalf of the Plan in connection with your adverse benefit determination will be identified, without regard to whether the advice was relied upon in making the benefit determination.
 

 (d)
 The health care professional engaged for purposes of a consultation under (b) above will be an individual who is neither an individual who was consulted in connection with the adverse benefit determination that is the subject of the appeal, nor the subordinate of any such individual.
  
 The Administrator will provide you with written or electronic notification of the Plan's benefit determination on review. The Administrator must provide you with notification of this denial within 60 days after the Administrator's receipt of your written claim for review, unless the Administrator determines that special circumstances require an extension of time for processing your claim. If the Administrator determines that an extension of time for processing is required, written notice of the extension will be furnished to you prior to the termination of the initial 60-day period. In no event will such extension exceed a period of 60 days from the end of the initial period. The extension notice will indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review. However, if the claim relates to disability benefits and disability is determined by a physician, then 45 days will apply instead of 60 days in the preceding sentences. In the case of an adverse benefit determination, the notification will set forth:
 

 (a)
 The specific reason or reasons for the adverse determination.
 

 (b)
 Reference to the specific Plan provisions on which the benefit determination is based.
 

 (c)
 A statement that you are entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to your claim for benefits.
 

 (d)
 In the case of disability benefits where disability is determined by a physician:
 

 (i)
 

 If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of the rule, guideline, protocol, or other similar criterion will be provided to you free of charge upon request.
 

 (ii)
 If the adverse benefit determination is based on a 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 your medical circumstances, or a statement that such explanation will be provided to you free of charge upon request.
 

 If you have a claim for benefits which is denied, then you may file suit in a state or Federal court. However, in order to do so, you must file the suit no later than 180 days after the Administrator makes a final determination to deny your claim.
 

 What are my rights as a Plan participant?
 

 As a participant in the Plan you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all Plan participants are entitled to:
 

 (a)
 Examine, without charge, at the Administrator's office and at other specified locations, all documents governing the Plan and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.
 

 (b)
 Obtain, upon written request to the Administrator, copies of documents governing the operation of the Plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated summary plan description. The Administrator may make a reasonable charge for the copies.
 

 (c)
 Receive a summary of the Plan's annual financial report. The Administrator is required by law to furnish each participant with a copy of this summary annual report.
 

 In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate your Plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your Employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension benefit or exercising your rights under ERISA.
 

 If your claim for a pension benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
 

 Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest annual report from the Plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Administrator to provide the materials and pay you up to $110.00 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Administrator.
 

 If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. In addition, if you disagree with the Plan's decision or lack thereof concerning the qualified status of a domestic relations order or a medical child support order, you may file suit in Federal court. You and your beneficiaries can obtain, without charge, a copy of the qualified domestic relations order ("QDRO") procedures from the Administrator.
 

 If it should happen that the Plan's fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. The court may order you to pay these costs and fees if you lose or if, for example, it finds your claim is frivolous.
 

 What can I do if I have questions or my rights are violated?
 

 If you have any questions about the Plan, you should contact the Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in the telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
 

 ARTICLE XI
 GENERAL INFORMATION ABOUT THE PLAN
 

 There is certain general information which you may need to know about the Plan. This information has been summarized for you in this Article.
 

 Plan Name
 

 

 The full name of the Plan is York River Electric, Inc. 401(k) Safe Harbor Plan.
 Plan Number
 

 Your Employer has assigned Plan Number 001 to your Plan.
 

 Plan Effective Dates
 

 This Plan was originally effective on January 1, 1990. The amended and restated provisions of the Plan become effective on January 1, 2010.
 

 Other Plan Information
 

 Valuations of the Plan assets are generally made every business day. Certain distributions are based on the Anniversary Date of the Plan. This date is the last day of the Plan Year.
 

 The Plan's records are maintained on a twelve-month period of time. This is known as the Plan Year. The Plan Year begins on January 1st and ends on December 31st.
 

 The Plan and Trust will be governed by the laws of Virginia to the extent not governed by federal law.
 

 Benefits provided by the Plan are NOT insured by the Pension Benefit Guaranty Corporation (PBGC) under Title IV of the Employee Retirement Income Security Act of 1974 because the insurance provisions under ERISA are not applicable to this type of Plan.
 

 Service of legal process may be made upon your Employer. Service of legal process may also be made upon the Trustee or Administrator.
 

 Employer Information
 

 Your Employer's name, address and identification number are:
 

 York River Electric, Inc.
 3201 Old Williamsburg Road
 Yorktown, Virginia 23690
 54-1361537
 

 Plan Administrator Information
 

 The Plan Administrator is responsible for the day-to-day administration and operation of the Plan. For example, the Administrator maintains the Plan records, including your account information, provides you with the forms you need to complete for Plan participation, and directs the payment of your account at the appropriate time. The Administrator will also allow you to review the formal Plan document and certain other materials related to the Plan. If you have any questions about the Plan or your 
 

 participation, you should contact the Administrator. The Administrator may designate other parties to perform some duties of the Administrator.
 

 The Administrator has the complete power, in its sole discretion, to determine all questions arising in connection with the administration, interpretation, and application of the Plan (and any related documents and underlying policies). Any such determination by the Administrator is conclusive and binding upon all persons.
 

 The name, address and business telephone number of the Plan's Administrator are:
 

 York River Electric, Inc.
 3201 Old Williamsburg Road
 Yorktown, Virginia 23690
 (757) 369-3673
 

 Plan Trustee Information and Plan Funding Medium
 

 All money that is contributed to the Plan is held in a trust fund. The Trustees are responsible for the safekeeping of the trust fund. The trust fund established by the Plan's Trustee(s) will be the funding medium used for the accumulation of assets from which benefits will be distributed. While all the Plan assets are held in a trust fund, the Administrator separately accounts for each Participant's interest in the Plan.
 

 The names and address of the Plan's Trustees are:
 Catherine McQuade
 Mark Bryan
 3201 Old Williamsburg Road
 Yorktown, Virginia 23690
 

 The Trustees shall collectively be referred to as Trustee throughout this Summary Plan Description.
 

 

 YORK RIVER ELECTRIC, INC. 401(K) SAFE HARBOR PLAN
 

 COMMON QUESTIONS ABOUT OUR 401(K) PLAN
 

 Introduction
 

 The following questions and answers highlight some of the important parts of our Plan. Remember, these are only highlights. The Summary Plan Description ("SPD") describes the Plan in much greater detail. If you have any questions about these highlights, the SPD, or the Plan, you should ask the Plan Administrator.
 

 Q.
 Why is your Employer sponsoring a 401(k) plan?
 

 A.
 Your Employer is sponsoring this Plan so that you may save for retirement. This Plan is a type of qualified retirement plan commonly referred to as a 401(k) plan. As a participant under the Plan, you may elect to contribute a portion of your compensation to the Plan. In addition, your Employer may make contributions to the Plan on your behalf.
 

 Q.
 How do I participate in the Plan?
 

 A.
 Provided you are not an Excluded Employee, you may begin participating under the Plan once you have satisfied the eligibility requirements and reached your "Entry Date." The following describes the eligibility requirements and Entry Date that apply.
 

 Salary Deferrals
 

 Participants who are eligible to make salary deferrals to the Plan are eligible for the safe harbor contribution described in Article III of the SPD.
 

 Excluded Employees. If you are a member of a class of employees identified below, you are an Excluded Employee and you are not entitled to participate in the Plan for purposes of salary deferrals and rollover contributions. The Excluded Employees are:
 ·
 union employees whose employment is governed by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining
 ·
 leased employees
 

 Eligibility Conditions. You will be eligible to participate for purposes of salary deferrals when you have satisfied the following eligibility condition(s). However, you will actually enter the Plan once you reach the Entry Date as described below.
 

 ·
 attainment of age 21.
 ·
 completion of six (6) months of service.
 

 Entry Date. For purposes of salary deferrals, your Entry Date will be the first day of the Plan Year or the first day of the seventh month of the Plan Year coinciding with or next following the date you satisfy the eligibility requirements.
 

 Matching Contributions
 

 Excluded Employees. If you are a member of a class of employees identified below, you are an Excluded Employee and you are not entitled to participate in the Plan for purposes of matching contributions. The Excluded Employees are:
 ·
 union employees whose employment is governed by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining
 ·
 leased employees
 

 Eligibility Conditions. You will be eligible to participate for purposes of matching contributions when you have satisfied the following eligibility condition(s). However, you will actually enter the Plan once you reach the Entry Date as described below.
 

 ·
 attainment of age 21.
 ·
 completion of one (1) Year of Service.
 

 Entry Date. For purposes of matching contributions, your Entry Date will be the first day of the Plan Year or the first day of the seventh month of the Plan Year coinciding with or next following the date you satisfy the eligibility requirements.
 

 Profit Sharing Contributions
 

 Excluded Employees. If you are a member of a class of employees identified below, you are an Excluded Employee and you are not entitled to participate in the Plan for purposes of profit sharing contributions. The Excluded Employees are:
 

 ·
 union employees whose employment is governed by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining
 ·
 leased employees
 

 Eligibility Conditions. You will be eligible to participate for purposes of profit sharing contributions when you have satisfied the following eligibility condition(s). However, you will actually enter the Plan once you reach the Entry Date as described below.
 

 ·
 attainment of age 21.
 ·
 completion of one (1) Year of Service.
 

 Entry Date. For purposes of profit sharing contributions, your Entry Date will be the first day of the Plan Year or the first day of the seventh month of the Plan Year coinciding with or next following the date you satisfy the eligibility requirements.
 

 Q.
 What are salary deferrals and how do I contribute them to the Plan?
 

 A.
 Salary Deferrals. As a participant under the Plan, you may elect to reduce your compensation by a specific percentage or dollar amount and have that amount contributed to the Plan. This amount is referred to as a salary deferral. Effective July 7, 2010, there are two types of salary deferrals: Pre-Tax 401(k) deferrals and Roth 401(k) deferrals. For purposes of this SPD, "salary deferrals" generally means both Pre-Tax 401(k) deferrals and Roth 401(k) deferrals. Regardless of the type of deferral you make, the amount you defer is counted as compensation for purposes of Social Security taxes.
 

 Pre-Tax 401(k) Deferrals. If you elect to make Pre-Tax 401(k) deferrals, then your taxable income is reduced by the deferral contributions so you pay less in federal income taxes. Later, when the Plan distributes the deferrals and earnings, you will pay the taxes on those deferrals and the earnings. Therefore, with a Regular 401(k) deferral, federal income taxes on the deferral contributions and on the earnings are only postponed. Eventually, you will have to pay taxes on these amounts. 
 

 Roth 401(k) Deferrals. If you elect to make Roth 401(k) deferrals, the deferrals are subject to federal income taxes in the year of deferral. However, the deferrals and, in most cases, the earnings on the deferrals are not subject to federal income taxes when distributed to you. In order for the earnings to be tax free, you must meet certain conditions. See "What are my tax consequences when I receive a distribution from the Plan?" You may receive additional amounts from your Employer if you do contribute.
 

 Q.
 When will I receive payments from the Plan?
 

 A.
 The Plan is designed to encourage you to stay with the Employer until retirement. Payment will generally occur at your Normal or Early Retirement Date, unless you postpone your actual retirement. Your Normal Retirement Date is the date on which you attain your Normal Retirement Age. You will attain your Normal Retirement Age when you reach your 65th birthday. Your Early Retirement Date is the date you have attained age 59 1/2 and completed 5 Years of Service with your Employer. Your Years of Service will be determined using Years of Service for vesting. You may elect to retire when you reach your Early Retirement Date.
 

 

 

 

 
 Q.
 How much will I be paid when I retire?
 

 A.
 The amount you are paid when you retire will be based upon the amount of money your Employer has put into the Plan for you (including your salary deferrals), plus or minus any earnings or losses. You should review the Article in the SPD entitled "Employer Contributions" for an explanation of how your Employer makes contributions to the Plan and how they are shared by eligible employees.
 

 Q.
 How will payments be made when I retire?
 

 A.
 If your vested account balance does not exceed $5,000, then your vested account balance may only be distributed to you in a single lump-sum payment. In determining whether your vested account balance exceeds the $5,000 threshold, "rollovers" (and any earnings allocable to "rollover" contributions) will be taken into account. In addition, if your vested account balance exceeds $1,000, you must consent to any distribution before it may be made. If your vested account balance exceeds $5,000, you may elect to receive a distribution of your vested account balance in:
 

 ·
 a single lump-sum payment
 ·
 partial withdrawals of at least $1,000
 

 You should review the Article in the SPD entitled "Benefits and Distributions Upon Termination of Employment" for a further explanation of the rules associated with the payment of benefits.
 

 Q.
 What if I stop working before I retire?
 

 A.
 If you stop working before you retire, you will only be entitled to the "vested percentage" of your account balance. 100% vested contributions. You are always 100% vested (which means that you are entitled to all of the amounts) in your accounts attributable to the following contributions:
 

 ·
 salary deferrals including Roth 401(k) deferrals and catch-up contributions
 ·
 rollover contributions
 ·
 safe harbor contributions
 

 Vesting schedules. Your "vested percentage" for certain Employer contributions is based on vesting Years of Service. This means at the time you stop working, your account balance (attributable to contributions subject to a vesting schedule) is multiplied by your vested percentage. The result, when added to the amounts that are always 100% vested as shown above, is your vested interest in the Plan, which is what you will actually receive from the Plan.
 

 

 

 Profit Sharing Contributions
 

 Your "vested percentage" in your account attributable to profit sharing contributions is determined under the following schedule. You will always, however, be 100% vested in your profit sharing contributions if you are employed on or after your Early or Normal Retirement Age or if you die or become disabled.
 

 Vesting Schedule
    Profit Sharing Contributions
                               Years of Service 
     Percentage
 

 Matching Contributions
 

 Your "vested percentage" in your account attributable to matching contributions is determined under the following schedule. You will always, however, be 100% vested in your matching contributions if you are employed on or after your Early or Normal Retirement Age or if you die or become disabled.
 

 Vesting Schedule
    Profit Sharing Contributions
                                Years of Service 
     Percentage
 

 Less than 2
 0%
         2
           20%
         3
           40%
         4
           60%
         5
           80%
         6
         100%
 

 Q.
 If I stop working before retirement, when will my vested amount be paid?
 

 A.
 If your employment terminates for reasons other than death, disability or early or normal retirement, you will be entitled to receive only the "vested percentage" of your account balance.
 

 You may elect to have your vested account balance distributed to you as soon as administratively feasible following your termination of employment. However, if the value of your vested account balance does not exceed $1,000, then a distribution will be made to you regardless of whether you consent to receive it. (See the question entitled "How will my benefits be paid to me?" for additional information.)
 

 

 

 

 

 
 Q.
 What if I die before I retire?
 

 A.
 Your beneficiary will be entitled to 100% of your interest in the Plan upon your death. If you are single, you may name anyone you like to be your beneficiary. If you are married, your spouse is your beneficiary with respect to 100% of your death benefit unless you and your spouse name someone else as your beneficiary. You should review the question entitled "Who is the beneficiary of my death benefit?" in the SPD.
 

 

 

 

 

 Q.
 Can I withdraw money from the Plan while I'm still working?
 

 A.
 Generally you may receive a distribution from the Plan from certain accounts prior to your termination of employment provided you satisfy any of the following conditions:
 ·
 you have attained age 59 1/2.
 

 This distribution is not in addition to your other benefits and will therefore reduce the value of the benefits you will receive at retirement.
 

 In certain instances you may also receive an in-service distribution if you incur a financial hardship. This hardship distribution is not in addition to your other benefits and will therefore reduce the value of the benefits you will receive at retirement.
 

 There are various rules and restrictions regarding withdrawing money from your accounts in the Plan while you are still employed. Please review the SPD for more information on these rules and restrictions.
 

 NOTE: THESE QUESTIONS AND ANSWERS ARE NOT MEANT TO BE A SUBSTITUTE FOR A THOROUGH READING OF THE SUMMARY PLAN DESCRIPTION. THE PROVISIONS OF THE 401(k) PLAN ARE VERY COMPLEX. IT IS NOT POSSIBLE TO FULLY EXPLAIN ALL ASPECTS OF THE PLAN IN THESE SHORT QUESTIONS AND ANSWERS. YOU SHOULD ALWAYS CONSULT THE SUMMARY PLAN DESCRIPTION IF YOU HAVE ANY QUESTIONS ABOUT THE PLAN. IF, AFTER READING THE SUMMARY PLAN DESCRIPTION, YOU STILL HAVE QUESTIONS, YOU SHOULD CONTACT THE PLAN ADMINISTRATOR.
 

 

 [Letterhead of York River Electric]
 

 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • 
 Fax (757) 369-3680
 

 

 SCHEDULE 4.27 – PROHIBITED TRANSACTIONS
 

 Except as set forth herein, from the date of the Financial Statements, the Company has not (i) entered into any Contract to merge or consolidate with any other Person; (ii) changed the character of its Business, or sold, transferred or otherwise disposed of any assets other than in the ordinary course of business;   (iii) entered into any new compensation or benefit Contracts with its employees; (iv) entered into any new or amended, or modified any existing collective bargaining Contract; (v) loaned any money; (vi) issued or contracted to issue any debt or guarantees of debt or otherwise pledged its credit other than in the ordinary course of business; (vii) created or permitted to exist any new Lien on its property or assets; (viii) entered into any joint venture, partnership or other arrangement for the conduct of its Business; (ix) declared or paid any dividend or other distribution in respect of shares of capital stock; (x) made any purchase, redemption or other acquisition, directly or indirectly, of any outstanding shares of its capital stock, (xi) forgiven, released or compromised any indebtedness owed to the Company by any Person except upon full payment or, in the case of any customer, returns and allowances made in the Ordinary Course of Business consistent with past practices; (xii) paid any pension amount not required to be paid under any employee benefit pension plan as described in Section 4.19 hereof; (xiii) purchased any assets or securities of any Person, other than in the Ordinary Course of Business, (xiv) created any new subsidiaries; or (xv) waived any rights or amended, modified, canceled or terminated any Contract.
 

 

 EXCEPTIONS:
 

 LOCAL 229 EASTERN PENNSYLVANIA – NEW CONTRACT
 ADDITIONAL $15,000 LOAN TO BLUE PACIFIC GENERAL CONTRACTORS
 PROFIT SHARING DISTRIBUTION FOR 2011 (DISCRETIONARY) $105,211.63 at 3/16/2012
 

 

 [Letterhead York River Electric]
 

 108 Production Drive • Yorktown, Virginia 23693 • Phone (757) 369-3673 • Fax (757) 369-3680
 

 

 SCHEDULE 5.07 – GOVERNMENTAL AGENCIES
 

 Buyer acknowledges and understands that the Company is a pre-qualified vendor with the governmental agencies which the Buyer has listed below, and is dependent upon Business derived therefrom for a substantial amount of income to the Company.  The Buyer further acknowledges and understands that, in the event the Transaction occurs, the Company is required to re-qualify as a vendor with said governmental agencies listed here and, in doing so, must disclose certain personal information relating to the principals of the Buyer.
 

 DEPARTMENT OF DEFENSE – DOD: 
 INCLUDES THE FOLLOWING AGENCIES
 U.S. ARMY
 U.S. NAVY
 U.S. AIR FORCE
 

 DEPARTMENT OF HOMELAND SECURITY – DHS
 INCLUDES THE FOLLOWING AGENCIES
 COAST GUARD
 

 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION – NASA
 

 GENERAL SERVICES ADMINSTRATION – GSA
 

 WASHINGTON HEADQUARTERS SERVICES 
 

 NATIONAL PARK SERVICE
 

 BANKRUPTCY COURTS
 

 VETERANS BENEFITS ADMINSTRATION

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00208-of-00352.parquet"}]]