Document:

THIS
NOTE HAS NOT
BEEN REGISTERED UNDER
THE SECURITIES ACT
OF 1933,
AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF REGISTRATION STATEMENT IN THE EFFECT WITH
RESPECT TO THE SECURITIES
OF DELIVERY TO THE COMPANY OF
AN OPINION OF COUSEL IN FORM AND SUBSTANCE
SATISFACTORY THE COMPANY THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WJTH THE ACT OR UNLESS
SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER
THE ACT.

 

CONVERTIBLE PROMISSORY
NOTE

 

	62,440.00 USD - Principal Amount	May 22, 2013. Las Vegas, Nevada

 

FOR
VALUE RECEIVED,
Harmonic Energy,
Inc. a Nevada corporation (the "Company"),
hereby promises to
pay to the order of Seahorse Investments Ltd, located at
Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro MH96960 Marshall Islands (the "Holder"),
in accordance with the terms hereof, the principal sum
of sixty two thousand four hundred forty US
dollars ($62,440.00) together with interest thereon
to the date of payment. Interest shall accrue on the twelve-month anniversary
following the date hereof at a rate equal to seven
percent (7%) per annum.
The outstanding principal amount and any accrued interest on the
Note shall be due and payable in full
on May 22, 2014. The Corporation may at its option
from time to time after May 22, 2013 prepay
this Note in whole or in part, including accrued interest,
on not Jess than 30 days written notice
delivered to the Holder.
Upon such prepayment, the Corporation shall
also pay the interest
accrued on that portion of principal so prepaid to
the date of prepayment.

 

1.                       
Convertible
Notes. This Note
maybe one or
one of several
promissory notes issued
pursuant to Securities
and Exchange Act
of 1934 ("the Act"), Regulation D, Rule
506. The term "Note" refers to this Note and the
term "Convertible Notes" refers
to this Note and the other promissory
notes issued pursuant to the Act. This Note
is including, without limitation, the extent
to which the Convertible Notes are subordinated
to other indebtedness of the Corporation and
the circumstances and procedures under
which the maturity of the Convertible Notes may be accelerated.

 

2.                       
Place and Manner
of Payment. All
sums
due under
this Note are
payable not later
than 5:00 P.M., East Coast time, in
legal tender of the United States of America
current on the dates such sums or payments
are respectively due, in immediately available
funds, without offset or setoff. All payments in excess
of $62,440.00 shall be
made at the option
of the Holder by
wire transfer to a bank account designated
in writing to the Corporation by
the Holder not
less than five days prior to
the time such
payment is due and, if no such
designation has been made by the Holder,
by check mailed by certified or registered
mail to the address of the
Holder designated in accordance with Section l2(b). Any
remittances by check shall
be made on the second day prior to
the time such payment is
due subject to the condition that such check
may be handled for collection in accordance with
the practice of the collecting bank or banks,
and any receipt shall
be void unless the amount due is actually
received by the Holder.

 

3.                       
Events
of Default; Consequences.
In the event
of the occurrence
of an Event
of Default (as defined) the Holder may, declare the entire unpaid principal
balance of this Note, together with interest
accrued, immediately due and payable at the
place of payment, without presentment,
protest, notice or demand, all of
which are expressly waived.

 

4.                      
No Setoff, Etc.
The obligations
of the Corporation
to pay the principal
balance and interest due
to the
Holder shall be
absolute and unconditional and the Corporation
shall make such payment without abatement, diminution or deduction regardless of any
cause or circumstances whatsoever including, without limitation, any
defense, setoff, recoupment, or counterclaim
which the Corporation may have or assert against
the Holder or any other person.

 

5.                        
Waiver of Presentment,
Etc. The Corporation
waives presentment, demand, notice
of dishonor, protest
and notice of nonpayment
and protest.

 

6.                        
Costs of Collection.
The Corporation shall
pay all costs and
expenses of collection
incurred by the
Holder, including reasonable attorneys' fees.

 

7.                        
Conversion.

(a)               
Commencing May 22,
2013, the Holder
may at any
time prior
to 5:00 p.m., West
Coast time, on May 22,
2014, convert the principal amount of this Note
or any portion in aggregate amounts of not
less than 50% of the original principal
amount outstanding under this Note on the
date of its initial issuance
(unless such amount is the only amount then remaining
outstanding under this Note
in which event the conversion of
the remaining principal amount then outstanding shall be permitted) into fully paid and nonassessable shares of the Common Stock,
par value $.001 per share, of the
Corporation (the "Common Stock"), at
a price equal to 90% of the
then current market price of the
corporations shares (the "Conversion
Price") in principal amount of
this Note. Such conversion shall be effected
by the surrender of this
Note at the principal office of the
Corporation (or such other office or agency
of the Corporation in the continental United States as
the Corporation may designate by notice in writing to
the Holder) at any time
during usual business
hours, together with notice in
writing that the Holder wishes to
convert a portion or all of this Note,
which notice shall also state the name(s) (with
addresses) and denominations in
which the certificate(s)
for Common Stock shall be issued
and shall include instructions for delivery thereof. Such
conversion shall be deemed to have
been effected as of the close of
business on the date
on which th.is Note shall have been
surrendered and such notice shall have been
received , and at such time (the "Voluntary
Conversion Date") the rights of the
Holder with respect to
the principal amount of
the Note converted shall
cease and the person(s) in whose
name(s) any certificate(s) for
Common Stock are to be issued upon
such conversion shall be deemed
to have become the holder or holders
of record of the shares of Common Stock represented
by such certificate(s). As soon
as practicable after the Voluntary
Conversion Date, the Corporation shall deliver to, or
as directed by, the Holder,
certificates representing the
number of shares of Common Stock
issuable by reason
of such conversion registered in such name
or names and
such denomination or denominations as the Holder shall have specified,
together with cash as provided in Section 10 in respect
of any fraction of a share of such stock otherwise issuable upon such conversion.
The Corporation shall also make payment
to the Holder of
accrued interest to the
date of conversion on the
portion of the Note converted in
accordance with the manner of payment provisions of Section
2 of this Note. In each case of
conversion of this Note in part only,
the Corporation shall receive and hold this
Note as a fiduciary agent
of the Holder, shall endorse on
this Note the
date and amount of this Note
so converted, and such amount
shall be deemed no longer outstanding.
Upon such endorsement, the Corporation
shall promptly return this Note
to the Holder.

 

    	 

    	 

    

 

(b)               
At any time
after May 22,
2013
the Corporation shall
be entitled, after
giving 20 days
prior written notice to the Holder
of its intent to prepay all or any portion of
this Note and receipt of notice from the Holder with in such
20 days that be declines to accept
prepayment, to compel the conversion of this
Note or such portion into fully
paid and nonassessable shares of
Common Stock at the ratio and (to the extent
not inconsistent with
the provisions of this subsection (b)) in
the manner set forth
in subsection (a) of this Section 7. In the event the
Holder shall fail to surrender this Note together
with a written notice stating the
names (with addresses) and denominations in
which the certificate(s) for Common Stock shall
be issued
(including instructions for delivery) on or before the tenth
day after the date of the
Prepayment Notice, this Note shall be
deemed to have been surrendered for conversion on such
date. The earlier of the date this Note
and said written notice are surrendered, or such tenth day
after the date of
the Prepayment Notice shall be referred to for purposes of this
Note as the "Mandatory Conversion Date."
Such conversion shall be deemed to have been effected as of the
close of business on the Mandatory Conversion Date, and at such time the rights
of the Holder shall
cease and
(i) the person(s) in whose name(s)
any certificate(s) for Common Stock are
to be issued upon
such conversion, or (ij) in the event the Holder
has failed to surrender this Note and the written notice as provided, the Holder,
shall be deemed to have become the
holder or holders of record of the shares of
Common Stock represented by such
certificate(s).  As soon as practicable after the Mandatory Conversion Date (but in
no event more than fifteen Business Days), the Corporation shall deliver to the Holder,
or as directed by the Holder if such be the case, certificates representing the number of
shares of Common Stock issuable by reason of such conversion registered in the name
of the Holder or, if such be the case,
in such name or names and in such denomination
or denominations as the Holder shall have specified. The Corporation
shall make payment to the
Holder of accrued interest to
the date of conversion on the converted
Note in accordance with the manner of payment provisions of
Section 2 of this
Note.

 

8.                        
Reservation of Common
Stock; Etc.

 

(a)                
The Corporation
will at all
times from and
after this date
reserve and keep
available out of
its authorized but unissued shares of Common Stock or its treasury shares,
or otherwise, solely for the purpose of issuance upon the conversion of
this Note, such number of
shares of Common Stock as shall then be issuable
upon the conversion of
this Note. The
Corporation covenants that all shares of Common Stock which
shall be so issuable
shall, when issued, be duly and
validly issued, fully
paid and nonassessable
and free from all taxes,
liens and charges.

 

(b)                
The Corporation will
not take any
action which would
result in any
adjustment of the number
of shares of
Common Stock acquirable upon conversion
of this Note if the total number of shares
issuable after such action upon
conversion of this Note, together with
the total number of shares of Common Stock then outstanding, would exceed the
total number of
shares of Common Stock then authorized under
the Corporation's Certificate of
Incorporation which are not reserved or
required to be reserved for any purpose
other than the purpose of issue upon conversion of this Note.

 

(c)                
The issuance of
certificates for shares
of Common Stock
upon conversion of
this Note shal1 be
made without charge to the Holder
for any issuance tax or other cost incurred by the Corporation
in connection with such
conversion and the related issuance of shares of Common Stock.

 

(d)                
If any shares of Common
Stock required to
be reserved for
purposes of conversion
of this Note
require, before such shares may be issued upon conversion, registration with
or approval of any governmental authority under any federal or state law (other than
any registration under the Securities Act of 1933, as then in effect, or any similar federal
statute then in force, or any state
securities law, required by reason of any transfer
involved in such
conversion) or listing on any domestic securities
exchange, the Corporation will, at
its expense and as expeditiously as possible, use its
best efforts to cause such shares to be
duly registered or approved for listing or
listed on such domestic securities exchange, as the case may be.

 

9.                       
Anti-Dilution Provisions.

 

The
Conversion Price shall
be subject to
appropriate adjustment so
as to protect
the rights of
Holder upon the occurrence
on or after
the Issue Date and prior to the Initial Public Offering of any stock dividend,
stock split, reverse stock split, recapitalization, reclassification, merger, combination, consolidation or
other similar transaction. Upon each occurrence
of any event described in the immediately preceding
sentence, the Conversion Price in effect immediately prior to
such event shall be adjusted (and any
other appropriate actions shall be taken
by the Company, including, upon the occurrence
of any merger, combination, consolidation or other
similar transaction, the issuance
to Holder of any securities into which this
Convertible Note shall be converted
by operation of law
or pursuant to the express terms
of such transaction provided that such transaction
has been approved by
the Board of the Company, so that Holder, upon any Conversion, shall be entitled
to receive the
number of Shares
or other property,
including cash or securities, that Holder
would have owned or would have been entitled
to receive upon or by
reason of any of the events described above, had
this Convertible Note been converted
immediately prior to the date of such event,
or if such event has a record date, then the record date applicable to such event. An
adjustment made pursuant to the immediately
preceding sentence shall
become effective retroactively to
the close of business
on the day upon which such event is effected.

 

10.                                  
Fractional Interests. The
Corporation shall not
be required to
issue any fractional
shares of Common
Stock on the conversion of this Note. If any fraction of a share
of Common Stock would be issuable upon conversion
of this Note, the Corporation shall "round-up" to
the next whole share.

 

11.                                  
Voting.  Nothing contained
in this Note
shall be construed
as conferring upon
the Holder the
right to vote or
to consent
or to receive notice
as a stockholder in respect of the
meetings of stockholders for the election of directors
of the Corporation or any
other matter. Notwithstanding the foregoing,
the Corporation shall mail by first class to
the Holder at the address specified
in Section 12, one copy
of all materials forwarded to stockholders
or filed with the Securities and Exchange Commission by the Corporation, said mailing to
be made promptly after mailing to stockholders
or filing with the Securities and Exchange
Commission, as the case may
be.

 

    	2

    	 

    

 

12.                  
Notices.

(a)                                   
Any notice pursuant
to this Note
to be given
or made by
the Holder to
or upon the
Corporation shall be
sufficiently given
or made if sent by certified
or registered mail, postage
prepaid, addressed (until another address is sent by the Corporation to the
Holder) as follows:

 

Harmonic
Energy, Inc.

3rd Floor,
207 Regent Street

London,
W IB 3HH

United
Kingdom

 

(b)                                   
Any notice pursuant
to this Note
to be given
or made by
the Corporation to
or upon the
Holder shall be sufficiently
given or made if sent by certified
or registered mail, postage
prepaid, addressed (until another
address is sent by the Holder to the Corporation)
to the address of the Holder set forth above.

 

13.                                     
Governing Law. This
Note shall be
governed by and
construed in accordance
with the
internal laws
of the State of
Nevada.

 

14.                                     
Register of Notes.
The Corporation shall
keep at its
principal office (or
such other place
the Corporation reasonably designates) a register for the registration of
Convertible Notes. Each transfer of the Convertible Notes, conversion
thereof into Common Stock and payment thereunder
as well as the name and
address of such holder of Convertible Notes shall
be noted on the register of Convertible
Notes. The register shall be made available
by the Corporation for review by the Holder or
his agent during usual business hours of the Corporation.

 

15.                                     
Modification and Waiver.
No modification or
waiver of any
provision of this
Note shall in
any event be effective unless the same shall be in writing signed by the Holder and
then such modification or waiver shall be effective only in
the specific instance for the specific
purpose given. Notwithstanding the foregoing, the Board of Directors of the
Corporation, in its sole discretion,
shall have the right at any time or from
time to time to decrease the Conversion
Price and/or to increase the number
of shares of Common Stock issuable upon conversion of this Note. Such
reduction of the Conversion Price and/or
increase in the
number of shares of Common Stock
issuable upon exercise shall be effective for a period or periods to be
determined by such Board.

 

IN WITNESS
WHEREOF, the
parties have executed
this Agreement by
their duly authorized
representatives.

 

Agreed:

 

	By: /s/ Authorized Signatory	By: /s/ Jamie Mann
	Holder	Jamie Mann, President and CEO

 

    	3Ex 10.1 Q1 2014

EXHIBIT 10.1

CONFIDENTIAL TREATMENT REQUESTED
THIS DOCUMENT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  REDACTED MATERIAL IS MARKED WITH A [****] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

AMENDMENT NO. TWO
TO 
AMENDED AND RESTATED 
PRIVATE LABEL CREDIT CARD PLAN AGREEMENT
BETWEEN COMENITY BANK
AND
STAGE STORES, INC.
SPECIALTY RETAILERS, INC. 

THIS AMENDMENT NO. TWO (“Amendment No. 2”) to that certain AMENDED AND RESTATED PRIVATE LABEL CREDIT CARD PLAN AGREEMENT entered into as of the 8th day of August, 2012 and effective as of the 1st day of August 2012 (the “Agreement”) by and between Stage Stores, Inc. (“SSI”) and Specialty Retailers, Inc. (“SRI”) (with SSI and SRI hereinafter collectively referred to as “Stage”) and Comenity Bank (formerly known as World Financial Network Bank) (“Bank”), is entered into by and between Bank and SSI and will be effective as of February 13, 2014 (the “Amendment No. 2 Effective Date”).

WHEREAS, Stage and Bank previously entered into the Agreement pursuant to which, among other things, Stage requested Bank to, and Bank agreed to, extend credit to qualifying individuals in the form of private label open-ended credit card accounts for the purchase of Goods and/or Services from Stage through designated Sales Channels and to issue Credit Cards to qualifying individuals under the Stage Nameplates.

WHEREAS, SRI, the wholly owned operating subsidiary of SSI and currently the employer of all Stage employees, signed the Agreement solely for purposes of Section 13.1(a) of the Agreement, thereby agreeing that the Amended and Restated Private Label Credit Card Program Agreement dated March 5, 2004 by and among SSI, SRI and Bank was terminated in its entirety upon the full execution of the Agreement and thereby terminating SRI’s status as a separate party to the Agreement effective August 1, 2012.

WHEREAS, SSI and Bank entered into Amendment No. One to the Agreement effective as of February 1, 2013   

WHEREAS, SSI and Bank now desire to amend the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the terms and conditions hereof, and for other good and valuable consideration, the receipt of which is hereby mutually acknowledged by the parties, SSI and Bank agree as follows:

		
	1.
	Definitions; References.  Capitalized terms not otherwise defined in this Amendment No. 2 are used herein as defined in the Agreement.  

		
	2.
	Section 3.6(b) Credit Decisions - Test Credit Program.  Pursuant to Section 3.6(b) of the Agreement, Bank hereby agrees to make available under the Plan the Test Credit Program described in Schedule 3.6(b)-1 attached hereto, subject to the terms and conditions contained therein.

		
	3.
	Consideration; Fees.  SSI and Bank agree that  SSI shall pay [****] per Account opened under the Test Credit Program (the "Test Program Fee").

		
	4.
	Counterparts; Effectiveness.  This Amendment No. 2 may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all of such counterparts shall together constitute one and the same instrument.  

		
	5.
	General.  This Amendment No. 2 shall not be changed, modified or amended except in writing and signed by both of the parties hereto.  Except as specifically amended in this Amendment No. 2, the provisions of the Agreement, as amended, remain unaffected and in full force and effect.  The provisions of this Amendment No. 2 shall prevail in the event of any conflict between the provisions hereof and the provisions of the Agreement.

IN WITNESS WHEREOF, SSI and Bank have executed this Amendment No. 2 in manner and form sufficient to bind them as of the Amendment No. 2 Effective Date.

	
					
	STAGE STORES, INC.
	 
	COMENITY BANK (formerly known as WORLD FINANCIAL NETWORK BANK)

	 
	 
	 
	 
	 

	By:
	/s/ Oded Shein                         n
	 
	By:
	/s/ John J. Coane                      n

	 
	 
	 
	 
	 

	 
	Oded Shein                              n
	 
	 
	John J. Coane                           n

	Printed Name
	 
	Printed Name

	 
	 
	 
	 
	 

	 
	EVP - CFO                                n
	 
	 
	President                                   n

	Title
	 
	Title

2

Schedule 3.6(b)-1

Test Credit Program
(Employee Plan)

(a)    The Employee Plan.  Bank shall establish a test Account program pursuant to and subject to the terms and conditions of this Schedule 3.6(b)-1 (the “Employee Plan”).  Accounts issued under the Employee Plan shall be referred to as “Employee Plan Accounts” and, for purposes of this Schedule 3.6(b)-1, shall continue to be Employee Plan Accounts irrespective of any termination, retirement or other change of status of such Employee.

(b)    Establishment of Employee Plan Accounts.  Subject to the terms and conditions of this Schedule 3.6(b)-1, the Employee Plan shall be available to each Employee of Stage who (i) submits a completed application to Bank on a form specially designated by Bank as an Employee application and by a delivery method (as agreed upon by the parties) that signifies to Bank that the applicant is an Employee of Stage (each, an “Employee Plan Account Application”); and (ii) meets the Employee Plan Account Application Criteria (defined below).  For purposes of this Schedule 3.6(b)-1, the term “Employee” shall mean (i) any full-time or part-time employee of Stage after the Amendment No. 2 Effective Date; and (ii) any person who was a full-time or part-time employee of Stage prior to the Amendment No. 2 Effective Date and who retired from Stage, but applies for a Card prior to March 31, 2014.  

(c)    Applications for Employee Plan Accounts.  Notwithstanding Section 3.5 of the Agreement, Employee-Applicants must submit Employee Plan Account Applications in order to qualify for the Employee Plan.  For clarity, Employee Plan Account Applications shall be treated in a manner that is consistent with the treatment of mail-in applications for purposes of calculating the measurement periods, penetration rates and targets set forth on Schedule 1.3(e) and Schedule 3.5(e) of the Agreement. For further clarity, Employee Plan Account Applications that meet the criteria for a Valid Application as defined in Schedule 3.5(e) shall be considered Valid Applications for purposes of Schedule 3.6.  If the Employee-Applicant satisfies the Employee Plan Account Application Criteria set forth in Section (d), below, then Bank shall issue an Employee Plan Account to such Employee-Applicant.

(d)    Employee Plan Account Application Criteria.  The “Employee Plan Account Application Criteria” shall be comprised of the following:

(i)    The Employee-Applicant delivers to Bank an Employee Plan Account Application that includes all of the information requested by Bank in such application; and 

(ii)    Bank verifies the identity of the Employee-Applicant in accordance with its then-current policies and procedures and requirements of Applicable Law (e.g., US PATRIOT ACT); and

(iii)    The Employee Plan Account Application passes the Bank’s then-current security screening procedures, including those required by Applicable Law and for detecting fraudulent applications; and

3

(iv)    Bank’s underwriting of the Employee Plan Account satisfies requirements of Applicable Law including requirements of the CARD ACT and its implementing regulations (e.g., satisfaction of requirements regarding applicants for a credit card who have not attained the age of 21, consideration of the applicant’s ability to repay., etc.); and

(v)    The Employee-Applicant accepts the terms and conditions of the Credit Card Agreement applicable to her/his Employee Plan Account.

(e)    Plan Committee.  The parties acknowledge and agree that  the Plan Committee provisions set forth in Schedule 3.1 of the Agreement shall apply to the Employee Plan, subject to the specific provisions set forth in this Schedule 3.6(b)-1, including Section (g) below, which shall control. Without limiting the generality of the foregoing, Operating Procedures, including the Employee Plan Account Application Criteria shall be a Bank Matter.  

(f)    Treatment of Employee Plan Accounts.  Except as otherwise provided in this Schedule 3.6(b)-1, each reference to “Account(s)” in the Agreement shall include “Employee Plan Account(s)” and the parties respective rights and obligations hereunder relative to the Plan shall also apply to the Employee Plan.  

(g)    Term and Termination of the Employee Plan

(i)    Bank agrees to test the Employee Plan for [****] consecutive months from the Amendment No. 2 Effective Date (the “Employee Plan Initial Term”) and to evaluate the Employee Plan to help determine if Bank desires to continue the Employee Plan after the Employee Plan Initial Term. 

(ii)    Notwithstanding the foregoing, Bank may notify SSI in writing at any time: (i) after the end of the [****] month of the Employee Plan Initial Term and before thirty (30) days after the end of the Employee Plan Initial Term of its desire to alter or discontinue the Employee Plan for any reason. The parties will discuss the disposition of the Employee Plan at the next regularly scheduled Plan Committee meeting, or if the next Plan Committee meeting will not occur for more than thirty (30) days, then the parties agree to hold a special Plan Committee meeting within thirty (30) days of SSI’s receipt of Bank’s notice.  The following shall apply in the event of a notice by Bank pursuant to this Section (g)(ii):

		
	(x)
	Bank shall provide to the Plan Committee in writing Bank's basis for altering or desire to terminate the Employee Plan to address any concern the Bank may have with respect to the Employee Plan.  The Plan Committee shall endeavor to deliberate on the Bank's proposal, if applicable, and endeavor to mutually agree upon the alteration or disposition of the Employee Plan, including the timing of such disposition.  

		
	(y)
	If the Plan Committee does not reach agreement on the alteration or disposition of the Employee Plan within thirty days after the Plan Committee meeting in which the matter was discussed, the parties shall follow the escalation process set forth in Section D of Schedule 3.1 to resolve the matter unless the Bank has requested termination of the Employee Plan.

4

		
	(z)
	If after the escalation process set forth in Section D of Schedule 3.1 has been exhausted and the parties have failed to agree to the terms of continuing the Employee Plan, or if the Bank has requested the termination of the Employee Plan, the parties shall cooperate in good faith to wind down the Employee Plan and the Bank shall cease accepting new Employee Plan account applications once the Employee Plan is terminated.

(iii)    In the event the Employee Plan is not terminated pursuant to Section (g)(ii) then, within thirty (30) days (before or after) each twelve (12) month anniversary date of the last day of the Employee Plan Initial Term, the Bank may notify SSI in writing at any time of its desire to alter or discontinue the Employee Plan as a result of the profitability of the Employee Plan in accordance with the following procedure:

		
	(x)
	Bank shall provide to the Plan Committee in writing Bank’s basis for altering the Employee Plan to address profitability of the Employee Plan, and the Plan Committee shall deliberate on Bank’s proposal(s). The Plan Committee shall endeavor to mutually agree upon the alteration or disposition of the Employee Plan, including the timing of such disposition.

		
	(y)
	If the Plan Committee does not reach agreement on the alteration or disposition of the Employee Plan within thirty (30) days after the Plan Committee meeting in which the matter was discussed, then the parties shall follow the escalation process set forth in Section D of Schedule 3.1 to resolve the matter.

		
	(z)
	If after the escalation process set forth in Section D of Schedule 3.1 has been exhausted and the parties have failed to agree to the terms of continuing the Employee Plan,  the parties shall cooperate in good faith to timely wind down the Employee Plan.  At a minimum, Bank shall cease accepting new Employee Plan Account Applications once the Employee Plan is terminated.

(iv)    Notwithstanding anything in this Schedule 3.6(b)-1 or Schedule 3.1 to the contrary: (A) Bank may discontinue the Employee Plan immediately by written notice on the basis of Bank’s belief that the continued offering of the Employee Plan violates Applicable Law (including any court or agency decisions and orders and staff interpretations and guidance from applicable regulatory agencies, all as determined by the reasonable opinion of Bank’s counsel) and (B) SSI may terminate the Employee Plan immediately by written notice to Bank on the basis of SSI’s belief that the continued offering of the Employee Plan violates Applicable Law (including any court or agency decisions and orders and staff interpretations and guidance from applicable regulatory agencies, all as determined by the reasonable opinion of SSI’s counsel).

(v)    Following the discontinuation or termination of the Employee Plan, in accordance with the terms of this Schedule 3.6(b), Bank shall (A) cease to accept new Employee Plan Account applications pursuant to the terms of this Schedule 3.6(b); and (B) continue to support Accounts opened under the Employee Plan prior to the discontinuation or termination of the Employee Plan.

5

(vi)    For clarity, Bank will continue to offer the Employee Plan after expiration of the Employee Plan Initial Term unless and until the Employee Plan is discontinued or terminated in accordance with the terms of this Schedule 3.6(b)-1.

6

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