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AMENDED AND RESTATED

EQUITY PURCHASE AGREEMENT

BY AND BETWEEN

SAUER ENERGY, INC.

AND

BEAUFORT VENTURES PLC

Dated

July 8, 2013

THIS AMENDED AND RESTATED EQUITY PURCHASE AGREEMENT entered into as of the 8th day of July, 2013 (this "AGREEMENT"), by and between Beaufort Ventures PLC, a United Kingdom corporation ("INVESTOR"), and Sauer Energy, Inc., a Nevada corporation (the "COMPANY").

WHEREAS, the parties previously entered into an Equity Purchase Agreement, dated as of May 13, 2013 (the “EPA”) and now desire to amend and restate the EPA in its entirety to read as set forth below;

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue and sell to Investor, from time to time as provided herein, and Investor shall purchase up to One Million Five Hundred Thousand Dollars ($1,500,000) of the Company's Common Stock (as defined below); and

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I CERTAIN DEFINITIONS

Section 1.1 DEFINED TERMS 

As used in this Agreement, the following terms shall have the following meanings specified or indicated (such meanings to be equally applicable to both the singular and plural forms of the terms defined)

"AGREEMENT" shall have the meaning specified in the preamble hereof.

"BY-LAWS" shall have the meaning specified in Section 4.7.

"CLAIM NOTICE" shall have the meaning specified in Section 9.3(a).

"CLEARING DATE" shall be the date in which the Estimated Put Shares (as defined in Section 2.2(a)) have been deposited into the Investor's brokerage account.

"CLOSING" shall mean one of the closings of a purchase and sale of shares of Common Stock pursuant to Section 2.3.

"CLOSING CERTIFICATE" shall mean the closing certificate of the Company in the form of Exhibit B hereto.

"CLOSING PRICE" shall mean the closing bid price for the Company's common stock on the Principal Market on a Trading Day as reported by Bloomberg Finance L.P.

"COMMITMENT PERIOD" shall mean the period commencing on the Effective Date, and ending on the earlier of (i) the date on which Investor shall have purchased Put Shares pursuant to this Agreement for an aggregate Purchase Price of the Maximum Commitment Amount, (ii) the date occurring thirty six (36) months from the date of commencement of the Commitment Period; or (iii) such date as the Registration Statement is no longer effective and no post effective amendment thereto has been effective for forty five (45) days. .

"COMMON STOCK" shall mean the Company's common stock, $0.001 par value per share, and any shares of any other class of common stock whether now or hereafter authorized, having the right to participate in the distribution of dividends (as and when declared) and assets (upon liquidation of the Company).

"COMMON STOCK EQUIVALENTS" shall mean any securities that are convertible into or exchangeable for Common Stock or any options or other rights to subscribe for or purchase Common Stock or any such convertible or exchangeable securities. 

"COMPANY" shall have the meaning specified in the preamble to this Agreement.

"DAMAGES" shall mean any loss, claim, damage, liability, cost and expense (including, without limitation, reasonable attorneys' fees and disbursements and costs and expenses of expert witnesses and investigation).

"DISPUTE PERIOD" shall have the meaning specified in Section 9.3(a).

"DOLLAR VOLUME" shall mean the product of (a) the Closing Price multiplied by (b) the trading volume on the Principal Market on a Trading Day.

"DTC" shall have the meaning specified in Section 2.3.

"DWAC" shall have the meaning specified in Section 2.3.

"EFFECTIVE DATE" shall mean the date that the Registration Statement is declared effective by the SEC.

"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.

"FAST" shall have the meaning specified in Section 2.3.

"FINRA" shall mean the Financial Industry Regulatory Authority, Inc.

"INDEMNIFIED PARTY" shall have the meaning specified in Section 9.3(a).

"INDEMNIFYING PARTY" shall have the meaning specified in Section 9.3(a).

"INDEMNITY NOTICE" shall have the meaning specified in Section 9.3(b).

"INVESTMENT AMOUNT" shall mean the dollar amount to be invested by Investor to purchase Put Shares with respect to any Put as notified by the Company to Investor in accordance with Section 2.2.

"INVESTOR" shall have the meaning specified in the preamble to this Agreement.

"LEGEND" shall have the meaning specified in Section 8.1.

"MARKET PRICE" shall mean the lowest Closing Price on the Principal Market for any Trading Day during the Valuation Period, as reported by Bloomberg Finance L.P.

"MATERIAL ADVERSE EFFECT" shall mean any effect on the business, operations, properties, or financial condition of the Company that is material and adverse to the Company and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to enter into and perform its obligations under any of this Agreement.

"MAXIMUM COMMITMENT AMOUNT" shall mean One Million Five Hundred Thousand Dollars ($1,500,000).

“MAXIMUM PUT AMOUNT” shall mean 200% of the average trading volume of the shares for the ten (10) trading days preceding the Put Notice. 

"PERSON" shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an 

agency or instrumentality thereof.

"PRINCIPAL MARKET" shall mean any of the national exchanges (i.e. NYSE, NYSE AMEX, Nasdaq), OTCQX, the OTC Bulletin Board, or other principal exchange which is at the time the principal trading exchange or market for the Common Stock.

"PURCHASE PRICE" shall mean 80% of the Market Price on such date on which the Purchase Price is calculated in accordance with the terms and conditions of this Agreement.

"PUT" shall mean the right of the Company to require the Investor to purchase shares of Common Stock, subject to the terms and conditions of this Agreement.

"PUT DATE" shall mean any Trading Day during the Commitment Period that a Put Notice is deemed delivered pursuant to Section 2.2(b).

"PUT NOTICE" shall mean a written notice, substantially in the form of Exhibit A hereto, to Investor setting forth the Investment Amount with respect to which the Company intends to require Investor to purchase shares of Common Stock pursuant to the terms of this Agreement.

"PUT SHARES" shall mean all shares of Common Stock issued or issuable pursuant to a Put that has been exercised or may be exercised in accordance with the terms and conditions of this Agreement.

"REGISTERED SECURITIES" shall mean the (a) Put Shares, and (b) any securities issued or issuable with respect to any of the foregoing by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. As to any particular Registered Securities, once issued such securities shall cease to be Registrable Securities when (i) a Registration Statement has been declared effective by the SEC and such Registrable Securities have been disposed of pursuant to a Registration Statement, (ii) such Registrable Securities have been sold under circumstances under which all of the applicable conditions of Rule 144 are met, (iii) such time as such Registrable Securities have been otherwise transferred to holders who may trade such shares without restriction under the Securities Act or (iv) in the opinion of counsel to the Company, which counsel shall be reasonably acceptable to Investor, such Registrable Securities may be sold without registration under the Securities Act or the need for an exemption from any such registration requirements and without any time, volume or manner limitations pursuant to Rule 144(b)(i) (or any similar provision then in effect) under the Securities Act.

"REGISTRATION STATEMENT" shall mean the Company's effective registration statement on file with the SEC, and any follow up registration statement or amendment 

thereto.

"REGULATION D" shall mean Regulation D promulgated under the Securities Act.

"RULE 144" shall mean Rule 144 under the Securities Act or any similar provision then in force under the Securities Act.

"SEC" shall mean the Securities and Exchange Commission.

"SECURITIES ACT" shall have the meaning specified in the recitals of this Agreement.

"SEC DOCUMENTS" shall mean, as of a particular date, all reports and other documents filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the Company's then most recently completed and reported fiscal year as of the time in question (provided that if the date in question is within ninety days of the beginning of the Company's fiscal year, the term shall include all documents filed since the beginning of the preceding fiscal year).

"SHORT SALES" shall mean all "short sales" as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

"SUBSCRIPTION DATE" shall mean the date on which this Agreement is executed and delivered by the Company and Investor.

"THIRD PARTY CLAIM" shall have the meaning specified in Section 9.3(a).

"TRADING DAY" shall mean a day on which the Principal Market shall be open for business.

"TRANSACTION DOCUMENTS" shall mean this Agreement and the Registration Rights Agreement.

"TRANSFER AGENT" shall mean the transfer agent for the Common Stock (and to any substitute or replacement transfer agent for the Common Stock upon the Company's appointment of any such substitute or replacement transfer agent).

"UNDERWRITER" shall mean any underwriter participating in any disposition of the Registered Securities on behalf of Investor pursuant to the Registration Statement.

"VALUATION EVENT" shall mean an event in which the Company at any time during a Valuation Period takes any of the following actions:

(a) subdivides or combines the Common Stock;

(b) pays a dividend in shares of Common Stock or makes any other distribution of shares 

of Common Stock, except for dividends paid with respect to any series of preferred stock authorized by the Company, whether existing now or in the future;

(c) issues any options or other rights to subscribe for or purchase shares of Common Stock other than pursuant to this Agreement, and other than options or stock grants issued or issuable to directors, officers and employees pursuant to a stock option program, whereby the price per share for which shares of Common Stock may at any time thereafter be issuable pursuant to such options or other rights shall be less than the Closing Price in effect immediately prior to such issuance;

(d) issues any securities convertible into or exchangeable for shares of Common Stock and the consideration per share for which shares of Common Stock may at any time thereafter be issuable pursuant to the terms of such convertible or exchangeable securities shall be less than the Closing Price in effect immediately prior to such issuance;

(e) issues shares of Common Stock otherwise than as provided in the foregoing subsections (a) through (d), at a price per share less, or for other consideration lower, than the Closing Price in effect immediately prior to such issuance, or without consideration; or

(f) makes a distribution of its assets or evidences of indebtedness to the holders of Common Stock as a dividend in liquidation or by way of return of capital or other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law or any distribution to such holders made in respect of the sale of all or substantially all of the Company's assets (other than under the circumstances provided for in the foregoing subsections (a) through (e).

"VALUATION PERIOD" shall mean the period of five (5) Trading Days immediately preceding the Clearing Date associated with the applicable Put Notice during which the Purchase Price of the Common Stock is valued; provided, however, that if a Valuation Event occurs during any Valuation Period, a new Valuation Period shall begin on the Trading Day immediately after the occurrence of such Valuation Event and end on the fifth (5th) Trading Day thereafter. Investor shall notify the Company in writing of the occurrence of the Clearing Date associated with a Put Notice. The Valuation Period shall begin the first Trading Day following such written notice from Investor.

"VWAP" shall mean the daily volume weighted average price for the Company's common stock on the Principal Market on a Trading Day as reported by Bloomberg Finance L.P.

ARTICLE II PURCHASE AND SALE OF COMMON STOCK

Section 2.1 INVESTMENTS.

PUTS. Upon the terms and conditions set forth herein (including, without limitation, the provisions of Article VII), on any Put Date the Company may exercise a Put by the delivery of a Put Notice. The number of Put Shares that Investor shall purchase pursuant to such Put shall be determined by dividing the Investment Amount specified in the Put Notice by the Purchase Price with respect to such Put Notice.

Section 2.2 MECHANICS.

(a) PUT NOTICE. At any time and from time to time during the Commitment Period, the Company may deliver a Put Notice to Investor, subject to the conditions set forth in Section 7.2; provided, however, that the Investment Amount identified in the applicable Put Notice, when taken together with all prior Put Notices, shall not exceed the Maximum Commitment Amount and no Put Notice shall exceed the Maximum Put Amount. On the Put Date the Company shall deliver to Investor's brokerage account estimated put shares equal to the Investment Amount indicated in the Put Notice divided by the Closing Price on the Trading Day immediately preceding the Put Date, multiplied by one hundred twenty five percent (125%) (the "Put Shares"). On the Trading Date immediately following delivery of the Put Shares, Investor shall deliver payment by check or wire transfer to the Company as the Company may request in an amount equal to the Purchase Price. 

(b) DATE OF DELIVERY OF PUT NOTICE. A Put Notice shall be deemed delivered on (i) the Trading Day it is received by facsimile or otherwise by Investor if such notice is received on or prior to 12:00 noon New York time, or (ii) the immediately succeeding Trading Day if it is received by facsimile or otherwise after 12:00 noon New York time on a Trading Day or at any time on a day which is not a Trading Day.

Section 2.3 CLOSINGS. The Closing of a Put shall occur upon the Trading Day following the day that the Put Shares are deposited in the Investor’s account and on such day the Investor shall deliver the Investment Amount specified in the Put Noticeby wire transfer of immediately available funds to an account designated by the Company.  In lieu of delivering physical certificates representing the Common Stock issuable in accordance with clause (a) of this Section 2.3, and provided that the Transfer Agent then is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of Investor, but subject to the applicable provisions of Article VIII hereof, the Company shall use its commercially reasonable efforts to cause the Transfer Agent to electronically transmit the applicable Put Shares by crediting the account of the Investor's prime broker with DTC through its Deposit Withdrawal At Custodian ("DWAC") system, and provide proof satisfactory to the Investor of such delivery. In addition, on or prior to such Closing Date, each of the Company and Investor shall deliver to each other all documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this 

Agreement in order to implement and effect the transactions contemplated herein.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF INVESTOR

Investor represents and warrants to the Company that:

Section 3.1 INTENT. Investor is entering into this Agreement for its own account and Investor has no present arrangement (whether or not legally binding) at any time to sell the Registered Securities to or through any person or entity; provided, however, that Investor reserves the right to dispose of the Registered Securities at any time in accordance with federal and state securities laws applicable to such disposition.

Section 3.2 NO LEGAL ADVICE FROM THE COMPANY. The Investor acknowledges that it has had the opportunity to review this Agreement and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. The Investor is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.

Section 3.3 SOPHISTICATED INVESTOR. Investor is a sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as defined in Rule 501 of Regulation D), and Investor has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Registered Securities. Investor acknowledges that an investment in the Registered Securities is speculative and involves a high degree of risk.

Section 3.4 AUTHORITY. (a) Investor has the requisite power and authority to enter into and perform its obligations under this Agreement and the transactions contemplated hereby in accordance with its terms; (b) the execution and delivery of this Agreement and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action and no further consent or authorization of Investor or its partners is required; and (c) this Agreement has been duly authorized and validly executed and delivered by Investor and constitutes a valid and binding obligation of Investor enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.

Section 3.5 NOT AN AFFILIATE. Investor is not an officer, director or "affiliate" (as that term is defined in Rule 405 of the Securities Act) of the Company.

Section 3.6 ORGANIZATION AND STANDING. Investor is a corporation duly organized, validly existing and in good standing under the laws of the United Kingdom 

and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Investor is duly qualified and in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure so to qualify would not have a material adverse effect on Investor.

Section 3.7 ABSENCE OF CONFLICTS. The execution and delivery of this Agreement and any other document or instrument contemplated hereby, and the consummation of the transactions contemplated hereby and thereby, and compliance with the requirements hereof and thereof, will not (a) violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on Investor, (b) violate any provision of any indenture, instrument or agreement to which Investor is a party or is subject, or by which Investor or any of its assets is bound, or conflict with or constitute a material default thereunder, (c) result in the creation or imposition of any lien pursuant to the terms of any such indenture, instrument or agreement, or constitute a breach of any fiduciary duty owed by Investor to any third party, or (d) require the approval of any third-party (that has not been obtained) pursuant to any material contract, instrument, agreement, relationship or legal obligation to which Investor is subject or to which any of its assets, operations or management may be subject.

Section 3.8 DISCLOSURE; ACCESS TO INFORMATION. Investor had an opportunity to review copies of the SEC Documents filed on behalf of the Company and has had access to all publicly available information with respect to the Company.

Section 3.9 MANNER OF SALE. At no time was Investor presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising.

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Investor that, except as disclosed in the SEC Documents:

Section 4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Nevada and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, other than those in which the failure so to qualify would not have a Material Adverse Effect.

Section 4.2 AUTHORITY. (a) The Company has the requisite corporate power and 

authority to enter into and perform its obligations under this Agreement and to issue the Put Shares; (b) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required; and (c) each of this Agreement and has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application. 

Section 4.3 CAPITALIZATION. As of the date hereof, the authorized capital stock of the Company consists of 650,000,000 shares of Common Stock, $0.0001 par value per share, of which  93,591,049 shares were issued and outstanding as of July 8, 2013, and no other class of securities.  Except as otherwise disclosed in the SEC Documents , there are no outstanding securities which are convertible into shares of Common Stock, whether such conversion is currently exercisable or exercisable only upon some future date or the occurrence of some event in the future.  All of the outstanding shares of Common Stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable. 

Section 4.4 COMMON STOCK. The Company is in full compliance with all reporting requirements of the Exchange Act, and the Company has maintained all requirements for the continued listing or quotation of the Common Stock, and such Common Stock is currently listed or quoted on the Principal Market which is presently the OTCBB.

Section 4.5 SEC DOCUMENTS. The Company may make available to Investor true and complete copies of the SEC Documents (including, without limitation, proxy information and solicitation materials). To the Company's knowledge, the Company has not provided to Investor any information that, according to applicable law, rule or regulation, should have been disclosed publicly prior to the date hereof by the Company, but which has not been so disclosed. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act, and other federal laws, rules and regulations applicable to such SEC Documents, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply as to form and 

substance in all material respects with applicable accounting requirements and the published rules and regulations of the SEC or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except (a) as may be otherwise indicated in such financial statements or the notes thereto or (b) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). 

Section 4.6 VALID ISSUANCES. When issued and paid for as herein provided, the Put Shares shall be duly and validly issued, fully paid, and non-assessable. The sales of the Put Shares pursuant to this Agreement, and the Company's performance of its obligations hereunder, shall not (a) result in the creation or imposition of any liens, charges, claims or other encumbrances upon the Put Shares, or any of the assets of the Company, or (b) entitle the holders of outstanding shares of Common Stock to preemptive or other rights to subscribe to or acquire the Common Stock or other securities of the Company. The Put Shares shall not subject Investor to personal liability, in excess of the subscription price by reason of the ownership thereof.

Section 4.7 NO CONFLICTS. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, including without limitation the issuance of the Put Shares, do not and will not (a) result in a violation of the Company's Articles of Incorporation or By-Laws or (b) conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture, instrument or any "lock-up" or similar provision of any underwriting or similar agreement to which the Company is a party, or (c) result in a violation of any federal, state or local law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect) nor is the Company otherwise in violation of, conflict with or in default under any of the foregoing. The business of the Company is not being conducted in violation of any law, ordinance or regulation of any governmental entity, except for possible violations that either singly or in the aggregate do not and will not have a Material Adverse Effect. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, 

authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or issue and sell the Common Stock in accordance with the terms hereof (other than any SEC, FINRA or state securities filings that may be required to be made by the Company subsequent to any Closing, any registration statement that may be filed pursuant hereto); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of Investor herein.

Section 4.8 NO MATERIAL ADVERSE CHANGE. Since February 28, 2013 no event has occurred that would have a Material Adverse Effect on the Company. 

Section 4.9 LITIGATION AND OTHER PROCEEDINGS. Except as disclosed in the Company's SEC filings and threatened litigation by Eclipse Advisors, LLP, there are no lawsuits or proceedings pending or to the knowledge of the Company threatened, against the Company, nor has the Company received any written or oral notice of any such action, suit, proceeding or investigation, which would have a Material Adverse Effect. No judgment, order, writ, injunction or decree or award has been issued by or, so far as is known by the Company, requested of any court, arbitrator or governmental agency which would have a Material Adverse Effect. 

Section 4.10 DILUTION. The number of shares of Common Stock issuable as Put Shares may increase substantially in certain circumstances, including, but not necessarily limited to, the circumstance wherein the trading price of the Common Stock declines during the period between the Effective Date and the end of the Commitment Period. The Company's executive officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement and recognize that they have a potential dilutive effect. The board of directors of the Company has concluded in its good faith business judgment that such issuance is in the best interests of the Company.

ARTICLE V COVENANTS OF INVESTOR

Section 5.1 COMPLIANCE WITH LAW; TRADING IN SECURITIES. Investor's trading activities with respect to shares of the Common Stock will be in compliance with all applicable state and federal securities laws, rules and regulations and the rules and regulations of FINRA and the Principal Market on which the Common Stock is listed or quoted.

Section 5.2 SHORT SALES AND CONFIDENTIALITY. Neither Investor nor any affiliate of the Investor acting on its behalf or pursuant to any understanding with it will execute any Short Sales during the period from the date hereof to the end of the Commitment Period. For the purposes hereof, and in accordance with Regulation SHO, the sale after delivery of a Put Notice of such number of shares of Common Stock reasonably expected to be purchased under a Put Notice shall not be deemed a Short Sale.

Other than to other Persons party to this Agreement, Investor has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

ARTICLE VI COVENANTS OF THE COMPANY

Section 6.1 RESERVATION OF COMMON STOCK. The Company will, from time to time as needed in advance of a Closing Date, reserve and keep available until the consummation of such Closing, free of preemptive rights sufficient shares of Common Stock for the purpose of enabling the Company to satisfy its obligation to issue the Put Shares to be issued in connection therewith. The number of shares so reserved from time to time, as theretofore increased or reduced as hereinafter provided, may be reduced by the number of shares actually delivered hereunder.

Section 6.2 LISTING OF COMMON STOCK. If the Company applies to have the Common Stock traded on any other Principal Market, it shall include in such application the Put Shares, and shall take such other action as is necessary to cause the Common Stock to be listed on such other Principal Market as promptly as possible. The Company shall use its commercially reasonable efforts to continue the listing and trading of the Common Stock on the Principal Market (including, without limitation, maintaining sufficient net tangible assets) and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the FINRA and the Principal Market.

ARTICLE VII CONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO CLOSING

Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE AND SELL COMMON STOCK. The obligation hereunder of the Company to issue and sell the Put Shares to Investor is subject to the satisfaction of each of the conditions set forth below.

(a) ACCURACY OF INVESTOR'S REPRESENTATIONS AND WARRANTIES. The 

representations and warranties of Investor shall be true and correct in all material respects as of the date of this Agreement and as of the date of each such Closing as though made at each such time.

(b) PERFORMANCE BY INVESTOR. Investor shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Investor at or prior to such Closing.

(c) PRINCIPAL MARKET REGULATION. The Company shall not issue any Put Shares, and the Investor shall not have the right to receive any Put Shares, if the issuance of such shares would exceed the aggregate number of shares of Common Stock which the Company may issue without breaching the Company's obligations under the rules or regulations of the Principal Market (the "EXCHANGE CAP").

Section 7.2 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER A PUT NOTICE AND THE OBLIGATION OF INVESTOR TO PURCHASE PUT SHARES. The right of the Company to deliver a Put Notice and the obligation of Investor hereunder to acquire and pay for the Put Shares is subject to the satisfaction of each of the following conditions:

(a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement, and any amendment or supplement thereto, shall remain effective for the sale by Investor of the Registered Securities subject to such Put Notice, and (i) neither the Company nor Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration Statement, either temporarily or permanently, or intends or has threatened to do so and (ii) no other suspension of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus shall exist.

(b) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company shall be true and correct in all material respects (except for representations and warranties specifically made as of a particular date), except for any conditions which have temporarily caused any representations or warranties herein to be incorrect and which have been corrected with no continuing impairment to the Company or Investor.

(c) PERFORMANCE BY THE COMPANY. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the 

Company.

(d) NO INJUNCTION. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or adopted by any court or governmental authority of competent jurisdiction that prohibits or directly and materially adversely affects any of the transactions contemplated by this Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by this Agreement.

(e) ADVERSE CHANGES. Since the date of filing of the Company's most recent SEC Document, no event that had or is reasonably likely to have a Material Adverse Effect has occurred.

(f) NO SUSPENSION OF TRADING IN OR DE-LISTING OF COMMON STOCK. The trading of the Common Stock shall not have been suspended by the SEC, the Principal Market or the FINRA and the Common Stock shall have been approved for listing or quotation on and shall not have been de-listed from the Principal Market.

(g) FIVE PERCENT LIMITATION. On each Closing Date, the number of Put Shares then to be purchased by Investor shall not exceed the number of such shares that, when aggregated with all other shares of Common Stock then owned by Investor beneficially or deemed beneficially owned by Investor, would result in Investor owning more than 4.99% of all of such Common Stock as would be outstanding on such Closing Date, as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder. For purposes of this Section, in the event that the amount of Common Stock outstanding as determined in accordance with Section 16 of the Exchange Act and the regulations promulgated thereunder is greater on a Closing Date than on the date upon which the Put Notice associated with such Closing Date is given, the amount of Common Stock outstanding on such Closing Date shall govern for purposes of determining whether Investor, when aggregating all purchases of Common Stock made pursuant to this Agreement, would own more than 4.99% of the Common Stock following such Closing Date.

(h) PRINCIPAL MARKET REGULATION.  The Company shall not issue any Put Shares, and the Investor shall not have the right to receive any Put Shares, if the issuance of such shares would exceed the Exchange Cap.

(i) NO KNOWLEDGE. The Company shall have no knowledge of any event more likely than not to have the effect of causing such Registration Statement to be suspended or otherwise ineffective (which event is more likely than not to occur within the fifteen (15) Trading Days following the Trading Day on which such Put Notice is deemed delivered).

(j) NO VIOLATION OF SHAREHOLDER APPROVAL REQUIREMENT. The 

issuance of shares of Common Stock with respect to the applicable Closing, if any, shall not violate the shareholder approval requirements of the Principal Market.

(k) NO VALUATION EVENT. No Valuation Event shall have occurred since the Put Date. 

(l) PUT NOTICE CERTIFICATE. On the date of delivery of each Put Notice, Investor shall have received a certificate in substantially the form and substance of Exhibit B hereto, executed by an executive officer of the Company and to the effect that all the conditions to such Closing shall have been satisfied as at the date of each such certificate.

ARTICLE VIII LEGENDS

Section 8.1 NO STOCK LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend shall be placed on the share certificates representing the Put Shares.

Section 8.2 INVESTOR'S COMPLIANCE. Nothing in this Article VIII shall affect in any way Investor's obligations under any agreement to comply with all applicable securities laws upon the sale of the Common Stock.

ARTICLE IX NOTICES; INDEMNIFICATION

Section 9.1 NOTICES. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram, facsimile, or email as a PDF, addressed as set forth below or to such other address as such party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, or email as a PDF, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of mailing by express courier service or on the fifth business day after deposited in the mail, in each case, fully 

prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.

The addresses for such communications shall be: If to the Company:

Sauer Energy, Inc., 4670 CalleCarga, Unit A, Camarillo, CA 93012, Attn.: Dieter Sauer, Jr., CEO; Tel and Fax: 888-829-8748 EMAIL: dieter@sauerenergy.com

Copy to (which shall not constitute notice): Frank J. Hariton, Esq., 1065 Dobbs Ferry Road, White Plains, NY 10607; Tel: 914-674-4373 Fax: 914-693-7353 EMAIL: hariton@sprynet.com.

If to Investor:

Beaufort Ventures PLC, c/o Beaufort Capital Partners, LLC, 660 White Plains Road, Suite 455, Tarrytown, NY 10591, Attn.: Robert P. Marino, Managing Member; Tel 914 332 4500; Fax 914 332 4577 EMAIL:Rmarino@beaufortcp.com

Either party hereto may from time to time change its address or facsimile number for notices under this Section 9.1 by giving at least ten (10) days' prior written notice of such changed address or facsimile number to the other party hereto.

Section 9.2 INDEMNIFICATION. Each party (an "Indemnifying Party") agrees to indemnify and hold harmless the other party along with its officers, directors, employees, and authorized agents, and each Person or entity, if any, who controls such party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (an "Indemnified Party") from and against any Damages, joint or several, and any action in respect thereof to which the Indemnified Party becomes subject to, resulting from, arising out of or relating to (i) any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Indemnifying Party contained in this Agreement, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or supplement thereto, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the 

omission or alleged omission to state therein any material fact necessary to make the statements made therein, in the light of the circumstances under which the statements therein were made, not misleading, or (iv) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law, as such Damages are incurred, except to the extent such Damages result primarily from Indemnified Party's failure to perform any covenant or agreement contained in this Agreement or Indemnified Party's negligence, recklessness or bad faith in performing its obligations under this Agreement; provided, however, that the foregoing indemnity agreement shall not apply to any Damages of an Indemnified Party to the extent, but only to the extent, arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made by an Indemnifying Party in reliance upon and in conformity with written information furnished to the Indemnifying Party by the Indemnified Party expressly for use in the Registration Statement, any post-effective amendment thereof or supplement thereto, or any preliminary prospectus or final prospectus (as amended or supplemented).

Section 9.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for indemnification by any Indemnified Party (as defined below) under Section 9.2 shall be asserted and resolved as follows:

(a) In the event any claim or demand in respect of which an Indemnified Party might seek indemnity under Section 9.2 is asserted against or sought to be collected from such Indemnified Party by a person other than a party hereto or an affiliate thereof (a "THIRD PARTY CLAIM"), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party's claim for indemnification that is being asserted under any provision of Section 9.2 against an Indemnifying Party, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim (a "CLAIM NOTICE") with reasonable promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party's ability to defend has been prejudiced by such failure of the Indemnified Party. The Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the "DISPUTE PERIOD") whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party under Section 9.2 and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party 

against such Third Party Claim.

(i) If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 9.3(a), then the Indemnifying Party shall have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not be indemnified in full pursuant to Section 9.2). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party's delivery of the notice referred to in the first sentence of this clause (i), file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate to protect its interests; and provided further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this clause (i), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing, the Indemnified Party may takeover the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under Section 9.2 with respect to such Third Party Claim.

(ii) If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to Section 9.3(a), or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party(with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified Party will have full control of such defense and proceedings, including any compromise or settlement thereof; 

provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this clause (ii), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in clause (iii) below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party's defense pursuant to this clause (ii) or of the Indemnifying Party's participation therein at the Indemnified Party's request, and the Indemnified Party shall reimburse the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this clause (ii), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.

(iii) If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to the Indemnified Party with respect to the Third Party Claim under Section 9.2 or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.

(b) In the event any Indemnified Party should have a claim under Section 9.2 against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under Section 9.2 specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim (an "INDEMNITY NOTICE") with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party's rights hereunder except to the extent that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim or the amount of the claim described 

in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under Section 9.2 and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.

(c) The Indemnifying Party agrees to pay the Indemnified Party, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. 

(d) The indemnity provisions contained herein shall be in addition to (i) any cause of action or similar rights of the Indemnified Party against the Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party may be subject to.

ARTICLE X MISCELLANEOUS

Section 10.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and interpreted in accordance with the laws of the United Kingdom without regard to the principles of conflicts of law. Each of the Company and Investor hereby submit to the exclusive jurisdiction of the United States Federal and state courts located in New York City with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby.

Section 10.2 JURY TRIAL WAIVER. The Company and the Investor hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other in respect of any matter arising out of or in connection with the Transaction Documents.

Section 10.3 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the Company and Investor and their respective successors. Neither this Agreement nor any rights of Investor or the Company hereunder may be assigned by 

either party to any other person. 

Section  10.4 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the Company and Investor and their respective successors, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

Section 10.5 TERMINATION. The Company may terminate this Agreement at any time by written notice to the Investor. Additionally, this Agreement shall terminate at the end of Commitment Period or as otherwise provided herein; provided, however, that the provisions of Articles IX, and Sections 10.1 and 10.2 shall survive the termination of this Agreement for a period of twenty four (24) months.

Section 10.6 ENTIRE AGREEMENT, AMENDMENT; NO WAIVER. This Agreement and the instruments referenced herein contain the entire understanding of the Company and Investor with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

Section 10.7 FEES AND EXPENSES. The Company agrees to pay its own expenses in connection with the preparation of this Agreement and performance of its obligations hereunder. The Company shall pay all stamp or other similar taxes and duties levied in connection with issuance of the Put Shares pursuant hereto.

Section 10.8 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which may be executed by less than all of the parties and shall be deemed to be an original instrument which shall be enforceable against the parties actually executing such counterparts and all of which together shall constitute one and the same instrument. This Agreement may be delivered to the other parties hereto by facsimile transmission or email of a copy of this Agreement bearing the signature of the parties so delivering this Agreement.

Section 10.9 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that such severability shall be ineffective if it materially changes the economic benefit of this Agreement to any party.

Section 10.10 FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this 

Agreement and the consummation of the transactions contemplated hereby.

Section 10.11 NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

Section 10.12  EQUITABLE RELIEF. The Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to Investor. The Company therefore agrees that Investor shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

Section 10.13 TITLE AND SUBTITLES. The titles and subtitles used in this Agreement are used for the convenience of reference and are not to be considered in construing or interpreting this Agreement.

Section 10.14  REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity relied upon for the determination of the Closing Price for the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg Finance L.P. or any successor thereto. The written mutual consent of Investor and the Company shall be required to employ any other reporting entity.

Section 10.15 PUBLICITY. The Company and Investor shall consult with each other in issuing any press releases or otherwise making public statements with respect to the transactions contemplated hereby and no party shall issue any such press release or otherwise make any such public statement without the prior written consent of the other parties, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which such case the disclosing party shall provide the other parties with prior notice of such public statement. Notwithstanding the foregoing, the Company shall not publicly disclose the name of Investor without the prior written consent of such Investor, except to the extent required by law. Investor acknowledges that this Agreement and all or part of the Transaction Documents may be deemed to be "material contracts" as that term is defined by Item 601(b)(10) of Regulation S-K, and that the Company may therefore be required to file such documents as exhibits to reports or registration statements filed under the Securities Act or the Exchange Act. Investor further agrees that the status of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.

IN WITNESS WHEREOF, the parties hereto have caused this Equity Purchase Agreement to be executed by the undersigned, thereunto duly authorized, as of the date 

first set forth above.

Beaufort Ventures, PLC

By:

/s/ Robert P. Marino

        Robert P. Marino, Managing Member

Sauer Energy, Inc.

By: 

/s/ Dieter Sauer Jr.

        Dieter Sauer, Jr., CEO

EXHIBITS

EXHIBIT A Put Notice

EXHIBIT B Closing Certificate

EXHIBIT A

FORM OF PUT NOTICE

TO: Beaufort Ventures PLC

We refer to the Equity Purchase Agreement dated May__, 2013 (the "Agreement") entered into by Sauer Energy, Inc. (the "Company") and you. Capitalized terms defined in the Agreement shall, unless otherwise defined, have the same meaning when used herein.

We hereby:

1. Give you notice that we require you to purchase $_________ (the "Investment Amount") in Put Shares;

2. Determine the Purchase Price for this Put, as defined in Section 2.2(c) of the Agreement, to be $___________; 

3.  Determine the Maximum Put Amount to be ______ shares; and

4. Certify that, as of the date hereof, to the best of our knowledge, the conditions set forth in Section 7.2 of the Agreement are satisfied.

Date: _____________, 20__

Sauer Energy, Inc.

By: ______________________ 

          Dieter Sauer, Jr., CEO

EXHIBIT B

FORM OF

CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER

OF

Sauer Energy, Inc.

Pursuant to Section 7.2(m) of that certain Amended and Restated Equity Purchase Agreement dated July 8,2013 (the "Agreement") by and between the Company and Beaufort Ventures PLC (the "Investor"), the undersigned, in his capacity as the Chief Executive Officer of Sauer Energy, Inc. (the "Company"), and not in his individual capacity, hereby certifies, as of the date hereof (such date, the "Condition Satisfaction Date"), the following:

1. The representations and warranties of the Company are true and correct in all material respects as of the Condition Satisfaction Date as though made on the Condition Satisfaction Date (except for representations and warranties specifically made as of a particular date) with respect to all periods, and as to all events and circumstances occurring or existing to and including the Condition Satisfaction Date, except for any conditions which have temporarily caused any representations or warranties of the Company set forth in the Agreement to be incorrect and which have been corrected with no continuing impairment to the Company or Investor; and

2. All of the Company's conditions to Closing set forth in Section 7.2 of the Agreement have been satisfied as of the Condition Satisfaction Date.

Capitalized terms used herein shall have the meanings set forth in the Agreement unless otherwise defined herein. IN WITNESS WHEREOF, the undersigned has hereunto affixed his hand as of the __ day of ____, 201_.

By: 

/s/ Dieter Sauer, Jr.

Chief Executive OfficerXLS-2013.6.30-EX10.18

EXHIBIT 10.18

EXELIS EXCESS PENSION PLAN IA

Effective as of July 1, 1975 
As Amended and Restated as of October 31, 2011

EXELIS EXCESS PENSION PLAN IA
The ITT Excess Benefit Plan I (the “Plan”) was effective as of July 1, 1975. The purpose of the Plan was to provide those employees participating in the Retirement Plan for Salaried Employees of ITT Corporation or any successor thereto (the “Retirement Plan”) benefits which would have been payable under the Retirement Plan but for the limitations imposed on qualified plans by Section 415 of the Internal Revenue Code of 1986, as amended (the “Code”).
Effective as of October 7, 1986, the ITT Select Management Plan I was authorized by the Board of Directors of ITT Corporation (the “Corporation”) to pay supplemental benefits to certain select management or highly compensated employees who have qualified for benefits under the Retirement Plan. As of December 19, 1995, the ITT Select Management Plan I was merged into the ITT Excess Benefit Plan I and the surviving Plan was renamed the ITT Industries Excess Pension Plan I. In addition, as of December 19, 1995, the Plan was amended to transfer the liabilities under the ITT Industries Excess Pension Plan I attributable to all participants thereunder other than former or current Presidents, Chairmen, Chief Executive Officers, Chief Operating Officers or Executive Vice Presidents of ITT Industries, Inc. into the ITT Industries Excess Pension Plan II.
As of January 1, 1996, the Plan was amended to provide solely to individuals who are designated Eligible Employees (as defined herein) under the Plan on and after December 19, 1995 benefits which would have been payable on their behalf under the Retirement Plan but for the limitations on benefits imposed by Sections 415 and 401(a)(17) of the Code, to transfer all liabilities not attributable to such excess benefits into the ITT Industries Excess Pension Plan IB (which was authorized to be effective as of January 1, 1996) and to rename the Plan, as amended, the ITT Industries Excess Pension Plan IA.  The Plan was amended, effective as of January 1, 2000, to reflect the changes in the Retirement Plan formula.
Effective as of July 13, 2004, the Plan was amended and restated to make certain administrative changes and to unify the definition of Acceleration Event (as defined herein) with other employee benefit plans of the Corporation. Effective as of July 13, 2004, the Plan was further amended to eliminate approval by the Compensation and Personnel Committee of the Board of Directors for lump-sum payments made on or after September 1, 2004, and to revise the interest rate assumption utilized to calculate the amount of an elective lump-sum payment available upon retirement to a Participant who becomes an Eligible Employee after January 1, 2005. Effective as of July 1, 2006, the Plan’s name was revised to the ITT Excess Pension Plan IA.
Effective as of January 1, 2008, the Plan was amended to freeze participation and to eliminate the election of lump-sum distribution after December 31, 2008. Effective as of December 31, 2008, the Plan was amended and restated to comply with the provisions of Section 409A of the Code and the regulations promulgated thereunder.
The benefits accrued and vested under the provisions of the Plan by a Participant (as defined herein) who terminated employment with the Corporation and all its Associated Companies (as defined herein) prior to January 1, 2005, shall be subject to the provisions of the ITT Industries Excess Pension Plan IA as in effect on October 3, 2004, (attached hereto as Appendix B and made a part thereof). In addition, with respect to a Participant who was employed by the Corporation or one of 

i

its Associated Companies on January 1, 2005, the portion of his benefit payable under the provisions of this Plan equal to his Grandfathered Pre-2005 Benefit (as defined herein) shall be subject to the provisions of the ITT Industries Excess Pension Plan IA as in effect on October 3, 2004, without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code, unless otherwise provided in Appendix A.
Effective as of October 31, 2011, ITT Corporation restructured into three separate, publicly-traded companies named ITT Corporation, Exelis Inc., and Xylem Inc.  In connection with the restructuring, the Plan is being amended, effective as of October 31, 2011, to reflect the restructuring and transfer of the Plan sponsorship to Exelis Inc. When used hereinafter, the term Corporation shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation.
Effective as of October 31, 2011, the Plan is being renamed the Exelis Excess Pension Plan IA. When used hereinafter, the term Plan shall collectively include the Exelis Excess Pension Plan IA and, for the period prior to October 31, 2011, the ITT Excess Benefit Plan IA and prior versions thereof. Effective December 31, 2016, the Plan is amended to cease all future accruals.
All benefits payable under this Plan, which is intended to constitute both an unfunded excess benefit plan under Section 3(36) of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and a nonqualified, unfunded deferred compensation plan for a select group of management or highly compensated employees under Title I of ERISA, shall be paid out of the general assets of the Corporation. The Corporation may establish a trust in order to aid it in providing benefits due under the Plan.

ii

EXELIS EXCESS PENSION PLAN IA
TABLE OF CONTENTS
	
			
	 
	 
	Page

	ARTICLE I.
	DEFINITIONS
	1

	1.01
	Acceleration Event
	1

	1.02
	Annuity Starting Date
	1

	1.03
	Associated Company
	1

	1.04
	Beneficiary
	1

	1.05
	Board of Directors
	1

	1.06
	Change in Control
	1

	1.07
	Code
	1

	1.08
	Committee
	1

	1.09
	Company
	1

	1.10
	Company Pension Plan
	2

	1.11
	Corporation
	2

	1.12
	Disability or Disabled
	2

	1.13
	Eligible Employee
	2

	1.14
	ERISA
	2

	1.15
	Excess Benefit Portion
	2

	1.16
	Grandfathered Pre-2005 Benefit
	2

	1.17
	Participant
	2

	1.18
	Plan
	2

	1.19
	Plan Administrator
	2

	1.20
	Retirement Plan
	2

	1.21
	Select Management Portion
	2

	1.22
	Supplemental Benefit
	3

	1.23
	409A Supplemental Benefit
	3

	1.24
	Termination of Employment
	3

	ARTICLE II.
	PARTICIPATION: AMOUNT AND PAYMENT OF BENEFITS
	4

	2.01
	Participation
	4

	2.02
	Amount of Supplemental Benefits
	4

	2.03
	Vesting
	6

	2.04
	Payment of Benefits
	6

	2.05
	Payment Upon the Occurrence of a Change in Control
	13

	2.06
	Reemployment of Former Participant or Retired Participant
	14

	ARTICLE III.
	GENERAL PROVISIONS
	15

	3.01
	Funding
	15

	3.02
	Duration of Benefits
	15

	3.03
	Discontinuance and Amendment
	15

	3.04
	Termination of Plan
	16

	3.05
	Plan Not a Contract of Employment
	16

iii

	
			
	3.06
	Facility of Payment
	16

	3.07
	Withholding Taxes
	17

	3.08
	Nonalienation
	17

	3.09
	Forfeiture for Cause
	17

	3.10
	Transfers
	17

	3.11
	Acceleration of or Delay in Payments
	18

	3.12
	Indemnification
	18

	3.13
	Claims Procedure
	18

	3.14
	Construction
	20

	ARTICLE IV.
	PLAN ADMINISTRATION
	21

	4.01
	Responsibility for Benefit Determination
	21

	4.02
	Duties of Committee
	21

	4.03
	Procedure for Payment of Benefits Under the Plan
	21

	4.04
	Compliance
	22

	APPENDIX A
	

	23

	APPENDIX B
	

	26

iv

EXELIS EXCESS PENSION PLAN IA
ARTICLE I. 
DEFINITIONS
The following terms when capitalized herein shall have the meanings assigned below.
		
	1.01
	Acceleration Event shall mean “Acceleration Event” as that term is defined under the provisions of the Plan as in effect on October 3, 2004.

		
	1.02
	Annuity Starting Date shall mean, unless the Plan expressly provides otherwise, the first day of the first period for which an amount is due as an annuity or any other form. However, if a Change in Control occurs, the Annuity Starting Date of a Participant with regard to his 409A Supplemental Benefit shall be the date such Change in Control occurs.

		
	1.03
	Associated Company shall mean any division, subsidiary or affiliated company of the Corporation not participating in the Plan which is an Associated Company, as defined in the Retirement Plan.

		
	1.04
	Beneficiary shall mean the person designated pursuant to the provisions of the Retirement Plan to receive benefits under said Retirement Plan after a Participant’s death. In the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner (as defined in the Retirement Plan)), if any, otherwise his estate. Notwithstanding the foregoing, with respect to any survivor benefit payable pursuant to the provision of Section 2.04(c)(ii) based on the Participant’s 409A Supplemental Benefit attributable to the Traditional Pension Plan (“TPP”) formula (as defined in Section 4.01(b) of the Retirement Plan), in the absence of a beneficiary designation under the provisions of the Retirement Plan, the Participant’s Beneficiary shall be his spouse (or Registered Domestic Partner), if any, otherwise the person or persons named as his beneficiary (or beneficiaries) under the Exelis Salaried Investment and Savings Plan, if any, or if none, then the person or persons named as his beneficiary (or beneficiaries) under the Company’s life insurance program.

		
	1.05
	Board of Directors shall mean the Board of Directors of Exelis Inc. or any successor thereto.

		
	1.06
	Change in Control shall mean “Change in Control” as such term is defined under the terms of the Exelis Excess Pension Plan IIA, as amended from time to time.

		
	1.07
	Code shall mean the Internal Revenue Code of 1986, as amended from time to time.

		
	1.08
	Committee shall mean the Benefits Administration Committee under the Retirement Plan.

		
	1.09
	Company shall mean, effective October 31, 2011, Exelis Inc. or any successor by merger or purchase or otherwise and any Participating Unit (as that term is defined in the Retirement Plan) authorized by the Corporation to participate in the Plan with respect to its employees. When used herein, the term Company shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation, and any Participating Unit.

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	1.10
	Company Pension Plan shall mean any tax qualified defined benefit plan other than the Retirement Plan maintained by the Company or an Associated Company.

		
	1.11
	Corporation shall mean, effective October 31, 2011, Exelis Inc., an Indiana corporation, or any successor by merger, purchase or otherwise. When used herein, the term Corporation shall collectively include Exelis Inc. and, for the period prior to October 31, 2011, ITT Corporation.

		
	1.12
	Disability or Disabled shall mean “Disability” or “Disabled” as such terms are defined under the terms of the Exelis Excess Pension Plan IIA, as amended from time to time.

		
	1.13
	Eligible Employee shall mean a member of the Retirement Plan who occupied on or prior to December 31, 2007, a position of senior management with the Corporation at the Vice President level or higher.

		
	1.14
	ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

		
	1.15
	Excess Benefit Portion shall mean the portion of the Plan which is intended to constitute an unfunded excess benefit plan under Sections 3(36) and 4(b)(5) of Title I of ERISA which provides benefits not otherwise payable under the Retirement Plan due to restrictions imposed by Section 415 of the Code.

		
	1.16
	Grandfathered Pre-2005 Benefit shall mean the portion of the Participant’s Supplemental Benefit, if any, that was accrued and vested before January 1, 2005, determined under the provisions of the Plan without regard to any amendments after October 3, 2004, which would cause a material modification for purposes of Section 409A of the Code, adjusted for the passage of time based on actuarial equivalent assumptions and procedures established by the Committee in accordance with the provisions of Treas. Reg. § 1.409A-6(a)(3)(iv).

		
	1.17
	Participant shall mean an Eligible Employee who is participating in the Plan pursuant to Section 2.01 hereof.

		
	1.18
	Plan shall mean the Exelis Excess Pension Plan IA, as set forth herein or as amended from time to time.

		
	1.19
	Plan Administrator shall mean the Benefits Administration Committee (as defined in the Retirement Plan) or in the case of an appeal under Section 3.13(c), the Appeals Committee (as defined in the Retirement Plan).

		
	1.20
	Retirement Plan shall mean the Exelis Salaried Retirement Plan, which was formerly known prior to October 31, 2011, as the ITT Salaried Retirement Plan and prior to that the ITT Industries Salaried Retirement Plan, as amended from time to time.

		
	1.21
	Select Management Portion shall mean the portion of the Plan, other than the Excess Benefit Portion, which is intended to constitute an unfunded deferred compensation plan for a select group of management or highly compensated employees under Title I of ERISA.

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	1.22
	Supplemental Benefit shall mean the monthly benefit payable to a Participant as determined under Section 2.02, which shall include a Participant’s Excess Benefit Portion and Select Management Portion as determined pursuant to Section 2.02 of this Plan.

		
	1.23
	409A Supplemental Benefit shall mean the portion of a Participant’s Supplemental Benefit, if any, in excess of his Grandfathered Pre-2005 Benefit.

		
	1.24
	Termination of Employment shall mean a “Separation from Service” as such term is defined in the Exelis Excess Pension Plan IIA, as amended from time to time.

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ARTICLE II. 
PARTICIPATION; AMOUNT AND PAYMENT OF BENEFITS
		
	2.01
	Participation

		
	(a)
	Each Eligible Employee who is a Participant in the Plan as of October 31, 2011, shall continue to be a Participant in the Plan, subject to the provisions of paragraph (d) below. Effective as of January 1, 2008, participation in the Plan was frozen and the admission of new Participants in the Plan on or after that date was prohibited.

		
	(b)
	Each Eligible Employee’s annual retirement allowance or vested benefit which at the time of payment under the Retirement Plan exceeds the limitations imposed by Section 415(b) of the Code (or prior to January 1, 2000, Section 415(e) of the Code) shall be payable from the Excess Benefit Portion of the Plan.

		
	(c)
	Each Eligible Employee’s annual retirement allowance or vested benefit which at the time of payment under the Retirement Plan is limited by reason of the limitation on Compensation (as that term is defined in the Retirement Plan) under Section 401(a)(17) of the Code shall be payable from the Select Management Portion of the Plan.

		
	(d)
	A Participant’s participation in the Plan shall terminate upon the Participant’s death or other Termination of Employment with the Company and all Associated Companies, unless a benefit is payable under the Plan with respect to the Participant or his Beneficiary under the provisions of this Article II.

		
	2.02
	Amount of Supplemental Benefits

		
	(a)
	A Participant’s Supplemental Benefit under this Article II shall be equal to the excess, if any, of (i) over (ii) as determined below:

		
	(i)
	the monthly retirement allowance or vested benefit determined as of such Participant’s Termination of Employment which would have been payable to the Participant under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv) of this Plan, whichever is applicable, and

		
	(1)
	prior to the application of any offset required pursuant to Section 4.10 or to an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;

		
	(2)
	without regard to the provisions contained in Section 415 of the Code relating to the maximum limitation on benefits, as incorporated into the Retirement Plan; and

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	(3)
	without regard to the annual limitation on Compensation contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan;

over
		
	(ii)
	the monthly retirement allowance or vested benefit which would have been payable for the Participant’s lifetime under Section 4.02, 4.03, 4.04, 4.05 or 4.06 of the Retirement Plan, whichever is applicable, assuming such benefit commences on the date set forth in Section 2.04(a)(i), (ii) or (iv), whichever is applicable, and determined

		
	(1)
	prior to the application of any offset required pursuant to Section 4.10 or an applicable Appendix of the Retirement Plan with regard to benefits payable under any other Company Pension Plan;

		
	(2)
	with regard to the provisions contained in Section 415 of the Code relating to maximum limitation benefits as incorporated into the Retirement Plan; and

		
	(3)
	with regard to the annual limitation on Compensation contained in Section 401(a)(17) of the Code, as incorporated into the Retirement Plan.

		
	(b)
	Except as otherwise provided below, if, after a Participant’s Annuity Starting Date, changes to the Code or ERISA permit the Retirement Plan to provide for payment of a Participant’s monthly retirement allowance or vested benefit in an amount greater than that permissible at that particular Annuity Starting Date, the Participant’s monthly benefit under this Plan shall be reduced by the portion of his retirement allowance or vested benefit actually paid from the Retirement Plan. This provision shall not be applicable to any portion of a Participant’s Supplemental Benefit received in the form of a lump-sum payment.

		
	(c)
	Notwithstanding anything to the contrary in Section 2.01 or Section 2.02(a), a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc. shall be treated for purposes of determining his Supplemental Benefit as though he earns Eligibility Service (as defined in the Retirement Plan) for Plan purposes until the earlier of October 31, 2016, the date such Participant terminates employment with ITT Corporation or Xylem Inc., the date on which the benefits under the Retirement Plan attributable to the TPP Formula commence, the date of his death or a Change in Control of ITT Corporation or Xylem Inc., as the case may be.

		
	(d)
	Notwithstanding anything to the contrary in Section 2.01 or 2.01(a), effective as of October 31, 2011, with respect to a Participant who on October 31, 2011, continued in employment with ITT Corporation or commenced employment with Xylem Inc., 

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the interest rate credited per annum on the Pension Equity Plan (“PEP”) (as defined in Section 4.01(c) of the Retirement Plan) lump-sum value of the portion of a Participant’s Supplemental Benefit payable under Section 2.02 attributable to the PEP formula during the period beginning on October 31, 2011 and ending on the Participant’s Annuity Starting Date shall be the greater of the 10-year Treasury rate as in effect on December 31 of the prior calendar year or 3.25 percent.
		
	(e)
	Notwithstanding anything to the contrary in Section 2.01 or this Section 2.02, effective December 31, 2016, Benefit Service (as defined under the Retirement Plan) and Compensation used to determine a Participant’s Supplemental Benefits under this Plan shall be frozen.

		
	2.03
	Vesting

Effective October 31, 2011, each Participant is vested in, and has a nonforfeitable right to, the benefit payable under this Article II.
		
	2.04
	Payment of Benefits

		
	(a)
	Timing of Payment

		
	(i)
	Subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following (1) the Participant’s Termination of Employment or (2) if the Participant is not at least age 50 on such date of Termination of Employment and his age and Eligibility Service as of such date does not equal 80 or more, the Participant’s attainment of age 55, if later.

		
	(ii)
	Notwithstanding the foregoing provisions of clause (i) above and subject to the provisions of clause (iii) below, the portion of any Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula, to the extent vested pursuant to Section 2.03, shall commence as of the first day of the month following the Participant’s Termination of Employment.

		
	(iii)
	Notwithstanding the foregoing, the actual payment of a 409A Supplemental Benefit payable under Section 2.02 due to the Participant’s Termination of Employment for reasons other than death or Disability shall not commence prior to the first day of the seventh month following the Participant’s Termination of Employment. Any payment due the Participant which he would have otherwise received under Section 2.02 during the six-month period immediately following such Participant’s Termination of Employment shall be accumulated, with interest, at the IRS Interest Rate (as defined in the Retirement Plan) in accordance with procedures 

6

established by the Committee. For the avoidance of doubt, the provisions of this clause (iii) shall not apply to a 409A Supplemental Benefit payable under (1) Section 2.04(c) due to the death of the Participant or (2) Section 2.04(d) due to the Participant’s Disability.
		
	(iv)
	Notwithstanding the foregoing, in the event a Participant who incurred a Termination of Employment prior to January 1, 2009, has not commenced payment of his 409A Supplemental Benefit as of January 1, 2009, such Participant’s 409A Supplemental Benefit shall commence as of January 1, 2009, or, if later, the date specified in clause (i), (ii) or (iii) above, whichever is applicable.

		
	(v)
	A Participant’s Grandfathered Pre-2005 Benefit shall commence in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.

		
	(b)
	Form of Benefit

		
	(i)
	Unless a Participant has a valid election under clause (ii) or (iii) below in effect, the portion of the Participant’s 409A Supplemental Benefit determined under Section 2.02 attributable to the TPP formula shall be paid in the form of a single life annuity for the life of the Participant, if the Participant is not married on his Annuity Starting Date, or in the form of a 50% joint & survivor annuity, if the Participant is married (or has a Registered Domestic Partner) on his Annuity Starting Date.

		
	(ii)
	Subject to the provisions of clause (iv) below, a Participant may elect to convert his 409A Supplemental Benefit payable under Section 2.02 attributable to the TPP formula into an optional annuity of equivalent actuarial value available to that Participant under the provisions of Section 4.07(b) of the Retirement Plan as of his Annuity Starting Date, provided said optional annuity satisfies the definition of “life annuity” as provided in Treas. Reg. § 1.409A-(2)(b)(2)(ii) and any further guidance thereto. Such equivalent actuarial value shall be based on the applicable factors set forth in Appendix A of the Retirement Plan.

		
	(iii)
	Notwithstanding the foregoing provisions of clauses (i) and (ii) above, a Participant may, subject to the timing limitations and other restrictions as shall be prescribed by the Committee, elect, by written notice received by the Committee, to receive the portion of his entire Supplemental Benefit payable under this Plan attributable to the TPP formula in the form of a single lump-sum payment if upon his Termination of Employment he retires under the provisions of the Retirement Plan at his Postponed Retirement Date, Normal Retirement Date, Standard Early Retirement Date or Special 

7

Early Retirement Date (as such terms are defined under the Retirement Plan). Such election must have been completed and filed with the Plan Committee no later than December 31, 2008, and became irrevocable as of January 1, 2009. However, if the Participant dies after his Early, Normal or Postponed Retirement Date but prior to receiving his lump-sum payment, the payment shall be made to the Participant’s Beneficiary with the calculation of such payment based on the assumption that payment had been made immediately preceding the Participant’s date of death. For avoidance of doubt, if a Participant has not satisfied the eligibility requirements to retire under the Retirement Plan with an early, normal or postponed retirement allowance upon his Termination of Employment, the election of a lump-sum payment under the provisions of the clause (iii) shall not be effective.
Such lump-sum payment shall be calculated on an actuarial equivalent basis using the interest rate assumption for immediate annuities used by the Pension Benefit Guaranty Corporation (“PBGC”) for valuing benefits for single employer plans as published by the PBGC for the month in which the payment is effective and the mortality table utilized as of such date under the provisions of the Retirement Plan to calculate the amount of a small lump-sum cashout. Notwithstanding the preceding sentence, with respect to a Participant who becomes an Eligible Employee after January 1, 2005, such lump-sum payment shall be calculated on an actuarial equivalent basis using the IRS Interest Rate as published in the fourth month prior to the month following the month in which the Participant’s Termination of Employment occurs and the mortality table utilized as of such date under the provisions of the Retirement Plan to calculate the amount of a small lump-sum cashout. The calculation of a lump-sum payment under this clause (iii) shall be based on the Participant’s benefit determined pursuant to Section 2.02 attributable to the TPP formula portion of such benefit as if it were paid in the form of a single life annuity to the Participant. The calculation of a lump-sum payment hereunder shall be made without regard to the possibility of any future changes after the Participant’s Annuity Starting Date in the amount of benefits payable under the Retirement Plan because of future changes in the limitations referred to in Section 2.02. This lump-sum payment plus any payment made pursuant to the provisions of clause (v) below represents a complete settlement of all 409A Supplemental Benefits due on the Participant’s behalf under the Plan.
		
	(iv)
	Notwithstanding the foregoing and subject to the provisions of Section 409A of the Code, a Participant’s election to receive his 409A Supplemental Benefit attributable to the TPP formula in an optional annuity form of payment as described in clause (ii) above shall be effective as of the Participant’s Annuity Starting Date applicable to that portion of his 409A Supplemental Benefit, provided the Participant makes and submits to the 

8

Committee in the manner prescribed by the Committee, his election of such optional annuity form prior to such applicable Annuity Starting Date. Unless otherwise provided under clause (iii) above, a Participant who fails to elect an optional annuity form of benefit applicable to the TPP formula portion of his 409A Supplemental Benefit in a timely manner shall receive such benefit in accordance with the provisions of clause (i) above.
		
	(v)
	Notwithstanding the foregoing provisions of this Section 2.04(b), the portion of a Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in the form of a single lump-sum payment. Such lump-sum payment shall be calculated on the same basis as provided in Section 4.07(b)(v) of the Retirement Plan except as otherwise provided in Section 2.02(d).

		
	(vi)
	The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the TPP formula shall commence and the form of payment of such benefit shall be determined in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any Plan amendments after that date which would constitute a material modification for purposes of Section 409A of the Code, unless a Participant has a valid election under clause (iii) above in effect as of his date of Termination of Employment. The portion of the Participant’s Grandfathered Pre-2005 Benefit payable under Section 2.02 attributable to the PEP formula shall be payable in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.

		
	(c)
	Death Prior to a Participant’s Annuity Starting Date

		
	(i)
	If a Participant entitled to a vested benefit under the Retirement Plan dies (1) before meeting the eligibility requirements for an Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan and while in active service with the Company or any Associated Company or while Disabled but before his Annuity Starting Date, or (2) after Termination of Employment with entitlement to a vested benefit hereunder but prior to his Annuity Starting Date, the Participant’s spouse (or Registered Domestic Partner) shall receive a monthly payment for life equal to the monthly income which would have been payable to such spouse (or Registered Domestic Partner) under Section 4.08(a) of the Retirement Plan based on the hypothetical benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence as of the first day of the month following the Participant’s date of death, or attainment of age 55, if later. The portion of such survivor benefit attributable 

9

to the Participant’s 409A Supplemental Benefit shall commence as of the first day of the month following the later of the Participant’s date of death, or the Participant’s attainment of age 55 (or in the event clause (iv) is applicable, the date specified in clause (iv)). Notwithstanding the foregoing, the portion of any benefit payable under this clause (i) attributable to the PEP formula portion of the benefit which would have been payable to the spouse (or Registered Domestic Partner) based on the hypothetical 409A Supplemental Benefit as calculated under Section 2.02 shall be determined assuming that portion of the survivor benefit commences as of the first day of the month following the Participant’s date of death (or the date specified in clause (iv), if later) and such benefit shall be payable in the form of a single lump-sum payment as of the first day of the month following the Participant’s date of death. This lump-sum payment shall be calculated on the same basis as provided in Section 4.08(a)(iii) of the Retirement Plan using the IRS Mortality Table (as defined in the Retirement Plan) and IRS Interest Rate. Notwithstanding any Plan provision to the contrary, the portion of any survivor benefit payable under this clause (i) attributable to the Participant’s Grandfathered Pre-2005 Benefit shall be payable in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
		
	(ii)
	Except as otherwise provided below or in clause (iii) of this Section 2.04(c), in the event a Participant who has satisfied the eligibility requirements for the Automatic Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, dies (1) while in active service with the Company or any Associated Company or (2) after his Termination of Employment or the date he becomes Disabled, if earlier, but prior to his Annuity Starting Date, the Participant’s Beneficiary, if any, shall receive a monthly payment for the life of the Beneficiary equal to the monthly income which would have been payable to such Beneficiary under Section 4.08(b) of the Retirement Plan based on the hypothetical retirement benefit attributable to his Supplemental Benefit as calculated under Section 2.02 hereof assuming payments commence on the first day of the month following the Participant’s death (or the date specified in clause (iv), if later). Notwithstanding the foregoing, the portion of any benefit payable under this clause (ii) attributable to the PEP formula portion of the benefit which would have been payable to the Beneficiary based on the hypothetical 409A Supplemental Benefit as calculated under Section 2.02 hereof shall be payable in the form of a single lump-sum payment. This lump-sum payment shall be calculated on the same basis as provided in Section 4.08(b)(iii) of the Retirement Plan except as otherwise provided in Section 2.02(d). The portion of any benefit payable under this clause (ii) attributable to a Participant’s 409A Supplemental Benefit as calculated under Section 2.02 

10

hereof shall commence on the first day of the month following the Participant’s death.
The portion of such survivor benefit payable under this clause (ii) of paragraph (c) attributable to the Participant’s Grandfathered Pre-2005 Benefit shall commence in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
		
	(iii)
	Notwithstanding the foregoing, in the event a Participant, who has satisfied the eligibility requirements to retire under the Retirement Plan with an early, normal or postponed retirement allowance, has filed a valid election to receive a lump-sum payment of benefits under the provisions of Section 2.04(b)(iii), dies on or after age 55 and prior to his Annuity Starting Date, the Beneficiary of such Participant shall receive a single lump-sum amount determined as follows:

		
	(A)
	In the event of the Participant’s death (i) prior to his Termination of Employment or (ii) after he becomes Disabled but prior to his Annuity Starting Date, the lump-sum payment shall be equal to the value of the Participant’s benefit attributable to his Supplemental Benefit, if any, accrued to his date of death as determined under the provisions of Section 2.02 hereof.

		
	(B)
	In the event of any other Participant’s death after his Termination of Employment and prior to his Annuity Starting Date, the lump-sum payment shall be equal to the value of the Participant’s Supplemental Benefit accrued to the Participant’s Termination of Employment as determined under the provisions of Section 2.02 hereof.

The portion of the lump-sum payment under this clause (iii) attributable to the PEP formula portion of his 409A Supplemental Benefit, if any, shall be calculated on the same basis as provided in Section 4.08(b)(iii) of the Retirement Plan except as otherwise provided in Section 2.02(d). The portion of the lump-sum payment under this clause (iii) attributable to the TPP formula portion of the Participant’s 409A Supplemental Benefit shall be (1) based on the Participant’s Plan benefit attributable to the TPP formula portion as if it were paid in the form of a single life annuity to the Participant and (2) calculated on an actuarial equivalent basis using the interest rate assumption for immediate annuities used by the PBGC for valuing benefits for single employer plans as published by the PBGC for the month following the Participant’s date of Termination of Employment or, if earlier, the date of his death and the mortality table utilized as of such date under the provisions of the Retirement Plan to calculate the amount of a small lump-sum cashout. Notwithstanding the preceding sentence, with respect to a 

11

Participant who becomes an Eligible Employee after January 1, 2005, the lump-sum payment in the preceding sentence shall be calculated on an actuarial equivalent basis using the IRS Interest Rate as published in the fourth month prior to the month in which the Participant’s Termination of Employment or, if earlier, date of death occurs and the mortality table utilized as of such date under the provisions of the Retirement Plan to calculate the amount of a small lump-sum cashout. The calculation of a lump-sum payment hereunder shall be made without regard to the possibility of any future changes after the Participant’s death in the amount of benefits payable under the Retirement Plan because of future changes in the limitations referred to in Section 2.02.
Notwithstanding the foregoing, the portion of such survivor benefit attributable to the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any Plan amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.
Notwithstanding the foregoing, a total lump-sum payment under this clause (iii) shall be made to the Participant’s Beneficiary only if the Participant has filed an election to receive a lump-sum payment of any benefits under the provisions of Section 2.04(a)(iii) in accordance with the timing limitations and other restrictions prescribed by the Committee. Payment shall be made to the Participant’s Beneficiary as soon as practicable after the Participant’s date of death. The lump-sum payment under this clause (iii) represents a complete settlement of all benefits due the Beneficiary on the Participant’s behalf under the Plan.
		
	(iv)
	Notwithstanding the foregoing, in the event the survivor benefit payable under this Section 2.04(c) to the spouse or Beneficiary of a Participant who died prior to January 1, 2009, has not commenced as of January 1, 2009, such survivor benefit shall commence as of January 1, 2009, or, if later, the date specified in clauses (i), (ii) or (iii) above, whichever is applicable.

		
	(d)
	Disability prior to Termination of Employment

		
	(i)
	Notwithstanding any Plan provision to the contrary, in the event a Participant becomes Disabled prior to his Termination of Employment, the Participant shall be entitled to a Disability Supplemental Benefit equal to the amount determined under the provisions of Section 2.02(a) based on his years of Benefit Service, accrued under the Retirement Plan to the date he became Disabled plus the years of Benefit Service, if any, such Participant accrues under the terms of the Retirement Plan after the date he becomes Disabled and prior to the earlier of his attainment of age 65 or December 31, 2016.

12

		
	(ii)
	The portion of the Disability Supplemental Benefit determined under the provisions of clause (i) in excess of the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of paragraph (b) above and payments shall commence on the first day of the month following the month in which the Participant attains age 65.

		
	(iii)
	Notwithstanding the foregoing, the portion of the Disability Supplemental Benefit attributable to the Participant’s Grandfathered Pre-2005 Benefit shall be paid in accordance with the provisions of the Plan as in effect on October 3, 2004, modified as set forth in Appendix A, and without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code.

		
	2.05
	Payment Upon the Occurrence of a Change in Control

Upon the occurrence of a Change in Control, (i) all retired Participants then receiving or then entitled to receive a 409A Supplemental Benefit under the Plan, (ii) all former Participants then receiving or then entitled to receive a 409A Supplemental Benefit hereunder, and (iii) all Participants who are then still in active service shall automatically receive, in a single lump-sum payment, the 409A Supplemental Benefit remaining due as of the Change in Control to any such retired or former Participant or the benefit, if any, accrued by such active Participant up to the Change in Control event and as determined under Section 2.02 hereof. The amount of such lump-sum payment attributable to the PEP formula portion of the Participant’s 409A Supplemental Benefit payable under this Plan not in payment status as of the occurrence of a Change in Control event shall be calculated on the same basis as provided in Section 4.07(b)(v) of the Retirement Plan using the IRS Mortality Table and IRS Interest Rate determined as if the date the Change in Control event occurs is the Participant’s Annuity Starting Date. The amount of the lump-sum payment attributable to the TPP formula portion of the Participant’s 409A Supplemental Benefit payable under this Plan shall be calculated on an actuarial equivalent basis using (i) the interest rate assumption used by the PBGC for valuing benefits for single employer plans as published by the PBGC for the month in which such Change in Control event occurs and (ii) the mortality table utilized as of the day immediately preceding the date the Change in Control event occurs under the provisions of the Retirement Plan to calculate the amount of a small lump-sum cashout. The interest rate for immediate annuities will be used, if the Participant has met the eligibility requirements to retire under the Retirement Plan with an early, normal or postponed retirement allowance as of the Change in Control or is then in receipt of monthly payments under this Plan. Otherwise the Plan shall use the interest rate assumption for deferred annuities to the earliest date the Participant could have commenced payment of such benefit or, if it results in a larger lump sum, his Normal Retirement Date (as defined under the Retirement Plan). If the Participant is not in receipt of his monthly 409A Supplemental Benefit payments under this Plan as of the Change in Control, the calculation of a lump-sum payment hereunder of the portion of the Participant’s accrued benefit payable under this Plan attributable to the TPP formula portion shall be based on the Participant’s 409A Supplemental Benefit payable under Section 2.02 attributable to such 

13

TPP formula as if it were paid in the form of a single life annuity to the Participant commencing on the Participant’s Annuity Starting Date; provided, however, if the Participant has not met the eligibility requirements to retire under the Retirement Plan with an early, normal or postponed retirement allowance, the calculation of such lump-sum payment shall be based on the Participant’s accrued 409A Supplemental Benefit payable under Section 2.02 attributable to such TPP formula as if it were paid in the form of a single life annuity to the Participant commencing on the earliest date he could have commenced payment of such benefit. In no event, however, shall the lump-sum payment determined under the preceding sentence be less than the lump-sum payment based on the Participant’s accrued 409 Supplemental Benefit payable under Section 2.02 attributable to such TPP formula as if it were paid in the form of a single life annuity to the Participant commencing on his Normal Retirement Date. The calculation of a lump-sum payment hereunder shall be made on the basis of the Participant’s age (and Beneficiary’s age, if applicable) at the Change in Control and without regard to the possibility of any future changes after the Change in Control in the amount of benefits payable hereunder because of future changes in the limitations referred to in Section 2.02. The lump-sum payment shall be made within 90 days following the date the Change in Control event occurs. In the event the Participant dies after such Change in Control event occurs but before receiving such payment, the lump-sum payment shall be made to his Beneficiary. This lump-sum payment represents a complete settlement of all benefits on the Participant’s behalf under the Plan.
For avoidance of doubt, upon the occurrence of an Acceleration Event, either prior to after or simultaneously with, the occurrence of a Change in Control, the provisions of Section 2.05 of the Plan as in effect on October 3, 2004, without regard to any amendments after October 3, 2004, which would constitute a material modification for purposes of Section 409A of the Code shall be applicable to a Participant’s Grandfathered Pre-2005 Benefit.
		
	2.06
	Reemployment of Former Participant or Retired Participant

If a Participant who retired or otherwise terminated employment with the Company and all Associated Companies is reemployed as an employee by the Company or an Associated Company, such reemployment shall have no impact on the payment or timing of payment of any 409A Supplement Benefits earned prior to reemployment.

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ARTICLE III. 
GENERAL PROVISIONS
		
	3.01
	Funding

		
	(f)
	All amounts payable in accordance with this Plan shall constitute a general unsecured obligation of the Corporation. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Corporation, to the extent not paid from the assets of any trust established pursuant to paragraph (b) below.

		
	(g)
	The Corporation may, for administrative reasons, establish a grantor trust for the benefit of Participants in the Plan. The assets placed in said trust shall be held separate and apart from other Corporation funds and shall be used exclusively for the purposes set forth in the Plan and the applicable trust agreement, subject to the following conditions:

		
	(i)
	the creation of said trust shall not cause the Plan to be other than “unfunded” for purposes of Title I of ERISA;

		
	(ii)
	the Corporation shall be treated as “grantor” of said trust for purposes of Section 677 of the Code; and

		
	(iii)
	the agreement of said trust shall provide that its assets may be used upon the insolvency or bankruptcy of the Corporation to satisfy claims of the Company’s general creditors and that the rights of such general creditors are enforceable by them under federal and state law.

		
	(h)
	To the extent that any person acquires a right to receive payments under the Plan, such right shall be no greater than the right of any unsecured creditor of the Corporation.

		
	3.02
	Duration of Benefits

Subject to Section 2.02(e), benefits shall accrue under the Plan on behalf of a Participant only for so long as the provisions of Sections 415 or 401(a)(17) of the Code limit the benefits that are payable under the Retirement Plan.
		
	3.03
	Discontinuance and Amendment

The Board of Directors reserves the right to modify, amend, or discontinue in whole or in part, benefit accruals under the Plan at any time. However, no modification, amendment, or discontinuance shall adversely affect the right of any Participant to receive the benefits accrued as of the date of such modification, amendment or discontinuance and after the occurrence of an Acceleration Event, no modification or amendment shall be made to Sections 2.03 or 2.05. Notwithstanding the foregoing, following any amendment and except 

15

as provided in Article II with respect to lump-sum payments hereunder, benefits may be adjusted as required to take into account the amount of benefits payable under the Retirement Plan after the application of the limitations referred to in Section 2.02.
		
	3.04
	Termination of Plan

The Board of Directors reserves the right to terminate the Plan at any time, provided, however, that no termination shall be effective retroactively. As of the effective date of termination of the Plan,
		
	(a)
	the benefits of any Participant or Beneficiary whose benefit payments have commenced shall continue to be paid, but only to the extent such benefits are not otherwise payable under the Retirement Plan because of the limitations referred to in Section 2.02; and

		
	(b)
	no further benefits shall accrue on behalf of any Participant whose benefits have not commenced, and such Participant and his Beneficiary shall retain the right to benefits hereunder; provided that, on or after the effective date of termination,

		
	(v)
	the Participant is vested under the Retirement Plan or pursuant to Section 2.03(b) or (c) above; and

		
	(vi)
	such benefits are not at any time otherwise payable under the Retirement Plan because of the limitations imposed by Sections 415 or 401(a)(17) of the Code.

All other provisions of this Plan shall remain in effect.
		
	3.05
	Plan Not a Contract of Employment

This Plan is not a contract of employment, and the terms of employment of any Participant shall not be affected in any way by this Plan or related instruments, except as specifically provided therein. The establishment of this Plan shall not be construed as conferring any legal rights upon any person for a continuation of employment, nor shall it interfere with the rights of the Corporation to discharge any person and to treat him without regard to the effect which such treatment might have upon him under this Plan. Each Participant and all persons who may have or claim any right by reason of his participation shall be bound by the terms of this Plan and all agreements entered into pursuant thereto.
		
	3.06
	Facility of Payment

In the event that the Committee shall find that a Participant is unable to care for his affairs because of illness or accident or is a minor or has died, the Committee may, unless claim shall have been made therefore by a duly appointed legal representative, direct that any benefit payment due him, to the extent not payable from a grantor trust, be paid on his behalf to his spouse, a child, a parent or other blood relative, or to a person with whom he resides, 

16

and any such payment so made shall be a complete discharge of the liabilities of the Corporation and the Plan therefore.
		
	3.07
	Withholding Taxes

The Company and an Associated Company shall have the right to deduct from each payment to be made under the Plan any required withholding taxes.
		
	3.08
	Nonalienation

Subject to any applicable law, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void, nor shall any such benefit be in any manner liable for or subject to garnishment, attachment, execution or levy, or liable for or subject to the debts, contracts, liabilities, engagements or torts of the person entitled to such benefits.
		
	3.09
	Forfeiture for Cause

In the event that a Participant shall at any time be convicted of a crime involving dishonesty or fraud on the part of such Participant in his relationship with the Company or an Associated Company, all benefits that would otherwise be payable to him or to a Beneficiary under the Plan shall be forfeited.
		
	3.10
	Transfers

		
	(a)
	Notwithstanding any Plan provision to the contrary, in the event the Corporation (i) sells, causes the sale of, or sold the stock or assets of any employing company in the controlled group of the Corporation to a third party or (ii) distributes or distributed to the holders of shares of the Corporation’s common stock all of the outstanding shares of common stock of a subsidiary or subsidiaries of the Corporation, and, as a result of such sale or distribution, such company (or subsidiary) or its employees are no longer eligible to participate hereunder, the liabilities with respect to the benefits accrued under this Plan for a Participant who, as a result of such sale or distribution, is no longer eligible to participate in this Plan, shall, at the discretion and direction of the Corporation (and approval by the new employer), be transferred to a similar plan of such new employer and become a liability thereunder. Upon such transfer (and acceptance thereof by such new employer) the liabilities for such transferred benefits shall become the obligation of the new employer and the liability under this Plan for such benefits shall then cease.

		
	(b)
	Notwithstanding any Plan provision to the contrary, at the discretion and direction of the Corporation, liabilities with respect to benefits accrued by a Participant under a plan maintained by such Participant’s former employer may be transferred to this Plan and upon such transfer shall become the obligation of the Corporation.

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	3.11
	Acceleration of or Delay in Payments

The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. § 1.409A-3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. § 1.409A-2(b)(7).
		
	3.12
	Indemnification

The members of the Committee, and the officers, employees and agents of the Company shall, unless prohibited by any applicable law, be indemnified against any and all liabilities arising by reason of any act or failure to act in relation to the Plan including, without limitation, expenses reasonably incurred in the defense of any claim relating to the Plan, amounts paid in any compromise or settlement relating to the Plan and any civil penalty or excise tax imposed by any applicable statute, if
		
	(a)
	the act or failure to act shall have occurred

		
	(i)
	in the course of the person’s service as an officer, employee or agent of the Company or as a member of the Committee, or as the Plan Administrator; or

		
	(ii)
	in connection with a service provided with or without charge to the Plan or to the Participants or Beneficiaries of the Plan, if such service was requested by the Committee or the Plan Administrator; and

		
	(b)
	the act or failure to act is in good faith and in, or not opposed to, the best interests of the Corporation. 

This determination shall be made by the Corporation and, if such determination is made in good faith and not arbitrarily or capriciously, shall be conclusive.
The foregoing indemnification shall be from the assets of the Corporation. However, the Corporation’s obligation hereunder shall be offset to the extent of any otherwise applicable insurance coverage under a policy maintained by the Corporation or any other person, or other source of indemnification.
		
	3.13
	Claims Procedure

		
	(a)
	Submission of Claims

Claims for benefits under the Plan shall be submitted in writing to the Committee or to an individual designated by the Committee for this purpose.

18

		
	(b)
	Denial of Claim

If any claim for benefits is wholly or partially denied, the claimant shall be given written notice within 90 days following the date on which the claim is filed, which notice shall set forth:
		
	(i)
	the specific reason or reasons for the denial;

		
	(ii)
	specific reference to pertinent Plan provisions on which the denial is based;

		
	(iii)
	a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

		
	(iv)
	an explanation of the Plan’s claim review procedure, including information as to the steps to be taken if the claimant wishes to submit the claim for review and the time limits for requesting a review.

If special circumstances require an extension of time for processing the claim, written notice of an extension shall be furnished to the claimant prior to the end of the initial period of 90 days following the date on which the claim is filed. Such an extension may not exceed a period of 90 days beyond the end of said initial period.
If the claim has not been granted and written notice of the denial of the claim is not furnished within 90 days following the date on which the claim is filed, the claim shall be deemed denied for the purpose of proceeding to the claim review procedure.
		
	(c)
	Claim Review Procedure

The claimant or his authorized representative shall have 60 days after receipt of written notification of denial of a claim to request a review of the denial by making written request to the Committee, and may review pertinent documents and submit issues and comments in writing within such 60-day period.
Not later than 60 days after receipt of the request for review, the persons designated by the Company to hear such appeals (the “Appeals Committee”) shall render and furnish to the claimant a written decision, which shall include specific reasons for the decision and shall make specific references to pertinent Plan provisions on which it is based. If special circumstances require an extension of time for processing, the decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review, provided that written notice and explanation of the delay are given to the claimant prior to commencement of the extension. Such decision by an Appeals Committee shall not be subject to further review. If a decision on review is not furnished to a claimant within the specified time period, the claim shall be deemed to have been denied on review.

19

		
	(d)
	Exhaustion of Remedy

No claimant shall institute any action or proceeding in any state or federal court of law or equity or before any administrative tribunal or arbitrator for a claim for benefits under the Plan until the claimant has first exhausted the procedures set forth in this section.
		
	3.14
	Construction

		
	(a)
	The Plan is intended to constitute both an excess benefit arrangement and an unfunded deferred compensation arrangement maintained for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, and all rights under this Plan shall be governed by ERISA. Subject to the preceding sentence, the Plan shall be construed, regulated and administered under the laws of the State of New York, to the extent such laws are not superseded by applicable federal law.

		
	(b)
	The masculine pronoun shall mean the feminine wherever appropriate.

		
	(c)
	The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.

		
	(d)
	The headings and subheadings in the Plan have been inserted for convenience of reference only, and are to be ignored in any construction of the provisions thereof.

		
	(e)
	The Plan shall be construed, regulated and administered in accordance with the laws of the State of New York, subject to the provisions of applicable federal laws.

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ARTICLE IV. 
PLAN ADMINISTRATION
		
	4.01
	Responsibility for Benefit Determination

The benefit of a Participant or Beneficiary under this Plan shall be determined either by the Committee or the Appeals Committee, as provided in Section 4.02 below, or such other party as is authorized under the terms of any grantor trust.
		
	4.02
	Duties of Committee

The Committee shall cause to be calculated, in accordance with Article II, the benefit of each Participant or Beneficiary under the Plan. To the extent a Participant’s, spouse’s or Beneficiary’s benefit are payable from the Plan, the Committee and as authorized in Section 3.13(c), the Appeals Committee, shall have full discretionary authority to resolve any question which shall arise under the Plan as to any person’s eligibility for benefits, the calculation of benefits, the form, commencement date, frequency, duration of payment, or the identity of the Beneficiary. Such question shall be resolved by the Committee and the Appeals Committee under rules uniformly applicable to all person(s) or employee(s) similarly situated. It is the intent of the Corporation that the provisions of the Plan comply with the provisions of Section 409A of the Code, any regulations and other guidance promulgated with respect thereto and the provisions of the Plan shall be interpreted to be consistent therewith.
		
	4.03
	Procedure for Payment of Benefits Under the Plan

With respect to any benefit to which a Participant or Beneficiary is entitled under this Plan which is not payable under any applicable grantor trust established by the Corporation to pay benefits under the Plan, the Committee (i) shall direct the commencement of benefit payments hereunder in accordance with the applicable procedures established by the Corporation, the Company and/or the Committee regarding the disbursement of amounts from the general funds of the Corporation and (ii) shall arrange, in conjunction with any other applicable excess benefit plan, for the payment of benefits under this Plan and/or any other applicable excess benefit plan.
With respect to any benefit to which a Participant or Beneficiary is entitled under this Plan which is payable under any applicable grantor trust established by the Corporation to pay benefits under the Plan, the Committee, acting for the Corporation and in accordance with the terms of any applicable grantor trust established by the Corporation to pay benefits under the Plan, shall forward the calculation of the Participant’s or Beneficiary’s benefit under Article II of the Plan to the Participant or Beneficiary for concurrence. Upon obtaining concurrence, the Committee, acting for the Corporation, shall forward such calculation and concurrence to the trustee of the grantor trust established by the Corporation to pay benefits under the Plan for the purpose of commencing payment of benefits in accordance with any applicable grantor trust. Any question that shall arise with regard to the benefits payable to 

21

a Participant or Beneficiary under any applicable grantor trust shall be resolved in accordance with the provisions of said trust.
		
	4.04
	Compliance

With respect to benefits hereunder subject to Section 409A of the Code, the Plan is intended to comply with the requirements of Section 409A of the Code and the provisions hereof shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code and the regulations thereunder, and the Plan shall be operated accordingly. If any provision of the Plan would otherwise frustrate or conflict with this intent, the provision will be interpreted and deemed amended so as to avoid this conflict. The Plan has been administered in good faith compliance with Section 409A of the Code and the guidance issued thereunder beginning on January 1, 2005.

22

APPENDIX A
Provisions Applicable to a Participant’s Grandfathered Pre-2005 Supplemental Benefit
This Appendix A constitutes an integral part of the Plan and is applicable with respect to the Grandfathered Pre-2005 Benefit of those individuals who were Participants in the Plan on December 31, 2004. The portion of a Participant’s Benefit, if any, determined under the provisions of Section 2.02 and Section 2.04(d) of the foregoing provisions of the Plan equal to his Grandfathered Pre-2005 Benefit is subject to the provisions of the Plan as in effect on October 3, 2004, modified as set forth in this Appendix A and without regard to any Plan amendments after October 3, 2004, which would constitute a material modification for Code Section 409A purposes. Section references in this Appendix A correspond to appropriate Sections of the said Plan as in effect on October 3, 2004, as set forth in Appendix B.
Article II — Participation Amount and Payment of Benefits
For purposes of Article II, the terms/phrases “termination of employment,” “terminates employment,” “retirement”, “employment is terminated” or other similar language shall mean, with respect to a Participant, the complete cessation of providing services to the Company and all Associated Companies as an employee.
Section 2.04  Payment of Benefits
		
	(a)
	Retirement or Termination of Employment Effective on and After December 31, 1995

		
	(i)
	Following a Participant’s retirement or termination of employment with the Company and all Associated Companies other than by reason of death, a Participant shall receive his Grandfathered Pre-2005 Benefit in the same form and at the same time as the Participant receives his corresponding retirement allowance or vested benefit under the Retirement Plan, except as otherwise provided below.

If a Participant becomes Disabled prior to his Termination of Employment, the portion of his Disability Supplemental Benefit equal to his Grandfathered Pre-2005 Benefit shall be paid at the same time and in the same form as his Retirement Plan benefit is paid.
		
	(ii)
	Notwithstanding the foregoing provisions of clause (i) above, the portion of his Grandfathered Pre-2005 Benefit attributable to the PEP formula shall be payable in the form of a lump-sum payment and effective as of January 1, 2008 the Participant’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.

		
	(iii)
	Notwithstanding any provisions the of Plan to the contrary, the provisions of clause (iii) of Section 2.04(a) shall only apply if the Participant completed 

23

and filed such lump-sum election with the Committee on or prior to December 31, 2008 in accordance with procedures established by the Committee of the Plan. In the event a Participant has made a valid lump-sum election under the provisions of this clause (iii), his Grandfathered Pre-2005 Benefit attributable to the TPP formula shall be paid in accordance with the provisions of this clause (iii).
		
	(b)
	Death Prior to a Participant’s Annuity Starting Date

		
	(i)
	The portion of the death benefit determined under Section 2.04(b)(i) of the foregoing provisions of this Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit payable to a Participant’s spouse (or Registered Domestic Partner) shall be paid in the same form and at the same time said spouse (or Registered Domestic Partner) receives payment under the Automatic Vested Spouse Benefit of the Retirement Plan. Notwithstanding the foregoing, effective on and after January 1, 2008, the portion of any benefit payable under this clause (i) attributable to the PEP formula based on his Grandfathered Pre-2005 Benefit shall be payable in a single lump-sum payment and effective as of January 1, 2008, the spouse’s (or Registered Domestic Partner’s) right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.

		
	(ii)
	Except as therein provided in clause (iii) of this Section 2.04(b), the portion of the death benefit determined under Section 2.04(b)(ii) of the foregoing provisions of the Plan attributable to a Participant’s Grandfathered Pre-2005 Benefit shall be payable to the Participant’s Beneficiary at the same time said Beneficiary would have received a Pre-Retirement Survivor’s Benefit under Section 4.08(b) of the Retirement Plan, provided, however, the portion of such survivor benefit attributable to the PEP formula shall be paid in a single lump-sum payment and effective as of January 1, 2008, the Beneficiary’s right to convert such PEP formula portion of his Grandfathered Pre-2005 Benefit into a form of life annuity is eliminated.

Notwithstanding any provisions of the Plan to the contrary, the provisions of clause (iii) of Section 2.04(b) shall only apply if the Participant completed and filed such lump-sum election with the Committee on or prior to December 31, 2008 in accordance with procedures established by the Committee of the Plan. In the event a Participant has made a valid lump-sum election under the provisions of said clause (iii), his Grandfathered Pre-2005 Benefit attributable to the TPP formula shall be paid in accordance with the provisions of said clause (iii).
Section 2.05  Payment Upon the Occurrence of an Acceleration Event
In the event an Acceleration Event occurs, regardless of whether or not such event satisfies the definition of a Change in Control event as defined in the foregoing provisions of this Plan, the 

24

provisions of this Section 2.05, which appears in Appendix B below, shall apply to the Participant’s Grandfathered Pre-2005 Benefit.

25

APPENDIX B
Provisions of the Plan as in effect on October 3, 2004
This Appendix B constitutes a part of this Plan and contains the Plan provisions as in effect on October 3, 2004.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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