Document:

exv10w1

 

Exhibit 10.1

STOCK PURCHASE AGREEMENT

BETWEEN

SUN NEW MEDIA, INC.

AND

BARRON PARTNERS LP

DATED

MARCH 6, 2006

 

 

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of the
6th day of March, 2006 between Sun New Media, Inc., a corporation organized and existing
under the laws of the State of Minnesota (“SNMD” or the “Company”) and BARRON PARTNERS LP, a
Delaware limited partnership (“Investor”).

PRELIMINARY STATEMENT:

     WHEREAS, the Investor wishes to purchase from the Company, upon the terms and subject to the
conditions of this Agreement, Fifty Thousand (50,000.0) shares of common stock of the Company for a
total purchase price of One Hundred and Two Thousand ($102,000.0) Dollars. In addition, the
Company will issue to the Investor a Common Stock Purchase Warrants (the “Warrants”) to purchase up
to an additional Four Million shares (4.0 million warrants with an initial exercise price of $2.10
per share) of common stock of the Company at exercise prices as stated in the Warrants; and

     WHEREAS, the parties intend to memorialize the purchase and sale of such Common Stock and the
Warrants.

     NOW, THEREFORE, in consideration of the mutual covenants and premises contained herein, and
for other good and valuable consideration, the receipt and adequacy of which are hereby
conclusively acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

INCORPORATION BY REFERENCE, SUPERSEDER AND DEFINITIONS

1.1 Incorporation by Reference. The foregoing recitals and the Exhibits and Schedules
attached hereto and referred to herein, are hereby acknowledged to be true and accurate, and are
incorporated herein by this reference.

1.2 Superseder. This Agreement, to the extent that it is inconsistent with any other
instrument or understanding among the parties governing the affairs of the Company, shall supersede
such instrument or understanding to the fullest extent permitted by law. A copy of this Agreement
shall be filed at the Company’s principal office.

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1.3 Certain Definitions. For purposes of this Agreement, the following capitalized terms
shall have the following meanings (all capitalized terms used in this Agreement that are not
defined in this Article 1 shall have the meanings set forth elsewhere in this Agreement):

     1.3.1 "1933 Act” means the Securities Act of 1933, as amended.

     1.3.2 "1934 Act” means the Securities Exchange Act of 1934, as amended.

     1.3.3 "Affiliate” means a Person or Persons directly or indirectly, through one or
more intermediaries, controlling, controlled by or under common control with the Person(s) in
question. The term “control,” as used in the immediately preceding sentence, means, with respect
to a Person that is a corporation, the right to the exercise, directly or indirectly, of more than
fifty percent of the voting rights attributable to the shares of such controlled corporation and,
with respect to a Person that is not a corporation, the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such controlled Person.

     1.3.4 "Articles” means the Articles of Incorporation of the Company, as the same may
be amended from time to time.

     1.3.5 "Closing” shall mean the Closing of the transactions contemplated by this
Agreement on the Closing Date.

     1.3.6 "Closing Date” means December 31, 2005.

     1.3.7 "Common Stock” means shares of common stock of the Company, par value $0.01 per
share.

     1.3.9 "Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers, consultants or directors of the Company pursuant to any stock or option plan
or arrangement duly adopted by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee directors established for
such purpose, (b) securities upon the exercise of or conversion of any securities issued hereunder,
and (c) securities issued pursuant to acquisitions or strategic transactions, provided any such
issuance shall only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which the Company
receives benefits in addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in securities.

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     1.3.10 "Material Adverse Effect” shall mean any adverse effect on the business,
operations, properties or financial condition of the Company that is material and adverse to the
Company and its subsidiaries and affiliates, taken as a whole and/or any condition, circumstance,
or situation that would prohibit or otherwise materially interfere with the ability of the Company
to perform any of its material obligations under this Agreement or the Registration Rights
Agreement.

     1.3.11 "Minnesota Act” means the Minnesota General Corporation Law, as amended.

     1.3.12 "Person” means an individual, partnership, firm, limited liability company,
trust, joint venture, association, corporation, or any other legal entity.

     1.3.13 "Purchase Price” means the One Hundred and Two Thousand ($102,000.0) Dollars
paid by the Investor to the Company for the Common Stock and the Warrants.

     1.3.14 "Registration Rights Agreement” shall mean the registration rights agreement
between the Investor and the Company attached to Exhibit B of the Note Purchase Agreement between
the parties of even date herewith (the “Note Purchase Agreement”).

     1.3.15 "Registration Statement” shall mean the registration statement under the 1933
Act to be filed with the Securities and Exchange Commission for the registration of the Shares
pursuant to the Registration Rights Agreement attached to Exhibit B of the Note Purchase Agreement.

     1.3.16 "SEC” means the Securities and Exchange Commission.

     1.3.17 "SEC Documents” shall mean the Company’s latest Form 10-K or 10-KSB as of the
time in question, all Forms 10-Q or 10-QSB and 8-K filed thereafter, and the Proxy Statement for
its latest fiscal year as of the time in question until such time as the Company no longer has an
obligation to maintain the effectiveness of a Registration Statement as set forth in the
Registration Rights Agreement.

     1.3.18 "Shares” shall mean, collectively, the shares of Common Stock of the Company
issued to the Investor and those shares of Common Stock issuable to the Investor upon exercise of
the Warrants.

     1.3.19 "Subsequent Financing” shall mean any offer and sale of shares of Preferred
Stock or debt that is initially convertible into shares of Common Stock or otherwise senior or
superior to the Common Stock.

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     1.3.20 "Transaction Documents” shall mean this Agreement, all Schedules and Exhibits
attached hereto and all other documents and instruments to be executed and delivered by the
parties in order to consummate the transactions contemplated hereby, including, but not
limited to the documents listed in Sections 3.2 and 3.3 hereof.

     1.3.21 "Warrants” shall mean the Common Stock Purchase Warrants in the form attached
hereto Exhibit A.

ARTICLE II

SALE AND PURCHASE OF SUN NEW MEDIA, INC. COMMON STOCK AND WARRANTS PURCHASE PRICE

2.1 Sale of Common Stock and Issuance of Warrants.

     (a) Upon the terms and subject to the conditions set forth herein, and in accordance with
applicable law, the Company agrees to sell to the Investor, and the Investor agrees to purchase
from the Company, on the Closing Date the Common Stock and the Warrants for the Purchase Price.
The Purchase Price shall be paid by the Investor to the Company on the Closing Date by a wire
transfer of the Purchase Price. The Company shall cause the Common Stock and the Warrants to be
issued to the Investor upon the release of the Purchase Price to the Company. The Company shall
register the shares of Common Stock pursuant to the terms and conditions of a Registration Rights
Agreement attached to the Exhibit B of the Note Purchase Agreement.

     (b) Upon execution and delivery of this Agreement and the Company’s receipt of the Purchase
Price, the Company shall issue to the Investor the Warrants to purchase an aggregate of Four
Million shares of Common Stock at exercise prices as stated in the Warrants, all pursuant to the
terms and conditions of the form of Warrants attached hereto as Exhibit A; provided,
however, that the Investor shall not be entitled to exercise the Warrants and receive shares of
Common Stock that would result in beneficial ownership by the Investor and its affiliates of more
than 4.9% of the then outstanding number of shares of Common Stock on such date. For the purposes
of the immediately preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.

2.2 Purchase Price. The Purchase Price shall be delivered by the Investor in the form of a
check or wire transfer made payable to the Company in United States Dollars from the Investor.

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ARTICLE III

CLOSING DATE AND DELIVERIES AT CLOSING

3.1 Closing Date. The closing of the transactions contemplated by this Agreement (the
"Closing”), unless expressly determined herein, shall be held at the offices of the
Company, at 5:00 P.M. local time, on the Closing Date or on such other date and at such other place
as may be mutually agreed by the parties, including closing by facsimile with originals to follow.

3.2 Deliveries by the Company. In addition to and without limiting any other provision of
this Agreement, the Company agrees to deliver, or cause to be delivered, to the Investor, the
following:

	 	(a)	 	At or prior to Closing, an executed Agreement with all exhibits and schedules
attached hereto;
	 
	 	(b)	 	At or prior to Closing, an executed copy of each of the Warrants in the name of
the Investor in the forms attached hereto;
	 
	 	(c)	 	The executed Registration Rights Agreement;
	 
	 	(d)	 	Within ten business days of Closing evidence of approval of the Board of
Directors of the Company of the Transaction Documents and the transactions contemplated
hereby;

3.3 Deliveries by Investor. In addition to and without limiting any other provision of
this Agreement, the Investor agrees to deliver, or cause to be delivered, to the Company, the
following:

	 	(a)	 	A deposit in the amount of the Investor Funds;
	 
	 	(b)	 	The executed Agreement with all Exhibits and Schedules attached hereto;
	 
	 	(c)	 	The executed Registration Rights Agreement;
	 
	 	(d)	 	Such other documents or certificates as shall be reasonably requested by the Company or
its counsel.

In the event any document provided to the other party in Paragraphs 3.2 and 3.3 herein are provided
by facsimile, the party shall forward an original document to the other party within thirty (30)
business days.

3.4 Further Assurances. The Company and the Investor shall, upon request, on or after the
Closing Date, cooperate with each other (specifically, the Company shall cooperate with the
Investor, and the Investor shall cooperate with the Company) by furnishing any additional

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information, executing and delivering any additional documents and/or other instruments and doing
any and all such things as may be reasonably required by the parties or their counsel to consummate
or otherwise implement the transactions contemplated by this Agreement.

3.5 Waiver. The Investor may waive any of the requirements of Section 3.2 of this
Agreement, and the Company at its discretion may waive any of the provisions of Section 3.3 of this
Agreement. The Investor may also waive any of the requirements of the Company under this
Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF

SUN NEW MEDIA, INC.

     The Company represents and warrants to the Investor as of the date hereof and as of Closing
(which warranties and representations shall survive the Closing regardless of what examinations,
inspections, audits and other investigations the Investor has heretofore made or may hereinafter
make with respect to such warranties and representations) as follows:

          4.1 Prior Representations and Warranties. Each of the representations and warranties
of the Company as set forth in the Note Purchase Agreement are incorporated by reference as it set
forth herein; provided that for the purposes hereof, references to the Agreement, the Note and the
Shares shall refer to this Agreement, the Warrants and the Shares as defined herein.

          4.2 Independent Board. As of the date of this Agreement, the Board of Directors of
the Company consists of a minimum of five directors with a majority being independent. At the
Closing, the Board of Directors of the Company shall consist of five directors, three of whom shall
be independent.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

The Investor represents and warrants to the Company that:

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5.1 Organization and Standing of the Investor. The Investor is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of Delaware. The state in
which any offer to purchase shares hereunder was made or accepted by such Investor is the state
shown as such Investor’s address. The Investor was not formed for the purpose of investing
solely in the Common Stock or the shares of Common Stock underlying the Warrants which are the
subject of this Agreement.

5.2 Authorization and Power. The Investor has the requisite power and authority to enter
into and perform this Agreement and to purchase the securities being sold to it hereunder. The
execution, delivery and performance of this Agreement by the Investor and the consummation by the
Investor of the transactions contemplated hereby have been duly authorized by all necessary
partnership action where appropriate. This Agreement and the Registration Rights Agreement have
been duly executed and delivered by the Investor and at the Closing shall constitute valid and
binding obligations of the Investor enforceable against the Investor in accordance with their
terms, except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable
principles of general application.

5.3 No Conflicts. The execution, delivery and performance of this Agreement and the
consummation by the Investor of the transactions contemplated hereby or relating hereto do not and
will not (i) result in a violation of such Investor’s charter documents or bylaws where appropriate
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument to which the Investor is a
party, or result in a violation of any law, rule, or regulation, or any order, judgment or decree
of any court or governmental agency applicable to the Investor or its properties (except for such
conflicts, defaults and violations as would not, individually or in the aggregate, have a Material
Adverse Effect on such Investor). The Investor is not required 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 such Investor’s obligations under this Agreement or to
purchase the securities from the Company in accordance with the terms hereof, provided that for
purposes of the representation made in this sentence, the Investor is assuming and relying upon the
accuracy of the relevant representations and agreements of the Company herein.

5.4 Financial Risks. The Investor acknowledges that such Investor is able to bear the
financial risks associated with an investment in the securities being purchased by the Investor
from the Company and that it has been given full access to such records of the Company and the
subsidiaries and to the officers of the Company and the subsidiaries as it has deemed necessary

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or
appropriate to conduct its due diligence investigation. The Investor is capable of evaluating the
risks and merits of an investment in the securities being purchased by the Investor from the
Company by virtue of its experience as an investor and its knowledge, experience, and
sophistication in financial and business matters and the Investor is capable of bearing the entire
loss of its investment in the securities being purchased by the Investor from the Company.

5.5 Accredited Investor. The Investor is (i) an “accredited investor” as that term is
defined in Rule 501 of Regulation D promulgated under the 1933 Act by reason of Rule 501(a)(3) and
(6), (ii) experienced in making investments of the kind described in this Agreement and the related
documents, (iii) able, by reason of the business and financial experience of its officers (if an
entity) and professional advisors (who are not affiliated with or compensated in any way by the
Company or any of its affiliates or selling agents), to protect its own interests in connection
with the transactions described in this Agreement, and the related documents, and (iv) able to
afford the entire loss of its investment in the securities being purchased by the Investor from the
Company.

5.6 Brokers. Except as set forth in Schedule 4.8, no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or Commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of the Investor.

5.7 Knowledge of Company. The Investor and such Investor’s advisors, if any, have been,
upon request, furnished with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the securities being purchased by the
Investor from the Company. The Investor and such Investor’s advisors, if any, have been afforded
the opportunity to ask questions of the Company and have received complete and satisfactory answers
to any such inquiries.

5.8 Risk Factors. The Investor understands that such Investor’s investment in the
securities being purchased by the Investor from the Company involves a high degree of risk. The
Investor understands that no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of the securities being
purchased by the Investor from the Company. The Investor warrants that such Investor is able to
bear the complete loss of such Investor’s investment in the securities being purchased by the
Investor from the Company.

5.9 Full Disclosure. No representation or warranty made by the Investor in this Agreement
and no certificate or document furnished or to be furnished to the Company pursuant to this
Agreement contains or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements contained herein or therein not
misleading. Except as set forth or referred to in this Agreement, Investor does not have any

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agreement or understanding with any person relating to acquiring, holding, voting or disposing of
any equity securities of the Company.

ARTICLE VI

COVENANTS OF THE COMPANY

6.1 Registration Rights. The Company shall cause the Registration Rights Agreement to
remain in full force and effect according to the provisions of the Registration Rights Agreement
and the Company shall comply in all material respects with the terms thereof.

6.2 Reservation of Common Stock. As of the date hereof, the Company has reserved and the
Company shall continue to reserve and keep available at all times, free of preemptive rights,
shares of Common Stock for the purpose of enabling the Company to issue the shares of Common Stock
and the shares of Common Stock underlying Warrants.

6.3 Compliance with Laws. The Company hereby agrees to comply in all respects with the
Company’s reporting, filing and other obligations under the Laws.

6.4 Exchange Act Registration. The Company will continue its obligation to report to the
SEC under the 1934 Act and will use its best efforts to comply in all respects with its reporting
and filing obligations under the 1934 Act, and will not take any action or file any document
(whether or not permitted by the 1934 Act or the rules thereunder) to terminate or suspend any such
registration or to terminate or suspend its reporting and filing obligations under the 1934 until
the Investors have disposed of all of their Shares.

6.5 Corporate Existence; Conflicting Agreements. The Company will take all steps necessary
to preserve and continue the corporate existence of the Company. The Company shall not enter into
any agreement, the terms of which agreement would restrict or impair the right or ability of the
Company to perform any of its obligations under this Agreement or any of the other agreements
attached as exhibits hereto.

6.6 Use of Proceeds. The Company will use the proceeds from the sale of the Common Stock
and the Warrants (excluding amounts paid by the Company for legal and administrative fees in
connection with the sale of such securities) for working capital and acquisitions.

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ARTICLE VII

COVENANTS OF THE INVESTOR

7.1 Compliance with Law. The Investor’s trading activities with respect to shares of the
Company’s Common Stock will be in compliance with all applicable state and federal securities laws,
rules and regulations and rules and regulations of any public market on which the Company’s Common
Stock is listed.

7.2 Transfer Restrictions. The Investor’s acknowledge that (1) the Note, Warrants and
shares underlying the Note and Warrants have not been registered under the provisions of the 1933
Act, and may not be transferred unless (A) subsequently registered thereunder or (B) the Investor
shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope
and substance to the Company, to the effect that the Note, Warrants and shares underlying the Notes
and Warrants to be sold or transferred may be sold or transferred pursuant to an exemption from
such registration; and (2) any sale of the Note, Warrants and shares underlying the Note and
Warrants made in reliance on Rule 144 promulgated under the 1933 Act may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any resale of such
securities under circumstances in which the seller, or the person through whom the sale is made,
may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder.

7.3 Restrictive Legend. The Investor acknowledges and agrees that the Common Stock, the
Warrants and the Warrants, and, until such time as the Shares of Common Stock and the Shares
underlying the Warrants have been registered under the 1933 Act and sold in accordance with an
effective Registration Statement, certificates and other instruments representing any of the
Shares, shall bear a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such securities):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH
SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND
ANY APPLICABLE STATE SECURITIES LAWS, OR (2) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, OR
(3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.”

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ARTICLE VIII

CONDITIONS PRECEDENT TO THE COMPANY’S OBLIGATIONS

     The obligation of the Company to consummate the transactions contemplated hereby shall be
subject to the fulfillment, on or prior to Closing Date, of the following conditions:

8.1 No Termination. This Agreement shall not have been terminated pursuant to Article X
hereof.

8.2 Representations True and Correct. The representations and warranties of the Investor
contained in this Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if made on as of the Closing Date.

8.3 Compliance with Covenants. The Investor shall have performed and complied in all
material respects with all covenants, agreements, and conditions required by this Agreement to be
performed or complied by it prior to or at the Closing Date.

8.4 No Adverse Proceedings. On the Closing Date, no action or proceeding shall be pending
by any public authority or individual or entity before any court or administrative body to
restrain, enjoin, or otherwise prevent the consummation of this Agreement or the transactions
contemplated hereby or to recover any damages or obtain other relief as a result of the
transactions proposed hereby.

ARTICLE IX

CONDITIONS PRECEDENT TO INVESTOR’S OBLIGATIONS

     The obligation of the Investors to consummate the transactions contemplated hereby shall be
subject to the fulfillment, on or prior to Closing Date unless specified otherwise, of the
following conditions:

9.1 No Termination. This Agreement shall not have been terminated pursuant to Article X
hereof.

9.2 Representations True and Correct. The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if made on as of the Closing Date.

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9.3 Compliance with Covenants. The Company shall have performed and complied in all
material respects with all covenants, agreements, and conditions required by this Agreement to be
performed or complied by it prior to or at the Closing Date.

9.4 No Adverse Proceedings. On the Closing Date, no action or proceeding shall be pending
by any public authority or individual or entity before any court or administrative body to
restrain, enjoin, or otherwise prevent the consummation of this Agreement or the transactions
contemplated hereby or to recover any damages or obtain other relief as a result of the
transactions proposed hereby.

ARTICLE X

TERMINATION, AMENDMENT AND WAIVER

10.1 Termination. This Agreement may be terminated at any time prior to the Closing Date

     10.1.1 by mutual written consent of the Investor and the Company;

     10.1.2 by the Company upon a material breach of any representation, warranty, covenant or
agreement on the part of the Investor set forth in this Agreement, or the Investor upon a material
breach of any representation, warranty, covenant or agreement on the part of the Company set forth
in this Agreement, or if any representation or warranty of the Company or the Investor,
respectively, shall have become untrue, in either case such that any of the conditions set forth in
Article VIII or Article IX hereof would not be satisfied (a “Terminating Breach”), and such breach
shall, if capable of cure, not have been cured within five (5) business days after receipt by the
party in breach of a notice from the non-breaching party setting forth in detail the nature of such
breach.

10.2 Effect of Termination. Except as otherwise provided herein, in the event of the
termination of this Agreement pursuant to Section 10.1 hereof, there shall be no liability on the
part of the Company or the Investor or any of their respective officers, directors, agents or other
representatives and all rights and obligations of any party hereto shall cease; provided that in
the event of a Terminating Breach, the breaching party shall be liable to the non-breaching party
for all costs and expenses incurred by the non-breaching party not to exceed $50,000.00.

10.3 Amendment. This Agreement may be amended by the parties hereto any time prior to the
Closing Date by an instrument in writing signed by the parties hereto.

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10.4 Waiver. At any time prior to the Closing Date, the Company or the Investor, as
appropriate, may: (a) extend the time for the performance of any of the obligations or other acts
of other party or; (b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto which have been made to it or them; or (c)
waive compliance with any of the agreements or conditions contained herein for its or their
benefit. Any such extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound hereby.

ARTICLE XI

GENERAL PROVISIONS

11.1 Transaction Costs. Except as otherwise provided herein, each of the parties
shall pay all of his or its costs and expenses (including attorney fees and other legal costs and
expenses and accountants’ fees and other accounting costs and expenses) incurred by that party in
connection with this Agreement; provided, the Company shall pay Investor such due diligence
expenses as described in the Note Purchase Agreement.

11.2 Indemnification. The Investor agrees to indemnify, defend and hold the Company
(following the Closing Date) and its officers and directors harmless against and in respect of any
and all claims, demands, losses, costs, expenses, obligations, liabilities or damages, including
interest, penalties and reasonable attorney’s fees, that it shall incur or suffer, which arise out
of or result from any breach of this Agreement by such Investor or failure by such Investor to
perform with respect to any of its representations, warranties or covenants contained in this
Agreement or in any exhibit or other instrument furnished or to be furnished under this Agreement.
The Company agrees to indemnify, defend and hold the Investor harmless against and in respect of
any and all claims, demands, losses, costs, expenses, obligations, liabilities or damages,
including interest, penalties and reasonable attorney’s fees, that it shall incur or suffer, which
arise out of, result from or relate to any breach of this Agreement or failure by the Company to
perform with respect to any of its representations, warranties or covenants contained in this
Agreement or in any exhibit or other instrument furnished or to be furnished under this Agreement.
In no event shall the Company or the Investors be entitled to recover consequential or punitive
damages resulting from a breach or violation of this Agreement nor shall any party have any
liability hereunder in the event of gross negligence or willful misconduct of the indemnified
party. In the event of a breach of this Agreement by the Company, the Investor shall be entitled
to pursue a remedy of specific performance upon tender into the Court an amount equal to the
Purchase Price hereunder.

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11.3 Headings. The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.

11.4 Entire Agreement. This Agreement (together with the Schedule, Exhibits, Warrants and
documents referred to herein) constitute the entire agreement of the parties and supersede all
prior agreements and undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof.

11.5 Notices. All notices and other communications hereunder shall be in writing and shall
be deemed to have been given in accordance with the terms of the Note Purchase Agreement.

11.6 Severability. If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any such term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as closely as possible
in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.

11.7 Binding Effect. All the terms and provisions of this Agreement whether so expressed or
not, shall be binding upon, inure to the benefit of, and be enforceable by the parties and their
respective administrators, executors, legal representatives, heirs, successors and assignees.

11.8 Preparation of Agreement. This Agreement shall not be construed more strongly against
any party regardless of who is responsible for its preparation. The parties acknowledge each
contributed and is equally responsible for its preparation.

11.9 Governing Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without giving effect to applicable principles of conflicts of
law.

11.10 Jurisdiction. This Agreement shall be exclusively governed by and construed in
accordance with the laws of the State of New York. If any action is brought among the parties with
respect to this Agreement or otherwise, by way of a claim or counterclaim, the parties agree that
in any such action, and on all issues, the parties irrevocably waive their right to a trial by
jury. Exclusive jurisdiction and venue for any such action shall be the Federal Courts serving the
State of New York. In the event suit or action is brought by any party under this Agreement to

STOCK PURCHASE AGREEMENT BETWEEN

SUN NEW MEDIA, INC. AND BARRON PARTNERS LP

PAGE 14 OF 24

 

 

enforce any of its terms, or in any appeal therefrom, it is agreed that the prevailing party shall
be entitled to reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.

11.11 Preparation and Filing of Securities and Exchange Commission filings. The Investor
shall reasonably assist and cooperate with the Company in the preparation of all filings with the
SEC after the Closing Date due after the Closing Date.

11.12 Further Assurances, Cooperation. Each party shall, upon reasonable request by the
other party, execute and deliver any additional documents necessary or desirable to complete the
transactions herein pursuant to and in the manner contemplated by this Agreement. The parties
hereto agree to cooperate and use their respective best efforts to consummate the transactions
contemplated by this Agreement.

11.13 Survival. The representations, warranties, covenants and agreements made herein shall
survive the Closing of the transaction contemplated hereby.

11.14 Third Parties. Except as disclosed in this Agreement, nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties hereto and their respective administrators,
executors, legal representatives, heirs, successors and assignees. Nothing in this Agreement is
intended to relieve or discharge the obligation or liability of any third persons to any party to
this Agreement, nor shall any provision give any third persons any right of subrogation or action
over or against any party to this Agreement.

11.15 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the
part of any party hereto in the exercise of any right hereunder shall impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any representation, warranty,
covenant or agreement herein, nor shall nay single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

11.16 Counterparts. This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed shall be deemed to
be an original, but all of which taken together shall constitute one and the same agreement. A
facsimile transmission of this signed Agreement shall be legal and binding on all parties
hereto.

STOCK PURCHASE AGREEMENT BETWEEN

SUN NEW MEDIA, INC. AND BARRON PARTNERS LP

PAGE 15 OF 24

 

 

[SIGNATURES ON FOLLOWING PAGE]

STOCK PURCHASE AGREEMENT BETWEEN

SUN NEW MEDIA, INC. AND BARRON PARTNERS LP

PAGE 16 OF 24

 

 

     IN WITNESS WHEREOF, the Investors and the Company have as of the date first written above
executed this Agreement.

THE COMPANY:

SUN NEW MEDIA, INC.

	 	 	 
	 
	 	 
	/s/ Bruno Wu
	 	 
	 
	 	 
	 
	 	 
	By: Bruno Wu
	 	 
	Title: Chairman

	 	 

INVESTOR:

BARRON PARTNERS LP

By: Barron Capital Advisors, LLC, its General Partners

	 	 	 
	 
	 	 
	/s/ Andrew Barron Worden
	 	 
	 
	 	 
	Andrew Barron Worden
	 	 
	President
	 	 
	730 Fifth Avenue, 9th Floor

	 	 
	New York NY 10019
	 	 

STOCK PURCHASE AGREEMENT BETWEEN

SUN NEW MEDIA, INC. AND BARRON PARTNERS LP

PAGE 17 OF 24

 

 

Schedule A

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	NUMBER OF SHARES	 	 
	 	 	 	 	 	 	OF COMMON STOCK	 	 
	 	 	 	 	 	 	INTO WHICH	 	NUMBER OF SHARES
	NAME AND ADDRESS	 	AMOUNT OF INVESTMENT	 	NOTE IS CONVERTIBLE	 	UNDERLYING WARRANTS
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Barron Partners LP
	 	 	 	 	 	 	 	 	 	 	 	 
	730 Fifth Avenue, 9th Floor
	 	 	 	 	 	 	 	 	 	 	 	 
	New York, New York 10019
	 	 	 	 	 	 	 	 	 	 	 	 
	Attn: Andrew Barron Worden
	 	$	102,000.0	 	 	 	50,000.0	 	 	 	4,000,000	 

STOCK PURCHASE AGREEMENT BETWEEN

SUN NEW MEDIA, INC. AND BARRON PARTNERS LP

PAGE 18 OF 24

 

 

Exhibit A

Warrants

STOCK PURCHASE AGREEMENT BETWEEN

SUN NEW MEDIA, INC. AND BARRON PARTNERS LP

PAGE 19 OF 24exv10w21

 

Exhibit 10.21

The Williams Companies, Inc.

Severance Pay Plan

Effective October 28, 2003

 

 

THE WILLIAMS COMPANIES, INC.

SEVERANCE PAY PLAN

(As Amended and Restated Effective as of October 28, 2003)

Article 1.

Definitions

The following capitalized words and phrases when used in the text of the Plan shall have the
meanings set forth below. Words in the masculine gender shall connote the feminine gender as well.

	1.1	 	“Administrative Committee” means the committee administering this Plan under
Article 5.
	 
	1.2	 	“Affiliate” means any Person that directly or indirectly, through one (1) or more
intermediaries, controls, is controlled by or is under common control with the Company.
	 
	1.3	 	“Aggregate Compensation” means Regular Wage Base and any annual cash incentive awards
from a Participating Company or Affiliate annual incentive program.
	 
	1.4	 	“Base Salary” means the amount a Participant is entitled to receive as wages or
salary on an annualized basis, including any salary deferral contributions made to any defined
contribution plan maintained by the Participating Company and any amounts contributed by an
Employee to any cafeteria plan, flexible benefits plan or qualified transportation plan
maintained by the Participating Company in accordance with Sections 125, 132 and related
provisions of the Code, but excluding all special pay, bonus, overtime, incentive
compensation, commissions, cost of living pay, housing pay, relocation pay, other taxable
fringe benefits and all extraordinary compensation, payable by the Company or any of its
Affiliates as consideration for the Participant’s services, as determined on the date
immediately preceding termination of employment, except that in the case of a termination of
employment for Good Reason, Base Salary shall be determined as of the date immediately
preceding the event which constitutes Good Reason.
	 
	1.5	 	“Benefits Committee” means the Company committee comprised of that group of
individuals appointed to act for the Company with respect to the Plan.
	 
	1.6	 	“Board of Directors” means the board of directors of the Company.
	 
	1.7	 	“Cause” means the occurrence of any one (1) or more of the following, as determined
in the good faith and reasonable judgment of the Administrative Committee:

(a) willful failure by an Employee to substantially perform his duties (as they existed
immediately prior to a reduction in force, job elimination or Change in Control), other

2

 

than any such failure resulting from a disability as defined in the Participating Company or
Affiliate disability program; or

(b) Employee’s conviction of or plea of nolo contendere to a crime involving fraud,
dishonesty or any other act constituting a felony involving moral turpitude or causing
material harm, financial or otherwise, to the Company or an Affiliate; or

(c) Employee’s willful or reckless material misconduct in the performance of his duties
which results in an adverse effect on the Company or an Affiliate; or

(d) Employee’s willful or reckless violation or disregard of the code of business conduct or
other published policy of the Company or an Affiliate; or

(e) Employee’s habitual or gross neglect of duties.

	1.8	 	“Change Date” means the date on which a Change in Control first occurs.
	 
	1.9	 	“Change in Control” means the occurrence of any one (1) or more of the following:

(a) any person (as such term is used in Rule 13d-5 of the SEC under the Exchange Act) or
group (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other
than a “Related Party”, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of 20 percent or more of the common stock of the Company or of Voting
Securities representing 20 percent or more of the combined voting power of all Voting
Securities of the Company, except that no Change in Control shall be deemed to have occurred
solely by reason of such beneficial ownership by a Person with respect to which both more
than 75 percent of the common stock of such Person and Voting Securities representing more
than 75 percent of the combined voting power of the Voting Securities of such Person are
then owned, directly or indirectly, by the persons who were the direct or indirect owners of
the common stock and Voting Securities of the Company immediately before such acquisition,
in substantially the same proportions as their ownership, immediately before such
acquisition, of the common stock and Voting Securities of the Company, as the case may be;
or

(b) the Company’s Incumbent Directors (determined using the Effective Date as the baseline)
cease for any reason to constitute at least a majority of the directors of the Company then
serving; or

(c) a Reorganization Transaction, other than a Reorganization Transaction that results in
the Persons who were the direct or indirect owners of the outstanding common stock and
Voting Securities of the Company immediately before such Reorganization Transaction
becoming, immediately after the consummation of such Reorganization Transaction, the direct
or indirect owners, of both at least 65 percent of the then-outstanding common stock of the
Surviving Corporation and Voting Securities representing at least 65 percent of the combined
voting power of the then-outstanding Voting Securities of the Surviving Corporation, in
substantially the same respective

3

 

proportions as such Persons’ ownership of the common stock and Voting Securities of the
Company immediately before such Reorganization Transaction; or

(d) approval by the stockholders of the Company of a plan or agreement for the sale or other
disposition of all or substantially all of the consolidated assets of the Company or a plan
of complete liquidation of the Company, other than any such transaction that would result in

(i) a Related Party owning or acquiring more than 50 percent of the assets owned by
the Company immediately prior to the transaction or

(ii) the Persons who were the direct or indirect owners of the outstanding common
stock and Voting Securities of the Company immediately before such transaction
becoming, immediately after the consummation of such transaction, the direct or
indirect owners, of more than 50 percent of the assets owned by the Company
immediately prior to the transaction.

Notwithstanding the occurrence of any of the foregoing events, a Change in Control
shall not occur with respect to an Employee if, in advance of such event, the Employee
agrees in writing that such event shall not constitute a Change in Control.

	1.10	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time.
References to a particular section of the Code include references to regulations and rulings
thereunder and to successor provisions.
	 
	1.11	 	“Company” means The Williams Companies, Inc., a Delaware corporation and any
successor or successors thereto that continue this Plan pursuant to Section 6.1 or otherwise.
	 
	1.12	 	“Comparable Offer of Employment” means an offer of employment for a position with the
Company, any of its Affiliates, or any successor of the Company or its Affiliates that
provides for Regular Wage Base equal to or greater than the Participant’s Regular Wage Base
immediately preceding the Participant’s termination date. A successor of the Company or any
of its Affiliates shall include, but shall not be limited to, any entity (or its Affiliate)
involved in or in any way connected with a corporate rearrangement, total or partial merger,
acquisition, sale of stock, sale of assets or any other transaction. A Comparable Offer of
Employment includes, without limitation, a position that requires the Employee to transfer to
a different work location, but only so long as the Employee’s commuting distance to the new
work location is no longer than the greater of fifty (50) miles or such Participant’s current
commute if the commuting distance from such Participant’s current residence to the original
work location is more than fifty (50) miles.
	 
	1.13	 	“Effective Date” means October 28, 2003, which is the effective date of this
amendment and restatement.
	 
	1.14	 	“Employee” means any regular full-time or part-time employee in the service and on
the payroll of a Participating Company as a common law employee. An Employee is

4

 

considered as part-time if he is regularly scheduled to work at least fifty percent of the
number of hours in the normal workweek established by a Participating Company. A regular
employee receiving benefits under a Participating Company’s Short-Term Disability Program or
Long-Term Disability Program is an Employee for purposes of this Plan. Employee shall not
include:

(a) an Employee who is a member of a group of Employees represented by a collective
bargaining representative, unless such agreement expressly provides for coverage of
bargaining unit employees under the Plan;

(b) an Employee who is not a resident of the United States and not a citizen of the United
States;

(c) a nonresident alien;

(d) a weekly-paid employee employed at a retail petroleum convenience store in any capacity
other than a store manager;

(e) a seasonal employee, temporary employee, leased employee, term employee, or an employee
not employed on a regularly scheduled basis;

(f) a person who has a written employment contract or other contract for services, unless
such contract expressly provides that such person is an employee;

(g) a person who is paid through the payroll of a temporary agency or similar organization
regardless of any subsequent reclassification as a common law employee;

(h) a person who is designated, compensated or otherwise treated as an independent
contractor by a Participating Company or its Affiliates regardless of any subsequent
reclassification as a common law employee;

(i) a person who has a written contract with a Participating Company or its Affiliates which
states either that such person is not an employee or that such person is not entitled to
receive employee benefits from a Participating Company for services under such contract;

(j) an individual who is not contemporaneously classified as an Employee for purposes of the
Participating Company’s payroll system. In the event any such individual is reclassified as
an Employee for any purpose, including, without limitation, as a common law or statutory
employee, by any action of any third party, including, without limitation, any government
agency, or as a result of any private lawsuit, action or administrative proceeding, such
individual will, notwithstanding such reclassification, remain ineligible for participation
hereunder and will not be considered an eligible Employee. In addition to and not in
derogation of the foregoing, the exclusive means for an individual who is not
contemporaneously classified as an Employee of the Participating Company’s payroll system to
become eligible to participate in this Plan is

5

 

through an amendment to this Plan which specifically renders such individual eligible for
participation hereunder; or

(k) any individual retained by a Participating Company or its Affiliates directly or through
an agency or other party to perform services for an Employer (for either a definite or
indefinite duration) in the capacity of a fee-for-service worker or independent contractor
or any similar capacity including, without limitation, any such individual employed by
temporary help firms, technical help firms, staffing firms, employee leasing firms,
professional employer organizations or other staffing firms, whether or not deemed to be a
“common law” employee.

	1.15	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time. References to a particular section of ERISA include references to regulations
and rulings thereunder and to successor provisions.
	 
	1.16	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time. References to a particular section of the Exchange Act include references to successor
provisions.
	 
	1.17	 	“Good Reason” means the occurrence, within two (2) years following a Change in
Control (other than during a Merger of Equals Period) and without a Participant’s prior
written consent, of any one (1) or more of the following:

(a) a material adverse reduction in the nature or scope of the Participant’s duties from the
most significant of those assigned at any time in the 90-day period prior to a Change in
Control; or

(b) a significant reduction in the authority and responsibility assigned to the Participant;
or

(c) any reduction in or failure to pay Participant’s Base Salary; or

(d) a material reduction of Participant’s Aggregate Compensation and/or aggregate benefits
from the amounts and/or levels in effect on the Change Date, unless such reduction is part
of a policy applicable to peer Participants of the Company and of any successor entity; or

(e) a requirement by the Company or any of its Affiliates that the Participant’s principal
duties be performed at a location requiring a commuting distance equal to the greater of the
Participant’s current commuting distance or more than fifty (50) miles commuting distance,
without the Participant’s consent (except for travel reasonably required in the performance
of the Participant’s duties).

Notwithstanding anything in this Plan to the contrary, no act or omission shall constitute
grounds for “Good Reason”:

(a) Unless, at least thirty (30) days prior to his termination, Participant gives a written
notice to the Company or the Affiliate that employs Participant of his intent to terminate

6

 

his employment for Good Reason which describes the alleged act or omission giving rise to
Good Reason; and

(b) Unless such notice is given within ninety (90) days of Participant’s first actual
knowledge of such act or omission, or if such act or omission would not constitute Good
Reason during a Merger of Equals Period, unless Participant’s termination date is within 90
days after the first date on which he first obtained actual knowledge of the fact that the
Merger of Equals Period has ended; and

(c) Unless the Company or the Affiliate that employs Participant fails to cure such act or
omission within the 30-day period after receiving such notice.

Further, no act or omission shall be “Good Reason” if Participant has consented in writing
to such act or omission.

	1.18	 	“Incumbent Directors” means determined as of any date by reference to any baseline
date:

(a) the members of the Board of Directors on the date of such determination who have been
members of the Board of Directors since such baseline date; and

(b) the members of the Board of Directors on the date of such determination who were
appointed or elected after such baseline date and whose election, or nomination for election
by stockholders of the Company or the Surviving Corporation, as applicable, was approved by
a vote or written consent of two-thirds (or by a simple majority for purposes of subsection
(b) of the definition of “Merger of Equals”) of the directors comprising the Company’s
Incumbent Directors on the date of such vote or written consent, but excluding each such
member whose initial assumption of office was in connection with:

(i) an actual or threatened election contest, including a consent solicitation,
relating to the election or removal of one (1) or more members of the Board of
Directors,

(ii) a “tender offer” (as such term is used in Section 14(d) of the Exchange Act),

(iii) a proposed Reorganization Transaction, or

(iv) a request, nomination or suggestion of any beneficial owner of Voting
Securities representing 20 percent or more of the aggregate voting power of the
Voting Securities of the Company or the Surviving Corporation, as applicable.

	1.19	 	“Leave of Absence” means an absence, with or without compensation, authorized on a
non-discriminatory basis by the Company or any of its Affiliates. For the purposes of
this Plan, Leave of Absence includes any leave of absence other than a Family and Medical
Leave of Absence or Military Leave of Absence.

7

 

	1.20	 	“Merger of Equals” means, as of any date, a Reorganization Transaction that,
notwithstanding the fact that such transaction may also qualify as a Change in Control,
satisfies all of the conditions set forth in subsections (a), (b) and (c) below:

(a) less than 65 percent, but not less than 50 percent, of the common stock of the Surviving
Corporation outstanding immediately after the consummation of the Reorganization
Transaction, together with Voting Securities representing less than 65 percent, but not less
than 50 percent, of the combined voting power of all Voting Securities of the Surviving
Corporation outstanding immediately after such consummation are owned, directly or
indirectly, by the persons who were the owners directly or indirectly of the common stock
and Voting Securities of the Company immediately before such consummation in substantially
the same proportions as their respective direct or indirect ownership, immediately before
such consummation, of the common stock and Voting Securities of the Company, respectively;
and

(b) the Company’s Incumbent Directors (determined using the date immediately preceding the
consummation date of the Reorganization Transaction as the baseline date) shall, throughout
the period beginning on the date of such consummation and ending on the second anniversary
of such consummation date, continue to constitute not less than 50 percent of the members of
the Board of Directors; and

(c) the person who was the Chief Executive Officer immediately prior to the consummation of
the Reorganization Transaction shall serve as the Chief Executive Officer of the Surviving
Corporation at all times during the period commencing on such consummation, and ending on
the first anniversary of the date of such consummation; provided, however, that a
Reorganization Transaction that qualifies as a Change in Control and a Merger of Equals
shall cease to qualify as a Merger of Equals and shall instead qualify as a Change in
Control that is not a Merger of Equals from and after the first date within the two-year
period following the Change in Control (such date, the “Merger of Equals Cessation Date”) as
of which any one (1) or more of the following shall occur for any reason:

(i) any condition of subsection (a) of this Section shall for any reason not be
satisfied immediately after the consummation of the Reorganization Transaction; or

(ii) as of the close of business on any date on or after the consummation of the
Reorganization Transaction and before the second anniversary of the Change Date, any
condition of subsections (a) and/or (b) of this Section shall not be satisfied; or

(iii) on any date prior to the first anniversary of the consummation of the
Reorganization Transaction, the Company shall make a filing with the SEC, issue a
press release, or make a public announcement to the effect that the Chief
Executive Officer has resigned or will resign or be terminated, other than on
account of a scheduled retirement, or the Company is seeking or intends to seek a
replacement for the then-Chief Executive Officer, whether such resignation,

8

 

termination or replacement is to become effective before or after such first
anniversary of the consummation of the Reorganization Transaction.

	1.21	 	“Merger of Equals Cessation Date” shall be the meaning set forth in the definition of
“Merger of Equals” Section 1.20.
	 
	1.22	 	“Merger of Equals Period” means the period commencing on the date of a Merger of
Equals and ending the earlier of the Merger of Equals Cessation Date or two (2) years
following the Change Date.
	 
	1.23	 	“Participant” means an Employee participating in the Plan as provided in Article 2.
	 
	1.24	 	“Participating Company” means the Company and any Affiliate of the Company, which has
adopted this Plan in accordance with Section 6.11.
	 
	1.25	 	“Person” means any individual, sole proprietorship, partnership, joint venture,
limited liability company, trust, unincorporated organization, association, corporation,
institution, public benefit corporate, entity or government instrumentality, division, agency,
body or department.
	 
	1.26	 	“Plan” means The Williams Companies, Inc. Severance Pay Plan.
	 
	1.27	 	“Plan Administrator” means the Administrative Committee appointed under Article 5.
	 
	1.28	 	“Plan Year” means the twelve (12) month period from January 1 through December 31.
	 
	1.29	 	“Regular Wage Base” means an Employee’s total weekly salary or wages, including any
salary deferral contributions made to any defined contribution plan maintained by the
Participating Company and any amounts contributed by an Employee to any cafeteria plan,
flexible benefit plan or qualified transportation plan maintained by the Participating Company
in accordance with Sections 125, 132 and related provisions of the Code, but excluding any
bonuses, overtime, incentive compensation, commissions, cost of living pay, housing pay,
relocation pay, other taxable fringe benefits and all other extraordinary compensation.
	 
	1.30	 	“Related Party” means an Affiliate or any employee benefit plan (or any related
trust) sponsored or maintained by the Company or any of its Affiliates.
	 
	1.31	 	“Reorganization Transaction” means the consummation of a merger, reorganization,
recapitalization, consolidation or similar transaction involving the Company.
	 
	1.32	 	“SEC” means the United States Securities and Exchange Commission, or any successor
thereto.
	 
	1.33	 	“Sponsor” means The Williams Companies, Inc., a Delaware corporation.
	 
	1.34	 	“Surviving Corporation” means the corporation resulting from a Reorganization
Transaction or, if securities representing at least 50 percent of the aggregate voting power

9

 

	 	 	of all Voting Securities of such resulting corporation are directly or indirectly owned by
another corporation, such other corporation.
	 
	1.35	 	“Voting Securities” means any securities of the Company that are entitled to vote
generally in the election of directors.
	 
	1.36	 	“Years of Service” means a Participant’s length of service with the Participating
Company as set by the latest hire date or rehire date of such Participant. For purposes of
this Plan, after the first year of service as a Participant, only full, completed years of
service will be counted. Service with a predecessor company will not be included unless, and
to the extent that, the Plan Administrator determines such service be included and notifies
the Participant in writing that such service is included.
	 
	 	 	If a Participant is terminated for any reason other than Cause and is rehired by the
Participating Company within twelve (12) months of such termination date, years of service
prior to such termination will be bridged and used in determining years of service for the
purposes of severance pay benefits in the event the Participant becomes eligible for
severance pay. The Plan Administrator’s determination of Years of Service in its sole and
absolute discretion will be final and binding on all persons to the maximum extent permitted
by law.

Article 2.

Eligibility

	2.1	 	Eligibility. Any Employee, who is not excluded pursuant to Section 2.2, shall be
entitled to become a Participant in the Plan when all of the following conditions are met:

(a) The senior officer of the Company responsible for compensation or benefits, or such
senior officer’s designee, approves the reduction in force or job elimination and the
Employee is notified in writing that employment is being terminated due to a reduction in
force which has caused the elimination of his position; or an Employee’s employment is
terminated involuntarily or voluntarily for Good Reason within two (2) years after a Change
in Control, or involuntarily immediately prior to a Change in Control for the purpose of
avoiding application of this Plan.

(b) The Employee remains in employment until his designated termination date unless an
earlier departure date will not have an adverse effect on the activities of the department
and is approved, in writing, by the Employee’s department head, unless the employee
terminates employment voluntarily for Good Reason within two (2) years after a Change in
Control.

	2.2	 	Exclusions. Notwithstanding the provisions of Section 2.1, an Employee will
not become a Participant in the Plan if any of the following conditions occur:

(a) An Employee discharged for Cause.

10

 

(b) An Employee voluntarily resigns for any reason, including retirement, except in the case
of voluntary resignation for Good Reason within two (2) years after a Change in Control.

(c) An Employee accepts any benefits under an early retirement incentive plan.

(d) An Employee fails to make a bona fide effort to secure employment within a Participating
Company or any of its Affiliates, or any successor of the Company or its Affiliates.

(e) An Employee transfers to or receives a Comparable Offer of Employment from a
Participating Company or any of its Affiliates.

(f) An Employee receives a Comparable Offer of Employment after a corporate rearrangement,
total or partial merger, acquisition, sale of stock, sale of assets or other transaction.

(g) An Employee accepts an offer of employment with a Participating Company or any of its
Affiliates, whether or not such offer of employment constitutes a Comparable Offer of
Employment.

(h) An Employee accepts an offer of employment with any purchaser company or resultant
entity, or an affiliate of such a company or entity, after a corporate rearrangement, total
or partial merger, acquisition, sale of stock, sale of assets or other transaction, whether
or not such offer of employment constitutes a Comparable Offer of Employment.

(i) An Employee dies prior to his termination of employment.

(j) Except as provided in subsection (k), an Employee on a Leave of Absence at the time he
is notified that his employment is being terminated due to a reduction in force.

(k) An Employee receiving benefits under the Short-Term Disability Program. This exclusion
may not apply if the Employee would have returned to work within the initial six-month
period of short-term disability had his termination of employment not occurred and a senior
officer of the Company responsible for compensation or benefits, or such senior officer’s
designee, approves eligibility for severance upon release to return to work in his sole
discretion. This exclusion does not apply in the event of a Change in Control.

(l) An Employee receiving benefits under the Long-Term Disability Program.

(m) An Employee has a written employment contract which contains severance provisions.

(n) An Employee received or is eligible to receive more favorable severance pay
benefits under any other severance pay plan, agreement or arrangement of a Participating
Company, any of its Affiliates, or any successor of a Participating Company.

11

 

Article 3.

Benefits

	3.1	 	Severance Pay. Except as provided in Section 3.7, subject to the Participant signing
a release of claims prepared by the Company, a Participant will be eligible for severance pay
benefits under this Section 3.1 equal to:

(a) the product of (i) two (2) weeks multiplied by (ii) the Participant’s Regular Wage Base,
if the Participant has less than one (1) full-completed Year of Service; or

(b) the product of (i) two (2) weeks for each full, completed Year of Service, with a
minimum of six (6) weeks and a maximum of fifty-two (52) weeks, multiplied by (ii) the
Participant’s Regular Wage Base, if the Participant has completed at least one (1) full Year
of Service.

	3.2	 	Change in Control Severance Pay. Subject to the Participant signing a release of
claims prepared by the Company, if a Participant’s employment is terminated voluntarily for
Good Reason or involuntarily within two (2) years after a Change in Control, the Participant
will be eligible for severance pay benefits under this Section 3.2 in lieu of any benefits
under Section 3.1 with the amount of such benefits equal to the sum of:

(a) the product of (i) the number of the Participant’s full, completed Years of Service
multiplied by (ii) three (3), and multiplied by (iii) the Participant’s Regular Wage Base;

(b) the product of (i) Participant’s Regular Wage Base multiplied by (ii) the quotient of
the Participant’s Base Salary divided by ten thousand (10,000); and

(c) the product of (i) the Participant’s target annual bonus (with respect to the
calendar year in which the termination occurs) multiplied by (ii) a fraction, the numerator
of which equals the number of days from and including the first day of such calendar year
through and including the date of termination, and the denominator of which equals three
hundred and sixty-five (365) (reduced by any annual bonus amount received with respect to
such calendar year).

Notwithstanding the foregoing, the sum of subsections (a) and (b) of this Section 3.2 shall
not be less than the product of the Participant’s Regular Wage Base multiplied by twelve (12)
nor more than the product of the Participant’s Regular Wage Base multiplied by one hundred
and four (104).

	3.3	 	Notice. Any Participant who is terminated and receives less than two (2) weeks
notice from a Participating Company will receive, in addition to the benefits provided in
Section 3.1 or 3.2 (whichever applies), severance pay for the lack of notice. Weeks or
fractions thereof,
will be granted which is equal to the difference between two (2) weeks and the number of days
notice received by the Participant. The amount of severance pay will be equal to the number
of weeks and/or fractions thereof granted to a Participant under this Section 3.3 

12

 

	 	 	times the
Participant’s Regular Wage Base. No payment will be made under this Section 3.3 if total
severance pay exceeds the maximum benefit allowed.

	3.4	 	Form of Payment. Severance benefits payable to a Participant under Section 3.1 shall
be paid in installments over a period not to exceed one (1) year from the date payment
commences. Severance benefits payable to a Participant under Section 3.2 shall be paid in a
lump sum within thirty days from the date of the Participant’s termination of employment.
	 
	3.5	 	Other Benefit Plans. Participants, regardless of whether they sign the release of
claims required to receive severance payments, who are otherwise entitled to receive severance
pay and who are eligible to continue participation in certain welfare benefit plans may choose
to continue their participation in accordance with this Section 3.5. Continued participation
in such welfare benefit plans is subject to the terms and conditions of the applicable plan
documents or insurance contracts in effect on the date of the Participant’s termination from
employment. Generally, the Participant has the option to elect the currently maintained
Participating Company group medical and dental plan that he is currently enrolled for up to 18
months under the Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation coverage.
If the Participant timely and properly elects COBRA coverage, the premiums for COBRA coverage
will be limited to the active employee rate for the initial three months of coverage. At the
end of this three-month period, the Participant will be required to pay the full cost for
medical and/or dental benefits under COBRA for the remainder of the 18-month period.
Participation in the Participating Company group medical and dental plan will generally cease
on the date the Participant or his dependents become covered under any other medical plan or
dental plan.
	 
	3.6	 	Paid-Time Off (PTO) Program. A Participant, regardless of whether he signs the
release of claims required to receive severance payments, shall be paid a single lump sum
payment for applicable PTO hours earned but not taken prior to the Participant’s employment
termination. PTO time will not be considered for purposes of continued coverage under any of
the other various employee benefit plans maintained by the Participating Company.
	 
	3.7	 	Rehired Participants after Receipt of Severance Pay.
	 
	 	 	This Section 3.7 applies to Participants rehired by a Participating Company or any
Affiliate after receipt of severance pay under Section 3.1.

(a) Severance Pay. The Participant will be entitled to keep a portion of his
severance pay equal to the number of weeks and/or fraction of weeks between his termination
date and the date of rehire. Any remainder must be returned to the Participating Company
that paid the severance pay upon rehire or it will be deducted from his wages paid after
rehire.

If a Participant is rehired within twelve (12) months of his termination date and again
becomes eligible for severance pay due to a subsequent event within twelve (12) months
of rehire, subject to the Participant signing a release of claims prepared by the Company,
the Participant will be eligible to receive the greater of

13

 

(i) the sum of any remaining severance not yet received from the initial termination
date in accordance with Section 3.1, plus two (2) weeks of severance pay or

(ii) two (2) weeks of severance pay.

Severance pay under this Section 3.7 will be paid in accordance with Section 3.4.

(b) PTO. If a Participant is rehired within the same calendar year in which his
employment was terminated and he received payment for PTO earned but not taken, he may
either retain the payment and forfeit PTO time for which he was eligible prior to his
employment termination, or he may return to the Company the amount he received and reinstate
PTO time for which he was eligible prior to termination.

	3.8	 	Discretionary Benefits. Under no circumstances will any discretionary benefits
be paid unless the senior officer of the Company responsible for compensation or benefits,
or such senior officer’s designee, signs a written document describing such benefits.
Payment of such discretionary benefits will be made only in accordance with the terms of
that document.

	3.9	 	No Vesting. Employees have no vested right to any benefits set forth in the
Plan until such time as an Employee becomes entitled to receive benefits under Article 2;
however, the Participant must execute a release in accordance with Section 3.1 or 3.2
(whichever applies) to receive any benefits under this Plan.

	3.10	 	Integration with Plant Closing Law(s). To the extent that a federal, state or
local law, including, but not limited to the Worker Adjustment and Retraining Act, requires
a Participating Company, as an employer, to provide notice and/or make a payment to an
Employee because of that Employee’s involuntary termination, or pursuant to a plant closing
law, the benefit payable under this Plan, including without limitation benefits payable
under Section 3.3, shall be reduced by any Regular Wage Base paid during such notice period
and/or by such other required payment.
	 
	 	 	Nothing in this section or any other section of this Plan shall be used to reduce benefits
under this Plan because of payments under state unemployment insurance laws.

Article 4.

Claims

	4.1	 	Claims for Benefits. To obtain payment of any benefits under the Plan, a
Participant must comply with such rules and procedures as the Plan Administrator may
prescribe.

	4.2	 	Claims Procedure. The Plan Administrator shall adopt, and may change from time
to time, claims procedures, provided that such claims procedures and changes thereof shall conform to
Section 503 of the Employee Retirement Income Security Act of 1974 and the regulations
promulgated thereunder. Such claims procedures, as in effect from time to time, shall be
deemed to be incorporated herein and made a part hereof.

14

 

Article 5.

Administration

	5.1	 	Fiduciaries. The Administrative Committee is designated as the only named fiduciary
of the Plan as defined in ERISA.
	 
	5.2	 	Allocation of Responsibilities.

(a) Board of Directors. The Board of Directors (through its delegatee, the
Compensation Committee of the Board of Directors) shall have exclusive authority and
responsibility, including the power to amend the Plan in Section 6.3 to the extent
necessary, for:

Plan matters that are deemed to be material under the corporate laws of
the State of Delaware to holders of common stock of the Company; and

The delegation to the Benefits Committee or other appropriate person of
any authority and responsibility reserved to it under the Plan that it can
delegate.

(b) Benefits Committee. The Benefits Committee shall have exclusive authority and
responsibility for those functions set forth in Section 5.3 and in other provisions of this
Plan.

(c) Administrative Committee The Administrative Committee shall serve as the Plan
Administrator and shall have exclusive authority and responsibility for those functions set
forth in Section 5.4 and in other provisions of this Plan.

	5.3	 	Provisions Concerning the Benefits Committee.

(a) Membership and Voting. Any member may resign by delivering a written
resignation to the Board of Directors. The Board of Directors shall fill vacancies in the
Benefits Committee arising by death, resignation or removal. The Benefits Committee shall
act by a majority of its members at the time in office, and such action may be taken by a
vote at a meeting, in writing without a meeting, or by telephonic communications.
Attendance at a meeting shall constitute waiver or notice thereof. A member of the Benefits
Committee who is a Participant of the Plan shall not vote on any question relating
specifically to such Participant. Any such action shall be voted or decided by a majority
of the remaining members of the Benefits Committee. The Benefits Committee shall appoint
a Secretary who may, but need not, be a member thereof. The Benefits Committee may appoint
from its members such subcommittees with such powers as the Benefits Committee shall
determine.

15

 

(b) Powers and Duties of Benefits Committee. The Benefits Committee shall
have exclusive authority and responsibility for:

(i) All amendments to this Plan, except to the extent such authority is
reserved to the Board of Directors, as provided in Articles 5 and 6;

(ii) The termination or other discontinuance of this Plan, in whole or in
part;

(iii) The approval of any merger or spin-off of any part of this Plan;

(iv) The delegation of its fiduciary responsibilities, if any, under the
Plan to another person or entity; and

(v) The appointment of members of the Administrative Committee, but only to
fill vacancies not filled by the Administrative Committee, and the
appointment of the chairman of the Administrative Committee, but only if a
chairman is not timely selected by the Administrative Committee’s members.

The Benefits Committee may appoint such accountants, counsel, specialists, and other
persons, as it deems necessary or desirable in connection with its duties under this Plan.
Such accountants and counsel may, but need not, be accountants and counsel for the
Company or an Affiliate. The Benefits Committee also shall have such other duties,
authority and responsibility under this Plan as may be delegated by the Board of
Directors.

	5.4	 	Provisions Concerning the Administrative Committee.

(a) Membership and Voting. The Administrative Committee shall consist of not
less than three (3) members. All members of the Administrative Committee must be Employees
of the Company. The Administrative Committee may remove any of its members at any time,
with or without cause, by written notice to such member and to the Benefits Committee. Any
member may resign by delivering a written resignation to the Administrative Committee.
Vacancies in the Administrative Committee arising by death, resignation or removal shall be
filled by the Administrative Committee, or the Benefits Committee to the extent not filled
by the Administrative Committee. The Administrative Committee shall act by a majority of
its members at the time in office, and such action may be taken by a vote at a meeting, in
writing without a meeting, or by telephonic communications. Attendance at a meeting shall
constitute waiver of notice thereof. A member of the Administrative Committee who is a
Participant of the Plan shall not vote on any question relating specifically to such
Participant. Any such action shall be voted
or decided by a majority of the remaining members of the Administrative Committee. The
Administrative Committee shall designate one of the members as the chairman and shall
appoint a secretary who may, but need not, be a member, but the Benefits

16

 

Committee may
appoint a chairman if the Administrative Committee fails to do so. The Administrative
Committee may appoint from its members such subcommittees with such powers as the
Administrative Committee shall determine.

(b) Duties of Administrative Committee. The Administrative Committee shall
administer the Plan in accordance with its terms and shall have all the powers necessary to
carry out such terms including, without limitation, the power, in its sole and absolute
discretion, to determine all benefits and to grant or to deny claims for benefits. The
Administrative Committee shall execute any certificate, instrument or other written
direction on behalf of the Plan. All interpretations of this Plan, and all questions
concerning its administration and application, including without limitation, all benefit
determinations and all claim decisions, shall be determined by the Administrative Committee
(or its delegate) in its sole and absolute discretion and such determination shall be
conclusive and binding on all persons to the maximum extent permitted by law. No
determination of the Administrative Committee for any Participant shall create a basis for
retroactive adjustment for any other Participant. The Administrative Committee may appoint
such accountants, counsel, specialists and other persons as it deems necessary or desirable
in connection with the administration of the Plan. Such accountants and counsel may, but
need to, be accountants and counsel for the Company or an Affiliate. The Administrative
Committee shall also have such other duties as the Benefits Committee may delegate. The
Administrative Committee shall report regularly, and at least once each Plan Year, on its
operations to the Benefits Committee.

	5.5	 	Delegation of Responsibilities; Bonding.

(a) Delegation and Allocation. The Administrative Committee shall have the
authority to delegate or allocate, from time to time, by a written instrument, all or any
part of its responsibilities under this Plan to such person or persons as it may deem
advisable and in the same manner to revoke any such delegation or allocation of
responsibility. Any action of a person in the exercise of such delegated or allocated
responsibility shall have the same force and effect for all purposes hereunder as if such
action had been taken by the Administrative Committee. The Administrative Committee shall
not be liable for any acts or omissions of any such person, who shall periodically report to
the Administrative Committee concerning the discharge of the delegated or allocated
responsibilities.

(b) Bonding. The members of the Benefits Committee, and the Administrative
Committee shall serve without bond (except as expressly required by federal law) and without
compensation for their services as such.

	5.6	 	No Joint Fiduciary Responsibilities. This Plan is intended to allocate to the
Administrative Committee the individual responsibility for the prudent execution of the
functions assigned to it, and none of such responsibilities or any other responsibility shall
be shared by any other fiduciaries under the Plan unless such sharing is provided for by a
specific provision of the Plan. Whenever one fiduciary is required herein to follow the
directions of another fiduciary, the two fiduciaries shall not be deemed to have been

17

 

	 	 	assigned a shared responsibility, but the responsibility of a fiduciary receiving such
directions shall be to follow them insofar as such instructions are on their face proper
under applicable law.
	 
	5.7	 	Fiduciary Capacity. Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
	 
	5.8	 	Information to be Supplied by Participating Company. Each Participating Company
shall supply to the Administrative Committee, within a reasonable time and in such form as the
Administrative Committee shall require, the names of all Employees who incurred a Termination
of Employment or layoff during the month, the date of termination of each, and the amount of
compensation paid to each Active Participant for the month. The Administrative Committee may
rely conclusively on the information certified to it by a Participating Company. Each
Participating Company shall provide to the Administrative Committee or its delegate such
information as it shall from time to time need in the discharge of its duties.
	 
	5.9	 	Right to Receive and Release Necessary Information. The Administrative Committee may
release or obtain any information necessary for the application, implementation and
determination of this Plan or other Plans without consent or notice to any person. This
information may be released to or obtained from any insurance company, organization or person.
Any individual claiming benefits under this Plan shall release to the Administrative
Committee such information as the Administrative Committee, in its sole and absolute
discretion, determines to be necessary to implement this provision.

Article 6.

General Provisions

	6.1	 	Successor to Company. This Plan shall bind any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) which becomes
such after Change in Control (Merger of Equals) has occurred to all or substantially all of
the business and/or assets of the Company in the same manner and to the same extent that the
Company would be obligated under this Plan if no succession had taken place. In the case of
any transaction in which a successor (which becomes such after a Change in Control [Merger
of Equals] of the Company has occurred) would not by the foregoing provision or by operation
of law be bound by this Plan, the Company shall require such successor expressly and
unconditionally to assume and agree to perform the Company’s obligations under this Plan, in
the same manner and to the same extent that the Company would be required to perform if no
such succession had taken place. The term “Company,” as used in this Plan, shall mean the
Company and any successor or assignee to the business or assets that by reason hereof
becomes bound by this Plan.
	 
	6.2	 	Duration. The Plan shall continue indefinitely unless terminated as provided in
subsection 6.3 hereof.

18

 

	6.3	 	Amendment and Termination. Except as provided in Section 5.2(a), the Benefits
Committee may amend, modify, change, revise or discontinue this Plan at any time prior to a
Change in Control occurring or within twelve (12) months after a Change in Control has
occurred; provided, however, that any such action taken that has the effect of reducing
Participant benefits under this Plan prior to a Change in Control shall not be effective
before six (6) months after adoption and shall be null and void if a Change in Control
occurs during that period.
	 
	6.4	 	Management Rights. Participation in the Plan shall not lessen or otherwise
affect the responsibility of an Employee to perform fully his duties in a satisfactory and
workmanlike manner. This Plan shall not be deemed to constitute a contract between a
Participating Company and any employee or other person whether or not in the employ of the
Participating Company, nor shall anything herein contained be deemed to give any employee
or other person whether or not in the employ of a Participating Company any right to be
retained in the employ of any Participating Company, or to interfere with the right of any
Participating Company to discharge any employee at any time and to treat him without any
regard to the effect which such treatment might have upon him as an employee covered by the
Plan.
	 
	6.5	 	Funding. The Plan shall constitute an unfunded and unsecured obligation of the
Participating Companies payable from the general funds of such Participating Companies.
	 
	6.6	 	Withholding of Taxes. Each Participating Company may withhold from any amounts
payable under the Plan all federal, state, city and/or other taxes as shall be legally
required.
	 
	6.7	 	Participant’s Responsibility. Each Participant (or personal representative of
a deceased Participant’s estate) shall be responsible for providing the Administrative
Committee with his current address. Any notices required or permitted to be given
hereunder shall be deemed given if directed to such address and mailed by regular United
States mail. The Administrative Committee shall not have any obligation or duty to locate
a Participant.
	 
	6.8	 	Indemnification. Each Participating Company shall indemnify and hold harmless
each member of the Board of Directors, each member of the Benefits Committee, each member
of the Administrative Committee and each officer and employee of a Participating Company to
whom are delegated duties, responsibilities, and authority with respect to this Plan
against all claims, liabilities, fines and penalties, and all expenses reasonably incurred
by or imposed upon him (including, but not limited to reasonable attorney fees) which arise
as a result of his actions or failure to act in connection with the operation and
administration of this Plan to the extent lawfully allowable and to the extent that such
claim, liability, fine, penalty, or expense is not paid for by liability insurance
purchased or paid for by a Participating Company. Notwithstanding the foregoing, a
Participating Company shall not indemnify any person for any such amount incurred through
any settlement or compromise of any action unless the Participating Company consents in
writing to such settlement or
compromise.

19

 

	6.9	 	Governing Law. The Plan shall be governed by and construed in accordance with
applicable Federal laws, including ERISA, governing employee benefit plans and in
accordance with the laws of the State of Oklahoma where such laws are not in conflict with
the aforementioned federal laws.

	6.10	 	Right of Recovery. If any Participating Company makes payment(s) in excess of
the amount required under the Plan, the Administrative Committee shall have the right to
recover the excess payment(s) from any person who received the excess payment(s). Such
recovery shall be returned by the Administrative Committee to such Participating Company.

	6.11	 	Adoption by Participating Company. Any Affiliate may adopt or withdraw from
this Plan. The adoption resolution may contain such specific changes and variations in this
Plan’s terms and provisions applicable to the employees of the adopting Participating
Company as may be acceptable to the Administrative Committee.

IN WITNESS WHEREOF, the Benefits Committee has caused this amended and restated Plan to be executed
effective as herein provided.

	 	 	 	 	 
	 	 	 
	 	BY:	 	/s/ Marcia M. MacLeod
 	 
	 	 	 	Marcia M. MacLeod 	 
	 	 	 	Benefits Committee Member 	 
	 

20

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