Document:

javo_8k-ex1004.htm

    Exhibit
10.4

     

    JAVO
BEVERAGE COMPANY, INC.

    FORM
OF SECURITIES PURCHASE AGREEMENT

     

     

    This
Securities Purchase Agreement (this “Agreement”) is made
as of the effective date set forth on the signature page, by and among Javo
Beverage Company, a Delaware corporation (the “Company”), and each
of the parties listed on Schedule I attached
hereto (the parties listed on Schedule I being
referred to individually as an “Investor” and
collectively as the “Investors”).

     

    RECITALS

     

    WHEREAS,
the Company in connection with the Company’s confidential private placement
memorandum dated December 9, 2008, (the “Offering”) has authorized the issuance
and sale to the Investors, in accordance with the terms hereof, of units (“Units”), with each
Unit consisting of (i) a promissory note in the principal amount of $100,000, to
be issued in substantially the form set forth as Exhibit A hereto
(each a “Note”
and collectively, the “Notes”), and (ii)
500,000 shares (the “Shares”) of the
Company’s Common Stock, par value $0.001 per share (the “Common
Stock”);

    

    WHEREAS,
the Company desires to issue and sell, and the Investors desire to purchase, the
Units on the terms and subject to the conditions set forth herein;

     

    AGREEMENT

     

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

     

    1.1           Sale and Issuance of
Units.  Subject
to the terms and conditions of this Agreement, each Investor agrees, severally
and not jointly, to purchase at the closing (the “Closing”), and the
Company agrees to issue and sell to each Investor at the Closing, that number of
Units set forth on Schedule I, at a
purchase price of $100,000 per full Unit (the “Purchase
Price”).  The Company may sell partial Units.

     

    1.2           Closing Date.  The
purchase and sale of the Units to the Investors shall take place at the offices
of the Company at 1311 Specialty Drive, Vista, California at 10:00 a.m. (local
time), on the fifth business day following the date of this Agreement (the
“Closing Date”), or at such other time and place as the Company and the
Investors mutually agree upon, orally or in writing.  The Closing need
not occur at the same time with respect to all Investors participating in the
Offering of the Units by the Company and references in this Agreement to the
Closing Date shall refer to the date of Closing for each particular Investor, as
determined pursuant to this Section 1.2.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.3           Payment;
Delivery.  On or about the Closing Date, the Company shall
deliver to each Investor a Note and a certificate or certificates representing
that number of Shares being purchased by such Investor at the Closing, against
payment of the Purchase Price by check payable to the Company or wire transfer
of immediately available funds.  The Company shall send such Note and
certificate or certificates to such Investor at the address furnished to the
Company for that purpose.

     

    2.           Representations, Warranties,
and Covenants of the Investors.  Each Investor, severally and
not jointly, hereby represents, warrants, covenants with respect to its purchase
of Units at the Closing that:

     

    2.1           Validity;
Enforcement.  Such Investor has full power and authority and
has taken all required action necessary to permit it to execute and deliver and
to carry out the terms of this Agreement, the Note and all other documents or
instruments required hereby and thereby, and each Agreement and Note, assuming
due execution and delivery thereof by the Company, constitutes a valid and
legally binding obligation of such Investor, enforceable against such Investor
in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

     

    2.2           Purchase Entirely for Own
Account.  This Agreement is made with such Investor in reliance
upon such Investor’s representation to the Company, which by such Investor’s
execution of this Agreement such Investor hereby confirms, that the Note and
Shares to be received by such Investor will be acquired for investment for such
Investor’s own account, not as a nominee or agent, and not with a view to the
distribution of any part thereof, and that such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same.  By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to the Note or any of the
Shares.

     

    2.3           Residency.  Such
Investor, if a natural person, is a resident of that state or country specified
in its address on Schedule I attached
hereto.

     

    2.4           Disclosure of
Information.  Such Investor believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Units.  Such Investor further represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the Offering of the Units and the business,
properties, prospects and financial condition of the Company and to obtain any
additional information of the same kind that is specified in Rule 502 of
Regulation D of the Securities Act, or that is necessary to verify the
accuracy of the other information obtained. The Investor acknowledges that it
has received such information as it deems necessary to enable it to make its
investment decision.

     

    2.5           No Governmental
Review.  Such 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 Units or the fairness
or suitability of the investment in the Units nor have such authorities passed
upon or endorsed the merits of the offering of the Units.

     

    
      
         

      

      
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    2.6           Legal, Tax or Investment
Advice.  Such Investor understands that nothing in this
Agreement or any other materials presented to such Investor in connection with
the purchase and sale of the Units constitutes legal, tax or investment
advice.  Such Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Units.

     

    2.7           Investment
Experience.  Such Investor acknowledges that it currently has,
and had immediately prior to its receipt of the offer of sale from the Company,
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of this investment and further
acknowledges that it is able to bear the economic risk of this
investment.

     

    2.8           Accredited
Investor.  Such Investor is an “accredited investor” as defined
by the rules and regulations of the Securities and Exchange Commission (the
“SEC”) pursuant to the Securities Act of 1933, as amended (the “Securities
Act”).  The “accredited investor” standards are attached hereto as
Annex A.

     

    2.9           Restricted
Securities.  Such Investor understands that the Notes and the
Shares will be characterized as “restricted securities” under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances.  Such Investor
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.

     

    2.10         Legends.  It
is understood that the Notes and the certificates evidencing the Shares may bear
one or all of the following legends:

     

    (a)             “THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT.”

     

    “THE
INDEBTEDNESS EVIDENCED BY THIS SENIOR SUBORDINATED NOTE IS SUBORDINATED TO
THE PRIOR PAYMENT AND SATISFACTION OF ALL SENIOR DEBT, EXISTING PROMISSORY
NOTES AND CERTAIN OTHER PERMITTED INDEBTEDNESS AS DESCRIBED MORE FULLY IN
THE SECURITIES PURCHASE AGREEMENT DATED [DECEMBER __, 2008,] AS THE
SAME MAY BE AMENDED, MODIFIED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME TO THE
EXTENT, AND IN THE MANNER PROVIDED THEREIN.”

    

    
      
         

      

      
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(b)             Any
legend required by the securities laws of the State of California or by any
other securities laws of other states in which the Company and Investor must
comply in order to distribute the Units pursuant to this Agreement.

     

    2.11           Exculpation Among
Investors.  Each Investor acknowledges that it is not relying
upon any person, firm or corporation, other than the Company and its officers
and directors, in making its investment or decision to invest in the
Company.  Each Investor agrees that no Investor nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Investor shall be liable to any other Investor for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Units.

     

    2.12           Senior Subordinated Notes
Subordinate to Senior Indebtedness.  The holder of the Senior
Subordinated Note, by its acceptance of a Senior Subordinated Note, covenants
and agrees (i) that the obligations represented by the Senior Subordinated Notes
and the payment of the principal of and interest on the Senior Subordinated
Notes are hereby expressly made subordinate and subject to Existing Promissory
Notes, capital leases, Senior Debt and other customary permitted indebtedness
and (ii) to the extent required by any such senior lender, shall enter into an
intercreditor or subordination agreement on such terms and conditions that would
be reasonably acceptable to a senior subordinated lender.

    

    Senior
Debt means (i) an unsecured credit facility or a series of related credit
facilities or other unsecured financing entered into following the issuance of
the Senior Subordinated Notes in the minimum original principal amount
(including commitments to lend, whether or not funded) of $500,000 or more that
by its terms is senior in payment to the Senior Subordinated Notes and (ii) a
secured credit facility or a series of related secured credit facilities entered
into prior to or following the issuance of the Senior Subordinated Notes that by
its terms is senior in payment to the Senior Subordinated Notes and that, in
each case, is incurred in connection with any (a) capital expenditures and
related expenses, including without limitation those relating to the purchase
and installation of beverage dispensing equipment or plant infrastructure, (b)
refinancing of indebtedness, (c) revolving line of credit or (d) strategic
acquisition or transaction approved by the Company’s board of
directors.

    

    Existing
Promissory Notes means those certain five-year promissory notes that were
entered into by the Company from 2002 to 2005 pursuant to private placement
offerings and that have currently outstanding principal that does not exceed
$400,000 in the aggregate.

     

    
      
         

      

      
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    3.           Further Limitations on
Disposition.  Without in any way limiting the representations
set forth in Section 2 above, each Investor further agrees not to make any
disposition of all or any portion of the Notes or the Shares unless and until
the transferee has agreed in writing for the benefit of the Company and the
other Investors to be bound by this Agreement and the terms of the Notes and the
Shares to be transferred to such transferee and:

     

    (a)           There
is then in effect a registration statement under the Securities Act covering
such proposed disposition and such disposition is made in accordance with such
registration statement; or

     

    (b)           Such
Investor shall have notified the Company of the proposed disposition and shall
have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and if reasonably requested by the
Company, such Investor shall have furnished the Company with an opinion of
counsel reasonably satisfactory to the Company that such disposition will not
require registration of such securities under the Act.  It is agreed
that the Company will not require opinions of counsel for transactions made
pursuant to Rule 144 or Rule 144A, except in unusual
circumstances.  In the event that any transfer agent or similar third
party shall require an opinion of counsel in connection with a transfer made
pursuant to Rule 144 or Rule 144A, the Company’s counsel will issue such
opinion, at the Company’s expense; provided that the Investor making such
transfer shall provide any and all documentation and/or back-up certificates
reasonably necessary for such counsel to issue such opinion.

     

    Notwithstanding
the provisions of paragraphs (a) and (b) above, no such registration statement
or opinion of counsel shall be necessary for a transfer for no new consideration
by any Investor to an affiliate of such Investor (including entities controlled
by such affiliates and employees, advisors and/or respective family members of
such affiliates), to a parent or a subsidiary corporation, or, in the case of an
Investor that is a partnership, to a partner of the partnership or a retired
partner of such partnership who retires after the date hereof, or to the estate
of any such partner or retired partner or the transfer by gift, will or
intestate succession of any partner to his spouse or to the siblings, lineal
descendants or ancestors of such partner or spouse, if the transferee agrees in
writing to be subject to the terms hereof and if the Note or the Shares are so
transferred to the same extent as if he were an original Investor hereunder and
the original holder thereof.

    

    Unless
and until the Notes have been repaid in full and subject to applicable
securities laws, the Investors agree to not engage in short sales of the
Company’s Common Stock.

    

    4.           Representations and
Warranties of the Company.  The
Company hereby represents and warrants to each Investor that:

     

    4.1           Organization, Good Standing
and Qualification.  The
Company is duly organized and validly existing in good standing under the laws
of the State of Delaware and has full power and authority to conduct its
business as presently conducted and as described in the documents filed by the
Company under the Securities Exchange Act of 1934 (the “Exchange Act”), since
January 1, 2008 through the date hereof, including, without limitation, its most
recent Annual Report on Form 10-K (as amended) and subsequent quarterly reports
on Form 10-Q, each as filed with the SEC (the “Exchange Act
Documents”).  The Company is registered or qualified to do business
and in good standing in each jurisdiction in which the nature of the business
conducted by it or the location of the properties owned or leased by it requires
such qualification and where the failure to be so qualified would have a
material adverse effect upon the condition (financial or otherwise), earnings,
or business (such business being as described in the Exchange Act Documents),
properties or operations of the Company and its subsidiaries, considered as one
enterprise, or impair the Company’s ability to perform on a timely basis its
obligations under this Agreement (any of the foregoing, a “Material Adverse
Effect”).  No proceeding has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.

     

    
      
         

      

      
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    4.2           Due Authorization and Valid
Issuance.  The Company has all requisite power and authority to
execute, deliver and perform its obligations under this Agreement and the Notes,
and this Agreement and the Notes have been duly authorized and validly executed
and delivered by the Company and, assuming due execution and delivery hereof by
the Investors, shall constitute the legal, valid and binding agreements of the
Company enforceable against the Company in accordance with their terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.  The Notes and the Shares being purchased by the Investors
hereunder will, upon issuance and payment therefore pursuant to the terms
hereof, be duly authorized, validly issued, fully-paid and
nonassessable.

     

    4.3           Non-Contravention.  The
execution and delivery of this Agreement and the Notes, the sale of the Units,
the fulfillment of the terms of this Agreement and the Notes, and the
consummation of the transactions contemplated hereby will not conflict with or
constitute a violation of (i) the charter, by-laws or other organizational
documents of the Company or (ii) assuming the correctness of the representations
and warranties of the Investors set forth herein, any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration
panel or authority applicable to the Company or its properties, except in the
case of clause (ii) for any such conflicts, violations or defaults which do not
have or would be reasonably likely to result in a Material Adverse
Effect.

     

    5.           Miscellaneous.

     

    5.1           Survival of
Warranties.  The warranties, representations and covenants of
the Company and Investors contained in or made pursuant to this Agreement, the
Notes or any other instrument or document delivered in connection herewith or
therewith, shall survive the execution and delivery hereof or
thereof.

     

    5.2           Successors and
Assigns.  The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of, and be enforceable by, the respective
successors and assigns of the parties hereto.  This Agreement shall
not run to the benefit of or be enforceable by any person other than a party to
this Agreement and its successors and assigns.

     

    5.3           Governing Law; Jurisdiction; Jury
Trial.  This Agreement shall be governed by and construed under
the internal laws of the State of Delaware without regard to the principles of
conflicts of law thereof.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding arising under or relating to this Agreement (a
“Proceeding”) by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any Proceeding.  If either
party shall commence a Proceeding to enforce any provisions of this Agreement,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its reasonable attorney’s fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such
Proceeding.  Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City and County of San Diego (the
“Courts”).  Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any such Court, or that such Proceeding has been commenced in an improper or
inconvenient forum.

     

    
      
        
        

      

      
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    5.4           Counterparts.  This
Agreement may be executed in two or more counterparts (facsimile or otherwise),
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

     

    5.5           Titles and
Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

     

    5.6           Notices.  All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed effectively given:  (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient; if not, then on the next business day, (iii) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.  All communications shall be sent to
the party at the address set forth on the Schedule attached hereto (or at such
other addresses as shall be specified by notice given in accordance with this
Section 5.6).

     

    
      5.7           Amendments and
Waivers.

       

      5.8          This
Agreement and the Notes issued pursuant to this Agreement may be amended and any
provision hereof or thereof may be waived as to all Investors in the Offering
only with the written consent of the Company and the holders of a majority of
the aggregate outstanding principal amount of the Notes then outstanding and if
no principal is then outstanding under the Notes, a majority of the Shares
issued pursuant to the Offering (a “Majority Interest”).  The
Investors hereby expressly agree that, only with the written consent of the
holders of a Majority Interest may any Investor proceed to protect and enforce
such Investor’s rights under the Notes, by suit in equity, action at law and/or
other appropriate proceeding, either for specific performance of any covenant,
provision or condition contained therein, or in aid of the exercise of any power
granted thereunder.

       

      
        
          
          

        

        
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    5.9           Severability.  If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

     

    5.10          Entire
Agreement.  This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations, or
covenants except as specifically set forth herein or therein.

     

    5.11          Obligations of Investors
Several and Not Joint.  The obligations of each Investor
hereunder are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under any Agreement.  Nothing
contained herein, and no action taken by any Investor hereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated hereby; provided that such obligations or the
transactions contemplated hereby may be modified, amended or waived in
accordance with Section 5.7 of this Agreement.  Each Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement (provided, that such rights
may be modified, amended or waived in accordance with Section 5.7), and it shall
not be necessary for any other Investor to be joined as an additional party in
any proceeding for such purpose.

     

    

     

    [Remainder
of Page Intentionally Left Blank]

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the dates set
forth below. This Agreement shall be effective upon the countersignature and
acceptance by the Company.

     

    
      
        	 
      	
                JAVO
      BEVERAGE COMPANY, INC.

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 

                
      
	 
      	 
      	
                Cody
      C. Ashwell

              
	 
      	 
      	
                Chairman
      and Chief Executive Officer

              
	 	 	 
	 
      	
                Date:

              	 

                
    

      

       

      
        	 
      	
                Address:

              	
                1311
      Specialty Drive

              
	 
      	 
      	
                Vista,
      CA  92081

              

      

       

      
        	 
      	 
      	 
      
	 
      	
                INVESTOR:

              
	 
      	 
      	 
      
	 
      	
                By:

              	 
      

                
    
	 
      	
                Name:

              	 
      

                
    
	 
      	
                Title:

              	 
      

                
    
	 
      	
                Date:

              	 
      

                
    
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                CO-INVESTOR:

              
	 
      	 
      	 
      
	 
      	
                By:

              	 
      

                
    
	 
      	
                Name:

              	 
      

                
    
	 
      	
                Title:

              	 
      

                
    
	 
      	
                Date:

              	 
      

                
    
	 
      	 
      	 
      

      

    

     

    
 

    [Signature
Page to Unit Purchase Agreement]

    
      
         

      

      
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    SCHEDULE
I

     

    INVESTOR
SCHEDULE

     

    

    
      	
              Contact
      Name

            	
               

              
                
      

            	 
	 
      	 
      	 
	
              SSN
      or Tax ID

            	
               

              
                
      

            	 
	 
      	 
      	 
	
              Address

            	
               

              
                
      

            	 
	
              (no
      P.O. Boxes please)

            	
               

              
                
      

            	 
	 
      	
               

              
                
      

            	 
	 
      	 
      	 
	
              Contact
      Numbers

            	
               

              
                
      

            	 
      

               (office/home)

            
	 
      	
               

              
                
      

            	 
      

               (mobile)

            
	 
      	
               

              
                
      

            	 
      

               (fax)

            
	 
      	 

              
    	 
      

               (email)

            
	 
      	 
      	 
	
              Number
      of Units Purchased

            	
               

              
                
      ($100,000 per
      unit)

            	
               

            

    

    

    Please
enter the name as you would like it to appear on your stock certificate and
note.

     

    
 

    
      
        

      

    
      
 

    

    
      
         

      

      
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      EXHIBIT
A

       

      FORM
OF PROMISSORY NOTE

    

     

    

    

    
      

      THIS
SENIOR SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THIS MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

      

      THE
INDEBTEDNESS EVIDENCED BY THIS SENIOR SUBORDINATED NOTE IS SUBORDINATED TO
THE PRIOR PAYMENT AND SATISFACTION OF ALL SENIOR DEBT, EXISTING PROMISSORY
NOTES AND CERTAIN OTHER PERMITTED INDEBTEDNESS AS DESCRIBED MORE FULLY IN
THE SECURITIES PURCHASE AGREEMENT DATED [DECEMBER __, 2008,] AS THE
SAME MAY BE AMENDED, MODIFIED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME TO THE
EXTENT, AND IN THE MANNER PROVIDED THEREIN.

      

      

      JAVO
BEVERAGE COMPANY, INC.

      _______________

      

      SENIOR
SUBORDINATED 10% NOTE

      

      
        	
                [$__________]

              	
                [_________ ___, ______] (the
      “Date of Issuance”)

              

      

      

      

      FOR VALUE
RECEIVED, Javo Beverage Company, Inc., a Delaware corporation (the “Company”), hereby
promises to pay to the order of [NAME OF INVESTOR] (the “Investor”) at such
place as such holder hereof shall designate, the principal amount of [AMOUNT OF NOTE] [($AMOUNT)]
(the “Principal
Amount”), together with simple interest on the principal balance from
time to time outstanding, at the rate of ten percent (10%) per annum,
commencing on the date hereof.  All accrued interest hereunder shall
be payable in arrears on the first day of the succeeding calendar quarter with
the first such payment due on April 1, 2009, and, together with all other
accrued and unpaid interest, on the date the final principal installment under
this Senior Subordinated Note becomes due and payable in full (whether by
acceleration or otherwise).  Interest shall be calculated on the basis
of a 365-day year for the actual number of days elapsed.  Except as
otherwise provided herein, the entire outstanding principal balance of this
Note, and all interest accrued thereon, shall be paid in full on January 1,
2017, (the “Maturity
Date”). Principal shall be payable in nineteen (19) consecutive quarterly
installments of [AMOUNT OF EACH INSTALLMENT][$INSTALLAMOUNT] beginning on April
1, 2012, and continuing thereafter on the first day of each calendar quarter,
together with a twentieth (20th)
payment on the Maturity Date, in an amount equal to all sums remaining unpaid
under this Note.  Whenever any amount expressed to be due by the terms
of this Note is due on any day that is not a Business Day, the same shall
instead be due on the next succeeding day that is a Business Day.  For
purposes of this Note, “Business Day” shall
mean any day on which commercial banks in California are required to be open for
business.

      

      

      
        
          
             

          

          
            A-1

            
              

            

          

          
             

          

        

      

      

      Payments
of principal and interest will be made by check or wire transfer in immediately
available United States funds sent to the holder at the address furnished to the
Company for that purpose.

      

      This
Senior Subordinated Note is one of a series of Senior Subordinated Notes of like
tenor that are being issued by the Company in accordance with the Company’s
confidential private placement memorandum dated December 9, 2008, (each a “Senior Subordinated
Note” and together, the “Senior Subordinated
Notes”) each pursuant to the terms and conditions of the related
securities purchase agreement (the “SPA” and together
with this Senior Subordinated Note, the “Note
Documents”).  This Senior Subordinated Note will be registered
on the books of the Company or its agent as to principal and
interest.  Any transfer of this Senior Subordinated Note will be
effected only by surrender of this Senior Subordinated Note to the Company and
reissuance of a new note to the transferee in accordance with the terms
herein.  For purposes hereof, “Majority Note
Holders” means the holders of a majority in interest of the principal of
the Senior Subordinated Notes then outstanding.

      

      
        	
                 
      

              	
                1.

              	
                Prepayment.  This
      Senior Subordinated Note may be prepaid in whole or in part at any time
      prior to the Maturity Date without penalty or
  premium.

              

      

      

      
        	
                 
      

              	
                2.

              	
                Transfer and
      Exchange.  The holder of this Senior Subordinated Note
      may, prior to maturity thereof, surrender such Senior Subordinated Note at
      the principal office of the Company for transfer or
      exchange.  Within a reasonable time after notice to the Company
      from such holder of its intention to make such exchange and without
      expense to such holder, except for any transfer or similar tax which may
      be imposed on the transfer or exchange, the Company shall issue in
      exchange therefor another note or notes (each, a “Transferee
      Note”) for the same aggregate principal amount as the unpaid
      principal amount of the Senior Subordinated Note so surrendered, having
      the same maturity and rate of interest, containing the same provisions and
      subject to the same terms and conditions as the Senior Subordinated Note
      so surrendered.  Each Transferee Note shall be made payable to
      such person or persons, or transferees, as the holder of such surrendered
      Senior Subordinated Note may designate, and such transfer or exchange
      shall be made in such a manner that no gain or loss of principal or
      interest shall result therefrom.  The Company may elect not to
      permit a transfer of the Senior Subordinated Note if it has not obtained
      satisfactory assurance that such transfer: (a) is exempt from the
      registration requirements of, or covered by an effective registration
      statement under, the Securities Act of 1933, as amended (the “Securities
      Act”), and the rules and regulations thereunder, and (b) is in
      compliance with all applicable state securities laws, including without
      limitation receipt of an opinion of counsel for the Investor (or other
      holder, as the case may be), which opinion shall be satisfactory to the
      Company.

              

      

      

      
        	
                 
      

              	
                3.

              	
                New
      Note.  Upon receipt of evidence reasonably satisfactory
      to the Company of the loss, theft, destruction or mutilation of this
      Senior Subordinated Note, the Company will issue a new Senior Subordinated
      Note, of like tenor and amount and dated the date to which interest has
      been paid, in lieu of such lost, stolen, destroyed or mutilated Senior
      Subordinated Note; provided that
      the Investor (or other holder, as the case may be) agrees to indemnify and
      hold harmless the Company in respect of any such lost, stolen, destroyed
      or mutilated Senior Subordinated
Note.

              

      

      

      

      
        
          
             

          

          
            A-2

            
              

            

          

          
             

          

        

      

      

      
        	
                 
      

              	
                4.

              	
                Right or
      Remedy.  A forbearance of any right or remedy under this
      Senior Subordinated Note on any occasion shall not be a bar to exercise of
      the same right or remedy on any subsequent occasion or of any other right
      or remedy at any time.

              

      

      

      
        	
                 
      

              	
                5.

              	
                Senior Subordinated
      Notes Subordinate to Senior Indebtedness.  The
      obligations represented by this Senior Subordinated Notes and the payment
      of the principal of and interest on the Senior Subordinated Notes are
      hereby expressly made subordinate and subject to Existing Promissory
      Notes, capital leases, Senior Debt and other customary permitted
      indebtedness; provided that
      regularly scheduled payments of principal and interest hereunder shall be
      permitted absent a default under any such senior
    obligation.

              

      

      

      Senior
Debt means (i) an unsecured credit facility or a series of related credit
facilities or other unsecured financing entered into following the issuance of
the Senior Subordinated Notes in the minimum original principal amount
(including commitments to lend, whether or not funded) of $500,000 or more that
by its terms is senior in payment to the Senior Subordinated Notes and (ii) a
secured credit facility or a series of related secured credit facilities entered
into prior to or following the issuance of the Senior Subordinated Notes that by
its terms is senior in payment to the Senior Subordinated Notes and that, in
each case, is incurred in connection with any (a) capital expenditures and
related expenses, including without limitation those relating to the purchase
and installation of beverage dispensing equipment or plant infrastructure, (b)
refinancing of indebtedness, (c) revolving line of credit or (d) strategic
acquisition or transaction approved by the Company’s board of
directors.

      

      Existing
Promissory Notes means those certain five-year promissory notes that were
entered into by the Company from 2002 to 2005 pursuant to private placement
offerings and that have currently outstanding principal that does not exceed
$400,000 in the aggregate.

      

      
        	
                 
      

              	
                6.

              	
                Notice.  Any
      notice required or permitted under this Senior Subordinated Note shall be
      in writing (including email or telecopy communications) and shall be
      deemed to have been given on the date of delivery, if personally delivered
      to the party to whom notice is to be given, or on the fifth Business Day
      after mailing, if mailed to the party to whom notice is to be given, by
      certified mail, return receipt requested, postage prepaid or when
      delivered via confirmed email or telecopy, and addressed as
      follows:

              

      

      

      
        
          
             

          

          
            A-3

            
              

            

          

          
             

          

        

      

      

      

      
        	
                 
      

              	
                if
      to the Company, at

              

      

      

      
        	
                 
      

              	
                Javo
      Beverage Company, Inc.

              

      

      
        	
                 
      

              	
                Attn:  William
      Marshall

              

      

      
        	
                 
      

              	
                1311
      Specialty Drive

              

      

      
        	
                 
      

              	
                Vista,
      CA 92081

              

      

      
        	
                 
      

              	
                Fax:
      (760) 597-9793

              

      

      

      if to the
holder, at the most recent address provided to the Company by the holder for
such purpose; or, in each case, to the most recent address, specified by written
notice, given to the sender pursuant to this paragraph.

      

      
        	
                 
      

              	
                7.

              	
                Highest Lawful
      Rate.  Anything herein to the contrary notwithstanding,
      if during any period for which interest is computed hereunder, the amount
      of interest computed on the basis provided for in this Senior Subordinated
      Note, together with all fees, charges and other payments or rights which
      are treated as interest under applicable law, as provided for herein or in
      any other document executed in connection herewith, would exceed the
      amount of such interest computed on the basis of the Highest Lawful Rate
      (as defined below), the Company shall not be obligated to pay, and the
      Investor shall not be entitled to charge, collect, receive, reserve or
      take, interest in excess of the Highest Lawful Rate, and during any such
      period the interest payable hereunder shall be computed on the basis of
      the Highest Lawful Rate.  “Highest Lawful
      Rate” means the maximum non-usurious rate of interest, as in effect
      from time to time, which may be charged, contracted for, reserved,
      received or collected by the Investor in connection with this Senior
      Subordinated Note under applicable law.  In accordance with this
      Section 7, any amounts received in excess of the Highest Lawful Rate shall
      be applied towards the prepayment of principal then
      outstanding.

              

      

      

      
        	
                 
      

              	
                8.

              	
                Entire Agreement;
      Waiver; Amendment.  The Note Documents constitute the
      full and entire understanding and agreement between the parties with
      regard to the subjects hereof.  The Company’s sales of the
      Senior Subordinated Notes to each of the Investors are separate
      sales.  Nonetheless, the Senior Subordinated Notes may be
      amended and the observance of any term of the Senior Subordinated Notes
      may be waived (either generally or in a particular instance and either
      retroactively or prospectively), with the written consent of the Company
      and the Majority Note Holders.  Any waiver or amendment effected
      in accordance with this Section 8 shall be binding upon any holder of any
      Senior Subordinated Note.

              

      

      

      
        	
                 
      

              	
                9.

              	
                Successors and
      Assigns.  This Senior Subordinated Note applies to,
      inures to the benefit of, and binds the successors and assigns of the
      parties hereto; provided that
      an attempted transfer of this Senior Subordinated Note by any holder not
      in compliance with Section 2 herein shall be null and
  void.

              

      

      

      
        	
                 
      

              	
                10.

              	
                Governing
      Law.  This Senior Subordinated Note shall be governed by
      and construed in accordance with the internal laws of the State of
      California.

              

      

      

      

      
        
          
             

          

          
            A-4

            
              

            

          

          
             

          

        

      

      

      
        	
                 
      

              	
                11.

              	
                Severability.  In
      the event any one or more of the provisions of this Senior Subordinated
      Note shall for any reason be held to be invalid, illegal or unenforceable,
      in whole or in part or in any respect, or in the event that any one or
      more of the provisions of this Senior Subordinated Note operate or would
      prospectively operate to invalidate this Senior Subordinated Note, then
      and in any such event, such provision(s) only shall be deemed null and
      void and shall not affect any other provision of this Senior Subordinated
      Note and the remaining provisions of this Senior Subordinated Note shall
      remain operative and in full force and effect and in no way shall be
      affected, prejudiced, or disturbed
thereby.

              

      

      

      IN
WITNESS WHEREOF, the undersigned have caused this instrument to be executed by
its duly authorized officers as of the date first above written.

      

      
        	 
      	
                JAVO
      BEVERAGE COMPANY, INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	 
      

                
    
	 
      	
                Name:

              	 
      

                
    
	 
      	
                Title:

              	 
      

                
    

      

      

      

       

       

      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

    

    ANNEX A

     

    DEFINITION
OF “ACCREDITED INVESTOR”

     

    Rule
501.                      Definitions and Terms Used
in Regulation D.

     

    (a)           Accredited
Investor.  “Accredited investor” shall mean any person who
comes within any of the following categories, or who the issuer reasonably
believes comes within any of the following categories, at the time of the sale
of the securities to that person:

     

    
      	
              (1)

            	
              Any
      bank as defined in section 3(a)(2) of the Act or any savings and loan
      association or other institution as defined in Section 3(a)(5)(A) of the
      Act whether acting in its individual or fiduciary capacity; any broker
      dealer registered pursuant to Section 15 of the Securities Exchange Act of
      1934; any insurance company as defined in Section 2(13) of the Act; any
      investment company registered under the Investment Company Act of 1940 or
      a business development company as defined in Section 2(a)(48) of that Act;
      any Small Business Investment Company licensed by the U.S. Small Business
      Administration under Section 301(c) or (d) of the Small Business
      Investment Act of 1958; any plan established and maintained by a state,
      its political subdivisions, or any agency or instrumentality of a state or
      its political subdivisions, for the benefit of its employees, if such plan
      has total assets in excess of $5,000,000; any employee benefit plan within
      the meaning of the Employee Retirement Income Security Act of 1974, if the
      investment decision is made by a plan fiduciary, as defined in Section
      3(21) of such Act, which is either a bank, savings and loan association,
      insurance company, or registered investment adviser, or if the employee
      benefit plan has total assets in excess of $5,000,000; or, if a
      self-directed plan, with investment decisions made solely by persons that
      are accredited investors;

            

    

     

    
      	
              (2)

            	
              Any
      private business development company as defined in Section 202(a)(22) of
      the Investment Advisers Act of
1940;

            

    

     

    
      	
              (3)

            	
              Any
      organization described in Section 501(c)(3) of the Internal Revenue Code,
      corporation, Massachusetts or similar business trust, or partnership, not
      formed for the specific purpose of acquiring the securities offered, with
      total assets in excess of
$5,000,000;

            

    

     

    
      	
              (4)

            	
              Any
      director, executive officer, or general partner of the issuer of the
      securities being offered or sold, or any director, executive officer, or
      general partner of a general partner of that
  issuer;

            

    

     

    
      	
              (5)

            	
              Any
      natural person whose individual net worth, or joint net worth with that
      person’s spouse, at the time of his purchase exceeds
      $1,000,000;

            

    

     

    
      	
              (6)

            	
              Any
      natural person who had an individual income in excess of $200,000 in each
      of the two most recent years or joint income with that person’s spouse in
      excess of $300,000 in each of those years and has a reasonable expectation
      of reaching the same income level in the current
  year;

            

    

     

    
      	
              (7)

            	
              Any
      trust with total assets in excess of $5,000,000, not formed for the
      specific purpose of acquiring the securities offered, whose purchase is
      directed by a sophisticated person as described in Rule 506(b)(2)(ii);
      and

            

    

     

    
      	
              (8)

            	
              Any
      entity in which all of the equity owners are accredited
      investors.

            

    

     

     

     

    Annex
A-1EXHIBIT 10.1.3

 

THE FEDERAL HOME LOAN BANK OF BOSTON

PENSION BENEFIT EQUALIZATION PLAN

(effective January 1, 2009)

 

Federal Home
Loan Bank of Boston (the “Bank”) adopted the Federal Home Loan Bank of Boston
Pension Benefit Equalization Plan (the “Plan”), as a component of the Federal
Home Loan Bank of Boston Benefit Equalization Plan, effective January 1,
1993.  The Plan is herein amended and
restated in order to comply with Code Section 409A, as enacted by the
American Jobs Creation Act of 2004 and applicable regulations thereunder.  This amendment and restatement shall be
effective January 1, 2009; provided, however, that any provision required
to be effective on and after January 1, 2005 in order for the Plan to
comply with Code Section 409A shall become effective as of January 1,
2005 (or such later date as shall be permitted under applicable Code Section 409A
transition rules); and provided further, that if the application of any amended
or restated provision below to a Member’s Grandfathered Supplemental Benefit
(as defined below) would constitute a “material modification” for purposes of
Treasury Regulation Section 1.409A-6(a)(4), the corresponding provision of
the Prior Plan shall apply in lieu of such amended or restated provision.

 

The Plan is
established and maintained by the Bank in order to provide designated Eligible
Executives with the benefits which would have been provided under the Pentegra
Defined Benefit Plan for Financial Institutions (the “Qualified Plan”) if (a) their
benefits under the Qualified Plan were not limited by certain limitations
imposed by the Internal Revenue Code applicable to the Qualified Plan; (b) “Salary”
as defined in the Qualified Plan took into account amounts paid under the
Bank’s incentive compensation plan(s) and elective deferrals to the
Federal Home Loan Bank of Boston Thrift Benefit Equalization Plan; and (c) certain
benefit adjustments were provided to Executive Officers as described herein.

 

The Plan is a
governmental plan under Section 4(b) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), and is therefore exempt from
coverage under ERISA.  The Plan is
unfunded and maintained primarily for the purpose of providing deferred
compensation to a select group of management or highly compensated employees,
and is not intended to be qualified under Section 401(a) of the
Internal Revenue Code.

 

SECTION 1 - DEFINITIONS

 

Each word used
herein not defined below that begins with a capital letter and is defined in
the Qualified Plan shall have the same definition as the definition given to
that word in the Qualified Plan. 
Wherever used herein, the following terms shall have the meanings
hereinafter set forth:

 

1.1           “Administrator”
means the Committee or such person or persons as may be appointed by the
Committee to be responsible for those functions assigned to the Administrator
under the Plan.

 

1.2           “Affiliate”
means any entity that is a member of a “controlled group” of corporations with
the Bank under Code Section 414(b) or a trade or business under
common control with the Bank under Code Section 414(c); provided, however,
that in applying Code

 

 

Sections 1563(a)(1), (2) and
(3) for purposes of Code Section 414(b), the language “at least 50
percent” will be used instead of “at least 80 percent” each place it appears,
and in applying Treasury Regulation Section 1.414(c)-2 for purposes of
Code Section 414(c), the language “at least 50 percent” will be used
instead of “at least 80 percent” each place it appears.  In addition, to the extent that the Administrator
determines that legitimate business criteria exist to use a reduced ownership
percentage to determine whether an entity is an Affiliate for purposes of
determining whether a Termination of Employment has occurred, the Administrator
may designate an entity that would meet the definition of “Affiliate”
substituting 20 percent in place of 50 percent in the preceding sentence as an
Affiliate in Appendix A hereto.  Such
designation shall be made by December 31, 2008 or, if later, at the time a
20 percent or more ownership interest in such entity is acquired.

 

1.3           “Bank” means
the Federal Home Loan Bank of Boston.

 

1.4           “Beneficiary”
means the person, persons or trust designated by a Member as direct or
contingent beneficiary in the manner prescribed by the Administrator.  The Beneficiary of a Member who has not
effectively designated a beneficiary shall be his or her estate.

 

1.5           “Board of Directors”
means the Board of Directors of the Bank.

 

1.6           “Code” means
the Internal Revenue Code of 1986, as amended from time to time, or any
successor thereto.

 

1.7           “Code Limitations”
means (a) the cap on compensation taken into account by the Qualified Plan
under Code Section 401(a)(17); and (b) the overall limitation on
benefits imposed by Code Section 415(b), as such provisions may be amended
from time to time, and any similar successor provisions of federal tax law.

 

1.8           “Committee”
means the Personnel Committee of the Board of Directors, which is authorized to
perform the functions described in Article V.

 

1.9           “Disability”
means that the Member (a) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months; (b) is, by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than 3 months under an accident and health plan covering employees of the Bank;
or (c) has been determined to be totally disabled by the Social Security
Administration.  Notwithstanding the
foregoing, 

 

2

 

whether a Member has incurred a
Disability with respect to his or her Grandfathered Supplemental Benefit shall
be determined under the provisions of the Prior Plan.

 

1.10         “Effective Date”
means January 1, 2009.  The Plan was
initially effective January 1, 1993 and was restated effective January 1,
1997.  Any provision of this amendment
and restatement required to be effective on and after January 1, 2005 in
order for the Plan to comply with Code Section 409A shall become effective
as of January 1, 2005 (or such later date up to January 1, 2008 as
shall be permitted under applicable Code Section 409A transition rules).

 

1.11         “Eligible Executive”
or “Executive” means an employee of the
Bank who is a corporate officer and (a) is eligible to participate in the
Thrift BEP, or (b) has been selected to be an Eligible Executive by the
Committee.

 

1.12         “Executive Officer”
means an Eligible Executive who is designated as an Executive Officer by the
Board of Directors or the Committee.

 

1.13         “Grandfathered Supplemental
Benefit” means, for any Member in the Plan on or before December 31,
2004, the present value of the amount to which the Member would have been
entitled under the Plan if he or she had voluntarily terminated service without
cause on December 31, 2004 (or his or her earlier termination of
employment), and received a payment of the benefits available from the Plan on
the earliest possible date allowed under the Plan in the form with the maximum
value.  Notwithstanding the foregoing,
for any subsequent Plan Year, the Grandfathered Supplemental Benefit may
increase to equal the present value of the benefit the Member actually becomes
entitled to, in the form and at the time actually paid, determined under the
terms of the Plan (including applicable Code limits), as in effect on October 3,
2004, without regard to any further services rendered by the service provider
after December 31, 2004, or any other events affecting the amount of or
the entitlement to benefits (other than the Member’s election with respect to
the time or form of an available benefit). 
For purposes of calculating the present value of the Grandfathered
Supplemental Benefit, reasonable actuarial assumptions and methods must be used.  The Grandfathered Supplemental Benefit shall
be calculated in accordance with the rules and regulations promulgated
under Code Section 409A in order to treat the greatest proportion of
accrued benefit possible as not subject to Section 409A because it was
vested and accrued prior to January 1, 2005.

 

1.14         “Incentive Compensation”
means annual bonus under the Bank’s Executive Incentive Plan and, if
applicable, any long-term incentive compensation payable to a Member under the
Bank’s incentive compensation plan(s).

 

1.15         “Member”
means a participant in this Plan, unless it is clear from the context that
participation in the Qualified Plan is referenced.

 

3

 

1.16         “Non-Grandfathered
Supplemental Benefit” means the amount of the Member’s accrued
benefit under the Plan, other than his or her Grandfathered Supplemental
Benefit, if any.

 

1.17         “Pension Commencement Date”
means the first day of the first period for which a Supplemental Benefit is
paid as an annuity or lump sum.  The
Pension Commencement Date is determined separately for Grandfathered and
Non-Grandfathered Supplemental Benefits.

 

1.18         “Plan” means
The Federal Home Loan Bank of Boston Pension Benefit Equalization Plan, as set
forth herein or as it may be amended or restated from time to time.

 

1.19         “Plan Year”
means the calendar year.

 

1.20         “Prior Plan”
means the Plan as in effect on October 3, 2004.

 

1.21         “Qualified Plan”
means the Pentegra Defined Benefit Plan for Financial Institutions, as from
time to time amended.  Any reference to a
section of the Qualified Plan herein shall be deemed to refer to any successor
provision of the Qualified Plan which may govern the subject matter of the
referenced section in the future.

 

1.22         “Qualified Plan Retirement
Benefit” means the benefit payable to a Member pursuant to the
Qualified Plan.

 

1.23         “Qualified Plan Survivor
Benefit” means the death benefit payable under the Qualified
Plan upon the death of a Member prior to his or her Pension Commencement Date,
including (if applicable) any “Active Service Death Benefit” (as described in Article V,
Section 4, of the Qualified Plan).

 

1.24         “Supplemental Benefit”
means a Supplemental Retirement Benefit or Supplemental Survivor Benefit
payable under the terms of the Plan.

 

1.25         “Supplemental Retirement
Benefit” means the benefit payable to a Plan Member pursuant to
the Plan.

 

1.26         “Supplemental Survivor
Benefit” means the benefit payable under the Plan with respect
to the death of a Member prior to the Pension Commencement Date.

 

4

 

1.27         “Thrift BEP”
means the Federal Home Loan Bank of Boston Thrift Benefit Equalization Plan, as
it may be amended or restated from time to time.

 

1.28         “Termination of Employment”
means the severing of employment with the Bank and any Affiliates, voluntarily
or involuntarily, for any reason.  A
Termination of Employment will be deemed to have occurred if the facts and
circumstances indicate that the Bank and the Member reasonably anticipate that no
further services will be performed after a certain date or that the level of bona fide services the Member will perform for the Bank and
its Affiliates after such date (whether as an employee or as an independent
contractor) will permanently decrease to no more than 20% of the average level
of bona fide services performed (whether as
an employee or an independent contractor) over the immediately preceding
36-month period (or the full period of services to the employer if the Member
has been providing services to the Bank and its Affiliates less than 36
months).  A Member will not be deemed to
have incurred a Termination of Employment while he or she is on military leave,
sick leave, or other bona fide
leave of absence (such as temporary employment by the government) if the period
of such leave does not exceed six months or such longer period as the Member’s
right to reemployment with the Bank is provided either by statute or by
contract.  For this purpose, a leave of
absence is bona fide only if there is a reasonable expectation that the
Member will return to employment at the conclusion of the leave.  If the period of leave exceeds six months and
the Member’s right to reemployment is not provided either by statute or by
contract, the Termination of Employment will be deemed to occur on the first
date immediately following such six-month period.  Whether a Member incurs a Termination of
Employment will be determined in accordance with the requirements of Code Section 409A.

 

Words in the
masculine gender shall include the feminine and the singular shall include the
plural, and vice versa, unless qualified by the context.  Any headings used herein are included for
ease of reference only and are not to be construed so as to alter the terms
hereof.

 

SECTION 2 - ELIGIBILITY AND PARTICIPATION

 

2.1           Participation.  Each Member of the Plan on December 31,
2007 will continue as a Member on the effective date of the amendment and
restatement of this Plan and thereafter to the extent eligible.  Each other Eligible Executive who is a
participant in the Qualified Plan shall become a Member on the earlier of (a) the
effective date of the Eligible Executive’s election to participate in the
Thrift BEP or January 1, 2008, if later; or (b) the effective date as
of which he or she is designated as a Member in the Plan by the Committee.  Within thirty (30) days of becoming a Member
(or a participant in any similar non-account balance, non-qualified deferred
compensation plan maintained by the Bank), the Member shall file an election
with the Administrator designating how his or her Supplemental Benefit shall be
paid.  If an Eligible Executive became a
Member under clause (a) above and is subsequently designated as eligible
for enhanced benefits under clause (b) above, the distribution election
made in connection with his or her initial participation shall continue to
apply.  The Surviving Spouse of a Member 

 

5

 

described above who dies prior
to the Member’s Pension Commencement Date shall be eligible to receive a
Supplemental Survivor Benefit, as set forth below.

 

2.2           Elections under
Section 409A Transition Rules.  Pursuant to Internal Revenue Service (“IRS”)
Notice 2005-1, Q&A-19(c), as extended by Notice of Proposed Rulemaking
REG-158080-04 and IRS Notice 2007—86, a Member who (a) has not incurred a
Termination of Employment or (b) has incurred a Termination of Employment
but has neither entered pay status under the Plan nor had an annuity purchased
in connection with his or her benefits under the Plan, may, in 2008, modify or
make a new election regarding distribution of his or her Non-Grandfathered
Supplemental Benefit at such time and in such form as the Administrator shall
designate; provided, however, that no such distribution election made in 2008
may affect payments that the Member would otherwise receive in 2008 or cause
payments to be made in 2008.  In
addition, pursuant to Internal Revenue Service Notice 2005-1, Q&A-23, as
extended, in the case of a distribution commencing on or before December 31,
2008 (or such later date as shall be permitted by the Administrator consistent
with Code Section 409A and regulations thereunder), an election as to the
time and form of payment of the Member’s benefit under the Qualified Plan shall
govern distribution of the Member’s Non-Grandfathered Supplemental Benefit
under this Plan, to the extent provided under the terms of the Prior Plan.

 

2.3           Cessation of Participation.  An Executive shall cease to be a Member in
the Plan if (a) he or she incurs a Termination of Employment for any reason,
(b) he or she remains in the service of a Bank but ceases to be an
Eligible Executive as described in Section 1.11 due to a change in
employment status, except to the extent that the Committee determines
otherwise, or (c) the Plan is terminated or otherwise amended so that the
Executive ceases to be eligible for participation; provided, however, that such
individual shall continue to be a Member solely with respect to his or her
benefits accrued through the date of such cessation, to the extent that such
benefits are or become vested prior to the Member’s Termination of
Employment.  Such cessation of
participation shall be effective upon the date of the change in status
described in clause (a) or (b) above, or upon the effective date of
an amendment or termination of the Plan described in clause (c) above.

 

2.4           Vesting.  A Member (or his or her Beneficiary, as the
case may be) shall be or become vested in his or her Supplemental Benefit as
and to the same extent that he or she is vested under the terms of the
Qualified Plan.

 

6

 

SECTION 3 - SUPPLEMENTAL RETIREMENT BENEFIT

 

3.1                                 Amount.  The Supplemental Retirement Benefit payable
to a Member on or after his or her Normal Retirement Date shall be a monthly amount
equal to the difference between either (a) or (b) below, as
applicable, minus (c) below, adjusted as determined in accordance with Section 3.2
or 3.3, as applicable, where:

 

(a)                                  in
the case of an Eligible Executive described in clause (a) of Section 1.11
who becomes a Member under clause (a) of Section 2.1 as a result of
participation in the Thrift BEP, the monthly amount of the Qualified Plan
Retirement Benefit to which the Member would have been entitled under the terms
of the Qualified Plan if such benefit were computed by including in the
definition of “Salary” any amounts voluntarily deferred by the Member under the
Thrift BEP; or

 

(b)                                 in
the case of an Eligible Executive described in clause (b) of Section 1.11
who becomes a Member under clause (b) of Section 2.1, the monthly
amount of the Qualified Plan Retirement Benefit to which the Member would have
been entitled under the terms of the Qualified Plan if such benefit were
computed:

 

(i)            including in the
definition of “Salary” any amounts voluntarily deferred by the Member under the
Thrift BEP;

 

(ii)           without regard to
Code Limitations;

 

(iii)          including in the
definition of “Salary” any Incentive Compensation paid during the applicable
Plan Year (determined prior to any deferral under the Thrift BEP);

 

(iv)          by recognizing the
Member’s years of service from his or her initial date of employment with any
employer participating in the Qualified Plan to his or her date of membership
in the Qualified Plan as benefit service under the Qualified Plan; and

 

(v)           solely with respect
to Executive Officers hired by the Bank prior to January 9, 2006 and
appointed as an Executive Officer effective on or prior to January 1,
2008, by applying an increased annual pension accrual rate of two and
three-eighths percent (2.375%); provided, however, that aggregate pension
benefits payable to such Executive Officers (taking into account benefits
determined under this Plan and the Qualified Plan, and from any other defined
benefit pension plan in which the Member participated during any period of
service taken into account in calculating the Member’s benefit hereunder) shall
not exceed a percentage of the Member’s “High-3 Salary” (taking into account
compensation described in clauses (i), (ii) and (iii) above) equal to
sixty-five 

 

7

 

percent (65%)
for Senior Vice Presidents, seventy percent (70%) for Executive Vice Presidents
and eighty percent (80%) for the President;

 

MINUS

 

(c)                                  the
monthly amount of the Qualified Plan Retirement Benefit payable to the Plan
Member under the terms of the Qualified Plan.

 

Notwithstanding the foregoing, the amount of a Member’s Supplemental
Retirement Benefit shall not be less than zero. 
Subject to Section 6.1 and the provisions of Code Section 409A,
the method for calculating a Member’s Non-Grandfathered Supplemental Benefit
may be modified from time to time in an offer letter or employment agreement
approved by the Committee and accepted by the Member, or other writing
specifically approved by the Committee and making specific reference to this
Plan.

 

3.2                                 Adjustment and Payment of Grandfathered
Supplemental Retirement Benefits.  The amount of Grandfathered Supplemental
Retirement Benefit to which a Member may be entitled, if any, shall be determined
under the terms of the Prior Plan, and shall be subject to such adjustments to
reflect the time and method of payment, and any “Active Service Death Benefit”
(as defined in Article V, Section 4 (or successor provision) of the
Qualified Plan), “Retirement Adjustment Payment” (as defined in Article V,
Section 5 (or successor provision) of the Qualified Plan), or “Annual
Increment” (as defined in Article V, Section 6(A) (or successor
provision) of the Qualified Plan) as may apply under the terms of the Prior
Plan and are both earned and vested prior to January 1, 2005.  An ad hoc cost of
living adjustment (referred to as a “Single Purchase Fixed Percentage
Adjustment” as defined in Article V, Section 6(B) (or successor
provision) of the Qualified Plan) applicable under the Qualified Plan shall be
taken into account solely to the extent provided by the Administrator
consistent with Code Section 409A. 
Under Section 3.02(a) of the Prior Plan, if a Member’s
Grandfathered Supplemental Retirement Benefit is not paid in the “Regular Form”
under the Qualified Plan, the benefit payable in an optional form shall be of
equivalent actuarial value to the benefit otherwise payable in the Regular
Form, determined using the same actuarial factors and assumptions then used to
determine actuarial equivalence under the Qualified Plan.  Except as otherwise provided in Section 7.3,
Grandfathered Supplemental Retirement Benefits to which a Member may be
entitled, if any, shall be paid in accordance with the terms of the Prior Plan.  Under Section 3.02(a) of the Prior
Plan, such benefit shall be paid in the same form as elected by the Member
under the Qualified Plan; provided, however, that an election to receive a lump
sum payment 

 

8

 

under the Plan must be filed at
least twelve (12) calendar months prior to the Member’s retirement.

 

3.3           Adjustment of
Non-Grandfathered Supplemental Retirement Benefits.  The amount of Non-Grandfathered Supplemental
Retirement Benefit described in Section 3.1 above shall be calculated
based upon the Member’s Qualified Plan Retirement Benefit determined as of the
earlier of (a) the Member’s actual “Commencement Date” under the Qualified
Plan, or (b) the Member’s Pension Commencement Date under this Plan (including
the Pension Commencement Date of any Grandfathered Supplemental Benefit).  To the extent that the Member’s Commencement
Date under the Qualified Plan is used as the calculation date, the Member’s
Non-Grandfathered Supplemental Retirement Benefit payable upon the Pension
Commencement Date shall be (i) the amount determined under Section 3.1
(including for this purpose any Grandfathered Supplemental Retirement Benefit)
with regard to any early retirement factors applied at such calculation date
under the Qualified Plan, (ii) reduced by any Grandfathered Supplemental
Retirement Benefit (calculated under Section 3.2 assuming payment
commencement as of the same date), (iii) with such resulting
Non-Grandfathered Supplemental Retirement Benefit converted to the Qualified
Plan normal form of benefit commencing at the Member’s Normal Retirement Date
based upon the early retirement factors set forth in the Qualified Plan.  The Member’s resulting Non-Grandfathered
Supplemental Retirement Benefit calculated under the preceding sentence shall
be adjusted as determined by the Administrator through the Pension Commencement
Date to take into account an allocable portion of any Retirement Adjustment
Payment (as defined in Article V, Section 5 (or successor provision) of
the Qualified Plan) or Post-Retirement Supplement (as defined in Article V,
Section 6 (or successor provision) of the Qualified Plan) applicable under
the Qualified Plan between the “Commencement Date” and the Pension Commencement
Date under this Plan.

 

To the extent
that the Member’s Pension Commencement Date under this Plan is used as the
calculation date (i.e., the Pension Commencement
Date under this Plan is prior to the Qualified Plan Commencement Date), the
Member’s Non-Grandfathered Supplemental Retirement Benefit payable upon the
Pension Commencement Date shall be the amount determined under Section 3.1
as though the Member has elected to receive payment of his or her Qualified
Plan benefit as of the same date, reduced by any Grandfathered Supplemental
Retirement Benefit (calculated as described in Section 3.2 assuming
payment commencement as of the same date).

 

The Member’s
Non-Grandfathered Supplemental Retirement Benefit shall be adjusted as provided
under the terms of the Qualified Plan, to the extent applicable, to reflect
commencement of payments prior to the Member’s Normal Retirement Date or
payment in a form of benefit other than a life annuity (as described in Article VII,
Section 1 (or successor provision) of the Qualified Plan, with regard to
“Additional Death Benefits” applicable under Article V, Section 4 (or
successor provision) of the Qualified Plan). 
In determining the amount of any optional form of benefit, the factors
set forth in the Qualified Plan shall apply. 
The Member’s Non-Grandfathered Supplemental Retirement Benefit in pay
status in annuity form shall be further adjusted to reflect any Retirement
Adjustment Payment and/or Annual Increment 

 

9

 

which becomes effective after
the Pension Commencement Date.  A Single
Purchase Fixed Percentage Adjustment after the Pension Commencement Date shall
apply to Non-Grandfathered Supplemental Retirement Benefits in pay status
solely to the extent provided by the Board of Directors consistent with Code Section 409A.  If a Member elects a lump sum distribution
hereunder, no Single Purchase Fixed Percentage Adjustment shall apply.

 

3.4                                 Payment of Non-Grandfathered Supplemental
Retirement Benefits. 
Except as otherwise provided in Section 7.3 or in the last sentence
of Section 2.2, a Member may elect to receive payment of his or her
Non-Grandfathered Supplemental Retirement Benefit in such distribution form as
is then available to the Member under the Qualified Plan upon Termination of
Employment.  An election under this Section 3.4
shall be made in a writing acceptable to the Administrator and filed with the
Administrator within the thirty (30) day period set forth in Section 2.1
or, if later, within the transition election period set forth in Section 2.2.  Notwithstanding the foregoing, if any portion
of the Member’s “High-3 Salary” (or “High-5 Salary, if applicable) that is used
to determine the Member’s Non-Grandfathered Benefit was earned prior to the
date of the Member’s election, such election shall not be effective with
respect to any portion of his or her Non-Grandfathered Supplemental Retirement
Benefit.

 

The Member’s
election may specify a payment commencement date which is no earlier than as
soon as practicable following the later of Termination of Employment or
attainment of age forty-five (45) (except in the case of a Disability
Retirement Benefit described below), and no later than the Member’s Normal
Retirement Date (or his or her actual retirement date, if later).  To the extent permitted by the Administrator
consistent with Code Section 409A and regulations thereunder, a Member may
elect a different available method of distribution with respect to different
events resulting in Termination of Employment (e.g.,
retirement, death or Disability).

 

If a Member
fails to file an election of method of distribution for his or her
Non-Grandfathered Supplemental Retirement Benefit within the time provided in Section 2.1
or 2.2 or the Member’s election is not effective for any reason, he or she shall
be deemed to have elected to have such benefit paid in a single lump sum
payment as soon as practicable after the first day of the month following the
later of the Member’s Termination of Employment or, if later, his or her
attainment of age forty-five (45). 
Notwithstanding the foregoing, the following rules apply to
Non-Grandfathered Supplemental Retirement Benefit distribution elections under
the Plan:

 

(a)                                  If
the Member’s Termination of Employment is due to Disability, the Member shall
be deemed to have elected to have annuity payments commence on the first day of
the month following the Administrator’s determination of such Disability.

 

10

 

(i)            If the Member
ceases to be entitled to a Disability Retirement Benefit under the Qualified
Plan prior to age 45, his or her Non-Grandfathered Supplemental Retirement
Pension shall cease if and when the Member ceases to be eligible for a
Disability Retirement Benefit under the terms of the Qualified Plan and shall
recommence in annuity form (as described above) upon the Member’s attainment of
age forty-five (45), reduced to the Non-Grandfathered Supplemental Retirement
Benefit amount that would otherwise have been payable as of such Pension
Commencement Date.

 

(ii)           If the Member
ceases to be entitled to a Disability Retirement Benefit under the Qualified
Plan at or after age 45, the Member’s Non-Grandfathered Supplemental Retirement
Benefit shall be reduced to the Non-Grandfathered Supplemental Retirement
Benefit amount that would otherwise have been payable to the Member, assuming
that the Member’s Pension Commencement Date is the date of such cessation of
disability.

 

(iii)          If the Member
returns to employment with the Bank upon or after cessation of his or her
disability, any additional benefit that may become payable under the Plan shall
be determined and paid upon the Member’s subsequent Termination of Employment
in accordance with Section 3.5(b) below.

 

(b)                                 If
a Member is reemployed by the Bank while receiving annuity benefits under the
Plan, the Member’s Non-Grandfathered Supplemental Retirement Benefit shall not
be suspended hereunder.  Upon the Member’s
subsequent Termination of Employment, the Member’s Non-Grandfathered
Supplemental Retirement Benefit then in pay status shall be adjusted to reflect
any additional benefit accruals that the Member earns under the terms of the
Plan during his period of reemployment, with such additional benefit accruals
reduced (but not below zero) by the value of any benefit payments made during
the period of reemployment.  Any increase
in Non-Grandfathered Supplemental Retirement Benefit shall be paid in
accordance with the distribution method then in effect for the Member
commencing as soon as practicable after the Member’s subsequent Termination of
Employment.

 

(c)                                  The
entitlement to a life annuity (including any joint and survivor annuity or
annuity with term certain) is treated as the entitlement to a single payment
for purposes of Code Section 409A. 
To the extent permitted under Code Section 409A and permitted by
the Administrator, a Member may change the form of distribution  from one type of life annuity to another type
of life annuity before the Pension Commencement Date, provided that the
annuities are actuarially equivalent applying reasonable actuarial
assumptions.  A payment required to be
made under the Plan upon or as soon as practicable after a designated payment
date shall be deemed to be made upon the date specified if it is made within
the same taxable year of the Member (i.e., the
calendar year) or, if later, by the 15th day of the third month after such designated
payment date, provided that the 

 

11

 

Member is not permitted, directly or indirectly, to designate the
taxable year of payment.

 

3.5                                Change in Distribution Election for
Non-Grandfathered Supplemental Benefits.  To the extent permitted by the Administrator
and consistent with Code Section 409A and regulations thereunder, a Member
may elect to change the method or time of distribution of his or her
Non-Grandfathered Supplemental Retirement Benefit after the initial deferral
election and before the Pension Commencement Date by filing a written request
with the Administrator.  Except in the
case of a transition election permitted under Section 2.2 above, such a
change election shall not take effect until at least twelve months after the
date on which it is made and shall be effective only if (a) the election
is filed with the Administrator before the Member’s Termination of Employment; (b) the
election does not accelerate the timing or payment schedule of any
distribution; (c) the payment commencement date in the change election is
not less than five years after the date the distribution would otherwise have
commenced for the event resulting in Termination of Employment without regard
to such election, and not later than five years after his or her Normal
Retirement Date or Postponed Retirement Date, as applicable; and (d) the
Administrator approves such election.  A
Member’s distribution election shall become irrevocable upon the Member’s
Termination of Employment. 
Notwithstanding the foregoing, a 
Member may not elect a distribution date later than (a) April 1
of the calendar year after the year in which the Member attains age 701⁄2, or (b) five
years after the Member’s Termination of Employment, if later.

 

3.6                                General Conditions of Payment.  All terms and conditions of the Prior Plan
applicable to the payment of Supplemental Retirement Benefits shall govern the
payment of Grandfathered Supplemental Retirement Benefits, including the
suspension of benefits provisions in Section 3.04 of the Prior Plan.  Except as otherwise expressly provided herein
or as required by Code Section 409A, all terms and conditions of the
Qualified Plan applicable to payment of a Qualified Plan Retirement Benefit or
a Qualified Plan Survivor Benefit shall also be applicable to a
Non-Grandfathered Supplemental Benefit payable hereunder.  Any Qualified Plan Retirement Benefit,
Qualified Plan Survivor Benefit or other benefit payable under the Qualified
Plan shall be paid solely in accordance with the terms and conditions of the
Qualified Plan, and nothing in this Plan shall operate or be construed in any
way to modify, amend or affect the terms and provisions of the Qualified Plan.

 

3.7                                Death after Pension Commencement Date of
Supplemental Retirement Benefits.  If a Member dies after the date
the Pension Commencement Date of Supplemental 

 

12

 

Retirement Benefits, the
only death benefit payable under the Plan in respect of such Member shall be
the amount, if any, payable under the form of payment which the Participant had
elected.

 

3.8                                Acceleration of Payment Date.  Notwithstanding the foregoing,  the distribution of Non-Grandfathered
Supplemental Benefits hereunder may be accelerated, with the consent of the
Administrator, under the following circumstances:

 

(a)                                  Compliance with Domestic Relations Order.  To permit payment to an individual other than
the Member as necessary to comply with the provisions of a domestic relations
order (as defined in Code Section 414(p)(1)(B));

 

(b)                                 Conflicts of Interest.  To permit payment as necessary to comply with
the provisions of a Federal government ethics agreement or to avoid violation
of an applicable Federal, state, local or foreign ethics law or conflicts of
interest law;

 

(c)                                  Payment of Employment Taxes.  To permit payment of federal employment taxes
under Code Sections 3101, 3121(a) or 3121(v)(2), or to comply with any
federal tax withholding provisions or corresponding withholding provisions of
applicable state, local, or foreign tax laws as a result of the payment of
federal employment taxes, and to pay the additional income tax at source on
wages attributable to the pyramiding Code Section 3401 wages and taxes; or

 

(d)                                 Tax Event.  Upon a good faith, reasonable determination
by the Administrator, and upon advice of counsel, that the Plan fails to meet
the requirements of Code Section 409A and regulations thereunder.  Such payment may not exceed the amount
required to be included in income as a result of the failure to comply with the
requirements of Code Section 409A.

 

3.9                                Delay of Payments.  A payment of Non-Grandfathered Supplemental
Benefits otherwise required to be made under the terms of the Plan may be
delayed solely to the extent necessary under the following circumstances,
provided that payment is made as soon as possible within the first calendar
year after the reason for delay no longer applies:

 

(a)                                  Payments Subject to the Deduction Limitation.  The Bank reasonably anticipates that such
payment would otherwise violate Code Section 162(m);

 

(b)                                 Violation of Law.  The Administrator reasonably determines that
making the payment will violate Federal securities or other applicable laws; or

 

(c)                                  Other Permitted Event. Upon
such other events and conditions as the Commissioner of Internal Revenue shall
prescribe in generally applicable guidance.

 

13

 

This Section 3.9
shall be applied to similarly-situated Members in a reasonably consistent
basis.

 

SECTION 4
- SUPPLEMENTAL SURVIVOR BENEFIT

 

4.1                                Amount.  If a Member dies prior to his or her Pension
Commencement Date under circumstances in which a Qualified Plan Survivor
Benefit is payable, then a Supplemental Survivor Benefit may be payable to his
or her Beneficiary as hereinafter provided. 
The monthly amount of the Supplemental Survivor Benefit shall be equal
to the difference between either (a) or (b) below, as applicable,
minus (c) below, where:

 

(a)                                  in
the case of an Eligible Executive described in Section 1.11(a) who
becomes a Member under Section 2.1(a) as a result of participation in
the Thrift BEP, the monthly amount of the Qualified Plan Survivor Benefit to
which the Member would have been entitled under the terms of the Qualified Plan
if such benefit were computed by including in the definition of “Salary” any
amounts voluntarily deferred by the Member under the Thrift BEP; or

 

(b)                                 in
the case of an Eligible Executive described in Section 1.11(b) who
becomes a Member under Section 2.1(b), the monthly amount of the Qualified
Plan Survivor Benefit to which the Member would have been entitled under the
terms of the Qualified Plan if such benefit were computed:

 

(i)            including in the definition of
“Salary” any amounts voluntarily deferred by the Member under the Thrift BEP;

 

(ii)           without regard to Code Limitations;

 

(iii)          including in the definition of
“Salary” any Incentive Compensation paid during the applicable Plan Year
(determined prior to any deferral under the Thrift BEP);

 

(iv)          by recognizing the Member’s years of
service from his or her initial date of employment with any employer participating
in the Qualified Plan to his or her date of membership in the Qualified Plan as
benefit service under the Qualified Plan; and

 

(v)           solely with respect to Executive
Officers hired by the Bank prior to January 9, 2006 and appointed as an
Executive Officer effective on or prior to 

 

14

 

January 1,
2008, by applying an increased annual pension accrual rate of two and
three-eighths percent (2.375%); provided, however, that aggregate pension
benefits payable to such Executive Officers (taking into account benefits
determined under this Plan and the Qualified Plan, and from any other defined
benefit pension plan in which the Member participated during any period of
service taken into account in calculating the Member’s benefit hereunder) shall
not exceed a percentage of the Member’s “High-3 Salary” (taking into account
compensation described in clauses (i), (ii) and (iii) above) equal to
sixty-five percent (65%) for Senior Vice Presidents, seventy percent (70%) for
Executive Vice Presidents and eighty percent (80%) for the President;

 

MINUS

 

(c)                                  the
monthly amount of the Qualified Plan Survivor Benefit that is or would be
payable to the Plan Member under the terms of the Qualified Plan, determined
assuming that the Member’s death has occurred prior to his or her actual “Commencement
Date” under the Qualified Plan.

 

Notwithstanding
the foregoing, the amount of a Member’s Supplemental Survivor Benefit shall not
be less than zero.  The amount described
above shall be adjusted as provided in the Qualified Plan to reflect the
identity of the Beneficiary, the form of benefit, and commencement of payments
prior to the Member’s Normal Retirement Date. 
If a Member dies after his or her Pension Commencement Date, the amount of
survivor benefit then payable, if any, shall be determined based upon the
method of distribution of benefits in effect at the time of the Member’s death.

 

4.2                                Adjustment and Payment of Grandfathered
Supplemental Survivor Benefits. 
The amount of Grandfathered Supplemental Retirement Benefit to which a
Member may be entitled, if any, shall be determined and paid under the terms of
the Prior Plan, and shall be subject to adjustment to reflect the time and
method of payment as described in Section 3.2.

 

4.3                                Non-Grandfathered Supplemental Survivor Benefits.  The amount of Non-Grandfathered Supplemental
Survivor Benefit described in Section 4.1 above shall be calculated based
upon the Member’s Qualified Plan Retirement Benefit determined assuming that
the Commencement Date under the Qualified Plan is the same as the Pension
Commencement Date under this Plan (regardless of whether the Member (or his or
her surviving spouse) entered pay status under the Qualified Plan prior to his
or her death or has elected to defer commencement of his or her Qualified Plan
Survivor Benefit to a later Commencement Date), reduced by any Grandfathered
Supplemental Survivor Benefit (calculated under Section 4.2 assuming
payment commencement as of the same date). 
In calculating the amount of the Non-Grandfathered Supplemental Survivor
Benefit under Section 4.1, any Retirement Adjustment Payment,
Post-Retirement Supplement or Single Purchase Fixed Percentage Adjustment under
the Qualified Plan prior to the Pension Commencement Date under this Plan shall
not be taken into account.

 

15

 

The
Member’s Non-Grandfathered Supplemental Survivor Benefit shall be adjusted as
provided under the terms of the Qualified Plan, to the extent applicable, to
reflect commencement of payments prior to the Member’s Normal Retirement Date
or payment in a form of benefit other than a single-life annuity.  In determining the amount of any optional
form of benefit, the factors set forth in the Qualified Plan shall apply.

 

4.4           Payment of Non-Grandfathered Supplemental Survivor
Benefits.  The
Non-Grandfathered Supplemental Survivor Benefit shall be paid to the Member’s
Beneficiary in a single lump sum as soon as practicable after the Member’s
death.

 

4.5                                Other Payment Rules.  Sections 3.6 through 3.9 shall apply to the
payment of Non-Grandfathered Supplemental Survivor Benefits.

 

SECTION 5
- ADMINISTRATION OF THE PLAN

 

5.1                                Administration by the Bank.  The Committee shall be responsible for the
general operation and administration of the Plan and for carrying out the
provisions thereof.  The Committee may
appoint such person or persons as it deems appropriate to perform all or any of
the functions of the Administrator under the terms of the Plan.  To the extent that no such person or persons
are appointed, the Committee shall serve as Administrator.

 

5.2                                General Powers of Administration.  The Committee shall have authority and
discretion to control and manage the operation and administration of the Plan,
including all rights and powers necessary or convenient to the carrying out of
its functions hereunder, whether or not such rights and powers are specifically
enumerated herein.  The Committee may, in
its discretion, delegate authority with regard to the administration of the
Plan to any individual, officer or committee in accordance with Section 5.2(g) below.  Notwithstanding any other provision of the
Plan, if an action or direction of any person to whom authority hereunder has
been delegated conflicts with an action or direction of the Committee, then the
authority of the Committee shall supersede that of the delegate with respect to
such action or direction.

 

Without
limiting the generality of the foregoing, and in addition to the other powers
set forth in this Section 5.2, the Committee or its delegate shall have
the following express authorities:

 

(a)                                  To
construe and interpret the provisions of the Plan; to decide all questions
arising thereunder, including, without limitation, questions of eligibility for
participation, eligibility for benefits, the validity of any election or
designation made under the Plan, and the amount, manner and time of payment of
any benefits hereunder; and 

 

16

 

to make factual determinations necessary or appropriate for such
decisions or determination;

 

(b)                                 To
prescribe procedures to be followed by Members, Beneficiaries or alternate
payees in filing applications for benefits and any other elections,
designations and forms required or permitted under the Plan;

 

(c)                                  To
prepare and distribute information explaining the Plan;

 

(d)                                 To
receive from the Bank and from Members, Beneficiaries and alternate payees such
information as shall be necessary for the proper administration of the Plan;

 

(e)                                  To
furnish the Bank or the Board of Directors, upon request, such reports with
respect to the administration of the Plan as are reasonable and appropriate;

 

(f)                                    To
appoint or employ advisors, including legal and actuarial counsel (who may also
be counsel to the Bank) to render advice with regard to any responsibility of
the Committee under the Plan or to assist in the administration of the Plan;

 

(g)                                 To
designate in writing other persons to carry out a specified part or parts of
its responsibilities hereunder (including this power to designate other persons
to carry out a part of such designated responsibility). Any such person may be
removed by the Committee at any time with or without cause;

 

(h)                                 To
rule on claims, and to determine the validity of domestic relations orders
and comply with such orders; and

 

(i)                                     All
rules, actions, interpretations and decisions of the Committee are conclusive
and binding on all persons, and shall be given the maximum possible deference
allowed by law.

 

5.3                                Rules of the Administrator.  The Administrator may adopt such rules as
it deems necessary, desirable or appropriate. When making a determination or
calculation, the Administrator shall be entitled to rely upon information
furnished by a Member or Beneficiary, the Bank, the legal counsel of the Bank,
or such other person as it deems appropriate, and shall further be entitled to
rely conclusively upon all tables, valuations, certificates, opinions and
reports furnished by any actuary, accountant, controller, counsel or other
person employed or engaged by the Bank with respect to the Plan.

 

5.4                                Claims Procedure.  Any person who believes that he or she is
then entitled to receive a benefit under the Plan may file a claim in writing
with the Administrator.  Except to the
extent the Committee adopts an alternate procedure for the review of claims,
the procedures in this Section 5.4 shall apply.  The Administrator shall, within ninety (90)
days of the receipt of a claim, either allow or deny the claim in writing.  A denial of a claim shall be written in a
manner calculated to be understood by the claimant and shall include: (a) the
specific reason or reasons 

 

17

 

for the denial; (b) specific
references to pertinent Plan provisions on which the denial is based; (c) 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 (d) an explanation of the Plan’s claim
review procedure.  A claimant whose claim
is denied (or his or her duly authorized representative) may, within sixty (60)
days after receipt of denial of the claim: (1) submit a written request
for review to the Committee; (2) review pertinent documents; and (3) submit
issues and comments in writing.  The
Administrator shall notify the claimant of the decision of the Committee on
review within sixty (60) days of receipt of a request.  No legal action may be commenced by a Member
or Beneficiary with respect to a benefit under this Plan without first
exhausting the Plan’s administrative claims procedures, and any legal action
with respect to a claim that has been finally denied must be commenced no later
than one year after the date of the Plan’s final denial of such claim upon appeal.

 

SECTION 6
- AMENDMENT OR TERMINATION

 

6.1                                Amendment or Termination.  The Board of Directors may amend or
terminate, in whole or in part, the Plan without the consent of any Member,
Beneficiary or other person; provided, however, that no amendment or
termination of the Plan shall retroactively impair or otherwise adversely
affect the rights of any Member or Beneficiary to benefits under the Plan which
have accrued prior to the date of such action; and provided further, that an
accrued benefit may be decreased as a result of equivalent increases in the
Member’s Qualified Plan Retirement Benefit due to increases in applicable Code
Limitations.  Notwithstanding the
foregoing, the Board of Directors may amend the Plan as it deems necessary to
comply with applicable law, including Code Section 409A and regulations
thereunder.

 

SECTION 7
- GENERAL PROVISIONS

 

7.1                                Member’s Rights Unsecured.  The right of any Member to receive future
payments under the provisions of the Plan shall be an unsecured claim against
the general assets of the Bank.  The Bank
shall be under no obligation to establish any separate fund, purchase any
annuity contract, or in any other way make any special provision or
specifically earmark any funds for the payment of amounts called for under the
Plan.  If the Bank chooses to establish
such a fund, or purchase such an annuity contract or make any other agreement
to provide for such payments, that fund, contract or arrangement shall remain
part of the Bank’s general assets and no person claiming payments under the
Plan shall have any right, title or interest in or to any such fund, contract
or arrangement.

 

18

 

7.2                                Non-assignability.  None of the benefits, payments, proceeds or
claims of any Member or Beneficiary shall be subject to any claim of any
creditor of any Member or Beneficiary and, in particular, the same shall not be
subject to attachment or garnishment or other legal process by any creditor of
such Member or Beneficiary, nor shall any Member or Beneficiary have any right
to alienate, anticipate, commute, pledge, encumber or assign any of the
benefits or payments or proceeds which he or she may expect to receive,
contingently or otherwise, under the Plan. 
Notwithstanding the foregoing, the Bank shall comply with the terms of a
domestic relations order applicable to a Member’s interest in the Plan,
provided that such order does not require the payment of benefits in a manner
or amount, or at a time, inconsistent with the terms of the Plan.  The Bank shall have no liability to any
Member or Beneficiary to the extent that his or her benefit is reduced in
accordance with the terms of a domestic relations order that the Bank applies
in good faith.  In determining the amount
of any Supplemental Benefit under Section 3.1 or 4.1 of the Plan, the
amount of Qualified Plan Benefit taken into account under Section 3.1(c) or
4.1(c), respectively, shall be determined prior to reduction for any award
under a qualified domestic relations order relating to such Benefit.

 

7.3                                Small Benefits.  If the present value of aggregate
Supplemental Benefit as of the Pension Commencement Date is less than the
dollar limitation on elective deferrals as then in effect under Code Section 402(g),
the Bank shall pay the present value of such benefit to the Member or
Beneficiary, as applicable, in a single lump sum in lieu of any further benefit
payments hereunder.  Present value shall
be calculated as provided in the Qualified Plan.

 

7.4                                Taxes.  The Administrator shall withhold all federal,
state or local taxes that it reasonably believes are required to be withheld
from any payments under the Plan.

 

7.5                                Limitation of Member’s Rights.  Nothing contained in the Plan shall confer
upon any person a right to be employed or to continue in the employ of the
Bank, or interfere in any way with the right of the Bank to terminate the
employment of a Member at any time, with or without cause.

 

7.6                                Receipt and Release.  Any payment to any Participant or Beneficiary
in accordance with the provisions of the Plan shall, to the extent thereof, be
in full satisfaction of all claims against the Bank or the Plan, and the
Administrator may require such Participant or Beneficiary, as a condition
precedent to such payment, to execute a receipt and release to such
effect.  If requested, such receipt and
release shall be executed by the Participant or Beneficiary no later than 90
days after the Participant’s scheduled payment commencement date.  If any Participant or Beneficiary is
determined by the Administrator to be incompetent by reason of physical or
mental disability (including minority) to give a valid receipt and release, the
Administrator may cause the payment or payments becoming due to such person to
be made to another person for his or her benefit without responsibility on the
part of the Administrator or the Bank to follow the application of such funds.

 

7.7                                Unclaimed Benefit.  Each Member shall keep the Company informed
of his or her current address and the current address of his or her spouse.  The Company shall not be 

 

19

 

obligated to search for
the whereabouts of any person.  In the
event any person who is entitled to a benefit from the Plan cannot be located
and such benefit remains unpaid for one year after the date payment was due,
the amount required to pay such benefit shall remain in the rabbi trust (if
applicable) or else retained by the Company; provided, however, that if the
person who is entitled to the benefit is subsequently located, the benefit
shall be restored and paid to such person without provision for interest.

 

7.8                                Governing Law.  The Plan shall be construed, administered,
and governed in all respects under and by the laws of the Commonwealth of
Massachusetts.  If any provision shall be
held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.

 

7.9                                Designation of Beneficiary.  Each Member may file with the Administrator a
written designation of one or more persons as the Beneficiary who shall be
entitled to receive the amount, if any, payable under the Plan upon the Member’s
death.  The Member may, from time to
time, revoke or change his or her Beneficiary designation without the consent
of any prior Beneficiary by filing a new designation with the
Administrator.  The last such designation
received by the Administrator shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless received
by the Administrator prior to the Member’s death, and in no event shall it be
effective as of a date prior to such receipt. 
If the Administrator is in doubt as to the right of any person to
receive such amount, the Administrator may retain such amount, without
liability for any interest thereon, until the rights thereto are determined, or
the Administrator may pay such amount into any court of competent jurisdiction
and such payment shall be a complete discharge of the liability of the Plan and
the Bank therefor.  If no Beneficiary is
designated or no designated Beneficiary survives the Member, payment shall be
made in a single lump sum to the Member’s estate.

 

7.10                          Successorship.  The Plan shall be binding upon and inure to
the benefit of the Bank and its successors and assigns, and the Members, and
the successors, assigns, designees and estates of the Members.  The Plan shall also be binding upon and inure
to the benefit of any successor bank or organization succeeding to
substantially all of the assets and business of the Bank, but nothing in the
Plan shall preclude the Bank from merging or consolidating into or with, or
transferring all or substantially all of its assets to, another bank which
assumes the Plan and all obligations of the Bank hereunder.  The Bank agrees that it will make appropriate
provision for the preservation of Members’ rights under the Plan in any
agreement or plan which it may enter into to effect any such merger,
consolidation, reorganization or transfer of assets.  In such a merger, consolidation,
reorganization, or transfer of assets and assumption of Plan obligations of 

 

20

 

the Bank, the term Bank
shall refer to such other bank and the Plan shall continue in full force and
effect.

 

7.11                          Indemnification.  No Committee member shall be personally
liable by reason of any instrument executed by him or on his behalf, or action
taken by him, in his capacity as a Committee member nor for any mistake of
judgment made in good faith.  The Bank
shall indemnify and hold harmless the Plan and each Committee member and each
employee, officer or director of the Bank or the Plan, to whom any duty, power,
function or action in respect of the Plan may be delegated or assigned, or from
whom any information is requested for Plan purposes, against any cost or
expense (including fees of legal counsel) and liability (including any sum paid
in settlement of a claim or legal action with the approval of the Bank) arising
out of anything done or omitted to be done in connection with the Plan, unless
arising out of such person’s fraud or bad faith.

 

7.12                          Headings and Subheadings.  Headings and subheading in this Plan are
inserted for convenience only and are not to be considered in the construction
of the provisions hereof.

 

IN WITNESS WHEREOF, and pursuant
to adoption of this Plan Document by the Board of Directors of the Bank has
caused this Plan Document to be executed this 30 day of December, 2008 by:

 

 

	
  /s/ Ellen McLaughlin

  	
   

  	
  /s/ Janelle K. Authur

  
	
  Ellen McLaughlin

  	
   

  	
  Janelle K. Authur

  
	
  Senior Vice President and General Counsel

  	
   

  	
  Senior Vice President and Executive

  
	
   

  	
   

  	
  Director of Human Resources

  

 

21

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