Document:

exhibit101.htm

EXHIBIT 10.1

 

 

 

 

PURCHASE AND SALE AGREEMENT

 

 

BY AND BETWEEN

 

 

SWO & ISM, LLC.

 

 

AND

 

 

HEIN OIL CO., INC.

 

 

AND

 

 

HEIN OIL WELL SERVICES, LLC.

 

 

“SELLERS”

 

 

AND

 

FIRST COLUMBIA GOLD CORPORATION

 

“BUYER”

 

 

 

 

 

  

  

  

 

 

 

TABLE OF CONTENTS

 

	  	  	  	  	
Page

	
ARTICLE 1.

	
DEFINITIONS

	  	
1

	  	
1.1

	
Definitions

	  	
1

	
ARTICLE 2.

	
TRANSFER OF THE PROPERTIES

	  	
9

	  	
2.1

	
Sale and Purchase

	  	
9

	
ARTICLE 3.

	
PURCHASE PRICE

	  	
9

	  	
3.1

	
Purchase Price

	  	
9

	  	
3.2

	
Earnest Money

	  	
9

	
ARTICLE 4.

	
DUE DILIGENCE REVIEW

	  	
10

	  	
4.1

	
Review of Records

	  	
10

	  	
4.2

	
Alleged Title Defects

	  	
10

	  	
4.3

	
Environmental Inspection

	  	
11

	  	
4.4

	
Alleged Environmental Conditions

	  	
11

	  	
4.5

	
Aggregate Threshold Amount

	  	
12

	  	
4.6

	
Waiver and Release

	  	
13

	
ARTICLE 5.

	
ACCOUNTING

	  	
13

	  	
5.1

	
Revenues, Expenses and Capital Expenditures

	  	
13

	  	
5.2

	
Taxes

	  	
14

	  	
5.3

	
Obligations and Credits

	  	
14

	  	
5.4

	
Final Accounting Statement

	  	
14

	  	
5.5

	
Post-Final Settlement Date

	  	
15

	
ARTICLE 6.

	
CASUALTY AND CONDEMNATION

	  	
15

	  	
6.1

	
Casualty and Condemnation

	  	
15

	
ARTICLE 7.

	
INDEMNITIES

	  	
15

	  	
7.1

	
Opportunity for Review

	  	
15

	  	
7.2

	
Assumptions of Obligations, Including Environmental

	  	
15

	  	
7.3

	
Seller’s Non-Environmental Indemnity Obligation

	  	
16

	  	
7.4

	
Buyer’s Non-Environmental Indemnity Obligation

	  	
16

	  	
7.5

	
NORM and Hazardous Substances

	  	
16

	  	
7.6

	
Notice and Cooperation

	  	
16

	  	
7.7

	
Defense of Claims

	  	
17

	  	
7.8

	
Waiver of Certain Damages

	  	
18

	  	
7.9

	
Limitations on Indemnities

	  	
18

	  	
7.10

	
Payment Disputes

	  	
18

	
ARTICLE 8.

	
SPECIAL WARRANTY OF TITLE AND DISCLAIMERS

	  	
18

	  	
8.1

	
Special Warranty of Title

	  	
18

	  	
8.2

	
Disclaimer - Representations and Warranties

	  	
18

	  	
8.3

	
Disclaimer - Statements and Information

	  	
19

	
ARTICLE 9.

	
SELLER’S REPRESENTATIONS AND WARRANTIES

	  	
19

	  	
9.1

	
Organization and Good Standing

	  	
19

	  	
9.2

	
Authority; Authorization of Agreement

	  	
19

	  	
9.3

	
No Violations

	  	
19

	  	
9.4

	
Absence of Certain Changes

	  	
20

	  	
9.5

	
Operating Costs

	  	
20

	  	
9.6

	
Pending Proceedings

	  	
20

 

 

 

 

  

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9.7

	
Bankruptcy

	  	
20

	  	
9.8

	
Liability for Brokers’ Fees

	  	
20

	  	
9.9

	
No Liens

	  	
21

	  	
9.10

	
Judgments

	  	
21

	  	
9.11

	
Records

	  	
21

	  	
9.12

	
Compliance with Law

	  	
21

	  	
9.13

	
Applicable Contracts

	  	
21

	  	
9.14

	
Permits

	  	
21

	  	
9.15

	
Taxes

	  	
21

	  	
9.16

	
Lease Accounts

	  	
21

	  	
9.17

	
Preferential Purchase Rights and Consents

	  	
21

	
ARTICLE 10.

	
BUYER’S REPRESENTATIONS AND WARRANTIES

	  	
22

	  	
10.1

	
Organization and Good Standing

	  	
22

	  	
10.2

	
Corporate Authority; Authorization of Agreement

	  	
22

	  	
10.3

	
No Violations

	  	
22

	  	
10.4

	
SEC Disclosure

	  	
22

	  	
10.5

	
Independent Evaluation

	  	
23

	  	
10.6

	
Governmental Approvals

	  	
23

	
ARTICLE 11.

	
ADDITIONAL AGREEMENTS

	  	
23

	  	
11.1

	
Covenants of Sellers

	  	
23

	  	
11.2

	
Notice of Loss

	  	
23

	  	
11.3

	
Subsequent Operations

	  	
23

	  	
11.4

	
Buyer’s Assumption of Obligations

	  	
23

	  	
11.5

	
Records

	  	
24

	
ARTICLE 12.

	
CONDITIONS PRECEDENT TO CLOSING

	  	
24

	  	
12.1

	
Conditions Precedent to Seller’s Obligation to Close

	  	
24

	  	
12.2

	
Conditions Precedent to Buyer’s Obligation to Close

	  	
24

	  	
12.3

	
Conditions Precedent to Obligation of Each Party

	  	
24

	
ARTICLE 13.

	
TERMINATION

	  	
25

	  	
13.1

	
Grounds for Termination

	  	
25

	  	
13.2

	
Effect of Termination

	  	
25

	  	
13.3

	
Dispute over Right to Terminate

	  	
26

	  	
13.4

	
Return of Documents

	  	
26

	  	
13.5

	
Confidentiality

	  	
26

	
ARTICLE 14.

	
THE CLOSING

	  	
26

	  	
14.1

	
Closing

	  	
26

	  	
14.2

	
Obligations of Seller at Closing

	  	
26

	  	
14.3

	
Obligations of Buyer at Closing

	  	
27

	
ARTICLE 15.

	
MISCELLANEOUS

	  	
27

	  	
15.1

	
Notices

	  	
27

	  	
15.2

	
Conveyance Costs

	  	
28

	  	
15.3

	
Brokers’ Fees

	  	
28

	  	
15.4

	
Access to Information

	  	
28

	  	
15.5

	
Further Assurances

	  	
28

	  	
15.6

	
Survival of Representations and Warranties

	  	
28

	  	
15.7

	
Amendments and Severability

	  	
29

 

 

 

 

 

  

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15.8

	
Successors and Assigns

	  	
29

	  	
15.9

	
Headings

	  	
29

	  	
15.10

	
Governing Law

	  	
29

	  	
15.11

	
No Partnership Created

	  	
29

	  	
15.12

	
Public Announcements

	  	
29

	  	
15.13

	
No Third Party Beneficiaries

	  	
29

	  	
15.14

	
Not to be Construed Against Drafter

	  	
29

	  	
15.15

	
Entire Agreement

	  	
30

	  	
15.16

	
Conspicuousness of Provisions

	  	
30

	  	
15.17

	
Arbitration

	  	
30

	  	
15.18

	
Execution in Counterparts

	  	
32

 

 

 

 

 

 

  

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EXHIBITS AND SCHEDULES

 

Exhibits

 

	
Exhibit A-1

	
Leases

	
Exhibit A-1-a

	
Allocated Value for Leases

	
Exhibit A-2

	
Wells

	
Exhibit A-3

	
Allocation of Purchase Price

	
Exhibit B

	
Amherst Facility

	
Exhibit C

	
Form of Assignment and Conveyance

	
Exhibit D

	
Bill of Sale

	
Exhibit E

	
Form of Letters in Lieu

	
Exhibit F

	
Seller’s Easements

	
Exhibit G

	
Seller’s Personal Property

	  	  
	
Schedules

	  
	  	  
	
Schedule 9.13

	
Applicable Contracts

	
Schedule 9.14

	
Permits

	
Schedule 9.17

	
Preferential Rights

 

 

 

 

 

  

- iv -

  

 

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is dated July 15, 2014, by and between SWO & ISM, LLC. (“SWOISM”), a ___________ corporation and HEIN OIL CO., INC. (“HOC”), a __________ corporation and HEIN OIL WELL SERVICES, LLC. (“HOWS”) a _______________ corporation (SWOISM, HOC and HOWS, together “Sellers”), and FIRST COLUMBIA GOLD CORPORATION. (“FCGD”), a Nevada corporation (“Buyer”).

 

WHEREAS, Sellers desire to sell, assign and convey to Buyer and Buyer desires to purchase and accept a 19.5% of Sellers ownership of certain oil and gas properties, gas gathering assets and related interests located in Monroe, Cumberland, Clinton and ________ Counties, Kentucky; and

 

WHEREAS, Sellers desire to sell, assign and convey to Buyer and Buyer desires to purchase certain equipment and real estate currently owned by Sellers; and

 

WHEREAS, the parties have reached agreement regarding such sale and purchase.

 

NOW, THEREFORE, for valuable consideration and the mutual covenants and agreements herein contained, Sellers and Buyer agree as follows:

 

ARTICLE 1. DEFINITIONS

 

1.1           Definitions. In this Agreement, capitalized terms have the meanings provided in this Article, unless expressly provided otherwise in other Articles.

 

“Accounting Referee” has the meaning set forth in Article 5.4.

 

“Affiliate” means and includes any entity that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the entity specified. Control means ownership of greater than fifty-one percent (51%) of the voting stock, units, or partnership interests of such entity.

 

“Aggregate Threshold Amount” has the meaning set forth in Article 4.5.

 

“Alleged Environmental Condition” means an Environmental Condition asserted by Buyer in accordance with Article 4.4.

 

“Alleged Title Defect” means a Title Defect (as hereinafter defined) which is asserted by Buyer in accordance with Article 4.2.

 

“Allocated Value” means the portion of the Purchase Price allocated to the various Properties as set forth on Exhibit A-1-a, for Leases, and on Exhibit A-2, for Wells.

 

“Assignment” means a document in the form of Exhibit C.

 

“Business Day” means a Day (as hereinafter defined) excluding Saturdays, Sundays and U.S. legal holidays.

 

“Buyer’s Knowledge” means the actual knowledge of any officer, director, or manager level employee of Buyer.

 

“Casualty Loss” means any loss, damage or reduction in value to the Properties resulting from mechanical failure or defects, catastrophic occurrences, acts of God and any other property losses which are not the result of normal wear and tear or of natural reservoir changes.

 

 

  

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“Claim” or “Claims” means any and all claims, demands, suits, causes of action, losses, damages, liabilities, fines, penalties and costs (including attorneys’ fees and costs of litigation) which are brought by or owed to a Third Party.

 

“Claim Notice” has the meaning set forth in Article 7.6.

 

“Claimant” has the meaning set forth in Article 15.16 regarding Arbitration.

 

“Close” or “Closing” means the consummation of the transfer of title to the Properties (as hereinafter defined) to Buyer, including execution and delivery of all documents provided herein.

 

“Closing Date” means the later of (i) July 15, 2014, or (ii) such other date as may result from the procedures set forth in this Agreement, or such other date as may be mutually agreed upon by the parties.

 

“Closing Statement” means the statement to be prepared and delivered under Article 14.1.

 

“Day” means a calendar day consisting of twenty-four (24) hours from midnight to midnight.

 

“Defensible Title” means, as to the Properties, such title that, subject to and except for the Permitted Encumbrances (as hereinafter defined), that:

 

	
  

	
(a)                                  With respect to each Lease shown on Exhibit A-1 or each Well shown on Exhibit A-2, obligates Sellers to bear a Working Interest for such Lease or Well not greater than the Working Interest shown thereon for such Lease or for such Well, without increase throughout the term of the Lease or the productive life of such Well, as applicable, except for (i) increases resulting from contribution requirements with respect to defaulting co-owners under applicable operating agreements, and (ii) increases to the extent that they are accompanied by a proportionate increase in Seller’s Net Revenue Interest;

 

	
  

	
(b)                                 With respect to each Well, entitles Sellers to receive the “Net Revenue Interests” set forth in Exhibit A-2 of all oil, gas and associated liquid and gaseous hydrocarbons produced, saved and marketed from the Wells without decrease throughout the term of the productive life of such Well, as applicable, except for (i) decreases in connection with those operations in which Sellers or Buyer may from and after the date of this Agreement be a non-consenting co-owner, (ii) decreases resulting from the establishment or amendment from and after the date of this Agreement of pools or units, and (iii) decreases required to allow other working interest owners to make up past underproduction or pipelines to make up past under deliveries; provided that disclosure thereof has been made by Sellers to Buyer in writing

 

	
  

	
(c)                                  Is free and clear of liens, encumbrances and encroachments;

 

	
  

	
(d)                                 Is deducible from applicable federal, tribal, state and county records; and

 

	
  

	
(e)                                  Permits Sellers and their assigns and designees rights of ingress and egress over the Properties for purposes of oil and gas exploration, development, gathering, and production.

 

“Dispute” has the meaning set forth in Article 15.16.

 

“Earnest Money” has the meaning set forth in Article 3.2.

 

“Effective Time” means 12:01 a.m. Central Standard Time on July 15, 2014.

 

 

 

 

  

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“Environmental Claims” means all Claims for pollution or environmental damages of any kind, including without limitation, those relating to: (a) remediation and/or clean-up required by Environmental Laws; (b) injury or death of any person or damage or loss of any property or reserve; (c) the assessment, remediation, removal, transportation or disposal of asbestos, NORM or other potentially hazardous substances associated with or attributable to the Properties; and/or (d) Claims relating to breach and/or violation of Environmental Laws, common law causes of action asserting damage to the environmental quality of a property such as negligence, gross negligence, strict liability, nuisance or trespass, or fault imposed by statute, rule or regulation.

 

“Environmental Condition” means any condition that, as of the Effective Time (as hereafter defined), is not in compliance with the then existing Environmental Laws (as hereafter defined), including, without limitation, non-compliance of permitting requirements and other filings and notice requirements.

 

“Environmental Laws” means all laws, statutes, ordinances, permits, orders, judgments, rules or regulations which are promulgated, issued or enacted by a governmental entity or tribal authority having appropriate jurisdiction that, (a) relate to the prevention of pollution or environmental damage, (b) the remediation of pollution or environmental damage, or (c) the protection of the environment generally; including without limitation, the Clean Air Act, as amended, the Clean Water Act, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Federal Water Pollution Control Act, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Safe Drinking Water Act, as amended, the Toxic Substance and Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous and the Solid Waste Amendments Act of 1984, as amended, and the Oil Pollution Act of 1990, as amended, and other environmental or notice obligations based upon common law.

 

“Final Accounting Statement” has the meaning set forth in Article 5.4. “Final Settlement Date” has the meaning set forth in Article 5.4.

 

“Applicable Contracts” shall mean all joint operating agreements; oil, gas, liquids, casinghead gas and condensate purchase, sales, processing, gathering, treatment, compression, and transportation agreements; farm-out or farm-in agreements; dry hole, bottom hole, acreage contribution, purchase and acquisition agreements; area of mutual interest agreements; servicing contracts; and all other executory contracts and agreements relating, in each case listed above, to the Seller Assets, as set forth on Schedule 9.13.

 

“Laws” means laws, statutes, ordinances, permits, decrees, orders, judgments, rules or regulations (including without limitation Environmental Laws) which are promulgated, issued or enacted by a governmental entity or tribal authority having appropriate jurisdiction.

 

“Letters-in-Lieu” means a document in the form of Exhibit E.

 

“Material,” for purposes of Article 9, means any matter reasonably anticipated to cost or have an adverse effect on the value, operation or use of any of the Properties in excess of two hundred and fifty thousand United States dollars ($250,000).

 

“Net Revenue Interest” with respect to any Well shall mean a party’s Working Interest share of revenues therefrom less such party’s proportionate share of all royalties, overriding royalties, production payments, applicable carried interests, net profits interests, reversionary interests, and other burdens.

 

“Non-Environmental Claims” means all Claims, except Environmental Claims. “NORM” means naturally occurring radioactive materials.

 

“Open Defects” means all Open Environmental Conditions and all Open Title Defects.

 

 

 

 

  

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“Open Environmental Conditions” means all uncured Qualifying Alleged Environmental Conditions that were submitted to Sellers on a timely basis and that remain in dispute.

 

“Open Title Defects” means all uncured Qualifying Alleged Title Defects that were submitted to Seller on a timely basis and that remain in dispute.

 

“Permitted Encumbrances” means:

 

	
  

	
(a)                                  Royalties, overriding royalties, production payments, reversionary interests, convertible interests, net profits interests, division orders and similar burdens encumbering the Properties to the extent the net cumulative effect of such burdens do not operate to reduce the Net Revenue Interests of the Wells to less than the Net Revenue Interests set forth in Exhibit A-2;

 

	
  

	
(b)                                 Preferential purchase rights and consents to assignment and similar contractual provisions encumbering the Properties with respect to which, prior to Closing, (i) waivers or consents are obtained from the appropriate parties, or (ii) the appropriate time period for asserting such rights have expired without an exercise of such rights;

 

	
  

	
(c)                                  All rights to consent by, required notices to, filings with, or other actions by governmental entities or tribal authorities in connection with the transfer of record legal title in and to the Properties to Buyer, if the same are customarily obtained subsequent to the transfer of title;

 

	
  

	
(d)                                 Rights reserved to or vested in any governmental entity or tribal authority having appropriate jurisdiction to control or regulate the Properties in any manner whatsoever, and all Laws of any such governmental entity or tribal authority;

 

	
  

	
(e)                                  Easements, rights-of-way, servitudes, surface leases, sub-surface leases, grazing rights, logging rights, canals, ditches, reservoirs, pipelines, utility lines, telephone lines, power lines, railways, streets, roads, alleys, highways and structures on, over and through the Properties, to the extent such rights, interests or structures do not materially interfere with the operation of the Properties;

 

	
  

	
(f)                                    The terms and conditions of all production sales contracts; division orders; contracts for agreements; equipment leases; surface leases; unitization and pooling designations, declarations, orders and agreements; processing agreements; plant agreements; pipeline, gathering, and transportation agreements; injection, repressuring, and recycling agreements; produced water or other disposal agreements; seismic or geophysical permits or agreements; calls on production in agreements pertaining to the Properties; and any and all other agreements filed of record in the county where the affected Property is located or which are ordinary and customary in the oil and gas exploration, development, or extraction business, or in the business of processing of gas and gas condensate production for the extraction of products therefrom attributable to or encumbering the Properties, including but not limited to the Seller Applicable Contracts;

 

	
  

	
(g)                                 Liens for taxes or assessments not yet due or not yet delinquent or, if delinquent, that are being contested by Sellers in good faith in the normal course of business;

 

	
  

	
(h)                                 Liens of operators or non-operators relating to obligations not yet due or not yet delinquent or, if delinquent, that are being contested by Sellers in good faith in the normal course of business;

 

 

 

 

  

Page 4 of 24

  

 

	
  

	
(i)                                     Title Defect(s) and Alleged Title Defects which are not Qualifying Alleged Title Defects or, when combined with all other Qualifying Alleged Title Defects, Qualifying Alleged Environmental Conditions and Casualty Losses, do not meet the Aggregate Threshold Amount and/or which Buyer has waived hereunder; and

 

	
  

	
(j)                                     Environmental Condition(s) and Alleged Environmental Condition(s) which are not Qualifying Alleged Environmental Conditions or, when combined with all other Qualifying Alleged Title Defects, Qualifying Alleged Environmental Conditions and Casualty Losses, do not meet the Aggregate Threshold Amount and/or which Buyer has waived hereunder.

 

“Properties” means the Seller’ Assets.

 

 “Purchase Price” has the meaning set forth in Article 3.1.

 

“Qualifying Alleged Environmental Condition” has the meaning set forth in Article 4.4. “Qualifying Alleged Title Defect” has the meaning set forth in Article 4.2.

 

“Records” means the Seller’s Records.

 

“Required Consents” means all consents and approvals, if any, whether required contractually or by applicable federal, state, local or tribal Law, or otherwise necessary for the execution, delivery and performance of this Agreement by Sellers (except for consents and approvals of governmental entities or tribal authorities customarily obtained subsequent to the transfer of title).

 

“Respondent” has the meaning set forth in Article 15.16 regarding Arbitration.

 

“Seller Assets” means all of Seller’s right, title and interest in, to and under, the following:

 

	
  

	
(a)                                  oil, gas and mineral leases and other mineral leases and the leasehold estates created thereby described in Exhibit A-1 hereto (collectively, the “Leases”), including all of Seller’s working interests, operating rights, mineral interests, overriding royalty interests, reversionary interests, net profits interests, net revenue interests, and any other similar or dissimilar interests, all rights in any pooled or unitized acreage by virtue of the Leases being a part thereof, all production from the pool or unit allocated to any such Leases, and all interests in any wells within the pool or unit associated with the Leases;

 

	
  

	
(b)                                 all wells described in Exhibit A-2 hereto (the “Wells”);

 

	
  

	
(c)                                  The Seller Personal Property;

 

	
  

	
(d)                                 The Seller Applicable Contracts;

 

	
  

	
(e)                                  The Seller Easements;

 

	
  

	
(f)                                    The Seller Permits; and

 

	
  

	
(g)                                 The Seller Records.

 

“Seller Easements” means the easements, surface use agreements, and right-of-way agreements, permits, licenses, servitudes or other interests held by Seller in the course of owning and operating the Seller Assets, as described on Exhibit F hereto.

 

 

 

 

  

Page 5 of 24

  

 

“Sellers’ Knowledge” means the actual knowledge of any officer, director, or manager level employee of such Seller.

 

 “Seller Permits” means to the extent assignable to Buyers, all permits, licenses, certificates, orders, approvals, authorizations, grants, consents, concessions, warrants, franchises and similar rights and privileges granted by a Governmental Authority that are used, or held for use exclusively for or in connection with the ownership, development and operation of the Seller Assets, as listed in Schedule 9.14 hereto.

 

“Seller Personal Property” means the equipment and other personal and mixed property (including liquid hydrocarbon inventory in tanks), improvements situated in or upon, or used or useful, or held for future use in connection with the exploration, development and production of oil, gas and other minerals, sulfur, associated gas from any of the Leases, or the treatment, storage or transportation of such substances therefrom, including Wells, casing, tubing, derricks, tanks, batteries, boilers, separators, rods, dehydrators, compressors, pumps, flow lines, water lines, water reservoirs, gas lines, buildings, field offices, fixtures, machinery, gas production, gathering or processing equipment, systems or pipelines, gas marketing systems or pipelines, power lines, telephone and telegraph lines, and all other fixtures and improvements, located on the Leases or lands pooled therewith or located thereon as set forth on Exhibit G hereto;

 

“Seller Records” means all contract, land, right of way, title, engineering, environmental, operating and maintenance, accounting, tax, files, documents, instruments, notes, papers, reports, abstracts, surveys, maps, books, records, correspondence, and studies to the extent relating to and used or held solely in connection with, the ownership, operation or maintenance of the Seller Assets.

 

“Title Defect” means any lien, encumbrance, encroachment or defect associated with the Sellers’ title to their respective Properties (excluding Permitted Encumbrances) that would cause such Seller not to have Defensible Title.  Notwithstanding the foregoing, the following shall not be considered Title Defects:

 

	
  

	
(1)                                  defects based solely on (i) lack of information in the Sellers’ files, or (ii) references to a document(s) if such document(s) is not in Sellers’ files;

 

	
  

	
(2)                                  defects in the chain of title prior to January 1, 1950, consisting of the mere failure to recite marital status in a document or omissions of successors of heirship or estate proceedings, unless Buyer provides affirmative evidence that such failure or omission has resulted in another party’s actual and superior claim of title to the relevant Property;

 

	
  

	
(3)                                  defects arising out of lack of survey, unless a survey is required by applicable laws or regulations;

 

	
  

	
(4)                                  defects arising out of lack of corporate or other entity authorization unless Buyer provides affirmative evidence that the action was not authorized and results in another party’s actual and superior claim of title to the relevant Property.

 

	
  

	
(5)                                  defects based on a gap in Sellers’ chain of title in the BLM or MMS records as to federal leases, in the state’s records as to state leases, or in the county or parish records as to fee Leases, unless such gap is affirmatively shown to exist in such records by an abstract of title, title opinion or landman’s title chain which documents shall be included in a Title Defect Notice; and

 

	
  

	
(6)                                  defects disclosed to or known by Buyer and/or its Affiliates prior to the execution of this Agreement.

 

 

 

 

 

  

Page 6 of 24

  

 

 “Third Party” means any person or entity, governmental or otherwise, other than the Sellers and Buyer, and their respective Affiliates.

 

 “Working Interest” with respect to any Well or Lease means the interest in and to such Well or Lease that is burdened with the obligation to bear and pay costs and expenses of maintenance, development operations and plugging and abandoning on or in connection with such Well or Lease, but without regard to the effect of any royalties, overriding royalties, production payments, net profits interests and other similar burdens upon, measured by, or payable out of production therefrom.

 

ARTICLE 2. TRANSFER OF THE PROPERTIES

 

2.1           Sale and Purchase.  On the Closing Date, effective as of the Effective Time and upon the terms and conditions herein set forth, (a) Sellers agrees to sell and assign the Seller Assets to Buyer and Buyer agrees to purchase and accept 19.5% of Sellers interest in the Seller’s Assets, and (b) Sellers agree to sell and assign 100% of the Seller’s Property to Buyer and Buyer agrees to purchase and accept the Seller’s Property. Each of the foregoing transactions shall be dependent upon the consummation of the other transaction and each shall be considered to have occurred simultaneously with the other.

 

ARTICLE 3. PURCHASE PRICE

 

3.1           Purchase Price.  The total purchase price, subject to adjustments as set forth herein, paid to Sellers by Buyer shall be Ten Million Shares of FCGD stock (“Purchase Price”), payable in full at Closing with the issuance coming in certificate form. The Purchase Price shall be increased to the extent that Seller’s production is increased by 2500 barrels of crude monthly at which time the Sellers shall receive an additional Ten Million Shares of FCGD stock.  This Purchase Price Extension shall occur when and only when the barrel count is increased by 2500 barrels of new crude being produced within wells currently being acquired as set forth on Exhibit A-2.  An allocation of the Purchase Price has been made by Buyer as between SWOISM, HOC and HOWS and that allocation is set forth on Exhibit A-3.  The allocation of the Purchase Price among the Properties has been made solely by Buyer based on its independent evaluation and appraisal of the Seller’s Assets and Seller’s Property and is deemed to be effective as of the Effective Time.  The allocation is subject to adjustment in accordance with any adjustments to the total Purchase Price as provided elsewhere herein.

 

ARTICLE 4. TITLE DEFECTS

 

4.1           Alleged Title Defects.

 

	
  

	
(a)                                  As soon as reasonably practicable after Buyer’s review of the title Records, but in no event later than July 22, 2014, Buyer shall deliver a written notice to Sellers identifying any Properties which are subject to Alleged Title Defect(s) with a value in excess of Five Thousand Dollars ($5,000.00) per Alleged Title Defect (a “Qualifying Alleged Title Defect”). Buyer shall endeavor to keep Sellers advised on a current basis of any Alleged Title Defects as any are identified. Buyer’s notice of Qualifying Alleged Title Defect(s) shall include a complete description (including any supporting documentation in Buyer’s possession) of each Alleged Title Defect being claimed and the value which Buyer attributes to each said Alleged Title Defect which shall not exceed the Allocated Value for the affected Property.

 

	
  

	
(b)                                 With respect to Qualifying Alleged Title Defect(s) that are not disputed in good faith by Sellers, Sellers shall use commercially reasonable efforts to cure such Qualifying Alleged Title Defects within ten (10) Business Days. If such Title Defects remain unresolved, Buyer and Sellers shall meet in an attempt to mutually agree on a proposed resolution with respect to any Qualifying Alleged Title Defect(s) which by such time have not been cured, agreed to or resolved between the parties. Sellers shall have the option, in their sole discretion, of indemnifying Buyer with respect to any Alleged Title Defect(s) in which case, such Alleged Title Defect(s) shall be deemed cured, agreed to or resolved between the parties.

 

 

 

 

  

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(c)                                If after twenty (20) Business Days, there are Open Title Defect(s) in excess of the Aggregate Threshold Amount, the parties shall refer such Open Title Defects, to binding resolution before an attorney licensed in the state where the affected portion of the Properties is located who is familiar with the types of leases or properties involved in or affected by the Open Title Defect and who has at least five (5) years of oil and gas title experience and satisfies the independence and neutrality standards set forth in Article 15.16(b). The title attorney shall resolve the Open Title Defects submitted by the parties in accordance with the procedure set forth in Article 15.16(c).

 

4.2           Aggregate Threshold Amount and Value.

 

	
  

	
(b)                                  The value attributable to an Alleged Title Defect shall be an amount determined to be reasonably required to cure or remove the Alleged Title Defect but shall not exceed:

 

	
  

	
(i)                                     With respect to an Alleged Title Defect affecting Leases, the value per acre as set forth on Exhibit A-1-a, multiplied by the number of acres of the affected Lease, multiplied by the decimal interest therein affected by the Open Defect; and

 

	
  

	
(ii)                                With respect to an Alleged Title Defect affecting Wells, the value as set forth on Exhibit A-2, proportionately reduced to the percentage of Sellers’ interest affected by the Alleged Title Defect.

 

	
  

	
(d)                               The value attributable to an Alleged Environmental Condition shall be the reasonably anticipated cost to cure or remedy the Environmental Condition but shall not exceed the Allocated Value of the affected Property.

 

ARTICLE 5. ACCOUNTING

 

5.1           Revenues, Expenses and Capital Expenditures. All revenues attributable to the operation of the Properties prior to the Effective Time shall be owned by and for the account of Sellers. Sellers shall be entitled to all operating revenues and shall be responsible for all operating expenses and related accounts payable arising in the ordinary course of business attributable to the Properties, in each case to the extent they relate to the time prior to the Effective Time. Buyer shall be entitled to 19.5% of all operating revenues to the extent they relate to time after the Effective Time.

 

5.2           Taxes. All taxes and assessments, including without limitation, excise taxes, ad valorem taxes and any other federal, state, local or tribal taxes or assessments attributable to the ownership or operation of the Properties prior to the Effective Time shall remain Sellers’ responsibility, and all deductions, credits and refunds pertaining to the aforementioned taxes and assessments, no matter when received, shall belong to Sellers. All taxes and assessments, including without limitation, excise taxes, ad valorem taxes and any other federal, state, local or tribal taxes and assessments attributable to the ownership or operation of the Properties after the Effective shall be divided among the parties according to their interest of ownership with 19.5% being the Buyer’s responsibility.

 

5.3           Obligations and Credits. All prepaid insurance premiums, utility charges, taxes, rentals and any other prepaids applicable to periods of time after the Effective Time, if any, and attributable to the Properties shall be reimbursed to Sellers by Buyer; and accrued payables applicable to periods of time prior to the Effective Time, if any, and attributable to the Properties shall be the responsibility of Sellers. The actual amounts or values associated with the above shall be accounted for in the Closing Statement or Final Accounting Statement.

 

 

 

  

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5.4           Final Accounting Statement. As soon as reasonably practicable, but in no event later than ninety (90) Days after Closing, Sellers shall deliver to Buyer a post-closing statement setting forth a detailed final calculation of all post-closing adjustments applicable to the periods before and after the Effective Time (“Final Accounting Statement”). As soon as reasonably practicable, but in no event later than thirty (30) Days after Buyer receives the Final Accounting Statement, Buyer shall deliver to Sellers a written report containing any changes Buyer proposes to be made to such statement. If Buyer fails to deliver such report to Sellers, the Final Accounting Statement delivered by Sellers shall be deemed to be true and correct and binding on and non-appealable by the parties. As soon as reasonably practicable, but in no event later than fifteen (15) Days after Sellers receive Buyer’s proposed changes to the Final Accounting Settlement, the parties shall meet and undertake to agree on the final post-closing adjustments. If the parties fail to agree on the final post-closing adjustments within such fifteen (15) Day period, the disputed items shall be resolved by submitting the same to a firm of independent nationally recognized accountants mutually acceptable to the parties (the “Accounting Referee”). The Accounting Referee shall resolve the dispute(s) regarding the Final Accounting Statement within thirty (30) Days after having the relevant materials submitted for review. The decision of the Accounting Referee shall be binding and non-appealable by the parties. The fees and expenses associated with the Accounting Referee shall be borne half by Buyer and half by Sellers. The date upon which all amounts associated with the Final Accounting Statement are agreed to by the parties or determined by decision of the Accounting Referee, is referred to as the “Final Settlement Date.” Any amounts owed by either party to the other as a result of the Final Accounting Statement shall be paid within five (5) Business Days after the Final Settlement Date.

 

5.5           Post-Final Settlement Date. Any revenues received or costs and expenses paid by Buyer after the Final Settlement Date which are attributable to the ownership or operation of the Properties prior to the Effective Time shall be billed or reimbursed to Sellers, as appropriate. Any revenues received or costs and expenses paid by Sellers after the Final Settlement Date which are attributable to the ownership or operation of the Properties after the Effective Time shall be reimbursed or billed to Buyer.

 

ARTICLE 6. CASUALTY AND CONDEMNATION

 

6.1           Casualty and Condemnation. Upon closing, all buyers and sellers agree to maintain proper and thorough insurance on all property and assets covered in this agreement specifically the Buyer’s Assets and Buyer’s Property.

 

ARTICLE 7. INDEMNITIES

 

7.1           Opportunity for Review. Each party represents that it has had an adequate opportunity to review the following indemnity and release provisions, including the opportunity to submit the same to legal counsel for review and comment. Based upon the foregoing representation, the parties agree to the provisions set forth below.

 

7.2           Assumption of Obligations, Including Environmental. Effective at the Effective Time, subject to Section 7.1 and except as otherwise expressly set out in this Agreement, Buyer assumes all rights, liabilities, duties, obligations, risk of loss, Claims, Losses and any related responsibility for the ownership, operation or use of the Properties and the business related thereto and any condition (including Environmental Claims) of or on the Properties attributable to any period of time, whether before, on or after the Effective Time. From and after the Closing Date, Sellers shall have no obligation whatsoever, under this Agreement or otherwise to protect, indemnify, defend or hold harmless Buyer, its officers, agents, employees and Affiliates (“Buyer Indemnitees”) from and against any Environmental Claims relating to, arising out of, or connected, directly or indirectly, with the ownership or operation of the Properties, no matter when asserted, and Buyer expressly releases Sellers, their officers, agents, employees and Affiliates (“Seller Indemnitees”) from the same. The indemnity obligation and release provided herein shall apply regardless of cause or of any negligent acts or omissions of any Seller Indemnitee.

 

 

 

  

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7.3           Sellers’ Indemnity Obligation. After Closing Sellers shall, individually and severally, release Buyer from and shall fully protect, indemnify and defend Buyer Indemnitees and hold them harmless from and against any and all Claims relating to, arising out of, or connected, directly or indirectly, with:

 

	
  

	
(a)                                the breach of any of the representations, warranties, covenants or agreements of such Seller contained in this Agreement to the extent that such survive Closing in accordance with Article 15.5; and

 

	
  

	
(b)                               amounts payable or other obligations, liabilities or Claims arising pursuant or related to any Seller Contracts, as applicable, but only to the extent such amounts or obligations relate to periods prior to the Effective Time.

 

7.4           Buyer’s Indemnity Obligation. After Closing, Buyer shall release Sellers from and shall fully protect, indemnify and defend Seller Indemnitees, and hold them harmless from and against any and all Claims relating to, arising out of, or connected, directly or indirectly, with:

 

	
  

	
(a)                                  the breach of any of the representations, warranties, covenants, or agreements of Buyer contained in this Agreement; and

 

	
  

	
(b)                                 to the extent that Sellers are not required to indemnify Buyers Indemnitees in accordance with Section 7.3, all liabilities or obligations of any kind or nature, resulting from or arising out of the ownership, use or operation of the Properties by Buyer, whether arising out of or relating to periods before, on or after the Effective Time. The indemnity obligation and release provided herein shall apply regardless of cause or of any negligent acts or omissions of any Seller Indemnitee.

 

7.5           NORM and Hazardous Substances. The parties acknowledge that the Properties may contain asbestos, NORM or other potentially hazardous substances, and that special procedures may be required for the assessment, remediation, removal, transportation or disposal of said asbestos, NORM or other potentially hazardous substances. Buyer agrees to assume any and all liability associated with or attributable to the assessment, remediation, removal, transportation and disposal of the asbestos, NORM or other potentially hazardous substances associated with or attributable to the Properties and will conduct said activities in accordance with all applicable Laws.

 

7.6           Notice and Cooperation. If a Claim is asserted against a party for which the party would be liable under the provisions of this Article, it is a condition precedent to the indemnifying party’s obligations hereunder that the indemnified party gives the indemnifying party written notice of such Claim setting forth full particulars of the Claim, as known by the indemnified party, including a copy of the Claim (if it was a written Claim) (a “Claim Notice”). The indemnified party shall make a reasonable effort to notify the indemnifying party of any Claim within one (1) month of receipt of a Claim but shall in all events effect such notice within such time as will allow the indemnifying party to defend against such Claim and no later than three (3) calendar months after receipt of the Claim by the indemnified party.

 

If the indemnifying party receives a Claim Notice which the indemnifying party believes in good faith that it is not obligated to assume and indemnify the indemnified party sending the Claim Notice, the indemnifying party shall deliver written notice to indemnified party rejecting the Claim Notice within fifteen (15) Days after receipt. The parties shall promptly meet to discuss the responsibility for the Claim described in the Claim Notice. If the parties fail to agree on which party is responsible for the Claim, the parties shall refer the matter to arbitration under Article 15. If the matter has not been arbitrated and the party who received the original demand or Claim is required to provide its own defense and satisfy any settlement or judgment, then such actions shall be without prejudice to or waiver of that party’s right to seek reimbursement for all costs, expenses (including attorney’s fees and court costs) and damages incurred in connection with the Claim.

 

 

 

  

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7.7           Defense of Claims.

 

	
  

	
(a)                                  Counsel.  Upon receipt of a Claim Notice, unless disputed, the indemnifying party shall, at the sole cost and expense of the indemnifying party, assume the defense thereof with counsel selected by the indemnifying party and reasonably satisfactory to the indemnified party. The indemnified party shall cooperate in all reasonable respects in such defense. If any Claim involves Claims with respect to which Buyer indemnifies Seller and also Claims for which Seller indemnifies Buyer, each party shall have the right to assume the defense of and hire counsel for that portion of the Claim for which it may have liability. The indemnified party shall have the right to employ separate counsel in any Claim and to participate in the defense thereof, provided the fees and expenses of counsel employed by an indemnified party shall be at the sole expense of the indemnified party, unless otherwise agreed between the parties.

 

	
  

	
(b)                                 Settlement. If the indemnifying party does not promptly notify the indemnified party that it has undertaken the defense thereof, the indemnified party has the right to defend, at the expense of the indemnifying party, the Claim with counsel of its own choosing, subject to the right of the indemnifying party to assume the defense of any Claim at any time prior to settlement or final determination thereof. If the indemnified party has exercised the right to defend hereunder, the indemnified party shall nevertheless be obligated to send a written notice to the indemnifying party of any proposed settlement of any Claim. The indemnifying party must either accept the settlement within thirty (30) Days of receipt of such notice, unless the settlement offer is limited to a shorter period of time in which case the indemnifying party shall have such shorter period of time in which to accept the proposed settlement, or immediately undertake the defense of the Claim and indemnify the indemnified party against all costs, expenses, and liabilities associated therewith. If the indemnifying party fails or refuses to accept a proposed settlement, and does not assume defense of the Claim, the indemnified party may, at its sole election, defend or settle the Claim, and the indemnifying party shall, upon demand by the indemnified party, reimburse the indemnified party for all costs, liabilities and expenses incurred by the indemnified party in the defense or settlement of the Claim.

 

7.8           Waiver of Certain Damages. Each of the parties hereby waives, and agrees not to seek consequential, punitive or special damages of any kind from the other with respect to any Claim or dispute, arising out of or relating to this Agreement or breach hereof. This provision does not diminish or affect in any way the parties’ rights and obligations under any indemnities from Third Party Claims provided for in this Agreement.

 

7.9           Limitations on Indemnities. In no event shall an indemnifying party have any obligation of indemnification to the other party if the Claim for which indemnity is sought was caused by gross negligence or willful misconduct on the part of the indemnified party and/or its officers, directors, employees, agents or Affiliates, nor shall any indemnity provisions in this Agreement apply or be deemed to apply to matters affecting lands other than those which are included in the Properties.

 

7.10         Payment Disputes. Notwithstanding the provisions of Article 7.2 and 7.3 above, if a Claim is brought after Closing by a third party against Buyer or Sellers alleging improper payment of royalty, severance, production, privilege, ad valorem or gross receipts taxes and any related penalties and interest assessed in connection therewith relating to the Properties for periods prior to or after the Effective Time, Buyer, as the custodian of the Records, shall defend such Claim or, at Sellers election, to the extent that the Claim is asserted in writing within one (1) year after Closing and relates to periods prior to the Effective Date, Sellers may assume defense of the claim and Buyer shall fully cooperate with Sellers in providing access to and copies of any required Records. In the event that Buyer has defended such Claim, Sellers shall reimburse Buyer for the portion of the amount actually paid to the Third Party in satisfaction of the Claim.

 

 

 

 

  

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ARTICLE 8. SPECIAL WARRANTY OF TITLE AND DISCLAIMERS

 

8.1           Special Warranty of Title. Sellers shall warrant and defend Defensible Title to the Properties against every person whomsoever lawfully claiming the Properties or any part thereof by, through or under Sellers, but not otherwise.

 

8.2           Disclaimer - Representations and Warranties. Buyer acknowledges and agrees that Buyer is purchasing the Properties on an “AS-IS, WHERE-IS” basis, and with all faults in their present condition and state of repair, without recourse. Except as expressly set forth in Article 9 of this Agreement, Sellers shall be deemed to have expressly disclaimed any and all representations and warranties concerning the Properties, express, statutory, implied or otherwise, including without limitation, any warranty of title other than the special warranty given in Article 8.1, the quality of hydrocarbon reserves, the quantity of hydrocarbon reserves, the amount of revenues, the amount of operating costs, condition (physical or environmental), compliance with applicable Laws, absence of defects (latent or patent), safety, state of repair, merchantability or fitness for a particular purpose. At Closing, Buyer expressly release Sellers from the same; provided, however, that Buyer shall have the right to enforce any representations and warranties given to Seller by a third party to the extent such are assignable to Buyer.

 

8.3           Disclaimer - Statements and Information.  Except as expressly set forth in this Agreement, Sellers disclaim any and all liability and responsibility for and associated with the quality, accuracy, completeness or materiality of the Records, data, information and materials furnished (orally or in writing) at any time to Buyer, its officers, agents, employees and Affiliates in connection with the transaction contemplated herein, including without limitation, the quality of hydrocarbon reserves, the quantity of hydrocarbon reserves, the amount of revenues, the amount of operating costs, the financial data, the contract data, the environmental condition of the Properties, the physical condition of the Properties and the continued financial viability of the Properties, and Buyer expressly releases Sellers from the same.

 

ARTICLE 9. SELLER’S REPRESENTATIONS AND WARRANTIES

 

Each Seller represents and warrants, individually and only as to itself, to Buyer that on the date hereof and as of the Closing Date the statements contained in this Article 9 are true and correct.

 

9.1           Organization and Good Standing. Each Seller is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of ____________, is duly qualified to do business in each State in which the Properties are located and has all requisite power and authority to own its interest in the Properties.

 

9.2           Authority; Authorization of Agreement. Each Seller has all requisite power and authority to execute and deliver this Agreement, to consummate the transactions contemplated herein and to perform all of the terms and conditions to be performed by it as provided for in this Agreement. The execution and delivery of this Agreement, the performance of all of the terms and conditions to be performed by it and the consummation of the transactions contemplated herein have been duly authorized and approved by all necessary corporate action on the part of each Seller. This Agreement has been duly executed and delivered by each Seller and constitutes the valid and binding obligation of such Seller, enforceable against it in accordance with its terms.

 

9.3           No Violations. The execution and delivery of this Agreement by Sellers does not, and the fulfillment and compliance with the terms and conditions hereof and the consummation of the transactions contemplated herein, will not:

 

 

 

 

 

 

  

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(a)                                  Conflict with or require the consent of any person or entity under any of the terms, conditions or provisions of the certificate of incorporation or bylaws of Sellers;

 

	
  

	
 (b)                                 Violate any provision of, or require any filing, consent or approval under any Law applicable to or binding upon Sellers (assuming receipt of all consents and approvals of governmental entities customarily obtained subsequent to the transfers of title);

 

	
  

	
(c)                                  Conflict with, result in a breach of, constitute a default under or constitute an event that with notice or lapse of time, or both, would constitute a default under, accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, (i) any mortgage, indenture, loan, credit agreement or other agreement, evidencing indebtedness for borrowed money to which either Seller is a party or by which either Seller is bound, or (ii) any order, judgment or decree of any governmental entity; or

 

	
  

	
(d)                                 Result in the creation or imposition of any lien or encumbrance upon the Properties.

 

9.4           Absence of Certain Changes. Between the date of execution of this Agreement and the Closing Date, there has not been without Buyer’s prior written consent, any of the following entered into by Sellers:

 

	
  

	
(a)                                  A sale, lease or other disposition of the Properties;

 

	
  

	
(b)                                 A mortgage, pledge or grant of a lien or security interest in any of the Properties; or

 

	
  

	
(c)                                  A contract or commitment to do either of the foregoing; and

 

	
  

	
(d)                                 Take any actions which could have a Material adverse effect on the Properties.

 

9.5           Pending Proceedings.  There is no action, suit or proceeding pending against either Seller which could have a material adverse effect on the value or operation of the Properties or that could prevent the consummation of the transactions contemplated by this Agreement, and to Sellers’ Knowledge, there is no such action, suit or proceeding threatened against either Seller that has not already been disclosed.

 

9.7           Bankruptcy.  There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by, or, to Sellers’ Knowledge, threatened against either Seller.

 

9.8           Liability for Brokers’ Fees.  Sellers have not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Buyer shall have any responsibility whatsoever.

 

9.9           No Liens.  Except for Permitted Encumbrances, the Properties will be conveyed to Buyer at the Closing free and clear of all liens and encumbrances.

 

9.10         Judgments.  There are no unsatisfied judgments or injunctions issued by a court of competent jurisdiction or other governmental agency outstanding against either Seller that would be reasonably expected to materially interfere with the ownership and operation of the Properties or impair their ability to consummate the transaction contemplated hereby.

 

 

 

 

 

  

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9.11         Records.  The Records are files, or copies thereof, that Sellers have used in the normal course of their business to own or operate the Properties. Sellers make no representations or warranties regarding the accuracy of any of the Records and any all implied warranties are expressly disclaimed.

 

9.12         Compliance with Law. With respect to the Properties, to Sellers’ Knowledge, neither Seller has received written notice (i) of a violation of any statute, law, ordinance, regulation, permit, rule or order of any foreign, federal, state, tribal or local government or any other governmental department or agency, or any judgment, decree or order of any court, applicable to their business or operations which remains uncured, and which would have a material adverse effect on any of the Properties, (ii) from any government authority with jurisdiction over the Properties that the Properties are not in substantial compliance with applicable laws, or (iii) a violation of any Environmental Law(s).

 

9.13         Applicable Contracts. Schedule 9.13 is a list of the Seller Applicable Contracts.  To Sellers’ Knowledge, all such agreements are in full force and effect and Sellers are not in default thereunder, and Sellers have not received a written notice of default with respect to such agreements that remains uncured.

 

9.14         Permits.  Schedule 9.14 is a list of all Seller Permits. To Sellers’ Knowledge (i) all permits are in force and effect, (ii) all fees relating thereto have been paid, and (iii) all filings and notices required to be made with any governmental authority have been made.

 

9.15         Taxes. During Sellers’ period of ownership to the Closing Date, all taxes relating to the Properties have been paid when due, unless contested in good faith by appropriate proceedings. All income taxes of Sellers and obligations relating thereto that could result in a lien or other claim against any of the Properties have been properly paid, unless contested in good faith by appropriate proceedings.

 

9.16         Lease Accounts. All federal, state and royalty accounts with respect to the Properties are current, and all payments required thereunder have been made except amounts, if any, held in suspense accounts in the ordinary course of business as referenced in Article 5.1 above and disclosed to Buyer in writing prior to Closing.

 

9.17         Preferential Purchase Rights.  Schedule 9.17 is a list of the Properties, if any, subject to preferential purchase rights.

 

ARTICLE 10. BUYER’S REPRESENTATIONS AND WARRANTIES

 

Buyer represents and warrants to Sellers that to the best of Buyer’s knowledge on the date hereof and as of the Closing Date the statements in this Article 10 are true and correct.

 

10.1         Organization and Good Standing. Buyer is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of ______________, is or will be duly qualified to do business in all States in which the Properties are located and has all requisite corporate power and authority to own and lease the Properties.

 

10.2         Corporate Authority; Authorization of Agreement. Buyer has all requisite corporate power and authority to execute and deliver this Agreement, to consummate the transactions contemplated herein and to perform all the terms and conditions to be performed by it as provided for in this Agreement. The execution and delivery of this Agreement by Buyer, the performance by Buyer of all the terms and conditions to be performed by it and the consummation of the transactions contemplated herein have been duly authorized and approved by all necessary corporate action. This Agreement has been duly executed and delivered by Buyer and constitutes the valid and binding obligation of Buyer, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or other Laws relating to or affecting the enforcement of creditors’ rights and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

 

 

  

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10.3         No Violations. The execution and delivery of this Agreement by Buyer does not, and the fulfillment and compliance with the terms and conditions hereof and the consummation of the transactions contemplated herein, will not:

 

	
  

	
(a)                                  Conflict with or require the consent of any person or entity under any of the terms, conditions or provisions of the certificate of incorporation or bylaws of Buyer;

 

	
  

	
(b)                                 Violate any provision of, or require any filing, consent or approval under any Law applicable to or binding upon Buyer; or

 

	
  

	
(c)                                  Conflict with, result in a breach of, constitute a default under or constitute an event that with notice or lapse of time, or both, would constitute a default under, accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under, (i) any mortgage, indenture, loan, credit agreement or other agreement evidencing indebtedness for borrowed money to which Buyer is a party or by which Buyer is bound, or (ii) any order, judgment or decree of any governmental entity.

 

10.4         Independent Evaluation. Buyer represents that it is sophisticated in the evaluation, purchase, operation and ownership of oil and gas properties. In making its decision to enter into this Agreement and to consummate the transaction contemplated herein, Buyer represents that it has relied solely on its own independent investigation and evaluation of the Properties and that at Closing Buyer will have satisfied itself as to the title, physical condition and the environmental condition of the Properties.

 

10.5         Governmental Approvals. No approval, consent, waiver, authorization or other order of, and no declaration, filing, registration, qualification or recording with, any person, including any governmental authority, is required to be obtained or made by or on behalf of the Buyer in connection with the execution, delivery or performance of this Agreement or the consummation of the Closing hereunder in accordance with the terms and conditions of this Agreement.

 

ARTICLE 11. ADDITIONAL AGREEMENTS

 

11.1         Covenants of Sellers. From the date hereof until Closing, without first obtaining the consent of Buyer, Sellers will not:

 

	
  

	
(a)                                  waive any right of material value relating to the Properties;

 

	
  

	
(b)                                 convey, encumber, mortgage, pledge or dispose of any of the Properties;

 

	
  

	
(c)                                  enter into, modify or terminate any of the Seller’s Applicable Contracts; or

 

	
  

	
(d)                                 contract or commit itself to do any of the foregoing.

 

11.2         Notice of Loss. From the date hereof until Closing, Sellers shall promptly notify Buyer of any loss or damage to the Properties, or any part thereof, known to Sellers and in the aggregate exceeding Ten Thousand and No/100 United States Dollars (US $10,000).

 

11.3         Subsequent Operations. Seller makes no representations or warranties to Buyer as to the transferability or assignability of the position of operator under the joint operating agreements pertaining to the Properties. Buyer acknowledges that the rights and obligations associated with operatorship of the Properties are governed by the applicable agreement(s) and that operatorship of the Properties will be decided in accordance with the terms of said agreement(s).

 

 

 

  

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11.4         Buyer’s Assumption of Obligations. Except as otherwise provided in this Agreement, Buyer agrees to assume and shall timely perform and discharge all duties and obligations of the owner of the Properties relating to the period of time after the Effective Time, including without limitation, duties and obligations under all the contracts associated with the Properties. Sellers shall incur no liability for Buyer’s failure to properly perform or discharge such duties and obligations. Buyer agrees to accept full responsibility for Seller’s proportionate share of the costs and expenses associated with or attributable to the plugging and abandonment of all wells, equipment and facilities conveyed to Buyer under this Agreement and the remediation, restoration and clean up of the Properties. In conducting the duties and obligations hereunder, Buyer shall comply with the applicable Laws of any governmental entity having appropriate jurisdiction.

 

11.5         Records. Within thirty (30) Days after Closing (except as provided below), Sellers shall furnish to Buyer all Records; provided, however, Sellers shall be entitled to retain copies of any or all such Records and to retain as long as needed (a) the originals of any Records required in connection with litigation or other proceedings pending or threatened against Sellers or the Properties as of the Closing Date, and/or (b) the originals of any Records required in connection with the Final Accounting Statement. At Sellers’ expense, photocopies of any and all Records retained by Sellers shall be furnished to Buyer within thirty (30) Days after Closing, and the originals of such Records shall be furnished to Buyer within thirty (30) Days after Sellers’ need for said Records ceases. Buyer agrees to maintain the Records received from Sellers in accordance herewith for a period of seven (7) years after the Closing and to afford Sellers reasonable access to the Records as requested by Sellers.

 

ARTICLE 12. CONDITIONS PRECEDENT TO CLOSING

 

12.1         Conditions Precedent to Seller’s Obligation to Close. Sellers shall be obligated to consummate the sale as contemplated by this Agreement on the Closing Date, provided the following conditions precedent have been satisfied or have been waived by Sellers:

 

	
  

	
(a)                                  All representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects at and as of Closing as though such representations and warranties were made at and as of such time; and

 

	
  

	
(b)                                 Buyer shall have complied in all material respects with all obligations and conditions contained in this Agreement to be performed or complied with on or prior to the Closing.

 

12.2         Conditions Precedent to Buyer’s Obligation to Close. Buyer shall be obligated to consummate the purchase as contemplated by this Agreement on the Closing Date, provided the following conditions precedent have been satisfied or have been waived by Buyer:

 

	
  

	
(a)                                  All representations and warranties of Sellers contained in this Agreement shall be true and correct in all material respects at and as of Closing as though such representations and warranties were made at and as of such time; and

 

	
  

	
(b)                                 Sellers shall have complied in all material respects with all obligations and conditions contained in this Agreement to be performed or complied with on or prior to the Closing.

 

12.3         Conditions Precedent to Obligation of Each Party. The parties shall be obligated to consummate the sale and purchase as contemplated in this Agreement on the Closing Date, provided the following conditions precedent have been satisfied or have been waived by the party or parties benefited or affected thereby:

 

 

 

 

 

  

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(a)                                  No suit, action or other proceedings shall be pending before any court or governmental entity in which it is sought by a person or entity other than the parties hereto or any of their Affiliates, officers, directors, or employees to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement, or to obtain substantial damages in connection with the transaction contemplated herein, nor shall there be any investigation by a governmental entity pending which might result in any such suit, action or other proceedings seeking to restrain, enjoin or otherwise prohibit the consummation of the transaction contemplated by this Agreement;

 

	
  

	
(b)                                 All Required Consents shall have been obtained and delivered to Buyer by the Closing; and

 

	
  

	
(c)                                  All preferential rights of purchase, if any, that may be applicable to such Properties shall have been waived, or the time to elect under such preferential rights shall have elapsed, prior to Closing.

 

ARTICLE 13. TERMINATION

 

13.1         Grounds for Termination. This Agreement may be terminated at any time prior to Closing:

 

	
  

	
(a)                                  By the mutual written agreement of Sellers and Buyer;

 

	
  

	
(b)                                 By either Seller or Buyer if the consummation of the transactions contemplated herein would violate any non-appealable final order, decree or judgment of any governmental entity having appropriate jurisdiction enjoining or awarding substantial damages in connection with the consummation of the transactions contemplated herein;

 

	
  

	
(c)                                  By either Seller or Buyer pursuant to Article 6.1 if the total value of all Casualty Losses and Open Defects exceeds two hundred fifty thousand United States dollars ($250,000); or

 

	
  

	
(d)                                 Notwithstanding anything contained in this Agreement to the contrary, by Buyer or either Seller if Closing shall not have occurred by July 15, 2014.

 

13.2         Effect of Termination. If this Agreement is terminated in accordance with Article 13.1, such termination shall be without liability of any party to this Agreement or any officer, director, Affiliate, or employee of such party, except the Earnest Money shall be returned to Buyer as provided in Article 3.2 above and the obligations provided in Articles 13.3, 13.4, 13.5 and 15.3 shall survive termination. If this Agreement is terminated as a result of Buyer’s failure or refusal to perform an obligation hereunder (including without limitation Closing on the Closing Date) or breach of Article 12.1, Sellers shall be entitled to retain the Earnest Money as a liquidated damage to reimburse Sellers for their out-of-pocket fees and expenses incurred in connection with the transactions contemplated by this Agreement. If Closing does not occur as a result of either Seller’s breach or as a result of termination by Buyer in accordance with the provisions of this Agreement, the Earnest Money shall be refunded to Buyer.

 

13.3         Dispute over Right to Terminate. If there is a dispute between the parties over either party’s right to terminate this Agreement under Article 13.1, Closing shall not occur as scheduled. The party which disputes the other party’s right to terminate may initiate arbitration proceedings in accordance with Article 15.16 within thirty (30) Days of the date on which Closing was scheduled to occur and, if arbitration is so initiated, the dispute will be resolved through such arbitration proceeding. If the party which disputes the termination right does not initiate an arbitration proceeding to resolve the dispute within the time period specified hereinabove, such party shall be deemed to have waived its right to object to such termination.

 

 

 

 

 

  

Page 17 of 24

  

 

13.4         Return of Documents. If this Agreement is terminated prior to Closing, each party shall return to the party which owns or is otherwise entitled thereto all books, records, maps, files, papers and other property in such party’s possession relating to the transaction contemplated by this Agreement.

 

13.5         Confidentiality. In the event of termination of this Agreement, the parties agree to keep all the terms of this transaction confidential for a period of two (2) years after termination of this Agreement.

 

ARTICLE 14. THE CLOSING

 

14.1         Closing. Three (3) Days prior to the Closing Date, Sellers shall provide Buyer with a Closing Statement setting forth the Purchase Price, as adjusted in accordance with this Agreement for all known adjustments as of that date. Sellers shall additionally provide Buyer with wiring instructions designating the account or accounts to which the Purchase Price is to be delivered in accordance with Article 14.3(b). Closing shall be held in Sellers’ office or any other location that is mutually agreeable to Sellers and Buyer.

 

14.2         Obligations of Seller at Closing. At the Closing, Sellers shall deliver to Buyer, unless waived by Buyer, the following:

 

	
  

	
(a)                                  An Assignment and Conveyance of the Seller Leases, Wells and Seller Easements, substantially in the form attached hereto as Exhibit C. The Assignment shall be executed and acknowledged in three (3) multiple originals or such greater number as agreed between the parties or as required by any applicable Law;

 

	
  

	
(b)                               An Assignment and Conveyance of the Easements, substantially in the form attached hereto as Exhibit C. The Assignment shall be executed and acknowledged in three (3) multiple originals or such greater number as agreed between the parties or as required by any applicable Law;

 

	
  

	
(c)                                  A Bill of Sale for the remaining Seller Assets, to the extent not conveyed by 14.2(a) above, substantially in the form attached hereto as Exhibit D.

 

	
  

	
(d)                                   Evidence of waiver or lapse of any unexercised preferential purchase rights that may be applicable to the sale of the Properties;

 

	
  

	
(e)                                    Any necessary Letters-in-Lieu of division orders or transfer orders as may be prepared by Buyer and presented to Sellers;

 

	
  

	
(f)                                 A Section 1445 Non-foreign Affidavit; and

 

	
  

	
(g)                                 Such other instruments as necessary to carry out Sellers’ obligations under this Agreement.

 

14.3         Obligations of Buyer at Closing. At the Closing, Buyer shall deliver to Seller, unless waived by Seller, the following:

 

	
  

	
(a)                                The Assignment and Conveyance documents, executed and properly acknowledged, referred to in Article 14.2(a) and (b);

 

	
  

	
(b)                                 The Bill of Sale documents, executed and properly acknowledged, referred to in Article 14.2(c) and (d);

 

 

 

 

 

  

Page 18 of 24

  

 

	
  

	
(c)                                  The adjusted Purchase Price, less Earnest Money, by wire transfer in accordance with Article 3 hereof;

 

	
  

	
(d)                                 Letters-in-Lieu of division orders or transfer orders executed by an authorized officer of Buyer substantially in the form of Exhibit E; and

 

	
  

	
(e)                                  Such other instruments as necessary to carry out Buyer’s obligations under this Agreement.

 

ARTICLE 15. MISCELLANEOUS

 

15.1         Notices. All notices and other communications required, permitted or desired to be given hereunder must be in writing and sent by U.S. mail, properly addressed as shown below, and with all postage and other charges fully prepaid or by hand delivery or by facsimile transmission. Date of service by mail is three Business Days following the date of mailing and hand delivery is the date on which such notice is delivered to the addressee and by facsimile is the date sent (as evidenced by fax machine confirmation of receipt), or if such date is not on a Business Day, then on the next date which is a Business Day. Each party may change its address by notifying the other party in writing.

 

 

	  	
If to Sellers:

	
SWO & ISM, LLC.

	  	  	
Address

	  	  	
Albany, KY

	  	  	
Attn:

	  	  	
E-mail:

	  	  	
Telephone:

	  	  	
Facsimile:

	  	  	  
	  	
If to Buyer:

	
First Columbia Gold Corp.

	  	  	
6000 Poplar Ave. Ste 250

	  	  	
Memphis, TN  38119

	  	  	
Attention: Mr. Robert Gates

	  	  	
E-mail: ergates@comcast.net

	  	  	
Telephone:

	  	  	
Facsimile:

 

15.2         Conveyance Costs. Buyer shall be solely responsible for filing and recording any documents related to the transfer of the Properties from Sellers to Buyer and for all costs and fees associated therewith, including filing any necessary transfer of ownership documents with appropriate federal, state, local and tribal authorities as required by applicable Law. Within thirty (30) Days after Closing, Buyer shall furnish Sellers with all recording data and evidence of all required filings.

 

15.3         Brokers’ Fees. Neither party has retained any brokers, agents or finders to act on behalf of either party in this matter. Each party agrees to release, protect, indemnify, defend and hold the other harmless from and against any and all Claims with respect to any commissions, finders’ fees or other remuneration due to any broker, agent or finder claiming by, through or under such party.

 

15.4         Access to Information. From the date hereof, Sellers will (i) give Buyer and its authorized representatives adequate and reasonable access, during normal business hours, to the offices, properties, books and records of Sellers relating to the Properties (including for the purposes of conducting a Financial Audit); (ii) furnish to Buyer and its authorized representatives such financial and operating data and other information relating to the Properties as may be reasonably requested; and (iii) cooperate with Sellers in connection therewith.

 

 

 

 

 

  

Page 19 of 24

  

 

15.5         Further Assurances. From and after Closing, at the request of Buyer but without further consideration, Sellers shall execute and deliver or use reasonable efforts to cause to be executed and delivered such other instruments of conveyance and take such other actions as Buyer reasonably may request to more effectively put Buyer in possession of the Properties.

 

15.6         Survival of Representations and Warranties. The representations and warranties contained in Articles 9.1, 9.2, 9.3, 9.8 and Article 10, and the special warranty of title in Article 8.1 of this Agreement shall survive Closing. No warranties or representations shall be superseded by or merged into the Assignment. The parties have made no representations or warranties, except those expressly set forth in this Agreement. All other representations, warranties, indemnities, covenants and agreements of Sellers shall terminate at Closing.

 

15.7         Amendments and Severability. No amendments or other changes to this Agreement shall be effective or binding on any of the parties unless the same shall be in writing and signed by Sellers and Buyer. The invalidity of any one or more provisions of this Agreement shall not affect the validity of this Agreement as a whole, and in case of any such invalidity, this Agreement shall be construed as if the invalid provision had not been included herein.

 

15.8         Successors and Assigns. This Agreement shall not be assigned, either in whole or in part, without the express written consent of the non-assigning party. The terms, covenants and conditions contained in this Agreement shall be binding upon and shall inure to the benefit of Sellers and Buyer and their respective successors and assigns.

 

15.9         Headings. The titles and headings set forth in this Agreement have been included solely for ease of reference and shall not be considered in the interpretation or construction of this Agreement.

 

15.10       Governing Law. This Agreement shall be governed by and construed under the Laws of the State of Tennessee, excluding any choice of law rules which may direct the application of the Laws of another jurisdiction.

 

15.11       No Third Party Beneficiaries. Nothing contained in this Agreement shall entitle anyone other than Sellers or Buyer or their authorized successors and assigns to any claim, cause of action, remedy or right of any kind whatsoever.

 

15.12       Not to be Construed Against Drafter. The parties acknowledge that they have had an adequate opportunity to review each and every provision contained in this Agreement and to submit the same to legal counsel for review and comment, including expressly but without limitation all waivers and indemnities in this Agreement. Based on said review and consultation, the parties agree with each and every term contained in this Agreement. Based on the foregoing, the parties agree that the rule of construction that a contract be construed against the drafter, if any, shall not be applied in the interpretation and construction of this Agreement.

 

15.13       Entire Agreement. This Agreement supersedes all prior and contemporaneous negotiations, understandings, letters of intent and agreements (whether oral or written) between the parties relating to the Properties and constitutes the entire understanding and agreement between the parties with respect to the sale and purchase of the Properties.

 

15.14       Conspicuousness of Provisions. The parties acknowledge that the provisions contained in this Agreement that are set out in “bold” satisfy the requirement of the express negligence rule and any other requirement at law or in equity that provisions contained in a contract be conspicuously marked or highlighted.

 

 

 

 

 

  

Page 20 of 24

  

 

15.15       Arbitration. Notwithstanding anything in this Agreement to the contrary, all disputes, other than those relating to the Final Accounting Statement which shall be resolved in accordance with Article 5.4 hereof, between the parties shall be solely and finally settled as follows:

 

	
  

	
(a)                                  Any controversy, dispute or claim arising out of, in connection with, or in relation to, the interpretation, performance, and enforceability of this Agreement (a “Dispute”), will be solely and finally settled by binding arbitration (“Arbitration”), without right of appeal. Subject to the immediately preceding sentence, any of the parties may demand arbitration by written notice to the other of the Dispute(s) and the remedy(s) sought (“Demand for Arbitration”), setting forth a summary of the Dispute and the party’s position, along with a list of three (3) arbitrator candidates, including a brief description of each arbitrator’s background and experience (provided such experience satisfies the criteria set forth in Articles 4.2(c) and 4.4(c), if applicable. The party receiving the Demand for Arbitration shall provide the other party with a response, including any affirmative defenses or counterclaims, and a list of three (3) arbitrator candidates, including a brief description of each arbitrator’s background and experience, within five (5) Business Days from the date of receipt of the Demand for Arbitration. In the event of any counterclaims being filed by a party, the other party shall have five (5) Business Days to provide the other party with a response. Any Demand for Arbitration and any counterclaims arising as a result thereof shall be initiated in accordance with any time limits provided under this Agreement for such a Dispute to be brought, and if no time limit is provided, within the time period allowed by any applicable statute of limitations.

 

	
  

	
(b)                                 The Arbitration will be conducted before a single arbitrator at a neutral location in Nashville, Tennessee. The arbitrator shall also acknowledge and agree to follow the arbitration procedures set forth herein and to make good faith efforts to meet the time lines provided hereunder. If the parties are unable to agree upon an arbitrator within ten (10) Business Days from the date of a party’s receipt of a Demand for Arbitration, then the Judicial Arbiter Group, Nashville, Tennessee (“JAG”) shall select the arbitrator for the parties. No party may have any ex parte communications with the arbitrator regarding any matter related to the Arbitration.

 

	
  

	
(c)                                  The arbitration hearing shall be scheduled within five (5) Business Days after the arbitrator is selected and shall be scheduled to take place no later than sixty (60) days from the date of the Demand for Arbitration. The arbitration shall be conducted in accordance with the following:

 

	
  

	
(i)                                     The parties may be represented by counsel.

 

	
  

	
(ii)                                  Each party shall provide the other with copies of all non-privileged documents and information that is relevant to the Dispute, on which it bases or supports its position(s) or which it intends to introduce at the arbitration hearing, and shall provide the other party with such documents or information within twenty (20) Business Days of the date of the Demand for Arbitration. Each party shall disclose to the other the names and addresses of all persons with knowledge relevant to the Dispute, including expert witnesses, who a party intends to call as a witness at the arbitration hearing.

 

 

 

 

 

 

  

Page 21 of 24

  

 

	
  

	
(iii)                             No later than five (5) Business Days before the arbitration hearing, each of the parties shall provide the other and the arbitrator with a concise written statement of the facts and evidence a party intends to present at the arbitration hearing together with a discussion of the applicable law and the basis for the requested remedy or aware or the denial of the relief sought. Unless good cause is shown, no rebuttal statements or other pre-hearing written submissions will be allowed.

 

	
  

	
(iv)                            The arbitrator shall determine the order of proof which will be similar to that used for federal judicial proceedings.

 

	
  

	
(v)                                 The arbitrator shall arrange for a stenographic or other record to be made of the arbitration hearing and both parties shall bear the cost thereof.

 

	
  

	
(vi)                            The arbitration hearing may proceed in the absence of a party who fails to attend. However, the arbitrator shall not render a decision solely on the basis of a party’s failure to attend the hearing.

 

	
  

	
(vii)                         The parties may jointly stipulate to a waiver of the hearing and agree to submit the Dispute to the arbitrator based solely on the written submissions and other evidence as the parties may agree.

 

	
  

	
(viii)                      The rules of evidence do not have to be strictly adhered to; provided, however, that the arbitrator shall apply applicable laws or

 

rules pertaining to any applicable privileges and/or work product. The arbitrator shall attempt to allow each of the parties the opportunity to present material and relevant evidence at the hearing and the arbitrator may be guided in this respect by the Federal Rules of Evidence.

 

	
  

	
(ix)                              The arbitrator will issue its decision (the “Decision”) within fifteen (15) Business Days after the close of the arbitration hearing. The arbitrator may grant any remedy or relief that the arbitrator deems to be just and equitable, including, but not limited to specific performance. The Decision shall be in writing signed by the arbitrator and shall address each Dispute or issue presented for Arbitration by the parties, including the basis or reason(s) for the Decision. Within five (5) Business Days of the issuance of the Decision, a party may serve a request on the other party and the arbitrator requesting a correction of any computation, typographical or other similar error in the Decision.  A party opposing such a request shall file its opposition within three (3) Business Days of being served with the request for the correction. Thereafter, the arbitrator shall have three (3) Business Days to take appropriate action on the request and, serve its corrected, modified or revised Decision, if any, upon the parties in writing (the “Revised Decision”). The Revised Decision shall be considered final, for purposes of any judicial proceeding to enforce or vacate the Revised Decision. All proceedings to enforce, confirm, modify or vacate the Revised Decision will be controlled by and pursuant to the Federal Arbitration Act, 9 U.S.C. § 1 et. seq. and any applicable law of the State of Tennessee before any state or federal court having jurisdiction thereof.

 

 

 

 

 

  

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(x)                                 The arbitrator may award sanctions, as appropriate, for a party’s willful failure to comply with any of its obligations hereunder, including the assessment of costs, the exclusion of evidence or any other relief as deemed equitable and just by the arbitrator.

 

	
  

	
(d)                               The parties shall bear equally the fees and expenses of the Arbitration, unless the arbitrator decides otherwise, and each party shall bear the costs of its own counsel, witnesses (if any) and employees, unless the arbitrator decides otherwise.  The parties intend that this agreement to arbitrate be valid, enforceable and irrevocable.

 

15.16       Execution in Counterparts. This Agreement may be executed in counterparts, which shall when taken together constitute one (1) valid and binding agreement. Facsimile signatures shall be effective and binding on all parties. Counterpart originals of all signatures provided by facsimile shall be provided to all parties within thirty (30) Days after execution of this Agreement.

 

[SIGNATURE PAGES FOLLOW]

 

 

 

 

 

 

 

 

  

Page 23 of 24

  

 

The parties have executed this Agreement as of the date first set forth above.

 

	  	
SELLERS:

	
SWO & ISM, LLC.

	  	  	  
	  	  	  
	  	  	By: /s/    Steve Wallace                                                                    
	  	  	
Name:    Steve Wallace

	  	  	
Title:

 

By: /s/    Monica Ticer                                                                     

Name:    Monica Ticer

Title:

	  	  	  
	  	  	
HEIN OIL CO., INC.

	  	  	  
	  	  	  
	  	  	
By: /s/    Steve Wallace                                                                     

	  	  	
Name:    Steve Wallace

	  	  	
Title:

 

By: /s/   Monica Ticer                                                                        

Name:   Monica Ticer

Title:

	  	  	
 

HEIN OIL WELL SERVICES, LLC.

 

 

By: /s/   Steve Wallace                                                                       

Name: Steve Wallace

Title:

 

By: /s/   Monica Ticer                                                                        

Name:   Monica Ticer 

Title:

	  	  	  
	  	
BUYER:

	
FIRST COLUMBIA GOLD CORP.

	  	  	  
	  	  	  
	  	  	
By: /s/   Dr. Robert Gates                                                                    

	  	  	Name:   Dr. Robert Gates
	  	  	Title:     Chief Executive Officer

 

 

  

Page 24 of 24IPG 6.30.14 10Q Exhibit 10(iii)(A)(1)

Exhibit 10(iii)(A)(1)
FORM FOR NEW PARTICIPANTS
Note:  This form should not be used for benefit increases.

Received by HR ____________________

The Interpublic Capital Accumulation Plan
Participation Agreement
WHEREAS, _______________________________ (the “Participant”) is a key executive of The Interpublic Group of Companies, Inc. (“Interpublic”) and its subsidiaries, and has been approved by Interpublic’s Management Human Resources Committee to participate in The Interpublic Capital Accumulation Plan (“CAP”);
WHEREAS, the Participant has received and reviewed the pamphlet entitled “The Interpublic Capital Accumulation Plan,” as amended and restated effective August 1, 2014, which sets forth the basic terms and conditions of CAP (such pamphlet, as in effect and amended from time to time, being referred to herein as the “Plan Document”); and
WHEREAS, the Plan Document provides that certain details with regard to the Participant’s account and other rights and responsibilities under CAP are to be set forth in the Participant’s Participation Agreement;
NOW, THEREFORE, the undersigned Participant agrees to be bound by the terms of the Plan Document, which terms are incorporated herein by reference, and modified and expanded as follows:
		
	1.
	Effective Date.  This Participation Agreement shall be effective as of __________; provided, however, that if the Participant does not execute the Participation Agreement and return it to Interpublic’s Human Resources Department by _______________ [insert the 30th day after he first became eligible to participate in CAP], this Participation Agreement shall not be effective until the next January 1st after [he] [she] returns the executed Participation Agreement to Interpublic’s Human Resources Department.

		
	2.
	Credit Amount.  

		
	•
	Subject to execution and return of this Participant Agreement by the deadline set forth above, the Participant’s dollar credit under CAP for calendar year __________ [insert year in which Participation Agreement first becomes effective] shall be $____________ [insert amount of prorated credit].

		
	•
	The Participant’s annual dollar credit under CAP for each full calendar year that starts after [he] [she] returns an executed copy of this Participation Agreement to Interpublic’s Human Resources Department shall be $_____________.

Dollar credits shall be credited to the Participant’s CAP Account only at the time, and under the circumstances, specified by the Plan Document.
		
	3.
	Interest.  The Participant’s CAP Account shall be credited with interest on December 31st of each 

DC: 949267-32

calendar year, starting with the first calendar year that starts after the first dollar credit is added to the Participant’s CAP Account, at the rate specified by the Plan Document.  For 2014, the interest rate is 3.04%.  
		
	4.
	Vesting.  Subject to paragraphs 5, 6, and 7, below, and the provisions of the Plan Document that are triggered by a Change of Control (as defined in the Plan Document), the Participant’s CAP account is scheduled to become fully vested on the following date (assuming the Participant continues in the employment of Interpublic and its Subsidiaries until such date):

		
	•
	If the Participant returns an executed copy of this Participation Agreement to Interpublic’s Human Resources Department by _______________  [insert 30th day after he first became eligible to participate in CAP], the scheduled vesting date will be ________________ [insert the third anniversary of effective date].

		
	•
	If the Participant does not return an executed copy of this Participation Agreement to Interpublic’s Human Resources Department by the date specified in the preceding paragraph, the scheduled vesting date will be December 31st of the third calendar year that starts after the Participant returns an executed copy of this Participation Agreement to Interpublic’s Human Resources Department.

		
	5.
	Release.  The Participant’s right to receive any payments under CAP is conditioned on executing the release described in the Plan Document by the deadline set forth therein, and not revoking such release.  If the Participant fails to execute such release by the applicable deadline, or the Participant revokes such release, [he] [she] shall forfeit [his] [her] the entire balance of [his] [her] CAP account and return the interest portion of any payments previously received under CAP.  

		
	6.
	Termination for Cause.  If the Participant’s employment with Interpublic and its Subsidiaries is terminated for Cause (as defined in the Plan Document), [he] [she] shall forfeit [his] [her] entire account balance.  

		
	7.
	Non-Competition, Non-Solicitation and Prohibited Activities.  For a period of two (2) years following the termination of the Participant’s employment for any reason, the Participant shall not:  (a) accept employment with or serve as a consultant, advisor or in any other capacity to an employer that is in competition with the business unit or units of Interpublic by which the Participant is employed (the “Business Unit”); (b) directly or indirectly, either on the Participant’s own behalf or on behalf of any other person, firm or corporation, solicit or perform services for any Client (as defined below); (c) directly or indirectly employ or attempt to employ or assist anyone else to employ any person who is at such time or who was within the six-month period immediately prior to such time in the employ of the Business Unit; or (d) engage in a Prohibited Activity (as defined below).  

“Client” includes any person (including a company or other entity) that, as of the date of the Participant’s termination of employment or at any time during the two-year period ending with the Participant’s termination of employment, is or was (i) a client of the Participant’s Business Unit or (ii) a prospective client with whom the Participant had direct contact.
“Prohibited Activity” includes: (i) any activity that would give rise to termination for Cause (as defined in the Plan Document); (ii) a material violation of any rule, policy or procedure of Interpublic or the Participant’s Business Unit, including but not limited to the Code of Conduct of Interpublic and any such Business Unit; or (iii) any other conduct or act that Interpublic’s 

Management Human Resources Committee (“MHRC”) or the Compensation and Leadership Talent Committee of Interpublic’s Board of Directors (the “Compensation Committee”) determines is injurious, detrimental, or prejudicial to any interest of Interpublic.  
If the Participant breaches any provision of this paragraph 7, [he] [she] shall forfeit all of the interest that has been or will be credited to [his] [her] CAP account.  The Participant acknowledges that these provisions are reasonable and necessary to protect Interpublic’s legitimate business interests, and that these provisions do not prevent the Participant from earning a living.  If at the time of enforcement of any provision of this Agreement, a court shall hold that the duration, scope, or area restriction of any provision hereof is unreasonable under circumstances now or then existing, the parties hereto agree that the maximum duration, scope, or area reasonable under the circumstances shall be substituted by the court for the stated duration, scope, or area.
		
	8.
	Time and Form of Payment.  The Participant’s vested benefit under CAP (if any) shall be paid in a lump sum at the time prescribed by the Plan Document.  The Participant may not change the form in which [his] [her] benefit under CAP will be paid, except to the extent (if at all) that the Plan Document permits the Participant to make such a change.

		
	9.
	Relationship to Plan Document.  This Participation Agreement is intended to be executed and administered in conjunction with the Plan Document, which is incorporated herein by reference.  To the extent that this Participation Agreement does not address an issue, the applicable terms and provisions of the Plan Document shall govern such issue.  To the extent that any term or provision of this Participation Agreement is inconsistent with a term or provision of the Plan Document, the term or provision of this Participation Agreement shall govern.

		
	10.
	Complete Statement and Amendment.  This Participation Agreement is a complete statement of the Participant’s benefit and other rights under CAP.  The terms of this Participation Agreement may be amended at any time to the extent permitted by the Plan  Document.

		
	11.
	Knowing and Voluntary Agreement.  By signing this Participation Agreement, the Participant acknowledges that —

		
	•
	[he] [she] has received and reviewed the Plan Document and this Participation Agreement,

		
	•
	[he] [she] fully understands the terms of the Plan Document and this Participation Agreement, and

		
	•
	[he] [she] is entering into this Participation Agreement voluntarily.

	
			
	*
	*
	*

IN WITNESS WHEREOF, Interpublic, by its duly authorized officer, and the Participant have caused this Participation Agreement to be executed.
	
		
	The Interpublic Group of Companies, Inc.
	Participant

	

BY:     _______________________________
            Ken Lareau
            Vice President, Global Compensation
	

              ______________________________

	

DATE:  ______________________________
	

DATE:  _______________________________

Return to Interpublic’s Human Resources Department.

	
	
	For HR Use Only

Effective Date:  _______________

Vesting Date:    _______________

First Dollar Credit:  $_____________, to be credited on December 31, ________

First Interest Credit:  To be credited on December 31, _______

BENEFICIARY DESIGNATION: Capital Accumulation Plan                
	
	
	 

Participant’s Name______________________________________________ Soc. Sec. No:  ______________________________
Home Address ____________________________________________________________________________________________
City________________________________________________ State _____________________________Zip________________
Date of Birth _____________________________
Daytime Telephone Number ___________________________ Evening Telephone Number ____________________________
q   Please check box if your address has changed within the last year.        q I am married.    q I am not married.

Primary Beneficiary Designation
I hereby designate such of the following person(s) who shall survive me as my Primary Beneficiary(ies):
	
					
	1.
	Name

	Relationship
	Date of Birth
	Percentage Share*

	 
	Address

	Social Security No.
	 

	2.
	Name

	Relationship
	Date of Birth
	Percentage Share*

	 
	Address

	Social Security No.
	 

	3.
	Name

	Relationship
	Date of Birth
	Percentage Share*

	 
	Address

	Social Security No.
	 

	 
	 
	 
	 
	Total = 100%

Contingent Beneficiary Designation
If no Primary Beneficiary named above shall survive me, I designate such of the following person(s) who shall survive me as my Contingent Beneficiary(ies).
	
					
	1.
	Name

	Relationship
	Date of Birth
	Percentage Share*

	 
	Address

	Social Security No.
	 

	2.
	Name

	Relationship
	Date of Birth
	Percentage Share*

	 
	Address

	Social Security No.
	 

	3.
	Name

	Relationship
	Date of Birth
	Percentage Share*

	 
	Address

	Social Security No.
	 

	 
	 
	 
	 
	Total = 100%

*If no percentage is designated, beneficiaries will share equally.  If any of my Primary Beneficiaries (or, if applicable, my Contingent Beneficiaries), predecease me, his or her benefits will be shared among my surviving Primary (or, if applicable, Contingent) Beneficiaries in accordance with the proportionate shares of the surviving beneficiaries designated above or, if no percentage is designated, equally.

Consent of Spouse
If a party other than the participant’s spouse is named as Primary Beneficiary above, this designation is valid only if the participant’s spouse (if any) consents below to the participant’s designation of the Primary Beneficiary(ies) and only if the spouse’s consent is witnessed by a notary public.

I, ____________________________________, am the spouse of the above-named participant.  I hereby consent to the designation of the Primary Beneficiary(ies) specified above.

______________________________________________________                ________________________
Spouse’s Signature                                    Date
	
	
	STATE OF ________________     COUNTY OF: ______________        ss:

On __________________________, before me personally came ________________________________; to me known and known to me to be the individual described as the spouse herein who executed the foregoing consent and duly acknowledged to me that he/she freely executed same.

_______________________________________
Notary Public             My Commission Expires:

Execution of Beneficiary Designation

	
			
	Participant's Signature
	 
	Date

	
	
	 

Exhibit 10(iii)(A)(1)

	
	
	 

THE INTERPUBLIC CAPITAL ACCUMULATION PLAN

	
	
	 

Amended and Restated
Effective August 1, 2014

	
			
	 
	 
	CAPITAL ACCUMULATION PLAN

TABLE OF CONTENTS
INTRODUCTION AND PLAN HIGHLIGHTS.........................................................................    1
ELIGIBILITY AND EFFECTIVE DATE OF PARTICIPATION AGREEMENT..................    2
YOUR BENEFIT............................................................................................................................    3
Benefit Increases and Decreases..................................................................................................    4
VESTING AND FORFEITURE...................................................................................................    4
General Rule................................................................................................................................    4
Release.........................................................................................................................................    5
Forfeiture......................................................................................................................................    5
PAYMENTS UNDER THE PLAN...............................................................................................    5
When Payments Start...................................................................................................................    5
Form of Payment..........................................................................................................................    6
DISABILITY..................................................................................................................................    7
DEATH BENEFITS.......................................................................................................................    7
Amount, Form, and Time of Death Benefit.................................................................................    7
Designating Your Beneficiary......................................................................................................    8
CHANGE OF CONTROL............................................................................................................    8
Special Vesting, Accrual, and Payment Rules..............................................................................    8
Deferred Compensation Trust......................................................................................................    9
Reduction of Benefits After a Change of Control......................................................................    10
MISCELLANEOUS.....................................................................................................................    10
Plan Administration and Review of Decisions...........................................................................10
Participation Agreement, Amendment, and Termination...........................................................    10
Successors to Interpublic............................................................................................................    11
Coordination with Other Benefits..............................................................................................    11
Nature of Your Account Balance and Plan Assets.....................................................................    12
Assignment and Alienation........................................................................................................    12
Withholding and Other Tax Consequences................................................................................    12
Authority to Determine Payment Date.......................................................................................    12
Compliance with Tax Code § 409A...........................................................................................    12
Mailing Address.........................................................................................................................    13
Overpayments............................................................................................................................    13
Incapacity and Minor Status......................................................................................................    13
Continued Employment.............................................................................................................    13
Liability Limited........................................................................................................................    13
Titles and Headings Not to Control...........................................................................................    13
Severability.................................................................................................................................    13
Variations in Plan Terms............................................................................................................    14
Complete Statement of the Plan.................................................................................................    14
CLAIMS AND APPEALS...........................................................................................................    14
Initial Claims..............................................................................................................................    14
Appeals.......................................................................................................................................    15
Other Rules and Rights Regarding Claims and Appeals............................................................    16
GLOSSARY OF KEY TERMS...................................................................................................    16

	
			
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EXHIBIT A:  SAMPLE RELEASE LANGUAGE...................................................................    21

As required by Treasury Department Circular 230, we inform you that (1) any statement regarding federal tax law contained in this pamphlet is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, (2) any such statement was written to support the promotion or marketing of the Plan, and (3) you should seek tax advice based on your individual circumstances from an independent tax advisor.

	
			
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INTRODUCTION AND PLAN HIGHLIGHTS
This pamphlet sets forth the basic terms of The Interpublic Capital Accumulation Plan, as amended and restated effective August 1, 2014. Capitalized terms used in this pamphlet are defined in the Glossary of Key Terms, at the end of the pamphlet.
The Plan is sponsored by Interpublic and has been in effect since August 2003. Your rights and responsibilities under the Plan are also governed by your Participation Agreement with Interpublic. Your Participation Agreement incorporates this pamphlet by reference — which means that this pamphlet is part of your Participation Agreement.
The Plan is unfunded and is designed primarily to provide deferred compensation for a select group of senior management employees of Interpublic and its Subsidiaries. The Plan is excepted from most of the requirements of ERISA.
The benefits provided under the Plan are offered to secure your goodwill, loyalty, and achievement, as well as to attract and retain other executives of outstanding competence. The Plan does not, however, give you the right to continue in the employ of Interpublic or its Subsidiaries, or to receive annual compensation of any particular amount.
Key features of the Plan include the following:
		
	•
	Eligibility to participate in the Plan must be approved by the MHRC. (See “Eligibility and Effective Date of Participation Agreement.”)

		
	•
	Your benefit under the Plan is expressed as an account balance — the total of all of the dollar amounts that have been entered in a bookkeeping account maintained for you under the Plan reduced by any previous distributions to you under the Plan and also reduced by any amounts that you have forfeited under the Plan.

		
	•
	Each year, as long as your Participation Agreement remains in effect, a dollar credit will be added to your account. The amount of the dollar credit is set forth in your Participation Agreement. In general, the dollar credit amount will be added to your account for a year only if you are an active employee participating in the Plan on December 31st of that year. However, special rules apply if your employment is terminated involuntarily without Cause or you resign for Good Reason. In addition, interest will be added to your account each December 31st.  (See “Your Benefit.”)

		
	•
	You may forfeit (or lose) your account balance under the Plan before you become vested. Subject to special rules that apply after a Change of Control, you vest in your account balance after you have participated in the Plan for three years. However, even after you vest, you will forfeit the interest that has been added to your account if you violate any restrictive covenant under your Participation Agreement; and additional forfeiture rules apply if your employment is terminated for Cause or you do not execute a required release. (See “Vesting and Forfeiture.”)

		
	•
	In general, Interpublic will pay (or begin to pay, if you are receiving monthly installments) your vested benefit under the Plan during the first month that starts on or after the second anniversary of your Termination of Employment. (See “When Payments Start.”)  However, special rules apply (a) if you terminate employment at age 66 or older, (b) if you die before payments start, and (c) in the event of a Change of Control. (See “When Payments Start,” “Death Benefits” and “Change of Control.”)

	
			
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	•
	If your participation was approved on or after August 1, 2014 your vested benefit under the Plan will be paid in a lump sum.  If your participation was approved before August 1, 2014, your vested benefit will be paid in the form specified in your Participation Agreement (generally a lump sum or monthly installments over 10 or 15 years). In any event, if your employment terminates before you reach age 55 or before you complete five years of participation in the Plan, your vested benefit will automatically be paid in a lump sum. (See “Form of Payment.”)  Also, special rules apply after a Change of Control. (See “Change of Control.”)

		
	•
	The Plan is not funded. This means that the promise to pay benefits under the Plan is not backed up by a trust fund or by any other dedicated assets and that, as a Plan participant, you are a general unsecured creditor of Interpublic. Although special rules apply in the event of a Change of Control, those rules do not change your status as a general unsecured creditor. (See “Change of Control” and “Nature of Your Account Balance and Plan Assets.”)

		
	•
	Your benefits under the Plan are in addition to, and independent of, any benefits to which you may be entitled under other benefit plans sponsored by Interpublic.

ELIGIBILITY AND EFFECTIVE DATE OF PARTICIPATION AGREEMENT
The Plan is designed to benefit key executives of Interpublic and its Subsidiaries.  You are eligible to participate in the Plan only if your participation is approved by the MHRC.
If you are eligible to participate in the Plan, you will become a participant after you execute your Participation Agreement.  Your Participation Agreement and any amendment to your Participation Agreement will become effective on the date set forth in your Participation Agreement or amendment.  
Your effective date is conditioned on returning your signed Participation Agreement to Interpublic by the deadline specified in your Participation Agreement.  If you miss the specified deadline, your Participation Agreement will not be effective until the next January 1st after you return your signed Participation Agreement.
Different rules applied if your participation was approved before August 1, 2014.

	
			
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YOUR BENEFIT
Your benefit under the Plan is expressed as an account balance.
		
	•
	On December 31st of each year (starting with the year in which your Participation Agreement becomes effective), if you are actively employed by Interpublic or a Subsidiary (and your participation in the Plan has not ended), the amount of the annual dollar credit set forth in your Participation Agreement will be added to your account. If your Participation Agreement becomes effective on a date other than January 1st, the dollar credit amount for your first year of participation will be pro-rated. The applicable dollar credit for a year will be added to your account only if you are an active employee participating in the Plan on December 31st of that year.    

		
	•
	If (a) your employment with Interpublic and its Subsidiaries is terminated involuntarily without Cause or (b) you resign from employment with Interpublic and its Subsidiaries for Good Reason, an additional amount will be added to your account as of December 31st of the year in which your Termination of Employment occurs.  The additional amount will equal the sum of the dollar credits that would have been added to your account on each December 31st after your Termination of Employment if you had continued working for Interpublic (as an active participant in the Plan) through your Severance Completion Date. (Unless your Severance Completion Date occurs on December 31st, you will not receive a dollar credit for the year in which your Severance Completion Date occurs.)  

Your account will also be credited with interest on December 31st of each year until your vested account balance is paid in full. The amount of interest added to your account on each December 31st will be based on your account balance on that date, excluding the amount of any dollar credit that is added to your account on the same date.
		
	•
	Effective for calendar years after 2005, the interest rate is the 10-year U.S. Treasury yield curve annual rate (also known as the “constant maturity rate”) as of the last business day of the immediately preceding calendar year, as published by the U.S. Department of Treasury’s Office of Debt Management.

		
	•
	For calendar years before 2006, the interest rate was set annually by the MHRC.

Unless the last payment of your vested account balance happens to be made on December 31st, interest will not be added to your account in the year the last payment is made.

	
			
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	EXAMPLE. Suppose you sign a Participation Agreement specifying an annual dollar credit of $25,000, effective July 1, 2014, and the Plan’s annual interest rate is 2%.
•    On December 31, 2014, $12,500 (1/2 of $25,000, because you participated in the Plan for only 1/2 of the year) would be added to your account. Your account balance as of January 1, 2015 would be $12,500.
•    On December 31, 2015, your account would be credited with $250 (2% of $12,500) in interest, and a dollar credit of $25,000 would be added to your account. Your account balance as of January 1, 2016 would be $37,750 ($12,500 + $250 + $25,000).
If your Participation Agreement remains in effect and is not amended, annual dollar credits and interest will be added to your account each December 31st if you are still an active employee participating in the Plan on that December 31st. After you terminate employment, your account will be credited with interest on each December 31st until your vested account balance is paid in full. (As explained above, your account will not be credited with interest for the year in which the last payment is made, unless the last payment is made on December 31st.)

Your account balance is subject to forfeiture until it becomes fully vested. The vesting rules are described under “Vesting and Forfeiture,” below. Also, special rules apply after a Change of Control. (See “Change of Control,” below.)
BENEFIT INCREASES AND DECREASES
The amount of your annual dollar credit under the Plan may be increased or decreased (including to zero) from time to time.  Any change in the amount of the annual dollar credit will be set forth in an amendment to your Participation Agreement or in a new Participation Agreement.  Except during the three-year period following a Change of Control, your consent is not required for any change to your dollar credit for periods after the change is made.
VESTING AND FORFEITURE
GENERAL RULE
In general, you will vest in your account balance after you have participated in the Plan for three years.
		
	•
	If (a) your employment with Interpublic and its Subsidiaries is terminated involuntarily without Cause or (b) you resign from employment with Interpublic and its Subsidiaries for Good Reason, you will receive service credit as if you had participated in the Plan through your Severance Completion Date.

For example, if your employment with Interpublic is terminated involuntarily without Cause after you participated in the Plan for two years, and you are eligible to receive Severance Pay in installments for 12 months after your Termination of Employment, you will have three years of service credit (2 years of active participation plus one year of severance). As a result, your account would be fully vested.
		
	•
	Participation in any predecessor plan, including an ESBA, will not count toward the three years of participation required for vesting.

		
	•
	Special rules apply after a Change of Control. (See “Change of Control,” below.)

	
			
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RELEASE
Effective August 1, 2014, to receive a benefit under the Plan, you must execute a release that is acceptable to Interpublic no later than 45 days after your Termination Date, and you must not revoke the release.  Sample release language appears at Exhibit A.  If you do not sign the release by the deadline (or you revoke the release) your benefit under the Plan will be forfeited, even if you previously satisfied the vesting conditions.
The release requirement does not apply if your participation in the Plan was approved before August 1, 2014.
FORFEITURE
You will forfeit (or lose) any portion of your benefit that is not vested upon your Termination of Employment (determined as if you had continued working for Interpublic, as an active participant in the Plan, through your Severance Completion Date). Any unvested account balance and years of participation that accrued before your Termination of Employment will not be reinstated, even if you are rehired.  In addition: 
		
	•
	You will forfeit all of the interest that has been or will be credited to your account if you violate a restrictive covenant set forth in your Participation Agreement.  Effective August 1, 2014, the restrictive covenants generally prohibit competition, solicitation of certain current, former, and prospective clients and employees, and any other Prohibited Activity (as defined in your Participation Agreement).

		
	•
	Effective August 1, 2014, you will forfeit your entire benefit if your employment is terminated for Cause or you fail to execute (or you revoke) the release described above.  (The release is not required if your participation in the Plan was approved before August 1, 2014.)

PAYMENTS UNDER THE PLAN
WHEN PAYMENTS START
Subject to special rules that apply after a Change of Control (see “Change of Control,” below), Interpublic will start paying your vested benefit during the first month that starts on or after the second anniversary of your Termination of Employment.
However, the two-year wait will not apply if your participation in the Plan was approved on or after August 1, 2014, and you terminate employment at age 66 or older.  In that case, Interpublic will pay your vested benefit, if any, as of the first day of the later of (a) the seventh month that starts after your Termination of Employment or (b) the first month that starts on or after your 68th birthday.
For example, if your employment with Interpublic and its Subsidiaries terminates on June 15, 2015, before you reach age 66, Interpublic would make the first payment in July 2017.

	
			
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	EXAMPLE. Suppose your Participation Agreement provides for an annual dollar credit of $25,000 and the Plan’s annual interest rate is 2%. If your employment is terminated involuntarily without Cause on June 15, 2015, before you reach age 66 but after your account is fully vested, and you are eligible to receive Severance Pay in installments for 12 months after your Termination of Employment —
•    Your Severance Completion Date would be on or about June 15, 2016. Accordingly, as of December 31, 2015, $25,000 (the dollar amount that would have been added to your account on December 31, 2015, if you had continued working, as an active participant in the Plan, through your Severance Completion Date) will be added to your account.
•    On December 31, 2015, your account (excluding the $25,000 added on December 31, 2015) would be credited with interest in an amount equal to 2% of your account balance as of December 31, 2015.
•    On December 31, 2016, your account would be credited with interest in an amount equal to 2% of your account balance as of December 31, 2016.
•    In July 2017, Interpublic would pay your benefit.  The amount paid to you would be your vested account balance as of December 31, 2016. You would not receive interest for the period from December 31, 2016 until your account balance is paid to you.

FORM OF PAYMENT
If your participation in the Plan was approved on or after August 1, 2014, Interpublic will pay your benefit in a lump sum.  
If your participation was approved before August 1, 2014, Interpublic will pay your benefit in the form specified in your Participation Agreement (generally a lump sum or monthly installments over 10 or 15 years).  However, if your employment terminates before age 55, or before you have completed at least five years of participation in the Plan, Interpublic will automatically pay your benefit in a lump sum, regardless of the form specified in your Participation Agreement.
If your benefit is paid in installments, the amount to be paid each year will be determined by dividing your vested account balance (determined as of the date when payments begin and, in succeeding years, as of the anniversary of that date) by the remaining number of annual installments. The amount of each monthly installment in a year will be 1/12th of the amount to be paid in that year.
As installments are being paid, the unpaid portion of your vested account will continue to earn interest on December 31st of each year, at the Plan’s interest rate.

	
			
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	EXAMPLE. Suppose your vested account balance is $500,000, your benefit is to be paid in installments over 10 years, and the Plan’s annual interest rate is 2%.
•    In Year #1, you would receive $50,000, in monthly payments of $4,166.67 each.
Annual Amount = $500,000/10 = $50,000
Monthly Amount = $50,000/12 = $4,166.67
•    At the end of Year #1, your vested account balance would be $450,000 and $9,000 in interest would be added to your account.
$500,000 - $50,000 = $450,000
2% of $450,000 = $9,000
New Balance = $450,000 + $9,000 = $459,000
•    In Year #2, when 9 annual payments remain, you would receive $51,000, in monthly payments of $4,250.00 each.
Annual Amount = $459,000/9 = $51,000
Monthly Amount = $51,000/12 = $4,250

Payments would continue, and interest would continue to be credited, according to the process described above, until your vested account balance is paid in full.  Your final installment payment would include interest credited to your account on the last December 31st before the final installment is paid.  (As explained above, you would not receive interest for the period from that December 31st until the last installment is paid.)

The Plan does not allow you to change the form in which your vested benefit will be paid.
DISABILITY
If you become disabled while employed, you will continue to earn dollar credits and to accumulate years of Plan participation until your Termination of Employment, and interest credits will continue to be added each year until your vested account balance is paid in full.  Payments will start after your Termination of Employment in accordance with the payment timing rules described in this pamphlet. (See “Payments Under the Plan,” above.)
The date of your Termination of Employment will be determined in accordance with the Plan’s definition of “Termination of Employment.”
DEATH BENEFITS
AMOUNT, FORM, AND TIME OF DEATH BENEFIT
If you die before your vested account balance is paid in full, a beneficiary (or beneficiaries) whom you select will be entitled to receive your remaining vested account balance in a lump sum. Interpublic will pay the lump sum within 90 days after your death.

	
			
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DESIGNATING YOUR BENEFICIARY
You may designate one or more primary beneficiaries to receive your vested account balance after your death. You may also designate one or more contingent beneficiaries, who would receive any remaining vested account balance if all of your primary beneficiaries die before all payments have been made. You may change your beneficiaries at any time before your death by filing a new beneficiary designation form with Interpublic’s Human Resources Department.
If you are married on the date of your death, your beneficiary will be your spouse, unless you specify a different beneficiary. You may not designate a beneficiary other than your spouse, however, without your spouse’s written consent.
In the absence of an effective beneficiary designation (or if none of your primary or contingent beneficiaries are living), your vested account balance (if any) will be distributed, in the form set forth above, to the first of the following to survive you:
		
	•
	Your spouse;

		
	•
	Your children (to be divided equally);

		
	•
	Your parents;

		
	•
	Your brothers and sisters (to be divided equally); or

		
	•
	The executors or administrators of your will.

The form for making your initial beneficiary designation is attached to your Participation Agreement. You may obtain new beneficiary designation forms from Interpublic’s Human Resources Department.
CHANGE OF CONTROL
SPECIAL VESTING, ACCRUAL, AND PAYMENT RULES
Special Vesting and Accrual Rules
If, after a Change of Control, (a) your employment with Interpublic and its Subsidiaries is terminated involuntarily without Cause or (b) you resign from employment with Interpublic and its Subsidiaries for Good Reason:
		
	•
	Your account will immediately become fully vested (if not already vested), and

		
	•
	Interpublic will immediately credit your account with the sum of the annual dollar credits that would have been added to your account on each December 31st after your Termination of Employment if you had continued working for Interpublic (as an active participant in the Plan) through your Severance Completion Date.

Special Payment Rule
		
	•
	If your Termination of Employment (for any reason) occurs within two years after a Change of Control, Interpublic will pay your account balance (including any additional credits, as described above, if your employment is terminated involuntarily without Cause or you resign for Good 

	
			
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Reason) in a lump sum.
		
	Ø 
	Unless Interpublic determines that you are a Top-50 Employee, the lump-sum payment will be made within 30 days after your Termination of Employment.

		
	Ø
	If Interpublic determines that you are a Top-50 Employee, the lump-sum payment will be delayed until the earlier of (a) the first day of the seventh month that starts after your Termination of Employment or (b) the first day of the first month that starts after your death. You will not receive any special interest payments for the delay, but Interpublic will continue to add annual interest credits to your account each December 31st until your account balance is paid in full.

		
	•
	If your Termination of Employment occurs after the second anniversary of the Change of Control, Interpublic will pay your account balance (including the additional credits described above) at the time and in the form that would apply if there had not been a Change of Control.

DEFERRED COMPENSATION TRUST
Before a Change of Control, Interpublic must contribute to a Deferred Compensation Trust an amount equal to the then-present value of the sum of all benefits that would become payable under the Plan if Interpublic terminated all participants’ employment without Cause immediately after the Change of Control. The amount to be contributed will be determined by an Outside Auditor engaged by Interpublic at Interpublic’s expense.
For purposes of calculating the amount to be contributed to a Deferred Compensation Trust, the Outside Auditor will make the following assumptions:
		
	•
	The assumed annual rate of interest and discount rate will be the rate of interest to be credited to accounts (as described under “Your Benefit,” above) for the year in which the Change of Control occurs, and

		
	•
	Payment of the benefits described above would be due within 30 days after the Change of Control.

Assets that Interpublic or any Subsidiary contributes to the Deferred Compensation Trust are subject to the claims of the creditors of Interpublic or the Subsidiary (as the case may be) in the event of its bankruptcy or insolvency. The Deferred Compensation Trust will not change your status as a general unsecured creditor of Interpublic.

	
			
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REDUCTION OF BENEFITS AFTER A CHANGE OF CONTROL
It is possible that some or all of the benefit you receive after a Change of Control will be treated as an “excess parachute payment” that is subject to a 20% excise tax under Section 4999 of the Tax Code. If an Outside Auditor determines that any amount payable to you under the Plan is reasonably likely to trigger the 20% excise tax, your benefit under the Plan will be whichever of the following amounts results in a larger net benefit to you, after taxes (as determined by the Outside Auditor):
		
	•
	Your full benefit under the Plan, all or part of which might be subject to a 20% excise tax, or

		
	•
	Your benefit under the Plan, reduced to the extent the Outside Auditor determines is necessary to avoid triggering the 20% excise tax.

Interpublic will engage and pay the fees for the Outside Auditor to perform these calculations.
MISCELLANEOUS
PLAN ADMINISTRATION AND REVIEW OF DECISIONS
The Plan’s administrator is the MHRC. Before a Change of Control, the Plan’s administrator has complete and exclusive discretionary authority and responsibility to administer and interpret the Plan’s governing documents (including the authority to make findings of fact and to resolve ambiguities and inconsistencies in the Plan’s language, and to correct any inadvertent omissions). All decisions of the Plan’s administrator are considered to be final and controlling. Review by a court of any decision of the Plan’s administrator will be subject to the following standard of review:
		
	•
	Before a Change of Control, the standard of review will be the “arbitrary and capricious” standard, which means that the court will defer to the MHRC’s decision (or the decision of any successor to the MHRC), and will not overturn that decision unless the court concludes that the decision cannot be supported by the relevant facts and applicable law.

		
	•
	After a Change of Control, the standard of review will be “de novo,” which means that the court may overturn the MHRC’s decision (or the decision of any successor to the MHRC) if it disagrees with the decision.

The MHRC has authority to delegate any of its duties and responsibilities under the Plan as it deems appropriate. In addition, the MHRC may engage one or more persons to render advice with regard to any of its administration responsibilities. Any final decision by a delegate of the MHRC will be treated for purposes of the Plan as a decision of the MHRC.
PARTICIPATION AGREEMENT, AMENDMENT, AND TERMINATION
Your Participation Agreement sets forth specific terms relating to your benefit under the Plan. Your Participation Agreement, including any amendment to your Participation Agreement, is valid only if it is executed on behalf of Interpublic, by Interpublic’s Vice President, Global Compensation or a member of the MHRC.

	
			
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Although Interpublic intends to continue the Plan indefinitely, Interpublic reserves the right to amend or terminate the Plan and any Participation Agreement at any time, and from time to time, either retroactively or prospectively, without your consent. However, unless necessitated by a change in applicable law, an amendment or termination may not —
		
	•
	reduce the amount of your vested account balance as of the later of (a) the effective date of the amendment or termination or (b) the date the amendment or termination is adopted; or

		
	•
	result in a change to the form or time for paying your account balance under the Plan, unless Interpublic determines, based on the advice of counsel, that a change in the form or time of payment will not trigger adverse tax consequences.

In addition, any amendment or termination that is adopted or becomes effective during the three years following a Change of Control may not take away any of your rights, or relieve Interpublic of any of its obligations under the Plan, including those set forth in the section entitled “Change of Control,” above.
Subject to the restrictions set forth above, any amendment or termination may be adopted by resolution of the Compensation Committee.  In addition, the MHRC —
		
	•
	may make any amendment required to comply with federal or state law (including any tax law that could result in adverse tax consequences), or that is desirable to improve the administration of the Plan, if the amendment does not materially affect the level of benefits provided under the Plan to or on behalf of any participant; 

		
	•
	may change the amount of your annual dollar credit (including a reduction to zero) for future periods; and

		
	•
	has discretion to accelerate payment to the extent that Interpublic or the MHRC determines, with the advice of counsel, is permitted without violating the requirements of Section 409A of the Tax Code.

SUCCESSORS TO INTERPUBLIC
Interpublic shall require any successor to its business or its assets to assume the Plan expressly, absolutely, and unconditionally, and to administer the Plan in accordance with its terms. After a Change of Control, all references to Interpublic and its Subsidiaries shall be deemed to refer to Interpublic’s successor and its Subsidiaries.
COORDINATION WITH OTHER BENEFITS
Your benefit under the Plan is designed to be in addition to any benefits you earn under other benefit plans sponsored by Interpublic and its Subsidiaries. Except as expressly provided in another plan or in this Plan, your right to a benefit under the Plan will not affect the benefits under any other plan.

	
			
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NATURE OF YOUR ACCOUNT BALANCE AND PLAN ASSETS
The obligation to pay your vested account balance is a liability of Interpublic. Benefits under the Plan are not insured by the Pension Benefit Guaranty Corporation, and any assets that Interpublic or a Subsidiary sets aside to fund your vested account balance under the Plan, whether in a Deferred Compensation Trust or otherwise, will remain available to creditors of Interpublic or the Subsidiary (as the case may be) in the event of its bankruptcy or insolvency.
ASSIGNMENT AND ALIENATION
In general, your right to a benefit under the Plan (and the corresponding rights of your beneficiaries) may not be assigned, transferred, alienated, encumbered, or otherwise subject to lien. However, the Plan will comply with domestic relations orders that the Plan’s administrator determines are “qualified domestic relations orders” under ERISA.
WITHHOLDING AND OTHER TAX CONSEQUENCES
Interpublic will deduct from amounts paid or due to a participant or beneficiary under the Plan all income, employment, excise and other taxes that it reasonably determines are required to be withheld by any government or government agency, including taxes on income that is currently subject to tax even though it is not currently paid or payable to you.  All benefit amounts described in the Participation Agreement and Plan document are gross amounts, before reductions for withholding.  You (or your beneficiaries) are responsible for satisfying any remaining tax obligations (including any tax or penalty due as a result of a failure to comply with Section 409A of the Tax Code; see “Compliance with Tax Code § 409A,” below), to the extent that amounts withheld (if any) are insufficient.
AUTHORITY TO DETERMINE PAYMENT DATE
To the extent that any payment under the Plan may be made within a specified number of days on or after any date or the occurrence of any event, the date of payment shall be determined by Interpublic in its sole discretion, and not by any participant, beneficiary, or other individual.
COMPLIANCE WITH TAX CODE § 409A
Your benefit under the Plan is subject to Section 409A of the Tax Code, which imposes restrictions on deferred compensation arrangements like the Plan. Interpublic intends to operate, administer, and interpret the Plan in accordance with Section 409A. If the Compensation Committee or the MHRC determines in good faith that (a) any aspect of the Plan is inconsistent with the restrictions imposed by Section 409A (including guidance interpreting Section 409A) and (b) an amendment to the Plan could reduce or eliminate adverse tax consequences under Section 409A, the Compensation Committee or the MHRC may amend the Plan (including your Participation Agreement) without your consent to the extent that it determines, based on the advice of counsel, the amendment is necessary to reduce or eliminate such adverse tax consequences.

	
			
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MAILING ADDRESS
After you terminate employment with Interpublic and its Subsidiaries, you will receive periodic correspondence related to your benefit (if any) under the Plan. It is your responsibility to notify Interpublic’s Human Resources Department of any changes in your mailing address or in the mailing address of any of your beneficiaries (or contingent beneficiaries). Failure to update your address could delay distribution of your vested account balance.
OVERPAYMENTS
If an overpayment of benefits is made under the Plan, the amount of the overpayment may be set off against future payments under the Plan until the overpayment has been recovered. If no future payments are scheduled, you will be required to return the overpaid amount, and Interpublic may pursue any legal or equitable avenue to effectuate recovery.
INCAPACITY AND MINOR STATUS
If any individual entitled to a payment under the Plan is a minor, or is physically or mentally unable to care for his or her affairs, and another person or institution is maintaining custody over the individual entitled to receive the payment, payments under the Plan may be made, for the benefit of the individual entitled to payment, to the custodial person or institution, as applicable. If a court has appointed a guardian or representative of the individual entitled to payment, payment will be made to the guardian or representative. Any such payment will discharge the Plan’s liability, as if the payment were made to the individual entitled to payment.
CONTINUED EMPLOYMENT
Nothing in the Plan gives you the right to continue in the employment or service of Interpublic or its Subsidiaries, or to receive annual compensation in any particular amount. Conversely, nothing in the Plan gives Interpublic or any Subsidiary the right to require you to remain in its employ.
LIABILITY LIMITED
Except as and to the extent otherwise provided by applicable law, no liability will attach to or be incurred by the shareholders, directors, officers, or employees of Interpublic and its Subsidiaries under or by reason of any of the terms and conditions of the Plan.
TITLES AND HEADINGS NOT TO CONTROL
The titles and headings of sections of the Plan are for convenience of reference only. In the event of any conflict, the text of the Plan, rather than the titles or headings, will control.
SEVERABILITY
If any provision of the Plan is held illegal or invalid for any reason, other provisions will be unaffected. The Plan will be construed as if any illegal or invalid provision were never inserted.

	
			
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VARIATIONS IN PLAN TERMS
Your individual Participation Agreement may contain provisions that conflict with or are otherwise inconsistent with the terms set forth in this plan document. If so, the terms of your Participation Agreement will control.  For the avoidance of doubt, however, this plan document applies to the extent that any issue is not addressed in your Participation Agreement: silence in your Participation Agreement will not be construed as a conflict or inconsistency.
COMPLETE STATEMENT OF THE PLAN
This pamphlet and your Participation Agreement are a complete statement of your rights under the Plan. Any question regarding your rights under the Plan must be resolved by applying the terms of the Plan document and your Participation Agreement. External evidence of intent or meaning will not be relevant.
CLAIMS AND APPEALS
The Plan has specific procedures for making a claim for benefits. You must exhaust this claim and appeal process before you can file a lawsuit in court. The claim and appeal process has two levels: (1) the initial claim and (2) review on appeal. They operate as follows:
INITIAL CLAIMS
		
	1.
	Any benefit claim must be in writing and delivered to the MHRC, at the following address:

IPG Management Human Resources Committee
1114 Avenue of the Americas, 19th Floor
New York, NY 10036
Attn: Executive Vice President, Chief Strategy and Talent Officer
		
	2.
	The MHRC will generally review and decide each claim within 90 days after the claim is received. If the MHRC needs more time to decide your claim, the MHRC will notify you, and may extend the review period by up to an additional 90 days.

		
	Ø
	The time period within which the MHRC must decide your claim starts on the date the MHRC receives your claim, even if you do not submit all of the information needed to resolve your claim. However, if the MHRC needs more information to resolve your claim, you and the MHRC may agree to extend the period for making the decision. If you do not provide any requested information by the deadline that the MHRC sets, the MHRC will decide your claim based on the information it has as of the deadline. This might result in your claim being denied.

		
	Ø
	If your claim is not resolved within the time periods described above, you may consider your claim to have been denied. You may (a) contact the MHRC to determine whether your claim has, in fact, been denied, (b) file an appeal with the MHRC (following the procedures set forth in the “Appeals” section, below), or (c) bring a lawsuit under Section 502(a) of ERISA.

		
	3.
	When your claim is decided, the MHRC will issue a written decision. If your claim is wholly or partially denied, the decision will include —

		
	Ø
	the specific reason or reasons for denial of your claim;

		
	Ø
	references to the specific Plan provisions upon which the denial is based;

	
			
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	Ø
	a description of any additional material or information necessary to perfect your claim, and an explanation of why the material or information is necessary;

		
	Ø
	an explanation of the appeal procedures and the applicable time limits; and

		
	Ø
	a statement of your right to file a lawsuit under Section 502(a) of ERISA if your claim is denied after the MHRC reviews its initial decision.

APPEALS
		
	1.
	Within 60 days after you receive a written notice of denial of your claim (or the end of the time period for deciding your claim), you may file a written request with the MHRC, at the address shown above, for a full and fair review of its initial decision (an “appeal”).

		
	2.
	In connection with a request for review, you may —

		
	Ø
	submit written comments, documents, records and other information relating to your claim; and

		
	Ø
	receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information that the MHRC determines is relevant to your claim.

		
	3.
	The review on appeal will take into account all comments, documents, records and other information that you submit, regardless of whether the information was considered in the initial benefit determination. The MHRC will generally decide your appeal within 60 days after your request for review is received. If the MHRC needs more time, the MHRC will notify you, and the MHRC may extend the review period by up to an additional 60 days.

		
	Ø
	If the MHRC needs more information to decide your appeal, the period within which the MHRC must decide your appeal will automatically be extended. The length of the extension will be equal to the number of days from when the MHRC sends you a request for additional information until the earlier of (a) the date the MHRC receives the requested information or (b) the due date that the MHRC establishes for providing that information.

		
	Ø
	If your appeal is not resolved within the time periods described above, you may consider your appeal to have been denied. You may (a) contact the MHRC to determine whether your appeal has, in fact, been denied and/or (b) bring a lawsuit under Section 502(a) of ERISA.

		
	4. 
	When your appeal is decided, the MHRC will render a written decision. If your appeal is wholly or partially denied, the decision will include —

		
	Ø
	the specific reason or reasons for the decision;

		
	Ø
	references to the specific Plan provisions upon which the decision is based;

		
	Ø
	an explanation of your right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information that the MHRC determines is relevant to your claim for benefits; and

		
	Ø
	a statement of your right to bring a civil action under Section 502(a) of ERISA.

	
			
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OTHER RULES AND RIGHTS REGARDING CLAIMS AND APPEALS
		
	•
	You may authorize a representative to pursue any claim or appeal on your behalf. The MHRC may establish reasonable procedures for verifying that any representative has in fact been authorized to act on your behalf.

		
	•
	The Plan will be interpreted and enforced in accordance with the applicable provisions of ERISA and federal tax laws that apply to nonqualified deferred compensation. To the extent that state-law issues arise, New York law (exclusive of choice of law provisions) will govern.

GLOSSARY OF KEY TERMS
	
		
	 
	 

	Business Unit
	The business unit or units of Interpublic by which you are employed.

	Cause
	Cause for your employer to terminate your employment with Interpublic and its Subsidiaries, which will exist if —
•    you materially breach a provision in an employment agreement between you and Interpublic or a Subsidiary, and you do not cure that breach within 15 days after you receive written notice from your employer of the breach;
•    without written approval from Interpublic’s Board of Directors or the person to whom you report directly, you (a) misappropriate funds or property of Interpublic or a Subsidiary or (b) attempt to secure any personal profit related to the business of Interpublic or a Subsidiary;
•    you engage in conduct that Interpublic determines constitutes fraud, material dishonesty, gross negligence, gross malfeasance, insubordination, or willful misconduct in the performance of your duties as an employee of Interpublic or a Subsidiary, or you willfully fail to follow Interpublic’s code of conduct, unless your actions (or failure to act) are taken in good faith and do not cause material harm to Interpublic or a Subsidiary;
•    you refuse or fail to attempt in good faith (a) to perform your duties as an employee of Interpublic or a Subsidiary or (b) to follow a reasonable good-faith direction of Interpublic’s Board of Directors or the person to whom you report directly, and you do not cure the refusal or failure within 15 days after you receive written notice from your employer of the refusal or failure;
•    you commit, or are formally charged or indicted for allegedly committing, a felony or a crime involving dishonesty, fraud, or moral turpitude; or
•    you engage in activities that are prohibited by Interpublic’s policy prohibiting discrimination or harassment based on age, gender, race, religion, disability, national origin or any other protected category.

	
			
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	Change of Control
	A change in (a) the ownership or effective control of Interpublic or (b) the ownership of a substantial portion of Interpublic’s assets, each as defined in rules and regulations under Section 409A of the Tax Code.
Subject to certain limited exceptions, a Change of Control of Interpublic would generally occur if —
•    a person or group acquires more than 50% of the total fair market value or voting power of Interpublic’s stock;
•    during a 12-month period, a person or group acquires 30% or more of the total voting power of Interpublic’s stock;
•    during a 12-month period, a person or group acquires 40% or more of Interpublic’s assets (determined based on gross fair market value); or
•    during a 12-month period, a majority of Interpublic’s Board of Directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board before the appointment or election.

	Compensation Committee
	The Compensation and Leadership Talent Committee of Interpublic’s Board of Directors, or its successor.

	Deferred Compensation Trust
	A trust agreement to which Interpublic is a party that is established to fund benefits under the Plan. The terms of any Deferred Compensation Trust are subject to the restrictions set forth in Section 409A of the Tax Code, and assets that Interpublic or a Subsidiary sets aside in any Deferred Compensation Trust will be subject to the claims of creditors of Interpublic or the Subsidiary (as the case may be) in the event of its bankruptcy or insolvency.

	ERISA
	The Employee Retirement Income Security Act of 1974, as amended.

	ESBA
	An Executive Special Benefit Agreement with Interpublic.

	
			
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	Good Reason 
	You will be considered to have resigned for Good Reason only if:
Ø    You notify Interpublic in writing that one or more of the “triggering circumstances” listed below has occurred within 90 days after the circumstance(s) first occurred;
Ø    The triggering circumstance(s) is (are) not remedied within 30 days after Interpublic receives the notice required by the preceding bullet;
Ø    You did not provide notice of your intent to resign at any time before the triggering circumstance(s) first occurred; and
Ø    Your Termination of Employment is effective as soon as practicable (and no more than 10 days) after the earlier of (1) the end of the 30-day cure period described above or (2) the date your Business Unit provides written notice of its express waiver of the cure period.
•    The following are the “triggering circumstances”:
Ø    Interpublic or a Subsidiary materially reduces your rate of base salary;
Ø    An action by Interpublic or a Subsidiary results in your authority, duties, or responsibilities being materially diminished;
Ø    An action by Interpublic or a Subsidiary results in material diminution in your reporting structure (for example, insertion of a new position between you and the position to which you report);
Ø Interpublic or a Subsidiary materially diminishes the budget over         which you retain authority;
Ø    Your principal place of work is moved more than 50 miles outside the city in which you are principally based, unless (a) you make the relocation decision or (b) you are notified in writing that Interpublic or your employer is seriously considering such a relocation and do not object in writing (based on a reasonable concern) within 10 days after you receive the written notice; or
Ø    Interpublic or a Subsidiary materially breaches any employment agreement between you and your employer.

	Interpublic
	The Interpublic Group of Companies, Inc., and any successor to The Interpublic Group of Companies, Inc.

	MHRC
	Interpublic’s Management Human Resources Committee.

	
			
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	Outside Auditor
	Either of the following firms:
•    The outside auditing firm retained by Interpublic in the last fiscal year that ends before a Change of Control, or
•    A national auditing firm acceptable to at least 75% of the Plan participants who are actively working for Interpublic or a Subsidiary immediately before a Change of Control.

	Participation Agreement
	The written agreement between you and Interpublic that documents the terms of your participation in the Plan.

	Plan
	The Interpublic Capital Accumulation Plan, as set forth in this pamphlet and your Participation Agreement, each as in effect and amended from time to time.

	Severance Completion Date
	The last day of the calendar month that includes the end of the payroll period for which your last Severance Payment (if any) is paid.  If you are not eligible to receive Severance Pay, or you receive Severance Pay in a lump sum, your Severance Completion Date is the date of your Termination of Employment.

	Severance Pay
	A payment or payments made under a severance plan or policy or an agreement with Interpublic or a Subsidiary upon or after your Termination of Employment as compensation for (a) terminating your employment involuntarily without Cause or (b) your resignation for Good Reason.

	Subsidiary
	Any corporation or other entity that is required to be combined with Interpublic as a single employer under Section 414(b) or (c) of the Tax Code. In general, this means Interpublic and all other entities of which Interpublic directly or indirectly owns 80 percent or more of the combined voting power or total value of shares.

	Tax Code
	The Internal Revenue Code of 1986, as amended.

	Termination of Employment
	The date your employment with Interpublic and its Subsidiaries ends, including the date on which you die, retire, quit, or are discharged, as determined by Interpublic in accordance with Treas. Reg. § 1.409A-1(h).  Subject to the next sentence, if you are on a leave of absence, your Termination of Employment will automatically be deemed to have occurred on the later of (a) the first day that is more than six months after your leave started or (b) the first day after all statutory and contractual rights to reemployment with Interpublic or a Subsidiary expire.  If the reason for your leave of absence is a medically determinable physical or mental condition that can be expected to last for six consecutive months or longer, and the condition causes you to be unable to perform the duties of your position or a substantially similar position, the six-month period described in clause (a) of the preceding sentence will be extended to 29 months.
A sale of assets by Interpublic or a Subsidiary to an unrelated buyer that results in your working for the buyer (or one of its affiliates) will not, by itself, constitute a Termination of Employment unless Interpublic (with the buyer’s written consent) so provides in writing 60 or fewer days before the closing of the sale.

	
			
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	Top-50 Employee
	A “specified employee” under Section 409A of the Tax Code, determined by Interpublic in accordance with Treas. Reg. § 1.409A-1(i). In general, as long as Interpublic is a public company (or, if Interpublic is acquired, the parent company is a public company), you will be a “specified employee” under Section 409A of the Tax Code if you are one of the 50 highest-paid officers of Interpublic (or, if Interpublic is acquired, the corporate parent) and its Subsidiaries.

	 
	 

	
			
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Exhibit A:  Sample Release Language
Release of Claims.  By signing this Agreement and Release, Employee, on behalf of him/herself and his/her current, former, and future heirs, executors, administrators, attorneys, agents and assigns, hereby fully and without limitation releases, covenants not to sue, and forever discharges Employer, The Interpublic Group of Companies, Inc. (“Interpublic”), and their respective parents, subsidiaries, and affiliates, officers, directors, employees, shareholders, members, agents, attorneys, trustees, fiduciaries, representatives, benefit plans and plan administrators, successors and/or assigns, and all persons or entities acting by, through, under, or in concert with any or all of them (collectively, the “Releasees”) from all rights, claims, actions and causes of action, whether in law or equity, suits, damages, losses, attorneys’ fees, costs, and expenses, of whatever nature whatsoever that Employee now has or has ever had, whether known or unknown or based on facts now known or unknown, fixed or contingent, suspected or unsuspected, against the Releasees, occurring from the beginning of time up to and including the date that Employee executes this Agreement and Release that arise out of, or are in any way related to Employee’s employment by Employer or the termination of Employee’s employment with Employer.
Without limiting the foregoing, Employee understands and agrees that the foregoing release provisions include, without limitation:  
		
	a.
	any claims for wrongful termination, defamation, invasion of privacy, intentional infliction of emotional distress, or any other common law claims;

		
	b.
	any claims for the breach of any written, implied or oral contract between Employee and Employer, including but not limited to any contract of employment;

		
	c.
	any claims of discrimination, harassment or retaliation based on such things as age, national origin, ancestry, race, religion, sex, sexual orientation, or physical or mental disability or medical condition; 

		
	d.
	any claims for payments of any nature, including but not limited to wages, overtime pay, vacation pay, severance pay, commissions, bonuses and benefits or the monetary equivalent of benefits, but not including any claims for unemployment or workers’ compensation benefits, or for the consideration being provided to Employee pursuant to Paragraph 2 of this Agreement; and 

		
	e.
	all claims that Employee has or that may arise under the common law and all federal, state and local statutes, ordinances, rules, regulations and orders, including but not limited to any claim or cause of action based on the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Americans with Disabilities Act, the Civil Rights Acts of 1866, 1871 and 1991, the Rehabilitation Act of 1973, the National Labor Relations Act, the Employee Retirement Income Security Act of 1974, the Worker Adjustment and Retraining Notification Act, the Vietnam Era Veterans' Readjustment Assistance Act of 1974, Executive Order 11246, and any state laws governing employee rights, [if Employer is located in California:  including, but not limited to, the California Labor Code, Section 1542 of the Civil Code of California] as each of them has been or may be amended.

[if Employer is located in California:  Section 1542 of the Civil Code of California provides:
A general release does not extend to claims, which the creditor does not 

	
			
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know or suspect to exist in his/her favor at the time of executing the release, which if known by him/her must have materially affected his settlement with the debtor.
Employee acknowledges that the above release covers all claims described in this Paragraph, whether such claims are known or unknown and suspected or unsuspected.  Employee further acknowledges that he/she understands the significance and consequences of this release and of this specific waiver of Section 1542 of the Civil Code of California.]
This Agreement and Release shall be binding upon and inure to the benefit of Employee and the Releasees and any other individual or entity who may claim any interest in the matter through Employee.  Employee also acknowledges that he/she has not assigned any of his/her rights to make the aforementioned claims or demands.  Employee also acknowledges and represents that he/she has not filed nor will he/she file any lawsuits based on claims or demands that he/she has released herein.

	
			
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