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Exhibit 10.3 UST Seq. No. 595 WAIVER In consideration for the benefits I will receive as a result of my employer’s participation in the United States Department of the Treasury’s TARP Capital Purchase Program (i.e. Reliance Bancshares, Inc.), I hereby voluntarily waive any claim against the United States or my employer for any changes to my compensation or benefits that are required to comply with the regulation issued by the Department of the Treasury as published in the Federal Register on I acknowledge that this regulation may require modification of the compensation, bonus, incentive and other benefit plans, arrangements, policies and agreements (including so-called “golden parachute” agreements) that I have with my employer or in which I participate as they relate to the period the United States holds any equity or debt securities of my employer acquired through the TARP Capital Purchase Program. This waiver includes all claims I may have under the laws of the United States or any state related to the requirements imposed by the aforementioned regulation, including without limitation a claim for any compensation or other payments I would otherwise receive, any challenge to the process by which this regulation was adopted and any tort or constitutional claim about the effect of these regulations on my employment relationship.           Date: February 13, 2009   -s- Jerry S. Von Rohr [c49556c4955600.gif]           Name:   Jerry S. Von Rohr     Title:   Chairman, President and         Chief Executive Officer of         Reliance Bancshares, Inc.   WAIVER Purchase Program.           Date: February 13, 2009   -s- Dale E. Oberkfell [c49556c4955601.gif]           Name:   Dale E. Oberkfell           Chief Financial Officer of     WAIVER Purchase Program. Date: February 13, 2009 -s- David S. Matthews [c49556c4955602.gif]   Name: David S. Matthews Title: Market President, Phoenix, Arizona of   WAIVER Purchase Program.           Date: February 13, 2009   -s- Daniel Jasper [c49556c4955603.gif]           Name:   Daniel Jasper     Title:   Vice Chairman and         Chief Executive Officer of     WAIVER Purchase Program.           Date: February 13, 2009   -s- Daniel S. Brown [c49556c4955604.gif]           Name:   Daniel S. Brown           Chief Lending Officer of  

Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 In connection with the Quarterly Report of LILM, Inc. (the “Company”) on Form 10-Q/A for the period ending March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George I. Norman, III, Chief Executive Officer and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/George I. Norman, III George I. Norman, III Chief Executive Officer Principal Accounting Officer May 21, 2012 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.The foregoing certifications are accompanying the Company's Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

Exhibit 32. 2 (b) Certification of Quarterly Report by Chief Financial Officer. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION -OXLEY ACT OF 2002 In connection with the Quarterly Report of hopTo Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jean-Louis Casabonne, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Jean-Louis Casabonne Jean-Louis Casabonne Chief Financial Officer November 14, 2014

USA Truck Announces Second Quarter Results VAN BUREN, ARKANSASJuly 21, 2011 USA Truck, Inc. (NASDAQ: USAK) today announced base revenue of $108.5 million for the quarter ended June 30, 2011, an increase of 14.3% from $94.9 million for the same quarter of 2010.Net income was $0.6 million, $0.06 per share, for the quarter ended June 30, 2011, compared to $0.9 million, $0.09 per share, for the same quarter of 2010.During the quarter ended June 30, 2010, we entered into, and subsequently sold, a fuel hedge contract which resulted in a reduction of fuel expense on a pre-tax basis of approximately $1.2 million and on a net-of-tax basis of approximately $0.7 million, or $0.07 per share. Base revenue increased 13.0% to $208.1 million for the six months ended June 30, 2011, from $184.1 million for the same period of 2010.We incurred a net loss of $2.12 million, $0.21 per share, for the six months ended June 30, 2011, compared to a net loss of $2.10 million, $0.20 per share, for the same period of 2010. In comparing the financial results of the quarter ended June 30, 2011, to the comparable period of 2010, Cliff Beckham, President and CEO, made the following statement: “Despite a relatively soft freight environment in the first six weeks of the quarter, we nearly tripled our earnings excluding the effect of last year's fuel hedge gain, which amounted to approximately $1.2 million pretax, or $0.07 per share. As we progress toward full implementation of our VEVA (Vision for Economic Value Added) strategic plan, we believe our diversified model of integrated and complimentary service offerings exhibits more signs of maturity. “In Trucking, our customer, lane and load selection continued to improve, partially offset by increased driver-related costs: · Customers who we consider “core” to our long-term prospects represented 33% of our total revenue during the quarter compared to just 24% during the comparable quarter. Those customers were specifically selected as “core” customers because, among other things, their freight has tended to remain consistent seasonally and cyclically. · Fifty-three percent of our loads moved in our Spider Web network compared to 46% a year ago. The improved density in our preferred lanes and a generally favorable industry environment for pricing led to an 8.5% increase in our loaded rate per mile to $1.655, the highest in our history. · Our freight network is becoming increasingly regionalized as our Spider Web density grows. Our loaded length of haul was 534 miles, the shortest in our history. · The growing ability of our team members to profitably service our customers' capacity needs and balance our freight network was increasingly evident throughout the course of the quarter. · The major impediment to greater earnings in Trucking was a lack of qualified drivers: · Though our turnover rate was actually lower than the second quarter of 2010, the carryover of unmanned trucks from the first quarter led to elevated driver-related costs as we worked to man those trucks with highly qualified drivers.As a result, driver compensation costs increased nearly $0.03 per mile or approximately $0.08 per share for the quarter.Driver recruiting and training costs also increased by 20%, or approximately $0.03 per share.We expect that most of these costs will subside upon reaching our goal of 3% unmanned tractors. · An average of 9.1% of our fleet was unmanned during the quarter compared to 6.5% last year. The 2.6% difference reduced earnings by nearly $0.05 per share due to a reduction in miles per tractor per week (achieving our goal of no more than 3% of unmanned trucks would have added approximately another $0.07 of earnings to the quarter). “In SCS (Strategic Capacity Solutions, our brokerage service offering), base revenue more than doubled and operating income increased approximately two-and-a-half times to $2.3 million. That performance was driven by growth in branch offices (we added three during the quarter bringing the total number of branches to 11), and by growth in productivity (operating income per SCS team member grew by 60%). Not only did our SCS team members execute the model well, but they also provided solutions for over 16,000 loads for our SCS customers, most of whom are also Trucking customers who appreciate the additional capacity. “In Intermodal, we are still working to fully utilize the private containers we took delivery of last fall.While the addition of those containers drove substantial revenue growth, a lack of load volume in the right lanes resulted in an operating loss.However, that loss was considerably smaller than the first quarter 2011 loss.Despite the lack of profitability during the quarter, Intermodal provided our customers with solutions for nearly 3,600 loads.We expect Intermodal will be profitable during the third quarter based on current market conditions. “Overall, our model gained momentum as the quarter unfolded.Tighter truck capacity relative to freight demand certainly contributed to that momentum late in the quarter, but we believe our model gained a measure of maturity during the quarter as we extended our services to specific new customers in the right lanes at the right prices. “While we realize that much work remains before we achieve our first strategic objective of earning our cost of capital and that a $0.06 profit is inadequate, we also recognize meaningful progress has been made and June gave us a glimpse of what we believe our developing model is capable of producing.” Darron Ming, Vice President and Chief Financial Officer of the Company, added the following statement concerning liquidity and capital resources: “Total debt increased $16.3 million from December 31, 2010 as a result of the purchase of 305 tractors and 350 trailers during the first half of 2011.In addition, cash provided by operations was hampered by the rise in fuel prices during 2011, which increased our accounts receivable as we passed along increased fuel surcharges to our customers.We would anticipate our cash provided by operations to show improvement during the second half of 2011, especially if fuel prices stabilize.We intend to purchase an additional 250 tractors during the second half of 2011, and we expect our total net capital expenditures for the remainder of the year to approximate $18.1 million.We were in compliance with all our debt covenants and as of June 30, 2011, we have $38.2 million available on our Credit Agreement and $37.7 million available through leasing commitments.” USA Truck, Inc. The following table summarizes the results of operations information of USA Truck, Inc. (“Company”) for the three and six month periods indicated: USA TRUCK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, Revenue: Trucking revenue $ Strategic Capacity Solutions revenue Intermodal revenue Base revenue Fuel surcharge revenue Total revenue Operating expenses and costs: Fuel and fuel taxes Salaries, wages and employee benefits Purchased transportation Depreciation and amortization Operations and maintenance Insurance and claims Operating taxes and licenses Communications and utilities Gain on disposal of revenue equipment, net Other Total operating expenses and costs Operating income (loss) Other expenses (income): Interest expense Other, net Total other expenses, net Income (loss) before income taxes Income tax expense (benefit) Net income (loss) $ Net earnings (loss) per share information: Average shares outstanding (Basic) Basic earnings (loss) per share $ Average shares outstanding (Diluted) Diluted earnings (loss) per share $ USA Truck, Inc. The following table includes key operating results and statistics for our three operating segments. Three Months Ended Six Months Ended June 30, June 30, Trucking: Operating income (loss) (in thousands) (1) $ 37 $ $ $ Operating ratio (2) % Total miles (in thousands) (3) Empty mile factor % Weighted average number of tractors (4) Average miles per tractor per period Average miles per tractor per week Average miles per trip Base Trucking revenue per tractor per week $ Number of tractors at end of period (4) Strategic Capacity Solutions: Operating income (in thousands) (1) $ Gross margin (5) % Intermodal: Operating (loss) income (in thousands) (1) $ 85 Gross margin (5) % (1)Operating income (loss) is calculated by deducting total operating expenses from total revenues. (2) Operating ratio is calculated by dividing total operating expenses, net of fuel surcharge, by base revenue. (3) Total miles include both loaded and empty miles. (4) Tractors include Company-operated tractors in service plus tractors operated by independent contractors. (5) Gross margin is calculated by taking total base revenue, less purchased transportation expense net of fuel surcharge revenue and dividing that amount by total base revenue.This calculation includes intercompany revenues and expenses. The following table reflects the condensed financial position of the Company as of the dates indicated: (in thousands) June 30, December 31, Assets Current assets: Cash

Exhibit 10.6 STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE–NET (Do not use this form for Multi-Tenant Property) 1. Basic Provisions (“Basic Provisions”) 1.1 Parties: This Lease (“Lease”), dated for reference purposes only. June 17, 1996, is made by and between HENRY SHWEID AND MARGARET MUNZIKA SCHWEID INTERVIVOS REVOCABLE TRUST (“Lessor”) and JUICE CLUB, INC. (“Lessee”), (collectively the “Parties,” or individually a “Party”). 1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, and commonly known by the street address of 1700 17TH STREET located in the City of San Francisco State of California and generally described as (describe briefly the nature of the property) approximately 30,650 rentable square foot building and all easements, rights-of-way and appurtenances thereto See Exhibit “A”. (“Premises”). (See Paragraph 2 for further provisions.) 1.3 Term: Five (5) years and one and one-half months (“Original Term”) commencing, June 15, 1996 (“Commencement Date”) and ending July 31, 2001 (“Expiration Date”). (See Paragraph 3 for further provisions.) See Addendum. 1.4 Early Possession: (See Addendum, Paragraph 1.3) (“Early Possession Date”). (See Paragraphs 3.2 and 3.3 for further provisions.) 1.5 Base Rent: See Addendum.                                                               (See Paragraph 4 for further provisions.) 1.6 Base Rent Paid Upon Execution: $             as Base Rent for the period of September 1, 1996 through and including September 30, 1996. 1.7 Security Deposit: $             (“Security Deposit”). (See Paragraph 5 for further provisions.) 1.8 Permitted Use: general offices, warehouse, distribution, research and development.                                                               (See Paragraph 6 for further provisions.) 1.9 Insuring Party: Lessor is the “Insuring Party” unless otherwise stated herein. (See Paragraph 8 for further provisions.) 1.10 Real Estate Brokers: The following real estate brokers (collectively, the “Brokers”) and brokerage relationships exist in this transaction and are consented to by the Parties (check applicable boxes): Emerald Real Estate Brokerage Investments represents     x  Lessor exclusively (“Lessor’s Broker”);    ¨  both Lessor and Lessee, and Whitney Cressman Limited represents    x  Lessee exclusively (“Lessee’s Broker”);    ¨  both Lessee and Lessor. (See Paragraph 15 for further provisions.) 1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by None (“Guarantor”). (See Paragraph 37 for further provisions.) 1.12 Addenda. Attached hereto is an Addendum                                                                                                    all of which constitute a part of this Lease. 2. Premises. 2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in the Lease. Unless otherwise provided herein, any statement of square footage set forth in this Lease, or that may have been used in calculating rental, is an approximation which Lessor and Lessee agree is reasonable and the rental based thereon is not subject to revision whether or not the actual square footage is more or less. 2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free of debris on the Commencement Date and warrants to Lessee that the existing plumbing, fire sprinkle system, lighting, roof, air conditioning, heating, and loading doors, if any, in the Premises, and all structural elements of the Premises other than those constructed by Lessee, shall be in good operating condition on the Commencement Date. If a non-compliance with said warranty exists as of the Commencement Date, Lessor shall, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify same at Lessor’s expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty within one (1) year after the Commencement Date, with respect to the roof and thirty (30) days with respect to the other items described above, correction of that non-compliance shall be the obligation of Lessee at Lessee’s sole cost and expense. See Addendum. 2.3 Compliance with Covenants, Restrictions and Building Code. Lessor warrants to Lessee that the improvements on the Premises comply with all applicable covenants or restrictions of record and applicable building codes, regulations and ordinances in effect on the Commencement Date. Said warranty does not apply to the use to which Lessee will put the Premises or to any Alterations or Utility Installations (as defined in Paragraph 7.3 (a)) made or to be made by Lessee. If the Premises do not comply with said warranty, Lessor shall, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify the same at Lessor’s expense. 2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has been advised by the Brokers to satisfy itself with respect to the condition of the Premises (including but not limited to the electrical and fire sprinkler systems, security, environmental aspects, compliance with Applicable Law, as defined in Paragraph 6.3) and the present and future suitability of the Premises for Lessee’s intended use, (b) that Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to Lessee’s occupancy of the Premises and/or the term of this Lease, and (c) that neither Lessor, nor any of Lessor’s agents, has made any oral or written representations or warranties with respect to the said matters other than as set forth in this Lease. See Addendum. 3. Term. 3.1 Term. The Commencement Date, Expiration Date and Original term of this Lease are as specified in Paragraph 1.3.   2 3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early possession. All other terms of this Lease, however, (including but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such early possession shall not affect nor advance the Expiration Date of the Original Term. 3.3 Delay in Possession. If for any reason Lessor cannot deliver possession of the Premises to Lessee as agreed herein by June 15, 1996, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease, or the obligations of Lessee hereunder, or extend the term hereof but in such case, Lessee shall not, except as otherwise provided herein, be obligated to pay rent or perform any other obligation of Lessee under the terms of this Lease until Lessor delivers possession of the Premises to Lessee. If possession of the Premises is not delivered to Lessee by July 15, 1996, Lessee may, at its option, by notice in writing to Lessor within ten (10) days thereafter, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder; provided, however, that if such written notice by Lessee is not received by Lessor within said ten (10) day period, Lessee’s right to cancel this Lease shall terminate and be of no further force or effect. Except as may be otherwise provided, and regardless of when the term actually commences, if possession is not tendered to Lessee by June 15, 1996 and Lessee does not terminate this Lease, as aforesaid, the period free of the obligation to pay Base Rent, if any, that Lessee would otherwise have enjoyed (that is, 77 days) shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts, changes or omissions of Lessee. 4. Rent. 4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or changes, as the same may be adjusted from time to time, to be received by Lessor in lawful money of the United States, without offset or deduction, on or before the day on which it is due under the terms of this Lease. Base Rent and all other rent and charges for any period during the term hereof which is for less than one (1) full calendar month shall be prorated based upon the actual number of days of the calendar month involved. Payment of Base Rent and other charges shall be made to Lessor at its address stated herein or to such other persons or at such other addresses as Lessor may from time to time designate in writing to Lessee. 5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee’s faithful performance of Lessee’s obligations under this Lease. If Lessee fails to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, cost, expense, loss or damage (including reasonable attorneys’ fees) which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within ten (10) days after written request therefor deposit moneys with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. Lessor shall not be required to keep all or any part of the Security Deposit separate from its general accounts. Lessor shall, within thirty (30)   3 days of the expiration or earlier termination of the term hereof and after Lessee has vacated the Premises, return to Lessee (or, at Lessor’s option, to the last assignee, if any, of Lessee’s interest herein), that portion of the Security Deposit not used or applied by Lessor. Unless otherwise expressly agreed in writing by Lessor, no part of the Security Deposit shall be considered to be held in trust, to bear interest or other increment for its use, or to be prepayment for any moneys to be paid by Lessee under this Lease. 6. Use. 6.1 Use. Lessee shall use and occupy the Premises only for the purposes set forth in Paragraph 1.8 or any other use which is comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that creates waste or nuisance, or that disturbs owners and/or occupants of, or causes damage to, neighboring premises or properties. Lessor hereby agrees to not unreasonably withhold or delay its consent to any written request by Lessee, Lessee’s assignees or subtenants, and by prospective assignees and subtenants of the Lessee, its assignees and subtenants, for a modification of said permitted purpose for which the premises may be used or occupied, so long as the same will not impair the structural integrity of the improvements on the Premises, the mechanical or electrical systems therein, is not significantly more burdensome to the Premises and the improvements thereon, and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within five (5) business days give a written notification of same, which notice shall include an explanation of Lessor’s reasonable objections to the change in use. 6.2 Hazardous Substances. (a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for liability of Lessor to any governmental agency or third party under any applicable stature or common law theory. Hazardous Substance shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or fractions thereof. Lessee shall not engage in any activity in, on or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances without the express prior written consent of Lessor and compliance in a timely manner (at Lessee’s sole cost and expense) with all Applicable Law (as defined in Paragraph 6.3). “Reportable Use” shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with any government authority. Reportable Use shall also include Lessee’s being responsible for the presence in, on or about the Premises of a Hazardous Substance brought onto the Premises by Lessee, its agents, employees, representatives and invitees with respect to which any Applicable Law requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may, without Lessor’s prior consent, but in compliance with all Applicable Law, use any ordinary and customary materials reasonably   4 required to be used by Lessee in the normal course of Lessee’s business permitted on the Premises, so long as such use is not a Reportable Use and does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may (but without any obligation to do so) condition its consent to the use or presence of any Hazardous Substance, activity or storage tank by Lessee upon Lessee’s giving Lessor such additional assurances as Lessor, in its reasonable discretion, deems necessary to protect itself, the public, the Premises and the environment against damage, contamination or injury and/or liability therefrom or therefor, including, but not limited to, the installation (and removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the Premises (such as concrete encasements) and/or the deposit of an additional Security Deposit under Paragraph 5 hereof. (b) Duty to inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance, or a condition involving or resulting from same, has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor. Lessee shall also immediately give Lessor a copy of any statement, report, notice, registration, application, permit, business plan, license, claim, action or proceeding given to, or received from, any governmental authority or private party, or persons entering or occupying the Premises, concerning the presence, spill, release, discharge of, or exposure to, any Hazardous Substance or contamination in, on, or about the Premises, including but not limited to all such documents as may be involved in any Reportable Uses involving the Premises. (c) Indemnification. Lessee shall indemnify, protect, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, and the Premises, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, costs, claims, liens, expenses, penalties, permits and attorney’s and consultant’s fees arising out of or involving any Hazardous Substance or storage tank brought onto the Premises by or for Lessee or under Lessee’s control. Lessee’s obligations under this Paragraph 6 shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation (including consultant’s and attorney’s fees and testing), removal, remediation, restoration and/or abatement thereof, or any contamination therein involved, and shall survive the expiration or earlier termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances or storage tanks, unless specifically so agreed by Lessor in writing at the time of such agreement. 6.3 Lessee’s Compliance with Law. Except as otherwise provided in this Lease, Lessee, shall, at Lessee’s sole cost and expense, fully, diligently and in a timely manner, comply with all “Applicable Law,” which term is used in this Lease to include all laws, rules, regulations, ordinances, directives, covenants, easements and restrictions of record, permits, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants, relating in any manner to the Premises (including but not limited to matters pertaining to (i) industrial hygiene, (ii) environmental conditions on, in, under or about the Premises, including soil and groundwater conditions caused by Lessee, its agents, employees, representatives and invitees, and (iii) the use, generation, manufacture, production installation, maintenance, removal, transportation, storage,   5 spill or release of any Hazardous Substance or storage tank by Lessee, its agents, employees representatives and invitees), now in effect or which may hereafter come into effect, and whether or not reflecting a change in policy from any previously existing policy. Lessee shall, within five (5) days after receipt of Lessor’s written request, provide Lessor with copies of all documents and information, including, but not limited to, permits, registrations, manifests, applications, reports and certificates, evidencing Lessee’s compliance with any Applicable Law specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving failure by Lessee or the Premises to comply with any Applicable Law. See Addendum. 6.4 Inspection: Compliance, Lessor and Lessor’s Lender(s) (as defined in Paragraph 6.3(a)) shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after 24 hours prior written notice, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease and all Applicable Laws (as defined in Paragraph 6.3), and to employ experts and/or consultants in connection therewith and/or to advise Lessor with respect to Lessee’s activities, including but not limited to the installation, operation, use, or from the Premises. The costs and expenses of any such inspections shall be paid by the party requesting same, unless a Default or Breach of this Lease, violation of Applicable Law, or a contamination, caused or materially contributed to by Lessee is found to exist or be imminent, or unless the inspection is requested or ordered by a governmental authority as the result of any such existing or imminent violation or contamination. In any such case, Lessee shall upon request reimburse Lessor or Lessor’s Lender, as the case may be, for the costs and expenses of such inspections. See Addendum. 7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations. 7.1 Lessee’s Obligations. (a) Subject to the provisions of Paragraphs 2.2 (Lessor’s warranty as to condition), 2.3 (Lessor’s warranty as to compliance with covenants, etc). 7.2 (Lessor’s obligations to repair). 9 (damage and destruction), and 14 (condemnation). Lessee shall, at Lesssee’s sole cost and expense and at all times keep the non-structural elements of the Premises and every part thereof in good order, condition and repair, structural and non-structural (whether or not such portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements or the age of such portion of the Premises), including, without limiting the generality of the foregoing all equipment or facilities serving the Premises, such as plumbing, heating, air conditioning, ventilating, electrical, lighting facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or standpipe and hose or other automatic fire extinguishing system, including fire alarm and/or smoke detection systems and equipment, fire hydrants, fixtures, walls (interior and exterior), ceilings, non-structural portions of the roofs, floors, windows, doors, plate glass, skylights landscaping, driveways, parking lots, [ILLEGIBLE] fences, retaining walls, signs, sidewalks and parkways located in, on, or about the Premises. Lessee shall not cause or permit   6 any Hazardous Substance to be spilled or released in, on, under or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee’s expense, take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises, the elements surrounding same, or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance and/or storage tank brought onto the Premises by or for Lessee or under its control. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices. Lessee’s obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements theron or a part thereof in good order, condition and state of repair. If Lessee occupies the Premises for seven (7) years or more, Lessor may require Lessee to repaint the exterior of the buildings on the Premises as reasonably required, but not more frequently than once every seven (7) years. See Addendum. (b) Lessee shall, at Lessee’s sole cost and expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in, the inspection, maintenance and service of the following equipment and improvements, if any, located on the Premises: (i) heating, air conditioning and ventilation equipment, (ii) boiler, fired or unfired pressure vessels; (iii) fire sprinkler and/or standpipe and hose or other automatic fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof covering and drain maintenance and (vi) asphalt and parking lot maintenance. 7.2 Lessor’s Obligations. Except for the warranties and agreements of Lessor contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3 (relating to compliance with covenants, restrictions and building code), 9 (relating to destruction of the Premises) and 14 (relating to condemnation of the Premises, Lessor shall, at Lessor’s expense, keep the foundations, structural portions of the roof and all structural aspects of the Premises in good order, condition and repair. Except as specified in this Paragraph 7.2 or elsewhere in this Lease, it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, the improvements located thereon, or the equipment therein, all of which obligations are intended to be that of the Lessee under Paragraph 7.1 hereof. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises. Lessee and Lessor expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease with respect to, or which affords Lessee the right to make repairs at the expense of Lessor or to terminate this Lease by reason of any needed repairs. See Addendum. 7.3 Utility Installations; Trade Fixtures; Alterations. (a) Definitions; Consent Required. The term “Utility Installations” is used in this Lease to refer to all carpeting, window coverings, air lines, power panels, electrical distribution, security, fire protection systems, communication systems, lighting fixtures, heating, ventilating, and air conditioning equipment, plumbing and fencing in, on or about the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment. The term “Alterations” shall mean any modification of the improvements on the Premises from that which are provided by Lessor under the terms of this Lease, other than Utility Installations or Trade   7 Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or Utility Installations” are defined as Alterations and/or Utility Installations made by lessee that are not yet owned by Lessor as defined in Paragraph 7.4(a). Lessee shall not make any Alterations or Utility Installations in, on, under or about the Premises without Lessor’s prior written consent. Lessee may, however, without Lessor’s approval (but following written notice to Lessor) make non-structural Utility Installations and Alterations to the interior of the Premises (excluding the roof), as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls and as long as the cost of any project does not exceed $25,000. (b) Consent. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with proposed detailed plans. All consents given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent, shall be deemed conditioned upon: (i) Lessee’s acquiring all applicable permits required by governmental authorities, (ii) the furnishing of copies of such permits together with a copy of the plans and specifications for the Alteration or Utility Installation to Lessor prior to commencement of the work thereon, and (iii) the compliance by Lessee with all conditions of said permits in a prompt and expeditious manner. Any Alterations or Utility Installations by Lessee during the term of this Lease shall be done in a good and workmanlike manner, with good and sufficient materials, and in compliance with all Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor with as-built plans and specifications therefor. See Addendum. (c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanics’ or materialmen’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days’ notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to one and one-half times the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same, as required by law for the holding of the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor’s attorney’s fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so. 7.4 Ownership; Removal; Surrender; and Restoration. (a) Ownership. Subject to Lessor’s right to require their removal or become the owner thereof as hereinafter provided in this Paragraph 7.4, all Alterations and Utility Additions made to the Premises by Lessee shall be the property of and owned by Lessee, but considered a part of the Premises Lessor may, at the termination of this Lease, elect in writing to Lessee to be the owner of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per subparagraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or earlier termination of this Lease, become the property of Lessor and remain upon and be surrendered by Lessee with the Premises.   8 (b) Removal. Unless otherwise agreed in writing, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or earlier termination of this Lease, notwithstanding their installation may have been consented to by Lessor. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent of Lessor. (c) Surrender/Restoration. Lessee shall surrender the Premises by the end of the last day of the Lease term or any earlier termination date, with all of the improvements, parts and surfaces thereof clean and free of debris and in good operating order, condition and state of repair, ordinary wear and tear excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have been prevented by good maintenance practice or by Lessee performing all of its obligations under this Lease. Except as otherwise agreed or specified in writing by Lessor, the Premises, as surrendered, shall include the Utility Installations. The obligation of Lessee shall include the repair of any damage occasioned by the installation, maintenance or removal of Lessee’s Trade Fixtures, furnishings, equipment, and Alterations and/or Utility Installations, as well as the removal of any storage tank installed by or for Lessee, and the removal, replacement, or remediation of any soil, material or ground water contaminated by Lessee, all as may then be required by Applicable Law and/or good service practice. Lessee’s Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee subject to its obligation to repair and restore the Premises per this Lease. 8. Insurance; Indemnity. 8.1 Payment For Insurance. Regardless of whether the Lessor or Lessee is the Insuring Party, Lessee shall pay its pro-rata share of for all insurance required under this Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Lessor in excess of $1,000,000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor within thirty (30) days following receipt of an invoice together with the premium statement for any amount due. See Addendum. 8.2 Liability Insurance. (a) Carried by Lessee. Lessee shall obtain and keep in force during the term of this Lease a Commercial General Liability policy of insurance protecting Lessee and Lessor (as an additional insured) against claims for bodily injury, personal injury and property damage based upon, involving or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an “Additional Insured-Managers or Lessors of Premises” Endorsement and contain the “Amendment of the Pollution Exclusion” for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s indemnity obligations under this Lease, except those   9 set forth in Section 6.2(c). The limits of said insurance required by this Lease or as carried by Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance to be carried by Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only. (b) Carried by Lessor. In the event Lessor is the Insuring Party. Lessor shall also maintain liability insurance described in Paragraph 8.2(a), above, in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein. 8.3 Property Insurance–Building, Improvements and Rental Value. (a) Building and Improvements. The Insuring Party shall obtain and keep in force during the term of this Lease a policy or policies in the name of Lessor, with loss payable to Lessor and to the holders of any mortgages, deeds of trust or ground leases on the Premises (“Lender(s)”). insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to time or the amount required by Lenders, but in no event more than the commercially reasonable and available insurable value thereof if, by reason of the unique nature or age of the improvements involved, such latter amount is less than full replacement cost. If Lessor is the Insuring Party, however Lessee Owned Alterations and Utility Installations shall be insured by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for any additional costs resulting from debris removal and reasonable amounts of coverage for the enforcement of any ordinance or law regulating the reconstruction or replacement of any undamaged sections of the Premises required to be demolished or removed by reason of the enforcement of any building, zoning, safety or land use laws as the result of a covered cause of loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall be liable for such deductible amount in the event of an Insured Loss, as defined in Paragraph 9.1(c). (b) Rental Value. The Insuring Party shall, in addition, obtain and keep in force during the term of this Lease a policy or policies in the name of Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the full rental and other charges payable by Lessee to Lessor under this Lease for one (1) year (including all real estate taxes, insurance costs, and any scheduled rental increases). Said insurance shall provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year’s loss of rental revenues from the date of any such loss. Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected rental income, property taxes,   10 insurance premium costs and other expenses, if any, otherwise payable by Lessee, for the next twelve (12) month period. Lessee shall be liable for any deductible amount in the event of such loss, not to exceed $1,000. (c) Adjacent Premises. If the Premises are part of a larger building, or if the Premises are part of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildings if said increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises. (d) Tenant’s Improvements. If the Lessor is the Insuring Party, the Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item in questions has become the property of Lessor under the terms of this Lease. If Lessee is the Insuring Party, the policy carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations and Utility Installations. 8.4 Lessee’s Property Insurance. Subject to the requirements of Paragraph 8.5, Lessee at its cost shall either by separate policy or at Lessor’s option, by endorsement to a policy already carried, maintain insurance coverage on all of Lessee’s personal property. Lessee Owned Alterations and Utility Installations in, on, or about the Premises similar in coverage to that carried by the Insuring Party under Paragraph 8.3. Such insurance shall be full replacement cost coverage. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property or the restoration of Lessee Owned Alterations and Utility Installations. Lessee shall be the Insuring Party with respect to the insurance required by this Paragraph 8.4 and shall provide Lessor with written evidence that such insurance is in force. See Addendum. 8.5 Insurance Policies. Insurance required hereunder shall be in companies duly licensed to transact business in the state where the Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at least A, V, or such other higher rating as may be required by a Lender having a lien on the Premises, as set forth in the most current issue of “Best’s Insurance Guide.” Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to in this Paragraph 8. If Lessee is the Insuring Party, Lessee shall cause to be delivered to Lessor certified copies of policies of such insurance or certificates evidencing the existence and amount of such insurance with the insureds and loss payable clauses as required by this Lease. No such policy shall be cancellable or subject to modification except after thirty (30) days prior written notice to Lessor. Lessor shall at least thirty (30) days prior to the expiration of such policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessee may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessor to Lessee upon demand. If the Insuring Party shall fail to procure and maintain the insurance required to be carried by the Insuring Party under this Paragraph 8, the other Party may, but shall not be required to, procure and maintain the same, but at Lessee’s expenses. See Addendum. 8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor (“Waiving Party”) each hereby release and relieve the other, and waive their entire right to recover damages (whether in contract or in tort) against the other, for loss of or damage   11 to the Waiving Party’s property arising out of or incident to the perils required to be insured against under Paragraph 8. The effect of such releases and waivers of the right to recover damages shall not be limited by the amount of insurance carried or required, or by any deductibles applicable thereto. 8.7 Indemnity. Except for Lessor’s or Lessor’s agents’ or employees’ negligence and/or breach of express warranties or wilful acts, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, costs, liens, judgments, penalties, permits, attorney’s and consultant’s fees, expenses and/or liabilities arising out of, involving, or in dealing with, the occupancy of the Premises by Lessee, the conduct of Lessee’s business, any act, omission or neglect of Lessee, it agents, contractors, employees or invitees, and out of any Default or Breach by Lessee in the performance in a timely manner of any obligation on Lessee’s part to be performed under this Lease. The foregoing shall include, but not be limited to, the defense or pursuit of any claim or any action or proceeding involved therein, and whether or not (in the case of claims made against Lessor) litigated and/or reduced to judgment, and whether well founded or not. In case any action or proceeding be brought against Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor shall defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be so indemnified. See Addendum. 8.8 Exemption of Lessor from Liability. Except for the negligent or wilful acts of Lessor or its agents or employees, Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is accessible or not. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessor. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s business or for any loss of income or profit therefrom. 9. Damage or Destruction. 9.1 Definitions. (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, the repair cost of which damage or destruction is less than 50% of the then Replacement Cost of the Premises immediately prior to such damage or destruction, excluding from such calculation in the value of the land and Lessee Owned Alterations and Utility Installations.   12 (b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations, the repair cost of which damage or destruction is 50% or more of the then Replacement Cost of the Premises immediately prior to such damage or destruction, excluding from such calculation the value of the land and Lessee (c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved. (d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by the Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of applicable building codes, ordinances or laws, and without deduction for depreciation. (e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises. 9.2 Partial Damage – Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then the Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect, provided, however, that Lessee shall, at Lessor’s election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less, and, in such event, Lessor shall make the insurance proceeds available to Lessee on a reasonable basis for that purpose Notwithstanding the foregoing. If the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible not to exceed $10,000, which is Lessee’s responsibility) as and when required to complete said repairs. In the event, however, the shortage in proceeds was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within ten (10) days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said ten (10) days period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If Lessor does not receive such funds or assurance within said period, Lessor may nevertheless elect by written notice to Lessee within ten (10) days thereafter to make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds in which case this Lease shall remain in full force and effect. If in such case Lessor does not so elect, then this Lease shall terminate sixty (60) days following the occurrence of the damage or destruction. Unless otherwise agreed, Lessee shall in no event have any right to reimbursement from Lessor for any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to   13 Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that there may be some insurance coverage, but the net proceeds of any such Insurance shall be made available for the repairs if made by either Party. 9.3 Partial Damage – Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense and this Lease shall continue in full force and effect, but subject to Lessor’s rights under Paragraph 13 [ILLEGIBLE] such proceeds shall be given to Lessee for such purpose), Lessor may at Lessor’s option, either: (i) repair such damage as soon as reasonable possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such damage of Lessor’s desire to terminate this Lease as of the date sixty (60) days following the giving of such notice in the event Lessor elects to give such notice of Lessor’s intention to terminate this Lease. Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee’s commitment to pay for the repair of such damage totally at Lessee’s expense and without reimbursement from Lessor. Lessee shall provide Lessor with the required funds or satisfactory assurance thereof within thirty (30) days following Lessees said commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible and the required funds are available. If Lessee does not give such notice and provide the funds or assurance thereof within the times specified above, this Lease shall terminate as of the date specified in Lessor’s notice of termination. 9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs (including any destruction required by any authorized public authority), this Lease shall terminate sixty (60) days following the date of such Premises Total Destruction, whether or not the damage or destruction is an Insured Loss or was caused by a negligent or willful act of Lessee. 9.5 Damage Near End of Term. If at any time during the last six (6) months of the term of this Lease there is damage for which the cost to repair exceeds three (3) month’s Base Rent, whether or not an Insured Loss, Lessor may, at Lessor’s option, terminate this Lease effective sixty (60) days following the date of occurrence of such damage by giving written notice to Lessee of Lessor’s election to do so within thirty (30) days after the date of occurrence of such damage. Provided, however, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease, by within twenty (20) days following the occurrence of the damage, or before the expiration of the time provided in such option for is exercise, whichever is earlier (“Exercise Period”), exercising such option in which event Paragraphs 9.1 through 9.4, above, shall govern. 9.6 Abatement of Rent; Lessee’s Remedies. (a) In the event of damage described in Paragraph 9.2 (Partial Damage – Insured), whether or not Lessor or Lessee repairs or restores the Premises, the Base Rent, Real Property Taxes, insurance premiums, and other charges, if any, payable by Lessee hereunder for the period during which such damage, its repair or the restoration continues (not to exceed the period for which rental value insurance is required under Paragraph 8.3(b)), shall be abated in   14 proportion to the degree to which Lessee’s use of the Premises is impaired. Except for abatement of Base Rent, Real Property Taxes, insurance premiums, and other charges, if any, as aforesaid, all other obligations of Lessee hereunder shall be performed by Lessee, to the extent feasible in light of the damage and destruction, and Lessee shall have no claim against Lessor for any damage suffered by reason of any such repair or restoration. (b) If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence, in a substantial and meaningful way, the repair or restoration of the Premises within ninety (90) days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice of Lessee’s election to terminate this Lease on a date not lese than sixty (60) days following the giving of such notice. If Lessee gives such notice to Lessor and such Lenders and such repair or restoration is not commenced within thirty (30) days after receipt of such notice, this Lease shall terminate as of the date specified in said notice. If Lessor or a Lender commences the repair or restoration of the Premises within thirty (30) days after receipt of such notice, this Lease shall continue in full force and effect. “Commence” as used in this Paragraph shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs. See Addendum. 9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition occurs, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by Applicable Law and this Lease shall continue in full force and effect, but subject to Lessor’s rights under Paragraph 13), Lessor may at Lessor’s option either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to investigate and remediate such condition exceeds twelve (12) times the then monthly Base Rent, give written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition of Lessor’s desire to terminate this Lease as of the date sixty (60) days following the giving of such notice. In the event Lessor elects to give such notice of Lessor’s intention to terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee’s commitment to pay for the investigation and remediation of such Hazardous Substance Condition totally at Lessee’s expense and without reimbursement from Lessor except to the extent of an amount equal to twelve (12) times the then monthly Base Rent. Lessee shall provide Lessor with the funds required of Lessee or satisfactory assurance thereof within thirty (30) days following Lessee’s said commitment. In such event this Lease shall investigation and remediation as soon as reasonably possible and the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the times specified above, this Lease shall terminate as of the date specified in Lessor’s notice of termination. If a Hazardous Substance Condition occurs for which Lessee is not legally responsible there shall be abatement of Lessee’s obligations under this Lease to the same extent as provided in Paragraph 9.6(a). See Addendum. 9.8 Termination – Advance Payments. Upon termination of this Lease pursuant to this Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any   15 other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor under the terms of this Lease. 9.9 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith. 10. Real Property Taxes. 10.1 (a) Payment of Taxes. Lessor shall deliver all tax bills to Lessee immediately upon receipt thereof. Lessee shall pay the Real Property Taxes, as defined in Paragraph 10.2, applicable to the Premises during the term of this Lease. Subject to Paragraph 10.1(b), all such payments shall be made at least ten (10) days prior to the delinquency date of the applicable installment. Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes have been paid. If any such taxes to be paid by Lessee shall cover any period of time prior to or after the expiration of earlier termination of the term hereof, Lessee’s share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year this Lease is in effect, and Lessor shall reimburse Lessee for any overpayment after such proration. If Lessee shall fail to pay any Real Property Taxes required by this Lease to be paid by Lessee, Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor therefore upon demand. 10.2 Definition of “Real Property Taxes.” As used herein, the term “Real Property Taxes” shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed upon the Premises by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, levied against any legal or equitable interest of Lessor in the Premises or in the real property of which the Premises are a part, Lessor’s right to rent or other income therefrom, and/or Lessor’s business of leasing the Premises. The term “Real Property Taxes” shall also include any tax, fee, levy assessment or charge, or any increase therein imposed by reason of events occurring, or changes in applicable law taking effect, during the term of this Lease, but shall not apply to any increase in taxes due to a change in the ownership of the Premises or in the improvements thereon, the execution of this Lease, or any modification, amendment or transfer thereof and whether or not contemplated by the Parties. See Addendum. 10.4 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises or elsewhere. When possible, Lessee shall cause its Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee’s said personal property shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee within ten (10) days after receipt of a written statement setting forth the taxes applicable to Lessee’s property or, at Lessor’s option, as provided in Paragraph 10.1(b).   16 11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered with other premises. 12. Assignment and Subletting. 12.1 Lessor’s Consent Required. (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or otherwise transfer or encumber (collectively, “assignment”) or sublet all or any part of Lessee’s interest in this Lease or in the Premises without Lessor’s prior written consent given under and subject to the terms of Paragraph 36. Lessor’s consent shall not be unreasonably withheld, and Lessor shall grant or deny consent within ten (10) days after receipt by Lessor of Lessee’s written request. (b) An assignment or subletting of Lessee’s interest in this Lease without Lessor’s specific prior written consent shall, at Lessor’s option, be a Default curable after notice per Paragraph 13.1(c). (c) Lessee’s remedy for any breach of this Paragraph 12.1 by Lessor shall be limited to compensatory damages and injunctive relief. 12.2 Terms and Conditions Applicable to Assignment of Subletting. (a) Regardless of Lessor’s consent, any assignment or subletting shall not: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease (prorated for a Sublessee), (ii) release Lessee of any obligations hereunder, or (iii) after the primary liability of Lessee for the payment of Base Rent and other sums due Lessor hereunder or for the performance of any obligations to be performed by Lessee under this Lease. (b) Lessor may accept any rent or performance of Lessee’s obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of any rent or performance shall constitute a waiver or estoppel of Lessor’s right to exercise its remedies for the Default or Breach by Lessee of any of the terms, covenants or conditions of this Lease. (c) The consent of Lessor to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting by Lessee or to any subsequent or successive assignment or subletting by the sublessee. However, Lessor may consent to subsequent sublettings and assignments of the sublease or any amendments or modifications thereto without notifying Lessee or anyone else liable on the Lease or sublease and without obtaining their consent, and such action shall not relieve such persons from liability under this Lease or sublease. (d) In the event of any Default or Breach of Lessee’s obligations under this Lease, Lessor may proceed directly against Lessee, any Guarantors or any one else responsible   17 for the performance of the Lessee’s obligations under this Lease, including the sublessee, without first exhausting Lessor’s remedies against any other person or entity responsible therefore to Lessor, or any security held by Lessor or Lessee. (e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor’s determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a non-refundable deposit of $1,000, as reasonable consideration for Lessor’s considering and processing the request for consent. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested by Lessor. (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or, entering into such sublease, be deemed, for the benefit of Lessor, to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligation as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented in writing. 12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: (a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all rentals and income arising from any sublease of all or a portion of the Premises heretofore or hereafter made by Lessee, and Lessor may collect such rent and income and apply same toward Lessee’s obligations under this Lease, provided, however, that until a Breach (as defined in Paragraph 13.1) shall occur in the performance of Lessee’s obligations under this Lease. Lessee may, except as otherwise provided in this Lease, receive, collect and enjoy the rents accruing under such sublease. Lessor shall not, by reason of this or any other assignment of such sublease to Lessor, nor by reason of the collection of the rents from a sublessee, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such sublessee under such sublease. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations under this Lease, to pay to Lessor the rents and other charges due and to become due under the sublease. Sublessee shall rely upon any such statement and request from Lessor and shall pay such rents and other charges to Lessor without any obligation or right to inquire as to whether such Breach exists and notwithstanding any notice from or claim from Lessee to the contrary. Lessee shall have no right or claim against said sublessee, or, until the Breach has been cured, against Lessor, for any such rents and other charges so paid by said sublessee to Lessor. (b) In the event of a Breach by Lessee in the performance of its obligations under this Lease, Lessor at its option and without any obligation to do so, may require any sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of   18 such sublease; provided however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any other prior Defaults or Breaches of such sublessor under such sublease. (c) Any matter or thing requiring the consent of the sublessor under a sublease shall also require the consent of Lessor herein. (d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor’s prior written consent, not to be unreasonably withheld or delayed, as stated above. (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee. 13. Default; Breach; Remedies. 13.1 Default; Breach. Lessor and Lessee agree that if an attorney is consulted by Lessor in connection with a Lessee Default or Breach (as hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence for legal services and costs in the preparation and service of a notice of Default and that Lessor may include the cost of such services and costs in said notice as rent due and payable to cure said Default. A “Default” is defined as a failure by the Lessee to observe, comply with or perform any of the terms, covenants, conditions or rules applicable to Lessee under this Lease A “Breach” is defined as the occurrence of any one or more of the following Defaults, and, where a grace period for cure after notice is specified herein, the failure by Lessee to cure such Default prior to the expiration of the applicable grace period, shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 and/or 13.3 (a) The vacating of the Premises without the intention to reoccupy same, or the abandonment of the Premises. (b) Except as expressly otherwise provided in this Lease, the failure by Lessee to make any payment of Base Rent or any other monetary payment required to be made by Lessee hereunder, whether to Lessor or to a third party, [ILLEGIBLE], the failure by Lessee to provide Lessor with reasonable evidence of insurance or surety bond required under this Lease, or the failure of Lessee to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of seven (7) days following written notice thereof by or on behalf of Lessor to Lessee. (c) Except as expressly otherwise provided in this Lease, the failure by Lessee to provide Lessor with reasonable written evidence (in duly executed original form, if applicable) of (i) compliance with Applicable Law per Paragraph 6.3, (ii) the inspection, maintenance and service contracts required under Paragraph 7.1(b), (iii) the recession of an unauthorized assignment or subletting per Paragraph 12.1(b), (iv) a Tenancy Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination of this Lease per Paragraph 30, (vi) the guaranty of the performance of Lessee’s obligations under this Lease if required under Paragraphs 1.11 and 37, (vii) the execution of any document requested under Paragraph 42 (easements), or (viii)   19 any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of twelve (12) days following written notice by or on behalf of Lessor to Lessee. (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof, that are to be observed, complied with or performed by Lessee, other than those described in subparagraphs (a), (b) or (c), above, where such Default continues for a period of thirty (30) days after written notice thereof by or on behalf of Lessor to Lessee; provided, however, that if the nature of Lessee’s Default if such that more than thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a Breach of this Lease by Lessee if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. (e) The occurrence of any of the following events: (i) The making by lessee of any general arrangement or assignment for the benefit of creditors; (ii) Lessee’s becoming a “debtor” as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within thirty (30) days; provided, however, in the event that any provision of this subparagraph (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (f) The discovery by Lessor that any financial statement given to Lessor by Lessee or any Guarantor of Lessee’s obligations hereunder was materially false. 13.2 Remedies. If Lessee fails to perform any affirmative duty or obligation of Lessee under this Lease, within thirty (30) days after written notice to Lessee (or in case of an emergency, without notice), Lessor may at its option (but without obligation to do so), perform such duty or obligation on Lessee’s behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, three (3) times in any calendar year, Lessor, at its option, may require all future payments to be made under this Lease by Lessee to be made only by cashier’s check. In the event of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach, Lessor may: (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the worth at the time of the award of the unpaid rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award   20 exceed the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion of the leasing commission paid by Lessor applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the prior sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee’s Default or Breach of this Lease shall not waive Lessor’s right to recover damages under this Paragraph. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding that unpaid rent and damages as are recoverable therein, or Lessor may reserve therein the right to recover all or any part thereof in a separate suit for such rent and/or damages. If a notice and grace period required under subparagraphs 13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or to perform or quit, as the case may be, given to Lessee under any statute authorizing the forfeiture of leases for unlawful detainer shall also constitute the applicable notice for grace period purposes required by subparagraph 13.1(b), (c) or (d). In such case, the applicable grace period under subparagraphs 13.1(b), (c) or (d) and under the unlawful detainer statute shall run concurrently after the one such statutory notice, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute. (b) Continue the Lease and Lessee’s right to possession in effect (in California under California Civil Code Section 1951.4) after Lessee’s Breach and abandonment and recover the rent as it becomes due, provided Lessee has the right to sublet or assign, subject only to reasonable limitations. See Paragraphs 12 and 36 for the limitations on assignment and subletting which limitations Lessee and Lessor agree are reasonable. Acts of maintenance or preservation, efforts to relet the Premises, or the appointment of a receiver to protect the Lessor’s interest under the Lease, shall not constitute a termination of the Lessee’s right to possession. (c) Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located. (d) The expiration or termination of this Lease and/or the termination of Lessee’s right to possession shall not relieve Lessee or Lessor from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises. 13.3 Late Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed   21 upon Lessor by the terms of any ground lease, mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Lessee shall not be received by Lessor or Lessor’s designee within five (5) days after Lessee received written notice that such amount shall be due, then, Lessee shall pay to Lessor a late charge equal to six percent (6%) of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. 13.4 Breach by Lessor. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable time shall in no event be less than thirty (30) days after receipt by Lessor, and by the holders of any ground lease, mortgage or deed of trust covering the Premises whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor’s obligation is such that more than thirty (30) days after such notice are reasonably required for its performance then Lessor shall not be in breach of this Lease if performance is commenced within such thirty (30) day period and thereafter diligently pursued to completion and provided further that Lessor shall be in Breach if Lessor fails to respond to an emergency condition threatening life, personal injury or substantial property damage, within a reasonable time (in light of the emergency condition(s)) after Lessor receives notification of such condition. 14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (all of which are herein called “condemnation”), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs If more than ten percent (10%) of the floor area of the Premises, or more than twenty-five percent (25%) of the land area not occupied by any building, is taken by condemnation, Lessee may, at Lessee’s option, to be exercised in writing within ten (10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten {10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in the same proportion as the rentable floor area of the Premises taken bears to the total rentable floor area of the building located on the Premises. No reduction of Base Rent shall occur if the only portion of the Premises taken is land on which there is no building. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any compensation separately awarded to Lessee for Lessee’s relocation expanses and/or loss of Lessee’s Trade Fixtures, goodwill, and any claim that does not reduce Lessor’s claim. In the event that this Lease is not terminated by reason of such condemnation. Lessor shall to the extent of its net severance damages received over and above the legal and other expenses incurred by Lessor in the condemnation matter, repair any damage to the Premises caused by such condemnation, except to the extent that Lessee has been reimbursed therefor by the condemning authority. See Addendum.   22 15. Broker’s Fee. 15.5 Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder (other than the Brokers, if any named in Paragraph 1.10) in connection with the negotiation of this Lease and/or the consummation of the transaction contemplated hereby, and that no broker or other person, firm or entity other than said named Brokers is entitled to any commission or finder’s fee in connection with said transaction. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto. 16. Tenancy Statement. 16.1 Each Party (as “Responding Party”) shall within ten (10) business days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current “Tenancy Statement” form published by the American Industrial Real Estate Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party. 16.2 If Lessor desires to finance, refinance, or sell the Premises, any part thereof, or the building of which the Premises are a part, Lessee and all Guarantors of Lessee’s performance hereunder shall deliver to any potential lender or purchaser designated by Lessor such financial statements of Lessee and such Guarantors as may be reasonably required by such lender or purchaser, including but not limited to Lessee’s financial statements for the past three (3) years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. See Addendum. 17. Lessor’s Liability. The term “Lessor” as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the Premises or, in this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor at the time of such transfer or assignment. Except as provided in Paragraph 15, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. 18. Severability. The invalidity of any provision of the Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 19. Interest on Past-Due Obligations. Any monetary payment due hereunder, other than late charges, not received within thirty (30) days following the date on which it was due, shall bear   23 interest from the thirty-first (31st) day after it was due at the rate of 10% per annum (“Interest Rate”), but not exceeding the maximum rate allowed by law, in addition to the late charge provided for in Paragraph 13.4. 20. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. 21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease are deemed to be rent. 22. No Prior or Other Agreements. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. 23. Notices 23.1 All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand or by messenger or courier service) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that Parties address for delivery or mailing of notice purposes. Either Party may by written notice to the other specify a different address for notice purposes, except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for the purpose of mailing or delivering notices to Lessee. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by written notice to Lessee. 23.2 Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, then the date of actual receipt. If sent by regular mail the notice shall be deemed given on the date of actual receipt. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the United State Postal Service or courier. If any notice is transmitted by facsimile transmission or similar means, the same shall be deemed served or delivered upon telephone confirmation or receipt of the transmission thereof, provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. Regardless of Lessor’s knowledge of a Default or Breach at the time of accepting rent, the acceptance of rent by Lessor shall not be a waiver of   24 any preceding Default or Breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted. Any payment given Lessor by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessor in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. 25. [DELETED] 26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or earlier termination of this Lease. 27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, whenever possible, be cumulative with all other remedies at law or in equity. 28. Covenants and Conditions. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. 29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal representatives, successors and assigns and be governed by the laws of the state in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.   30. Subordination; Attornment; Non-Disturbance. 30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, “Security Device”), now or hereafter placed by Lessor upon the real property of which the Premises are a part, to any and all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements and extensions thereof. In the event of Lessor’s default with respect to any such obligation. Lessee will give any Lender whose name and address have been furnished Lessee in writing for such purpose notice of Lessor’s default and allow such Lender thirty (30) days following receipt of such notice for the cure of said default before invoking any remedies Lessee may be by reason thereof. If any Lender shall elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device and shall give written notice thereof to Lessee, this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof. 30.2 Attornment. Subject to the non-disturbance provisions of Paragraph 30.3. Lessee agrees to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not (i) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership, (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor, or (iii) be bound by prepayment of more than one (1) month’s rent.   25 30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessees subordination of this Lease shall be subject, as a condition precedent, to receiving in commercially reasonable written form assurance (a “non-disturbance agreement”) from the Lender that Lessee’s possession and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. 30.4 Self-Executing. The agreements contained in this Paragraph 30 except Paragraph 30.3, shall be effective without the execution of any further documents, provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises. Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any such subordination or non-subordination attornment and/or non-disturbance agreement as is provided for herein. See Addendum. 31. Attorney’s Fees. If any Party brings an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorney’s fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term “Prevailing Party” shall include, without limitation, a Party who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party of its claim or defense. The attorney’s fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorney’s fees reasonably incurred. Lessor shall be entitled to attorney’s fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach. 32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to enter the Premises during business hours at any time in the case of an emergency, (at any time) and otherwise at reasonable times after 24 hours prior written notice for the purpose of showing the same to prospective purchasers, lenders, or lessees and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part, as Lessor may reasonable deem necessary Lessor may at any time place on or about the Premises or building any ordinary “For Sale” signs and Lessor may at any time during the last one hundred twenty (120) days of the term hereof place on or about the Premises any ordinary “For Lease” signs. All such activities of Lessor shall be without abatement of rent or liability to Lessee, but Lessor shall use reasonable efforts to minimize inconvenience to Lessee. 33. Auctions. Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor’s prior written consent. Notwithstanding anything to the contrary in this Lease. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent. 34. Signs. Lessee may place any sign upon the Premises subject to any and all governmental approval. The installation of any sign on the Premises by or for Lessee shall be subject to the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations). Landlord shall not unreasonably withhold its consent. See Addendum.   26 35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, Lessor shall, in the event of any such surrender, termination or cancellation, have the option to continue any one or all of any existing subtenancies. Lessor’s failure within ten (10) days following any such event to make a written election to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s election to have such event constitute the termination of such interest. 36. Consents. (a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable out-of-pocket costs and expenses (including but not limited to architects’, attorneys’, engineers’, or other consultants’ fees (not to exceed $500)) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent pertaining to this Lease or the Premises, shall be paid by Lessee to Lessor upon receipt of an invoice and supporting documentation therefor Subject to Paragraph 12.2(e) (applicable to assignment or subletting). Lessor may, as a condition to considering any such request by Lessee, require that Lessee deposit with Lessor an amount of money (in addition to the Security Deposit held under Paragraph 5) (not to exceed $500) reasonably calculated by Lessor to represent the cost Lessor will incur in considering and responding to Lessee’s request. Except as otherwise provided, any unused portion of said deposit shall be refunded to Lessee without interest. Lessor’s consent to any act, assignment of this Lease or subletting of the Premises by Lessee shall not constitute an acknowledgement that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. (b) All conditions to Lessor’s consent authorized by this Lease are acknowledged by Lessee as being reasonable. The failure to specify herein any particular condition to Lessor’s consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. 37. [DELETED] 38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and the observance and performance of all of the covenants, conditions and provisions on Lessee’s part to be observed and performed under this Lease. Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease. 39. Options. 39.1 Definition. As used in this Paragraph 39 the word “Option” has the following meaning: (a) the right to extend the term of this Lease or to renew this Lease. 39.2 [DELETED]   27 39.3 Multiple Options. In the event that Lessee has any Multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options to extend or renew this Lease have been validly exercised. 39.4 Effect of Default on Options (a) Lessee shall have no right to exercise an Option, notwithstanding any provision in the grant of Option to the contrary: (i) during the period commencing with the giving of any notice of Default under Paragraph 13.1 and continuing until the noticed Default is cured, or (ii) during the period of time any monetary obligation due Lessor from Lessee is unpaid provided Lessee has previously received written notice thereof, or (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three (3) or more proper notices of Default under Paragraph 13.1, whether or not the Defaults are cured, during the twelve (12) month period immediately preceding the exercise of the Option. (b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of Paragraph 39.4(a). (c) All rights of Lessee under the provisions of an Option shall terminate and be of no further force or effect, notwithstanding Lessee’s due and timely exercise of the Option, if, after such exercise and during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a period of thirty (30) days after Lessee receives notice of such failure, or (ii) Lessor gives to Lessee three (3) or more proper notices of Default under Paragraph 13.1 during any twelve (12) month period, whether or not the Defaults are cured. 40. Multiple Buildings. If the Premises are part of a group of buildings controlled by Lessor, Lessee agrees that it will abide by, keep and observe all reasonable rules and regulations which Lessor may make from time to time for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of such other buildings and their invitees, and that Lessee will pay its fair share of common expenses incurred in connection therewith. 41. Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties. 42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions. 43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against   28 whom the obligations to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease. 44. Authority. If either Party hereto is a corporation, trust, or general or limited partnership, the corporation represents and warrants that it is duly authorized to execute and deliver this Lease on its behalf. If Lessee is a corporation, trust or partnership, Lessee shall, within thirty (30) days after request by Lessor, deliver to Lessor evidence satisfactory to Lessor of such authority. See Exhibit “B”. 45. Conflict. Any conflict between the printed provisions of this Lease and the Addendum shall be controlled by the Addendum or handwritten provisions. 46. Offer. Preparation of this Lease by Lessor or Lessor’s agent and submission of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is not intended to be binding until executed by all Parties hereto. 47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. The parties shall amend this Lease from time to time to reflect any adjustments that are made to the Base Rent or other rent payable under this Lease. 48. Multiple Parties. Except as otherwise expressly provided herein, if more than one person or entity is named herein as either Lessor or Lessee, the obligations of such Multiple Parties shall be the joint and several responsibility of all persons or entities named herein as such Lessor or Lessee. 49. Option to Extend. See Addendum. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE   29 REAL ESTATE BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES: THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED. The parties hereto have executed this Lease at the place on the dates specified above to their respective signatures.   Executed at        Executed at     on:        on:     by LESSOR:    by LESSEE: HENRY SHWEID AND MARGARET MUNZIKA SHWEID INTERVIVOS REVOCABLE TRUST    JUICE CLUB, INC., a California corporation           By   /s/ Henry Shweid, Trustee    By   /s/ Kirk Perron Name Printed:   Henry Shweid    Name Printed:   Kirk Perron Title:   Trustee    Title:   President By   /s/ Margaret Munzika Shweid, Trustee    By     Name Printed:   Margaret Munzika Shweid    Name Printed:     Title:   Trustee    Title:     Address:        Address:   631 Boward Street, Suite 500      San Francisco, CA 94105 Tel. No.   (     )                 Fax No.(     )                    Tel. No. (415)357-1300   Fax No. (415) 356-6920 NET   NOTICE:    These forms are often modified to meet changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most current form: American Industrial Real Estate Association, 345 South Figueroa Street, Suite M-1, Los Angeles, CA 90071. (213) 687-8777. Fax. No. (213) 687-8616. © Copyright 1990 – By American Industrial Real Estate Association. All rights reserved. No part of these works may be reproduced in any form without permission in writing.   30 ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET, DATED JUNE      1996 HENRY SHWEID AND MARGARET MUNZIKA SHWEID INTERVIVOS REVOCABLE TRUST/JUICE CLUB, INC., a California corporation This Addendum (the “Addendum”) to Standard Industrial/Commercial Single-Tenant Lease—Net, is made as of this 17th day of June, 1996, by and between HENRY SHWEID AND MARGARET MUNZIKA SHWEID INTERVIVOS REVOCABLE TRUST and JUICE CLUB, INC., a California corporation (“Lessee”). The term “Lease” shall mean the form lease attached hereto (of even date herewith) (the “Form Lease”), as modified by this Addendum. 1.3 Lease Commencement. The Lease shall commence on June 15, 1996 (the “Commencement Date”). Notwithstanding the foregoing or anything contained in the Form Lease, the Base Rent, and all other monetary obligations of Lessee, shall not commence until September 1, 1996 (the “Rent Commencement Date”), or later pursuant to Paragraph 3.3 of the Form Lease. 1.5 Base Rent. Base Rent payable hereunder shall commence on the Rent Commencement Date, as defined above (September 1, 1996 or later), and be payable as follows:   A. From September 1, 1996 through and including July 31, 1998 . . $21,710.41 per month   B. From August 1, 1998 through and including July 31, 2001 . . . . $22,987.50 per month. Base Rent shall be paid in advance on the first (1st) day of each calendar month, based on the amounts set forth above, except that the Base Rent due for the period of the Rent Commencement Date (September 1, 1996 or later) through and including September 30, 1996, in the amount of $21,710.41, shall be paid concurrently with the execution of the Lease. If the Rent Commencement Date is delayed, as provided in Paragraph 3.3 of the Form Lease, then the prorated Base Rent for the period of the Rent Commencement Date through the end of the calendar month in which the Rent Commencement Date occurs shall be based on a full monthly amount of $.71 per square foot per month. 2.2 Lessor’s Further Promises and Warranties. In addition to the warranty contained in Paragraph 2.2. of the Form Lease, Lessor agrees to place in good working order (a) the plumbing, lighting, heating and loading doors for the period from the Commencement Date through and including thirty (30) days after the Commencement Date; and (b) the roof for the period from the Commencement Date through and including one (1) year after the Commencement Date. 2.5 Parking. Lessor shall make available to Lessee, without any additional cost or expense to Lessee, the southern one-half of the fenced-in parking lot that is adjacent to the Premises (the “Parking Lot”). This one-half portion of the Parking lot contains approximately 6,000 square feet. Lessor agrees that Lessee’s portion of the Parking Lot is, and shall continue to be, separated by a chain link fence. Lessee shall have the exclusive right to use the southern one half of the Parking Lot, and Lessor represents and warrants that no other individual or entity has any right to use Lessee’s one-half portion of the Parking Lot.   31 6.3 Lessee’s Compliance with Applicable Requirements. To the best of Lessor’s actual knowledge, Lessor represents and warrants that there are no covenants, conditions, restrictions or easements concerning the Premises that would require Lessee to take any action in order to comply with the same. 6.5 Lessor’s Obligations Regarding Hazardous Substances. To the best of Lessor’s actual knowledge as of the date of this Lease, Lessor hereby warrants and represents that, as of the date of this Lease, the Premises shall be free of all Hazardous Substances (including, but not limited to, underground storage tanks). Lessor shall, upon its discovery or receipt of notification of the presence of Hazardous Substances on, in, or under any part of the Premises notify Lessee and, at no expense to Lessee, cause any such Hazardous Substances to be removed, if required by law, or take any other action required by law, all in compliance with all applicable laws and in a manner causing the least disruption of or interference with the operation of Lessee’s business. 7.1 Lessee’s Responsibility. Notwithstanding the provisions of Paragraph 7.1 of the Form Lease, Lessor (not Lessee) shall be solely responsible, at Lessor’s cost, for the structural portions of the roof, foundations and structural elements of the Premises. In addition, if Lessee is required to replace any of the building systems or roof during the last three (3) years of the Term (unless such replacement is due to Lessee’s negligence or wilful acts or omissions), Lessee shall pay only a percentage of the cost of such replacements, which percentage shall be measured as a fraction, the numerator of which is the amount of time then remaining in the Term and the denominator of which is the useful life of the replacements, not to exceed seven (7) years; Lessor shall pay the balance of the cost of the replacements. 7.2 Maintenance and Repair. If Lessee provides notice to Lessor of an event or circumstance which requires the action of Lessor with respect to Lessor’s obligations under Section 7.2 the Form Lease, and Lessor fails to provide such action within thirty (30) days, then Lessee may proceed to take the required action upon delivery of an additional ten (10) business days’ notice to Lessor specifying that Lessee is taking such required action, and Lessee shall be entitled to reimbursement within ten (10) days after Lessor’s receipt of invoice by Lessor of Lessee’s reasonable costs and expenses in taking such action plus interest at the Interest Rate. 7.3 Lessee’s Improvements. Lessee, at Lessee’s sole expense, will assume the cost for any improvements to the Premises desired by Lessee (“Lessee’s Initial Improvements”); provided that Lessee shall not be responsible for, and Lessor shall pay for, an elevator between the first and second floors of the Premises, if required by government authorities; provided Lessor’s obligations to pay for the elevator shall not exceed $40,000. Lessee agrees to cooperate with Lessor’s architect and to use commercially reasonable efforts and due diligence to attempt to cause the government not to require an elevator between the first and second floors. Notwithstanding anything contained in the Form Lease, if Lessor is directed by any local, State or Federal agency to remove any Hazardous Substances, not caused by Lessee, its agents, employees, representatives or invitees, Lessor will remove such Hazardous Substances, at Lessor’s sole cost and expense. Lessee reserves the right to manage Lessee’s Initial Improvements, and all other improvements to the Premises. Further, in those instances where   32 Lessor’s consent is required under the Form Lease for any improvements to the Premises, Lessor shall not unreasonably withhold or delay its consent, and in connection therewith may consult Lessor’s architect. 8.1 Lessor’s Insurance. Lessor discloses that it acquires combined insurance for the Premises and the adjacent building. The Premises and the adjacent building combined, have a total of 56,000 square feet. Accordingly, Lessee’s prorata share of the insurance costs and Real Property Taxes (discussed in Paragraph 10 of the Form Lease) is sixty-five percent (65%), measured as 30,650 (the size of the Premises) divided by 56,000 (the size of the Premises plus the adjacent building). 8.4 Lessee’s Insurance. If this Lease terminates because of a damage or destruction, Lessee shall be entitled to retain all proceeds of the insurance that Lessee acquires under this Lease. 8.5 Insurance. Lessee may carry insurance under a so-called “blanket” policy, provided that such policy provides the amount of insurance required under this Lease. Lessor shall provide Lessee with certificates evidencing the insurance required to be carried by Lessor under the Form Lease. 8.7 Lessor’s Indemnity. Lessor agrees to defend, indemnify, protect and hold harmless Lessee from and against any and all claims, actions, damages and liability resulting in loss of life, personal injury, damage to property or other losses occasioned by any negligent or wilful act or omission by Lessor, or its agents or employees, on or about the Premises, or occasioned by Hazardous Substances that Lessor, or its agents or employees brings onto or causes to be brought onto or exist on the Premises. 9.6(b) Lessee’s Remedies. Further, if Lessor is obligated or elects to repair or restore the Premises as provided in Paragraph 9 of the Form Lease and the amount of damage to the Premises is substantial, then if Lessor does not substantially complete the repair and restoration within one-hundred eighty (180) days after the damage, Lessee shall have the right to terminate this Lease. 9.7 Hazardous Substance Condition. Lessee shall also have a right to terminate the Lease if the estimated costs to investigate and remediate such condition exceeds twelve (12) times the monthly Base Rent, unless such Hazardous Substance Condition is caused by Lessee, its agents, employees, representatives or invitees. Further, Lessor shall not have the right to terminate this Lease by reason of Hazardous Substances caused by Lessor, its agents, representatives or employees, and, in such event, Lessor shall remediate all such Hazardous Substances and repair the Premises. If Lessor elects or is required to repair a Hazardous Substance Condition and the existence or remediation of such Hazardous Substance Condition significantly affects the operation of Lessee’s business, then Lessor shall complete such remediation within one-hundred eighty (180) days after being first notified of the condition; if Lessor fails to complete within such time, Lessee shall have the right to terminate this Lease. 10.2 Taxes and Other Governmental Charges. There shall be included within the definition of “Real Property Taxes” with respect to any calendar year only the amount currently payable on any bonds or special assessments, including interest for such tax calendar year or the current   33 annual installment for such calendar year. Tax refunds shall be paid to Lessee, regardless of when received, based on the year to which the refund is applicable, even if received after the termination or expiration of this Lease. Lessee’s obligation to pay Real Property Taxes levied or assessed against the Premises or improvements thereon or personal property on or in the Premises or such improvements shall not include the following: business, income or profits taxes levied or assessed against Lessor by federal, state, county, municipal or other governmental agencies; transfer taxes of Lessor; franchise or other profits taxes imposed on the owner of the fee to the Premises; gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, and other taxes to the extent applicable to Lessor’s general or net income (as opposed to rents or receipts); any increase of, or reassessment in, real property taxes and/or assessments resulting from a sale, transfer or other change in ownership in the Premises or the real property upon which the Premises is located or in any portion of the same, or in any entity having a direct or indirect interest in all or any portion of the same; or any other taxes or assessments charged or levied against Lessor which are not directly incurred as a result of the operation of the Premises. 10.3 Lessee’s Share of Real Property Taxes. Lessor discloses that the Real Property Taxes associated with the Premises are included in a larger tax bill, including the property immediately adjacent to the Premises and owned by Lessor. Therefore, Lessee shall pay its prorata share of the larger tax bill. Lessee’s prorata share of Real Property Taxes is therefore sixty-five percent (65%), measured as 30,650 (the size of the Premises) divided by 56,000 (the size of the Premises plus the adjacent building). 12.4 Assignment or Sublease Without Lessor’s Consent. Notwithstanding anything stated in the Form Lease, Lessor’s consent shall not be required for any of the following: A. assignment or sublease to any individual or entity as a result of a merger or consolidation involving Lessee, provided the assignee or sublessee has a net worth of at least $10 Million, as established under generally accepted B. assignment or sublease to any parent, subsidiary or affiliate of Lessee; C. assignment or sublease in conjunction with, or any transaction involving, the sale of (1) all or substantially all of Lessee’s assets; or (2) any or, all of Lessee’s corporate stock. None of the foregoing shall be considered an assignment or sublease under the terms of this Lease. 12.5 Transfer Profit. Lessee agrees that Lessor shall be entitled to fifty percent (50%) of all “Transfer Profit”. “Transfer Profit” is defined to mean any and all rent paid by an assignee or sublessee above (a) the total rental and other monetary obligations owing by Lessee hereunder; plus (b) the total costs incurred by Lessee in assigning or subleasing, including but not limited to the costs to renovate the Premises and brokers’ commissions. This Paragraph 12.5 shall not apply with respect to any of the events described in Paragraph 12.4, above, or any merger or consolidation involving Lessee, whether or not Lessee is able to meet the net worth requirement in Paragraph 12.4A, above. Accordingly, Lessee shall be entitled to retain the entirety of, and Lessor shall not have any right to, any Transfer Profit in connection with any of the events described in Paragraph 12.4, above, or any merger or consolidation involving Lessee, whether or not Lessee is able to meet the net worth requirement in Paragraph 12.4A, above.   34 14. Condemnation of Parking Lot. If any of Lessee’s portion of the Parking Lot is taken by condemnation and Lessor does not provide substitute parking in the amount taken and in a reasonable location, Lessee shall be entitled to a proportionate reduction of Base Rent based on the rental value of Lessee’s portion of the Parking Lot being $1500 per month. Further, if more than 50% of Lessee’s portion of the Parking Lot is taken by condemnation, then Lessee shall have the right to terminate this Lease unless Lessor provides substitute parking in the amount taken and in a reasonable location. 15.4 Broker. Lessor shall pay the Brokers identified in Paragraph 1.10(a) the following commissions and shall indemnify Lessee in connection with the payment of such commissions: $61,912, one-half of which ($30,956) shall be paid to Emerald Real Estate Brokerage Investments, and one-half of which ($30,956) shall be paid to Whitney Cressman Limited. 16.2 Financial Statements. The obligation of Lessee to deliver any financial information is expressly conditioned upon Lessee concurrently receiving a confidentiality agreement from all recipients of such information, in form and content acceptable to Lessee. 30.5 Non-Disturbance Agreement. Lessor represents and warrants that there are currently no Security Devices (defined in Paragraph 30.1 of the Form Lease) pertaining to the Premises. 34. Signage. Lessor may not place any sign in, on or about the Premises, except that within the last six (6) months of the Term, Lessor may install commercially reasonable “For Lease” signs on the Premises, and Lessor may install no more than 2 “For Sale” signs outside the Premises; provided that Lessor must obtain Lessee’s prior approval of the size, location and design of the “For Sale” signs, which approval shall not be unreasonably withheld. 49. Option to Extend. Lessee has the right to extend this Lease for one (1) period of five (5) years, commencing on August 1, 2001, and terminating on July 31, 2006 (the “Extended Term”). The Lease during the Extended Term shall be on the same terms and conditions as during the Original Term, except that the Base Rent shall be $28,095.83 per month. In the event Lessee desires to exercise its option to extend, as granted in this Paragraph 49, Lessee must give Lessor written notice of exercise of this option (“Notice to Extend”) not less than one-hundred eighty (180) days prior to the expiration of the Original Term. If Lessee fails to give Lessor such notice, the option to extend granted in this Paragraph 49 shall be null and void and of no further force or effect. The term of this Lease, i.e., the Original Term in addition to the Extended Term or any other extensions (when exercised), shall hereinafter be referred to as the “Term”.   35 “LESSOR” HENRY SHWEID AND MARGARET MUNZIKA SHWEID INTERVIVOS REVOCABLE TRUST By:     HENRY SHWEID, TRUSTEE By:   /s/ Margaret Munzika Shweid   MAGARET MUNZIKA, TRUSTEE “LESSEE” JUICE CLUB, INC., a California corporation By:     KIRK PERRON   PRESIDENT   36 AMENDMENT NO. 1 This is an Amendment (“Amendment”) to that certain Standard Industrial/Commercial Single Tenant Lease by and between The Henry Shweid and Margaret Munzika Shweid Intervivos Revocable Trust (“Lessor”) and Juice Club, Inc. (“Lessee”) for the premises commonly known as 1700 17th Street located in the City and County of San Francisco (“Premises”) dated June 17, 1996 (the “Lease)”. The Lease is hereby amended as follows:   1. Subject to existing Tenant’s (Abbey Rent’s) rights under their current lease, Lessee (Juice Club, Inc.) shall have the first right to lease the adjacent space (Abbey Rent’s space) when and if it becomes available at a square footage rent equal to that currently being paid under this lease.   AGREED AND ACCEPTED: LESSOR The Henry Shweid and Margaret Munzika Shweid Intervivos Revocable Trust By:     Date:   July 8, 1996   Henry Shweid, Trustee     By:     Date:   July 8, 1996   Margaret Munzika Shweid, Trustee     AGREED AND ACCEPTED: LESSEE     Juice Club, Inc.     By:     Date:   7/11/96   Kirk Perron, President       37 AMENDMENT NO. 2 This is the Second Amendment (“Amendment No. 2”) to that certain Standard Industrial/Commercial Single Tenant Lease-Net entered into by and between The Henry Shweid and Margaret Munzika Shweid Intervivos Revocable Trust (“Lessor”) and Juice Club, Inc., a California corporation (“Lessee”) dated June 17, 1996 as modified by the Addendum attached thereto and previously amended by Amendment No. 1 thereto (the “Lease)”. This Amendment No. 2 is made and entered into as of this 9th day of December, 1996 by and between Lessor and Lessee as hereinabove identified.   1. Term. Paragraph 1.3 of the Form Lease shall be amended to provide a Lease Term of five (5) years and six and one half months commencing on June 15, 1996 (“Commencement Date”) and ending on December 31, 2001 (“Expiration Date”).   2. Base Rent. Paragraph 1.5 of the Form Lease shall be amended to provide that the Base Rent payable under the Lease shall commence effective January 1, 1997, and shall be according to the following schedule:     A. From January 1, 1997 through July 31, 1998, Base Rent shall be twenty one thousand seven hundred ten dollars and forty one cents ($21,710.41) per month.     B. From August 1, 1998 through December 31, 2001 Base Rent shall be twenty two thousand nine hundred eighty seven dollars and fifty cents ($22,987.50) per month.   3. Condition of Premises. Paragraph 2.2 of the Lease Form shall be amended to provide that, in areas directly or indirectly impacted by Lessee’s Tenant Improvement work, the repair and maintenance of the roof membrane is the responsibility of the Lessee.   4. Insurance and Real Property Taxes. Paragraphs 8.1 and 10.3 of the Lease Form shall he amended to provide that Lessee’s pro rata share of the Insurance Cost and Real Property Taxes is fifty-five percent (55%).   5. Option to Extend. Paragraph 49 of the Lease shall be amended to provide Lessee the right to extend the Lease for one (1) period of five (5) years, commencing on January 1, 2002 and terminating on December 31, 2006.   38   Date:   12/11/96   Henry Shweid, Trustee     By:     Date:   12/11/96   Margaret Munzika Shweid, Trustee     AGREED AND ACCEPTED: LESSEE     Juice Club, Inc.     By:     Date:   12/9/96   Kirk Perron, President       39 CONTRACT ADDENDUM San Francisco Association of REALTORS® Standard Form The following terms and conditions are hereby incorporated in and made a part of the ¨ Contract for the Sale and Purchase of Real Property, or  ¨ Counter Offer No.             , or  x other Lease dated June 17, 1996 for the Property known as 1700 17th Street, San Francisco, CA between Jamba Juice Company, a CA Corp. as successor in Interest to Juice Club, Inc. Lesee and David O’Keeff, lessorr     a) Current Lease expired on 12-31-06. No hold over provision exists, Lessor and lessee wish to extend the Lease term by ninety (90) days under the following terms:     1) TERM: January 1, 2007 through March 31, 2007 (three months).     2) RENT: Rent for period of January 1, 2007 through March 31, 2007 shall be Fifty-Six Thousand One Hundred Ninety-One Thousand Dollars and 66/100 ($56,191.66) per month.     3) All other terms and conditions to remain the same.     4) End of Addendum. Any inconsistencies between the terms and conditions stated in this Addendum and those contained in the document indicated above shall be resolved in favor of this Addendum. The foregoing terms and conditions are hereby agreed to and the undersigned acknowledge receipt of a copy of this Addendum.   Date   10/2/06     Date   10/2/06 Lessor   /s/ David O’Keeffe     Lessee   /s/ Donald D. Breen         Lessee   CFO Jamba Juice Copyright (c) 2000 San Francisco Association of Realtors   40

Exhibit 99.1 For more information, contact: James M. Otterberg Chief Financial Officer (336) 316-5424 Unifi Announces First Quarter 2015 Results GREENSBORO, N.C., October 22, 2014 – Unifi, Inc. (NYSE: UFI) today released preliminary operating results for the first quarter ended September 28, 2014. Net sales increased $5.5 million, or 3.3%, to $174.2 million for the September 2014 quarter compared to net sales of $168.7 million for the prior year quarter. The year-over-year improvement in net sales is attributable to improved volume in the Company’s Nylon and International Segments, along with mix enrichment improvements in the Company’s Polyester Segment. Net income for the September 2014 quarter was $7.1 million, or $0.39 per basic share, compared to net income of $8.9 million, or $0.46 per basic share, for the prior year quarter. Improved operating results for the Company’s Central American operations were offset primarily by a $2.5 million decrease in earnings from the Company’s equity affiliate, Parkdale America, LLC. Other highlights for the September 2014 quarter included: ● Gross margin increasing by 20 basis points despite larger than anticipated manufacturing variances related to the Company’s July 4th shutdown; ● Adjusted EBITDA of $14.2 million for the September 2014 quarter, a slight decline from $14.5 million for the prior year quarter; ● Repurchase of 148,500 shares of common stock under a previously announced stock repurchase program; ● Completion of a new long-term yarn supply agreement with Hanesbrands, Inc., which will be in effect through June 30, 2018; and ● The Fifth Amendment to our Credit Agreement, which increased borrowing capacity by $22 million. -continued- Unifi Announces First Quarter 2015 Results – page 2 “We are very pleased with the growth for our textured polyester business within the CAFTA region and the continued strength of our REPREVE® recycled fiber,” said Roger Berrier, President and Chief Operating Officer of Unifi. “We will continue to drive awareness and demand for REPREVE® through high visibility partnerships and consumer activations, which include programs with the Detroit Lions of the NFL, the University of North Carolina at Chapel Hill, and Marvel Universe Live! . Our marketing programs have attracted the attention of many brands and retailers, and have led to the development and adoption of new programs featuring REPREVE® and our other value-added products.” Cash and cash equivalents of $15.8 million as of September 28, 2014 remained relatively unchanged compared to $15.9 million as of June 29, 2014. Net debt at the end of the September 2014 quarter was $95.8 million, compared to $83.6 million at June 29, 2014. The Company had $72.5 million available under its revolver as of September 28, 2014, compared to $61.1 million as of June 29, 2014. Bill Jasper, Chairman and CEO of Unifi, added: “Based on the success of our domestic business and the expansion of our business within the CAFTA region, the Company anticipates utilizing our cash from operations and additional borrowing capacity to fund growth related initiatives in fiscal year 2015. We are planning to increase texturing capacity in the U.S. and Central America to better serve the growing demand for synthetic yarns in the CAFTA region and to support our mix enrichment strategies. Because of the continued success and expected growth of REPREVE® , we will also continue exploring backward integration opportunities into bottle washing.” -continued- Unifi Announces First Quarter 2015 Results – page 3 The Company will provide additional commentary regarding its first quarter results and other developments during its earnings conference call on October 23, 2014, at 8:30 a.m. Eastern Time. The call will be webcast live at http://investor.unifi.com/, will be available for replay approximately two hours after the live event, and will be archived for approximately twelve months. Additional supporting materials and information related to the call, as well as the Company's financial results for the September 2014 quarter, will also be available at http://investor.unifi.com/. The Company will also host its annual investor update at the New York Stock Exchange in New York, NY, on Thursday, November 6, 2014 from 1:00 p.m. to 3:00 p.m. To attend, please contact Amber Smith at 336-316-5455 or [email protected]. Unifi, Inc. (NYSE: UFI) is a multi-national manufacturing company that produces and sells textured and other processed yarns designed to meet customer specifications, and premier value-added (“PVA”) yarns with enhanced performance characteristics. Unifi maintains one of the textile industry’s most comprehensive polyester and nylon product offerings. Unifi enhances demand for its products, and helps others in creating a more effective textile industry supply chain, through the development and introduction of branded yarns that provide unique performance, comfort and aesthetic advantages. In addition to its flagship REPREVE® products – a family of eco-friendly yarns made from recycled materials – key Unifi brands include: SORBTEK® , REFLEXX® , aio® - all-in-one performance yarns, SATURA® , AUGUSTA® A.M.Y.® , MYNX® UV, and MICROVISTA® . Unifi's yarns are readily found in the products of major brands in the apparel, hosiery, automotive, home furnishings, industrial and other end use markets. For more information about Unifi, visit www.unifi.com; to learn more about REPREVE® , visit www.repreve.com. ### Financial Statements to Follow -continued- Unifi Announces First Quarter 2015 Results – page 4 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (amounts in thousands, except share and per share amounts) September 28, 2014 June 29, 2014 ASSETS Cash and cash equivalents $ $ Receivables, net Inventories Income taxes receivable Deferred income taxes Other current assets Total current assets Property, plant and equipment, net Deferred income taxes Intangible assets, net Investments in unconsolidated affiliates Other non-current assets Total assets $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Accounts payable $ $ Accrued expenses Income taxes payable Current portion of long-term debt Total current liabilities Long-term debt Other long-term liabilities Deferred income taxes Total liabilities Commitments and contingencies Common stock, $0.10 par (500,000,000 shares authorized, 18,165,459 and 18,313,959 shares outstanding) Capital in excess of par value Retained earnings Accumulated other comprehensive loss ) ) Total Unifi, Inc. shareholders’ equity Non-controlling interest Total shareholders’ equity Total liabilities and shareholders’ equity $ $ -continued- Unifi Announces First Quarter 2015 Results – page 5 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (amounts in thousands, except per share amounts) For The Three Months Ended September 28, 2014 September 29, 2013 Net sales $ $ Cost of sales Gross profit Selling, general and administrative expenses Provision (benefit) for bad debts ) Other operating expense, net Operating income Interest income ) ) Interest expense Equity in earnings of unconsolidated affiliates ) ) Income before income taxes Provision for income taxes Net income including non-controlling interest Less: net (loss) attributable to non-controlling interest ) ) Net income attributable to Unifi, Inc. $ $ Net income attributable to Unifi, Inc. per common share: Basic $ $ Diluted $ $ -continued- Unifi Announces First Quarter 2015 Results – page 6 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (amounts in thousands) For The Three Months Ended September 28, 2014 September 29, 2013 Cash and cash equivalents at beginning of year $ $ Operating activities: Net income including non-controlling interest Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities: Equity in earnings of unconsolidated affiliates ) ) Distributions received from unconsolidated affiliates — Depreciation and amortization expense Non-cash compensation expense, net Excess tax benefit on stock-based compensation plans — ) Deferred income taxes ) 17 Other 83 Changes in assets and liabilities: Receivables, net ) Inventories ) ) Other current assets and income taxes receivable ) Accounts payable and accruals ) ) Income taxes payable Other non-current assets 51 Net cash provided by operating activities Investing activities: Capital expenditures ) ) Proceeds from sale of assets 22 Proceeds from other investments 34 Other ) ) Net cash used in investing activities ) ) Financing activities: Proceeds from revolving credit facility Payments on revolving credit facility ) ) Proceeds from term loan Common stock repurchased and retired under publicly announced programs ) ) Proceeds from stock option exercises — Contributions from non-controlling interest — Excess tax benefit on stock-based compensation plans — Other ) ) Net cash provided by (used in) financing activities ) Effect of exchange rate changes on cash and cash equivalents ) 81 Net (decrease) increase in cash and cash equivalents ) Cash and cash equivalents at end of period $ $ -continued- Unifi Announces First Quarter 2015 Results – page 7 RECONCILIATIONS OF NET INCOME ATTRIBUTABLE TO UNIFI, INC. TO ADJUSTED EBITDA (Unaudited) (amounts in thousands) The reconciliations of Net income attributable to Unifi, Inc. to EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are as follows: For the Three Months Ended September 28, 2014 September 29, 2013 Net income attributable to Unifi, Inc. $ $ Provision for income taxes Interest expense, net 38 Depreciation and amortization expense EBITDA Non-cash compensation expense Other Adjusted EBITDA Including Equity Affiliates Equity in earnings of unconsolidated affiliates ) ) Adjusted EBITDA $ $ -continued- Unifi Announces First Quarter 2015 Results – page 8 NON-GAAP FINANCIAL MEASURES Certain non-GAAP financial measures included herein are designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America ("GAAP") because management believes such measures are useful to investors. These non-GAAP financial measures are Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA. EBITDA represents net income or loss attributable to Unifi, Inc. before net interest expense, income tax expense, and depreciation and amortization expense. Adjusted EBITDA Including Equity Affiliates represents EBITDA adjusted to exclude non-cash compensation expense, gains or losses on extinguishment of debt, loss on previously held equity interest, and certain other adjustments. Such other adjustments include operating expenses for Repreve Renewables, restructuring charges and start-up costs, gains or losses on sales or disposals of property, plant and equipment, currency and derivative gains or losses, and other operating or non-operating income or expense items necessary to understand and compare the underlying results of the Company. Adjusted EBITDA represents Adjusted EBITDA Including Equity Affiliates adjusted to exclude equity in earnings and losses of unconsolidated affiliates. The Company may, from time to time, change the items included within Adjusted EBITDA. EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are alternative views of performance used by management, and we believe that investors’ understanding of our performance is enhanced by disclosing these performance measures. Management uses Adjusted EBITDA: (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of (a) items directly related to our asset base (primarily depreciation and amortization) and (b) items that we would not expect to occur as a part of our normal business on a regular basis; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is also a key performance metric utilized in the determination of variable compensation. We believe that the use of EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA as operating performance measures provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense decreases as deductible interest expense increases; and depreciation and amortization are non-cash charges. Equity in earnings and losses of unconsolidated affiliates is excluded because such earnings or losses do not reflect our operating performance. The other items excluded from Adjusted EBITDA are excluded in order to better reflect the performance of our continuing operations. -continued- Unifi Announces First Quarter 2015 Results – page 9 In evaluating EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA, you should be aware that in the future, we may incur expenses similar to the adjustments included herein. Our presentation of EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA should not be construed as indicating that our future results will be unaffected by unusual or non-recurring items. EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA are not determined in accordance with GAAP and should not be considered as substitutes for net income, operating income or any other performance measures determined in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. Each of our EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA measures has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: ●it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows; ●it does not reflect the impact of earnings or charges resulting from matters we consider not indicative of our ongoing operations; ● it does not reflect changes in, or cash requirements for, our working capital needs; ●it does not reflect the cash requirements necessary to make payments on our debt; ●it does not reflect our future requirements for capital expenditures or contractual commitments; ● it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and ● other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure. Because of these limitations, EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations, including those under our outstanding debt obligations. You should compensate for these limitations by relying primarily on our GAAP results and using these measures only as supplemental information. -continued- Unifi Announces First Quarter 2015 Results – page 10 CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about the financial condition and results of operations of Unifi, Inc. (the “Company”) that are based on management’s beliefs, assumptions and expectations about our future economic performance, considering the information currently available to management. The words “believe,” “may,” “could,” “will,” “should,” “would,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “seek,” “strive,” and words of similar import, or the negative of such words, identify or signal the presence of forward-looking statements. These statements are not statements of historical fact; they involve risk and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that we express or imply in any forward-looking statement. Factors that could contribute to such differences include, but are not limited to: the competitive nature of the textile industry and the impact of worldwide competition; changes in the trade regulatory environment and governmental policies and legislation; the availability, sourcing and pricing of raw materials; general domestic and international economic and industry conditions in markets where the Company competes, such as recession and other economic and political factors over which the Company has no control; changes in consumer spending, customer preferences, fashion trends and end-uses; the financial condition of the Company’s customers; the loss of a significant customer; the success of the Company’s strategic business initiatives; the continuity of the Company’s leadership; volatility of financial and credit markets; the ability to service indebtedness and fund capital expenditures and strategic initiatives; availability of and access to credit on reasonable terms; changes in currency exchange, interest and inflation rates; the ability to reduce production costs; the ability to protect intellectual property; employee relations; the impact of environmental, health and safety regulations; the operating performance of joint ventures and other equity investments; and the accurate financial reporting of information from equity method investees. All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, except as may be required by federal securities law. The above and other risks and uncertainties are described in the Company’s most recent annual report on Form 10-K, and additional risks or uncertainties may be described from time to time in other reports filed by the Company with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. -end-

  EXHIBIT 10.4C   PENINSULA GAMING PARTNERS, LLC   PROFITS INTEREST PLAN   [FORM OF SPECIAL PROFITS INTEREST] AWARD AGREEMENT   This Award Agreement (this “Agreement”), dated as of [●], is entered into by and between Peninsula Gaming Partners, LLC, a Delaware limited liability company (the “Company”), and [●] (the “Grantee”).   WHEREAS, the Company maintains the Peninsula Gaming Partners, LLC Profits Interest Plan (the “Plan”), which is incorporated herein by reference as though set forth herein in its entirety (all capitalized terms used herein but not defined herein shall have the respective meanings ascribed thereto by the Plan);   WHEREAS, the Grantee is an Eligible Participant; and   WHEREAS, the Board has determined that it is in the best interests of the Company and the Members to grant an award of Special Profits Interests (which shall constitute a transfer of property for purposes of Section 83 of the Internal Revenue Code of 1986, as amended) and a Cash-Based Award (collectively, the “Award”) to the Grantee subject to the terms and conditions set forth below.     1. Grant of Award.  The Company hereby grants the Grantee the following Award:   (a) a Cash-Based Award in the amount of $[●] in accordance with Section 2(a) below; and   (b) a total of [●] Special Profits Interests, [●] of which (representing [●]% of all Special Profits Interests awarded hereunder) shall be subject to time vesting in accordance with Section 2(b) below (the “Time Vesting Special Profits Interests”), and [●] of which (representing [●]% of all Special Profits Interests awarded hereunder) shall be subject to performance vesting in accordance with Section 2(c) below (the “Performance Vesting Special Profits Interests”).   2. Terms and Conditions.  The Award granted hereunder is subject to the following terms and conditions, in addition to the terms and conditions of the Plan and the LLC Agreement.   (a)           Payment of Cash-Based Award.  The Cash-Based Award shall be paid on or within 60 days following the earlier to occur of:  (i) [DATE]1 and (ii) termination of the Grantee’s employment or service with the Company and its subsidiaries due to termination by the Company or such subsidiary without Cause or the Grantee’s death or Disability.    _______________________   1 In the event that the Grantee is terminated with Cause prior to this date, consider whether the Cash-Based Award should still be paid or should be forfeited. NEWYORK 6895162 (2K)       1   (b)           Time Vesting Special Profits Interests.  The Time Vesting Special Profits Interests shall vest in accordance with the following schedule: Vesting Date Percentage Vested [●] [●]% [●] [●]% [●] [●]% [●] [●]%   (c) Performance Vesting Special Profits Interests.  The Performance Vesting Special Profits Interests shall vest to the extent the Company attains the target Consolidated EBITDA of the Company and its subsidiaries for the fiscal year ending [●] (the “Performance Period”), as set forth in the annual budget of the Company approved by the Board for such fiscal year (the “Target EBITDA”), in accordance with the following schedule:   Target EBITDA Attained Percentage Vested Less than $[●] million 0% At least $[●] million but less than $[●] million [●]% [●]% [●]% [●]% [●]% [●]% [●]% [●]% $[●] million or greater 100%   To the extent the Performance Vesting Special Profits Interests do not become vested based on the foregoing schedule for the Performance Period, such unvested Performance Vesting Special Profits Interests shall be forfeited.  For purposes of this Agreement, the Consolidated EBITDA of the Company and its subsidiaries shall be determined by the Board based on the final audit by the Company’s independent certified public accountants of the Company’s and its subsidiaries’ financial statements for the fiscal year ending [●].   (d) Termination of Employment or Service.  Notwithstanding the foregoing provisions of this Section 2, the following provisions shall apply to the Special Profits Interests:   (i)           Change of Control.2  If the Grantee’s employment or service with the Company and/or its subsidiaries is not terminated in connection with a Change of Control (except as otherwise provided in clause (ii) of this Section 2(d)), then as of the date of such Change of Control, all Special Profits Interests that have not previously vested shall vest.    _____________________   2 Note that the definition of “Change of Control” in the LLC Agreement (i) does not include an IPO where the composition of the board remains the same during the 24-month period following the IPO, and (ii) does include the adoption of a plan of liquidation.         2   (ii) Without Cause, Death or Disability.  If the Grantee’s employment or service with the Company and its subsidiaries terminates due to termination by the Company or such subsidiary without Cause or due to the Grantee’s death or Disability, then as of the date of such termination, all Time Vesting Special Profits Interests shall vest and all Performance Vesting Special Profits Interests shall continue to be subject to vesting in accordance with paragraphs (c) and (d)(i) of this Section 2.3   (iii)           Other Employment Termination.  If the Grantee’s employment or service with the Company and its subsidiaries terminates for any reason other than termination by the Company or such subsidiary without Cause or the Grantee’s death or Disability, the Grantee shall, as of the date of such termination, forfeit all of the Special Profits Interests that have not become vested as of the date of such termination.   (e) Withholding Taxes.  The grant and vesting of the Award are subject to withholding of any applicable taxes.  In no event shall Special Profits Interests be delivered, or amounts paid to the Grantee pursuant to this Agreement, unless and until the Grantee has paid to the Company in cash, or made arrangements satisfactory to the Company regarding the payment of, the amount of any taxes of any kind required by law to be withheld with respect to the Award, and the Company shall have the right to deduct any such taxes from any payment of any kind otherwise due to the Grantee.   (f) No Right to Continued Employment or Services.  Neither the Award nor any terms contained in this Agreement shall confer upon the Grantee any express or implied right to be retained in the employment or service of the Company or any subsidiary thereof for any period or at all, nor restrict in any way the right of the Company or any such subsidiary, which right is hereby expressly reserved, to terminate the Grantee’s employment or services at any time with or without Cause.   (g) Inconsistency with Plan.  Notwithstanding any provision herein to the contrary, the Award provides the Grantee with no greater rights or claims than are specifically provided for under the Plan.  If and to the extent that any provision contained in this Agreement conflicts with the Plan, the Plan shall govern.   (h) Compliance with Laws, Regulations and LLC Agreement.  The Award shall be subject in all respects to (i) all applicable Federal and state laws, rules and regulations; (ii) any registration, qualification, approvals or other Board shall, in its sole discretion, determine to be necessary or applicable; and (iii) the terms, conditions and limitations of the Plan and the LLC Agreement (including, without limitation, all provisions thereof relating to transferability or repurchase).  The Grantee acknowledges that the Special Profits Interests subject to the Award have not been registered under the Securities Act of 1933, as amended, or under any state securities or “blue sky” law or regulation.  As of the date hereof, the Grantee shall execute a joinder to the LLC Agreement (in the form provided by the Company) with respect to the number of Special Profits Interests subject to the Award.   3.   Miscellaneous.  ___________________________   3 Alternatively, consider whether vesting should be accelerated with respect to Performance Vesting Special Profits Interests so that they fully vest upon termination without Cause, death or Disability.  Also, consider whether accelerated vesting should occur upon “good reason” or “constructive discharge” termination.         3   4.     (a) This Agreement shall be governed by the laws of the state of Delaware, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  Except as otherwise permitted by the Plan, this Agreement may not be terminated, modified or amended, nor may any provision hereof be waived, in any way except in writing signed by the parties hereto.  The invalidity or   (b) The Board may make such rules and regulations and establish such procedures for the administration of this Agreement as it deems appropriate.  Without limiting the generality of the foregoing, the Board may interpret this Agreement, with such interpretations to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law.  In the event of any dispute or disagreement as to the interpretation of this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to this Agreement, the decision of the Board shall be final and binding upon all persons.   (c) The failure of the Grantee or the Company to insist upon strict compliance with any provision of this Agreement or the Plan, or to assert any right the Grantee or the Company, respectively, may have under this Agreement or the Plan, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement or the Plan.   (d) This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto; provided, however, that the provisions of any employment or services agreement shall be applicable with respect hereto to the extent expressly provided for herein.   (e) This Agreement has been executed in two counterparts, each of which shall   5.   Definitions.  For purposes of this Agreement:   (a)           (i) if the Grantee is party to an effective employment or services agreement with the Company or any of its subsidiaries that contains a definition of “Cause,” then “Cause” shall have the same meaning as such term is defined therein; or (ii) otherwise, “Cause” shall mean (1) the Grantee’s engaging in (A) willful or gross misconduct or (B) willful or gross neglect; (2) the Grantee’s repeatedly failing to adhere to the directions of the Grantee’s superiors or the Board or the written policies and practices of the Company or a subsidiary thereof; (3) the commission by the Grantee of a felony or a crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime involving the Company or a subsidiary thereof; (4) the Grantee’s engaging in any fraud, misappropriation or embezzlement; (5) a breach by the Grantee of any noncompetition, nonsolicitation, confidentiality or other restrictive covenant agreement between the Grantee and the Company or a subsidiary thereof; (6) a material failure by the Grantee to perform substantially and adequately the Grantee’s duties in respect of the Company or a subsidiary thereof; or (7) any illegal act of the Grantee detrimental to the Company or a subsidiary thereof.           4   (b)           “Change of Control” shall have the meaning given such term in the LLC Agreement.   (c)           The Grantee shall be considered to have a “Disability” during the period in which the Grantee is unable, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition has had, or is reasonably expected to have, a duration of not less than 120 days; provided, however, that if the Grantee is party to an effective employment or services agreement with the Company or any of its subsidiaries that contains a definition of “Disability,” “Disabled,” “Total Disability” or “Totally Disabled,” then, notwithstanding the foregoing provisions of this definition or the provisions of this Agreement, the definition of “Disability,” “Disabled,” “Total Disability” or “Totally Disabled” in such employment or services agreement, rather than the foregoing definition in this Agreement, shall apply as the definition of “Disability” to the Grantee             5   IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement as     By:         Name        Title                                            [●]                                                                    6  

Title: Im scared im gonna go to jail Question:i just turned 18 a bit ago and i got some breaches on a charge i got when i was seventeen, and i didnt go to court today. what now? Answer #1: What’s the charge, what was court for? I’m assuming breaches is kind of like a probation violation?

EXHIBIT 4 Letter from Clinton Magnolia Master Fund, Ltd. to Porter Bancorp, Inc., dated July 11, 2011 CLINTON MAGNOLIA MASTER FUND, LTD. c/o Clinton Group Inc. 9 West 57th Street, 26th Floor New York, New York 10019 July 11, 2011 By Facsimile and Fedex Porter Bancorp, Inc. 2500 Eastpoint Parkway Louisville, Kentucky 40223 Attention: J. Chester Porter Chairman Dear Mr. Porter: Clinton Magnolia Master Fund, Ltd. (together with its affiliates, “Clinton”) is the direct beneficial owner of 744,135 shares (the “Shares”) of common stock, no par value (the “Common Stock”), of Porter Bancorp, Inc. (together with PBI Bank, Inc., the “Bank”), which represents approximately 6.2% of the Common Stock outstanding. At the time of our investment, we believed in the underlying value of the Bank and its future growth prospects. However, we have come to believe that the Bank will only remain a safe and sound Bank and reach its full potential if its Board of Directors (the “Board”) brings in new executive leadership. Very recently, the Bank consented to the issuance of a Consent Order (the “Consent Order”) against it by the Federal Deposit Insurance Corporation and the Kentucky Department of Financial Institutions that mandated a third-party evaluation of the executive team “for the purpose of providing qualified management for the Bank.” The Consent Order, as you know, also requires the Bank to take near-term action in a number of areas that, frankly, would have already been addressed by qualified executive leadership: shoring up the Bank’s capital, reducing substandard assets, “accurately” reporting its ALLL, strengthening its loan review function, eliminating loss assets, and reducing loan concentrations, to name a few. In the interest of the Bank’s safety and soundness, we believe the time has come for the Board of Directors to replace the Chief Executive Officerwith an experienced executive who can quickly resolve the Bank’s ongoing issues and properly manage the Bank’s operations, compliance with GAAP, financial disclosures and relationships with the regulators going forward. We trust that any third party consultant hired by the Bank in compliance with the Consent Order will so demand and we urge the Board to act quickly on the consultant’s recommendation. For months the Bank’s Chief Executive has assured us that she was diligently working to resolve the Bank’s NPA issues. But essentially nothing substantial has happened. The quarters of dawdling on this front have threatened the safety and soundness of the Bank (as now confirmed by the Consent Order), stymied the Bank’s business plan, destroyed a tremendous amount of shareholder value (more than $75 million in just the last twelve months), and discouraged sell-side analysts (each of whom has only been able to muster a “hold” recommendation, despite the Bank’s low valuation) and investors alike. More generally, as I am sure you can appreciate, it is disconcerting to us as a large investor in the Bank that the regulators have found so many deficiencies and that the executive team and the Board have to be led into compliance by the Bank’s regulators. Moreover, the Consent Order requires the Bank to eliminate or correct “all violations of law, rule and regulation” identified in the January 3, 2011 Evaluation Report. It should go without saying that the Bank’s operating procedures and standards should have been compliant with law all along. We again encourage the Bank to deal with its NPA issues and to do so immediately. On a related topic, it is now also apparent that a number of the representations and warranties made to us in connection with our investment were likely false, including, but not limited to, representations and warranties with respect to financial statements, internal controls, compliance with law, Sarbanes Oxley compliance and loan loss reserves. We have reason to believe that in addition to the areas explicitly noted in the Consent Order, there were significant deficiencies in the appraisals of the Bank’s loan portfolio and in the Bank’s review of those appraisals. As a result of the deficiencies explicitly noted by the regulators and those relating to appraisals, we believe that the Bank’s financial statements were not prepared in accordance with GAAP and did not reflect the true financial position of the Bank, and that the internal controls over financial reporting and Sarbanes-Oxley disclosure controls were not effective as represented. We are mindful that the biggest beneficiaries of the lofty valuation in the June and July 2010 private placement were Ms. Bouvette and you, as the largest holders of the Bank’s equity. We note with some trepidation that the Consent Order specifically admonishes the Bank, if it is to raise capital again, to do so this time through offering materials that provide “an accurate description of the financial condition of the Bank”. We fear that was not done the last time and that we are the victims of those “inaccurate” descriptions of the Bank’s then condition. In light of the apparent misrepresentations, we demand that the Bank take immediate steps to make investors in the June and July 2010 transactions, such as us, whole, through the issuance of additional securities that do not reduce the Bank’s capital or affect its safety and soundness.If the Bank fails to do, we reserve our right to pursue all available remedies to us for breach. The circumstances here – strong regulatory action, operational mismanagement, substantial loss of shareholder value, misrepresentations made to investors, and an ongoing failure to confront the NPAs on the books – give rise to heightened duties for the Board. In addition to compensating investors such as ourselves that were induced to purchase securities through misrepresentations in a manner that is consistent with the safety and soundness of the Bank, we believe the Board must immediately implement the various requirements of the Consent Order and, consistent with that Consent Order and subject to any required regulatory consent, should also take the following steps to preserve shareholder value and ensure the safety and soundness of the Bank: ● replace the Bank’s Chief Executive Officer by conducting an expedited search with input from the Bank’s significant stakeholders, such as Clinton; ● augment the Board by expanding it to eight members, filling the vacancy so created with an appropriately qualified individual designated by Clinton; ● raise additional capital, if necessary, in way that does not disadvantage the existing shareholders; and ● create a special committee of the Board, including the Clinton Board designee, to oversee asset sales. We hope that the Board will act in accordance with the foregoing.If the Board fails to do so, we reserve our right to pursue all available remedies against the Bank and the Board to protect the safety and soundness of the Bank, achieve redress for the misrepresentations made to us, and prevent the further deterioration of shareholder value. This letter is without prejudice to, and we fully and specifically reserve, any and all rights, powers, privileges and remedies, with respect to the improper management of the Bank, including failures of oversight by the Board, and for the breaches of representations made to us in connection with our investment. We stand ready to assist in the Bank’s return to safety and soundness, including potentially committing additional capital, provided the aforementioned necessary steps are taken. Very truly yours, CLINTON MAGNOLIA MASTER FUND, LTD. By: /s/ George Hall Name: George Hall Title: Authorized Signatory cc: Members of the Board of Directors Frost Brown Todd LLC 400 West Market Street Suite 3200 Louisville, Kentucky 40202 Attention:Alan MacDonald James Straus

Exhibit 10(e)(3)   AMENDED AND RESTATED EMPLOYMENT CONTINUATION AGREEMENT WITH EXECUTIVE OFFICER   This Amended and Restated Employment Continuation Agreement dated as of November 3, 2008 (“Agreement”) is by and between Protective Life Corporation, a Delaware corporation (the “Company”), and     WHEREAS, the Company has determined that Executive holds a position that is critical to the Company;   WHEREAS, the Company believes that, if it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of shareholders;   WHEREAS, the Company understands that any such situation could be a distraction to Executive, to the detriment of the Company and its shareholders;   WHEREAS, the Company desires to assure itself of Executive’s services during the period in which it is confronting such a situation, and to provide Executive with certain financial assurances to enable Executive to perform his or her responsibilities without undue distraction and without bias due to Executive’s personal circumstances; and   WHEREAS, to achieve these objectives, the Company and Executive have previously entered into an Employment Continuation Agreement (the “Prior Agreement”) which provided the Company and Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2);   NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and Executive hereby amend and restate the Prior Agreement to bring it into compliance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and to make certain other changes (as so amended and restated, the “Agreement”) as follows:   1.               Effective Date.  The effective date of this Agreement (the “Effective Date”) shall be the date on which a Change of Control occurs during the term of this Agreement (as provided in Section 12(c)); provided that (i) anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if Executive’s employment with the Company is terminated before the date on which the Change of Control occurs, and if it is reasonably demonstrated by Executive that such termination of employment (A) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control, or (B) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately before such termination of employment, and (ii) except as provided in clause (i) above, if     Executive is not employed by the Company on the date on which a Change of Control occurs, this Agreement shall be void and without effect.   2.               Definition of Change of Control.  Subject to the provisions of Code Section 409A, a “Change of Control” shall occur when (i) any one person (or more than one person acting as a group (as provided in Code Section 409A)) (such person or group, an “Acquiring Person”) acquires ownership of the Company’s stock that, together with stock previously held by the Acquiring Person, constitutes more than 50% of the total fair market value or more than 50% of the total voting power of the Company, or (ii) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election was not endorsed by a majority of the members of the Board before the date of the appointment or election, or (iii) an Acquiring Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Acquiring Person) assets from the Company that have a total gross fair market value equal to or more than 80% of the total gross fair market value of the Company’s assets immediately before such acquisition or acquisitions, or (iv) (except for purposes of Section 1) any other event or transaction occurs that is declared by resolution of the Board to constitute a Change in Control for purposes of this Agreement .   3.               Employment Period.  Subject to Section 6, the Company agrees to continue Executive in its employ, and Executive agrees to remain in the employ of the Company, for the period (the “Employment Period”) commencing on the Effective Date and ending on the second anniversary of the Effective Date.   4.               Position and Duties.  (a)  No Reduction in Position.  During the Employment Period, Executive’s position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately before the Effective Date.  Executive’s services shall be performed at the location where Executive was employed immediately before the Effective Date.   (b)         Business Time.  From and after the Effective Date, Executive agrees to devote Executive’s full attention during normal business hours to the business and affairs of the Company and to perform faithfully and efficiently the responsibilities assigned to Executive to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which Executive is entitled. Executive’s continuing to serve on any boards and committees on which Executive is serving or with which Executive is otherwise associated immediately before the Effective Date shall not be deemed to interfere with the performance of Executive’s services for the Company.   5.               Compensation.  (a) Base Salary.  During the Employment Period, Executive shall receive a base salary at a monthly rate at least equal to the monthly base salary paid to Executive by the Company immediately before the Effective Date.  The base salary shall be reviewed at least once each year after the Effective Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company’s regular practices. Executive’s base salary, as it may be increased from time to time, shall hereafter be referred to as “Base Salary”.  Neither the Base Salary nor any increase   2   in Base Salary after the Effective Date shall limit or reduce any other obligation of the Company hereunder.   (b)         Annual Bonus and Incentive Compensation.  During the Employment Period, in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, Executive shall be entitled to receive an (i) annual bonus which is at least equal to the greater of (A) the highest annual bonus, including any bonus provided under the Company’s Annual Incentive Plan (“AIP”), that had been payable to Executive in respect of either of the two fiscal years ended immediately before the Effective Date or (B) the amount that would have been payable to Executive as a target bonus under any bonus program in which Executive participated (including the AIP) for the year in which the Effective Date occurs and (ii) long-term incentive compensation opportunities on terms and conditions no less favorable to Executive than those applicable to Executive before the Effective Date.  Any amount payable hereunder as an annual bonus shall be paid later than March 15 of the year following the year for which the amount is payable, unless electively deferred by Executive pursuant to any deferral programs or arrangements that the Company may make available to Executive.   (c)          Benefit Plans.  During the Employment Period, Executive (and, to the extent applicable, Executive’s dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with Executive’s participation in such plans immediately before the Effective Date or, if more favorable to Executive, at the level made available to Executive or other similarly situated employees at any time thereafter.  Executive shall also be entitled to receive such perquisites as were generally provided to Executive in accordance with the Company’s policies and practices immediately before the Effective Date.   (d)         Expenses.  During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the policies and procedures of the Company as in effect immediately before the Effective Date.  Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Effective Date to Executive, if such policies and procedures are more favorable to Executive than those in effect immediately before the Effective Date.   (e)          Indemnification.  During and after the Employment Period, the Company shall indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of or related in any way to Executive’s performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company’s Certificate of Incorporation and By-Laws (the “Governing Documents”); provided that in no event shall the protection afforded to Executive hereunder be less than that afforded under the Governing Documents as in effect immediately before the Effective Date.                                                   6.               Termination of Employment.  (a)  Death or Disability.  Executive’s employment shall automatically terminate upon Executive’s death or termination of employment due to Disability (as defined below) during the Employment Period. For purposes of this Agreement,   3   “Disability” shall mean Executive’s inability to perform the duties of procedures applicable with respect to the Company’s long-term disability plan as in effect immediately before the Effective Date.   (b)         Voluntary Termination.  Anything in this Agreement to the contrary notwithstanding, Executive may, upon not less than 10 days’ written notice to the Company, voluntarily terminate employment for any reason (including early retirement under the terms of any of the Company’s retirement plans as in effect from time to time) during the Employment Period; provided that any termination of employment by Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b).   (c)          Cause.  The Company may terminate Executive’s employment for Cause.  For purposes of this Agreement, “Cause” shall mean (i) Executive’s conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on Executive’s part which result or are intended to result in material damage to the Company’s business or reputation; or (iii) repeated material violations by Executive of Executive’s obligations under Section 4, which violations are demonstrably willful and deliberate on Executive’s part and which result in material damage to the Company’s business or reputation.   (d)         Good Reason.  Executive may terminate employment for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following, without the express written consent of Executive, after the Effective Date:   (i)  (A) the assignment to Executive of any duties inconsistent in any material adverse respect with Executive’s position (including titles), authority or responsibilities as contemplated by Section 4, or (B) any other material adverse change in such position (including titles), authority or responsibilities;   (ii)  any failure by the Company to comply with any of the provisions of Section 5, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by Executive;   (iii)  the Company’s requiring Executive to be based at any office or location more than 20 miles from that location at which Executive performed services specified under the provisions of Section 4 immediately before the Change of Control, except for travel reasonably required in the performance of Executive’s responsibilities; or   (iv) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b).   In no event shall the mere occurrence of a Change of Control, absent any further impact on Executive, be deemed to constitute Good Reason.   (e)          Notice of Termination.  Any termination of Executive’s employment by the Company for Cause or by Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e).  For purposes of   4   this Agreement, a “Notice of Termination” shall mean a written notice given, in the case of a termination for Cause, within 10 business days of the Company’s having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of Executive’s having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice).  The failure by Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing Executive’s rights hereunder.   (f)            Date of Termination.  For purposes of this Agreement, the term “Date of Termination” shall mean (i) in the case of a termination of employment for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, and (ii) in all other cases, the actual date on which Executive’s employment terminates during the Employment Period.   7.               Obligations of the Company upon Termination.  (a)  Death or Disability.  If Executive’s employment is terminated during the Employment Period by reason of Executive’s death or Disability, this Agreement shall terminate without further obligations to Executive or Executive’s legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to Executive (or Executive’s beneficiary or estate) (i) Executive’s full Base Salary through the Date of Termination (the “Earned Salary”), (ii) any vested amounts or benefits owing to Executive under the Company’s otherwise applicable employee benefit plans and programs, including any compensation previously deferred by Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the “Accrued Obligations”), and (iii) any other benefits payable due to Executive’s death or Disability under the Company’s plans, policies, programs or arrangements (the “Additional Benefits”).   Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination.  Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, policy, program or arrangement.   (b)         Cause and Voluntary Termination.  If, during the Employment Period, Executive’s employment is terminated for Cause or voluntarily terminated by Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, policy, program or arrangement.   5   (c)          Termination by the Company other than for Cause and Good Reason Termination by Executive.   (i)                           Lump Sum Payments.  If either (a) the Company terminates Executive’s employment other than for Cause during the Employment Period or (b) Executive terminates employment for Good Reason at any time during the Employment Period, then the Company shall pay to Executive the following amounts:   (A)      Executive’s Earned Salary;   (B)        a cash amount (the “Severance Amount”) equal to three (3) times the sum of   (1)  Executive’s annual Base Salary; and   (2)  the greater of (i) the average of the bonus amount payable (including any amounts payable under the AIP) to Executive (including any amounts the receipt of which Executive elected to defer) with respect to the three fiscal years of the Company (or, if fewer, the number of such fiscal years in which Executive was an employee of the Company or its affiliates) immediately before the Change in Control (including, for this purpose, any AIP Payout (as defined in Section 7(c)(i)(C)) or (ii) the average of the bonus amount payable (including any amounts payable under the AIP) to Executive (including any amounts the receipt of which Executive elected to defer) with respect to the three fiscal years of the Company (or, if fewer, the number of such fiscal years in which Executive was an employee of the Company or its affiliates) immediately before the Date of Termination (including, for this purpose, any AIP Payout); and   (3)  the amount determined by dividing (i) the sum of the Grant Values (as defined below) for the Regular Grants (as defined below) made in the calendar year in which the Change of Control occurred and in the previous two calendar years (or, if the Change of Control occurred in a calendar year in which Executive and other similarly-situated senior executives have not received a Regular Grant, the Regular Grants made in the three calendar years preceding the calendar year in which the Change of Control occurred); provided that any calendar year in which Executive was not an employee of the Company or its affiliates shall be disregarded, by (ii) the number of calendar years taken into account pursuant to clause (i) above.  A Regular Grant shall mean any grant or award of performance shares, stock appreciation rights, restricted stock, stock options or other long-term stock-based incentives; provided that any “special” or “one-time” grant or award (as determined by the Committee) shall not be deemed a Regular Grant.  The Grant Value of any Regular Grant means (a) the value of each such Regular Grant as of the date of grant (as determined or approved by the Committee), or (b) if no such value has been   6   established by the Committee, the value of each such Regular Grant as of the date of grant as determined by application of the Black-Scholes pricing model or such valuation methodology as may have been regularly used by the Company or its independent compensation consultant before the Change of Control.  Notwithstanding the foregoing, (a) the Grant Value of Executive’s Regular Grants in 2006 shall be $              ; (b) the Grant Value of Executive’s Regular Grants in 2007 shall be $                ; and (c) the Grant Value of Executive’s Regular Grants in 2008 shall be $                .   (C)  if Executive has an annual cash bonus opportunity (including a cash bonus  opportunity under the AIP) outstanding and unpaid as of the Date of Termination, a cash payment (the “AIP Payout”) equal to (1) if the Date of Termination is before December 31 of the fiscal year of the Company to which such bonus opportunity relates, an amount equal to Executive’s target bonus opportunity under such bonus plan for such fiscal year, and (2) if the Date of Termination is on or after December 31 of the fiscal year of the Company to which such bonus opportunity relates, an amount equal to the amount Executive would have received under such bonus plan for such fiscal year based on actual achievement of the performance goals with respect thereto (assuming, for this purpose, that all subjective performance measures are achieved at a level equal to the greater of the level determined by the Company pursuant to the terms of such bonus plan and 100%).  Payment of the AIP Payout shall be in lieu of payment of any annual cash bonus opportunity otherwise due and payable with respect to the fiscal year of the Company referred to in this Section 7(c)(i)(C).   (D)       the Accrued Obligations.   Subject to Section 7(f), the Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination.  Subject to Section 7(f), the AIP Payout shall be paid in cash in a single lump sum (a) if payable under Section 7(c)(i)(C)(1), as soon as practicable, but in no event more than 10 business days (or such earlier date required by law), following the Date of Termination, and (b) if payable under Section 7(c)(i)(C)(2), as soon as practicable, but in no event later than the earlier of (i) 30 business days (or such earlier date required by law) following the Date of Termination and (ii) March 15 of the year following the calendar year for which the AIP Payout is payable.  Accrued Obligations shall be paid in accordance with the terms of the applicable plan, policy, program or arrangement.   (ii)                        Supplemental Retirement Payment.  If Executive is entitled to receive the Severance Amount described in Section 7(c)(i), Executive shall be entitled to receive a supplemental retirement payment, payable in a cash lump sum, equal in value to the actuarial equivalent (as defined below) of (A) the monthly benefit payable to Executive (expressed as a life annuity payable commencing at the later of the Date of Termination and age 65) determined by adding three years to   7   Executive’s credited service as determined at Executive’s Date of Termination under the terms of Company’s qualified defined benefit pension plan and supplemental or excess pension plan (collectively, the “Pension Plans”) as in effect immediately before the Change in Control (subject to any maximum on credited service set forth in the Pension Plans), minus (B) the monthly benefit payable to Executive (expressed as a life annuity payable commencing at the later of the Date of Termination and age 65) determined pursuant to the terms of all defined benefit pension plans (including the Pension Plans), active or frozen, in which Executive is a participant at Executive’s Date of Termination if such plans are sponsored by the Company or its successors or affiliates.   For purposes of this Agreement, “actuarial equivalent” shall mean a benefit actuarially equal in value to the value of a given benefit in a given form or schedule, based upon (1) the mortality table or tables (including any set backs of ages) used to calculate actuarial equivalents under the Pension Plans as of the date on which an actuarial equivalent is being determined under this Agreement and (2) an interest rate equal to the sum of (A) the yield on U.S. 10-year Treasury Notes at constant maturity as most recently published by the Federal Reserve Bank of New York before Executive’s Date of Termination; provided, however, that if such yield has not been so published within 90 days before Executive’s Date of Termination, the interest rate shall be the yield on substantially similar securities on the business day before Executive’s Date of Termination as determined by Regions Bank N.A. upon the request of either the Company or Executive, plus (B) .75%.   For purposes of making the foregoing determinations, at the request of Executive in writing within 5 days of Executive’s receipt of Notice of Termination or Executive’s Date of Termination, but in either event at the Company’s expense, the independent pension consultants most recently used by the Company in connection with its qualified pension plan before the Change in Control shall be engaged and shall certify the benefits due to Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination.  In any event, the supplemental retirement payment shall be paid to Executive (subject to Section 7(f)) no later than 45 days after the Date of Termination.  If the amount to be offset under clause (B) of the first paragraph of this Section 7(c)(ii) has not been determined within 30 days after the Date of Termination, no such offset shall be permitted.   (iii)                     Continuation of Benefits. If Executive is entitled to receive the Severance Amount described in Section 7(c)(i), Executive (and, to the extent applicable, Executive’s dependents) shall be entitled, after the Date of Termination and until the earlier of (A) the second anniversary of the Date of Termination (the “End Date”) or (B) the date Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company’s employee welfare benefit plans including the Company’s hospital, medical, accident, disability, and life insurance plans (the “Benefit Plans”) as were generally provided to Executive in accordance with the Company’s policies and practices immediately before the Effective Date.  To the   8   extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall pay Executive an amount equal to the cost to the Company of providing such coverage at the same time as the Severance Amount is payable to Executive.  Executive’s participation in the Benefit Plans will be on the same terms and conditions that would have applied had Executive continued to be employed by the Company through the End Date.  To the extent any Benefit Plan is a self-insured group health or dental benefit plan, then in addition to any other limitation provided hereunder, the period of coverage provided by this Section 7(c)(iii) under such self-insured group health or dental benefit plan shall not exceed the period of time during which Executive would be entitled to receive continuation coverage under Code Section 4980B (“COBRA”) if Executive had elected such coverage and paid the premiums required by COBRA.  To the extent that immediately preceding sentence applies, the Company shall pay Executive an amount equal to the cost of such COBRA continuation coverage for a period equal to the excess of (i) 24 months minus (ii) the number of months of COBRA coverage initially available to Executive, as determined in good faith by the Company, at the same time as the Severance Amount is payable to Executive.   (d)         Discharge of the Company’s Obligations.  Except as expressly provided in the last sentence of this Section 7(d), the amounts payable to Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of Executive’s employment shall be in full and complete satisfaction of Executive’s rights under this Agreement and any other claims Executive may have in respect of employment by the Company or any of its subsidiaries.  Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon Executive’s receipt of such amounts, the Company shall be released and discharged from any and all liability to Executive in connection with this Agreement or otherwise in connection with Executive’s employment with the Company and its subsidiaries.  Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify Executive and hold Executive harmless as provided in Section 5(e).   (e)          Certain Further Payments by the Company.   (i)  If any amount or benefit paid or distributed to Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to Executive by the Company or any affiliated company (including any distribution or payment made pursuant to the terms of the Company’s compensation plans or arrangements) (collectively, the “Covered Payments”) are or become subject to the tax (the “Excise Tax”) imposed under Code Section 4999 or any similar tax that may hereafter be imposed, the Company shall pay to Executive at the time specified in Section 7(e)(v) an additional amount (the “Tax Reimbursement Payment”) such that the net amount retained by Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax   9   withholding on such Covered Payments, shall be equal to the amount of the Covered Payments.   (ii)  For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as “parachute payments” within the meaning of Code Section 280G, and as all “parachute payments” in excess of the “base amount” (as defined under Code Section 280G(b)(3)) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company’s independent certified public accountants appointed before the Effective Date or tax counsel selected by such accountants (collectively, the “Accountants”), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for personal services actually rendered (within the meaning of Code Section 280G(b)(4)(B)) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Code Section 280G.   (iii)  For purposes of determining the amount of the Tax Reimbursement Payment, Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year.   (iv)  If the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Code Section 1274(b)(2)(B).  Notwithstanding the foregoing, if any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to Executive, and interest payable to the Company shall not exceed interest received or credited to Executive by such tax authority for the period it held such portion.  Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if Executive’s good faith claim for refund or credit is denied.   10   If the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined but in no event later than December 31 of the year following the calendar year in which such excess is paid by Executive.   (v)  The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) shall be paid to Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Code Section 1274(b)(2)(B)) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment.  If the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Code Section 1274(b)(2)(B)).   (f)          Delay of Payments.  Any provision of this Agreement to the contrary notwithstanding and subject to Code Section 409A, if Executive is a Specified Employee (as defined below), any payments due under this Agreement to Executive that are treated as deferred compensation for purposes of Code Section 409A (such as the Severance Amount) and that are payable on account of a termination of employment shall be made on the later to occur of the time otherwise specified in this Section 7 and the first business day after the date that is six months after Executive’s Date of Termination (or, if earlier, within 15 business days after the date of death of Executive). Executive will be a Specified Employee if, with respect to April 1 of each calendar year (beginning April 1, 2005) and for the 12-month period thereafter, Executive meets the definition of “key employee” of the Company under Code Section 416(i) (without regard to Code Section 416(i)(5)) at any time during the preceding calendar year, all as provided in Code Section 409A.   8.             Non-exclusivity of Rights.  Except as expressly provided herein, nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which Executive may qualify, or limit or otherwise prejudice such rights as Executive may have under any other agreements with the Company or any of its affiliated companies.  Amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or   11   subsequent to the Date of Termination shall be payable in accordance with such plan or program.   9.             Full Settlement.  The Company’s obligation to make the payments hereunder shall not be affected by any circumstances, including any set-off, counterclaim, recoupment, defense or other right which the Company may have against Executive or others whether by reason of the subsequent employment of Executive or otherwise.   10.       Legal Fees and Expenses.  If Executive asserts any claim in any contest (whether initiated by Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay Executive’s legal expenses (or cause such expenses to be paid) in accordance with Section 12(j) of this Agreement, including Executive’s reasonable attorney’s fees, on a quarterly basis, upon presentation of proof of such expenses; provided that Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement.   11.       Successors.  (a)  This Agreement is personal to Executive and, without the prior written consent of the Company, shall not be assignable by Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.   Company and its successors.  The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.   12.       Miscellaneous.  (a)  Applicable Law; Interpretation.  This Agreement shall be governed by and construed and conferred in accordance with the laws of the State of Delaware applied without reference to principles of conflict of laws.  If any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected.  The masculine shall include the feminine (and vice versa), the single shall include the plural (and vice versa), and the words “include” and “including” shall be deemed to be followed by the phrase “without limitation” unless the context clearly requires otherwise.  This Agreement may be executed by manual or facsimile signature.  The headings in this Agreement are solely for convenience and shall not affect the meaning or interpretation of this Agreement.   (b)   Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration.  The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American   12   Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity.  The arbitrator shall be acceptable to both the Company and Executive.  If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators.   (c)   Agreement Term, Termination and Amendment.  The initial term of this Agreement shall begin on the date hereof and shall terminate on May 1, 2012.  On each May 1 beginning May 1, 2009, the term of this Agreement shall automatically extend by one year unless at least 30 days prior to such May 1 the Board of Directors of the Company determines, and the Company so notifies Executive, that there will be no such extension.  The determination made by the Board of Directors as set forth in the preceding sentence shall not be effective if it is reasonably demonstrated by Executive that such determination (i) was at the Change of Control, or (ii) otherwise arose in connection with or anticipation of a Change of Control.  This Agreement may be amended or modified only by a written agreement signed by the parties hereto or by their respective successors and legal representatives.   (d)   Entire Agreement. This Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein and, without limiting the generality of the foregoing, any Employment Continuation Agreement executed between the Company and Executive before the date of this Agreement is hereby terminated.  There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein.  Executive is entering into this Agreement of Executive’s own free will and accord, and with no duress, has read this Agreement, and understands it and its legal consequences.   (e)   Notices.  All notices and other communications hereunder shall be in writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:   If to Executive:   at the home address of Executive as set forth in the records of the Company         Protective Life Corporation     2801 Highway 280 South     Birmingham, Alabama  35223     Attn: General Counsel   writing in accordance herewith.  Notices and communications shall be effective   (f)   Confidentiality.  Executive agrees to keep the terms of this Agreement confidential and agrees not to voluntarily disclose any information concerning this Agreement to anyone except Executive’s spouse, parents, legal counsel or accountant and provided that they (each and all) agree at Executive’s risk to keep such information confidential and not disclose it to others; provided that this nondisclosure provision does not prohibit disclosure (1) at the   13   direction or with the consent of the President or an Executive Vice President of the Company, (2) to tax agencies, (3) as required by law or court order, or (4) as may be necessary to enforce Executive’s rights under this Agreement.   (g)   Tax Withholding.  The Company may withhold from any amounts payable under this Agreement such Federal, state, local, or foreign taxes as shall be required   (h) Waivers.  The failure of Executive or the Company to insist upon strict right Executive or the Company may have hereunder, including the right of Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or of any other provision or right of this Agreement.   (i)   Employment at Will.  Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between Executive and the Company, the employment of Executive by the Company is “at will” and, subject to Section 1, Executive’s employment may be terminated by either Executive or the Company at any time prior to the Effective Date, in which case Executive shall have no further rights under this Agreement.   (j)   Reimbursement of Expenses.  Except as permitted by Code Section 409A, (i) the right to reimbursement of expenses under this Agreement shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement under this Agreement provided during any taxable year shall not affect the expenses eligible for reimbursement to be provided in any other taxable year, provided that the foregoing clause (ii) shall not be violated without regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense was incurred.   (k)   Termination of Employment.  For all purposes of this Agreement, Executive shall not have “termination of employment” (and corollary terms) from the Company unless and until Executive has a “separation from service” (as determined under Code Section 409A as uniformly applied in accordance with such rules as shall be established from time to time by the Company).   (l)   Amendment to LTIP.  Executive hereby agrees to the terms of the Company’s Long-Term Incentive Plan as amended and restated as of December 31, 2008 (the “Amended LTIP”) and to the application of terms of the Amended LTIP to any awards previously granted to Executive.   [This Agreement is continued and signed on the following page.]   14   IN WITNESS WHEREOF, the Company and Executive have duly executed this Agreement         PROTECTIVE LIFE CORPORATION                   By:       Name: John D. Johns     Title: Chairman of the Board, President and       Chief Executive Officer                     EXECUTIVE                     Signature:     15

EXHIBIT 32.01 CERTIFICATION BY CHIEF EXECUTIVE OFFICER I, Stephen C. Roussin, certify that (i) the Form 10Q for the quarter endedMarch 31, 2012 ofThe Campbell Fund Trust fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10Q for the quarter ended March 31, 2012 fairly presents, in all material respects, the financial condition and results of operations of The Campbell Fund Trust. Date: May 15, 2012 THE CAMPBELL FUND TRUST By: Campbell & Company, Inc., Managing Operator By: /s/ Stephen C. Roussin Stephen C. Roussin Chief Executive Officer

EXHIBIT 10.3 STOCK PLEDGE AGREEMENT   This STOCK PLEDGE AGREEMENT (this (“Agreement”) is made this 18th day of March, 2010 by and between SILICON VALLEY BANK, a California corporation with a loan production office located at 380 Interlocken Crescent, Suite 600, Broomfield, Colorado 80021  (“Bank”), and WIRELESS RONIN TECHNOLOGIES, INC. (“Pledgor”), with offices located at 5929 Baker Road, Suite 475, Minneapolis, Minnesota 55345.   RECITALS   Bank proposes to make certain loans to Pledgor, a Minnesota corporation pursuant to a Loan and Security Agreement dated as of even date herewith (the “Loan Agreement”).  To secure the Obligations, as defined in the Loan Agreement, Pledgor has agreed to pledge to Bank one hundred percent (100%) of the outstanding capital stock of each Subsidiary listed on Exhibit A hereto (the “Pledged Subsidiaries”), in each case in which Pledgor now owns or hereafter acquires an interest (collectively, the “Shares”).  The current issued and outstanding Shares are also listed on Exhibit A hereto.  Any capitalized terms used without definition herein shall have the meanings assigned to them in the Loan Agreement.   NOW, THEREFORE, Pledgor and Bank agree as follows:   1.           Pledge of Securities.   A.           Pledgor hereby pledges, assigns and delivers to Bank and grants to Bank a security interest in the Shares, together with all proceeds and substitutions thereof, all cash, stock and other moneys and property paid thereon, all rights to subscribe for securities declared or granted in connection therewith, and all other cash and noncash proceeds of the foregoing (all hereinafter called the “Pledged Collateral”), as security for the prompt performance of all of the Obligations, as defined in the Loan Agreement, and Pledgor’s obligations hereunder.   B.           The term “Pledged Collateral” shall also include any securities, instruments or distributions of any kind issuable, issued or received by Pledgor upon conversion of, in respect of, or in exchange for any other Pledged Collateral, including, but not limited to, those arising from a stock dividend, stock split, reclassification, reorganization, merger, consolidation, sale of assets or other exchange of securities or any dividends or other distributions of any kind upon or with respect to the Pledged Collateral.   C.           The certificate or certificates for the securities included in the Pledged Collateral (if such securities are certificated), accompanied by an instrument of assignment duly executed in blank by Pledgor, have been, or will be immediately upon the subsequent receipt thereof by Pledgor, delivered by Pledgor to Bank.  To the extent such securities are uncertificated, Pledgor hereby acknowledges and agrees that such securities shall only be certificated after prior written notice has been provided to Bank, and upon such certification, such securities shall promptly be delivered to Bank, accompanied by an instrument of assignment duly executed in blank by Pledgor.  Pledgor shall cause the books of each Pledged Subsidiary to reflect the pledge of the Shares.  Upon the occurrence and during the continuance of an Event of Default hereunder, Bank may effect the transfer of any securities included in the Pledged Collateral into the name of Bank and cause new certificates representing such securities to be issued in the name of Bank.  Pledgor will execute and deliver such documents, and take or cause to be taken such actions, as Bank may reasonably request to perfect or continue the perfection of Bank’s security interest in the Pledged Collateral.         D.           Pledgor agrees to execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s Lien in the Pledged Collateral or to effect the purposes of this Agreement.   2.           Representations, Warranties and Covenants.  Pledgor represents and warrants to and covenants with Bank that:   A.           The Pledged Collateral is owned by Pledgor free and clear of any security interests, liens or encumbrances, subject to applicable foreign law with respect to Foreign Subsidiaries;   B.           Pledgor has full power and authority to create a first lien, subject to applicable foreign law with respect to Foreign Subsidiaries, on the Pledged Collateral in favor of Bank and no disability or contractual obligation exists which would prohibit Pledgor from pledging the Pledged Collateral pursuant to this Agreement, and Pledgor will not assign, create or permit to exist any other claim to, lien or encumbrance upon, or security interest in any of the Pledged Collateral;   C.           There are no subscriptions, warrants or other options exercisable with respect to the Shares;   D.           The Shares have been duly authorized and validly issued, and are fully paid and non-assessable; and   E.           The Pledged Collateral is not the subject of any present or threatened suit, action, arbitration, administrative or other proceeding, and Pledgor knows of no reasonable grounds for the institution of any such proceedings.   All the above representations and warranties shall survive the making of this Agreement.   3.           Voting Prior to Demand.  Unless an Event of Default (as defined below) shall have occurred and be continuing, Pledgor shall be entitled to exercise any voting rights with respect to the Pledged Collateral and to give consents, waivers and ratifications in respect thereof, provided that no vote shall be cast or consent, waiver or ratification given or action taken which would be inconsistent with any of the terms of this Agreement or which would constitute or create any violation of any of such terms.  All such rights of Pledgor to vote and give consents, waiver and ratifications shall upon notice to Pledgor cease in case such an Event of Default hereunder shall occur and be continuing.   4.           Events of Default.  Each of the following shall constitute an event of default (“Event of Default”) hereunder:   A.           The occurrence of an Event of Default under the Loan Agreement; or   B.           The breach of any provision of this Agreement by Pledgor or the failure by Pledgor to observe or perform any of the provisions of this Agreement (in any case, after giving effect to any applicable cure or grace period).     2   5.           Bank’s Remedies Upon Default.   A.           Upon the occurrence and during the continuance of an Event of Default, Bank shall have the right, subject to applicable foreign law with respect to Foreign Subsidiaries,  to exercise all such rights as a secured party under the Uniform Commercial Code of the State of Illinois as it, in its sole judgment, shall deem necessary or appropriate, including the right to sell all or any part of the Pledged Collateral at one or more public or private sales upon ten (10) days’ written notice to Pledgor, and any such sale or sales may be made for cash, upon credit, or for future delivery, and in connection therewith, Bank may grant options, provided that any such terms or options shall, in the best judgment of Bank, be extended only in order to obtain the best possible price.   B.           Pledgor recognizes that Bank may be unable to effect a public sale of all or a part of the Pledged Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended (the “Act”), so that Bank may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire the Pledged Collateral for their own account, for investment and without a view to the distribution or resale thereof.  Pledgor understands that private sales so made may be at prices and on other terms less favorable to the seller than if the Pledged Collateral were sold at public sales, and agrees that Bank has no obligation to delay the sale of any of the Pledged Collateral for the period of time necessary (even if Bank would agree), to register such securities for sale under the Act.  Pledgor agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner.   C.           After the sale of any of the Pledged Collateral, Bank may deduct all reasonable legal and other expenses and attorney’s fees for preserving, collecting, selling and delivering the Pledged Collateral and for enforcing its rights with respect to the Obligations, and shall apply the residue of the proceeds to the Obligations in such manner as Bank in its reasonable discretion shall determine, and shall pay the balance, if any to Pledgor.   6.           Pledgor Waivers.  Pledgor waives any right to require Bank to (a) proceed against the Pledged Subsidiaries, any guarantor or any other person; (b) proceed against or exhaust any security held from the Pledged Subsidiaries; (c) marshal any assets of the Pledged Subsidiaries; or (d) pursue any other remedy in Bank’s power whatsoever.  Bank may, at its election, exercise or decline or fail to exercise any right or remedy it may have against the Pledged Subsidiaries or any security held by Bank, including without limitation the right to foreclose upon any such security by judicial or nonjudicial sale, without affecting or impairing in any way the liability of Pledgor hereunder.  Pledgor waives any defense arising by reason of any disability or other defense of the Pledged Subsidiaries or by reason of the cessation from any cause whatsoever of the liability of the Pledged Subsidiaries.  Until the indefeasible payment in full of the Obligations, Pledgor waives (i) any setoff, defense or counterclaim that Pledgor or any of the Pledged Subsidiaries may have against Bank; (ii) waives any right of subrogation or reimbursement, contribution or other rights against the Pledged Subsidiaries; (iii) any right to enforce any remedy that Bank now has or may hereafter have against any of the Pledged Subsidiaries; (iv) any defense arising out of the absence, impairment or loss of any right of reimbursement or subrogation or any other rights against any of the Pledged Subsidiaries; (v) all rights to participate in any security now or hereafter held by Bank; and (vi) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Agreement, notices of any default, notices of payment and nonpayment, or any nonpayment at maturity, notices of release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Pledgor may in any way be liable, and notices of the existence, creation, or incurring of new or additional indebtedness, in each case other than as specifically provided for in the Loan Documents.  Pledgor assumes the responsibility for being and keeping itself informed of the financial condition of the Pledged Subsidiaries and of all other circumstances bearing upon the risk of nonpayment of any indebtedness or nonperformance of any obligation of Pledgor, warrants to Bank that it will keep so informed, and agrees that absent a request for particular information by Pledgor, Bank shall have no duty to advise Pledgor of information known to Bank regarding such condition or any such circumstances.     3   7.           Insolvency.  If Pledgor becomes insolvent or is adjudicated bankrupt or file a petition for reorganization, arrangement, composition or similar relief under any present or future provision of the United States Bankruptcy Code, or if such a petition is filed against Pledgor, and in any such proceeding some or all of any indebtedness or obligations under the Loan Documents are terminated or rejected or any obligation of Pledgor is modified or abrogated, or if Pledgor’s obligations are otherwise avoided for insolvency, bankruptcy or any similar reason, Pledgor agrees that Pledgor’s liability hereunder shall not thereby be affected or modified and such liability shall continue in full force and effect as if no such action or proceeding had occurred.  This Agreement shall continue to be effective or be reinstated, as the case may be, if any payment must be returned by Bank upon the insolvency, bankruptcy or reorganization of Pledgor, any other person, or otherwise, as though such payment had not been made.   8.           Intentionally deleted.   9.           Notices.  Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by certified mail, postage prepaid, return receipt requested, or by prepaid telefacsimile to Pledgor or to Bank, as the case may be, at its addresses set forth below.  Such notice shall be deemed effective three (3) days after deposit if sent by first class mail, upon actual receipt if personally delivered or sent by certified mail, or upon confirmed transmission if sent via telefacsimile.     4   If to Pledgor:                        Wireless Ronin Technologies, Inc.             5920 Baker Road, suite 475             Minneapolis, Minnesota 55345             Attn: Mr. Darin McAreavey             Fax:  (952) 974-7887             Email: [email protected]   If to Bank:                             Silicon Valley Bank             380 Interlocken Crescent, Suite 600             Broomfield, Colorado 80021             Attn: Mr. Adam Glick            Fax:  (617) 880-3456            Email: [email protected]     Riemer & Braunstein LLP     Three Center Plaza     Boston, Massachusetts 02108     Attn:  Charles W. Stavros, Esquire         Email: [email protected]   The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.   10.           CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER   The laws of the State of Illinois shall apply to this Agreement.  PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF ILLINOIS IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND, AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS AGREEMENT.  NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE, BANK SHALL SPECIFICALLY HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST PLEDGOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS AGAINST PLEDGOR OR ITS PROPERTY.   PLEDGOR AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT.  EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.     5   11.           Amendment of Loan Documents.  Pledgor authorizes Bank, without notice or demand and without affecting its liability hereunder, from time to time to apply such security and direct the order or manner of sale thereof as set forth in the Loan Agreement.  This Agreement may not be amended or modified except by a written instrument signed by Bank and Pledgor.   12.           This Agreement and the agreements and instruments executed in connection therewith constitute the entire agreement between Bank and Pledgor with respect to the subject matter hereof and supersede all prior agreements, understandings, offers and negotiations, oral or written.   13.           This Agreement may be executed in two or more counterparts, each one and the same document.   14.           Upon payment in full of the Obligations and at such time as Bank’s obligation to make Credit Extension has terminated, Bank shall release its lien and security interests in Pledged Collateral and all rights therein shall revert to Pledgor.           6   as a sealed instrument under the laws of the State of Illinois, as of the date first written above.   PLEDGOR:   WIRELESS RONIN TECHNOLOGIES, INC.   By: /s/ Darin McAreavey   Name: Darin McAreavey   Title: CFO   BANK:           SILICON VALLEY BANK   By: /s/ Adam Glick   Name: Adam Glick   Title: Relationship Manager         Exhibit A   Pledged Shares     Pledgor Issuer Interest in Issuer % of Ownership % of Ownership Pledged* WIRELESS RONIN TECHNOLOGIES (CANADA), INC. Shares 100% 100%                                                               * If and/or when certificated, such stock and/or membership interest certificates shall be delivered to Bank, together with a stock/membership power executed in blank.  

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007 oTRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number:333-26933 COMMONWEALTH INCOME & GROWTH FUND III (Exact name of registrant as specified in its charter) Pennsylvania 23-2895714 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) Brandywine Bldg. One, Suite 200 2 Christy Drive Chadds Ford, PA 19317 (Address, including zip code, of principal executive offices) (610) 594-9600 (Registrant’s telephone number including area code) Indicate by check mark whether the registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (ii) has been subject to such filing requirements for the past 90 days: YESxNOo Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated fileroAccelerated fileroNon-accelerated filer x Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).YESoNOx -1- FORM 10-Q SEPTEMBER 30, 2007 TABLE OF CONTENTS PART I Item 1. Financial Statements 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 Item 4. Controls and Procedures 14 PART II Item 1. Legal Proceedings 15 Item 1 A. Risk Factors 15 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Securities Holders 15 Item 5. Other Information 15 Item 6. Exhibits 15 -2- Part I. FINANCIAL INFORMATION Item 1. Financial Statements Commonwealth Income & Growth Fund III Condensed Balance Sheets September 30, 2007 December 31, 2006 (unaudited) Assets Cash and cash equivalents $ 22,588 $ 2,878 Lease income receivable 11,337 4,285 Prepaid expenses 1,074 363 34,999 7,526 Computer equipment, at cost 167,167 364,796 Accumulated depreciation (107,922 ) (341,135 ) 59,245 23,661 Equipment acquisition costs and deferred expenses, net 85 654 Total Assets $ 94,329 $ 31,841 Liabilities and Partners' Capital Liabilities Accounts payable $ 40,980 $ 26,094 Accounts payable - affiliated limited partnerships 31,645 49,700 Accounts payable - General Partner 100,943 100,576 Accounts payable - Commonwealth Capital Corp. 27,865 37,099 Other accrued expenses 10,490 10,487 Unearned lease income 491 122 Notes payable 4,243 13,511 Total Liabilities 216,657 237,589 Partners' Capital General partner 1,000 1,000 Limited partners (123,328 ) (206,748 ) Total Partners' Capital (122,328 ) (205,748 ) Total Liabilities and Partners' Capital $ 94,329 $ 31,841 see accompanying notes to condensed financial statements -3- Table of Contents Commonwealth Income & Growth Fund III Condensed Statements of Operations Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 (unaudited) (unaudited) Revenue Lease $ 9,255 $ 8,040 $ 25,707 $ 35,284 Interest and other 122 31 134 831 Gain on sale of computer equipment 7,760 96 8,045 265 Total Revenue 17,137 8,167 33,886 36,380 Expenses Operating, excluding depreciation 4,649 8,734 29,366 32,130 Equipment management fee - General Partner - 402 823 1,764 Interest 87 283 389 1,031 Depreciation 5,435 3,446 13,537 22,721 Amortization of equipment acquisition costs and deferred expense 170 224 569 823 Other - 434 - 434 Total expenses 10,341 13,523 44,684 58,903 Net income (loss) $ 6,796 $ (5,356 ) $ (10,798 ) $ (22,523 ) Net income (loss) allocated to limited partners $ 6,645 $ (5,484 ) $ (11,251 ) $ (22,957 ) Net income (loss) per equivalent limited partnership unit $ 0.04 $ (0.04 ) $ (0.07 ) $ (0.15 ) Weighted average number of equivalent limited partnership units outstanding during the period 151,178 151,178 151,178 151,178 see accompanying notes to condensed financial statements -4- Table of Contents Commonwealth Income & Growth Fund III Condensed Statements of Partners' Capital For the Nine Months ended September 30, 2007 (unaudited) General Partner Units Limited Partner Units General Partner Limited Partner Total Partners' capital deficit - January 1, 2007 50 151,178 $ 1,000 $ (206,748 ) $ (205,748 ) Net Income (loss) - - 453 (11,251 ) (10,798 ) Contributions-Cash contribution - - 90,697 - 90,697 Contributions-Forgiveness of Fees - - 48,878 - 48,878 Transfer of partners' capital - - (139,575 ) 139,575 - Distributions - - (453 ) (44,904 ) (45,357 ) Partners' capital (deficit)- September 30, 2007 50 151,178 $ 1,000 $ (123,328 ) $ (122,328 ) see accompanying notes to condensed financial statements -5- Table of Contents Commonwealth Income & Growth Fund III Condensed Statements of Cash Flow Nine Months Ended September 30, 2007 2006 (unaudited) Net cash provided by operating activities $ 15,446 $ 18,037 Investing activities: Capital expenditures (52,873 ) - Net proceeds from the sale of computer equipment 11,797 6,111 Net cash (used in) provided by investing activities (41,076 ) 6,111 Financing activities: Contributions 90,697 10,000 Distributions to partners (45,357 ) (43,497 ) Net cash provided by (used in) financing activities 45,340 (33,497 ) Net increase (decrease) in cash and equivalents 19,710 (9,349 ) Cash and cash equivalents, beginning of period 2,878 10,333 Cash and cash equivalents, end of period $ 22,588 $ 984 see accompanying notes to condensed financial statements -6- Table of Contents NOTES TO CONDENSED FINANCIAL STATEMENTS 1. Business Commonwealth Income & Growth Fund III (the “Partnership”) is a limited partnership organized in the Commonwealth of Pennsylvania on April 17, 1997.The Partnership offered for sale up to 750,000 Units of the limited partnership at the purchase price of $20 per unit (the “Offering”).The Offering was terminated at the close of business on July31, 2000. The Partnership used the proceeds of the Offering to acquire, own and lease various types of computer information technology (I.T.) equipment and other similar capital equipment, which is leased primarily to U.S. corporations and institutions.Commonwealth Capital Corp. (“CCC”), on behalf of the Partnership and other affiliated partnerships, acquires computer equipment subject to associated debt obligations and lease agreements and allocates a participation in the cost, debt and lease revenue to the various partnerships it controls based on certain risk factors. The Partnership’s General Partner is Commonwealth Income & Growth Fund, Inc. (the “General Partner”), a Pennsylvania corporation which is an indirect wholly owned subsidiary of CCC.Approximately ten years after the commencement of operations, the Partnership intends to sell or otherwise dispose of all of its computer equipment, make final distributions to partners, and to dissolve.Unless sooner terminated, the Partnership will continue until December31, 2009. 2. Business Plan The Partnership has suffered recurring losses from operations and has a deficit partners’ capital of approximately $123,000 at September 30, 2007.The General Partner and CCC have forgiven amounts payable by the Partnership to them and have deferred payments on other amounts to allow for distributions to limited partners.(See note 5) The General Partner and CCC have committed to fund, either through cash contributions and/or forgiveness of indebtedness, any necessary cash shortfalls of the Partnership throughDecember 31, 2007. No fees will be charged to the fund during 2007.CCC has committed to fund distributions through December 30, 2007, at which time it will reassess the operations of the fund.CCC will continue to reassess the operations on a quarterly basis throughout 2007. 3. Summary of Significant Accounting Policies Basis of Presentation The financial information presented as of any date other than December 31, 2006 has been prepared from the books and records without audit.Financial information as of December 31, 2006 has been derived from the audited financial statements of the Partnership, but does not include all disclosures required by generally accepted accounting principles.In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated, have been included.For further information regarding the Partnership’s accounting policies, refer to the financial statements and related notes included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2006.Operating results for the nine months ended September 30, 2007 are not necessarily indicative of financial results that may be expected for the full year ended December 31, 2007. -7- Table of Contents Long-Lived Assets The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable.The Partnership determines whether an impairment exists by estimating the undiscounted cash flows to be generated by each asset.If the estimated undiscounted cash flows are less than the carrying value of the asset, an impairment exists.The amount of the impairment is determined based on the difference between the carrying value and the fair value.Fair value is determined based on estimated discounted cash flows to be generated by the asset.The Partnership determined that no impairment existed as of September 30, 2007. Depreciation on computer equipment for financial statement purposes is based on the straight-line method over estimated useful lives of four years. Forgiveness of Related Party Payables In accordance with Accounting Principles Board Opinion No. 26, Early Extinguishment of Debt, the Partnership accounts for forgiveness of related party payables as partner’s capital transactions. Net Income (Loss) Per Equivalent Limited Partnership Unit The net income (loss) per equivalent limited partnership unit is computed based upon net income (loss) allocated to the limited partners and the weighted average number of equivalent units outstanding during the period. 4. Computer Equipment The Partnership is the lessor of equipment under operating leases with periods ranging from 29 to 39 months.In general, associated costs such as repairs and maintenance, insurance and property taxes are paid by the lessee. Through September 30, 2007, the Partnership has only entered into operating leases.Lease revenue is recognized on a monthly straight-line basis which is generally in accordance with the terms of the operating lease agreements. Remarketing fees are paid to the leasing companies from which the Partnership purchases leases.These are fees that are earned by the leasing companies when the initial terms of the lease have been met and the equipment is re-leased or sold.The General Partner believes that this strategy adds value since it entices the leasing company to "stay with the lease" for potential extensions, remarketing, or sale of equipment.This strategy potentially minimizes any conflicts the leasing company may have with a potential new lease and will potentially assist inmaximizing overall portfolio performance.The remarketing fee is tied into lease performance thresholds and is factored in the negotiation of the fee.Remarketing fees incurred in connection with lease extensions are accounted for as operating costs.Remarketing fees incurred in connection with the sale of computer equipment are included in our gain or loss calculations.For the nine months ended September 30, 2007 and 2006, remarketing fees were incurred in the amountsof $1,000 and $1,200, respectively. As of September 30, 2007 the Partnership did not have any equipment in which it participated with other partnerships.The Partnership’s share of the computer equipment in which it participates with other partnerships at December 31, 2006 was approximately $4,000, and is included in the Partnership’s fixed assets on its balance sheet.The total cost of the equipment shared by the Partnership with other partnerships at December 31, 2006 was approximately $13,000.There was no outstanding debt associated with the equipment at September 30, 2007 and December 31, 2006.There also was no total outstanding debt at September 30, 2007 and December 31, 2006 related to the equipment shared by the Partnership. -8- Table of Contents The following is a schedule of future minimum rentals on noncancellable operating leases at September 30, 2007: Amount Three Months ended December 31, 2007 $ 7,455 Year Ended December 31, 2008 12,456 Year Ended December 31, 2009 11,383 Year Ended December 31, 2010 2,846 $ 34,140 5. Related Party Transactions Receivables/Payables As of September 30, 2007 the Partnership’s related party receivables and payables are short term, unsecured, and non-interest bearing. Forgiveness of Related Party Payables During the nine months ended September 30, 2007, CCC and the General Partner forgave payables owed to them by the Partnership of approximately $49,000. Reimbursable Expenses The General Partner and its affiliates are entitled to reimbursement by the Partnership for the cost of supplies and services obtained and used by the General Partner in connection with the administration and operation of the Partnership from third parties unaffiliated with the General Partner.In addition, the General Partner and its affiliates are entitled to reimbursement for certain expenses incurred by the General Partner and its affiliates in connection with the administration and operation of the Partnership.During the nine months ended September 30, 2007, the Partnership recorded approximately $21,000 for reimbursement of expenses to the General Partner.During the nine months ended September 30, 2006, the Partnership recorded approximately $8,000 for reimbursement of expenses to the General Partner. Equipment Management Fee The General Partner is entitled to be paid a monthly fee equal to the lesser of (i) the fees which would be charged by an independent third party for similar services for similar equipment or (ii) the sum of (a) two percent of (1) the gross lease revenues attributable to equipment which is subject to full payout net leases which contain net lease provisions plus (2) the purchase price paid on conditional sales contracts as received by the Partnership and (b) 5% of the gross lease revenues attributable to equipment which is subject to operating and capital leases.For the nine months ended September 30, 2007, equipment management fees of approximately $800 were earned by the General Partner.For the nine months ended September 30, 2006, equipment management fees of approximately $1,700 were earned by the General Partner. -9- Table of Contents 6. Notes Payable Notes payable consisted of the following: September 30, 2007 December 31, 2006 Installment note payable to bank; interest at 5.5%, due in monthly installments of $1,073, including interest, with final payment in January 2008. $ 4,243 $ 13,511 This note is secured by specific computer equipment and is a nonrecourse liability of the Partnership.Aggregate maturities of notes payable for each of the periods subsequent to September 30, 2007 are as follows: Amount Three months ended December 31, 2007 $ 3,175 Year ended December 31, 2008 1,068 $ 4,243 7. Supplemental Cash Flow Information Other noncash activities included in the determination of net loss are as follows: Nine months ended September 30, 2007 2006 Lease income, net of interest expense on notes payable realized as a result of direct payment of principal by lessee to bank $ 9,268 $ 13,131 No interest or principal on notes payable was paid by the Partnership because direct payment was made by lessee to the bank in lieu of collection of lease income and payment of interest and principal by the Partnership. Non-cash operating, investing and financing activities include the following: Nine months ended September 30, 2007 2006 Forgiveness of related party payables recorded as a capital contribution $ 48,878 $ 100,000 -10- Table of Contents Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations FORWARD LOOKING STATEMENTS Certain statements within this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements are being made pursuant to the PSLRA, with the intention of obtaining the benefits of the “safe harbor” provisions of the PSLRA, and, other than as required by law, we assume no obligation to update or supplement such statements. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. You can identify these statements by the use of words such as “may,” “will,” “could,” “anticipate,” “believe,” “estimate,” “expects,” “intend,” “predict” or “project” and variations of these words or comparable words or phrases of similar meaning. These forward-looking statements reflect our current beliefs and expectations with respect to future events and are based on assumptions and are subject to risks and uncertainties and other factors outside our control that may cause actual results to differ materially from those projected. CRITICAL ACCOUNTING POLICIES The Partnership's discussion and analysis of its financial condition and results of operations are based upon its financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Partnership to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Partnership bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Partnership believes that its critical accounting policies affect its more significant judgments and estimates used in the preparation of its financial statements. COMPUTER EQUIPMENT Commonwealth Capital Corp., on behalf of the Partnership and other affiliated partnerships, acquires computer equipment subject to associated debt obligations and lease revenue and allocates a participation in the cost, debt and lease revenue to the various partnerships based on certain risk factors.Depreciation on computer equipment for financial statement purposes is based on the straight-line method over estimated useful lives of four years. REVENUE RECOGNITION Through September 30, 2007, the Partnership has only entered into operating leases.Lease revenue is recognized on a monthly straight-line basis which is generally in accordance with the terms of the operating lease agreements. The Partnership reviews a customer’s credit history before extending credit, and establishes provisions for uncollectible accounts based upon the credit risk of specific customers, historical trends and other information. LONG-LIVED ASSETS The Partnership evaluates its long-lived assets when events or circumstances indicate that the value of the asset may not be recoverable.The Partnership determines whether impairment exists by estimating the undiscounted cash flows to be generated by each asset.If the estimated undiscounted cash flows are less than the carrying value of the asset then impairment exists.The amount of the impairment is determined based on the difference between the carrying value and the fair value.Fair value is determined based on estimated discounted cash flows to be generated by the asset. -11- Table of Contents LIQUIDITY AND CAPITAL RESOURCES The Partnership’s primary sources of cash for the nine months ended September 30, 2007 were contributions of approximately $91,000 and operating activities of approximately $15,000. The primary uses of cash were for capital expenditures of approximately $53,000 and payments of preferred distributions to partners of approximately $45,000.For the nine month period ending September 30, 2007, the Partnership generated cash flow from operating activities of approximately $15,000, which includes a net loss of approximately $11,000 and depreciation and amortization expenses of approximately $14,000. Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $9,000. While the Partnership intends to invest additional capital in equipment during the remainder of 2007, the amount of such additional investment is uncertain. The additional investment will be dependent on multiple factors including the partnership’s available cash flow and the general partner’s ability to purchase leases consistent with the partnership’s objectives. For the nine month period ending September 30, 2006, the Partnership generated cash flow from operating activities of approximately $18,000, which includes a net loss of approximately $23,000 and depreciation and amortization expenses of approximately $24,000. Other non-cash activities included in the determination of net income include direct payments of lease income by lessees to banks of approximately $13,000. The Partnership's investment strategy of acquiring computer equipment and generally leasing it under “triple-net leases” to operators who generally meet specified financial standards minimizes the Partnership's operating expenses.As of September 30, 2007, the Partnership had future minimum rentals on non-cancelable operating leases of approximately $7,500 for the balance of the year ending December 31, 2007 and approximately $27,000 thereafter.As of September 30, 2007, the outstanding debt was approximately $4,000 with an interest rate of 5.5%, and will be payable through January 2008. If available Cash Flow or Net Disposition Proceeds are insufficient to cover the Partnership expenses and liabilities on a short and long term basis, the Partnership will attempt to obtain additional funds by disposing of or refinancing Equipment, or by borrowing within its permissible limits.The Partnership may, from time to time, reduce the distributions to its Partners if it deems necessary.Since the Partnership’s leases are on a “triple-net” basis, no reserve for maintenance and repairs is deemed necessary. The General Partner and CCC have forgiven amounts payable by the Partnership to them and have deferred payments on other amounts owed, to allow for distributions to limited partners.During the nine months ended September 30, 2007, CCC and the General Partner forgave payables owed to them by the Partnership of approximately $49,000.The General Partner and CCC have committed to fund, either through cash contributions and/or forgiveness of indebtedness, any necessary cash shortfalls of the Partnership, including the amounts necessary to fund, if any, distributions to limited partners, through December 30, 2007. -12- Table of Contents RESULTS OF OPERATIONS Three Months Ended September 30, 2007 compared to Three Months Ended September 30, 2006 For the three months ended September 30, 2007, the Partnership recognized revenue of approximately $17,000 and expenses of approximately $10,000 resulting in a net income of approximately $7,000.For the three months ended September 30, 2006, the Partnership recognized revenue of approximately $8,000 and expenses of approximately $14,000, resulting in a net loss of approximately $6,000. Lease income increased by 15% to approximately $9,000 for the three months ended September 30, 2007, from approximately $8,000 for the three months ended September 30, 2006.This increase was due to more lease agreements being acquired during the three months ended September 30, 2007 compared to the three months ended September 30, 2006. Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC for administration and operation of the Partnership.With the exception of legal and accounting fees, CCC has determined that in the best interest of the Partnership, the majority of shared expenses allocable to the Partnership were not charged to the Partnership, but were absorbed by CCC.The expenses decreased 47% to approximately $5,000 for the three months ended September 30, 2007, from $9,000 for the three months ended September 30, 2006.This decrease is primarily attributable to a decrease in remarketing fees, accounting fees, and printing fees. The equipment management fee is approximately 5% of the gross lease revenue attributable to equipment that is subject to operating leases. The equipment management fee was forgiven by the general partner in an effort to assist in the operating results of the Partnership for the three months ended September 30, 2007.The equipment management fee was approximately $400 for the three months ended September 30, 2006. Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. The expenses increased 53% to approximately $6,000 for the three months ended September 30, 2007, from approximately $4,000 for the three months ended September 30, 2006 due to more leases being acquired. The Partnership sold computer equipment for the three months ended September 30, 2007 with no net book value for a net gain on sale of equipment of approximately $8,000. Nine Months Ended September 30, 2007 compared to Nine Months Ended September 30, 2006 For the nine months ended September 30, 2007, the Partnership recognized revenue of approximately $34,000 and expenses of approximately $45,000, resulting in a net loss of approximately $11,000.For the nine months ended September 30, 2006, the Partnership recognized revenue of approximately $36,000 and expenses of approximately $58,000, resulting in a net loss of approximately $23,000. Lease income decreased by 27% to approximately $26,000 for the nine months ended September 30, 2007, from approximately $35,000 for the nine months ended September 30, 2006, primarily due to more lease agreements ending than new lease agreements being acquired since the nine months ended September 30, 2006. Operating expenses, excluding depreciation, primarily consist of accounting, legal, outside service fees and reimbursement of expenses to CCC for administration and operation of the Partnership.With the exception of legal and accounting fees, CCC has determined that in the best interest of the Partnership, the majority of shared expenses allocable to the Partnership were not charged to the Partnership, but were absorbed by CCC.The expenses decreased 9% to approximately $29,000 for the nine months ended September 30, 2007, from $32,000 for the nine months ended September 30, 2006, which is primarily attributable to a decrease in printing fees of approximately $3,000. -13- Table of Contents The equipment management fee is approximately 5% of the gross lease revenue attributable to equipment that is subject to operating leases. The equipment management fee was approximately $800 for the nine months ended September 30, 2007.For the nine months ended September 30, 2006, the equipment management fee was approximately $2,000 Depreciation and amortization expenses consist of depreciation on computer equipment and amortization of equipment acquisition fees. The expenses decreased 40% to approximately $14,000 for the nine months ended September 30, 2007, from approximately $23,000 for the nine months ended September 30, 2006 due to equipment and acquisition fees being fully depreciated/amortized and not being replaced with as many new purchases. The Partnership sold computer equipment for the nine months ended September 30, 2007 with a net book value of approximately $4,000 for a net gain on sale of equipment of approximately $8,000.The Partnership sold computer equipment with a net book value of approximately $6,000 for the nine months ended September 30, 2006, for a net gain of approximately $300. Item 3.Quantitative and Qualitative Disclosures about Market Risk The Partnership believes its exposure to market risk is not material due to the fixed interest rate of its long- term debt and its associated fixed revenue streams. Item 4.Controls and Procedures The Chief Executive Officer and Principal Financial Officer of the Partnership have conducted a review of the Partnership's disclosure controls and procedures as of September 30, 2007. The Partnership’s disclosure controls and procedures include the Partnership's controls and other procedures designed to ensure that information required to be disclosed in this and other reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Partnership’s disclosure controls and procedures also include the Partnership's controls and other procedures designed to ensure that information required to be disclosed in this and other reports filed under the Exchange Act is accumulated and communicated to the Partnership's management, including its Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure and to ensure that such information is recorded, processed, summarized and reported within the required time periods. Based upon this review, the Partnership’s Chief Executive Officer and Principal Financial Officer have concluded that the Partnership's disclosure controls (as defined in Rule 13a-15e promulgated under the Exchange Act) are effective to ensure that the information required to be disclosed by the Partnership in the reports it files under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) is accumulated and communicated to the Partnership's management, including its Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure and to ensure that such information is recorded, processed, summarized and reported within the required time periods. There have been no changes in the General Partner’s internal controls or in other factors that could materially affectthe disclosure controls and procedures in the nine months ended September 30, 2007, that have materially affected or are reasonably likely to materially affect the General Partner’s internal controls over financial reporting. -14- Table of Contents Part II:OTHER INFORMATION Commonwealth Income & Growth Fund III Item 1.Legal Proceedings N/A Item 1 A.

WRL LETTERHEAD April 19, 2011 Western Reserve Life Assurance Co. of Ohio 570 Carillon Parkway St. Petersburg, FL33716 RE:WRL Series Life Account WRL Freedom Elite Builder & WRL Associate Freedom Elite Builder File Nos. 333-58322/811-4420 Gentlemen: This opinion is furnished in connection with the filing by Western Reserve Life Assurance Co. of Ohio (“Western Reserve”) of Post-Effective Amendment No. 20 (the “Amendment”) to the Registration Statement on Form N-6 for the WRL Freedom Elite Builder and WRL Associate Freedom Elite Builder, a flexible premium variable life insurance policy ("Policy"). The forms of the Policy were prepared under my direction, and I am familiar with the Registration Statement and Exhibits thereof. In my opinion: 1) the illustrations of death benefits, cash values, and net surrender values included in Appendix C to the Prospectus are consistent with the provisions of the Policy and Western Reserve’s administrative procedures; 2) the rate structure of the Policy has not been designed, and the assumptions for the illustrations (including sex, age, rating classification, and premium amount and payment schedule) have not been selected, so as to make the relationship between premiums and benefits, as shown in the illustrations, appear to be materially more favorable than for other prospective purchasers with different assumptions; and 3) the illustrations represent a rating classification, premium payment amount, and issue age that they are fairly representative of Policies sold. I hereby consent to use of this opinion as an exhibit to the Amendment and to the reference to my name under the heading "Experts" in the Statement of Additional Information. This document is intended exclusively for the purpose of documenting the above-stated opinion on the Appendix C illustrations and the above-stated consents.This document may not be appropriate for other purposes. Very truly yours, /s/ Lorne Schinbein Lorne Schinbein Senior Vice President and Managing Actuary

Exhibit 10.3   PEPCO HOLDINGS, INC.   RESTRICTED STOCK UNIT AGREEMENT   (Time-Vested)   THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is effective this __ day of ___________, 20__ (the “Date of Grant”), by and between Pepco Holdings, Inc. (the “Company”), and ___________________, an employee of the Company (the   WHEREAS, the Company has adopted the Pepco Holdings, Inc. 2012 Long-Term Incentive Plan, as it may be amended, amended and restated and/or restated from time to time (the “Plan”).   WHEREAS, on ____________, 20__, the Committee granted to the Participant a Service-Based Award of ______________ Restricted Stock Units under the Plan (the “RSU Award”).   WHEREAS, the Company desires to enter into an agreement with the Participant evidencing the grant to the Participant of the RSU Award approved by the Committee on the terms and conditions set forth herein.   NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the Company and the Participant agree as follows:   1.           Restricted Stock Unit Award. The RSU Award is a Service-Based Award under the Plan consisting of ___________ Restricted Stock Units.  The Restricted Stock Units are notional units of measurement denominated in shares of Stock (i.e., one Restricted Stock Unit is equivalent in value to one share of Stock, subject to the terms hereof). The Restricted Stock Units represent an unfunded, unsecured contractual right.   2.           Vesting. This RSU Award shall vest, as follows:   (a)           On the ____ anniversary of the Date of Grant (the “Vesting Date”), this RSU Award shall vest in full, provided that the Participant remains continuously employed by the Company or a Subsidiary beginning on the Date of Grant and ending on the Vesting Date.  Except as otherwise provided by Section 2(b), 2(c) or 3 hereof, if the employment of the Participant by the Company or any Subsidiary terminates prior to the Vesting Date, this RSU Award shall be immediately forfeited in its entirety.  The ___-year vesting period described in this Section 2(a) shall be referred to herein as the “Restriction Period.”   (b)           Upon (i) the Termination of the Participant’s employment without Cause, or (ii) the death or Disability of the Participant during the Restriction Period and prior to any termination of the Participant’s employment with the Company or any Subsidiary, a portion of the RSU Award shall vest, which portion shall equal the number of Restricted Stock Units covered by this Agreement multiplied by a fraction, the numerator of which shall be the number of days in the Restriction Period during which the Participant was continuously employed by the Company or a Subsidiary, and the denominator of which           shall be the total number of days in the Restriction Period.  The remaining portion of this RSU Award shall immediately be forfeited.   (c)           The Committee may, in its sole discretion, provide that, upon the retirement of the Participant (as determined by the Committee in its sole discretion), all or part of the Restricted Stock Units covered by this RSU Award shall vest.  Any such action by the Committee must be made in writing prior to the effective date of the Participant’s retirement.   Any Restricted Stock Units associated with this RSU Award as to which the vesting requirement of this Section 2 has been satisfied shall be payable in accordance with Section 5 hereof.   3.           Accelerated Vesting.  Notwithstanding the foregoing (but subject to compliance with the provisions of Section 17 hereof), if the Participant is terminated by the Company or a Subsidiary as an employee or if the Participant terminates such employment for Good Reason, in each case within 12 months following a Change in Control and within the Restriction Period, all of the Restricted Stock Units represented hereby shall vest upon such termination and be payable in accordance with Section 5 hereof.   4.           Dividend Equivalents.  Dividend Equivalents under the Plan have been granted in conjunction with this RSU Award, such that any dividend paid in cash on shares of Stock will be credited to the Participant as Dividend Equivalents as if the Restricted Stock Units represented hereby were outstanding shares of Stock.  Such credit shall be made in the form of additional whole and/or fractional Restricted Stock Units, based on the Fair Market Value of the Stock on the trading day immediately prior to the date of payment of any such dividend.  All such additional Restricted Stock Units shall be subject to the same vesting and forfeiture provisions applicable to the Restricted Stock Units in respect of which they were credited and shall be paid in accordance with Section 5 hereof.   5.           Payment of Award.  Payment of vested Restricted Stock Units (which shall include Restricted Stock Units credited pursuant to Dividend Equivalents described in Section 4) shall be made within thirty (30) days following the earlier of (i) the Vesting Date; or (ii) the vesting of this RSU Award in whole or in part pursuant to Sections 2(b), 2(c) or 3 hereof, but subject in each case, as applicable, to any delay that may be required under Section 16 hereof.  The vested Restricted Stock Units shall be paid in the form of one share of Stock for each Restricted Stock Unit, minus deductions for applicable minimum statutory withholding taxes as set forth in Section 11 of this Agreement.   6.           Nontransferability of Award.  None of the Restricted Stock Units covered hereby (including any Dividend Equivalents described in Section 4) may be assigned or alienated, and shall not be subject to attachment or other legal process except (i) to the extent specifically mandated and directed by applicable state or Federal statute; or (ii) as provided in Section 11 this Agreement with respect to withholding of applicable taxes.  Any attempted disposition of this RSU Award or the Restricted Stock Units (or any interest herein) in violation of this Section 6 shall be null and void.   7.           Terms and Conditions. The terms and conditions included in the Plan are incorporated herein by reference, and to the extent that any conflict or ambiguity may exist   -2-       between the terms and conditions included in this Agreement and the terms and conditions included in the Plan, the terms and conditions included in the Plan shall control. By execution of this Agreement, the Participant acknowledges receipt of a copy of the Plan and further agrees to be bound thereby and by the actions of the Committee and/or the Board pursuant to the Plan.   8.           No Rights as a Stockholder. The Restricted Stock Units granted pursuant to this RSU Award, whether or not vested, will not confer any voting rights or any other rights of a stockholder of the Company upon the Participant, and the Participant will not acquire any voting rights or any other rights of a stockholder of the Company unless and until such Restricted Stock Units have vested and shares of Stock underlying such Restricted Stock Units have been issued and delivered to the Participant.  The Company shall not be required to issue or transfer any certificates representing shares of Stock upon vesting of the RSU Award until all applicable requirements of any law, rule or regulation have been compiled with, and any required government agency approvals have been obtained.  Further, no issue or transfer of such certificates shall occur until such shares of Stock have been duly listed on any securities exchange on which the Stock may then be listed.   9.           Stock Issuable Upon Vesting.  Upon vesting of the RSU Award and payment of Stock pursuant to Section 5 hereof, the Participant shall be provided with the certificate(s) or certificate number(s) evidencing ownership of the shares of such Stock, subject to the implementation of an arrangement with the Participant to effectuate all necessary tax withholding.  If the shares of Stock evidenced by such certificate(s) were not offered and sold to the Participant in a transaction registered under the Securities Act of 1933, as amended (the “Securities Act”), the certificate(s) may include a legend noting that the Stock may not be sold or transferred by the Participant unless such Stock is registered for resale or unless the Participant meets an exemption from registration under the Securities Act. The Company shall follow all requisite procedures to deliver such certificates to the Participant; provided, however, that such delivery may be postponed to enable the Company to comply with any applicable procedures, regulations or listing requirements of any government agency, stock exchange, transfer agent or regulatory agency.   10.           No Employment Right; Tenure.  This Agreement shall not constitute a contract of employment between the Company or any Subsidiary and the Participant.  The Participant’s right, if any, to serve the Company as a director, officer, employee or otherwise shall not be enlarged or otherwise affected by this Agreement or his or her designation as a participant under the Plan.   11.           Tax Withholding. The Participant acknowledges this RSU Award may give rise to a tax liability and a withholding obligation associated therewith, and that no shares of Stock shall be issuable to the Participant hereunder until such withholding obligation is satisfied in full.  In accordance with Section 19.C. of the Plan, the Company or a Subsidiary may withhold up to, but no more than, the minimum applicable statutory federal, state and/or local taxes (collectively, “Tax Withholding Requirements”) at such time and upon such terms and conditions as required by law or determined by the Company or a Subsidiary.  Subject to compliance with any requirements of applicable law, the Participant shall have all or any portion of any Tax Withholding Requirements that may be payable in respect of the RSU Award satisfied when due through the payment by the Participant of cash to the Company or a Subsidiary, funded by the disposition on the Participant’s behalf or for the Participant’s account of shares of Stock which   -3-       would otherwise be delivered to the Participant having an aggregate fair market value equal to the aggregate amount of such Tax Withholding Requirements.   12.           Securities Law Compliance.  The Company currently has an effective registration statement on file with the Securities and Exchange Commission with respect to the shares of Stock subject to the RSU Award. The Company intends to maintain the effectiveness of this registration statement but has no obligation to the Participant to do so.  If the registration statement ceases to be effective, the Participant will not be able to transfer or sell shares of Stock, which were issued to the Participant pursuant to the RSU Award at a time that such registration statement was not effective, unless exemptions from registration under applicable securities laws are available.  Such exemptions from registration are very limited and might not be available.  The Participant agrees that any resale of shares of Stock issued pursuant to the RSU Award shall comply in all respects with the requirements of all applicable securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act and the Securities Exchange Act of 1934, and the respective rules and regulations promulgated thereunder) and any other law, rule or regulation applicable thereto, as such laws, rules, and regulations may be amended from time to time. The Company shall not be obligated to either issue shares of Stock or permit the resale of any such shares if such issuance or resale would violate any such requirements.   13.           Other Plans and Agreements. Any gain realized by the Participant pursuant to this Agreement shall not be taken into account as compensation in the determination of the Participant’s benefits under any pension, savings, group insurance, or other benefit plan maintained by the Company or a Subsidiary, except as determined by the board of directors of such company or as expressly provided under the terms of such other plan. The Participant acknowledges that receipt of this Agreement or any prior agreement under the Plan shall not entitle the Participant to any other benefits under the Plan or any plans maintained by the Company or a Subsidiary.   14.           Committee Authority. The Committee shall have complete discretion in the exercise of its rights, powers, and duties under this Agreement and the Plan. Any interpretation or construction of any provision of, and the determination of any question arising under, this Agreement shall be made by the Committee in its sole discretion and shall be final, conclusive, and binding.  The Committee may designate any individual or individuals to perform any of its functions hereunder.   15.           Changes in Capitalization.  The Restricted Stock Units under this RSU Award shall be subject to the provisions of Section 19.H. of the Plan relating to adjustments for changes to the Company’s capitalization.  The RSU Award shall not affect the right of the Company or any Subsidiary to reclassify, recapitalize or otherwise change its capital or debt structure or to merge, consolidate, convey any or all of its assets, dissolve, liquidate, windup or otherwise reorganize.   16.           Section 409A.  This Agreement shall be interpreted to ensure, to the fullest extent possible, that the payments contemplated hereby comply with Section 409A of the Internal Revenue Code of 1986, as amended, including the Treasury Regulations promulgated thereunder (“Section 409A”).  However, if the RSU Award is determined to be subject to Section 409A and any payment is triggered by a separation from service, the payment will, if the Participant is a   -4-       specified employee (as determined under Section 409A) and to the extent required by Section 409A, be delayed until the date that is one day after the six month anniversary of such separation from service.   17.           Clawback Rules.  If the Participant is subject to the provisions of (i) Section 304 of the Sarbanes-Oxley Act of 2002; (ii) any policies adopted by the Company in accordance with rules that may be promulgated by the Securities and Exchange Commission pursuant to Section 10D of the Securities Exchange Act of 1934, as amended; and (iii) any other existing or future applicable law, rule, regulation, stock exchange rule, or policy of the Board providing for the forfeiture or recoupment of equity-based compensation granted by the Company (individually or collectively, the “Clawback Rules”), this Award and the Restricted Stock Units described herein, as well as any shares of Common Stock issued hereunder (and any proceeds from the sale or disposition thereof), are subject to potential forfeiture or “clawback” to the fullest extent called for by the Clawback Rules.  By accepting this Award, the Participant agrees to return to the Company the full amount required by the Clawback Rules.   18.           Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.   19.           Binding Effect.  This Agreement shall inure to the benefit of, and be binding on, the Company and its successors and assigns, and the Participant and his or her heirs, administrators, executors, other legal representatives and permitted assigns, whether so expressed or not.   20.           No Waiver.  No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right under this Agreement constitute a continuing waiver of the same or a waiver of any other right hereunder.   21.           Further Assurances.  The Participant hereby agrees to take whatever additional action and execute and deliver all agreements, instruments and other documents the Company may deem necessary or advisable to carry out or effect any of the obligations or restrictions imposed on the Participant or the RSU Award pursuant to the express provisions of the Agreement and/or the Plan.   22.           Definition of Terms.  Capitalized terms used herein but not otherwise defined in this Agreement shall have the meanings ascribed to them under the Plan.   23.           Entire Agreement.  This Agreement and the Plan constitute the entire understanding and agreement between the parties hereto with regard to the subject matter hereof, and they supersede all other negotiations, understandings and representations (if any) made by and between such parties.   [signatures appear on the following page]   -5-         duly authorized officer, and the Participant has hereunder set his hand, all as of this ___ day of __________________, 20__.   ATTEST:                       By:     By:   Name:     Name:   Title:     Title:                             PARTICIPANT:                                   Printed Name:                 -6-  

Exhibit 10.1 TRIANGLE CAPITAL CORPORATION AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLAN (Effective May 7, 2008, as amended on May 2, 2012, May 8, 2013 and October 2, 2016) Section 1. Purposes. 1.1.    Generally. This plan shall be known as the “Triangle Capital Corporation Amended and Restated 2007 Equity Incentive Plan” (the “Plan”). The purpose of the Plan is to promote the interests of Triangle Capital Corporation, a Maryland corporation (the “Company”), its Affiliates (as defined herein) and its stockholders by (i) attracting and retaining key officers, employees, and directors of, the Company and its Affiliates; (ii) motivating such individuals by means of individual performance-related incentives to achieve long-range performance goals; (iii) encouraging ownership of stock in the Company by such individuals; and (iv) linking their compensation to the long-term interests of the Company and its stockholders. With respect to any awards granted under the Plan that are intended to comply with the requirements of “performance-based compensation” under Section 162(m) of the Code, the Plan shall be interpreted in a manner consistent with such requirements. 1.2.    Amendment and Restatement. This Plan amends and restates the Triangle Capital Corporation 2007 Equity Incentive Plan adopted February 13, 2007 (the “Prior Plan”) in its entirety. All Awards (as defined below) granted subsequent to the date of this Plan's adoption by the Company's stockholders shall be Section 2. Definitions. As used in the Plan, the following terms shall have the meanings set forth below: (a)“1940 Act” means the Investment Company Act of 1940, as amended. (b)“Affiliate” shall mean any wholly-owned consolidated subsidiary of the Company. (c)“Award” shall mean any Option or Restricted Share Award granted under the Plan, whether singly, in combination or in tandem, to a Participant by the Board pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Board may establish or which are required by applicable legal requirements. (d)“Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant. (e)“Board” shall mean the Board of Directors of the Company. (f)“Cause” shall mean, unless otherwise defined in the applicable Award Agreement, (i) the engaging by the Participant in willful misconduct that is injurious to the Company or its Affiliates, or (ii) the embezzlement or misappropriation of funds or property of the Company or its Affiliates by the Participant. For purposes of this paragraph, no act, or failure to act, on the Participant's part shall be considered “willful” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that the Participant's action or omission was in the best interest of the Company. Any determination of Cause for purposes of the Plan or any Award shall be made by the Board in its sole discretion. Any such determination shall be final and binding on a Participant. (g)“Change in Control” shall mean, unless otherwise defined in the applicable Award Agreement, any of the following events: (i)any person or entity, including a “group” as defined in Section 13(d)(3) of the Exchange Act, other than the Company or an Affiliate thereof or any employee benefit plan of the Company or any of its Affiliates, becomes the beneficial owner of the Company's securities having 35% or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business); (ii)as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination or contested election, or any combination of the foregoing transactions, less than a majority of the combined voting power of the then outstanding securities of the Company or any successor company or entity entitled to vote generally in the election of the directors of the Company or such other corporation or entity after such transaction are held in the aggregate by the holders of the Company's securities entitled to vote generally in the election of directors of the Company immediately prior to such transaction; (iii)during any period of two (2) consecutive years, individuals who at the beginning of any such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's stockholders, of each Director of the Company first elected during such period was approved by a vote of at least two-thirds (2/3rds) of the Directors of the Company then still in office who were (i) Directors of the Company at the beginning of any such period, and (ii) not initially (a) appointed or elected to office as result of either an actual or threatened election and/or proxy contest by or on behalf of a Person other than the Board, or (b) designated by a Person who has entered into an agreement with the Company to effect a transaction described in (i) or (ii) above or (iv) or (v) below; (iv)a complete liquidation or dissolution of the Company; or (v)the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to an Affiliate). (h)“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. (i)“Committee” shall mean a committee of two or more members of the Board appointed by the Board in accordance with Section 3.3. (j)“Covered Officer” shall mean at any date (i) any individual who, with respect to the previous taxable year of the Company, was a “covered employee” of the Company within the meaning of Section 162(m) of the Code; provided, however, that the term “Covered Officer” shall not include any such individual who is designated by the Board, in its discretion, at the time of any Award or at any subsequent time, as reasonably expected not to be such a “covered employee” with respect to the current taxable year of the Company and (ii) any individual who any subsequent time, as reasonably expected to be such a “covered employee” with respect to the current taxable year of the Company or with respect to the taxable year of the Company in which any applicable Award will be paid or vested. (k)“Director” shall mean a member of the Board. (l)“Disability” shall mean, unless otherwise defined in the applicable Award Agreement, a disability that would qualify as a total and permanent disability under the Company's then current long-term disability plan. (m)“Employee” shall mean an officer or employee of the Company or of any Affiliate. (n)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended (o)“Fair Market Value” with respect to the Shares, shall mean, for purposes of a grant of an Award as of any date, (i) the closing sales price of the Shares on the New York Stock Exchange, or any other such exchange on which the Shares are traded, on such date, or (ii) in the event there is no public market for the Shares on such date, the fair market value as determined, in good faith, by the Board in its sole discretion (which, for purposes of Section 6.2, will in no event will be less than the net asset value of such Shares on such date, as determined in accordance with the 1940 Act and the rules thereunder), and for purposes of a sale of a Share as of any date, the actual sales price on that date. (p)“Incentive Stock Option” shall mean an option to purchase Shares from the Company that is granted under Section 6 of the Plan and that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto. (q)“Non-Qualified Stock Option” shall mean an option to purchase Shares from the Company that is granted under Sections 6 or 9 of the Plan and is not intended to be an Incentive Stock Option. (r)“Non-Employee Director” shall mean a Director who is not an officer or employee of the Company. (s)“Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option. (t)“Option Price” shall mean the purchase price payable to purchase one Share upon the exercise of an Option. (u)“Participant” shall mean any Employee or Director. (v)“Performance Award” shall mean any Award granted under Section 8 of the Plan. (w)“Person” shall mean any individual, corporation, partnership, limited organization, government or political subdivision thereof or other entity. (x)“Restricted Share” or “Restricted Share Award” shall mean any Share granted under Sections 7 or 9 of the Plan. (y)“Retirement” shall mean, unless otherwise defined in the applicable Award Agreement, retirement of a Participant from the employ or service of the Company or any of its Affiliates in accordance with the terms of the applicable Company retirement plan or, if a Participant is not covered by any such plan, retirement on or after such Participant's 65th birthday. (z)“SEC” shall mean the Securities and Exchange Commission or any successor thereto. (aa)“Section 16” shall mean Section 16 of the Exchange Act and the rules promulgated thereunder and any successor provision thereto as in effect from time to time. (ab)“Section 162(m)” shall mean Section 162(m) of the Code and the regulations time to time. (ac)“Shares” shall mean shares of the common stock, $0.001 par value, of the Company. (ad)“Substitute Awards” shall mean Awards granted solely in assumption of, or in substitution for, outstanding awards previously granted by a company acquired by the Company or with which the Company combines. Section 3. Administration. 3.1.    Administration by the Board. The Board shall administer the Plan unless and until it delegates administration to a Committee, as provided in Section 3.3 hereof. 3.2.    Powers of the Board. The Board shall have the power, subject to the express provisions of the Plan and applicable law: (a)To determine from time to time which of the persons eligible under the Plan shall be granted Awards; when and how each Award shall be granted and documented; what type or combination of types of Awards shall be granted; the provision of each Award granted, including the time or times when a Participant shall be permitted to exercise an Award; and the number of Shares with respect to which an Award shall be granted to each such Participant. Notwithstanding the foregoing powers of the Board, any grants of Awards to Non-Employee Directors under the Plan shall be automatic and shall not be changed without SEC approval, and the issuance of any Award to an Employee will be approved by the required majority, as defined in Section 57(o) of the 1940 Act, of the Company's directors on the basis that such issuance is in the best interests of the Company and its stockholders. (b)To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Award documentation, in such manner and to such extent as it shall deem necessary or expedient to make the Plan fully effective. (c)To amend the Plan or an Award as provided in Section 13. (d)To terminate or suspend the Plan as provided in Section 13. (e)Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan. 3.3.    Delegation to Committee. The Board may delegate administration of the Plan to a Committee or Committees of three (3) or more members of the Board, and the term “Committee” shall apply to any persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board, other than the Board reference at the end of this sentence and Board references in the last sentence of this Section 3.3 shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. 3.4.    Effects of Board's Decision. Determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons. Section 4. Shares Available For Awards. 4.1.    Shares Available. Subject to the provisions of Section 4.5 hereof, the stock to be subject to Awards under the Plan shall be the Shares of the Company and the maximum number of Shares with respect to which Awards may be granted under the Plan shall be 2,400,000. If, after the effective date of the Plan, any Shares covered by an Award granted under this Plan, or to which such an Award relates, are forfeited, or if such an Award is settled for cash or otherwise terminates, expires unexercised or is canceled or settled without the delivery of Shares or with the delivery of a reduced number of Shares, then the Shares covered by such Award, or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares with respect to which Awards may be granted, to the extent of any such settlement, reduction, forfeiture, termination, expiration or cancellation, shall again become Shares with respect to which Awards may be granted. In the event that any Award granted hereunder is exercised through the delivery of Shares or in the event that withholding tax liabilities arising from such Award are satisfied by the withholding of Shares by the Company, the number of Shares available for Awards under the Plan shall be increased by the number of Shares so surrendered or withheld. 4.2.    Limits on Grants of Individual Awards. (a)No individual Participant shall be granted Options under the Plan in any calendar year that relate to more than 100,000 Shares.    (b)No individual Participant shall be granted Awards under the Plan relating to more than 25% of the Shares reserved for issuance. 4.3.    Limits on Grants of Restricted Shares. The combined maximum amount of Restricted Shares that may be issued under the Plan will be 10% of the outstanding Shares on the Effective Date (as defined in Section 15.1 below) plus 10% of the number of Shares issued or delivered by the Company (other than pursuant to compensation plans) during the term of the Plan. 4.4.     Limits on Number of Awards. The amount of voting securities that would result from the exercise of all of the Company's outstanding warrants, options and rights, together with any Restricted Shares issued pursuant to the Plan, at the time of issuance shall not exceed 25% of the outstanding voting securities of the Company, except that if the amount of voting securities that would result from the exercise of all of the Company's outstanding warrants, options, and rights issued to the Company's directors, officers, and employees, together with any Restricted Shares issued pursuant to the Plan, would exceed 15% of the outstanding voting securities of the Company, then the total amount of voting securities that would result from the exercise of all outstanding warrants, options, and rights, together with any Restricted Shares issued pursuant to the Plan, at the time of issuance shall not exceed 20% of the outstanding voting securities of the Company. 4.5.    Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares, then the Board shall in an equitable and proportionate manner (and, as applicable, in such manner as is consistent with Sections 422 and 409A of the Code and the regulations thereunder and with Section 162(m)) either: (i) adjust any or all of (1) the aggregate number of securities or property) with respect to which Awards may be granted under the Plan; (2) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards under the Plan, provided that the number of shares subject to any Award shall always be a whole number; (3) the grant or exercise price with respect to any Award under the Plan (but only provided that the SEC has issued an exemptive order or the SEC's staff has provided written confirmation allowing the Company to do so); and (4) the limits on the number of Shares that may be granted to Participants under the Plan in any calendar year; (ii) provide for an equivalent award in respect of securities of the surviving entity of any merger, consolidation or other transaction or event having a similar effect; or (iii) make provision for a cash payment to the holder of an outstanding Award. 4.6.    Substitute Awards. Any Shares issued by the Company as Substitute Awards in connection with the assumption or substitution of outstanding grants from any acquired corporation shall not reduce the Shares available for Awards under the Plan. 4.7.    Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of issued Shares which have been reacquired by the Company. 4.8.    No Grants in Contravention of 1940 Act. No Award may be granted under the Plan if the grant of such Award would cause the Company to violate Section 61(a)(3) of the Act, and, if otherwise approved for grant, shall be void and of no effect. The grants of Awards under the Plan to Non-Employee Directors shall be automatic and shall not be changed without SEC approval. Section 5. Eligibility. Any Employee or Director shall be eligible to be designated a Participant; provided, however, that Non-Employee Directors shall only be eligible to receive Awards of Restricted Shares granted consistent with Section 9. Section 6. Stock Options. 6.1.    Grant. The Board shall have sole and complete authority to determine the Participants to whom Options shall be granted, the number of Shares subject to each Award, the exercise price (subject to Section 6.2 below) and the conditions and limitations applicable to the exercise of each Option. The Board shall have the authority to grant Incentive Stock Options, and to grant Non-Qualified Stock Options. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with Section 422 of the Code, as from time to time amended, and any regulations implementing such statute. A person who has been granted an Option under this Plan may be granted additional Options under the Plan if the Board shall so determine; provided, however, that to the extent the aggregate Fair Market Value (determined at the time the Incentive Stock Option is granted) of the Shares with respect to which all Incentive Stock Options are exercisable for the first time by an Employee during any calendar year (under all plans described in of Section 422(d) of the Code of the Employee's employer corporation and its parent and Affiliates) exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. 6.2.    Price. The Board in its sole discretion shall establish the Option Price at the time each Option is granted. Except in the case of Substitute Awards, the Option Price of an Option may not be less than one hundred percent (100%) of the Fair Market Value of the Shares with respect to which the Option is granted on the date of grant of such Option. Once established, the Option Price of any Option may not be changed absent an exemptive order from the SEC or written confirmation from its staff allowing the Company to do so. 6.3.    Term. Subject to the Board's authority under Section 3.2 and the provisions of Section 6.5, each Option and all rights and obligations thereunder shall expire on the date determined by the Board and specified in the Award Agreement. The Board shall be under no duty to provide terms of like duration for Options granted under the Plan. Notwithstanding the foregoing, no Option shall be exercisable after the expiration of ten (10) years from the date such Option was granted. 6.4.    Exercise. (a)Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may, in its sole discretion, specify in the applicable Award Agreement or thereafter. The Board shall have full and complete authority to determine, subject to Section 6.5 herein, whether an Option will be exercisable in full at any time or from time to time during the term of the Option, or to provide for the exercise thereof in such installments, upon the occurrence of such events and at such times during the term of the Option as the Board may determine. (b)The Board may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal, state or foreign securities laws or the Code, as it may deem necessary or advisable. The exercise of any Option granted hereunder shall be effective only at such time as the sale of Shares pursuant to such exercise will not violate any state or federal securities or other laws. (c)An Option may be exercised in whole or in part at any time, with respect to whole Shares only, within the period permitted thereunder for the exercise thereof, and shall be exercised by written notice of intent to exercise the Option, delivered to the Company at its principal office, and payment in full to the Company at the direction of the Board of the amount of the Option Price for the number of Shares with respect to which the Option is then being exercised. (d)Payment of the Option Price shall be made in cash or cash equivalents, or, at the discretion of the Board, (i) by transfer, either actually or by attestation, to the Company of Shares that have been held by the Participant for at least six (6) months (or such lesser period as may be permitted by the Board), valued at the Fair Market Value of such Shares on the date of exercise, together with any applicable withholding taxes, such transfer to be upon such terms and conditions as determined by the Board, or (ii) by a combination of such cash (or cash equivalents) and such Shares; provided, however, that the optionee shall not be entitled to tender Shares pursuant to successive, substantially simultaneous exercises of an Option or any other stock option of the Company. Subject to applicable securities laws, an Option may also be exercised by delivering a notice of exercise of the Option and simultaneously selling the Shares thereby acquired, pursuant to a brokerage or similar agreement approved in advance by proper officers of the Company, using the proceeds of such sale as payment of the Option Price, together with any applicable withholding taxes. Until the optionee has been issued the Shares subject to such exercise, he or she shall possess no rights as a stockholder with respect to such Shares. 6.5.    Ten Percent Stock Rule. Notwithstanding any other provisions in the Plan, if at the time an Option is otherwise to be granted pursuant to the Plan, the optionee or rights holder owns directly or indirectly (within the meaning of Section 424(d) of the Code) Shares of the Company possessing more than ten percent (10%) of the total combined voting power of all classes of Stock of the Company or its parent or Affiliate corporations (within the meaning of Section 422(b)(6) of the Code), then any Incentive Stock Option to be granted to such optionee or rights holder pursuant to the Plan shall satisfy the requirement of Section 422(c)(5) of the Code, and the Option Price shall be not less than one hundred ten percent (110%) of the Fair Market Value of the Shares of the Company, and such Option by its terms shall not be exercisable after the expiration of five (5) years from the date such Option is granted. Section 7. Restricted Shares. 7.1.    Grant. (a)Subject to the provisions of the Plan and other applicable legal requirements, the Board shall have sole and complete authority to determine the Participants to whom Restricted Shares shall be granted, the number of Restricted Shares to be granted to each Participant, the duration of the period during which, and the conditions under which, the Restricted Shares may be forfeited to the Company, and the other terms and conditions of such Awards. The Restricted Share Awards shall be evidenced by Award Agreements in such form as the Board shall from time to time approve, which agreements shall comply with and be subject to the terms and conditions provided hereunder and any additional terms and conditions established by the Board that are consistent with the terms of the Plan. (b)Each Restricted Share Award made under the Plan shall be for such number of Shares as shall be determined by the Board and set forth in the Award Agreement containing the terms of such Restricted Share Award. Such agreement shall set forth a period of time during which the grantee must remain in the continuous employment of the Company in order for the forfeiture and transfer restrictions to lapse. If the Board so determines, the restrictions may lapse during such restricted period in installments with respect to specified portions of the Shares covered by the Restricted Share Award. The Award Agreement may also, in the discretion of the Board, set forth performance or other conditions that will subject the Shares to forfeiture and transfer restrictions. The Board may, at its discretion, waive all or any part of the restrictions applicable to any or all outstanding Restricted Share Awards. (c)Notwithstanding Sections 7.1(a) and 7.1(b) hereof, any grants of Restricted Shares to Non-Employee Directors under the Plan shall be automatic and shall not be changed without SEC approval. 7.2.    Delivery of Shares and Transfer Restrictions. At the time of a Restricted Share Award, a certificate representing the number of Shares awarded thereunder shall be registered in the name of the grantee. Such certificate shall be held by the Company or any custodian appointed by the Company for the account of the grantee subject to the terms and conditions of the Plan, and shall bear such a legend setting forth the restrictions imposed thereon as the Board, in its discretion, may determine. The applicable Award Agreement will specify whether a grantee has the right to receive dividends with respect to the Restricted Shares prior to the lapsing of transfer restrictions. Unless otherwise provided in the applicable Award Agreement, the grantee shall have all other rights of a stockholder with respect to the Restricted Shares, including the right to vote such Shares, subject to the following restrictions: (i) the grantee shall not be entitled to delivery of the stock certificate until the expiration of the restricted period and the fulfillment of any other restrictive conditions set forth in the Award Agreement with respect to such Shares; (ii) none of the Shares may be transferred except for disposition by gift, will or the laws of descent and distribution during such restricted period or until after the fulfillment of any such other restrictive conditions; and (iii) except as otherwise determined by the Board at or after grant, all of the Shares shall be forfeited and all rights of the grantee to such Shares shall terminate, without further obligation on the part of the Company, unless the grantee remains in the continuous employment of the Company for the entire restricted period in relation to which such Shares were granted and unless any other restrictive conditions relating to the Restricted Share Award are met. Unless otherwise provided in the applicable Award Agreement, any Shares, any other securities of the Company and any other property (except for cash dividends) distributed with respect to the Shares subject to Restricted Share Awards shall be subject to the same restrictions, terms and conditions as such restricted Shares. 7.3.    Termination of Restrictions. At the end of the restricted period and provided that any other restrictive conditions of the Restricted Share Award are met, or at such earlier time as otherwise determined by the Board, all restrictions set forth in the Award Agreement relating to the Restricted Share Award or in the Plan shall lapse as to the restricted Shares subject thereto, and a stock certificate for the appropriate number of Shares, free of the restrictions and restricted stock legend, shall be delivered to the Participant or the Participant's beneficiary or estate, as the case may be. Section 8. Performance Awards. 8.1.    Grant. The Board shall have sole and complete authority to determine the Employees who shall receive a Performance Award, which shall consist of a right that is (i) denominated in cash or Shares (including but not limited to Restricted Shares), (ii) valued, as determined by the Board, in accordance with the achievement of such Employees' individual performance goals during such performance periods as the Board shall establish, and (iii) payable at such time and in such form as the Board shall determine. 8.2.    Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Board shall determine the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award and the amount and kind of any payment or transfer to be made pursuant to any Performance Award, and may amend specific provisions of the Performance Award; provided, however, that such amendment may not adversely affect existing Performance Awards made within a performance period commencing prior to implementation of the amendment. 8.3.    Payment of Performance Awards. Performance Awards may be paid in a lump sum or in installments following the close of the performance period or, in accordance with the procedures established by the Board, on a deferred basis. Termination of employment prior to the end of any performance period, other than for reasons of death or Disability, will result in the forfeiture of the Performance Award, and no payments will be made. An employee's rights to any Performance Award may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of in any manner, except by will or the laws of descent and distribution, and/or except as the Board may determine at or after grant. Section 9. Non-Employee Director Awards. 9.1.    Each Non-Employee Director shall receive a grant of Restricted Shares at the beginning of each one-year term of service on the Board, for which forfeiture restrictions will lapse at the end of that year. The number of Restricted Shares granted to each Non-Employee Director shall be the equivalent of $50,000 worth of Shares based on the market value at the close of the New York Stock Exchange on the date of grant. In addition, the Board may provide that all or a portion of a Non-Employee Director's annual retainer, meeting fees and/or other awards or compensation as determined by the Board, be payable in Shares reserved under the Plan and available for issuance. The Board shall determine the terms and conditions of any such Awards, including the terms and conditions which shall apply upon a termination of the Non-Employee Director's service as a member of the Board, and shall have full power and authority in its discretion to administer such Awards, subject to the terms of the Plan and applicable law. 9.2.    Subject to applicable legal requirements and Section 9.3 below, the Board may also grant Awards to Non-Employee Directors pursuant to the terms of the Plan, including any Award described in Sections 6 or 7 above. 9.3.    Any grants of Awards to Non-Employee Directors under the Plan shall be automatic and shall not be changed without SEC approval. Section 10. Provisions Applicable To Covered Officers And Performance Awards. 10.1.    Notwithstanding anything in the Plan to the contrary, unless the Board determines that a Performance Award to be granted to a Covered Officer should not qualify as “performance-based compensation” for purposes of Section 162(m), Performance Awards granted to Covered Officers shall be subject to the terms and provisions of this Section 10. Accordingly, unless otherwise determined by the Board, if any provision of the Plan or any Award Agreement relating to such an Award does not comply or is inconsistent with Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Board discretion to increase the amount of compensation otherwise payable to a Covered Officer in connection with any such Award upon the attainment of the performance criteria established by the Board. 10.2.    With respect to any Covered Officer, the maximum annual number of Shares in respect of which all Performance Awards may be granted under Section 8 of the Plan is 100,000 and the maximum amount of all Performance Awards that are settled in cash and that may be granted under Section 8 of the Plan in any year is $1,000,000. 10.3.    To the extent necessary to comply with Section 162(m), with respect to grants of Performance Awards, no later than 90 days following the commencement of each performance period (or such other time as may be required or permitted by Section 162(m) of the Code), the Board shall, in writing, (1) select the individual performance goal or goals applicable to the performance period, (2) establish the various targets and bonus amounts which may be earned for such performance period, and (3) specify the relationship between performance goals and targets and the amounts to be earned by each Covered Officer for such performance period. Following the completion of each performance period, the Board shall certify in writing whether the applicable performance targets have been achieved and the amounts, if any, payable to Covered Officers for such performance period. In determining the amount earned by a Covered Officer for a given performance period, subject to any applicable Award Agreement, the Board shall have the right to reduce (but not increase) the amount payable at a given level of performance to take into account additional factors that the Board may deem relevant in its sole discretion to the assessment of individual performance for the performance period. Section 11. Termination Of Employment. The Board shall have the full power and authority to determine the terms and conditions that shall apply to any Award upon a termination of employment with the Company and Affiliates, including a termination by the Company with or without Cause, by a Participant voluntarily, or by reason of death, Disability or Retirement, and may provide such terms and conditions in the Award Agreement or in such rules and regulations as it may prescribe. Section 12. Change In Control. The Board may specify in the applicable Award Agreement at or after grant, or otherwise by resolution prior to a Change in Control, that all or a portion of the outstanding Awards shall vest, become immediately exercisable or payable and have all restrictions lifted upon a Change in Control. Section 13. Amendment And Termination. 13.1.    Amendments to the Plan. The Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided that no such amendment, alteration, suspension, discontinuation or termination shall be made without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement. 13.2.    Amendments to Awards. Subject to the restrictions of Section 6.2 above and Section 13.5 below, the Board may waive any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or holder or beneficiary. 13.3.    Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Board is hereby authorized to make equitable and proportionate adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (and shall make such adjustments for events described in Section 4.5 hereof) affecting the Company or any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations or accounting principles. 13.4.    Section 409A Compliance. No Award (or modification thereof) shall provide for deferral of compensation that does not comply with Section 409A of the Code unless the Board, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code. Notwithstanding any provision of this Plan to the contrary, if one or more of the payments or benefits received or to be received by a Participant pursuant to an Award would cause the Participant to incur any additional tax or interest under Section 409A of the Code, the Board may reform such provision to maintain to the maximum extent practicable the original intent of the applicable provision without violating the provisions of Section 409A of the Code. 13.5. Exercise Price of Awards. Once established, the exercise price of an Award shall not be changed absent an exemptive order from the SEC or written confirmation from its staff that the Company may do so. Section 14. General Provisions. 14.1.    Limited Transferability of Awards. Except as otherwise provided in the Plan, no Award shall be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant, except by gift, will or the laws of descent and distribution. In addition, no transfer or disposition of an Award shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and an authenticated copy of the gift affidavit, will and/or such other evidence as the Board may deem necessary or appropriate to establish the validity of the transfer. 14.2.    Dividends. In the sole and complete discretion of the Board, an Award may provide the Participant with dividends, payable in cash, Shares, other securities or other property on a current or deferred basis. All dividends which are not paid currently may, at the Board's discretion, accrue interest, be reinvested into additional Shares, or, in the case of dividends credited in connection with Performance Awards, be credited as additional Performance Awards and paid to the Participant if and when, and to the extent that, payment is made pursuant to such Award. The total number of Shares available for grant under Section 4 shall not be reduced to reflect any dividends that are reinvested into additional Shares or credited as Performance Awards. 14.3.    No Rights to Awards. No Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards need not be the same with respect to each Participant. 14.4.    Share Certificates. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Board may deem advisable under the Plan or the rules, regulations and other requirements of the SEC or any state securities commission or regulatory authority, any stock exchange or other market upon which such Shares or other securities are then listed, and any applicable Federal or state laws, and the Board may cause a legend or legends to be put on any such 14.5.    Withholding. A Participant may be required to pay to the Company or any Affiliate any applicable withholding or other tax-related obligations in respect of an Award, its exercise or any other transaction involving an Award, including the vesting thereof, or any payment or transfer under an Award or under the Plan. In connection therewith, the Participant shall have the right to request that the Company or any Affiliate withhold from any Award, from any payment due or transfer made under any Award or under the Plan, or from any compensation or other amount owed by the Participant the amount in cash, Shares or other securities, necessary to satisfy withholding obligations under tax rules. The Board may provide for additional cash payments to holders of Options to defray or offset any tax arising from the grant, vesting, exercise or payment of any Award. 14.6.    Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement that shall be delivered to the Participant and may specify the terms and conditions of the Award and any rules applicable thereto. In the event of a conflict between the terms of the Plan and any Award Agreement, the terms of the Plan shall prevail. The Board shall, subject to applicable law, determine the date an Award is deemed to be granted. The Board or, except to the extent prohibited under applicable law, its delegate(s) may establish the terms of agreements or other documents evidencing Awards under this Plan and may, but need not, require as a condition to any such agreement's or document's effectiveness that such agreement or document be executed by the Participant, including by electronic signature or other electronic indication of acceptance, and that such Participant agree to such further terms and conditions as specified in such agreement or document. The grant of an Award under this Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in this Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the agreement or other document evidencing such Award. 14.7.    No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of Options or Restricted Shares. 14.8.    No Right to Employment. The grant of an Award shall not be construed as giving an Employee the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss an Employee from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in an Award Agreement. 14.9.    No Rights as Stockholder. Subject to the provisions of the Plan and the applicable Award Agreement, no Participant or holder or beneficiary of any Award shall have any rights as a stockholder with respect to any Shares to be distributed under the Plan until such person has become a holder of such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Shares hereunder, the applicable Award Agreement shall specify if and to what extent the Participant shall not be entitled to the rights of a stockholder in respect of such Restricted Shares. 14.10. Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Maryland without giving effect to conflicts of laws principles. 14.11. Severability. If any provision of the Plan or any Award is, or becomes, or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award 14.12. Other Laws. The Board may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation (including applicable non-U.S. laws or regulations) or entitle the Company to recover the same under Exchange Act Section 16(b), and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. 14.13. No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. 14.14. No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Board shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated. 14.15. Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. 14.16. 1940 Act. No provision of this Plan shall contravene any portion of the 1940 Act, and in the event of any conflict between the provisions of the Plan or any Award and the 1940 Act, the applicable section of the 1940 Act shall control and all Awards under the Plan shall be so modified. All Participants holding such modified Awards shall be notified of the changes to their Awards and such change shall be binding on such Participant. Section 15. Term Of The Plan. 15.1.    Effective Date. The Plan shall become effective upon approval by the stockholders of the Company and the Board; provided, however, that the Plan shall not be effective with respect to any Award to a Non-Employee Director or any award of Restricted Shares unless the Company has received an order from the SEC that permits such Award. 15.2.    Expiration Date. No new Awards shall be granted under the Plan after the tenth anniversary of the Effective Date. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award granted hereunder may, and the authority of the Board to amend, alter, adjust, suspend, discontinue or terminate any such Award or to waive any conditions or rights under any such Award shall, continue after the tenth anniversary of the Effective Date.

EXHIBIT 4.1 CWABS, INC., Depositor COUNTRYWIDE HOME LOANS, INC., Seller PARK MONACO INC., Seller PARK SIENNA LLC, Seller COUNTRYWIDE HOME LOANS SERVICING LP, Master Servicer THE BANK OF NEW YORK, Trustee and THE BANK OF NEW YORK TRUST COMPANY, N.A., Co-Trustee POOLING AND SERVICING AGREEMENT Dated as of March 1, 2007 ASSET-BACKED CERTIFICATES, SERIES 2007-6 Table of Contents Page ARTICLE I. DEFINITIONS Section 1.01 Defined Terms. 8 Section 1.02 Certain Interpretive Provisions. 52 ARTICLE II. CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND WARRANTIES Section 2.01 Conveyance of Mortgage Loans. 53 Section 2.02 Acceptance by Trustee of the Mortgage Loans. 60 Section 2.03 Representations, Warranties and Covenants of the Master Servicer and the Sellers. 66 Section 2.04 Representations and Warranties of the Depositor. 86 Section 2.05 Delivery of Opinion of Counsel in Connection with Substitutions and Repurchases. 88 Section 2.06 Authentication and Delivery of Certificates. 88 Section 2.07 Covenants of the Master Servicer. 89 ARTICLE III. ADMINISTRATION AND SERVICING OF MORTGAGE LOANS Section 3.01 Master Servicer to Service Mortgage Loans. 89 Section 3.02 Subservicing; Enforcement of the Obligations of Master Servicer. 91 Section 3.03 Rights of the Depositor, the Sellers, the Certificateholders, the NIM Insurer and the Trustee in Respect of the Master Servicer. 92 Section 3.04 Trustee to Act as Master Servicer. 93 Section 3.05 Collection of Mortgage Loan Payments; Certificate Account; Distribution Account; Pre-Funding Account; Capitalized Interest Account. 93 Section 3.06 Collection of Taxes, Assessments and Similar Items; Escrow Accounts. 97 Section 3.07 Access to Certain Documentation and Information Regarding the Mortgage Loans. 98 Section 3.08 Permitted Withdrawals from the Certificate Account, Distribution Account, Carryover Reserve Fund and the Principal Reserve Fund. 98 Section 3.09 [Reserved]. 101 Section 3.10 Maintenance of Hazard Insurance. 101 Section 3.11 Enforcement of Due-On-Sale Clauses; Assumption Agreements. 102 Section 3.12 Realization Upon Defaulted Mortgage Loans; Determination of Excess Proceeds and Realized Losses; Repurchase of Certain Mortgage Loans. 103 Section 3.13 Co-Trustee to Cooperate; Release of Mortgage Files. 107 Section 3.14 Documents, Records and Funds in Possession of Master Servicer to be Held for the Trustee. 108 i Section 3.15 Servicing Compensation. 108 Section 3.16 Access to Certain Documentation. 109 Section 3.17 Annual Statement as to Compliance. 109 Section 3.18 [Reserved]. 110 Section 3.19 The Corridor Contracts. 110 Section 3.20 Prepayment Charges. 110 Section 3.21 Swap Contract. 111 ARTICLE IV. DISTRIBUTIONS AND ADVANCES BY THE MASTER SERVICER Section 4.01 Advances; Remittance Reports. 114 Section 4.02 Reduction of Servicing Compensation in Connection with Prepayment Interest Shortfalls. 115 Section 4.03 [Reserved]. 115 Section 4.04 Distributions. 115 Section 4.05 Monthly Statements to Certificateholders. 123 Section 4.06 Termination of the Mortgage Insurance Policy. 124 Section 4.07 Carryover Reserve Fund. 124 Section 4.08 [Reserved]. 124 Section 4.09 Swap Trust and Swap Account. 124 Section 4.10 Final Maturity Reserve Trust and Final Maturity Reserve Fund. 124 ARTICLE V. THE CERTIFICATES Section 5.01 The Certificates. 124 Section 5.02 Certificate Register; Registration of Transfer and Exchange of Certificates. 124 Section 5.03 Mutilated, Destroyed, Lost or Stolen Certificates. 124 Section 5.04 Persons Deemed Owners. 124 Section 5.05 Access to List of Certificateholders’ Names and Addresses. 124 Section 5.06 Book-Entry Certificates. 124 Section 5.07 Notices to Depository. 124 Section 5.08 Definitive Certificates. 124 Section 5.09 Maintenance of Office or Agency. 124 ARTICLE VI. THE DEPOSITOR, THE MASTER SERVICER AND THE SELLERS Section 6.01 Respective Liabilities of the Depositor, the Master Servicer and the Sellers. 124 Section 6.02 Merger or Consolidation of the Depositor, the Master Servicer or the Sellers. 124 ii Section 6.03 Limitation on Liability of the Depositor, the Sellers, the Master Servicer, the NIM Insurer and Others. 124 Section 6.04 Limitation on Resignation of Master Servicer. 124 Section 6.05 Errors and Omissions Insurance; Fidelity Bonds. 124 ARTICLE VII. DEFAULT; TERMINATION OF MASTER SERVICER Section 7.01 Events of Default. 124 Section 7.02 Trustee to Act; Appointment of Successor. 124 Section 7.03 Notification to Certificateholders. 124 ARTICLE VIII. CONCERNING THE TRUSTEE AND THE CO-TRUSTEE Section 8.01 Duties of Trustee. 124 Section 8.02 Certain Matters Affecting the Trustee. 124 Section 8.03 Trustee Not Liable for Mortgage Loans. 124 Section 8.04 Trustee May Own Certificates. 124 Section 8.05 Master Servicer to Pay Trustee’s Fees and Expenses. 124 Section 8.06 Eligibility Requirements for Trustee. 124 Section 8.07 Resignation and Removal of Trustee. 124 Section 8.08 Successor Trustee. 124 Section 8.09 Merger or Consolidation of Trustee. 124 Section 8.10 Appointment of Co-Trustee or Separate Trustee. 124 Section 8.11 Tax Matters. 124 Section 8.12 Co-Trustee. 124 Section 8.13 Access to Records of the Trustee. 124 Section 8.14 Suits for Enforcement. 124 ARTICLE IX. TERMINATION Section 9.01 Termination upon Liquidation or Repurchase of all Mortgage Loans. 124 Section 9.02 Final Distribution on the Certificates. 124 Section 9.03 Additional Termination Requirements. 124 Section 9.04 Auction of the Mortgage Loans and REO Properties. 124 ARTICLE X. MISCELLANEOUS PROVISIONS Section 10.01 Amendment. 124 Section 10.02 Recordation of Agreement; Counterparts. 124 Section 10.03 Governing Law. 124 Section 10.04 Intention of Parties. 124 iii Section 10.05 Notices. 124 Section 10.06 Severability of Provisions. 124 Section 10.07 Assignment. 124 Section 10.08 Limitation on Rights of Certificateholders. 124 Section 10.09 Inspection and Audit Rights. 124 Section 10.10 Certificates Nonassessable and Fully Paid. 124 Section 10.11 Rights of NIM Insurer. 124 Section 10.12 Protection of Assets. 124 ARTICLE XI. EXCHANGE ACT REPORTING Section 11.01 Filing Obligations. 124 Section 11.02 Form 10-D Filings. 124 Section 11.03 Form 8-K Filings. 124 Section 11.04 Form 10-K Filings. 124 Section 11.05 Sarbanes-Oxley Certification. 124 Section 11.06 Form 15 Filing. 124 Section 11.07 Report on Assessment of Compliance and Attestation. 124 Section 11.08 Use of Subservicers and Subcontractors. 124 Section 11.09 Amendments. 124 Section 11.10 Reconciliation of Accounts. 124 iv Exhibits EXHIBIT A Forms of Certificates EXHIBIT A-1 Form of Class 1-A Certificate EXHIBIT A-2 Form of Class 2-A-1 Certificate EXHIBIT A-3 Form of Class 2-A-2 Certificate EXHIBIT A-4 Form of Class 2-A-3 Certificate EXHIBIT A-5 Form of Class 2-A-4 Certificate EXHIBIT A-6 Form of Class M-1 Certificate EXHIBIT A-7 Form of Class M-2 Certificate EXHIBIT A-8 Form of Class M-3 Certificate EXHIBIT A-9 Form of Class M-4 Certificate EXHIBIT A-10 Form of Class M-5 Certificate EXHIBIT A-11 Form of Class M-6 Certificate EXHIBIT A-12 Form of Class M-7 Certificate EXHIBIT A-13 Form of Class M-8 Certificate EXHIBIT B Form of Class P Certificate EXHIBIT C Form of Class C Certificate EXHIBIT D Form of Class A-R Certificate EXHIBIT E Form of Tax Matters Person Certificate EXHIBIT F Mortgage Loan Schedule v EXHIBIT F-1 List of Mortgage Loans EXHIBIT F-2 Mortgage Loans for which All or a Portion of a Related Mortgage File is not Delivered to the Trustee on or prior to the Closing Date EXHIBIT G Forms of Certification of Trustee EXHIBIT G-1 Form of Initial Certification of Trustee (Initial Mortgage Loans) EXHIBIT G-2 Form of Interim Certification of Trustee EXHIBIT G-3 Form of Delay Delivery Certification EXHIBIT G-4 Form of Initial Certification of Trustee (Subsequent Mortgage Loans) EXHIBIT H Form of Final Certification of Trustee EXHIBIT I Transfer Affidavit for Class A-R Certificates EXHIBIT J-1 Form of Transferor Certificate for Class A-R Certificates EXHIBIT J-2 Form of Transferor Certificate for Private Certificates EXHIBIT K Form of Investment Letter (Non-Rule 144A) EXHIBIT L Form of Rule 144A Letter EXHIBIT M Form of Request for Document Release EXHIBIT N Form of Request for File Release EXHIBIT O Copy of Depository Agreement EXHIBIT P Form of Subsequent Transfer Agreement EXHIBIT Q-1 Form of Class 1-A Corridor Contract EXHIBIT Q-2 Form of Class 2-A Corridor Contract EXHIBIT Q-3 Form of Subordinate Corridor Contract EXHIBIT R [Reserved] EXHIBIT S-1 Form of Corridor Contract Assignment Agreement EXHIBIT S-2 Form of Corridor Contract Administration Agreement EXHIBIT T Officer’s Certificate with respect to Prepayments EXHIBIT U Form of Swap Contract EXHIBIT V-1 Form of Swap Contract Assignment Agreement EXHIBIT V-2 Form of Swap Contract Administration Agreement EXHIBIT V-3 Form of Swap Contract and Corridor Contracts Guarantee EXHIBIT W Form of Monthly Statement EXHIBIT X-1 Form of Performance Certification (Subservicer) EXHIBIT X-2 Form of Performance Certification (Trustee) EXHIBIT Y Form of Servicing Criteria to be Addressed in Assessment of Compliance Statement EXHIBIT Z List of Item 1119 Parties EXHIBIT AA Form of Sarbanes-Oxley Certification (Replacement Master Servicer) SCHEDULE I Prepayment Charge Schedule and Prepayment Charge Summary SCHEDULE II Collateral Schedule SCHEDULE III 40-Year Target Schedule vi POOLING AND SERVICING AGREEMENT, dated as of March 1, 2007, by and among CWABS, INC., a Delaware corporation, as depositor (the “Depositor”), COUNTRYWIDE HOME LOANS, INC., a New York corporation, as seller (“CHL” or a “Seller”), PARK MONACO INC., a Delaware corporation, as a seller (“Park Monaco” or a “Seller”), PARK SIENNA LLC, a Delaware limited liability company, as a seller (“Park Sienna” or a “Seller”, and together with CHL and Park Monaco, the “Sellers”), COUNTRYWIDE HOME LOANS SERVICING LP, a Texas limited partnership, as master servicer (the “Master Servicer”), THE BANK OF NEW YORK, a New York banking corporation, as trustee (the “Trustee”), and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association, as co-trustee (the “Co-Trustee”). PRELIMINARY STATEMENT The Depositor is the owner of the Trust Fund that is hereby conveyed to the Trustee in return for the Certificates. The Trust Fund (excluding the Carryover Reserve Fund, the assets held in the Pre-Funding Account and the Capitalized Interest Account and the Trust Fund’s rights with respect to payments received under the Corridor Contracts) for federal income tax purposes will consist of three REMICs (the “Swap-IO REMIC,” the “Strip REMIC” and the “Master REMIC”).Each Certificate, other than the Class A-R Certificate, will represent ownership of one or more regular interests in the Master REMIC for purposes of the REMIC Provisions. The Class A-R Certificate represents ownership of the sole class of residual interest in the Swap-IO REMIC, the Strip REMIC and the Master REMIC.The Master REMIC will hold as assets the several classes of uncertificated Strip REMIC Interests (other than the STR-A-R Interest).Each Strip REMIC Interest (other than the STR-A-R Interest) is hereby designated as a regular interest in the Strip REMIC.The Strip REMIC will hold as assets the several classes of uncertificated Swap-IO REMIC Interests (other than the SWR-A-R Interest). Each Swap-IO REMIC Interest (other than the SWR-A-R Interest) is hereby designated as a regular interest in the Swap-IO REMIC.The Swap-IO REMIC will hold as assets all property of the Trust Fund (excluding the Carryover Reserve Fund, the assets held in the Pre-Funding Account and the Capitalized Interest Account and the Trust Fund’s rights with respect to payments received under the Corridor Contracts).The latest possible maturity date of all REMIC regular interests created in this Agreement shall be the Latest Possible Maturity Date. None of the REMICs described herein shall hold any interest in the Swap Trust, Swap Contract, Swap Account or Final Maturity Reserve Trust. SWAP-IO REMIC: The Swap-IO REMIC Interests will have the principal balances and pass-through rates as set forth below. Swap-IO REMIC Interest Initial Principal Balance(1) Pass-Through Rate SWR-7A $7,561,906.50 (2) SWR-7B 7,561,906.50 (3) SWR-8A 7,802,989.00 (2) SWR-8B 7,802,989.00 (3) SWR-9A 9,006,566.50 (2) 1 Swap-IO REMIC Interest Initial Principal Balance(1) Pass-Through Rate SWR-9B 9,006,566.50 (3) SWR-10A 8,544,081.50 (2) SWR-10B 8,544,081.50 (3) SWR-11A 9,331,908.00 (2) SWR-11B 9,331,908.00 (3) SWR-12A 2,212,937.50 (2) SWR-12B 2,212,937.50 (3) SWR-13A 5,778,117.00 (2) SWR-13B 5,778,117.00 (3) SWR-14A 12,846,296.00 (2) SWR-14B 12,846,296.00 (3) SWR-15A 11,122,504.00 (2) SWR-15B 11,122,504.00 (3) SWR-16A 10,151,019.50 (2) SWR-16B 10,151,019.50 (3) SWR-17A 9,056,136.00 (2) SWR-17B 9,056,136.00 (3) SWR-18A 7,734,133.00 (2) SWR-18B 7,734,133.00 (3) SWR-19A 7,376,546.00 (2) SWR-19B 7,376,546.00 (3) SWR-20A 6,582,480.50 (2) SWR-20B 6,582,480.50 (3) SWR-21A 6,695,712.50 (2) SWR-21B 6,695,712.50 (3) SWR-22A 7,220,639.00 (2) SWR-22B 7,220,639.00 (3) SWR-23A 11,089,909.00 (2) SWR-23B 11,089,909.00 (3) SWR-24A 16,950,975.50 (2) SWR-24B 16,950,975.50 (3) SWR-25A 16,434,165.50 (2) SWR-25B 16,434,165.50 (3) SWR-26A 14,963,019.00 (2) SWR-26B 14,963,019.00 (3) SWR-27A 12,129,595.00 (2) SWR-27B 12,129,595.00 (3) SWR-28A 10,341,921.50 (2) SWR-28B 10,341,921.50 (3) SWR-29A 9,022,100.50 (2) SWR-29B 9,022,100.50 (3) SWR-30A 7,564,219.50 (2) SWR-30B 7,564,219.50 (3) SWR-31A 7,116,221.00 (2) 2 Swap-IO REMIC Interest Initial Principal Balance(1) Pass-Through Rate SWR-31B 7,116,221.00 (3) SWR-32A 6,164,110.00 (2) SWR-32B 6,164,110.00 (3) SWR-33A 5,991,229.00 (2) SWR-33B 5,991,229.00 (3) SWR-34A 5,058,448.50 (2) SWR-34B 5,058,448.50 (3) SWR-35A 4,857,161.50 (2) SWR-35B 4,857,161.50 (3) SWR-36A 5,536,991.00 (2) SWR-36B 5,536,991.00 (3) SWR-37A 5,332,257.00 (2) SWR-37B 5,332,257.00 (3) SWR-38A 5,109,676.00 (2) SWR-38B 5,109,676.00 (3) SWR-39A 4,646,274.50 (2) SWR-39B 4,646,274.50 (3) SWR-40A 4,375,913.50 (2) SWR-40B 4,375,913.50 (3) SWR-41A 3,991,709.00 (2) SWR-41B 3,991,709.00 (3) SWR-42A 28,363,171.00 (2) SWR-42B 28,363,171.00 (3) SWR-43A 42,024,608.50 (2) SWR-43B 42,024,608.50 (3) SWR-44A 10,940,940.00 (2) SWR-44B 10,940,940.00 (3) SWR-45A 1,846,754.50 (2) SWR-45B 1,846,754.50 (3) SWR-46A 12,978,640.50 (2) SWR-46B 12,978,640.50 (3) SWR-47A 54,892.50 (2) SWR-47B 54,892.50 (3) SWR-48A 2,023,431.50 (2) SWR-48B 2,023,431.50 (3) SWR-49A 900,883.50 (2) SWR-49B 900,883.50 (3) SWR-50A 17,173,426.00 (2) SWR-50B 17,173,426.00 (3) SWR-Support (4) (5) SWR-P $100.00 (6) SWR-40 Year Reserve (7) (7) SW-A-R (8) (8) 3 (1) Scheduled principal, prepayments and Realized Losses will be allocated first, to the SWR-Support Interest and second, to the numbered classes sequentially (from lowest to highest).Amounts so allocated to a numbered class shall be further allocated between the “A” and “B” components of such numbered class pro-rata until the entire class is reduced to zero. (2) On and after the 7th Distribution Date and on and until the 50th Distribution Date, a rate equal to twice the Pool Tax Cap less 10.16% per annum.Prior to the 7th Distribution Date and on and after the 51st Distribution Date, a rate equal to the Pool Tax Cap.The “Pool Tax Cap” means the weighted average of the Adjusted Net Mortgage Rates of all the Mortgage Loans.For this purpose, beginning on the Distribution Date in April 2017 and ending on the Distribution Date in March 2037 (the “Last Scheduled Distribution Date”), the Adjusted Net Mortgage Rate shall be determined by first reducing the interest payable on each 40-Year Mortgage Loan by the 40-Year Reserve Rate. (3) On and after the 7th Distribution Date and on and until the 50th Distribution Date, a rate equal to the lesser of (i) 10.16% per annum and (ii) twice the Pool Tax Cap.Prior to the 7th Distribution Date and on and after the 51st Distribution Date, a rate equal to the Pool Tax Cap. (4) On the Closing Date and on each Distribution Date, following the allocation of Principal Amounts and Realized Losses, the principal balance in respect of the SWR-Support Interest will equal the excess of (a) the sum of (i) the principal balance of the Mortgage Loans (as of the end of the related Due Period, reduced by principal prepayments received after such Due Period that are to be distributed on such Distribution Date) and (ii) the amount, if any, on deposit in the Pre-Funding Account in respect of the Mortgage Loans over (b) the principal balance in respect of the remaining Swap-IO REMIC Interests other than the SWR-P and the SWR-A-R Interests. (5) A rate equal to the Pool Tax Cap. (6) On each Distribution Date the SWR-P Interest is entitled to all Prepayment Charges collected with respect to the Mortgage Loans.It pays no interest. (7) Beginning on the Distribution Date in April 2017 and ending on the Last Scheduled Distribution Date, the SW-40 Year Reserve Interest shall be entitled to a specific portion of the interest payable on each 40-Year Mortgage Loan.Specifically, the SW-40 Year Reserve Interest shall be entitled to a specific portion of the interest payable on the Stated Principal Balance of each 40-Year Mortgage Loan as of the Due Date in the month preceding the month of that Distribution Date (after giving effect to principal prepayments in the Prepayment Period related to that prior Due Date) at a per annum rate equal to 0.80% (the “40-Year Reserve Rate”). (8) The SW-A-R Interest is the sole class of residual interest in the Swap-IO REMIC.It has no principal and pays no principal or interest. On each Distribution Date, the Interest Funds and the Principal Distribution Amount payable with respect to the Mortgage Loans shall be payable with respect to the Swap-IO REMIC Interests in the following manner: (1)Interest.Interest is to be distributed with respect to each Swap-IO REMIC Interest at the rate, or according to the formulas, described above. 4 (2)Principal.Principal Distribution Amounts shall be allocated among the Swap-IO REMIC Interests as described above. (3)Prepayment Penalties.All Prepayment Charges are allocated to the SWR-P Interest. STRIP REMIC: The Strip REMIC Regular Interests will have the principal balances, pass-through rates and Corresponding Classes of Certificates as set forth in the following table: Strip REMICInterest Initial Principal Balance Pass-ThroughRate Corresponding Class of Certificates STR-1-A (1) (2) 1-A STR-2-A-1 (1) (2) 2-A-1 STR-2-A-2 (1) (2) 2-A-2 STR-2-A-3 (1) (2) 2-A-3 STR-2-A-4 (1) (2) 2-A-4 STR-M-1 (1) (2) M-1 STR-M-2 (1) (2) M-2 STR-M-3 (1) (2) M-3 STR-M-4 (1) (2) M-4 STR-M-5 (1) (2) M-5 STR-M-6 (1) (2) M-6 STR-M-7 (1) (2) M-7 STR-M-8 (1) (2) M-8 STR-$100 $100 (3) A-R STR-C-OC (4) (2) N/A STR-C-Swap-IO (5) (5) N/A STR-C-40 Year IO (6) (6) N/A STR-P $100 (7) P STR-A-R (8) (8) N/A (1) This Strip REMIC Interest has a principal balance that is initially equal to 100% of its Corresponding Certificate Class issued by the Master REMIC.Principal payments, both scheduled and prepaid, Realized Losses and Subsequent Recoveries attributable to the Swap-IO REMIC Interests held by the Strip REMIC will be allocated to this class to maintain its size relative to its Corresponding Certificate Class. (2) On each Distribution Date, the pass-through rate for this Strip REMIC Interest will be the “Strip REMIC Cap,” which will equal the weighted average of the pass-through rates of the Swap-IO REMIC Interests (other than the SWR-P, SWR-40 Year Reserve and SWR-A-R Interests) treating each “B” Interest the cardinal number of which (for example, SW-7B, SW-8B, SW-9B, etc.) is not less than the ordinal number of the Distribution Date (seventh Distribution Date, eighth Distribution Date, ninth Distribution Date, etc.) as capped at a rate equal to the product of (i) 2 and (ii) LIBOR. 5 (3) This Strip REMIC Interest pays no interest. (4) This Strip REMIC Interest has a principal balance that is initially equal to 100% of the Overcollateralized Amount.Principal payments, both scheduled and prepaid, Realized Losses and Subsequent Recoveries attributable to the Swap-IO REMIC Interests held by the Strip REMIC will be allocated to this class to maintain its size relative to the Overcollateralized Amount. (5) For each Distribution Date, the STR-C-Swap-IO Interest is entitled to receive from each Swap REMIC “B” Interest the cardinal number of which (for example, SW-7B, SW-8B, SW-9B, etc.) is not less than the ordinal number of the Distribution Date (seventh Distribution Date, eighth Distribution Date, ninth Distribution Date, etc.) the interest accruing on such interest in excess of a per annum rate equal to the product of (i) 2 and (ii) LIBOR. (6) The STR-C-40 Year IO Interest is entitled to all amounts payable with respect to the SWR-40 Year Reserve Interest. (7) The STR-P Interest is entitled to all amounts payable with respect to the SWR-P Interest.It pays no interest. (8) The STR-A-R Interest is the sole class of residual interest in the Strip REMIC.It has no principal balance and pays no principal or interest. On each Distribution Date, the Interest Funds and the Principal Distribution Amount payable with respect to the Swap-IO Interests shall be payable with respect to the Strip REMIC Interests in the following manner: (1)Interest.Interest is to be distributed with respect to each Strip REMIC Interest at the rate, or according to the formulas, described above. (2)Principal.Principal Distribution Amounts shall be allocated among the Strip REMICInterests as described above. (3) Prepayment Penalties.All Prepayment Charges are allocated to the STR-P Interest. MASTER REMIC: The following table specifies the class designation, interest rate, and principal amount for each class of Master REMIC Interest: Class Original Certificate Principal Balance Pass-Through Rate Class 1-A $272,850,000 (1) Class 2-A-1 $247,191,000 (1) Class 2-A-2 $84,897,000 (1) Class 2-A-3 $152,794,000 (1) Class 2-A-4 $44,768,000 (1) 6 Class Original Certificate Principal Balance Pass-Through Rate Class M-1 $45,500,000 (1) Class M-2 $42,000,000 (1) Class M-3 $15,500,000 (1) Class M-4 $14,500,000 (1) Class M-5 $14,500,000 (1) Class M-6 $10,000,000 (1) Class M-7 $12,000,000 (1) Class M-8 $9,500,000 (1) Class C (2) (3) Class P $100.00 (4) Class A-R $100.00 (5) (1) The Certificates will accrue interest at the related Pass-Through Rates identified in this Agreement.For federal income tax purposes, including the computation of the Class C Distributable Amount and entitlement to Net Rate Carryover, the Pass-Through Rate in respect of each Class 1-A Certificate, Class 2-A Certificate and Class M Certificate will be subject to a cap equal to the Strip REMIC Cap rather than its applicable Net Rate Cap. (2) For federal income tax purposes, the Class C Certificates will be treated as having a Certificate Principal Balance equal to the Overcollateralized Amount. (3) For each Interest Accrual Period the Class C Certificates are entitled to an amount (the “Class C Distributable Amount”) equal to the sum of (a) the interest payable on the STR-C-Swap-IO Interest, (b) the interest payable on the STR-C-OC Interest, (c) the interest payable on the STR-C-40 Year IO Interest and (d) a specified portion of the interest payable on the Strip REMIC Regular Interests (other than the STR-$100, STR-C-OC, STR-C-Swap-IO, STR-C-40 Year IO and STR-P Interests) equal to the excess of the Strip REMIC Cap over the weighted average interest rate of the Strip REMIC Regular Interests (other than the STR-$100, STR-C-OC, STR-C-Swap-IO, STR-C-40 Year IO and STR-P Interests) with each such Class subject to a cap equal to the Pass-Through Rate of the Corresponding Master REMIC Class.The Pass-Through Rate of the Class C Certificates shall be a rate sufficient to entitle it to an amount equal to all interest accrued on the Mortgage Loans less the interest accrued on the other interests issued by the Master REMIC.The Class C Distributable Amount for any Distribution Date is payable from current interest on the Mortgage Loans and any related Overcollateralization Reduction Amount for that Distribution Date. (4) For each Distribution Date the Class P Certificates are entitled to all Prepayment Charges distributed with respect to the STR-P Interest. (5) The Class A-R Certificates represent the sole class of residual interest in each REMIC created hereunder.The Class A-R Certificates are not entitled to distributions of interest. The foregoing REMIC structure is intended to cause all of the cash from the Mortgage Loans to flow through to the Master REMIC as cash flow on REMIC regular interests, without creating any shortfall—actual or potential (other than for credit losses)— to any REMIC regular interest. It is not intended that the Class A-R Certificates be entitled to any cash flows pursuant to this Agreement except as provided in Section 3.08(a) hereunder. 7 ARTICLE I DEFINITIONS Section 1.01 Defined Terms. Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings: 40-Year Target Schedule:Schedule III hereto. 40-Year Mortgage Loan:A Mortgage Loan with an original term to maturity of 40 years. 40-Year Reserve Rate:As defined in the Preliminary Statement. Acceptable Bid Amount:Either (i) a bid equal to or greater than the Minimum Auction Amount or (ii) the highest bid submitted by a Qualified Bidder in an auction if the Directing Certificateholder agrees to pay the related Auction Supplement Amount. Account:Any Escrow Account, the Carryover Reserve Fund, the Certificate Account, the Distribution Account, the Pre-Funding Account, the Capitalized Interest Account, the Principal Reserve Fund, the Swap Account, the Final Maturity Reserve Fund or any other account related to the Trust Fund or the Mortgage Loans. Accrual Period:With respect to any Distribution Date and each Class of Interest-Bearing Certificates, the period commencing on the immediately preceding Distribution Date (or, in the case of the first Distribution Date, the Closing Date) and ending on the day immediately preceding such Distribution Date.With respect to any Distribution Date and the Class C Certificates, the calendar month preceding the month in which such Distribution Date occurs.All calculations of interest on the Interest-Bearing Certificates will be made on the basis of the actual number of days elapsed in the related Accrual Period and on a 360-day year.All calculations of interest on the Class C Certificates will be made on the basis of a 360-day year consisting of twelve 30-day months. Additional Designated Information:As defined in Section 11.02. Adjusted Mortgage Rate:As to each Mortgage Loan, the related Mortgage Rate less the related Servicing Fee Rate. Adjusted Net Mortgage Rate:As to each Mortgage Loan, the related Mortgage Rate less the related Expense Fee Rate. Adjusted Replacement Upfront Amount:As defined in Section 3.21. Adjustment Date:As to each Mortgage Loan, each date on which the related Mortgage Rate is subject to adjustment, as provided in the related Mortgage Note. 8 Advance:The aggregate of the advances required to be made by the Master Servicer with respect to any Distribution Date pursuant to Section 4.01, the amount of any such advances being equal to the aggregate of payments of principal of, and interest on the Stated Principal Balance of, the Mortgage Loans (net of the Servicing Fees) that were due on the related Due Date and not received by the Master Servicer as of the close of business on the related Determination Date including an amount equivalent to interest on the Stated Principal Balance of each Mortgage Loan as to which the related Mortgaged Property is an REO Property or as to which the related Mortgaged Property has been liquidated but such Mortgage Loan has not yet become a Liquidated Mortgage Loan; provided, however, that the net monthly rental income (if any) from such REO Property deposited in the Certificate Account for such Distribution Date pursuant to Section 3.12 may be used to offset such Advance for the related REO Property; provided, further, that for the avoidance of doubt, no Advances shall be required to be made in respect of any Liquidated Mortgage Loan. Agreement:This Pooling and Servicing Agreement and any and all amendments or supplements hereto made in accordance with the terms herein. Amount Held for Future Distribution:As to any Distribution Date, the aggregate amount held in the Certificate Account at the close of business on the immediately preceding Determination Date on account of (i) all Scheduled Payments or portions thereof received in respect of the Mortgage Loans due after the related Due Date, (ii) Principal Prepayments received in respect of such Mortgage Loans after the last day of the related Prepayment Period and (iii) Liquidation Proceeds and Subsequent Recoveries received in respect of such Mortgage Loans after the last day of the related Due Period. Applied Realized Loss Amount:With respect to any Distribution Date and any Loan Group or Loan Groups, the amount, if any, by which, the aggregate Certificate Principal Balance of the Class(es) of Certificates listed opposite such Loan Group(s) in the following table (after all distributions of principal on such Distribution Date) exceeds the sum of (x) the aggregate Stated Principal Balance of the Mortgage Loans in such Loan Group(s) for such Distribution Date and (y) the amount on deposit in the Pre-Funding Account in respect of such Loan Group(s); provided, however, that an Applied Realized Loss Amount will not exist for a Class of Class A Certificates unless the Certificate Principal Balances of the Subordinate Certificates have been reduced to zero. Loan Group(s) Class(es) of Certificates 1 and 2 Interest-Bearing 1 1-A 2 2-A Appraised Value:The appraised value of the Mortgaged Property based upon the appraisal made for the originator of the related Mortgage Loan by an independent fee appraiser at the time of the origination of the related Mortgage Loan, or the sales price of the Mortgaged Property at the time of such origination, whichever is less, or with respect to any Mortgage Loan originated in connection with a refinancing, the appraised value of the Mortgaged Property based upon the appraisal made at the time of such refinancing. 9 Auction Supplement Amount:As defined in Section 9.04(c). Bankruptcy Code:Title 11 of the United States Code. Bid Determination Date:As defined in Section 9.04(b). Book-Entry Certificates:Any of the Certificates that shall be registered in the name of the Depository or its nominee, the ownership of which is reflected on the books of the Depository or on the books of a person maintaining an account with the Depository (directly, as a “Depository Participant”, or indirectly, as an indirect participant in accordance with the rules of the Depository and as described in Section 5.06).As of the Closing Date, each Class of Interest-Bearing Certificates constitutes a Class of Book-Entry Certificates. Business Day:Any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the State of New York or California or the city in which the Corporate Trust Office of the Trustee is located are authorized or obligated by law or executive order to be closed. Capitalized Interest Account: The separate Eligible Account designated as such and created and maintained by the Trustee pursuant to Section 3.05(e).The Capitalized Interest Account shall be treated as an “outside reserve fund” under applicable Treasury regulations and shall not be part of any REMIC.Except as provided in Section 3.05(e), any investment earnings on the amounts on deposit in the Capitalized Interest Account shall be treated as owned by the Depositor and shall be taxable to the Depositor. Capitalized Interest Deposit:$299,560.34. Capitalized Interest Release Amount:With respect to any Subsequent Transfer Date, an amount equal to the product of (1) the sum of (a) the Trustee Fee Rate and (b) the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans (excluding any Subsequent Mortgage Loans conveyed to the Trust Fund during the calendar month in which such Subsequent Transfer Date occurs) as of the first day of the Due Period beginning in the month in which such Subsequent Transfer Date occurs (after giving effect to Principal Prepayments received during the Prepayment Period, if any, that ends during such Due Period), (2) the Subsequent Transfer Date Transfer Amount for such Subsequent Transfer Date and (3) a fraction, the numerator of which is the number of calendar months in the period beginning with the calendar month in which such Subsequent Transfer Date occurs and ending with the calendar month containing the latest date on which the Funding Period could end, and the denominator of which is 12. Capitalized Interest Requirement:With respect to each Funding Period Distribution Date, 1/12 of the product of (1) the sum of (a) the Trustee Fee Rate and (b) the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans (excluding any Subsequent Mortgage Loans conveyed to the Trust Fund during the calendar month preceding such Distribution Date) as of the first day of the related Due Period (after giving effect to Principal Prepayments received during the Prepayment Period, if any, that ends during such Due Period) and (2) the amount on deposit in the Pre-Funding Account as of the last day of the calendar month preceding such Funding Period Distribution Date (or, if the Funding Period ended during such calendar month, as of the last day of the Funding Period). 10 Carryover Reserve Fund:The separate Eligible Account created and initially maintained by the Trustee pursuant to Section 4.07 in the name of the Trustee for the benefit of the Certificateholders and designated “The Bank of New York in trust for registered Holders of CWABS, Inc., Asset-Backed Certificates, Series 2007-6”.Funds in the Carryover Reserve Fund shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. Certificate:Any one of the certificates of any Class executed and authenticated by the Trustee in substantially the forms attached hereto as Exhibits A-1 through A-13, Exhibit B, Exhibit C, Exhibit D and Exhibit E. Certificate Account:The separate Eligible Account created and initially maintained by the Master Servicer pursuant to Section 3.05(b) with a depository institution in the name of the Master Servicer for the benefit of the Trustee on behalf of the Certificateholders and designated “Countrywide Home Loans Servicing LP in trust for registered Holders of CWABS, Inc., Asset-Backed Certificates, Series 2007-6”.Funds in the Certificate Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. Certificate Owner:With respect to a Book-Entry Certificate, the person that is the beneficial owner of such Book-Entry Certificate. Certificate Principal Balance:As to any Certificate (other than the Class C Certificates) and as of any Distribution Date, the Initial Certificate Principal Balance of such Certificate (A) less the sum of (i) all amounts distributed with respect to such Certificate in reduction of the Certificate Principal Balance thereof on previous Distribution Dates pursuant to Section 4.04(b) and (ii) any Applied Realized Loss Amounts allocated to such Certificate on previous Distribution Dates pursuant to Section 4.04(h), and (B) increased by any Subsequent Recoveries allocated to such Certificate pursuant to Section 4.04(i) on such Distribution Date.References herein to the Certificate Principal Balance of a Class of Certificates shall mean the Certificate Principal Balances of all Certificates in such Class.The Class C Certificates do not have a Certificate Principal Balance.With respect to any Certificate (other than the Class C Certificates) of a Class and any Distribution Date, the portion of the Certificate Principal Balance of such Class represented by such Certificate equal to the product of the Percentage Interest evidenced by such Certificate and the Certificate Principal Balance of such Class. Certificate Register:The register maintained pursuant to Section 5.02 hereof. Certificateholder or Holder:The person in whose name a Certificate is registered in the Certificate Register (initially, Cede & Co., as nominee for the Depository, in the case of any Class of Book-Entry Certificates), except that solely for the purpose of giving any consent pursuant to this Agreement, any Certificate registered in the name of the Depositor or any affiliate of the Depositor shall be deemed not to be Outstanding and the Voting Interest evidenced thereby shall not be taken into account in determining whether the requisite amount of Voting Interests necessary to effect such consent has been obtained; provided that if any such Person (including the Depositor) owns 100% of the Voting Interests evidenced by a Class of Certificates, such Certificates shall be deemed to be Outstanding for purposes of any provision hereof (other than the second sentence of Section 10.01 hereof) that requires the consent of the Holders of Certificates of a particular Class as a condition to the taking of any action hereunder.The Trustee is entitled to rely conclusively on a certification of the Depositor or any affiliate of the Depositor in determining which Certificates are registered in the name of an affiliate of the Depositor. 11 Certification Party:As defined in Section 11.05. Certifying Person:As defined in Section 11.05. CHL:Countrywide Home Loans, Inc., a New York corporation, and its successors and assigns. CHL Mortgage Loans:The Mortgage Loans identified as such on the Mortgage Loan Schedule for which CHL is the applicable Seller. Class:All Certificates bearing the same Class designation as set forth in Section 5.01 hereof. Class 1-A Certificate:Any Certificate designated as a “Class 1-A Certificate” on the face thereof, in the form of Exhibit A-1 hereto, representing the right to distributions as set forth herein. Class 1-A Corridor Contract:With respect to the Class 1-A Certificates, the transaction evidenced by the related Confirmation (as assigned to the Corridor Contract Administrator pursuant to the Corridor Contract Assignment Agreement), a form of which is attached hereto as Exhibit Q-1. Class 1-A Net Rate Cap:For any Distribution Date, the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 1 as of the first day of the related Due Period (after giving effect to Principal Prepayments received during the Prepayment Period that ends during such Due Period), adjusted to an effective rate reflecting the calculation of interest on the basis of the actual number of days elapsed during the related Accrual Period and a 360-day year, minus a fraction, expressed as a percentage, the numerator of which is (a) the product of (x) the sum of (1) the sum of the Net Swap Payment payable to the Swap Counterparty with respect to such Distribution Date and the Final Maturity Reserve Deposit for such Distribution Date times a fraction, the numerator of which is 360 and the denominator of which is the actual number of days in the related Accrual Period and (2) any Swap Termination Payment payable to the Swap Counterparty for such Distribution Date (other than a Swap Termination Payment due to a Swap Counterparty Trigger Event) and (y) a fraction, the numerator of which is the Interest Funds for Loan Group 1 for such Distribution Date, and the denominator of which is the Interest Funds for Loan Group 1 and Loan Group 2 for such Distribution Date, and the denominator of which is (b) the sum of the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 1 as of the first day of the related Due Period (after giving effect to Principal Prepayments received during the Prepayment Period that ends during such Due Period) plus any amounts on deposit in the Pre-Funding Account in respect of Loan Group 1 as of the first day of that Due Period. Class 1-A Principal Distribution Amount:With respect to any Distribution Date, the product of (x) the Class A Principal Distribution Target Amount and (y) a fraction, the numerator of which is the Principal Remittance Amount for Loan Group 1 and the denominator of which is the Principal Remittance Amount for both Loan Groups. 12 Class 2-A-1 Certificate:Any Certificate designated as a “Class 2-A-1 Certificate” on the face thereof, in the form of Exhibit A-2 hereto, representing the right to distributions as set forth herein. Class 2-A-2 Certificate:Any Certificate designated as a “Class 2-A-2 Certificate” on the face thereof, in the form of Exhibit A-3 hereto, representing the right to distributions as set forth herein. Class 2-A-3 Certificate:Any Certificate designated as a “Class 2-A-3 Certificate” on the face thereof, in the form of Exhibit A-4 hereto, representing the right to distributions as set forth herein. Class 2-A-4 Certificate:Any Certificate designated as a “Class 2-A-4 Certificate” on the face thereof, in the form of Exhibit A-5 hereto, representing the right to distributions as set forth herein. Class 2-A Certificates:The Class 2-A-1, Class 2-A-2, Class 2-A-3 and Class 2-A-4 Certificates collectively. Class 2-A Corridor Contract:With respect to the Class 2-A Certificates, the transaction evidenced by the related Confirmation (as assigned to the Corridor Contract Administrator pursuant to the Corridor Contract Assignment Agreement), a form of which is attached hereto as Exhibit Q-2. Class 2-A Net Rate Cap:For any Distribution Date, the weighted average Adjusted Net Mortgage Rate of the Mortgage Loans in Loan Group 2 as of the first day of the related Due Period (after giving effect to Principal Prepayments received during the Prepayment Period that ends during such Due Period), adjusted to an effective rate reflecting the calculation of interest on the basis of the actual number of days elapsed during the related Accrual Period and a 360-day year, minus a fraction, expressed as a percentage, the numerator of which is (a) the product of (x) the sum of (1) the sum of the Net Swap Payment payable to the Swap Counterparty with respect to such Distribution Date and the Final Maturity Reserve Deposit for such Distribution Date times a fraction, the numerator of which is 360 and the denominator of which is the actual number of days in the related Accrual Period and (2) any Swap Termination Payment payable to the Swap Counterparty for such Distribution Date (other than a Swap Termination Payment due to a Swap Counterparty Trigger Event) and (y) a fraction, the numerator of which is the Interest Funds for Loan Group 2 for such Distribution Date, and the denominator of which is the Interest Funds for Loan Group 1 and Loan Group 2 for such Distribution Date, and the denominator of which is (b) the sum of the aggregate Stated Principal Balance of the Mortgage Loans in Loan Group 2 as of the first day of the related Due Period (after giving effect to Principal Prepayments received during the Prepayment Period that ends during such Due Period) plus any amounts on deposit in the Pre-Funding Account in respect of Loan Group 2 as of the first day of that Due Period. 13 Class 2-A Principal Distribution Amount:With respect to any Distribution Date, the product of (x) the Class A Principal Distribution Target Amount and (y) a fraction, the numerator of which is the Principal Remittance Amount for Loan Group 2 and the denominator of which is the Principal Remittance Amount for both Loan Groups. Class A-R Certificate:Any Certificate designated as a “Class A-R Certificate” on the face thereof, in the form of Exhibit D hereto or, in the case of the Tax Matters Person Certificate, Exhibit E hereto, in either case representing the right to distributions as set forth herein. Class A Certificate:Any Class 1-A or Class 2-A Certificate. Class A Principal Distribution Target Amount:With respect to any Distribution Date, the excess of (1) the aggregate Certificate Principal Balance of the Class A Certificates immediately prior to such Distribution Date, over (2) the lesser of (x) 60.50% of the aggregate Stated Principal Balance of the Mortgage Loans for such Distribution Date and (y) the aggregate Stated Principal Balance of the Mortgage Loans for such Distribution Date minus the OC Floor. Class C Certificate:Any Certificate designated as a “Class C Certificate” on the face thereof, in the form of Exhibit C hereto, representing the right to distributions as set forth herein. Class C Distributable Amount:As defined in the Preliminary Statement. Class M-1 Certificate:Any Certificate designated as a “Class M-1 Certificate” on the face thereof, in the form of Exhibit A-6 hereto, representing the right to distributions as set forth herein. Class M-2 Certificate:Any Certificate designated as a “Class M-2 Certificate” on the face thereof, in the form of Exhibit A-7 hereto, representing the right to distributions as set forth herein. Class M-3 Certificate:Any Certificate designated as a “Class M-3 Certificate” on the face thereof, in the form of Exhibit A-8 hereto, representing the right to distributions as set forth herein. Class M-4 Certificate:Any Certificate designated as a “Class M-4 Certificate” on the face thereof, in the form of Exhibit A-9 hereto, representing the right to distributions as set forth herein. Class M-5 Certificate:Any Certificate designated as a “Class M-5 Certificate” on the face thereof, in the form of Exhibit A-10 hereto, representing the right to distributions as set forth herein. Class M-6 Certificate:Any Certificate designated as a “Class M-6 Certificate” on the face thereof, in the form of Exhibit A-11 hereto, representing the right to distributions as set forth herein. 14 Class M-7 Certificate:Any Certificate designated as a “Class M-7 Certificate” on the face thereof, in the form of Exhibit A-12 hereto, representing the right to distributions as set forth herein. Class M-8 Certificate:Any Certificate designated as a “Class M-8 Certificate” on the face thereof, in the form of Exhibit A-13 hereto, representing the right to distributions as set forth herein. Class P Certificate: Any Certificate designated as a “Class P Certificate” on the face thereof, in the form of Exhibit B hereto, representing the right to distributions as set forth herein. Class P Principal Distribution Date:The first Distribution Date that occurs after the end of the latest Prepayment Charge Period for all Mortgage Loans that have a Prepayment Charge Period. Closing Date:March 30, 2007. Code:The Internal Revenue Code of 1986, including any successor or amendatory provisions. Collateral Schedule:Schedule II hereto. Commission:The U.S. Securities and Exchange Commission. Compensating Interest:With respect to each Loan Group and any Distribution Date, an amount equal to the lesser of (x) one-half of the Servicing Fee for the Mortgage Loans in that Loan Group for the related Due Period and (y) the aggregate Prepayment Interest Shortfalls for the Mortgage Loans in that Loan Group for such Distribution Date. Confirmation:The confirmation, reference number Global Deal ID: 2968086, 2968087, with a trade date of March 28, 2007 evidencing a transaction between the Corridor Contract Counterparty and CHL relating to the Class 1-A Corridor Contract, the confirmation, reference number Global Deal ID: 2968088, 2968089, with a trade date of March 28, 2007 evidencing a transaction between the Corridor Contract Counterparty and CHL relating to the Class 2-A Corridor Contract, the confirmation, reference number Global Deal ID: 2968090, 2968091, with a trade date of March 28, 2007 evidencing a transaction between the Corridor Contract Counterparty and CHL relating to the Subordinate Corridor Contract and the confirmation, reference number Global Deal ID: 2967983, with a trade date of March 28, 2007 evidencing a transaction between the Swap Counterparty and CHL relating to the Swap Contract, as applicable. Corporate Trust Office:The designated office of the Trustee in the State of New York where at any particular time its corporate trust business with respect to this Agreement shall be administered, which office at the date of the execution of this Agreement is located at 101 Barclay Street, Floor 4W, New York, New York 10286 (Attention:Corporate Trust MBS Administration), telephone: (212) 815-3236, facsimile: (212) 815-3986. 15 Corridor Contract:The Class 1-A Corridor Contract, Class 2-A Corridor Contract or Subordinate Corridor Contract, as applicable. Corridor Contract Administration Agreement:The corridor contract administration agreement dated as of the Closing Date among CHL, the Trustee and the Corridor Contract Administrator, a form of which is attached hereto as Exhibit S-2. Corridor Contract Administrator:The Bank of New York, in its capacity as corridor contract administrator under the Corridor Contract Administration Agreement. Corridor Contract Assignment Agreement:The Assignment Agreement dated as of the Closing Date among CHL, the Corridor Contract Administrator and the Corridor Contract Counterparty, a form of which is attached hereto as Exhibit S-1. Corridor Contract Counterparty:Lehman Brothers Special Financing Inc. and its successors. Corridor Contract Termination Date:The Distribution Date occurring in September 2007. Co-Trustee:The Bank of New York Trust Company, N.A., a national banking association, not in its individual capacity, but solely in its capacity as co-trustee for the benefit of the Certificateholders under this Agreement, and any successor thereto, and any corporation or national banking association resulting from or surviving any consolidation or merger to which it or its successors may be a party. Covered Mortgage Loan:A Mortgage Loan listed on the Mortgage Loan Schedule as being covered by the Mortgage Insurance Policy. Credit Bureau Risk Score:A statistical credit score obtained by CHL in connection with the origination of a Mortgage Loan. Cumulative Loss Trigger Event: With respect to a Distribution Date on or after the Stepdown Date, a Cumulative Loss Trigger Event will be in effect if (x) the aggregate amount of Realized Losses on the Mortgage Loans from the Cut-off Date for each such Mortgage Loan to (and including) the last day of the related Due Period (reduced by the aggregate amount of any Subsequent Recoveries received through the last day of that Due Period) exceeds (y) the applicable percentage, for such Distribution Date, of the sum of the aggregate Cut-off Date Principal Balance of the Initial Mortgage Loans and the Pre-Funded Amount, as set forth below: 16 Distribution Date Percentage April 2009 — March 2010 1.40% with respect to April 2009, plus an additional 1/12th of 1.75% for each month thereafter through March 2010 April 2010 — March 2011 3.15% with respect to April 2010, plus an additional 1/12th of 1.80% for each month thereafter through March 2011 April 2011 — March 2012 4.95% with respect to April 2011, plus an additional 1/12th of 1.40% for each month thereafter through March 2012 April 2012 — March 2013 6.35% with respect to April 2012, plus an additional 1/12th of 0.75% for each month thereafter through March 2013 April 2013 and thereafter 7.10% Current Interest:With respect to each Class of Interest-Bearing Certificates and each Distribution Date, the interest accrued at the applicable Pass-Through Rate for the applicable Accrual Period on the Certificate Principal Balance of such Class immediately prior to such Distribution Date. Cut-off Date:When used with respect to any Mortgage Loan the “Cut-off Date” shall mean the Initial Cut-off Date or the related Subsequent Cut-off Date, as the case may be. Cut-off Date Principal Balance:As to any Mortgage Loan, the unpaid principal balance thereof as of the close of business on the Cut-off Date after application of all payments of principal due on or prior to the Cut-off Date, whether or not received, and all Principal Prepayments received on or prior to the Cut-off Date, but without giving effect to any installments of principal received in respect of Due Dates after the Cut-off Date. Debt Service Reduction:With respect to any Mortgage Loan, a reduction by a court of competent jurisdiction in a proceeding under the Bankruptcy Code in the Scheduled Payment for such Mortgage Loan that became final and non-appealable, except such a reduction resulting from a Deficient Valuation or any other reduction that results in a permanent forgiveness of principal. 17 Deficient Valuation:With respect to any Mortgage Loan, a valuation by a court of competent jurisdiction of the Mortgaged Property in an amount less than the then outstanding indebtedness under such Mortgage Loan, or any reduction in the amount of principal to be paid in connection with any Scheduled Payment that results in a permanent forgiveness of principal, which valuation or reduction results from an order of such court that is final and non-appealable in a proceeding under the Bankruptcy Code. Definitive Certificates:As defined in Section 5.06. Delay Delivery Mortgage Loans:(i) The Initial Mortgage Loans identified on the schedule of Mortgage Loans hereto set forth on Exhibit F-2 hereof for which all or a portion of a related Mortgage File is not delivered to the Co-Trustee on or prior to the Closing Date, and (ii) the Subsequent Mortgage Loans identified on the schedule of Subsequent Mortgage Loans set forth in Annex A to each related Subsequent Transfer Agreement for which all or a portion of the related Mortgage File is not delivered to the Co-Trustee on or prior to the related Subsequent Transfer Date.The Depositor shall deliver (or cause delivery of) the Mortgage Files to the Co-Trustee:(A) with respect to at least 50% of the Initial Mortgage Loans in each Loan Group, not later than the Closing Date and with respect to at least 10% of the Subsequent Mortgage Loans in each Loan Group conveyed on a Subsequent Transfer Date, not later than such Subsequent Transfer Date, (B) with respect to at least an additional 40% of the Initial Mortgage Loans in each Loan Group, not later than 20 days after the Closing Date, and not later than 20 days after the relevant Subsequent Transfer Date with respect to the remaining Subsequent Mortgage Loans conveyed on such Subsequent Transfer Date, and (C) with respect to the remaining Initial Mortgage Loans, not later than thirty days after the Closing Date.To the extent that Countrywide Home Loans, Inc. shall be in possession of any Mortgage Files with respect to any Delay Delivery Mortgage Loan, until delivery of such Mortgage File to the Co-Trustee as provided in Section 2.01, Countrywide Home Loans, Inc. shall hold such files as agent and in trust for the Co-Trustee. Deleted Mortgage Loan:A Mortgage Loan replaced or to be replaced by a Replacement Mortgage Loan. Delinquency Trigger Event: With respect to any Distribution Date on or after the Stepdown Date, a Delinquency Trigger Event will be in effect if the Rolling Sixty-Day Delinquency Rate for Outstanding Mortgage Loans equals or exceeds the product of (x) the Senior Enhancement Percentage for such Distribution Date and (y) the applicable percentage listed below for the most senior Class of Interest-Bearing Certificates: 18 Class Percentage A 40.00% M-1 51.97% M-2 71.82% M-3 83.60% M-4 98.75% M-5 120.61% M-6 142.34% M-7 181.61% M-8 232.35% Denomination:With respect to each Certificate, the amount set forth on the face thereof as the “Initial Certificate Balance of this Certificate” or, if not the foregoing, the Percentage Interest appearing on the face thereof, as applicable. Depositor:CWABS, Inc., a Delaware corporation, or its successor in interest. Depository:The initial Depository shall be The Depository Trust Company, the nominee of which is Cede & Co., or any other organization registered as a “clearing agency” pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.The Depository shall initially be the registered Holder of the Book-Entry Certificates.The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York. Depository Agreement:With respect to the Book-Entry Certificates, the agreement among the Depositor and the initial Depository, dated as of the Closing Date, substantially in the form of Exhibit O. Depository Participant:A broker, dealer, bank or other financial institution or other person for whom from time to time a Depository effects book-entry transfers and pledges of securities deposited with the Depository. Determination Date:With respect to any Distribution Date, the 15th day of the month of such Distribution Date or, if such 15th day is not a Business Day, the immediately preceding Business Day. Directing Certificateholder:As defined in Section 9.04(a). Distribution Account:The separate Eligible Account created and maintained by the Trustee pursuant to Section 3.05(c) in the name of the Trustee for the benefit of the Certificateholders and designated “The Bank of New York, in trust for registered Holders of CWABS, Inc., Asset-Backed Certificates, Series 2007-6”.Funds in the Distribution Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. 19 Distribution Account Deposit Date:As to any Distribution Date, 1:00 p.m. Pacific time on the Business Day immediately preceding such Distribution Date. Distribution Date:The 25th day of each month, or if such day is not a Business Day, the first Business Day thereafter, commencing in April 2007. Due Date:With respect to any Mortgage Loan and Due Period, the due date for Scheduled Payments of interest and/or principal on that Mortgage Loan occurring in such Due Period as provided in the related Mortgage Note. Due Period:With respect to any Distribution Date, the period beginning on the second day of the calendar month preceding the calendar month in which such Distribution Date occurs and ending on the first day of the month in which such Distribution Date occurs. EDGAR:The Commission’s Electronic Data Gathering, Analysis and Retrieval system. Eligible Account:Any of (i) an account or accounts maintained with a federal or state chartered depository institution or trust company, the long-term unsecured debt obligations and short-term unsecured debt obligations of which (or, in the case of a depository institution or trust company that is the principal subsidiary of a holding company, the debt obligations of such holding company, if Moody’s is not a Rating Agency) are rated by each Rating Agency in one of its two highest long-term and its highest short-term rating categories respectively, at the time any amounts are held on deposit therein, or (ii) an account or accounts in a depository institution or trust company in which such accounts are insured by the FDIC (to the limits established by the FDIC) and the uninsured deposits in which accounts are otherwise secured such that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating Agency, the Certificateholders have a claim with respect to the funds in such account or a perfected first priority security interest against any collateral (which shall be limited to Permitted Investments) securing such funds that is superior to claims of any other depositors or creditors of the depository institution or trust company in which such account is maintained, or (iii) a trust account or accounts maintained with the corporate trust department of a federal or state chartered depository institution or trust company having capital and surplus of not less than $50,000,000, acting in its fiduciary capacity or (iv) any other account acceptable to the Rating Agencies without reduction or withdrawal of their then-current ratings of the Certificates as evidenced by a letter from each Rating Agency to the Trustee.Eligible Accounts may bear interest, and may include, if otherwise qualified under this definition, accounts maintained with the Trustee. Eligible Repurchase Month:As defined in Section 3.12(d) hereof. ERISA:The Employee Retirement Income Security Act of 1974, as amended. ERISA-Qualifying Underwriting:A best efforts or firm commitment underwriting or private placement that meets the applicable requirements of the Underwriter’s Exemption. 20 ERISA-Restricted Certificates:The Class A-R Certificates, Class P Certificates, Class C Certificates and Certificates of any Class that does not have or no longer has a rating of BBB- or its equivalent, or better, from at least one Rating Agency. Escrow Account:As defined in Section 3.06 hereof. Event of Default:As defined in Section 7.01 hereof. Excess Cashflow:With respect to any Distribution Date the sum of (i) the amount remaining after the distribution of interest to Certificateholders for such Distribution Date pursuant to Section 4.04(a)(v)(b), (ii) the amount remaining after the distribution of principal to Certificateholders for such Distribution Date, pursuant to Section 4.04(b)(1)(B)(ii) or 4.04(b)(2)(B)(ii) and (iii) the Overcollateralization Reduction Amount for such Distribution Date. Excess Deposit:As defined in Section 8.11 hereof. Excess Overcollateralization Amount: With respect to any Distribution Date, the excess, if any, of the Overcollateralized Amount for such Distribution Date over the Overcollateralization Target Amount for such Distribution Date. Excess Proceeds:With respect to any Liquidated Mortgage Loan, the amount, if any, by which the sum of any Liquidation Proceeds and Subsequent Recoveries are in excess of the sum of (i) the unpaid principal balance of such Liquidated Mortgage Loan as of the date of liquidation of such Liquidated Mortgage Loan plus (ii) interest at the Mortgage Rate from the Due Date as to which interest was last paid or advanced to Certificateholders (and not reimbursed to the Master Servicer) up to the Due Date in the month in which Liquidation Proceeds are required to be distributed on the Stated Principal Balance of such Liquidated Mortgage Loan outstanding during each Due Period as to which such interest was not paid or advanced. Exchange Act:The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. Exchange Act Reports:Any reports on Form 10-D, Form 8-K and Form 10-K required to be filed by the Depositor with respect to the Trust Fund under the Exchange Act. Expense Fee Rate:With respect to any Mortgage Loan, the sum of (i) the related Servicing Fee Rate, (ii) the Trustee Fee Rate, (iii) with respect to a Covered Mortgage Loan, the applicable Mortgage Insurance Premium Rate and (iv) with respect to any Mortgage Loan covered by a lender paid mortgage insurance policy (other than the Mortgage Insurance Policy), the related mortgage insurance premium rate. Extra Principal Distribution Amount:With respect to any Distribution Date and each of Loan Group 1 and Loan Group 2, the lesser of (1) the Overcollateralization Deficiency Amount and (2) the Excess Cashflow available for payment thereof, to be allocated between Loan Group 1 and Loan Group 2, pro rata, based on the Principal Remittance Amount for each such Loan Group for such Distribution Date. 21 Fannie Mae:The Federal National Mortgage Association, a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act, or any successor thereto. FDIC:The Federal Deposit Insurance Corporation, or any successor thereto. Final Maturity Funding Cap:For any Distribution Date beginning with the Distribution Date in April 2017, the least of (i) the aggregate Certificate Principal Balance of the Interest-Bearing Certificates immediately prior to that Distribution Date, (ii) the aggregate Stated Principal Balance of all outstanding 40-Year Mortgage Loans as of the first day of the related Due Period (after giving effect to Principal Prepayments received during the Prepayment Period that ends during such Due Period) and (iii) $29,556,759. Final Maturity OC Trigger: With respect to any Distribution Date on or after the Distribution Date in April 2027, the Final Maturity OC Trigger will be in effect if and for so long as the sum of (x) the amount on deposit in the Final Maturity Reserve Fund on that Distribution Date (including any Final Maturity Reserve Deposit made on the Distribution Date) and (y) the Overcollateralized Amount for that Distribution Date (calculated after giving effect to all distributions to be made prior to the time of determination) is less than the outstanding Stated Principal Balance of all 40-Year Mortgage Loans as of the Due Date occurring in the month of that Distribution Date (after giving effect to Principal Prepayments received during the Prepayment Period ending in the same month as the Distribution Date). Final Maturity Required Deposit Trigger:With respect to any Distribution Date on or after the Distribution Date in April 2017 up to and including the Distribution Date in March 2037, the Final Maturity Required Deposit Trigger shall be in effect with respect to such Distribution Date if the aggregate Stated Principal Balance of the 40-Year Mortgage Loans as of the Due Date occurring in the month preceding the month of that Distribution Date (after giving effect to Principal Prepayments in the Prepayment Period related to that prior Due Date) is greater than the “40-Year Target” specified on the 40-Year Target Schedule for such Distribution Date. Final Maturity Reserve Deposit:For any Distribution Date on which the Final Maturity Required Deposit Trigger is not in effect, $0.For any Distribution Date on which the Final Maturity Required Deposit Trigger is in effect, an amount equal to the lesser of (a) one-twelfth of the product of (i) 0.80% and (ii) the aggregate Stated Principal Balance of the 40-Year Mortgage Loans as of the Due Date occurring in the month preceding the month of that Distribution Date (after giving effect to Principal Prepayments in the Prepayment Period related to that prior Due Date) and (b) the excess of (i) the Final Maturity Funding Cap for such Distribution Date over (ii) the amount on deposit in the Final Maturity Reserve Fund immediately prior to such Distribution Date. Final Maturity Reserve Fund:The separate Eligible Account created and initially maintained by the Trustee pursuant to Section 4.10 in the name of the Trustee for the benefit of the Certificateholders and designated “The Bank of New York in trust for registered Holders of CWABS, Inc., Asset-Backed Certificates, Series 2007-6”.Funds in the Final Maturity Reserve Fund shall be held in trust by the Final Maturity Reserve Trustee for the Certificateholders for the uses and purposes set forth in this Agreement. 22 Final Maturity Reserve Trust:The trust fund established by Section 4.10. Final Maturity Reserve Trustee:The Bank of New York, a New York banking corporation, not in its individual capacity, but solely in its capacity as final maturity reserve trustee for the benefit of the Holders of the Certificates under this Agreement, and any successor thereto, and any corporation or national banking association resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor final maturity reserve trustee as may from time to time be serving as successor final maturity reserve trustee hereunder. Five-Year Hybrid Mortgage Loan:A Mortgage Loan having a Mortgage Rate that is fixed for 60 months after origination thereof before such Mortgage Rate becomes subject to adjustment. Form 10-D Disclosure Item:With respect to any Person, any material litigation or governmental proceedings pending against such Person, or against any of the Trust Fund, the Depositor, the Trustee, any co-trustee, the Master Servicer or any Subservicer, if such Person has actual knowledge thereof. Form 10-K Disclosure Item:With respect to any Person, (a) Form 10-D Disclosure Item, and (b) any affiliations or relationships between such Person and any Item 1119 Party. Freddie Mac:The Federal Home Loan Mortgage Corporation, a corporate instrumentality of the United States created and existing under Title III of the Emergency Home Finance Act of 1970, as amended, or any successor thereto. Funding Period:The period from the Closing Date to and including the earlier to occur of (x) the date the amount in the Pre-Funding Account is less than $175,000 and (y) May 24, 2007. Funding Period Distribution Date:Each Distribution Date during the Funding Period and, if the Funding Period ends on or after the Distribution Date in a month, the immediately succeeding Distribution Date. Gross Margin:The percentage set forth in the related Mortgage Note to be added to the Index for use in determining the Mortgage Rate for each Mortgage Loan on each of its Adjustment Dates. Group 1 Mortgage Loans:The group of Mortgage Loans identified in the related Mortgage Loan Schedule as “Group 1 Mortgage Loans”, including in each case any Mortgage Loans delivered in replacement thereof. Group 1 Overcollateralization Reduction Amount: With respect to any Distribution Date, the Overcollateralization Reduction Amount for such Distribution Date multiplied by a fraction, the numerator of which is (x) the Principal Remittance Amount for Loan Group 1 for such Distribution Date, and the denominator of which is (y) the aggregate Principal Remittance Amount for Loan Group 1 and Loan Group 2 for such Distribution Date. 23 Group 1 Pre-Funded Amount:The portion of the Pre-Funded Amount allocable for purchase of Subsequent Mortgage Loans as Group 1 Mortgage Loans on the Closing Date, which shall equal $9,019,060.62. Group 2 Mortgage Loans:The group of Mortgage Loans identified in the related Mortgage Loan Schedule as “Group 2 Mortgage Loans”, including in each case any Mortgage Loans delivered in replacement thereof. Group 2 Overcollateralization Reduction Amount: With respect to any Distribution Date, the Overcollateralization Reduction Amount for such Distribution Date multiplied by a fraction, the numerator of which is the Principal Remittance Amount for Loan Group 2 for such Distribution Date, and the denominator of which is the aggregate Principal Remittance Amount for Loan Group 1 and Loan Group 2 for such Distribution Date. Group 2 Pre-Funded Amount:The portion of the Pre-Funded Amount allocable for purchase of Subsequent Mortgage Loans as Group 2 Mortgage Loans on the Closing Date, which shall equal $14,172,598.89. Index:As to any Mortgage Loan on any Adjustment Date related thereto, the index for the adjustment of the Mortgage Rate set forth as such in the related Mortgage Note, or, if the Index in the Mortgage Note ceases to be published or becomes unavailable for any reason, then the Index shall be a new index selected by the Master Servicer, based on comparable information and in accordance with the Mortgage Note and applicable law. Initial Adjustment Date:As to any Mortgage Loan, the first Adjustment Date following the origination of such Mortgage Loan. Initial Certificate Account Deposit:An amount equal to the aggregate of all amounts in respect of (i) principal of the Initial Mortgage Loans due after the Initial Cut-off Date and received by the Master Servicer before the Closing Date and not applied in computing the Cut-off Date Principal Balance thereof and (ii) interest on the Initial Mortgage Loans due after the Initial Cut-off Date and received by the Master Servicer before the Closing Date. Initial Certificate Principal Balance:With respect to any Certificate (other than the Class C Certificates) the Certificate Principal Balance of such Certificate or any predecessor Certificate on the Closing Date. Initial Cut-off Date:In the case of any Initial Mortgage Loan, the later of (x) March 1, 2007 and (y) the date of origination of such Initial Mortgage Loan. Initial Mortgage Loan:A Mortgage Loan conveyed to the Trustee on the Closing Date pursuant to this Agreement as identified on the Mortgage Loan Schedule delivered to the Trustee on the Closing Date. Initial Mortgage Rate:As to each Mortgage Loan, the Mortgage Rate in effect prior to the Initial Adjustment Date. 24 Initial Periodic Rate Cap:With respect to each Mortgage Loan, the percentage specified in the related Mortgage Note that limits the permissible increase or decrease in the Mortgage Rate on its initial Adjustment Date. Institutional Accredited Investor or IAI:An “accredited investor” as defined in any of paragraphs (1), (2), (3)and (7) of Rule 501(a) under the Securities Act or any entity in which all of the equity owners come within such paragraphs. Insurance Policy:With respect to any Mortgage Loan included in the Trust Fund, any insurance policy, including the Mortgage Insurance Policy and all riders and endorsements to the Mortgage Insurance Policy in effect with respect to such Mortgage Loan, including any replacement policy or policies for any Insurance Policy. Insurance Proceeds:Proceeds paid in respect of the Mortgage Loans pursuant to any Insurance Policy or any other insurance policy covering a Mortgage Loan, to the extent such proceeds are payable to the mortgagee under the Mortgage, the Master Servicer or the trustee under the deed of trust and are not applied to the restoration of the related Mortgaged Property or released to the Mortgagor in accordance with the procedures that the Master Servicer would follow in servicing mortgage loans held for its own account, in each case other than any amount included in such Insurance Proceeds in respect of Insured Expenses and received either prior to or in connection with such Mortgage Loan becoming a Liquidated Mortgage Loan. Insured Expenses:Expenses covered by an Insurance Policy or any other insurance policy with respect to the Mortgage Loans. Interest-Bearing Certificates:The Class A Certificates and the Subordinate Certificates. Interest Carry Forward Amount:With respect to each Class of Interest-Bearing Certificates and each Distribution Date, the excess of (i) the Current Interest for such Class with respect to prior Distribution Dates over (ii) the amount actually distributed to such Class with respect to interest on such prior Distribution Dates. Interest Determination Date:With respect to the first Accrual Period for the Interest-Bearing Certificates, March 28, 2007.With respect to any Accrual Period for the Interest-Bearing Certificates thereafter, the second LIBOR Business Day preceding the commencement of such Accrual Period. Interest Funds:With respect to any Distribution Date and Loan Group, the Interest Remittance Amount for such Loan Group and Distribution Date, less the portion of the Trustee Fee for such Distribution Date allocable to such Loan Group, plus the Adjusted Replacement Upfront Amount, if any, allocable to that Loan Group, less the Mortgage Insurance Premiums for the Covered Mortgage Loans in that Loan Group for such Distribution Date. 25 Interest Remittance Amount:With respect to the Mortgage Loans in each Loan Group and any Distribution Date, (x) the sum, without duplication, of (i) all scheduled interest collected during the related Due Period with respect to the related Mortgage Loans less the related Servicing Fee, (ii) all interest on prepayments received during the related Prepayment Period with respect to such Mortgage Loans, other than Prepayment Interest Excess, (iii) all related Advances relating to interest with respect to such Mortgage Loans, (iv) all related Compensating Interest with respect to such Mortgage Loans, (v) Liquidation Proceeds with respect to such Mortgage Loans collected during the related Due Period (to the extent such Liquidation Proceeds relate to interest), (vi) in the case of the first Distribution Date, any Seller Interest Shortfall Payments with respect to the Initial Mortgage Loans in such Loan Group, and in the case of each Distribution Date occurring in a calendar month following any Subsequent Transfer Date, any Seller Interest Shortfall Payments for the Subsequent Mortgage Loans in such Loan Group conveyed on such Subsequent Transfer Date, and (vii) in the case of each Funding Period Distribution Date, the portion of the Capitalized Interest Requirement for such Distribution Date allocable to such Loan Group, if any, less (y) all reimbursements to the Master Servicer during the related Due Period for Advances of interest previously made allocable to such Loan Group. Investment Letter:As defined in Section 5.02(b). ISDA Master Agreement:The 1aster Agreement (Multicurrency –

U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2007 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission File No. 000-52682 AFH Holding II, Inc. (Name of Small Business Issuer in its charter) Delaware (State or other jurisdiction of (I.R.S. employer incorporation or formation) identification number) 9595 Wilshire Blvd. Suite 900 Beverly Hills, CA 90212 (Address of principal executive offices) Issuer’s telephone number:(310) 300-3431 Issuer’s facsimile number: (310) 300-3412 No change (Former name, former address and former fiscal year, if changed since last report) Copies to: AFH Holding II, Inc. 9595 Wilshire Blvd.,Suite 900 Beverly Hills, CA 90212 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of September 30, 2007: 5,000,000 shares of common stock. Item 1.Financial Statements. AFH HOLDING II, INC. FINANCIAL STATEMENTS (Unaudited) September 30, 2007 AFH HOLDING II, INC. (A Development Stage Enterprise) INDEX TO INTERIM AND UNAUDITED FINANCIAL STATEMENTS September 30, 2007 (Unaudited) Page Financial Statements: Balance Sheet F−1 Statements of Operations F−2 Statements of Stockholder’s Equity F−3 Statements of Cash Flows F−4 Notes to Financial Statements F-5

EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. 1350 In connection with the Quarterly Report of Akorn, Inc. (the “Company”) on Form 10-Q for the period ended September30, 2010, as filed with the Securities and Exchange Commission and to which this Certification is an exhibit (the “Report”), the undersigned officer of the Company does hereby certify, pursuant to Section1350 of Chapter63 of Title 18 of the United States Code (18 U.S.C. 1350) and Rule13a-14(b) promulgated under the Securities Exchange Act of 1934 (17 CFR 240.13a-14(b)), that to my knowledge: (1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 9, 2010 /s/ TIMOTHY A. DICK Timothy A. Dick Chief Financial Officer

EXHIBIT 10.20 Conformed Copy CONTRACT OF SALE           THIS CONTRACT OF SALE (this "Contract") is made and entered as of May 23, 2003 (the "Effective Date") by and between SEAWAY FOOD TOWN, INC., a Michigan corporation, GRUBER'S FOOD TOWN, INC., a Michigan corporation, BUCKEYE REAL ESTATE MANAGEMENT CO., an Ohio corporation, and GRUBER'S REAL ESTATE, LLC, a Michigan limited liability company (together "Seller"), on the one part, and THE KROGER CO., an Ohio corporation ("Buyer") on the other part. I.          Seller is the owner or lessee of thirteen (13) stores listed on Exhibit A and Exhibit B attached hereto (the "Stores"). II.          Seller desires to sell all of Seller's right, title and interest in and to the Stores and related assets, and Buyer desires to purchase the Stores and related assets from Seller, for the consideration and on the terms and           For and in consideration of the mutual covenants and agreements contained in this Contract and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows: 1.          PURCHASE, SALE AND ASSIGNMENT: Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property (hereinafter defined) for the consideration and upon and subject to the terms, provisions and conditions hereinafter set forth. The "Property" means:           (a)          (i) The land upon which the Stores described in Exhibit A are located (the "Land"), the legal descriptions of which are attached as Exhibit A-1, together with all of Seller's right, title and interest in the improvements situated on the Land and in all other structures, buildings and improvements situated on the Land (the Land and such buildings, structures, and improvements situated on the Land being herein called the "Owned Store Properties"); and (ii) all of Seller's right, title and interest as lessee under those certain leases for the Stores described on Exhibit B hereto, which leases are listed on Exhibit B-1 attached hereto (the "Store Leases"), together with all of Seller's right, title and interest in and to the buildings, structures and improvements situated on the real property leased under the Store Leases (Seller's right, title and interest in and to the real property leased under the Store Leases and the buildings, structures and other improvements situated thereon being herein called the "Leased Store Properties") (the Owned Store Properties and the Leased Store Properties are herein collectively called the "Store Properties"); together with all of Seller's right, title and interest in any and all rights, titles, privileges, easements, licenses, rights-of-way and interests appurtenant to the Store Properties;           (b)          The food and general merchandise inventory owned by Seller located at, or otherwise held for sale, at the Stores (the "Inventory") as set forth in Section 3 below;           (c)          The furniture, trade fixtures, bascarts, furnishings, machinery and equipment located in, at or upon the Stores on the Closing Date (as hereinafter defined) ("FF&E") but excluding the items listed on Exhibit C attached hereto;           (d)          All of Seller's right, title and interest in all leases by Seller as landlord of the Owned Store Properties or as sublandlord of the Leased Store Properties listed on Exhibit D attached hereto (the "Tenant Leases");           (e)          To the extent assignable, all of Seller's right, title and interest in the agreements listed on Exhibit E attached hereto, and all other cleaning, maintenance, utility, service or similar contracts or agreements relating to the operation of the Stores and the Property ("Service Contracts") in the ordinary course of business, that Buyer elects to assume in writing prior to the end of the Feasibility Period (as hereinafter defined). Seller shall cancel, at or before Closing (as hereinafter defined), any other service contracts of Seller related exclusively to the Stores or the Property that Buyer does not so elect to assume;           (f)          All of Seller's interest in all transferable licenses, permits and approvals to the extent they relate exclusively to the operation of the Stores and the Property, but only if and to the extent legally assignable (the "Permits");           (g)          All of Seller's right, title and interest in the pharmacy prescription files ("Files") maintained at any Store operating a pharmacy;           (h)          All of Seller's right, title and interest in any transferable warranties relating exclusively to the Store Properties and the FF&E; and           (i)          All of Seller's right, title and interest in any construction drawings, plans and specifications and/or other drawings and maintenance records applicable exclusively to the Store Properties.           Notwithstanding anything to the contrary set forth in Section 1 and without limitation, the following property, rights and interests are excepted and excluded from the Property and shall be retained by Seller (collectively, the "Excluded Assets"):   (i) All cash, notes, accounts receivable and refunds of prepaid expenses;         (ii) Any equipment or other assets listed on the "Retained Equipment List" attached hereto as Exhibit C, and any vendor-owned equipment;         (iii) Any inventory ordered prior to the Closing Date (hereinafter defined) but delivered after the Closing Date unless Buyer elects to pay for the same;         (iv) All of Seller's trade names, trademarks and service marks relating to the Stores but excluding any shopping center names which do not have the word "Food Town" as a part thereof,         (v) Seller's software (but excluding any pharmacy records required by law to be delivered to the Buyer); and 2         (vi) Seller's signs and any equipment displaying the "Food Town" logo from which the logo cannot be removed without disabling or injuring the equipment.         (vii) The items of inventory excluded from this sale under the provisions of Section 3. All Excluded Assets shall be removed from the Stores by Seller, at Seller's expense on or before five (5) business days immediately following the Closing Date (as herein defined) except for excluded inventory, which Seller shall use reasonable efforts to remove from the Stores by Seller, at Seller's expense, prior to taking an inventory count as hereinafter provided. Promptly following to taking an inventory count, Seller shall segregate vender-owned equipment in a location of such Store not open to customers, until such equipment is removed in a manner consistent with the foregoing sentence. Buyer may store, use or dispose of any Excluded Assets which are not timely removed in such manner as Buyer deems appropriate, at Seller's risk and expense. Notwithstanding the foregoing, Seller shall cooperate with Buyer's efforts to coordinate the removal of Seller's signs from the Stores and the installation of Buyer's signs on the Stores. Prior to the Closing, Buyer shall obtain and provide to Seller a detailed estimate of the cost of such removal at each of the Stores for which Buyer desires to coordinate the removal and installation of signs. If Seller approves such cost estimate, which approval shall not be unreasonably withheld, then Buyer shall remove Seller's signs from the Stores covered by the approved cost estimate, and Seller shall reimburse Buyer for the cost of such removal up to the amount of the approved cost estimate. 2.          [Intentionally Omitted] 3.          PHYSICAL INVENTORY: The value assigned to the Inventory shall be determined pursuant to a physical inventory of the Stores taken by a team of RGIS or Keller (as most recently used by the particular Store) inventory takers (the "Inventory Service"), as set forth in Section 6 below (or such other date and time as the parties shall mutually agree upon). Representatives of Buyer and Seller shall be present at the taking of the physical inventories to settle all disputes as to damaged, obsolete, unsalable or other items not to be included in the Inventory. All damaged or unsalable inventory, consigned inventory, inventory with expired "pull dates," prescription drugs carrying an expiration date that is within sixty (60) days after the Closing Date (as hereinafter defined), and so-called "private label" inventory of Seller, and any other items listed on Exhibit F attached hereto shall be excluded from the Inventory schedule and shall be removed by Seller prior to the Closing (as hereinafter defined). Buyer acknowledges and agrees that during the 30-day period preceding the Closing, Seller is permitted to sell-down its inventory not included in the Inventory to be purchased by Buyer under this Contract. Buyer and Seller shall each pay one-half of the costs for the services of the inventory takers. Buyer and Seller agree that all economic operations of the Stores and all deliveries of Inventory to the Stores from and after the Closing Date shall be for the account of Buyer or Buyer's designee, as the case may be, except that which was ordered by Seller, such that any Inventory ordered by Seller prior to the Closing Date, but which does not arrive until after the Closing Date, shall be the 3 property of Seller. The sales price for the Inventory shall be determined as set forth on Exhibit F. Buyer and Seller agree to execute, effective as of the Closing Date, a resale certificate(s) for the Inventory if required by the State of Ohio or Michigan, as applicable. As soon as practicable following completion of the taking of the physical inventories of the Store, the Inventory Service shall prepare and furnish to Seller and Buyer a detailed accounting of the computation of the value of the Inventory for the Stores, taking the results of the physical counts of the Inventory and applying the formulas set forth on Exhibit F. Seller and Buyer shall then have five (5) business days after its receipt of such detailed accounting in which to examine such accounting, during which time Buyer and Seller shall reasonably cooperate to resolve any computational errors or discrepancies. If Seller and Buyer are unable to resolve any such errors or discrepancies on mutually agreeable terms, then the matter shall be submitted to the Inventory Service for final determination, which determination shall be binding upon Seller and Buyer and not subject to further review. 4.          CONTRACT SALES PRICE: The total purchase price (the "Sales Price") for the Property, excluding Inventory, shall be TWENTY-TWO MILLION and 00/100 DOLLARS ($22,000,000.00), payable in cash at the Closing (as hereinafter defined), as allocated on Exhibit G attached hereto and incorporated herein, plus or minus the prorated amounts described in Section 6 and any other adjustments described herein. In addition, at the Closing, Buyer shall pay to Seller in cash the Inventory value based on the preliminary accounting prepared by the Inventory Service following completion of the physical count, less any amount disputed by Buyer (the "Preliminary Inventory Amount"). Within five (5) days following determination of the final Inventory value as provided in Section 3, if the final Inventory value exceeds the Preliminary Inventory Amount, then Buyer shall pay to Seller in cash the difference; if the Preliminary Inventory Amount exceeds the final Inventory value, then Seller shall pay to Buyer in cash the difference. Payment in cash shall mean by wire transfer of immediately available federal funds ("Immediately Available Funds"). 5.          [Intentionally Omitted] 6.          CLOSING:           (a)           (1)           The closing of Seller's sale of the Property to Buyer (the "Closing") shall be conducted by the Title Company (hereinafter defined) through the mail (or such other manner or place as may be mutually agreed to by the parties) in two stages. The first Closing shall occur on Friday, June 20, 2003 (the "Initial Closing Date") and the second Closing shall occur one week later (the "Subsequent Closing Date"), provided that such dates may be extended upon the request of Seller for an additional period of time or periods of time not beyond Monday, July 28, 2003 as reasonably necessary to (i) allow for the fulfillment of any condition to Closing which has not been satisfied or waived by the applicable party to which such condition applies or (ii) correct a Material Defect or Material Title Defect. The three Stores listed on Exhibit B (and the Property related to such Stores) shall be transferred on the Initial Closing Date and the remaining ten Stores listed on Exhibit A (and the Property related to such Stores) shall be transferred on the Subsequent Closing Date. The Initial Closing Date and the 4 Subsequent Closing Date shall be deemed a "Closing Date" with respect to the Stores (and related Property) which are to be transferred on such date.                     (2)          The Closing shall be conducted, pro-rations determined and possession delivered in accordance with the following procedures:   (i) On the Wednesday prior to the Initial Closing, Seller and Buyer shall put into escrow with Chicago Title Insurance Company ("Title Company") the net amount due from Buyer at Closing according to the Settlement Statement and all Closing documents required to be delivered pursuant to the terms of this Contract for all the Stores.         (ii) On the Wednesday preceding the applicable Closing Date, the Stores to be transferred on such Closing Date shall be closed at 6:00 p.m. eastern time (no Inventory shall be sold or delivered) and the parties shall cause the Inventory to be counted in accordance with the terms and conditions of this Contract (including Exhibit C). At the conclusion of the inventory count, all keys, combinations to safes, and passwords for the Stores shall be delivered to authorized personnel of Buyer ("Possession Date"), and Buyer shall immediately make their own arrangements to have the locks changed.         (iii) All pro-rations shall be calculated as of the Closing Date, in accordance with the other terms and conditions of this Contract.         (iv) Exclusive possession of the Property shall transfer as of the Possession Date, subject only to the Permitted Exceptions and the Tenant Leases.         (v) The Deeds and other documents put into escrow relating to a Store shall be disbursed out of escrow and recorded (where necessary) on the Closing Date for such Store; and on such date, the net amount due Seller according to the Settlement Statement for such Store shall be disbursed by the Title Company to Seller.         (vi) The Title Company shall invest the funds escrowed by the Buyer in such manner as the Buyer may direct for the period of time the Title Company holds any or all of such funds in escrow. After Closing, the Title Company shall deliver any interest so earned to the Buyer.         (vii) Seller shall bear the risk of loss for all Property relating to a Store up and until conclusion of the inventory count on the Possession Date.         (viii) The parties agree to reasonably cooperate to effect the turnover of the Stores. Buyer shall be permitted to commence conversion operations at a particular Store following the closing of the Store for the physical inventory. 5           (b)          At the Closing, Seller shall deliver to Buyer, at Seller's sole cost and expense, the following, unless such delivery shall occur earlier, as provided below:     (1) duly executed and acknowledged Limited Warranty Deeds in the form mutually agreed upon by the parties (the "Deeds") conveying good and marketable title in fee simple to the Owned Store Properties, by reference to the "historical" legal description or other legal description reasonably acceptable to Buyer and Seller, subject to: (i) the Permitted Exceptions, (ii) easements and restrictions of record, (iii) roads and public rights of way, (iv) real estate taxes and installments of assessments not due and payable as of the Closing Date, (v) zoning laws and ordinances, (vi) exceptions caused by the acts or omissions of Buyer, (vii) matters approved, assumed or waived by Buyer, (viii) matters insured by the Title Company, and (ix) such state of facts as would be shown on an accurate ALTA/ASCM Land Title Survey (nothing contained in this subsection shall affect Buyer's right to object to Material Title Defects in accordance with Section 8(a) below or to refuse to close because the condition set forth in Section 18(e) has not been satisfied);             (2) an Assignment and Assumption of Leasehold Agreement in substantially the form attached hereto as Exhibit I (the "Assignment and Assumption of Leasehold") duly executed and acknowledged by Seller, whereby Seller assigns all of Seller's right, title and interest to the Leased Store Properties to Buyer and Buyer agrees to assume all obligations of Seller under the applicable Store Lease from and after the Closing Date;             (3) duly executed bills of sale in the form mutually agreed upon by the parties (the "Bills of Sale") covering FF&E and Inventory;             (4) an Assignment and Assumption of Contracts in substantially the form attached hereto as Exhibit K (the "Assignment and Assumption of Contracts") duly executed and acknowledged by Seller, whereby each of the Service Contracts agreed to be assumed by Buyer are assigned to Buyer and whereby the assignable Permits and any assignable warranties, guaranties and bonds are assigned to Buyer and Buyer agrees to assume all obligations under such Service Contracts, Permits and warranties arising from and after the Closing Date;             (5) an Assignment and Assumption of Leases in substantially the form attached hereto as Exhibit L (the "Assignment and Assumption of Tenant Leases") whereby each of the Tenant Leases applicable to a Store Property are assigned to Buyer and Buyer agrees to assume all obligations of the Seller under the Tenant Leases which arise from and after the Closing Date (subject to Section 6(h)); 6     (6) evidence of its capacity and authority for the Closing of the transaction contemplated herein;             (7) a non-foreign affidavit as permitted by Section 1445 of the Internal Revenue Code, as amended, and the regulations promulgated thereunder;             (8) a Settlement Statement executed by the parties showing the Sales Price adjusted by the prorations, costs, and other adjustments required by this Contract ("Settlement Statement");             (9) All original Permits, which if located at the Store, shall remain at the Store; and             (10) such other documents as may be reasonably required to close this transaction, duly executed, and in a form and substance reasonably satisfactory to Seller and Buyer, including, without limitation, any required Title Company affidavits, Closing certificates, recording affidavits and/or other items routine for a closing of this nature or necessary for the Title Company to remove any standard exceptions in its final title policies;   (c) At the Closing, Buyer shall perform and deliver, at Buyer's sole cost and expense, the following:     (1) the Sales Price subject to prorations and adjustments as provided in this Contract, in Immediately Available Funds;             (2) the Assignment and Assumption of Leasehold duly executed by Buyer;             (3) the Assignment and Assumption of Contracts duly executed by Buyer.             (4) the Assignment and Assumption of Tenant Leases duly executed by Buyer;             (5) evidence of its capacity and authority for the closing of the transaction contemplated herein;             (6) the Settlement Statement; and             (7) duly executed and in form and substance reasonably satisfactory to Seller and Buyer. 7           (d)          Seller shall pay 1/2 of any escrow fee arising from the transactions contemplated hereby, and with respect to the Owned Store Properties, 1/2 of the abstracting and title examination costs, title commitment fees, and title premiums with respect to the Owned Store Properties, 1/2 of the transfer tax and conveyance fees, and all of Seller's attorneys' fees and other expenses stipulated to be paid by Seller under other provisions of this Contract. Buyer shall pay all of the Survey costs, and all of the costs of any abstracting and title examination costs, title commitment fees, and title premiums with respect to the Leased Store Properties. Buyer shall pay 1/2 of any escrow fee, 1/2 of the abstracting and title examination costs, title commitment fees, and title premiums for the owner's title policies, 1/2 of the transfer tax and conveyance fees, and all of the costs of any endorsement to the owner's title policies and leasehold title policies (other than as required to correct a Material Title Defect), the recording fees for the Deeds, UCC search costs, Buyer's attorneys' fees, and other expenses stipulated to be paid by Buyer under other provisions of this Contract.           (e)          Seller shall pay all property taxes and installments of assessments with respect to the Owned Store Properties that are due and payable as of the Closing Date. With respect to the Owned Store Properties located in Michigan, property taxes and installments of assessments shall be prorated to the Closing Date as provided in Section 211.2 of the Michigan Compiled Laws, as if paid in advance for the twelve (12) month period succeeding the date they first are billed and become due and payable. With respect to the Owned Store Properties located in Lucas County, Ohio, property taxes and installments of assessments shall be prorated from the last due and payable date to the date of Closing. With respect to all other Owned Store Properties located in Ohio, Seller shall be responsible for all unpaid taxes and installments of assessments for the year prior to Closing and taxes and installments of assessments for the year of Closing shall be prorated from January 1st to and including the date of Closing. Subject to the prorations described above, Buyer shall be responsible for all real property taxes and installments of assessments not yet due and payable including, but not limited to, deferred installments not yet payable of assessments that are a lien on the Owned Store Property on the Closing Date.           (f)          Common area maintenance charges and assessments, taxes, rent, and other lease payments payable by Seller with respect to the Leased Store Properties, to the extent paid for by Seller or required to be paid for by Seller for a period after Closing, shall be prorated as of the Closing Date. CAM charges, insurance, utilities and taxes that have been billed by landlord(s), if any, as to the Leased Store Properties for the period prior to the Closing Date, and which Seller has not otherwise paid or pro-rated at Closing, shall be a continuing obligation of Seller which shall survive Closing. If, under the terms of the applicable Store Lease, Buyer is required to pay percentage rent for any period that includes the Closing Date, then Seller shall pay its pro rata share of such percentage rent based on the sales made by Seller from the applicable Store prior to the Closing Date. For purposes of such proration, the minimum sales base specified in the applicable Store Lease shall be prorated between Seller and Buyer based on the number of days in such period before and after the Closing Date. Subject to the pro rations referred to above, in connection with the Store Leases for Fremont and Suder Avenue in Toledo, Seller shall have the right to collect and retain all reimbursements owed to Seller by landlord or another tenant for common 8 area maintenance and insurance costs, assessments and taxes, and other reimbursable costs incurred by Seller for the period prior to the Closing Date.           (g)          Utilities and other customarily prorated expenses, including but not limited to water, sewer, gas, electricity, trash removal and fire protection service if such utilities cannot be transferred as of the Closing Date, and the Service Contracts, to the extent paid for by Seller or required to be paid for by Seller for a period after Closing, shall be prorated as of the Closing Date. Buyer shall arrange and bear all responsibility to arrange with all utility companies to have accounts styled in Buyer's name beginning on the Closing Date; provided, however, that Seller shall use its prompt and reasonable efforts to cooperate with Buyer in the transfer of such utilities to Buyer, including, without limitation, making reasonable efforts to obtain final meter readings and executing any documentation required to assign the existing telephone numbers for the Stores to Buyer. Seller shall remain responsible for any payments due to third-parties attributable to the period prior to the Closing; provided, however, that within thirty (30) days after the Closing Date, Buyer shall reimburse Seller for any portion of such payments for utilities and Service Contracts assumed by Buyer attributable to the period           (h)          Security deposits paid by tenants under Tenant Leases shall be transferred to Buyer. Rents due from tenants under Tenant Leases, if applicable, and operating expenses and/or taxes payable by tenants under Tenant Leases, if applicable, shall be apportioned as of the Closing Date on the basis of the period for which the same is payable and if, as and when collected, as follows:                     (1)          With respect to any parcel of Owned Store Property that contains a free standing Store (that is, a Store that is not part of a shopping center), the following provisions shall apply: All base rent, percentage rent, additional rent and similar charges collected in advance by Seller under the terms of the Tenant Leases shall be prorated between Buyer and Seller as of the Closing Date. To the extent that either party receives any payment of base rent, percentage rent, additional rent and/or other charges after the Closing Date, the same will be paid to or retained by the Parties in accordance with the terms of the Tenant Leases and this Section 6(h)(1). At Closing, base rent shall be prorated as of the Closing Date. Percentage rent will be separately prorated based on the percentage rents actually collected by Buyer and Seller. Such proration will be made separately for each tenant who is obligated to pay percentage rent for any period that includes the Closing Date. Any percentage rent received from a tenant after the Closing Date will be applied as follows: (i) Buyer will be entitled to a prorata portion of such percentage rent payment based on the number of days within the period on or after the Closing Date and (ii) Seller will be entitled to a prorata portion of such percentage rent payment based on the number of days within the period prior to the Closing Date. A party receiving any percentage rent from a tenant after the Closing Date shall promptly forward payment of the appropriate prorated portion to the other party. Any additional rent or similar charges received from a tenant after the Closing Date for charges incurred by Seller shall be retained by or forwarded by Buyer to Seller (as the case may be). 9                     (2)          With respect to any parcel of Owned Store Property that contains a Store that is part of a shopping center, the following provisions shall apply: All base rent shall be prorated between Buyer and Seller as of the Closing Date. Percentage rent will be separately prorated based on the percentage rents actually collected by Buyer and Seller. Such proration will be made separately for each tenant who is obligated to pay percentage rent for any payment year that includes the Closing Date. Any percentage rent received from a tenant after the Closing Date will be applied as follows: (i) Buyer will be entitled to a prorata portion of such percentage rent payment based on the number of days within the payment year on or after the Closing Date and (ii) based on the number of days within the payment year prior to the Closing Date. A party receiving any percentage rent from a tenant after the Closing Date shall promptly forward payment of the appropriate prorated portion to the other party. Buyer shall apply rent and other income received from tenants under Tenant Leases after Closing in the following order of priority: (i) first, to base rent first coming due after Closing and applicable to the period of time after Closing, which amount shall be retained by Buyer (ii) second, to payment of the current base rent then due for the month in which the Closing Date occurs, which amount shall be apportioned between Buyer and Seller as of the Closing Date (with Seller's portion thereof to be delivered to Seller); (iii) third, to delinquent base rent which was due and payable as of Closing but not collected by Seller as of Closing, which amount shall be delivered to Seller; and (iv) thereafter, to other tenant receivables for operating expenses and/or taxes payable by tenants under Tenant Leases before or after the Closing Date ("Other Tenant Receivables"). After the Closing Date, Seller shall provide a statement to Buyer setting forth the amount of estimated payments received from tenants under the Tenant Leases with respect to any payment period that includes the Closing Date, and a statement of the operating expenses and/or taxes incurred by Seller with respect to the same payment period. Such statement of operating expenses and/or taxes may include all amounts paid or incurred by Seller regardless of whether such amounts were billed to or paid by Seller before or after the Closing Date. Buyer shall incorporate such statements into the final reconciliation or determination of operating expenses and/or taxes due under the Tenant Leases for such payment period. If the final reconciliation or determination of operating expenses and/or taxes due under the Tenant Leases shows that a net amount is owed by Seller to Buyer, Buyer's pro rata portion shall be paid by Seller to Buyer within ten (10) business days of such final determination under the Tenant Leases. If the final determination of operating expenses and/or taxes due under the Tenant Leases shows that a net amount is owed by Buyer to Seller, Buyer shall, within ten (10) business days of such final determination, remit to Seller Seller's portion of operating expenses and/or taxes for the period up to and including the Closing Date, if, as and when received. If the amount of Other Tenant Receivables received from tenants under the Tenant Leases is not sufficient to pay the entire deficiency owed by such tenants to Seller and Buyer for their respective periods of ownership before and after the Closing Date, the amounts received shall be prorated between Seller and Buyer based on the total amount owed by such tenants to Seller and Buyer. Buyer agrees to receive and hold any monies received on account of such Other Tenant Receivables in trust for Seller and to pay same promptly to Seller as aforesaid. Notwithstanding the foregoing, Seller shall have the right to pursue the collection of Other Tenant Receivables for a period of one (1) year after Closing without prejudice to 10 Seller's rights or Buyer's obligations hereunder, provided, however, Seller shall have no right to cause any such tenant to be evicted or to exercise any other "landlord" remedy (as set forth in such tenant's Tenant Lease) against such tenant other than to sue for collection. Seller expressly agrees that if Seller receives any amounts after the Closing Date which are attributable, in whole or in part, to any period after the Closing Date, Seller shall remit to Buyer that portion of the monies so received by Seller to which Buyer is entitled within ten (10) business days after receipt thereof. With respect to by Seller as of Closing and Other Tenant Receivables, Buyer covenants and agrees to (A) bill the same when billable and (B) reasonably cooperate with Seller to determine and collect the correct amount of such delinquent base rent and Other Tenant Receivables due from tenants under the Tenant Leases. The Parties acknowledge that notwithstanding the terms of the Tenant Leases, all monthly payments made by tenants for estimated operating costs and/or taxes have been collected and reconciled by Seller on a calendar-year basis.           (i)          Seller agrees to pay or discharge at or prior to Closing all leasing commissions under any brokerage or leasing commission agreements, costs for tenant improvements, legal fees and other costs and expenses (collectively, "Leasing Costs") that are due with respect to Tenant Leases in force as of or prior to the Closing Date. As of Closing, Buyer shall assume Seller's obligations for Leasing Costs incurred with respect to Tenant Leases and Tenant Lease renewals and extensions executed subsequent to the Closing Date.           (j)          Seller shall deliver to each tenant under the Tenant Lease immediately after the Closing a notice regarding the sale, the form of which shall be reasonably acceptable to Buyer.           (k)          Within a commercially reasonable period of time after Closing but in no event more than three (3) weeks after Closing, Seller shall deliver to Buyer all of its (i) maintenance and inspection records applicable to the Stores and/or the FF&E and (ii) such other documents and files which Buyer may reasonably request which are not proprietary to Seller.           The provisions of Section 6 shall survive Closing. 7.          FEASIBILITY STUDY AND INSPECTION, TERMINATION RIGHT:           (a)          Subject to the terms and conditions of the Tenant Leases, Buyer shall conduct such engineering studies and physical inspections of the Stores and the Store Properties that Buyer deems necessary, including, without limitation, environmental site assessments (collectively, the "Feasibility Study") during the period (the "Feasibility Period") commencing on the Effective Date of this Contract and ending at 5:00 p.m., eastern time on the date that is thirty (30) days after the Effective Date of this Contract. After Seller has received advance notice (which may be by facsimile) sufficient to permit it to schedule in an orderly manner Buyer's examination of the Stores, Buyer or its designated agents may enter upon the Stores during such hours as may be reasonably agreed to by Seller's representative during the Feasibility Period for 11 purposes of analysis or other tests and inspections which may be deemed necessary by Buyer for the Feasibility Study. Buyer shall not be required to give more than twenty-four (24) hours' notice to examine the Stores. Buyer's notice shall state the dates on which Buyer shall inspect the Stores. Seller agrees to make its designated representatives available for such inspections. Seller shall have the right to accompany Buyer and/or its representatives during all inspections and any employee interviews (which interviews shall not be permitted without the pre-approval of Seller through its designated contact). Buyer shall not alter the physical condition of a Store without notifying Seller of its requested tests and obtaining the written consent of Seller to any physical alteration of the Store. Seller agrees to cooperate with Buyer to accommodate all inspections reasonably requested by Buyer during the Feasibility Period.           (b)          In the event that the Feasibility Study, in the reasonable judgment of Buyer, based on the operating standards of other similarly situated properties in Buyer's chain, discloses a Material Defect (as hereinafter defined), then Buyer shall notify Seller of the Material Defect in writing (the "Material Defect Notice") no later than the last day of the Feasibility Period (time being of the essence with respect thereto). A "Material Defect" with respect to any individual Store and related Store Property is defined as defect(s) in the condition of the structure (including roof), equipment, plumbing, electrical or mechanical systems, or parking lot or other building included in such Store Property (each a "Store Component"), or an environmental condition affecting such Store Property that would materially and adversely affect the value of such Store Property, but only to the extent that such defect(s) for such Store Property would cost more than $75,000, in the aggregate, to correct. Notwithstanding the foregoing, the term "Material Defect" shall not be deemed to include (i) reasonable wear and tear or other conditions related to the age of any Store Component, unless such Store Component is in immediate need of replacement due to the imminent failure thereof prior to the Closing Date, or (ii) any condition that is within the maintenance obligations of the landlord under the terms of any of the Store Leases; and if equipment is not working (and has not otherwise been repaired or replaced by Seller), then the correction cost shall be included in the calculation of the $75,000 referenced in the preceding sentence. The Material Defect Notice, in order to be effective, must include (i) a reasonably sufficient description of the Material Defect(s), (ii) the recommended form of correction, and (iii) a reasonable estimate of the cost involved in order to correct the same provided by an independent architect, engineer or contractor (the "Cost Estimate"). Buyer shall pay the first $75,000, in the aggregate, of the cost of correction of the Material Defect(s) for each Store Property. If the Material Defect(s) for a Store Property would cost more than $75,000, in the aggregate, to correct (according to the Cost Estimate), Seller shall pay the next $75,000 of the cost of correction up to the amount of the Cost Estimate, but only to the extent that such cost is not recoverable by Buyer under Tenant Leases. In lieu of paying the cost of correction, Seller may replace any Store Component with a reasonably comparable used Store Component supplied by Seller. If Seller corrects the Material Defect(s) prior to the Closing Date, Buyer shall pay its share of the cost of such correction on or before the Closing Date. If Seller does not correct the Material Defect(s) on or before the Closing Date, Seller agrees that an amount equal to 100% of Seller's share of the Cost Estimate (less any amount recoverable by Buyer under Tenant Leases) will be placed in escrow until such Material Defect(s) are corrected. If the Material Defect(s) are not corrected by Seller within sixty 12 (60) days after the Closing Date, subject to force majeure, then Buyer shall make the corrections and deduct Seller's share of the cost of such corrections (up to the amount of the Cost Estimate) from the escrow account. Any proceeds remaining in the escrow account following the earlier of (i) the correction of the Material Defect(s) or, (ii) the first anniversary of the Closing Date, shall be released to Seller. If Seller and Buyer cannot agree on the form or cost of correction, such dispute shall be submitted to an engineer mutually agreeable to the parties, the expense of which shall be borne equally by the parties. The engineer shall decide which form of correction is the most cost-effective solution based on the age and condition of the Store Property and such decision shall be binding upon the parties. Notwithstanding anything to the contrary contained in this Section 7(b), if the Material Defect(s) for a Store Property would cost more than $150,000, in the aggregate, to correct, and Seller elects not to pay any cost of correction in excess of $150,000, Seller shall give written notice of such election to Buyer. Buyer may exclude such Store Property in accordance with Section 25 by giving Seller written notice within five (5) business days of Seller's notification of its intent not to pay any cost of correction in excess of $150,000. If Buyer does not give such notice to Seller, then Buyer shall purchase the Store at the Closing. If any equipment located in the Stores is in working order at the time of Kroger's completion of the Feasibility Study, but breaks down prior to the Closing, Seller shall either repair or replace such equipment prior to the Closing (and may replace such equipment with reasonably comparable used equipment supplied by Seller).           (c)          Except as otherwise may be set forth herein, the Feasibility Study shall be at Buyer's expense. Buyer shall promptly restore the Stores and the FF&E to their condition prior to Buyer's entry thereon if damaged or changed due to the tests and inspections performed by Buyer, free of any mechanic's or materialmen's liens or other encumbrances arising out of any of the inspections or tests, and shall provide Seller, at no cost to Seller, without warranty or representation by Buyer of any kind, a copy of the results of any tests and inspections made by Buyer, its agents, independent contractors, servants and/or employees (collectively, "Buyer's Related Parties"). Prior to Closing, Buyer shall keep confidential the results of any tests and inspections made by Buyer, and shall not disclose such results to any third parties, other than Buyer's partners, employees and agents and prospective lenders, partners, engineers, prospective tenants and/or purchasers, all of whom shall similarly keep such information confidential, except disclosure required under force of law. Buyer hereby indemnifies and holds Seller harmless from all claims, liabilities, damages, liens, losses, costs, expenses (including, without limitation, reasonable attorneys' fees), actions and causes of action arising out of the tests and inspections performed by Buyer and/or Buyer's Related Parties, excluding those caused by or in any way contributed to by the negligence or willful misconduct of Seller, its agents, independent contractors, servants and/or employees; provided, for purposes of this indemnification only, Buyer shall not have any liability for any pre-existing conditions discovered by Buyer in connection with its Feasibility Study, except to the extent that such pre-existing conditions are aggravated by Buyer or Buyer's Related Parties in conducting its Feasibility Study.           (d)          All information and material furnished or made available by Seller to Buyer in accordance with this Contract or obtained by Buyer in the course of its investigation 13 shall be treated as confidential information by Buyer prior to the purchase of the Property by Buyer, and if this Contract shall not close, Buyer shall not divulge, and shall use reasonable efforts to prevent Buyer's Related Parties from divulging, such information, except as reasonably necessary to third parties engaged by Buyer for the limited purpose of analyzing and investigating such information for the purpose of consummating the transaction, including, without limitation, Buyer's attorneys and representatives, agents, experts, consultants, prospective lenders, partners, engineers, tenants and/or purchasers, all of whom shall similarly keep such information confidential, except disclosure required under force of law, except disclosure required under force of law. Notwithstanding the foregoing, Buyer shall be permitted to disclose, during the term of this Contract, to its prospective lenders, agents, experts, consultants, partners, engineers, tenants and/or purchasers, courts and governmental agencies having jurisdiction, information regarding the description, location and condition of the Stores, including the fact that Buyer has the Stores under contract, and the proposed Closing Date. In the event this Contract shall not close, Buyer shall deliver to Seller within ten (10) business days all copies made of materials and information pertaining to the Property furnished or made available to Buyer or Buyer's Related Parties (excluding Buyer's or its assignees' financial information). The provisions of this Section 7(d) shall survive the Closing or any termination of this Contract for so long as the Confidentiality Agreement, dated December 23, 2002 between Buyer and Spartan Stores, Inc. (the "Confidentiality Agreement"), by its express terms, survives. Buyer shall have no liability to Seller or otherwise for information already in the public domain or obtained by third-parties independently. In the event of any inconsistency between this Contract and the Confidentiality Agreement, this Contract shall control. Notwithstanding the above, the Confidentiality Agreement remains in effect with respect to the information provided to Buyer about the operation of Seller or its affiliates not related to the Stores or the Property (i.e., the other stores of Seller that Buyer is not purchasing under this Contract).           (e)          Within ten (10) days after the Effective Date, Seller shall deliver to Buyer true, correct and complete copies of (i) the Permits, and (ii) any existing land surveys, environmental assessments or reports, appraisals, plans and specifications, engineering, maintenance and inspection records pertaining to the Property and in Seller's possession. All such materials and information shall be provided to Buyer in such form as such information may presently exist or be readily available. If this purchase and sale is closed, then Buyer may keep and use all such information and materials without restriction. If this purchase and sale does not close for any reason, then Buyer shall promptly return such materials and information to Seller within ten (10) business days after written demand, provided however, in the event of Seller's default, Buyer shall be entitled to retain copies of such material, if any, relating to such default. The provisions of this Section 7(e) shall survive Closing or any termination of this Contract.           (f)          Prior to the Effective Date, Buyer has reviewed copies of the Leases and Tenant Leases. If a Store Lease or Tenant Lease is materially different from the copies provided to Buyer prior to the Effective Date or contains material terms not previously disclosed to Buyer which are unacceptable to Buyer in its reasonable discretion, Buyer shall notify Seller of its objection ("Lease Objection") no later than the last day of the Feasibility Period. In the event Seller is unwilling or unable to cure a 14 Lease Objection, Seller shall give notice to Buyer that it is unwilling or unable to cure such Lease Objection, and Buyer shall either waive the uncured Lease Objection and proceed to Closing or exclude the Store with the Lease Objection in accordance with Section 25. Buyer shall give notice to Seller of its election to exclude or purchase the Store within five (5) business days of its receipt of Seller's notice.           (g)          Seller has provided to Buyer copies of Seller's records, if any, concerning asbestos containing materials present at the Store Properties, or presumed to be present at the Store Properties.           The provisions of Section 7 shall survive the Closing or any termination of this Contract. 8.          TITLE APPROVAL:           (a)           During the Feasibility Period, Buyer may obtain, at Buyer's sole option, for each Store Property a Commitment for Title Insurance from the Title Company with copies of all recorded instruments affecting the Store Property and recited as exceptions in such Commitment for Title Insurance (the "Commitment"). During the Feasibility Period, Buyer, at Buyer's sole option, may obtain current surveys of the Store Properties (the "Survey") made by a registered professional land surveyor. Buyer may, within the Feasibility Period, provide to Seller a notice ("Title Defect Letter") setting forth all such title and survey matters constituting a Material Title Defect (defined below) to which Buyer objects, and Seller shall have the option to be exercised in writing ("Seller Response Letter") within five (5) days of the receipt of the Title Defect Letter to elect to cure (or cause the Title Company to "insure over") some or all of such objections but shall not be required to correct the same; provided that Seller shall be required, at or prior to the Closing, to remove (or cause the Title Company to "insure over") any existing deeds of trust, mortgages, liens or other encumbrances evidencing final and determinable monetary obligations given by or caused by Seller and recorded in the chain of title against the Store Properties, but in no event shall any of Seller's obligations hereunder require expenditures of money for the discharge of judgment or other non consensual liens in excess of the Sales Price. In the event such objections cannot be corrected or such objection can be cured (or "insured over") and Seller elects not to correct such objection, it shall notify Buyer, and Buyer shall either waive the uncured title objections and proceed to Closing, or exclude the Store with the Material Title Defect in accordance with Section 25. Buyer shall notify Seller of its election to exclude or purchase the Store within five (5) business days of its receipt of notice from Seller. Buyer may not remove a Store as a result of any matter in any Commitment or Survey which is not a Material Title Defect (as defined below). The phrase "Permitted Exceptions" shall mean: (i) those exceptions to title set forth in a Commitment or disclosed by the Survey that are not Material Title Defects or are Material Title Defects (A) to which Buyer does not object, (B) to which Buyer waives any objection, or (C) which are cured by Seller (or "insured over"), and (ii) the two easements to be placed on the Land related to Store 6042, located at 850 S. Monroe St., Monroe, Michigan 48161 (one being a replacement easement for parking and drainage in favor of Monroe Bank and Trust and the other being an access easement to Wendy's). To the extent Buyer's title examinations reveal any title defect that has, in Buyer's reasonable 15 business judgment, a material adverse effect on the ability of the Buyer to utilize a Store as a Kroger full service grocery supermarket and pharmacy or materially and adversely affect the value of the Property, then any such title exception is herein called a "Material Title Defect". Without limitation, a Material Title Defect shall be deemed to exist if (i) any third-party has the right to "repurchase" all or any portion of any Owned Store Property or a reversionary interest exists with respect thereto, (ii) Buyer's rights as a tenant under a Lease may be foreclosed or otherwise terminated by the existence of a lien, mortgage, deed of trust or other encumbrance on the fee-interest or any superior leasehold interest in the Leased Store Property or (iii) any judgment or non-consensual liens recorded against a Store Property which is not fully bonded over or fully insured over by the Title Company. If Seller elects to cause the Title Insurer to "insure over" any objection, Seller shall pay any resulting increase in the title insurance premium, and the form of "insurance over" such objection shall be subject to Buyer's approval, which shall not be unreasonably withheld.           (b)          After the Effective Date of this Contract, Seller, without the prior written consent of Buyer, shall not intentionally or deliberately place, or permit to be placed, on any Store Property any lien, encumbrance or other exception other than (1) the Permitted Exceptions; and (2) any replacement, renewal, refinancing, or extension of any secured indebtedness of Seller or affiliate of Seller existing as of the date of this Contract (each, a "Refinancing"). If as a result of Seller's intentional or deliberate actions without the prior written consent of Buyer, any lien, encumbrance or other matter is placed on a Store Property after the Effective Date and prior to the Closing Date, then Buyer shall nevertheless proceed to Closing and Seller shall provide evidence at Closing, as approved by the Title Company, of the removal of the lien, encumbrance or other matter from the Title Policy, or shall otherwise cure or remove the lien, encumbrance or other matter or cause the Title Company to insure over such defect in a manner reasonably acceptable to Buyer. 9.          BROKER'S FEE: Except for the commission owed to The Food Partners, which Seller agrees to pay, Buyer and Seller represent and warrant to each other that no real estate commissions, finders' fees, or brokers' fees have been or will be incurred in connection with the sale of the Property by Seller to Buyer. Buyer and Seller shall indemnify, defend and hold each other harmless from any claim, liability, obligation, cost or expense (including reasonable attorneys' fees and expenses) for fees or commissions relating to Buyer's purchase of the Property asserted against either party by any broker or other person claiming by, through or under the indemnifying party or whose claim is based on the indemnifying party's acts. The provision of this Section 9 shall survive the 10.          LIMITATIONS OF SELLER'S REPRESENTATIONS AND WARRANTIES:           Buyer acknowledges and agrees that, except as otherwise expressly stated in Section 13A or in any conveyance instrument delivered by Seller pursuant to this Contract, Seller has not made, and Seller hereby specifically disclaims any warranty, guaranty or representation, oral or written, past, present or future, including but not limited to any warranty, guaranty or representation concerning (i) the nature and condition of the Property, including, without limitation, the water, soil and geology, and 16 the suitability thereof and of the Property for any and all activities and uses which Buyer may elect to conduct thereon; (ii) except for any warranty contained in the Deed, any Assignment and Assumption of Leasehold, any Assignment and Assumption of Tenant Leases, any Assignment and Assumption of Contracts and any Bills of Sale to be delivered by Seller pursuant to this Contract, the existence, nature and extent of any right-of-way, lease, right to possession or use, lien, encumbrance, license, reservation, condition or other matter affecting title to the property; and (iii) the compliance of the Property or its operation with any laws, ordinances, orders, rules or regulations of any governmental or other body. Buyer acknowledges that, having been given the opportunity to inspect the Property, Buyer is relying solely on the express provisions of Section 13A and on its own investigation of the Property. Buyer agrees to accept the Property and acknowledges that the sale of the Property as provided for in this Contract is made by Seller on an "as is, where is and with all faults" basis, except as otherwise expressly provided in Section 13A or as expressly agreed to in writing prior to closing. Buyer expressly acknowledges that, in consideration of the agreements of Seller in this Contract, except as otherwise specified in Section 13A, Seller makes no warranty or representation, express or implied, or arising by operation of law, including, but not limited to, any warranty of condition, habitability, merchantability, tenantability or fitness for a particular use or purpose, with respect to the Property. 11.          DEFAULT: Unless otherwise provided for in this Contract, if the transaction contemplated hereby is not consummated by reason of Buyer's breach or other failure to timely perform all obligations and conditions to be performed by Buyer, and Buyer fails to cure such breach or failure within twenty (20) days following written notice from Seller, Seller may (i) terminate this Contract, (ii) sue Buyer for specific performance or (iii) pursue such other remedies as may be available at law or in equity, including a recovery for damages sustained and proven as a result of the breach of this Contract by Buyer provided that Buyer's liability for damages hereunder shall in no event exceed the Sales Price. If the transaction contemplated hereby is not consummated by reason of Seller's breach or other failure to timely perform all obligations and conditions to be performed by Seller, and Seller fails to cure such breach or failure within twenty (20) days following written notice from Buyer, Buyer may (i) terminate this Contract, (ii) sue Seller for specific performance or (iii) pursue such other remedies as may be available at law or in equity, including a recovery for damages sustained and proven as a result of a breach of this Contract by Seller provided that Seller's liability for damages hereunder shall in no event exceed the Sales Price. 12.          ATTORNEYS' FEES: Any party to this Contract who is the prevailing party in any legal proceeding against the other party brought under or with respect to this Contract or transaction (including any post Closing matters) shall be additionally entitled to recover court costs and reasonable attorneys' fees from the non-prevailing party. 13A.          REPRESENTATIONS AND WARRANTIES OF SELLER: Seller hereby represents and warrants to Buyer, as of the effective date of this Contract and remade as of the Closing Date as follows:           (a)          Corporate Status. Seller is a corporation duly organized and validly existing and in good standing under the laws of the jurisdiction of the State of Ohio or 17 Michigan, as applicable, and is qualified to transact business in, and is in good standing under the laws of, the State of Ohio or Michigan, as applicable. Seller has the corporate power and authority to sell and convey the Property as provided in this Contract and to carry out Seller's obligations hereunder, and all requisite corporate action necessary to authorize Seller to enter into this Contract and to carry out Seller's obligations hereunder has been taken.           (b)          No Violation, Binding Effect. The execution, delivery and performance of this Contract by Seller do not contravene, or constitute a default under, Seller's articles of incorporation or any provision of any agreement, law, rule, regulation, judgment, order, decree or other instrument binding upon Seller or the Property. This Contract has been duly executed and delivered by Seller and constitutes a valid and binding agreement of Seller, enforceable against Seller in accordance with its terms.           (c)          Leases. Seller has provided to Buyer a true and complete copy of the Store Leases to which Seller is a party, which have not been amended or modified except as set forth in Exhibit B-1. Seller has not previously assigned its interest in the Store Leases. The leasehold estate created under the Store Leases are, or will be, as of the Closing Date, free and clear of all liens created by, through or under Seller except the Permitted Exceptions. Seller is not in default in the payment of rent or other sums due under the Store Leases, and to Seller's current actual knowledge, Seller is not in material default under any other provision of the Store Leases. "Seller's current actual knowledge" means the actual knowledge of the current executive officers of Seller, Cliff Sasfy, Director of Real Estate, Darline Wessels, Manager of Real Estate, and Bob Dykhouse, Manager of Facilities.           (d)          Tenant Leases. Seller has provided a true and complete copy of the Tenant Leases to which Seller is a party existing as of the Effective Date of this Contract, which have not been materially amended, modified or supplemented, except as set forth in Exhibit D. Seller has not previously assigned its interest in such Tenant Leases. To Seller's current actual knowledge, Seller is not in material default under such Tenant Leases. To Seller's current actual knowledge, the tenants under the Tenant Leases are not in material default of such leases, except as described in Exhibit M.           (e)          Property. To Seller's current actual knowledge, Seller has or, as of the Closing Date, will have, good and marketable title in all respects to the Property, subject to the Permitted Exceptions. None of the personal property included in the Property will be subject to any lien, except for Permitted Exceptions. Except for the Tenant Leases, there are no leases, sub-leases, licenses, concession or similar agreements that grant any third party the right to occupy any part of a Store or Store Property or to operate any business or conduct any other activity in a Store or Store Property. The Owned Store Properties are covered by insurance at $65 per square foot and other retail improvements are covered by insurance at $40 per square foot.           (f)          Litigation. Except for any litigation described on Exhibit N, to Seller's current actual knowledge there are no judgments, orders or decrees binding on Seller that are reasonably likely to delay or prevent the consummation of the transaction 18 contemplated hereby or are reasonably likely to prevent or materially and adversely affect the operation of any Store Property by Buyer. Except as disclosed on such Exhibit N, to Seller's current actual knowledge Seller has not received any written notice of (i) any pending or threatened litigation or governmental proceeding which would materially adversely affect the Store Property; or (ii) any violation or alleged violation of any governmental requirement affecting the Store Property which would materially and adversely affect any Store Property.           (g)          Hazardous Materials. Except as disclosed in Section 7(g), Seller has no current actual knowledge of and has received no written notice of (i) any violation of any environmental laws, rules, regulations, ordinances or order with respect to any hazardous wastes, hazardous materials, toxic substances or related substances with respect to any Store Property, or (ii) the existence of any underground or aboveground storage tanks under or on any Store Property.           (h)          No Violations. To Seller's current actual knowledge, no written notice of material violation of any building, zoning, fire, health or other regulatory laws, statutes, ordinance or regulations relating to any Store Property has been received by Seller and is now outstanding, except for any matters disclosed on Exhibit O.           (i)          Permits. To Seller's current actual knowledge, Seller has obtained from all federal, state and local authorities all material permits, licenses and variances required for Seller's operation of the Store Properties. To Seller's current actual knowledge, the Store Properties are not being operated or sold in any material respects in violation of any of the provisions           (j)          Personal Property Tax. Seller has delivered to Buyer accurate and complete copies of all personal property tax documents for the Stores for the tax year 2002 filed with the State of Ohio or Michigan, as applicable.           (k)          [Intentionally Omitted]           (l)          Vendor Equipment. Seller has granted Buyer access to all Stores; all equipment owned by third-party vendors and located in the Stores was present in the Stores at such time. All such equipment (excluding any equipment covered by leases assumed by Buyer at Closing) shall be removed by Seller from the Stores within five (5) business days after the Closing Date.           (m)          Seller Equipment. Seller has granted Buyer access to all Stores; all equipment owned by Seller and located in the Stores was present in the Store at such time. All such equipment is present in the Store as of the Effective Date. No replacement/removal of such equipment shall be allowed other than as contemplated by Section 7. 13.B.          SURVIVABILITY OF REPRESENTATIONS AND WARRANTIES: Any representations and warranties contained in this Section 13 shall survive from and after the Closing Date for a period of eighteen (18) months except that the representations in (a), (b) and (e) shall survive for an unlimited period ("Survivability Period"). To enforce a 19 breach of any representations and warranties set forth in this Section 13, Buyer must commence a legal action in writing prior to the expiration of the Survivability Period. In the event of a breach of such representations and warranties, Buyer shall be entitled to be indemnified by Seller for its damages proven and arising from such breach (subject to the limitations set forth in Section 20). 14.A.          COVENANTS OF SELLER: Seller agrees with Buyer that, from and after the Effective Date of this Contract to and including the applicable Possession Date:           (a)          Modify Contract. Seller shall not amend, extend, modify or in any way alter any Lease, Tenant Lease or other contract or agreement in any material respect which adversely affects the Property or enter into any new contract or agreement affecting the Property or any portion thereof in any material respect without the prior written consent of Buyer, except (i) Seller may grant any lien, encumbrance, interest or other matter on or in Property after the Effective Date and prior to the Closing Date in connection with a Refinancing if it removes or otherwise cures the lien, encumbrance, interest or other matter prior to the Closing Date, or if such Property is covered by the Title Policy, then Seller will remove the lien, encumbrance interest or other matter from the Title Policy, or shall otherwise cure or remove the lien, encumbrance interest or other matter or cause the Title Company to insure over such defect in a manner reasonably acceptable to Buyer, (ii) Seller may amend, extend, modify or otherwise alter any contracts or agreements which are terminable on the Closing Date or are terminable upon the delivery of thirty (30) days prior notice by the owner of the Property, (iii) Seller may amend, modify or otherwise alter any existing Tenant Lease in the ordinary course of business except in no event shall there be any change in the term (unless a tenant is exercising a right of renewal or extension), decrease in monetary obligations or adverse change in the use or exclusions of such Tenant Lease without the prior written consent of Buyer and (iv) Seller shall terminate any Service Contracts as of the Closing Date (as to the Store being transferred) which Buyer has not elected to assume during the Feasibility Period.           (b)          Expenses. Seller shall, subject to the prorations and other provisions described herein, pay all accounts, bills, trade payable and expenses of maintenance and operation of the Property relating to the Store attributable to the period prior to the Closing Date, except for such amounts as are contested or disputed by Seller in good faith with reasonable grounds.           (c)          Maintenance. Seller will maintain and keep the Property, the Stores and all FF&E located therein in the condition as exists on the Effective Date of this Contract, except for ordinary wear and tear and damage due to casualty or condemnation.           (d)          Insurance. Seller will keep in full force and effect insurance comparable in amount and scope of coverage to that now maintained by it with respect to the Property and will not change or alter its current programs of insurance.           (e)          Permits and Approvals. Seller will perform in all material respects all of its obligations under all licenses, permits and approvals relating to or affecting the Store. 20           (f)          Disposition of Assets. Seller will not sell, assign, transfer, convey or otherwise dispose of, or enter into any agreement to sell, assign, transfer, convey or otherwise dispose of, any of the Property (excluding sales of Inventory in the ordinary course of business) without Buyer's prior written approval, provided Seller shall be allowed (i) to sell or dispose of any FF&E in the ordinary course of its store operations provided other FF&E in substantially the same or better condition replaces the sold or disposed FF&E, or (ii) Seller may grant any lien, encumbrance, interest or other matter on or in Property after the Effective Date and prior to the Closing Date in connection with a Refinancing if it removes or otherwise cures the lien, encumbrance, interest or other matter prior to the Closing Date, or if such Property is covered by the Title Policy, then Seller will remove the lien, encumbrance interest or other matter from the Title Policy, or shall otherwise cure or remove the lien, encumbrance interest or other matter or cause the Title Company           (g)          Employee Termination. Seller is responsible for complying with the requirements of the Worker Adjustment and Retaining Notification Act ("WARN") with respect to its cessation of operation of the Stores.           (h)          Inventory Transfers. Except in the ordinary course of business, Seller shall not transfer any Inventory into a Store from any store or other facility owned or operated by Seller or any affiliate of Seller.           (i)          Bulk Sales Act. Buyer waives compliance by Seller with any applicable Bulk Sales Act or similar law to the extent required in connection with this transaction. Seller shall indemnify, defend and hold harmless Buyer and the Property from any demands, claims or liabilities arising from any failure of Seller to so comply as provided in Section 20 of this Contract. 14.B.          ADDITIONAL COVENANTS: Each party will use all reasonable efforts necessary to bring about the timely consummation of the transactions contemplated by this Contract. After the Closing, each party will take all such further actions, execute and deliver all such further documents and do all other acts and things as the other party may reasonably request for the purpose of carrying out the intent of this Contract (including the satisfaction of closing conditions) and the other documents referred to in this Contract. Promptly following the Closing, Seller shall make a public announcement in the markets served by the Stores that it will accept Spartan Stores-affiliated gift cards and gift certificates at its Pharm stores. 15.          CONDEMNATION: Seller shall give prompt written notice to Buyer of Seller's receipt of any pending or threatened condemnation affecting a Store. If prior to the Closing, condemnation proceedings are commenced in writing against Store Properties that involve a taking that has a material adverse effect on the ability of Buyer to utilize a store as a Kroger full service grocery supermarket (and pharmacy if applicable), then Buyer shall have the right to exclude such Store in accordance with Section 25 by giving Seller written notice within five (5) business days following its receipt of Seller's notice. If Buyer does not exercise its right to exclude the Store, then at Closing Seller 21 shall assign to Buyer the condemnation award, if any, previously received by, or subsequently payable to, Seller with respect to the Store, and the Sales Price shall not be reduced. 16.          DAMAGE TO PROPERTY: Seller agrees to give Buyer prompt notice of any fire or other casualty affecting a Store between the Effective Date of this Contract and the Closing.           (a)          Owned Store Property. If, prior to the Closing, there shall occur any damage to an Owned Store Property caused by fire or other casualty ("Casualty"), and if such Casualty damages twenty percent (20%) or less (by replacement cost) of the buildings located on the Land, Buyer shall purchase the Store at Closing without reduction in the Sales Price, whereupon Seller shall assign any Casualty award under any applicable insurance policy to Buyer and shall pay Buyer an amount equal to any deductible under such insurance policy. If, prior to the Closing, there shall occur any damage to an Owned Store Property caused by Casualty, and if such Casualty damages more than twenty percent (20%) (by replacement cost) of the buildings located on the Land, then Buyer, at its option, shall either (i) purchase the Store at the Closing without reduction in the Sales Price, whereupon Seller shall assign any Casualty award under any applicable insurance policy to Buyer and shall pay Buyer an amount equal to any deductible under such insurance policy, or (ii) elect to exclude the Store from this Contract in accordance with Section 25. Buyer shall notify Seller of its election to exclude or purchase the Store within twenty (20) days from the date of the Casualty.           (b)          Leased Store Properties. If prior to the Closing, any part of any of the Leased Store Properties shall be damaged by Casualty such that the landlord under such Store Lease may elect to terminate the Lease and the landlord does so elect to terminate such Lease, such Store shall be excluded from this Contract in accordance with Section 25. If the landlord has not exercised its election as of the scheduled Closing Date, the Closing Date for the affected Leased Store Property shall be delayed until ten (10) days after the Landlord exercises such election. If the landlord does not or cannot terminate such Lease, then the Closing shall take place and Seller shall assign its right, title and interest in any Casualty award under the applicable Lease to Buyer. Notwithstanding the foregoing, if any such Casualty damages more than twenty percent (20%) (by replacement cost) of the premises described in any Store Lease, then regardless of whether the landlord elects not to terminate the Store Lease, Buyer, at its option, may either (i) purchase the Leased Store Property at the Closing without reduction in the Sales Price, whereupon Seller policy, or (ii) elect to exclude the Store from this Contract in accordance with Store within twenty (20) days from the date of the Casualty. 17.          REPRESENTATIONS AND WARRANTIES OF BUYER: Buyer represents and warrants to Seller, which representations and warranties shall be deemed made by Buyer to Seller as of the Effective Date of this Contract and also as of the Closing Date, as follows: 22           (a)           Corporate Status. Buyer is a corporation duly organized and validly existing and in good standing under the laws of the State of Ohio. Buyer has the power and authority to purchase and receive the Property as provided in this Contract and to carry out Buyer's obligations hereunder, and all requisite action necessary to authorize Buyer to enter into this Contract and to carry out Buyer's obligations hereunder has been taken.           (b)          No Violation, Binding, Effect. The execution, delivery and performance of this Contract by Buyer do not contravene, or constitute a default under, Buyer's articles of incorporation or by-laws or any provision of any agreement, law, rule, regulation, judgment, order, decree or other instrument binding upon Buyer. This Contract has been duly executed and delivered by Buyer and constitutes a valid and binding agreement of Buyer enforceable against Buyer in accordance with its terms. 18.          CONDITIONS PRECEDENT TO PERFORMANCE OF BUYER'S OBLIGATIONS: The obligations of Buyer to purchase the Property under this Contract are subject to the satisfaction at or prior to the Closing Date or waiver by Buyer of the following conditions:           (a)          No Violations of Law. At the Closing Date there shall exist (i) no law, rule or regulation, (ii) no judgment, order or decree, and (iii) no violation by Seller of any law, rule, regulation, judgment order or decree which makes the transactions (or any part of same) described herein illegal or otherwise prohibited; provided that if such condition cannot be satisfied, Seller shall have the option to elect to exclude one or more Stores from this Contract in accordance with Section 25; and provided further, that this subsection shall not include the existence of any law, rule, or regulation that would otherwise limit or prohibit the transfer of a license or permit (e.g., pharmacy or liquor license).           (b)           Performance of Agreements. Seller shall have duly performed in all material respects all of its agreements herein that are required to be performed by it at or prior to the Closing Date.           (c)          Consents. Seller shall have obtained the consent of the landlords, if required, to the assignment of the Store Leases to Buyer, or if such consent cannot be obtained, Buyer shall either (i) purchase the Leased Store Property at the Closing without reduction in the Sales Price, or (ii) elect to exclude the Store from this Contract in accordance with Section 25.           (d)          Estoppels. Seller shall obtain and deliver to Buyer an estoppel certificate as to each Leased Store Property executed by the landlord thereof, dated within sixty (60) days of the Closing Date and in the form attached hereto as Exhibit P, or a Seller's certificate dated as of the Possession Date certifying to the same matters set forth in the subject estoppel certificate. If a landlord deletes or otherwise fails to address any specific substantive item set forth in the estoppel certificate it receives from Seller, Seller shall deliver a Seller's certificate dated as of the Possession Date covering such deleted or unaddressed item. Such Seller's certificates shall be valid for the remaining 23 term of the Store Lease to which it applies, excluding any renewal period that has not commenced prior to the Closing Date. Seller has delivered to Buyer estoppel certificates from the tenants under the Tenant Leases occupying seventy-five percent 75% or more of the floor space in the Owned Store Properties dated within 180 days prior to the Effective Date. At the Closing, Seller shall deliver to Buyer Seller's certificates dated as of the Possession Date certifying the same matters set forth in such estoppel certificates for the period from the date thereof through the Possession Date, which certificates shall be valid for a period of eighteen (18) months after the Closing Date. If, after the Closing Date, Seller delivers to Buyer an estoppel certificate from any landlord or tenant who did not provide an estoppel certificate prior to the Closing Date, Seller may substitute such estoppel certificate for the corresponding Seller's certificate, and Seller shall be released from any liability with respect thereto.           (e)          Title Insurance. Buyer shall receive at Closing the Title Policy or a final binding Commitment for each Store Property (dated as of the Closing Date) containing no unsatisfied title requirements of Seller and no exceptions to title, except for any Permitted Exceptions.           (f)          Representations and Warranties. The warranties and representations of Seller contained in this Contract shall be true in all material respects at and as of the Closing Date, except where the failure to be true in all material respects does not (i) prevent or materially impair the operation of the Store Property as a Kroger grocery supermarket in the ordinary course of Buyer's business or (ii) materially and adversely affect the value of the Property. 19.          CONDITION PRECEDENT TO PERFORMANCE OF SELLER'S OBLIGATIONS. The obligations of Seller to sell the Property under this Contract are subject to the satisfaction at or prior to the Closing Date or waiver by Seller of the following: (iii) no violation by Buyer of any law, rule regulation, judgment order or decree which makes the transactions described herein (or any part of same) illegal or otherwise prohibited.           (b)          Performance of Agreements. Buyer shall have duly performed in all material respects all of its agreements contained herein that           (c)          Representations and Warranties. The warranties and representations of Buyer contained in this Contract shall be true in all material respects at and as of the Closing Date. 20.          INDEMNIFICATION:           (a)          Indemnification by Seller. Seller agrees to indemnify, defend and hold harmless Buyer from any and all liability, claims, damages, expenses (including reasonable attorneys' fees), judgments, proceedings and causes of action arising out of (i) non-compliance by Seller with any applicable state "Bulk Sales Law" (ii) subject to 24 the Survivability Period, the breach of any warranty or representation of Seller as of the Closing Date (other than those disclosed to Buyer by written notice prior to Closing given by Seller or of which Buyer becomes aware and nevertheless elected to close) which has been claimed by Buyer in accordance with Section 13B, and (iii) the employment of any person at the Store by Seller (including, without limitation, any actual or alleged unfair labor practice, discrimination, wrongful discharge or similar activity) prior to the Closing Date. Seller shall indemnify and hold Buyer harmless for any inadequacy of the WARN ACT (hereinafter defined) notice and from any liability whatsoever, including, without limitation, fines, costs, expenses, reasonable attorney fees, and other payments described in the WARN ACT (hereinafter defined).           (b)          Indemnification by Buyer. Buyer agrees to indemnify, defend and hold harmless Seller from any and all liability, claims, damages, expenses (including reasonable attorneys' fees), judgments, proceedings, and causes of action arising out of or in any way connected with (i) the use by Buyer of Seller's DEA or States of Ohio and Michigan licenses pursuant to Section 22 below, (ii) the breach of any warranty or representation of Buyer as of the Closing Date (other than those disclosed to Seller by written notice prior to Closing given by Buyer or of which Seller becomes aware and nevertheless elected to close), (iii) the employment of any person at the Store by Buyer (including, without limitation, any actual or alleged unfair labor practice, discrimination, wrongful discharge or similar activity, including those based on actions or inactions of Buyer prior to Closing) on or after the Closing Date or (iv) any Store conversion work undertaken by Buyer in the Store prior to the Closing Date, except as arising from the negligence or willful misconduct of Seller, its agents, employees and contractors.           (c)          Notice. It is further agreed that in the event of any claim which is indemnified under this Section 20, the indemnitee shall give prompt notice of the claim to the indemnitor and shall cooperate fully with the indemnitor, so that the indemnitor can be responsible for and control the defense and/or settlement of such claim in the indemnitor's sole discretion. In the event the indemnitee shall fail to give such notice or shall settle or otherwise compromise any claim without the written consent of the indemnitor, then the indemnity shall be of no force or effect with respect to such claim. The indemnitee may, at its options and expense, participate in the defense of any claim for which indemnity is sought.           (d)          Limitations. Seller shall not be liable to Buyer, and Buyer shall not be liable to Seller, for indemnification pursuant to this Section 20 unless (i) the amount of any individual loss or series of related losses exceeds the sum of $25,000 (such losses in excess of $25,000 are each called "Permitted Losses") and (ii) the aggregate amount of all Permitted Losses exceeds a sum equal to $200,000 (the "Floor"), in which event the indemnified party shall be entitled to indemnification for all Permitted Losses in excess of the Floor, up to $3,300,000; provided, however that the Floor and limitation on Permitted Losses shall not be applicable to claims arising from the failure (i) of either party to satisfy any payment obligation under the Store Leases or Permitted Exceptions, or in respect of the assumed liabilities or excluded liabilities with respect to third party claims, (ii) of Buyer to pay the Purchase Price, (iii) of Seller to satisfy any obligations arising under Section 21, including any obligations arising under the WARN ACT, (iv) of either party to pay or reimburse the other party for apportionments provided for herein, 25 and (v) the failure of either party to pay or perform any obligation set forth herein, including the obligations of Seller to remove any Excluded Equipment or Inventory, the obligation of Buyer to pay delinquent rent or Other Tenant Receivables collected by Buyer on Seller's behalf, and the obligations of either party to pay escrow fees, transfer taxes, prorations and apportionments, and to deliver documents and other agreements. Neither party will have any liability for indemnification (i) to the extent it cures the breach within a reasonable period of time following notice from the other party, and (ii) on account of consequential, incidental or indirect damages or losses and, in particular, no "multiple of profits" or other items will be applied in calculating any indemnity amount. In addition, Seller will have no liability for indemnification with respect to the uncollectability of any amounts payable by tenants under the Tenant Leases accruing after the Closing Date. The right of a party to assert indemnification claims and receive indemnification payments pursuant to this Section 20 shall be the sole and exclusive remedy exercisable by that party with respect to any breach by the other party of any provision of this Contract for which indemnification may be sought, and each party hereby irrevocably waives and releases each other from any and all claims and other causes of action relating to this Contract for which indemnification may be sought. 21.          OPERATION OF STORE, EMPLOYEES:           (a)          Continued Operation. Seller covenants and agrees to maintain the equipment and Store facilities as usual at the Stores, except as expressly provided in this Contract. Notwithstanding any provision in this Contract, Buyer acknowledges and agrees that Buyer is not purchasing a substantial portion of Seller's inventory pursuant to Exhibit F. Accordingly, Seller may sell-down such non-purchased inventory and make reductions in labor and other expenses if and to the extent that sales decline as a result of such inventory sell-down or otherwise. Effective upon the Closing Date, Seller shall terminate its business and employees as provided in Section (b) below.           (b)          Store Closure. Effective as of the Closing Date, Seller shall (A) terminate the employment of all employees working at the Stores (or transfer such employees to other stores or facilities owned or operated by Seller); and (B) terminate all vendor, distribution and supply agreements applicable with respect to the Stores, except for any Service Contracts Buyer has elected to assume pursuant to this Contract or in writing delivered during the Feasibility Period.           (c)          Seller's Employee Obligations. Seller shall remain responsible for payment of, and shall pay, all amounts accruing to or for employees of the Stores prior to the effective time of Closing, including expenses for accrued wages and salary, vacation pay, severance pay, COBRA benefits, and other employee benefits. Buyer shall not be responsible for any obligations or accrued obligations of Seller to any of Seller's employees, pursuant to any collective bargaining agreements or otherwise, including without limitation pensions or otherwise, or arising out of services rendered, employment, occurrence, or transaction entered into while employed by Seller. Buyer agrees to interview Seller's employees at the Stores and to consider hiring such employees, but Buyer shall not be obligated to employ or extend any offer of employment to any employee of Seller. 26           Buyer will provide Seller with a list of employees to whom Buyer has made an offer of employment and a list of employees who have accepted offer of employment with Buyer or one of its affiliates. For a period of 120 days after the Closing, Buyer shall promptly notify Seller of the name, date of hire and rate of compensation of any person hired by Buyer or one of its affiliate and who was an employee of Seller or one of its affiliates.           (d)          Business Taxes. Seller shall file, with respect to the business of the Store, applicable business, sales and use tax returns with all requisite jurisdictions as soon as practicable after the Closing; and upon request, shall furnish to Buyer a receipt, certificate of the taxing authority or other evidence that all taxes have been paid. 22.          PHARMACY ISSUES: Buyer and Seller agree to cooperate with one another in connection with the transfer of existing pharmacy records from Seller to Buyer at Closing in accordance with applicable law. Without limitation, Seller and Buyer both agree to cooperate in effectuating the transfer of the prescription dispensing records and other patient records for at least two (2) years immediately prior to the Closing Date in accordance with board regulations and in a manner to insure the confidentiality, integrity and security of the pharmacy prescription dispensing records, other patient records, and the continuity of pharmacy services at the Store at substantially the same level of that offered by the Seller. Additionally, Buyer agrees to promptly make all applications and post such notices as may be required in connection with Ohio and Michigan law for the transfer of the pharmacy licenses. Seller agrees to grant Buyer or its designee a limited power of attorney under Seller's "DEA" license or State of Ohio or Michigan license, if any, so as to allow Buyer or its designee to order pharmacy supplies after Closing until Buyer obtains its DEA license. The provisions of this Section 22 shall survive Closing. To the extent required by applicable law, Buyer shall maintain all prescription records for a period of seven years from the Closing Date. 23.          ABC NOTICE: Following the Public Announcement Date (as hereinafter defined), Buyer may post in the Store any notice required for purposes of obtaining liquor licenses from Alcohol Beverage Control authorities. 24.          SHOPPING CENTER NAMES: Notwithstanding the fact that the Excluded Assets includes any shopping center name with the word "Food Town" as a part thereof, in the event that the removal of the "Food Town" name from the signage for any applicable shopping center would cause a violation of any sign and/or zoning ordinance applicable to such shopping center, Buyer shall be entitled to continue to use for a period not to exceed three (3) months the "Food Town" name as part of the shopping center's name and on the shopping center's signage until Buyer is able to obtain any necessary approvals from applicable governmental authorities to remove the "Food Town" name from such shopping center's signage. 25.          EXCLUSION OF STORES.           (a)          If, under Section 7(b), 7(f), 8(a), 15, 16(a), 16(b), or 18 Buyer or Seller excludes one or more Stores (including all related real and personal property) from this 27 Contract, then the Sales Price shall be reduced by the sum of the allocated values of such Store(s) as set forth on Exhibit G.           (b)          If Buyer or Seller excludes a particular Store, then Seller shall have the option to exclude from this Contract each other Store (including all related real and personal property) located in the same market (as indicated on Exhibit G) as such excluded Store(s) and the Sales Price shall be further reduced by the sum of the allocated values of such Stores as set forth on Exhibit G; provided that if a Findlay Store is excluded pursuant to Section 18(a), then both Findlay Stores shall automatically be excluded. Seller may exercise this option to exclude Stores in the same market by written notice to Buyer within five (5) business days of its receipt of notice from Buyer of the exclusion of one or more Stores.           (c)          If three or more Stores are excluded from this Contract (by either Buyer or Seller or a combination of both), then Seller shall have the option to terminate this Contract without obligation or liability of either party. Seller may exercise this termination option by written notice to Buyer at any time following the exclusion of the third Store from this Contract. 26.          MISCELLANEOUS:           (a)          Except as otherwise provided herein, any notice required or permitted to be delivered hereunder shall be in writing and shall be deemed received when (i) personally delivered, (ii) sent by United States mail, postage prepaid, registered or certified mail, return receipt requested, and properly addressed, (iii) deposited with a nationally recognized overnight courier service, charges prepaid, and properly addressed or (iv) sent by facsimile transmission. For purposes of this Subsection, the addresses of each party shall be that set forth below with a copy to the other addressees set forth below the signature of such party. Either party may change its address for notice from time to time by delivery of at least five (5) days prior written notice of such change to the other party hereto in the manner prescribed herein. Seller Spartan Stores, Inc. 850 76th Street, S.W. P.O. Box 8700 Grand Rapids, Michigan 49518-8700 Telephone:  (616) 878-2426 Facsimile:  (616) 878-2775 Attn:  David M. Staples          Executive Vice President          And Chief Financial Officer Buyer The Kroger Co. - Real Estate Dept. 1014 Vine Street Cincinnati, OH 45202-1100 Attn: James E. Hodge Telephone:  (513) 762-4214 Telecopier:  (513) 762-4839     Copy to Copy to     Warner Norcross & Judd LLP 900 Fifth Third Center 111 Lyon Street, N.W. Grand Rapids, Michigan 49503-2489 The Kroger Co. - Law Dept. 1014 Vine Street Attn: Patricia Tighe Ash, Esq. 28 Telephone:  (616) 752-2000 Facsimile:  (616) 752-2500 Attn:  Alex J. DeYonker Telephone:  (513) 762-4423 Telecopier:  (513) 762-4935           (b)          This Contract shall be construed under and in accordance with the laws of the State of Ohio, without giving effect to its conflict of law principles.           (c)          This Contract shall be binding upon and inure to the benefit of the parties hereto, their successors and permitted assigns. Nothing in this Contract, express or implied, is intended to confer upon any other person or entity any rights or remedies under or by reason of this Contract, this Contract being for the exclusive benefit of the parties and their respective successors and authorized assigns.           (d)          In case any one or more of the provisions contained in this Contract shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Contract shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. Furthermore, in lieu of any such invalid, illegal or unenforceable provision, there shall be automatically added to this Contract a provision as similar to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.           (e)          This Contract constitutes the sole and only agreement of prior understandings or written or oral agreements between the parties respecting the subject matter hereof and cannot be changed except by their written consent.           (f)           Time is of the essence with regard to the performance of this Contract.           (g)           Words of any gender used in this Contract shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise.           (h)          The parties may execute this Contract in one or more identical counterparts, all of which when taken together will constitute one and the same instrument.           (i)          The parties hereto acknowledge that the parties and their respective counsel have each reviewed and revised this Contract, and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Contract or any amendments or exhibits hereto.           (j)          Buyer may assign this Contract to a subsidiary corporation or affiliate or may designate a subsidiary corporation or affiliate to take title to one or more of the Store Properties, provided (i) such assignment would not delay or prevent the consummation of the transaction contemplated hereby, and (ii) no such assignment or designation shall relieve Buyer of its obligations under this Contract. 29           (k)          Buyer and Seller agree to consult and cooperate in the release of public information concerning the transaction contemplated by this Contract. Neither party shall make any public announcement of the transaction or the existence of this Contract, without the prior written consent of the other party, prior to Initial Closing Date at which time all parties hereto shall issue a mutually agreeable press release (the "Public Announcement") as further described herein. The parties agree to furnish each other with draft copies of the Public Announcement before the Initial Closing Date so that all parties may agree on the content and wording contained in such Public Announcement. Prior to the Initial Closing Date, Buyer and/or its affiliates shall be prohibited from discussing the transaction described herein with any Store employees. Nothing contained herein shall prevent either party at any time from promptly furnishing any information or making any public announcement required by law, or governmental authority, the Nasdaq Stock Market, or the New York Stock Exchange with respect to the transaction.           (l)          Buyer (as Seller's landlord) hereby consents to the assignment by Seller (as tenant) of its real property lease to a third-party in connection with Seller's divestiture of its Bellevue, Ohio location (Seller's store #6063), provided Seller shall remain principally liable for tenant's obligations under such lease.   EXHIBITS:         A - List of Owned Store Properties         A-1 - Legal Descriptions of Owned Store Properties         B - List of Leased Store Properties         B-1 - List of Leases         C - Retained Equipment List         D - List of Tenant Leases         E - List of Service Contracts         F - Inventory Procedures         G - Allocation of Sales Price         H - [Reserved]         I - Form of Assignment and Assumption of Leasehold Agreement         J - [Reserved] 30   K - Form of Assignment and Assumption of Contracts         L - Form of Assignment and Assumption of Tenant Leases         M - Defaults under Tenant Lease         N - Litigation         O - Violation of Laws         P - Form of Estoppel Certificate 31           IN WITNESS WHEREOF, the parties hereto have caused this Contract to be   SELLER:       SEAWAY FOOD TOWN, INC.       By: /s/ David M. Staples     Name: David M. Staples     Title: Treasurer       GRUBER'S FOOD TOWN, INC.     By:         Title: Treasurer       BUCKEYE REAL ESTATE MANAGEMENT CO.       By:         Title: Treasurer       GRUBER'S REAL ESTATE, L LC       By:         Title: Treasurer       BUYER:       THE KROGER CO.       By: /s/ James E. Hodge     Name: James E. Hodge     Title: Vice President 32

SCHEDULE 14-A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant x Filed by a Party other than the Registrant o Check the appropriate box: oPreliminary Proxy Statement xDefinitive Proxy Statement o Definitive Additional Materials o Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12 Kaiser Federal Financial Group, Inc. (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): xNo fee required. o $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). o $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). oFee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: 4) Proposed maximum aggregate value of transaction: o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: November 21, 2011 Dear Stockholder: We cordially invite you to attend the 2011 Annual Meeting of Stockholders of Kaiser Federal Financial Group, Inc., the parent company of Kaiser Federal Bank.The annual meeting will be held at the main office of Kaiser Federal Bank, located at 1359 North Grand Avenue, Covina, California 91724, at 5:00 p.m., local time, on December 22, 2011. The enclosed notice of annual meeting of stockholders and proxy statement describes the formal business to be transacted at the annual meeting.During the annual meeting we will also report on the operations of Kaiser Federal Financial Group, Inc.Our directors and officers will be present to respond to any questions that stockholders may have.Also, enclosed for your review is our Annual Report on Form 10-K to Stockholders, which contains detailed information concerning the activities and operating performance of Kaiser Federal Financial Group, Inc. The business to be conducted at the annual meeting includes the election of two directors, the approval of the Kaiser Federal Financial Group, Inc. 2011 Equity Incentive Plan, the ratification of the appointment of Crowe Horwath LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2012, the consideration of an advisory, non-binding resolution with respect to the executive compensation described in this proxy statement and the consideration of an advisory, non-binding proposal with respect to the frequency that stockholders will vote on our executive compensation. You may vote your shares by Internet, telephone, regular mail or in person at the annual meeting. Instructions regarding the various methods of voting are contained on the notice and on the Proxy Card. Our Board of Directors has determined that the matters to be considered at the annual meeting are in the best interests of Kaiser Federal Financial Group, Inc. and its stockholders.For the reasons set forth in the proxy statement, the Board of Directors unanimously recommends a vote “FOR” each matter to be considered and that stockholders mark the “ONE YEAR” box with respect to the advisory proposal on the frequency of the stockholders’ vote on executive compensation. On behalf of the Board of Directors, we urge you to vote your shares of common stock as soon as possible even if you currently plan to attend the annual meeting.This will not prevent you from voting in person, but will assure that your vote is counted if you are unable to attend the annual meeting. Sincerely, /s/ Dustin Luton Dustin Luton President and Chief Executive Officer KAISER FEDERAL FINANCIAL GROUP, INC. 1359 North Grand Avenue Covina, California 91724 (800) 524-2274 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To be held on December 22, 2011 Notice is hereby given that the 2011 Annual Meeting of Stockholders of Kaiser Federal Financial Group, Inc. will be held at the main office of Kaiser Federal Bank, located at 1359 North Grand Avenue, Covina, California 91724, on December 22, 2011 at 5:00 p.m., local time. The annual meeting is for the purpose of considering and acting upon: 1. The election of two directors of Kaiser Federal Financial Group, Inc.; 2. The approval of the Kaiser Federal Financial Group, Inc. 2011 Equity Incentive Plan; 3. The ratification of the appointment of Crowe Horwath LLP as the independent registered public accounting firm for Kaiser Federal Financial Group, Inc. for the fiscal year ending June 30, 2012; 4. An advisory, non-binding resolution with respect to the executive compensation described in this proxy statement; 5. An advisory, non-binding proposal with respect to the frequency that stockholders will vote on our executive compensation; and transacting such other business as may properly come before the annual meeting, or any adjournments thereof.As of the date of this notice, the Board of Directors is not aware of any other business to come before the annual meeting. Any action may be taken on the foregoing proposals at the annual meeting on the date specified above, or on any date or dates to which the annual meeting may be adjourned.Stockholders of record at the close of business on November 1, 2011, are the stockholders entitled to vote at the annual meeting, and any adjournments thereof. We call your attention to the proxy statement accompanying this notice for a more complete statement regarding the matters to be acted upon at the annual meeting.You may also read, print and download our 2011 Annual Report to Stockholders on Form 10-K and our Proxy Statement at www.kffg.com.Please read it carefully. BY ORDER OF THE BOARD OF DIRECTORS /s/ Rita H. Zwern Rita H. Zwern Corporate Secretary Covina, California November 21, 2011 TABLE OF CONTENTS ANNUAL MEETING OF STOCKHOLDERS 1 REVOCATION OF PROXIES 1 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF 1 PROPOSAL 1 — ELECTION OF DIRECTORS 4 PROPOSAL 2 — APPROVAL OF THE KAISER FEDERAL FINANCIAL GROUP, INC. 2 29 PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 35 PROPOSAL 4—ADVISORY VOTE ON EXECUTIVE COMPENSATION 37 PROPOSAL 5—ADVISORY VOTE ON FREQUENCY OF FUTURE “SAY-ON-PAY” ADVISORY VOTES 38 ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED AT THE 2 39 STOCKHOLDER PROPOSALS 40 OTHER MATTERS 40 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING 40 MISCELLANEOUS 40 APPENDIX A A-1 PROXY STATEMENT KAISER FEDERAL FINANCIAL GROUP, INC. 1359 North Grand Avenue Covina, California 91724 (800) 524-2274 ANNUAL MEETING OF STOCKHOLDERS December 22, 2011 This proxy statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Kaiser Federal Financial Group, Inc. to be used at the 2011 Annual Meeting of Stockholders of Kaiser Federal Financial Group, Inc., which will be held at the main office of Kaiser Federal Bank, located at 1359 North Grand Avenue, Covina, California 91724, on December 22, 2011, at 5:00 p.m., local time, and all adjournments of the annual meeting.The notice of annual meeting of stockholders and this proxy statement are first being mailed to stockholders on or about November 21, 2011. REVOCATION OF PROXIES Stockholders who execute proxies in the form solicited hereby retain the right to revoke them in the manner described below. Unless so revoked, the shares represented by such proxies will be voted at the annual meeting and all adjournments thereof. Proxies solicited on behalf of the Board of Directors of Kaiser Federal Financial Group, Inc. will be voted in accordance with the directions given thereon. You can vote your shares of our common stock prior to the annual meeting by internet, telephone or regular mail in accordance with instructions set forth on the proxy card. Proxies received by us, which are signed, but contain no instructions for voting, will be voted “FOR” the proposals set forth in this proxy statement for consideration at the annual meeting and “ONE YEAR” with respect to the advisory proposal on the frequency of the stockholders’ vote on executive compensation. Proxies may be revoked by sending written notice of revocation to the Secretary of Kaiser Federal Financial Group, Inc., Rita H. Zwern, at our address shown above, by returning a duly executed proxy bearing a later date, by internet, telephone or regular mail in accordance with instructions set forth on the proxy card or by voting in person at the annual meeting. The presence at the annual meeting of any stockholder who had previously given a proxy shall not revoke such proxy unless the stockholder delivers his or her ballot in person at the annual meeting or delivers a written revocation to the Secretary of Kaiser Federal Financial Group, Inc. prior to the voting of such proxy. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF Holders of record of our common stock, par value $0.01 per share, as of the close of business on November 1, 2011 are entitled to one vote for each share then held.As of the record date, there were 9,605,154 shares of our common stock issued and outstanding.The presence in person or by proxy of a majority of the outstanding shares of common stock entitled to vote is necessary to constitute a quorum at the annual meeting.Abstentions and broker non-votes will be counted for purposes of determining that a quorum is present. As to the election of directors, a stockholder may vote FOR the election of the nominees proposed by the Board of Directors, or WITHHOLD authority to vote for one or more of the nominees being proposed.Directors are elected by a plurality of votes cast, without regard to either broker non-votes, or proxies as to which the authority to vote for the nominees being proposed is withheld. As to the approval of the Kaiser Federal Financial Group, Inc. 2011 Equity Incentive Plan, a stockholder may: (i) vote FOR the Equity Incentive Plan; (ii) vote AGAINST the Equity Incentive Plan; or (iii) ABSTAIN from voting on the Equity Incentive Plan.The affirmative vote of a majority of the votes cast at the annual meeting in person or by proxy is required for the approval of the Kaiser Federal Financial Group, Inc. 2011 Equity Incentive Plan.The approval of this matter shall be determined without regard to broker non-votes or proxies marked “ABSTAIN.” As to the ratification of Crowe Horwath LLP as our independent registered public accounting firm, a stockholder may: (i) vote FOR the ratification; (ii) vote AGAINST the ratification; or (iii) ABSTAIN from voting on such ratification.The affirmative vote of a majority of the votes cast at the annual meeting in person or by proxy is required for the ratification of Crowe Horwath LLP as the independent registered public accounting firm for the fiscal year ending June 30, 2012.The ratification of this matter shall be determined without regard to broker non-votes or proxies marked “ABSTAIN.” As to the advisory, non-binding resolution with respect to our executive compensation as described in this proxy statement, a stockholder may: (i)vote “FOR” the resolution; (ii)vote “AGAINST” the resolution; or (iii) “ABSTAIN” from voting on the resolution. The affirmative vote of a majority of the votes cast at the annual meeting, without regard to either broker non-votes, or shares as to which the “ABSTAIN” box has been selected on the proxy card, is required for the approval of this non-binding resolution. While this vote is required by law, it will neither be binding on Kaiser Federal Financial Group, Inc. or the Board of Directors, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, Kaiser Federal Financial Group, Inc. or the Board of Directors. As to the advisory, non-binding proposal with respect to the frequency that stockholders will vote on our executive compensation, a stockholder may select that stockholders: (i)consider the proposal every “ONE YEAR”; (ii)consider the proposal every “TWO YEARS”; (iii)consider the proposal every “THREE YEARS”; or (iv) “ABSTAIN” from voting on the proposal. Generally, approval of any matter presented to stockholders requires the affirmative vote of a majority of the votes cast.However, because this vote is advisory and non-binding, if none of the frequency options receive a majority of the votes cast, the option receiving the greatest number of votes will be considered the frequency recommended by Kaiser Federal Financial Group, Inc.’s stockholders. Even though this vote will neither be binding on Kaiser Federal Financial Group, Inc. or the Board of Directors, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, Kaiser Federal Financial Group, Inc. or the Board of Directors, the Board of Directors will take into account the outcome of this vote in making a determination on the frequency that advisory votes on executive compensation will be included in our proxy statements. As provided in Section D of Article 5 of our Articles of Incorporation, record holders who beneficially own in excess of 10% of the outstanding shares of our common stock are not entitled to vote any shares held in excess of the 10% limit. Subject to certain exceptions, a person is deemed to beneficially own shares owned by an affiliate of, as well as by persons acting in concert with, such person. The Board of Directors of Kaiser Federal Financial Group, Inc. is authorized to construe and apply the provisions of Section D of Article 5 of the Articles of Incorporation, and to make all determinations it deems necessary or desirable to implement them, including determining the number of shares beneficially owned by any person, and to demand certain information from any person who is reasonably believed to beneficially own stock in excess of the 10% limit and reimbursement for all expenses incurred by Kaiser Federal Financial Group, Inc. in connection with an investigation conducted by the Board of Directors pursuant to the provisions of Article 5, Section D of the Articles of Incorporation. If you have selected a broker, bank, or other intermediary to hold your common stock rather than having the shares directly registered in your name with our transfer agent, Broadridge, you will receive instructions directly from your broker, bank, or other intermediary in order to vote your shares.Your brokerage firm may also provide the ability to vote your proxy by telephone or online.Please be advised that if you choose not to vote your proxy, your brokerage firm has the authority under applicable stock market rules to vote your shares “FOR” or “AGAINST” routine matters.The ratification of our independent registered public accounting firm is deemed to be a routine matter.Accordingly, we urge you to vote by following the instructions provided by your broker, bank, or other intermediary. 2 Persons and groups who beneficially own in excess of 5% of our common stock are required to file certain reports with the Securities and Exchange Commission regarding such ownership pursuant to the Securities Exchange Act of 1934, as amended.The following table sets forth, as of the record date, the shares of common stock beneficially owned by each person who was the beneficial owner of more than 5% of the outstanding shares of our common stock. Name and Address of Beneficial Owners Amount of Shares Owned and Nature of Beneficial Ownership (1) Percent of Shares of Common Stock Outstanding Columbia Wanger Asset Management, LLC 2227 W. Monroe Street Suite 3000 Chicago, IL 60606 (2) % Principal Financial Group Inc Delaware Charter Guarantee and Trust Company dba Principal Trust Company 711 High Street Des Moines, IA 50392 (3) % Castine Capital Management, LLC One International Place, Suite 2401 Boston, MA 02110(4) % Bay Pond Partners, L.P. Wellington Hedge Management, LLC c/o Wellington Management, LLP 75 State Street Boston, Massachusetts 02109 (5) % In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a person is deemed to be the beneficial owner for purposes of this table, of any shares of common stock if he has shared voting or investment power with respect to such security, or has a right to acquire beneficial ownership at any time within 60 days from the date as of which beneficial ownership is being determined. As used herein, “voting power” is the power to vote or direct the voting of shares and “investment power” is the power to dispose or direct the disposition of shares, and includes all shares held directly as well as by spouses and minor children, in trust and other indirect ownership, over which shares the named individuals effectively exercise sole or shared voting or investment power. Based on a Schedule 13G filed with the Securities and Exchange Commission on June 10, 2011, by Columbia Wanger Asset Management, LLC. Based on a Schedule 13G filed with the Securities and Exchange Commission on June 9, 2011, by Principal Financial Group Inc. and Principal Trust Company as Trustee for the Kaiser Federal Bank Employee Stock Ownership Plan and the Kaiser Federal Bank Employees’ Savings & Profit Sharing Plan. Based on a Schedule 13G filed with the Securities and Exchange Commission on February 4, 2011, by Castine Capital Management, LLC. Based on a Schedule 13G filed with the Securities and Exchange Commission on February 14, 2011, by Bay Pond Partners, L.P. and Wellington Hedge Management, LLC who claimed shared voting and dispositive ownership over all shares reported. 3 PROPOSAL 1 — ELECTION OF DIRECTORS Our Board of Directors consists of seven members. Our bylaws provide that approximately one-third of the directors are to be elected annually. Directors are generally elected to serve for a three-year period, or a shorter period if the director is elected to fill a vacancy, and until their respective successors shall have been elected and shall qualify. Two directors will be elected at the annual meeting and will serve until their successors have been elected and qualified. The governance/nominating committee has nominated John H. Cochrane and Donald R. Voss to serve as directors for three-year terms. The following table as of November 1, 2011, provides the positions, ages and terms of office as applicable to our nominees, directors and executive officers along with the beneficial ownership of our common stock held by our nominees, directors and executive officers, individually and as a group. It is intended that the proxies solicited on behalf of the Board of Directors (other than proxies in which the vote is withheld as to the nominee) will be voted at the annual meeting for the election of the nominees identified below. If the nominees are unable to serve, the shares represented by all such proxies will be voted for the election of such substitute as the Board of Directors may recommend. At this time, the Board of Directors knows of no reason why the nominees might be unable to serve, if elected. Except as indicated herein, there are no arrangements or understandings between the nominees and any other person pursuant to which such nominees were selected. Name (1) Age (2) Positions Held with Kaiser Federal Financial Group, Inc. Director Since (3) Current Term to Expire Shares of Common Stock Beneficially Owned (4)(5) Percent of Class NOMINEES John H. Cochrane 50 Director Nominee — — —% Donald R. Voss 61 Director Nominee — — — DIRECTORS NOT CONTINUING IN OFFICE Diana L. Peterson-More 61 Director 2,241(6) * Rita H. Zwern 64 Director * DIRECTORS CONTINUING IN OFFICE Giovani O. Dacumos 41 Director 3,667(8) * Michael J. Sacher 58 Director 14,866(9) * Robert C. Steinbach 58 Director 43,157(10) * James L. Breeden 68 Chairman of the Board 37,721(11) * Laura G. Weisshar 60 Director 23,077(12) * EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS Dustin Luton*** 41 President and Chief Executive Officer N/A N/A 63,908(13) * Jean M. Carandang*** 46 Chief Financial Officer N/A N/A 15,303(14) * Nancy J. Huber** 49 Chief Credit Officer N/A N/A 46,050(15) * Jeanne R. Thompson** 64 Chief Administrative Officer N/A N/A 53,482(16) * All nominees, directors and executive officers as a group (13 persons) 326,891 3.4% Footnotes follow on next page 4 * Less than 1%. ** Ms Huber and Ms. Thompson are officers of Kaiser Federal Bank only. *** Mr. Luton was appointed President and Chief Executive Officer and Ms. Carandang was appointed Chief Financial Officer of Kaiser Federal Financial Group, Inc. on July 1, 2011. The mailing address for each person listed is 1359 North Grand Avenue, Covina, California 91724. As of November 1, 2011. For Directors Breeden and Zwern, reflects initial appointment to the Board of Directors of Kaiser Permanente Federal Credit Union, the predecessor to Kaiser Federal Bank.Each director of Kaiser Federal Financial Group, Inc. is also a director of Kaiser Federal Bank. In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is deemed to be the beneficial owner for purposes of this table, of any shares of common stock if he or she has voting or investment power with respect to such security, or has a right to acquire beneficial ownership at any time with 60 days from the date as of which beneficial ownership is being determined. As used herein, “voting power” is the power to vote or direct the voting of shares and “investment power” is the power to dispose or direct the disposition of shares, and includes all shares held directly as well as by spouses and minor children, in trust and other indirect ownership, over which shares the names individuals effectively exercise sole or shared voting or investment power. Includes the following amounts of unvested shares of restricted stock granted under the K-Fed Bancorp 2004 Recognition and Retention Plan: 1,000 for director Dacumos, 1,000 for director Peterson-More, 2,158 for director Sacher, 1,439 for director Weisshar, 4,878 for Mr. Luton, 6,316 for Ms. Carandang, 2,000 for Ms. Huber and 2,000 for Ms. Thompson. Includes 1,241 shares held in an IRA for Ms. Peterson-More. Includes 10,469 shares of common stock held in a trust for Ms. Zwern. Includes 12,950 stock options that have vested or will vest within 60 days after November 1, 2011. Includes 800 shares of common stock held by Mr. Dacumos’ spouse. Includes 4,075 shares of common stock held in a trust for Mr. Sacher. Includes 7,194 stock options that have vested or will vest within 60 days after November 1, 2011. Includes 10,791 shares of common stock held by Mr. Steinbach’s spouse and 1,000 shares held in a trust for Mr. Steinbach.Includes 12,950 stock options that have vested or will vest within 60 days after November 1, 2011. Includes 1,896 shares of common stock held by Mr. Breeden’s spouse and 11,150 shares of common stock held in an IRA for Mr. Breeden.Includes 5,755 stock options that have vested or will vest within 60 days after November 1, 2011. Includes 11,568 shares of common stock held in a living trust. Includes 8,633 stock options that have vested or will vest within 60 days after November 1, 2011. Includes 7,574 shares of common stock held in the Kaiser Bank employee stock ownership plan, 3,977 shares of common stock held in the Kaiser Federal Bank 401(k) Plan and 1,438 shares held in an IRA for Mr. Luton. Includes 34,531 stock options that have vested or will vest within 60 days after November 1, 2011. Includes 2,801 shares of common stock held in Kaiser Federal Bank employee stock ownership plan and 1,150 shares of common stock held in the Kaiser Federal Bank 401(k) Plan. Includes 2,158 stock options that have vested or will vest within 60 days after November 1, 2011. Includes 15,823 shares of common stock held in the Kaiser Federal Bank employee stock ownership plan. Includes 20,142 stock options that have invested or will vest within 60 days after November 1, 2011. Includes 843 shares of common stock held by Ms. Thompson’s spouse, 6,042 shares of common stock held in a trust for Ms. Thompson, 13,684 shares of common stock held in the Kaiser Federal Bank employee stock ownership plan and 9,552 shares of common stock held in the Kaiser Federal Bank 401(k) Plan. Includes 20,142 stock options that have vested or will vest within 60 days after November 1, 2011. 5 The Business Background of Kaiser Federal Financial Group, Inc.’s Directors and Executive Officers The board believes that the many years of service that many of our directors have at Kaiser Federal Financial Group, Inc. and Kaiser Federal Bank is an important qualification for service on our board.This service has given them extensive knowledge of the banking business and of Kaiser Federal Financial Group, Inc.Furthermore, their service on our board committees, especially in the areas of audit, compensation and corporate governance, is critical to their ability to oversee the management of Kaiser Federal Bank by our executive officers. Each outside director brings special skills, experience and expertise to the board as a result of his or her other business activities and associations.The business experience of each of our directors for at least the past five years and the experience, qualifications, attributes, skills and areas of expertise of each director that further supports his or her service as a director are set forth below.Unless otherwise indicated, each director has held his or her current position for at least the past five years. Nominees John H. Cochrane. Mr. Cochrane serves as President and Chief Executive Officer of be.group, formerly known as Southern California Presbyterian Homes, one of the nation’s largest nonprofit organizations dedicated to providing quality housing, health and support services for older adults of all faiths.Prior to joining be.group in August 2009, he served as Chief Operating Officer from December 2006 to July 2009 at Lifespace Communities, a nonprofit operator of senior living communities located throughout the Midwest and Florida.Mr. Cochrane is a graduate of Northwestern University School of Law in Chicago and practiced law in the areas of real estate and finance before working in senior housing.He brings general management, legal, risk management and brand development skills to his service on the board. Donald R. Voss. Mr. Voss is an elected Councilmember of the City of La Cañada Flintridge, California.He became a member of the City Council in 2006 following five years service as City Treasurer.Previously, Mr. Voss held a variety of positions in a 25 year career with First Interstate Bank, culminating as an Executive Vice President and Manager of the U.S. Banking Division.Much of his banking experience was with domestic and international financial institutions.He brings general business, financial, credit and risk management, treasury management, and governance skills, which will be of importance to his service on our board. Directors Continuing in Office James L. Breeden. Mr. Breeden has served as Chairman of the Board of Directors since November 2000. He is a retired hospital administrator for the Kaiser Foundation Hospitals where he worked for 27 years.His management and business experience in hospital administration bring unique knowledge and skills directly related to our Kaiser Permanente affiliated customers that are beneficial to his service on the board, Executive Committee and the Audit Committee. Giovani O. Dacumos. Mr. Dacumos was appointed to the Board of Directors in April 2010. Mr. Dacumos has served as Director of Systems for the Department of Building and Safety of the City of Los Angeles since 2009 and has been with the department since 1999.He brings general business and financial skills, including a deep understanding of information technology, which is valuable to his service on our board, IT Steering Committee and the Audit Committee. Michael J. Sacher.Mr. Sacher was appointed to the Board of Directors in October 2008.He has spent the past 30 years in public accounting, specializing in the financial institutions sector.From August 2001 through July 2008, he served as a partner in the Credit Union Division with McGladrey & Pullen, LLP which served as the former registered public accounting firm of K-Fed Bancorp until 2004.Mr. Sacher resigned his partnership with McGladrey & Pullen to start a consulting firm providing services to the financial institutions sector. He is licensed as a certified public accountant in the State of California.He brings specific business, financial, risk management, audit and accounting skills related to financial institutions, which are important to his service on our board, Executive Committee and the Audit Committee. 6 Robert C. Steinbach. Mr. Steinbach has been employed by the City of Los Angeles Department of Building and Safety since January 1985 where he currently serves as an Assistant General Manger and Chief of the Inspection Bureau of over 350 employees, including all emergency response activities.He has served as Mayor and as City Council Member for the City of Lomita from 2000 – 2004 as well as six years as Chairman of the Planning and Community Development Advisory Boards. He brings general business, construction development, governmental relations, public / private sector relations, financial and risk management skills, including knowledge of compensation matters, to his service on our board, Executive Committee and the Compensation Committee. Laura G. Weisshar. Ms. Weisshar has been employed by the Kaiser Foundation Health Plan since 1992, serving in a number of management positions until her appointment in 2002 as the Vice President and Controller of the Kaiser Permanente Southern California Region.In 2010, Ms. Weisshar was promoted to the national position of Vice President of Finance for Community Benefit, Research and Health Policy. Ms. Weisshar is licensed as a certified public accountant in the State of California.Her experience brings unique knowledge and skills related to the Kaiser Permanente affiliated customers and as well as general business, financial, audit and accounting skills, which are important to her service on our board and the Audit Committee. Directors Not Continuing in Office Diana L. Peterson-More. Ms. Peterson-More joined the Board of Directors in May 2010.Ms. Peterson-More is the president of the Organizational Effectiveness Group, an organizational development and human resources consulting firm founded in 1996. Previously she served in a number of executive positions at Southern California Edison (where she was elected and served as Corporate Secretary at SCECorp and its chief subsidiary Southern California Edison Company) and The Times Mirror Company, where she headed the human resources department, covering 58,000 employees.Ms. Peterson-More is licensed to practice law in the State of California, and developed a recognized expertise as a management labor lawyer.She brings general business, financial, risk management, legal and corporate governance skills, including a proficiency in compensation matters, which is important to her service on our Compensation Committee. Rita H. Zwern. Ms. Zwern has served as secretary of Kaiser Federal Financial Group, Inc. since its formation in July 2003.She was employed by Kaiser Foundation Health Plan since 1984 until her retirement as manager of State Programs in 2011.Her management and business experience in the administration of Kaiser Foundation Health Plan’s state programs bring unique knowledge and skills to her service on the board and the Compensation Committee.Effective at this year’s annual meeting, Ms. Zwern will be appointed a director emeritus of Kaiser Federal Bank. Executive Officers Who are Not Directors Dustin Luton. Mr. Luton was appointed President and Chief Executive Officer of Kaiser Federal Financial Group, Inc. and of Kaiser Federal Bank effective July 1, 2011. Mr. Luton served as Chief Financial Officer for Kaiser Federal Bank from November 2006 until his appointment as the Chief Operating Officer in July 2009 and was given the additional position as President of the Bank in February 2011. He served as Chief Financial Officer of Kaiser Federal Financial Group, Inc. since November 2006 until his appointment as President and Chief Executive Officer. Previously, he was the Partner-in-Charge of the Southern California office of the National Credit Union Division of the accounting firm, McGladrey & Pullen, LLP. He was employed by McGladrey & Pullen, LLP beginning in 2000 and was responsible for supervising the professional staff and professional services provided to clients in the Southern California region. Jean M. Carandang. Ms. Carandang was appointed Chief Financial Officer of Kaiser Federal Financial Group, Inc. on July 1, 2011. Ms. Carandang joined the Bank in December 2008 as Vice President of Finance and was appointed Chief Financial Officer of Kaiser Federal Bank in July 2009. She was formerly Senior Vice President, Controller of PFF Bank & Trust from 2005 until 2008 and also served as Corporate Controller and Risk Officer at Quaker City Bank from 1993 until 2005. 7 Nancy J. Huber.Ms. Huber joined Kaiser Federal Bank in 1992 and has served as the Chief Credit Officer since 1999. In this role, she is responsible for all credit related functions including retail loan originations, income property lending, loan servicing, credit administration, lending compliance, and loss mitigation including collections, special asset monitoring, and problem asset disposition. From 2002-2010, Ms. Huber was Kaiser Federal Bank’s Community Reinvestment Act Officer. Jeanne R. Thompson. Ms. Thompson has served as Chief Administrative Officer since 2009.From 2001 until 2009, she served as Chief Operating Officer of Kaiser Federal Bank.She served as senior vice president for branch operations of Indy Mac Bank from 2000 to 2001 upon the acquisition of First Federal Savings and Loan Association of San Gabriel Valley, where she served from 1985 to 2000. Board Independence The Board of Directors consists of a majority of “independent directors” within the meaning of the Nasdaq corporate governance listing standards. The Board of Directors has determined that directors Breeden, Dacumos, Peterson-More, Sacher, Steinbach, Weisshar and Zwern and nominees John H. Cochrane and Donald R. Voss are each “independent” within the meaning of the Nasdaq corporate governance listing standards. There were no transactions between the members of the Board of Directors and Kaiser Federal Financial Group, Inc. that we considered in determining the independence of a director, except those stated in “Transactions with Certain Related Persons.”The Board of Directors has adopted a policy that the independent directors of the board shall meet in executive sessions periodically, which meetings may be held in conjunction with regularly scheduled board meetings. Board Leadership Structure and Risk Oversight Our Board of Directors is chaired by James L. Breeden, who is a non-executive director.This structure ensures a greater role for the independent directors in the oversight of the Kaiser Federal Financial Group, Inc. and Kaiser Federal Bank and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of the Board. The Board of Directors is actively involved in oversight of risks that could affect Kaiser Federal Financial Group, Inc. This oversight is conducted primarily through committees of the Board of Directors, but the full Board of Directors has retained responsibility for general oversight of risks. The Board of Directors satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within Kaiser Federal Financial Group, Inc.Risks relating to the direct operations of Kaiser Federal Bank are further overseen by the Board of Directors of Kaiser Federal Bank, who are the same individuals who serve on the Board of Directors of Kaiser Federal Financial Group, Inc.The Board of Directors of Kaiser Federal Bank also has additional committees that conduct risk oversight separate from Kaiser Federal Financial Group, Inc. Further, the Board of Directors oversees risks through the establishment of policies and procedures that are designed to guide daily operations in a manner consistent with applicable laws, regulations and risks acceptable to the organization. Meetings and Committees of the Board of Directors Our business is conducted at regular and special meetings of the full Board of Directors and its standing committees. The standing committees consist of the executive, audit, compensation and governance/nominating committees. During the fiscal year ended June 30, 2011, the Board of Directors of Kaiser Federal Financial Group, Inc. held four regular meetings and one special meeting and the Board of Directors of Kaiser Federal Bank held 12 regular meetings and no special meetings. No director attended fewer than 75% in the aggregate of the total number of board meetings held and the total number of committee meetings on which he or she served during fiscal 2011. Executive Committee. The executive committee consists of directors Breeden, who serves as Chairman, Sacher and Steinbach. The executive committee meets as needed. The executive committee is generally authorized to act on behalf of the full Board of Directors when certain business matters require prompt action.The executive committee met four times during the fiscal year ended June 30, 2011. 8 Audit Committee. The audit committee consists of directors Sacher, who serves as Chairman, Breeden, Dacumos and Weisshar. The audit committee meets with the independent registered public accounting firm at least on a quarterly basis to discuss the results of operations and on an annual basis to review the results of the annual audit and other related matters. Each member of the audit committee is “independent” as defined in the Nasdaq corporate governance listing standards and Rule 10A-3 of the Securities and Exchange Commission. The Board of Directors has determined that directors Sacher and Weisshar qualify as “audit committee financial experts” as that term is used in the rules and regulations of the Securities and Exchange Commission. The audit committee charter is available on Kaiser Federal Financial Group, Inc.’s website at www.kffg.com. The audit committee met five times during the fiscal year ended June 30, 2011. Compensation Committee. The compensation committee is responsible for recommending to the full board the compensation of the chief executive officer and senior management, reviewing and administering overall compensation policy, including setting performance measures and goals, approving benefit programs, establishing compensation of the Board of Directors and other matters of personnel policy and practice of Kaiser Federal Bank. The compensation committee of Kaiser Federal Financial Group, Inc. is comprised of directors Steinbach, who serves as Chairman, Peterson-More, and Zwern. Each member of the compensation committee is considered “independent” as defined in the Nasdaq corporate governance listing standards. The report of the compensation committee is included elsewhere in this proxy statement. Our Board of Directors has adopted a written charter for the compensation committee, which is available on Kaiser Federal Financial Group, Inc.’s website at www.kffg.com. The compensation committee met eight times during the fiscal year ended June 30, 2011. The role of the compensation committee is to review annually the compensation levels of the executive officers and recommend compensation changes to the Board of Directors. The compensation committee is composed entirely of outside, non-employee directors. It is intended that the executive compensation program will enable us to attract, motivate and retain talented executive officers who are capable of achieving our growth strategy and enhancing long-term stockholder value. The compensation committee has adopted a compensation philosophy that seeks to provide competitive, performance-based compensation strongly aligned with the financial and stock performance of Kaiser Federal Financial Group, Inc. The key elements of our compensation program for executives are: base salary, annual incentive compensation and stock based award compensation. For a discussion of how the compensation committee evaluates compensation components in making its decisions, see “Compensation Discussion and Analysis.” Governance/Nominating Committee. The governance/nominating committee consists of directors Sacher, who serves as Chairman, Breeden, Dacumos, Steinbach and Weisshar.Each member of the governance/nominating committee is considered “independent” as defined in the Nasdaq corporate governance listing standards. The Board of Directors has adopted a written charter for the governance/nominating committee, which is available on Kaiser Federal Financial Group, Inc.’s website at www.kffg.com. The governance/nominating committee met one time during the fiscal year ended June 30, 2011.The functions of the governance/nominating committee include the following: ● leading the search for individuals qualified to become members of the Board of Directors and to select director nominees to be presented for stockholder approval; ● developing and recommending to the Board of Directors other specific criteria not specified in its charter for the selection of individuals to be considered for election or re-election to the Board of Directors; ● adopting procedures for the submission of recommendations by stockholders for nominees for the Board of Directors; and 9 ● annually reviewing the adequacy of its charter and recommending any proposed changes to the Board of Directors. The governance/nominating committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service. Current members of the Board of Directors with skills and experience that are relevant to our business and who are willing to continue in service are first considered for re-nomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining a new perspective. In addition, the governance/nominating committee is authorized by its charter to engage a third party to assist in the identification of director nominees. Although the governance/nominating committee and the Board do not have a formal policy with regard to the consideration of diversity in identifyingdirector nominees, the governance/nominating committee would seek to identify a candidate who, at a minimum, satisfies the following criteria: ● the highest personal and professional ethics and integrity and whose values are compatible with our values; ● experience and achievements that have given them the ability to exercise and develop good business judgment; ● a willingness to devote the necessary time to the work of the Board of Directors and its committees, which includes being available for board and committee meetings; ● a familiarity with the communities in which we operate and/or are actively engaged in community activities; ● involvement in other activities or interests that do not create a conflict with their responsibilities to us and our stockholders; and ● the capacity and desire to represent the balanced, best interests of our stockholders as a group, and not primarily a special interest group or constituency. The governance/nominating committee will also take into account whether a candidate satisfies the criteria for “independence” under the Nasdaq corporate governance listing standards. Procedures for the Nomination of Directors by Stockholders. The governance/nominating committee has adopted procedures for the submission of recommendations for director nominees by our stockholders. If a determination is made that an additional candidate is needed for the Board of Directors, the governance/nominating committee will consider candidates submitted by our stockholders. Stockholders can submit the names of qualified candidates for director by writing to the chairman of the governance/nominating committee at 1359 North Grand Avenue, Covina, California 91724. The chairman must receive a submission not less than one hundred and twenty (120) days prior to the date of our proxy materials for the preceding year’s annual meeting. The submission must include the following information: ● a statement that the writer is a stockholder and is proposing a candidate for consideration by the governance/nominating committee; ● the name and address of the stockholder as they appear on our books, and number of shares of our common stock that are owned beneficially by such stockholder (if the stockholder is not a holder of record, appropriate evidence of the stockholder’s ownership will be required); ● the name, address and contact information for the candidate, and the number of shares of our common stock that are owned by the candidate (if the candidate is not a holder of record, appropriate evidence of the stockholder’s ownership should be provided); 10 ● a statement of the candidate’s business and educational experience; ● such other information regarding the candidate as would be required to be included in the proxy statement pursuant to Regulation 14A of the Securities Exchange Act of 1934; ● a statement detailing any relationship between the candidate and any customer, supplier or competitor of Kaiser Federal Financial Group, Inc. or its affiliates; ● detailed information about any relationship or understanding between the proposing stockholder and the candidate; and ● a statement of the candidate that the candidate is willing to be considered and willing to serve as a director if nominated and elected. A nomination submitted by a stockholder for presentation by the stockholder at an annual meeting of our stockholders must comply with the procedural and informational requirements described in our bylaws. Stockholder Communications with the Board of Directors. A stockholder who wants to communicate with the Board of Directors or with any individual director can write to Kaiser Federal Financial Group, Inc. at 1359 North Grand Avenue, Covina, California 91724, Attention: Chairman of the Governance/Nominating Committee. The letter should indicate that the author is a stockholder and, if shares are not held of record, should include appropriate evidence of stock ownership. Depending on the subject matter, management will: ● forward the communication to the director or directors to whom it is addressed; ● attempt to handle the inquiry directly, or forward the communication for response by another employee. For example, a request for information about us as a stock-related matter may be forwarded to our stockholder relations officer; or ● not forward the communication if it is primarily commercial in nature, relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate. At each Board of Directors meeting, management shall present a summary of all communications received since the last meeting that were not forwarded and make those communications available to the directors. Code of Ethics The Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our officers, directors and employees, and a Code of Ethics for the Chief Executive Officer and senior financial officers of Kaiser Federal Financial Group, Inc.The codes are intended to promote honest and ethical conduct, full and accurate reporting and compliance with laws. The codes are available on Kaiser Federal Financial Group, Inc.’s website at www.kffg.com. Amendments to and waivers from the Code of Ethics will also be disclosed on Kaiser Federal Financial Group, Inc.’s website. Attendance at Annual Meetings of Stockholders Although we do not have a formal written policy regarding director attendance at annual meetings of stockholders, it is expected that directors will attend our annual meetings. All of our current directors attended the prior year’s annual meeting of stockholders. Audit Committee Report The audit committee operates under a written charter adopted by the Board of Directors. The audit committee has issued a report which states that it has: 11 ● reviewed and discussed with management and our independent registered public accounting firm, our audited consolidated financial statements for the fiscal year ended June 30, 2011; ● discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended; and ● received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence, and has discussed with the independent registered public accounting firm their independence from us. Based on the review and discussions referred to above, the audit committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2011 and to be filed with the Securities and Exchange Commission. In addition, the audit committee approved the appointment of Crowe Horwath LLP as the independent registered public accounting firm for us for the fiscal year ending June 30, 2012, subject to the ratification of this appointment by our stockholders. This report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this report by reference, and shall not otherwise be deemed filed with the Securities and Exchange Commission. This report has been provided by the audit committee. Michael J. Sacher, Chairman James L. Breeden Giovani O. Dacumos Laura G. Weisshar Section 16(a) Beneficial Ownership Reporting Compliance Our common stock is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended. Our officers and directors and beneficial owners of greater than 10% of our common stock are required to file reports on Forms 3, 4 and 5 with the Securities and Exchange Commission disclosing beneficial ownership and changes in beneficial ownership of our common stock. Securities and Exchange Commission rules require disclosure in a company’s annual proxy statement of the failure of an officer, director or greater than 10% beneficial owner of the common stock to file a Form 3, 4 or 5 on a timely basis. Based on our review of such ownership reports, no officer, director or 10% beneficial owner of our common stock failed to file such ownership reports on a timely basis for the fiscal year ended June 30, 2011. Compensation Committee Interlocks and Insider Participation Our Compensation Committee determines the salaries to be paid each year to the Chief Executive Officer of Kaiser Federal Financial Group, Inc. and those executive officers who report directly to the Chief Executive Officer.None of the members of the Compensation Committee was an officer or employee of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank during the fiscal year ended June 30, 2011, or is a former officer of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank. During the fiscal year ended June 30, 2011, (i) no executive of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the Compensation Committee of Kaiser Federal Financial Group, Inc.; (ii) no executive officer of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank served as a director of another entity, one of whose executive officers served on the Compensation Committee of Kaiser Federal Financial Group, Inc.; and (iii) no executive officer of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank. 12 Compensation Discussion and Analysis Compensation Objectives.We believe the most effective executive compensation program is one that is aligned with achievement of our long-term strategic goals and we intend for our compensation program to align executives’ interests with those of the stockholders by rewarding performance for implementing our various strategies with the ultimate objective of improving stockholder value.We evaluate both performance and compensation to ensure that we maintain our ability to attract and retain employees in key positions and to ensure that compensation provided to key employees keeps these employees focused on value creation.Accordingly, the objectives of our compensation program are as follows: ● Meeting the Demands of the Market – Our goal is to compensate our employees at competitive levels that position us as the employer of choice among our peers who provide similar financial services in the markets we serve. ● Aligning with Stockholders – We use equity compensation as a key component of our compensation mix to develop a culture of ownership among our key personnel and to align their individual financial interests with the interests of our stockholders. ● Driving Performance – We will base compensation in part on the attainment of company-wide, business unit and individual targets that return positive results to our bottom line. ● Reflecting our Business Philosophy – Our approach to compensation reflects our values and the way we do business in the communities we serve. This discussion is focused specifically on the compensation of the following executive officers, each of whom is named in the Summary Compensation Table which appears later in this section.These five executives are referred to in this discussion as “named executive officers.” Name Title Kay M. Hoveland President and Chief Executive Officer of Kaiser Federal Financial Group, Inc. and Chief Executive Officer of Kaiser Federal Bank Dustin Luton Chief Financial Officer of Kaiser Federal Financial Group, Inc. and President and Chief Operating Officer of Kaiser Federal Bank Jean M. Carandang Chief Financial Officer of Kaiser Federal Bank Nancy J. Huber Chief Credit Officer of Kaiser Federal Bank Jeanne R. Thompson Chief Administrative Officer of Kaiser Federal Bank Effective July 1, 2011, Ms. Hoveland retired from her positions as Chief Executive Officer and director of Kaiser Federal Bank as well as President and Chief Executive Officer and director of Kaiser Federal Financial Group, Inc.The Board of Directors appointed Mr. Luton to succeed Ms. Hoveland as the Chief Executive Officer of the Bank and President and Chief Executive Officer of Kaiser Federal Financial Group, Inc. effective July 1, 2011.In addition, the Board of Directors appointed Ms. Carandang to succeed Mr. Luton as Chief Financial Officer of Kaiser Federal Financial Group, Inc., effective July 1, 2011. 13 Role of the Compensation Committee.Our Compensation Committee has a significant role in helping us achieve our compensation objectives.The Compensation Committee is responsible for all compensation and benefit matters relating to the named executive officers, including the evaluation and compensation of our Chief Executive Officer.The Compensation Committee regularly evaluates and approves all compensation practices applicable to the named executive officers, including our Chief Executive Officer.The Chief Executive Officer evaluates the performance of the other named executive officers and recommends to the Compensation Committee the named executive officers’ compensation levels for approval. Market Comparisons.In determining the compensation program for our named executive officers, the Compensation Committee engaged McLagen, a compensation consulting firm specializing in the banking industry, to conduct a total compensation review for its top executive officers.As part of this process, the Compensation Committee selected a peer group of 19 public banks based on geographic location, asset size and performance.The Compensation Committee reviewed compensation data derived from public filings of these publicly traded financial institutions.Based on such market comparison information, the recommendations of the Chief Executive Officer and the independent analysis of the data performed by the Compensation Committee, the Compensation Committee determined the various components and levels of compensation for our named executive officers.Following the completion of the 2011 fiscal year, the Compensation Committee adopted a compensation philosophy to provide overarching guidance for establishing and managing all elements of executive compensation.The Compensation Committee targets base salary for each named executive officer at the 50th to 60th percentiles of Kaiser Federal Financial Group, Inc.’s peer group, total annual compensation at the 50th to 75th percentiles of Kaiser Federal Financial Group, Inc.’s peer group for target level performance; and the 75th to 90th percentiles of Kaiser Federal Financial Group, Inc.’s peer group for maximum level performance. The peer group was created based on the following criteria: ● Publicly traded financial institutions. ● Locations in the states of California, Oregon and Washington. ● $500 Million - $1.6 Billion in assets. ● Comparable business model and performance results. The peer group was as follows: ●First California Financial Group ●Heritage Financial Corp. ●Provident Financial Holdings ●Sierra Bancorp ●Pacific Continental Corp. ●Bank of Marin Bancorp ●Pacific Mercantile Bancorp ●Bridge Capital Holdings ●Heritage Oaks Bancorp ●Bank of CommerceHoldings ●First PacTrust Bancorp, Inc. ●Riverview Bancorp, Inc. ●Pacific Premier Bancorp ●Central Valley Community Bancorp ●California United Bank ●First Northern Community Bancorp ●FNB Bancorp ●Community West Bancshares ●American River Bankshares Compensation Program.We provide what we consider to be a competitive compensation package for the named executive officers, comprised of a base salary, an annual incentive plan, a stock option plan, a recognition and retention plan for restricted stock awards, an employee stock ownership plan, a 401(k) Plan, and a deferred compensation program, as well as health and welfare benefits.See “Executive Compensation—Benefit Plans” and “Executive Compensation—Tax Qualified Benefit Plans” for further details.These benefits are provided to our named executive officers in order to attract and retain these highly qualified individuals for the benefit of all of our stockholders and are considered by the Compensation Committee to be reasonable when compared to industry averages.The Compensation Committee seeks to create what it believes is the best mix of base salary, annual cash incentives, and equity compensation in delivering the named executive officers’ total cash compensation. The compensation program is also designed to encourage and reward executives for achieving and maintaining high levels of performance. 14 The Compensation Committee reviewed compensation for the year ended June 30, 2011 for the named executive officers relative to the competitive market and relative to results delivered on established objectives and performance criteria.The Compensation Committee concluded that the named executive officers’ compensation was consistent with market practice and was based on reasonable performance. Base Salary. It is our philosophy to maintain base salaries at levels comparable to the salaries paid by similar organizations. In establishing base salaries, we take into account each named executive officer’s ability and experience as well as past and potential performance.On an annual basis, each named executive officer is evaluated and his or her base salary may be adjusted, based on market data and the above factors.The Compensation Committee set the base salaries for Ms. Hoveland, Mr. Luton, Ms. Carandang, Ms. Huber and Ms. Thompson at $364,000, $275,000, $180,000, $175,000, and $155,000, respectively, for the 2011 fiscal year.For the 2012 fiscal year, the Compensation Committee increased the base salaries of Mr. Luton, Ms. Carandang, Ms. Huber and Ms. Thompson to $325,000, $187,200, $182,000 and $161,200, respectively, based on the named executive officer’s individual qualifications, experience and performance and the value of his or her service to the organization.Each named executive officer’s 2012 base salary was in the range of the 50th to the 60th percentile of Kaiser Federal Financial Group, Inc.’s peer group with respect to his or her executive position. Annual Cash Incentives. The Annual Incentive Plan was adopted in order to link potential payments with our stockholders’ interests, and is an integral part of the named executive officers’ total compensation package that recognizes their annual contribution to our success. The Annual Incentive Plan also rewards the named executive officers who are directly responsible for the high performance of Kaiser Federal Financial Group, Inc. and Kaiser Federal Bank.The Annual Incentive Plan is designed to: (1) support a business change to community-based banking; (2) support a culture change to pay-for-performance; (3) focus the executive team on annual goals to meet long-term goals; (4) reward executives for their contributions; and (5) align compensation with the goals of the organization and marketplace practices.The award is achieved only if Kaiser Federal Bank achieves a minimum return on average assets (ROA) which is set at the beginning of each plan year.ROA was established as the performance metric for the plan since ROA is a commonly used metric to determine the performance of a financial institution. If our ROA goal is achieved, each individual executive must also achieve certain personal performance objectives set by the Chief Executive Officer or the Board of Directors. Personal performance objectives vary and are tailored to the job responsibilities of each individual executive.However, one of these objectives must address expense management.The Chief Executive Officer of Kaiser Federal Bank and the President of Kaiser Federal Bank are eligible to receive an amount up to 30% of their annual base salary and the remaining named executive officers are eligible to receive amounts up to 20% of their annual base salaries under this plan. In addition, the dollar amount of an award may be further increased over such maximums up to an additional 20% of the award to recognize achievement significantly in excess of performance objectives.For the 2011 plan year, the performance metric for ROA was set at 0.63%, which was achieved by Kaiser Federal Bank.As a result, Mr. Luton, Ms. Carandang, Ms. Huber, and Ms. Thompson each received a payment under the Annual Incentive Plan equal to $66,458, $36,000, $35,000 and $31,000, respectively. On July 26, 2011, Kaiser Federal Bank adopted a new Annual Incentive Plan.The plan will provide annual incentive awards to participants based on overall company-wide, department and/or individual performance goals as established annually by the Compensation Committee.The company-wide performance goals will be based on Kaiser Federal Bank’s success as measured by criteria determined by the Compensation Committee, with input from the Chief Executive Officer which will be determined by using performance history, peer data, market data and management’s judgment based on previous experience and projected market conditions.The department and/or individual performance goals will be based on the department and/or participant’s individual success as measured against predetermined goals.The terms of the plan are substantially similar to our prior Annual Incentive Plan except that participants who are “named executive officers” (as determined by the Compensation Committee) will be required to defer 30% of any incentive award earned during the plan year.The deferred amount will be payable in two installments, with the first installment to be paid within two and one-half (2.5) months following the end of the first anniversary date following the end of the plan year, and second installment payment to be paid within two and one-half (2.5) months following the end of the second anniversary date following the end of the plan year.Payments of the deferred amounts to the participants will be subject to certain performance requirements that must be satisfied by Kaiser Federal Bank and/or the participant during such deferral period.In addition, incentive awards that are payable to participants who are named executive officers will be subject to clawback if the incentive awards were determined based on any materially inaccurate financial information or if the participants’ activities within the plan year, and for one year thereafter, pose material risk to Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank.We believe that requiring a named executive officer to defer a portion of his or her incentive compensation earned under the plan and having a clawback feature makes the plan more sensitive to risk. 15 Equity Compensation.The Compensation Committee uses the award of stock options and restricted stock under the 2004 Stock Option Plan and the 2004 Recognition and Retention Plan to align the interests of the named executive officers with those of our stockholders. At the annual meeting of stockholders in 2004, stockholders approvedthe 2004 Stock Option Plan and2004 Recognition and Retention Plan.Ms. Hoveland, Ms. Huber, and Ms. Thompson received both stock options and restricted stock awards from the Compensation Committee under each of those equity compensation plans during 2004.Mr. Luton received stock options and restricted stock awards when he became Chief Financial Officer of K-Fed Bancorp in November 2006.Ms. Carandang received restricted stock awards when she became Chief Financial Officer of Kaiser Federal Bank in July 2009.In January 2009, all of the named executive officers were granted stock options.In June 2011, all of the named executive officers, except Ms. Hoveland who was retiring, were granted restricted stock awards.Also, Mr. Luton upon announcement of his promotion to President and Chief Executive Officer was granted stock options.Both the stock options and the restricted stock awards vest at a rate of 20% per year, over five years, commencing on the first anniversary of the grant date. The Compensation Committee believes that the five-year vesting of stock options and restricted stock awards applicable to these grants will focus senior management on long-term performance and stock appreciation, which will align their interests with our stockholders. Information regarding the outstanding stock option grants and unvested recognition and retention plan awards is included in the section titled “Executive Compensation — Outstanding Equity Awards at Year End.” Other Benefit Plans.The Compensation Committee annually reviews the expense and appropriateness of all benefit plans for the named executive officers and all other employees. The benefit plans include a tax-qualified 401(k) plan and employee stock ownership plan, a non-qualified deferred compensation plan and other benefit plans such as medical, dental, life and disability insurance. The named executive officers are eligible to participate in a 401(k) plan, which includes the right to receive a matching contribution from Kaiser Federal Bank of up to 50% of the participant’s eligible contributions, not to exceed 10% of the participant’s salary.The matching contribution and the investment options available to the named executive officers are identical to those available to all other participants. Under the terms of our employee stock ownership plan, all employees, including our named executive officers, who have attained age 21 and have completed 12 months of service during which they have worked at least 1,000 hours are eligible to participate in the employee stock ownership plan.Allocations under the employee stock ownership plan are based upon each participant’s eligible compensation, up to $245,000, in relation to all other participants. Our named executive officers are eligible to participate in the Amended and Restated Kaiser Federal Bank 2005 Executive Nonqualified Retirement Plan, which is a non-qualified deferred compensation plan that allows them to defer a portion of their compensation earned during the plan year. At our discretion, we have the ability to match the elective deferrals of the participants.However, we have not made any matching contributions to this plan since the plan’s inception. 16 Employment Agreements.The Board of Directors approved the employment agreements for Ms. Hoveland, Mr. Luton, Ms. Carandang, Ms. Huber, and Ms. Thompson. The employment agreements are designed to give us the ability to retain the services of the named executive officers while reducing, to the extent possible, unnecessary disruptions to Kaiser Federal Bank’s business operations.The Compensation Committee believes that the employment agreements are consistent with industry practices and desirable for retaining executive talent, and will provide stability among our senior management team. Tax and Accounting Implications.In consultation with our advisors, we evaluate the tax and accounting treatment of our compensation program at the time of adoption and on an annual basis to ensure that we understand the financial impact of the program.Our analysis includes a detailed review of recently adopted and pending changes in tax and accounting requirements.As part of our review, we consider modifications and/or alternatives to existing programs to take advantage of favorable changes in the tax or accounting environment or to avoid adverse consequences.To preserve maximum flexibility in the design and implementation of our compensation program, we have not adopted a formal policy that requires all compensation to be tax deductible.However, to the greatest extent possible, it is our intent to structure our compensation program in a tax efficient manner. Risk Management. The Compensation Committee believes that any risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on Kaiser Federal Financial Group, Inc. and Kaiser Federal Bank. In addition, the Compensation Committee believes that the mix and design of the elements of our executive compensation does not encourage management to assume excessive risks. The Compensation Committee regularly reviews our incentive-based plans to ensure that controls are in place so that our employees are not presented with the opportunities to take unnecessary and excessive risks that could threaten the value of Kaiser Federal Financial Group, Inc. and Kaiser Federal Bank.With respect to the Annual Incentive Plan, the Compensation Committee reviews and approves individual performance objectives that determine the bonus payments to be made thereunder, and payments are contingent upon Kaiser Federal Bank’s satisfaction of the ROA performance metric that is established at the beginning of the plan year.Finally, our employee stock ownership plan and stock-based incentives plans have put more stock into the hands of our employees which will align their interests with those of our stockholders, and in turn will contribute to long-term stockholder value and decrease the likelihood that they would take excessive risks that could threaten the value of their common stock received under each plan. Report of the Compensation Committee on Executive Compensation The Compensation Committee has reviewed and discussed the section entitled “Compensation Discussion and Analysis” with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement. This report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this report by reference, and shall not otherwise be deemed filed with the Securities and Exchange Commission. This report has been provided by the Compensation Committee Robert C. Steinbach, Chairman Diana L. Peterson-More Rita H. Zwern 17 Executive Compensation Summary Compensation Table.The following table sets forth, for the years ended June 30, 2011, 2010 and 2009, certain information as to the total compensation paid to Ms. Hoveland, who served as President and Chief Executive Officer of Kaiser Federal Financial Group, Inc. and Chief Executive Officer of Kaiser Federal Bank, Mr.Luton, who served as Chief Financial Officer of Kaiser Federal Financial Group, Inc. and President and Chief Operating Officer of Kaiser Federal Bank, and to the three other most highly compensated executive officers of Kaiser Federal Financial Group, Inc. and its subsidiaries.Each of the individuals listed in the table below is referred to as a “named executive officer.” Summary Compensation Table Name and Principal Position Year Salary Bonus Option Awards Stock Awards Non-equity incentive plan compensation All other compensation ($)(3) Total Kay M. Hoveland,(4) — President and Chief Executive — Officer of Kaiser Federal Financial — — Group, Inc. and Chief Executive Officer of Kaiser Federal Bank Dustin Luton,(4) — Chief Financial Officer of Kaiser — Federal Financial Group, Inc. and — — President and Chief Operating Officer of Kaiser Federal Bank Jean M. Carandang,(4), (5) — — Chief Financial Officer of — — — Kaiser Federal Bank — — Nancy J. Huber, — — Chief Credit Officer of Kaiser — — — Federal Bank — — Jeanne R. Thompson, — — Chief Administrative Officer of — — — Kaiser Federal Bank — — Represents the grant date fair value of stock options and restricted stock received by the named executive officers under the 2004 Stock Option Plan and the 2004 Recognition and Retention Plan.The grant date fair value has been computed in accordance with the stock-based compensation accounting rules (FASB ASC Topic 718, formerly SFAS 123R).A discussion of the assumptions used in calculating the award values may be found at Note 12 of our notes to our consolidated financial statements. All cash incentive plan awards are reported for the fiscal year for which they were earned pursuant to the Annual Incentive Plan.These awards are traditionally paid during the first quarter of the following fiscal year. The amounts in this column reflect the various benefits and payments received by the applicable named executive officer.A break-down of the various elements of compensation in this column is set forth in the table provided below for the year ended June 30, 2011. Ms. Hoveland retired as President and Chief Executive Officer effective on July 1, 2011.Mr. Luton and Ms. Carandang were promoted to President and Chief Executive Officer of Kaiser Federal Financial Group, Inc. and Kaiser Federal Bank and Chief Financial Officer of Kaiser Federal Financial Group, Inc., respectively, on July 1, 2011. Ms. Carandang joined Kaiser Federal Bank effective December 8, 2008. 18 All Other Compensation Name Year Perquisites Employer Contributions to 401(k) Plan ($) RRP Dividends ESOP Allocation Directors Fees Total Kay M. Hoveland — — Dustin Luton — — Jean M. Carandang — — Nancy J. Huber — — — Jeanne R. Thompson — — — For the year ended June 30, 2011, no named executive officer received perquisites or personal benefits which exceeded $10,000. Represents dividends on unearned restricted stock awards granted pursuant to the 2004 Recognition and Retention Plan. Ms. Hoveland, our President and Chief Executive Officer, is also a director. Grants of Plan-Based Awards.The following table provides information for the year ended June 30, 2011 as to grants of plan-based awards for our named executive officers. Grants of Plan-Based Awards For the Year Ended June 30, 2011 Estimated future payouts under Non- equity incentive plan awards All other stock awards: number of shares of stock or units (#)(2) All other option awards: number of securities underlying options (#)(3) Exercise or base price of option awards ($/Sh) Grant Date Fair Value of Stock and Option Awards Name Grant Dates Threshold Target Maximum Kay M. Hoveland 7/1/2010 — Dustin Luton 7/1/2010 — 6/28/2011 — — — Jean M. Carandang 7/1/2010 — 6/28/2011 — Nancy J. Huber 7/1/2010 — 6/28/2011 — Jeanne R. Thompson 7/1/2010 — 6/28/2011 — Represents threshold, target, and maximum payments achievable under the Annual Incentive Plan, based upon the financial targets to be achieved during the year ended on June 30, 2011. Stock awards were issued under the 2004 Recognition and Retention Plan. Option awards were issued under the 2004 Stock Option Plan. Benefit Plans Employment Agreements.On November 19, 2010, Kaiser Federal Bank entered into employment agreements with Ms. Hoveland, Mr. Luton, Ms. Carandang, Ms. Huber and Ms. Thompson (referred to below as the “executives” or “executive”).Each employment agreement has an initial term of two years.At least 60 days prior to the anniversary date of each agreement, the disinterested members of the Board of Directors of Kaiser Federal Bank must conduct a comprehensive performance evaluation and affirmatively approve any extension of each agreement for an additional year or determine not to extend the term of the agreement.If the Board of Directors determines not to extend the term, it must notify the executive at least 30 days, but not more than 60 days, prior to such date.Each agreement will provide for a payment of base salary for 2011 of $364,000, $275,000, $180,000, $175,000, and $155,000, for Ms. Hoveland, Mr. Luton, Ms. Carandang, Ms. Huber and Ms. Thompson, respectively.Each executive’s base salary will be reviewed at least annually, and may be increased, but not decreased.In addition to base salary, each agreement provides for, among other things, participation in bonus programs and other employee pension benefit and fringe benefit plans applicable to executive employees. 19 In the event of the executive’s involuntary termination of employment for reasons other than cause, disability or death, or in the event the executive resigns during the term of his or her agreement for “good reason,” the executive would be entitled to a severance payment equal to one times the executive’s highest annual rate of base salary at any time during the term of the agreement, payable in a single cash lump sum distribution.In addition, the executive would be entitled, at no expense, to the continuation of substantially comparable life, medical and disability coverage that cease upon the earlier of: (i) the last day of the 12-month period following the executive’s date of termination; or (ii) the date the executive becomes eligible for Medicare coverage.Finally, the executive would be entitled to receive a lump-sum payment equal to the present value of Kaiser Federal Bank’s contributions that would have been made on his or her behalf to the 401(k) plan and the employee stock ownership plan as if the executive had continued working for Kaiser Federal Bank for a 12-month period following the executive’s date of termination, earning his or her base salary in effect as of the date of termination and as if the executive had made the maximum amount of employee contributions permitted under the 401(k) plan.For purposes of each agreement, “good reason” is defined as follows: (i) a material reduction in base compensation; (ii) a material reduction in the executive’s duties or responsibilities; (iii) a requirement that the executive reports to a corporate officer other than the President and Chief Executive Officer; (iv) a material reduction in the budget over which the executive has authority; (v) a relocation of the executive’s principal place of employment by more than 50 miles from the location, as of the date of the agreement; or (vi) a material breach of the agreement by Federal Kaiser Bank.For Ms. Hoveland, “good reason” is defined as the requirement that she reports to a corporate officer instead of the Board of Directors. If the executive’s involuntary termination of employment or voluntary resignation for “good reason” occurs following a change in control of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank, the executive would be entitled to a severance payment equal to two times the sum of: (i) the executive’s highest annual rate of base salary at any time during the term of the agreement and (ii) the executive’s highest annual bonus received during the latest two calendar years prior to the termination, payable in a single cash lump sum distribution.In addition, the executive would be entitled, at no expense, to the continuation of substantially comparable life, medical and disability coverage that cease upon the earlier of: (i) the last day of the 24-month period following the executive’s date of termination; or (ii) the date the executive becomes eligible for Medicare coverage.Finally, the executive would be entitled to receive a lump-sum payment equal to the present value of Kaiser Federal Bank’s contributions that would have been made on his or her behalf to the 401(k) plan and the employee stock ownership plan as if the executive had continued working for Kaiser Federal Bank for a 24-month period following the executive’s date of termination, earning his or her base salary in effect as of the date of termination and as if the executive had made the maximum amount of employee contributions permitted under the 401(k) plan. Each agreement provides that for one year following the executive’s termination (other than termination of employment following a change in control), the executive agrees not to compete with Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank within 25 miles of the locations in which Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank has business operations or has filed an application for regulatory approval to establish an office. On July 1, 2011, Kaiser Federal Bank and Mr. Luton entered into an employment agreement that superseded and replaced his employment agreement as described above.The parties desired to enter into a new employment agreement as a result of Mr. Luton’s promotion to President and Chief Executive Officer on July 1, 2011.The terms of Mr. Luton’s new employment agreement are materially consistent with the terms of his employment agreement dated November 19, 2010, except that he is entitled to a base salary of $325,000 per year. 20 Annual Incentive Plan.Kaiser Federal Bank sponsors the Annual Incentive Plan (“AIP”) in order to provide financial incentives to a select group of executive officers.The Board of Directors and the Chief Executive Officer have the authority to select the employees who will participate in the AIP, determine the terms and conditions of the awards, and interpret the AIP. Under the AIP, the participants are only eligible to receive an award if Kaiser Federal Bank achieves a minimum return on average assets (ROA), which is set at the beginning of each plan year.For the 2011 fiscal year, the ROA target was 0.63%.If the ROA target is achieved, a participant is eligible to receive an annual target bonus amount based on the satisfaction of his or her individual performance objectives set by the Chief Executive Officer and the Board of Directors.Each participant has one to five performance objectives.One or more of the performance objectives is required to address expense management.A participant may also be assigned other personal performance objectives addressing non-routine job goals, such as a new initiative or a substantial enhancement to an existing performance standard.Each performance objective is assigned a percentage weight to reflect its relative importance and/or difficulty, and the sum of the weights must equal 100% of the annual target bonus, such that if the participant fully achieves all of his or her performance objectives, the participant will receive 100% of the annual target bonus.Ms. Hoveland, as Chief Executive Officer, was eligible to receive an annual target bonus up to 30% of her annual base salary level for 2011.Mr. Luton, as President of the Bank effective February 3, 2011, was eligible to receive an annual target bonus up to 30% of his base salary level.Prior to February 3, 2011 Mr. Luton, as Chief Operating Officer was eligible to only receive 20% of his base salary level. As a result, Mr. Luton was eligible to receive a target bonus equal to 24.17%, which represents his pro-rated target bonus level for the entire 2011 fiscal year.The other named executive officers are eligible to receive an annual target bonus up to 20% of their annual base salary level.The participant’s annual target bonus may be further increased by up to an additional 20% if the outcome of the participant’s performance objective significantly exceeded all expectations and made a contribution to Kaiser Federal Bank well beyond what was originally envisioned by the Chief Executive Officer, President and the Board of Directors.For 2011, Mr. Luton’s annual incentive award equaled 24.17% of his 2011 base salary level of $275,000.Ms. Carandang’s, Ms. Huber’s and Ms. Thompson’s annual incentive award was equal to 20% of their 2011 base salary level of $180,000, $175,000 and $155,000, respectively.Ms. Hoveland did not receive an annual incentive award for 2011. Stock Benefit Plans.Outside directors and key employees of Kaiser Federal Bank, Kaiser Federal Financial Group, Inc. or their affiliates are eligible to participate in and receive awards under the K-Fed Bancorp 2004 Stock Option Plan (“2004 Stock Option Plan”) and the K-Fed Bancorp 2004 Recognition and Retention Plan (“2004 Recognition and Retention Plan”). Under the 2004 Stock Option Plan, we reserved 409,105 shares of common stock (as adjusted following the completion of our second-step conversion) to be issued pursuant to grants of stock option awards.A stock option gives the recipient the right to purchase shares of our common stock at a specified price during a specified period of time.Awards may be granted as either incentive or non-statutory stock options.Incentive stock options have certain tax advantages and must comply with the requirements of Section 422 of the Internal Revenue Code.Only employees are eligible to receive incentive stock options.Shares of common stock purchased upon the exercise of a stock option must be paid for in full at the time of exercise either in cash or with common stock that was owned by the recipient. Under the 2004 Recognition and Retention Plan, we reserved 163,642 shares of common stock (as adjusted following the completion of our second-step conversion) to be issued pursuant to grants of restricted stock awards. All stock options vest at a rate determined by the Board of Directors at the time the awards are granted to the recipient.All restricted stock awards must vest at least 20% per year, beginning one year following the date of grant.However, stock options will fully vest and become immediately exercisable and restricted stock awards will fully vest upon the recipient’s termination of service due to death ordisability, or following a change in control of Kaiser Federal Financial Group, Inc. 21 Outstanding Equity Awards at Year End.The following table sets forth information with respect to the outstanding equity awards as of June 30, 2011 for the named executive officers. Outstanding Equity Awards at Year Ended June 30, 2011 Name Grant Date Number of securities underlying unexercised options exercisable (#) Number of securities underlying unexercised options unexercisable (#) Option exercise price Option expiration date Number of shares or units of stock that have not vested (#) Market value of shares or units of stock that have not vested Kay M. Hoveland 11/16/2004 — 11/16/2014 — — 01/30/2009 01/30/2019 — — Dustin Luton 11/15/2006 11/15/2016 — — 11/16/2006 — 01/30/2009 01/30/2019 — — 06/28/2011 — 06/28/2021 Jean M. Carandang 01/30/2009 01/30/2019 06/28/2011 — Nancy J. Huber 11/16/2004 — 11/16/2014 — — 01/30/2009 01/30/2019 — — 06/28/2011 — Jeanne R. Thompson 11/16/2004 — 11/16/2014 — — 01/30/2009 01/30/2019 — — 06/28/2011 — This amount is based on the fair market value of Kaiser Federal Financial Group, Inc. common stock of $12.32 on June 30, 2011. Stock option awards vest ratably per year, commencing January 30, 2012, such that the stock options will become fully vested on January 30, 2014. Stock option awards will fully vest on November 15, 2011. Restricted stock awards will fully vest on November 16, 2011. Stock option awards vest ratably per year, commencing June 28, 2012, such that the stock options will become fully vested on June 28, 2016. Restricted stock awards will vest as follows:500 shares will vest on each of June 28, 2012, June 28, 2013, June 28, 2014, June 28, 2015 and June 28, 2016. Restricted stock awards will vest as follows: 1,439 shares will vest on each of June 23, 2012, June 23, 2013, and June 23, 2014. 22 Options Exercised and Stock Vested. The following table sets forth information for the named executive officers with respect to option exercises and restricted stock awards that have vested during the year ended June 30, 2011. Option Exercises and Stock Vested for the Year Ended June 30, 2011 Option awards Stock awards Name Number of shares acquired on exercise (#) Value realized on exercise Number of shares acquired on vesting (#) Value realized on vesting Kay M. Hoveland — Dustin Luton — — Jean M. Carandang — — Nancy J. Huber — Jeanne R. Thompson — The value realized on vesting represents the fair market value of our common stock on the day the restricted stock award vested. Nonqualified Deferred Compensation. The following table sets forth information with respect to the Amended and Restated Kaiser Federal Bank 2005 Executive Nonqualified Retirement Plan for the year ended June 30, 2011 for the named executive officers. Nonqualified Deferred Compensation for the Year Ended June 30, 2011 Name Executive Contributions in Last FY ($) Registrant Contributions in Last FY ($) Aggregate Earnings in Last FY ($)(1) Aggregate Withdrawals/ Distributions Aggregate Balance at Last FYE Kay M. Hoveland — — — The amount reported in this column was not reported as compensation for the 2011 fiscal year in the Summary Compensation Table.Only the above-market earnings on nonqualified deferred compensation is required to be included, if applicable. The amount reported in this column was not previously reported as compensation to the named executive officer in the Summary Compensation Table for previous years because (i) there was no executive or registrant contribution made to the Amended and Restated Kaiser Federal Bank 2005 Executive Nonqualified Retirement Plan during the 2011, 2010 and 2009 fiscal years, and (ii) there was no above-market earnings on nonqualified deferred compensation during such period. Amended and Restated Kaiser Federal Bank 2005 Executive Non-Qualified Retirement Plan. Effective January 1, 2005, Kaiser Federal Bank adopted the Amended and Restated Kaiser Federal Bank 2005 Executive Nonqualified Retirement Plan for a select group of management and highly compensated employees.Ms. Hoveland is currently the only participant in the plan.The plan allows for a participant to elect to defer a portion of his or her base compensation into the plan.In addition, Kaiser Federal Bank, in its sole discretion, may choose to make a matching contribution on behalf of the participant for the plan year.All employer discretionary contributions vest at a rate of 20% per year, beginning with the participant’s completion of his or her second year of service, and will be fully vested upon completion of six years of service.However, the participant’s employer discretionary contributions will fully vest in the event of the participant’s separation from service following the participant’s attainment of age 60, or due to disability or death.All amounts contributed to the plan are credited to a bookkeeping account established on behalf of each participant.The participant’s account balance will be credited with earnings based on the participant’s crediting rate.The crediting rate will be determined based on the participant’s choice among the investment alternatives made available by Kaiser Federal Bank.Upon the earlier of the participant’s separation from service, death or disability, the participant will be entitled to receive his or her vested account balance payable in a lump sum or annual installments over a period not to exceed 15 years.In the event of a change in control of Kaiser Federal Bank, the participant’s vested account balance will be payable in a lump sum on the effective date of the change in control. 23 Tax-Qualified Benefit Plans 401(k) Plan. Kaiser Federal Bank maintains the Kaiser Federal Bank Employees’ Savings & Profit Sharing Plan, a tax-qualified defined contribution retirement plan, for all employees who have satisfied the 401(k) plan’s eligibility requirements.All employees begin participation in the 401(k) plan in the first calendar quarter on or after the employee attains age 21.However, a participant will not be eligible to receive any contributions from Kaiser Federal Bank until he or she has completed one year of service. A participant may contribute up to 100% of his or her compensation to the 401(k) Plan on a pre-tax basis, subject to the limitations imposed by the Internal Revenue Code.For 2011 calendar year, the maximum salary deferral contribution that can be made by a participant is $16,500, provided however that a participant over age 50 may contribute an additional $5,500 to the 401(k) plan.In addition to salary deferral contributions, Kaiser Federal Bank will make a matching contribution equal to 50% of the first 10% of the compensation that is deferred by the participant during the plan year.A participant is always 100% vested in his or her salary deferral contributions.All employer contributions vest at a rate of 20% per year, beginning after the participant’s completion of his or her second year of service, such that the participant will be fully vested upon completion of six years of credited service.However, a participant will immediately become 100% vested in the employer contributions upon his or her death, disability, or attainment of age 65 while employed with Kaiser Federal Bank.Generally, a participant (or participant’s beneficiary) may receive a distribution from his or her vested account at retirement (age 65), early retirement (age 55 and ten years of vesting service), age 59½ (while employed with Kaiser Federal Bank), death, disability, or termination of employment. Each participant has an individual account under the 401(k) plan and may direct the investment of his or her account among a variety of investment options or vehicles available, including the Kaiser Federal Financial Group, Inc. Stock Fund, which allows participants to invest in the common stock of Kaiser Federal Financial Group, Inc. Employee Stock Ownership Plan. Kaiser Federal Bank maintains the Kaiser Federal Bank Employee Stock Ownership Plan.Employees of Kaiser Federal Financial Group, Inc. and Kaiser Federal Bank who have been credited with at least 1,000 hours of service during a twelve-month period are eligible to participate in the employee stock ownership plan. As part of the initial public offering of K-Fed Bancorp, the employee stock ownership plan borrowed funds from K-Fed Bancorp to purchase 454,940 shares of common stock, which served as collateral for the loan.The loan was scheduled to be repaid by Kaiser Federal Bank through discretionary contributions to the employee stock ownership plan over 10 years. Shares purchased by the employee stock ownership plan are held in a suspense account for allocation among the participants’ accounts as the loan is repaid. Contributions to the employee stock ownership plan and shares released from the unallocated suspense account in an amount proportional to the repayment of the employee stock ownership plan loan will be allocated to each eligible participant’s plan account, based on the ratio of each participant’s compensation to the total compensation of all eligible participants.Vested benefits will be payable generally upon the participants’ termination of employment, and will be paid in the form of common stock, or to the extent participants’ accounts contain cash, benefits will be paid in cash.However, participants have the right to elect to receive their benefits entirely in the form of cash or common stock, or a combination of both.Pursuant to FASB ASC Topic 718-40, we are required to record a compensation expense each year in an amount equal to the fair market value of the shares released from the suspense account. 24 As a result of the second-step conversion, the shares of K-Fed Bancorp common stock held by the suspense account were converted to 122,731 shares of Kaiser Federal Financial Group, Inc. common stock, and all shares allocated to participants’ accounts were converted to shares of Kaiser Federal Financial Group, Inc. common stock pursuant to the 0.7194 exchange ratio.In addition, the employee stock ownership plan purchased 382,500 shares of Kaiser Federal Financial Group, Inc. common stock issued in the second-step conversion offering.The employee stock ownership plan funded its stock purchase with a loan from Kaiser Federal Financial Group, Inc. equal to the aggregate purchase price of the common stock.This loan will be repaid principally through Kaiser Federal Bank’s contribution to the employee stock ownership plan and dividends payable on the common stock held by the employee stock ownership plan over the anticipated 12-year term of the loan.The interest rate for the employee stock ownership plan loan is an adjustable-rate equal to the prime rate, as published in The Wall Street Journal, on the closing date of the offering.Thereafter, the interest rate adjusts annually.The original loan from K-Fed Bancorp to the employee stock ownership plan in connection with the initial public offering was refinanced and rolled into the loan received by the employee stock ownership plan from Kaiser Federal Financial Group, Inc. in connection with the second-step conversion. The trustee will hold the shares purchased by the employee stock ownership plan in an unallocated suspense account, and shares will be released to the participants’ accounts as the loan is repaid, on a pro-rata basis.The trustee will allocate the shares released among the participants’ accounts on the basis of each participant’s proportional share of eligible plan compensation relative to all participants’ proportional share of eligible plan compensation. 25 Potential Payments Upon Termination or Change in Control.The following table sets forth estimates of the amounts that would be payable to the named executive officers upon the executive’s voluntary resignation, early retirement, normal retirement, involuntary termination or resignation for “good reason,” termination of employment for “cause,” termination following a change in control, death or disability, if such termination were effective as of June 30, 2011.The table does not include vested or accrued benefits under tax-qualified benefit plans that are disclosed elsewhere in the Annual Report on Form 10-K.The actual amounts to be paid upon any future termination can only be determined at the time of such actual separation. Voluntary Resignation Early Retirement Normal Retirement Involuntary Termination or Resignation for “Good Reason” Involuntary Termination for Cause Termination after Change in Control Disability Death Kay M. Hoveland Employment Agreement (1) ― 2004 Stock Option Plan (2) ― 2004 Recognition and Retention Plan ― Executive Non-Qualified Retirement Plan (3) n/a Dustin Luton Employment Agreement (1) ― 2004 Stock Option Plan (4) ― 2004 Recognition andRetention Plan (5) ― Jean M. Carandang Employment Agreement (1) ― 2004 Stock Option Plan (6) ― 2004 Recognition andRetention Plan (7) ― Nancy J. Huber Employment Agreement (1) ― 2004 Stock Option Plan (8) ― 2004 Recognition andRetention Plan(9) ― Jeanne R. Thompson Employment Agreement (1) ― 2004 Stock Option Plan (10) ― 2004 Recognition and Retention Plan(11) ― (footnotes follow on next page) 26 Amount reflects the severance benefits payable to each named executive officer as stipulated under his or her Employment Agreement.Please see the descriptions of each Employment Agreement set forth under “Executive Compensation-Benefit Plans” for further details. This amount represents the difference between the fair market value of the Kaiser Federal Financial Group, Inc. common stock and the exercise price of 10,791 stock option awards that become vested and exercisable as a result of Ms. Hoveland’s termination of employment following a change in control, death, or disability.The fair market value of a share of Kaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011 and the exercise price of each option was $10.85. This amount represents Ms. Hoveland’s accumulated benefit under the Executive Non-Qualified Retirement Plan. This amount represents the difference between the fair market value of the Kaiser Federal Financial Group, Inc. common stock and the exercise price of 16,633 stock option awards that become vested and exercisable as a result of Mr. Luton’s termination of employment following a change in control, death, or disability.The fair market value of a share of Kaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011 and the exercise price of 8,633 options were $10.85 and 8,000 options were $12.30. This amount represents the fair market value of 4,878 shares of restricted stock that become vested as a result of Mr. Luton’s termination of employment following a change in control, death, or disability.The fair market value of each share of Kaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011. This amount represents the difference between the fair market value of the Kaiser Federal Financial Group, Inc. common stock and the exercise price of 3,237 stock option awards that become vested and exercisable as a result of Ms. Carandang’s termination of employment following a change in control, death, or disability.The fair market value of a share of Kaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011 and the exercise price of each option was $10.85. This amount represents the fair market value of 6,316 shares of restricted stock that become vested as a result of Ms. Carandang’s termination of employment following a change in control, death, or disability.The fair market value of each share ofKaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011. This amount represents the difference between the fair market value of the Kaiser Federal Financial Group, Inc. common stock and the exercise price of 6,475 stock option awards that become vested and exercisable as a result of Ms. Huber’s termination of employment following a change in control, death, or disability.The fair market value of a share of Kaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011 and the exercise price of each option was $10.85. This amount represents the fair market value of 2,000 shares of restricted stock that become vested as a result of Ms. Huber’s termination of employment following a change in control, death, or disability.The fair market value of each share ofKaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011. This amount represents the difference between the fair market value of the Kaiser Federal Financial Group, Inc. common stock and the exercise price of 6,475 stock option awards that become vested and exercisable as a result of Ms. Thompson’s termination of employment following a change in control, death, or disability.The fair market value of a share of Kaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011 and the exercise price of each option was $10.85. This amount represents the fair market value of 2,000 shares of restricted stock that become vested as a result of Ms. Thompson’s termination of employment following a change in control, death, or disability.The fair market value of each share ofKaiser Federal Financial Group, Inc. common stock was $12.32 on June 30, 2011. 27 Directors Compensation Set forth below is a summary of the compensation for each of our non-employee directors for the year ended June 30, 2011.Director compensation paid to directors who also are named executive officers is reflected above in “Executive Compensation – Summary Compensation Table.” Director Compensation Name Fees earned or paid in cash Stock awards Option awards ($)(1) All other compensation Total James L. Breeden — — — Giovani O. Dacumos — — Diana L. Peterson-More — — Michael J. Sacher — — Robert C. Steinbach — — — Laura G. Weisshar — — Rita H. Zwern — — — As of June 30, 2011, the directors have the following outstanding equity awards: Mr. Breeden had 14,388 stock option awards.Mr. Dacumos has 1,000 restricted stock awards. Ms. Peterson-More has 1,000 restricted stock awards. Mr. Sacher had 2,158 restricted stock awards and 14,388 stock option awards.Mr. Steinbach had 17,265 stock option awards.Ms. Weisshar had 1,439 restricted stock awards and 14,388 stock option awards.Ms. Zwern had 17,265 stock option awards. Represents the grant date fair value of the restricted stock received under the 2004 Recognition and Retention Plan.The grant date fair value has been computed in accordance with the stock-based compensation accounting rules (FASB ASC Topic 718, formerly SFAS 123R).A discussion of the assumptions used in calculating the award values may be found at Note 12 of our notes to our consolidated financial statements. This amount represents dividends received in 2011 on unvested stock awards granted pursuant to the 2004 Recognition and Retention Plan.For the year ended June 30, 2011, no director received perquisites or personal benefits which exceeded $10,000. Members of the Board of Directors and the committees of Kaiser Federal Financial Group, Inc. do not receive separate compensation for their service on the Board of Directors or the committees of Kaiser Federal Bank. For the year ended June 30, 2011, members of the Board of Directors of Kaiser Federal Bank received an annual stipend of $22,500. The Chairman of the Board of Directors and the Audit Committee Chair received an annual stipend of $25,000.Each member of Kaiser Federal Bank’s committees received $500 per committee meeting.The Board Chairman, Mr. Breeden, also received $500 per meeting for attending periodic credit committee and asset/liability management committee meetings and monthly internal asset review committee meetings which totaled $34,500 for fiscal 2011.In addition, members of the Board of Directors are eligible to participate in the 2004 Stock Option Plan and the 2004 Recognition and Retention Plan.Please see the descriptions of each plan set forth under “Executive Compensation – Benefit Plans” for further details. Transactions with Certain Related Persons Kaiser Federal Bank has a policy of granting loans to officers and directors, which fully complies with all applicable federal regulations. Loans to directors and executive officers are made in the ordinary course of business and on the same terms and conditions as those of comparable transactions with unaffiliated third parties prevailing at the time, in accordance with our underwriting guidelines, and do not involve more than the normal risk of collectability or present other unfavorable features. In addition, all loans to directors and executive officers are approved by at least a majority of the independent, disinterested members of the board. All loans Kaiser Federal Bank makes to its directors and executive officers are subject to regulations restricting loans and other transactions with affiliated persons of Kaiser Federal Bank. Loans to all directors and executive officers and their associates totaled approximately $811,000 at June 30, 2011, which was 0.52% of our stockholders’ equity at that date. All loans to directorsand executive officers were performing in accordance with their terms at June 30, 2011. 28 Any transaction with a director is reviewed by and subject to approval of the members of the Board of Directors who are not directly involved in the proposed transaction to confirm that the transaction is on terms that are no less favorable than those that would be available to us from an unrelated party through an arms-length transaction. PROPOSAL 2 — APPROVAL OF THE KAISER FEDERAL FINANCIAL GROUP, INC. 2 The Board of Directors has adopted, subject to stockholder approval, the 2011 Equity Incentive Plan (the “Equity Plan”), to provide officers, employees, directors, including director emeritus and advisory directors of Kaiser Federal Financial Group, Inc. and Kaiser Federal Bank with additional incentives to promote our growth and performance.Most companies that we compete with for directors and management-level employees are public companies that offer equity compensation as part of their overall director and officer compensation programs.By approving the Equity Plan, our stockholders will give us the flexibility we need to continue to attract and retain highly qualified officers and directors by offering a competitive compensation program that is linked to the performance of our common stock. The following is a summary of the material features of the Equity Plan, which is qualified in its entirety by reference to the provisions of the Equity Plan, attached hereto as Appendix A. General Subject to permitted adjustments for certain corporate transactions, the Equity Plan authorizes the issuance of up to 892,500shares of our common stock pursuant to grants of incentive and non-statutory stock options and restricted stock awards and restricted stock units.No more than 255,000shares may be issued as restricted stock awards or restricted stock units. The Equity Plan will be administered by the members of our Compensation Committee (the “Committee”) who are “disinterested board members,” as defined in the Equity Plan.The Committee has full and exclusive power within the limitations set forth in the Equity Plan to make all decisions and determinations regarding the selection of participants and the granting of awards; establishing the terms and conditions relating to each award; adopting rules, regulations and guidelines for carrying out the Equity Plan’s purposes; and interpreting and otherwise construing the Equity Plan.The Equity Plan also permits the Board of Directors or the Committee to delegate to one or more officers of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank the Committee’s power to (i)designate officers and employees who will receive awards, and (ii)determine the number of awards to be received by them. The Committee may use shares of stock available under the Equity Plan as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank, including the plans and arrangements of a company or a subsidiary assumed in a business combination. Eligibility Employees, directors and other service providers, including directors emeritus and advisory directors, of Kaiser Federal Financial Group, Inc. or any subsidiary, including Kaiser Federal Bank, are eligible to receive awards under the Equity Plan, except that non-employees may not be granted incentive stock options. 29 Types of Awards The Committee may determine the type and terms and conditions of awards under the Equity Plan, which shall be set forth in an award agreement delivered to each participant.Awards may be granted in a combination of incentive and non-statutory stock options, or restricted stock awards and restricted stock units, as follows. Stock Options.A stock option gives the recipient or “optionee” the right to purchase shares of common stock at a specified price for a specified period of time.The exercise price may not be less than the fair market value on the date the stock option is granted.Fair market value for purposes of the Equity Plan means the final sales price of our common stock as reported on the Nasdaq Global Market on the date the option is granted, or if our common stock was not traded on such date, then on the day prior to such date or on the next preceding day on which our common stock wastraded, and without regard to after-hours trading activity.The Committee will determine the fair market value, in accordance with Section422 of the Internal Revenue Code and applicable requirements of Section 409A of the Internal Revenue Code, if it cannot be determined in the manner described above.Further, the Committee may not grant a stock option with a term that is longer than 10 years. Stock options are either “incentive” stock options or “non-qualified” stock options.Incentive stock options have certain tax advantages and must comply with the requirements of Section422 of the Internal Revenue Code. Only employees are eligible to receive incentive stock options.Shares of common stock purchased upon the exercise of a stock option must be paid for in full at the time of exercise (i)either in cash or with stock valued at fair market value as of the day of exercise, (ii)by a “cashless exercise” through a third party; (iii) by a net settlement of the stock option using a portion of the shares obtained on exercise in payment of the exercise price of the stock option; (iv) by personal, certified or cashiers’ check; or (v) by a combination of the foregoing.Stock options are subject to vesting conditions and restrictions as determined by the Committee. Restricted Stock.A restricted stock award is a grant of common stock, subject to vesting requirements, to a participant for no consideration or minimum consideration as may be required by applicable law.Restricted stock awards under the Equity Plan will be granted only in whole shares of common stock and are subject to vesting conditions and other restrictions established by the Committee as set forth in the Equity Plan or the award agreement.Awards will be evidenced by agreements approved by the Committee, which set forth the terms and conditions of each award.Prior to their vesting, unless otherwise determined by the Committee, the recipient of a restricted stock award may exercise any voting rights with respect to common stock subject to an award and receive any dividends and distributions with respect to the common stock. Restricted Stock Units.Restricted stock units are similar to restricted stock awards in that the value of a restricted stock unit is denominated in shares of stock, however, unlike a restricted stock award, no shares of stock are transferred to the recipient until certain requirements or conditions associated with the award are satisfied.The limitation on the number of restricted stock awards available described in the paragraph above is also applicable to restricted stock units. Prohibition Against Option Repricing. The Equity Plan provides that neither the Committee nor the Board is authorized to make any adjustment or amendment that reduces or would have the effect of reducing the exercise price of a stock option right previously granted. Prohibition on Transfer. Generally, all awards, except non-statutory stock options, granted under the Equity Plan will be nontransferable except by will or in accordance with the laws of intestate succession.Restricted stock awards may be transferable pursuant to a qualified domestic relations order.At the Committee’s sole discretion, non-statutory stock options may be transferred for valid estate planning purposes that are permitted by the Internal Revenue Code and the Exchange Act.During the life of the participant, awards can only be exercised by him or her.The Committee may permit a participant to designate a beneficiary to exercise or receive any rights that may exist under the Equity Plan upon the participant’s death. 30 Limitation on Awards Under The Equity Plan The following limits apply to awards under the Equity Plan: ● the maximum number of shares of stock that may be available for awards under the Equity Plan is 892,500 of which up to 637,500 of stock may be delivered as a result of the exercise of stock options and 255,000 shares of stock may be issued as restricted stock awards or restricted stock units; and ● the maximum number of shares of stock that may be covered by options that are intended to be “performance-based compensation” under a grant to any one employee in any one calendar year is 100,000 shares. In the event of a corporate transaction involving the stock of Kaiser Federal Financial Group, Inc. (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the foregoing shares limitations and all outstanding awards will automatically be adjusted proportionally and uniformly to reflect such event to the extent that the adjustment will not affect the award’s status as “qualified performance-based compensation” under Section162(m) of the Internal Revenue Code, if applicable; provided, however, that the Committee may adjust awards to preserve the benefits or potential benefits of the awards, including the prevention of automatic adjustments if appropriate. In addition, to the extent any shares of stock covered by an award under the Equity Plan (including restricted stock awards) are not delivered to a participant or beneficiary because the award is forfeited or canceled or because the stock option is not exercised, then such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of stock available for delivery under the Equity Plan. Performance Features Section162(m) of the Internal Revenue Code. A federal income tax deduction for Kaiser Federal Financial Group, Inc. will generally be unavailable for annual compensation in excess of $1.0 million paid to its chief executive officer or three other most highly compensated officers (other than its chief financial officer).However, amounts that constitute “qualified performance-based compensation” (as the term is used in Section 162(m) of the Internal Revenue Code) are not counted toward the $1.0 million limit. The Equity Plan is designed so that stock options will be considered “qualified performance-based compensation.”The Committee may designate whether any restricted stock awards or restricted stock units being granted to any participant are intended to be “qualified performance-based compensation.” Any such awards designated as intended to be “qualified performance-based compensation” will be conditioned on the achievement of one or more performance measures, to the extent required by Section 162(m)of the Internal Revenue Code. Performance Measures. The performance measures that may be used for such awards will be based on any one or more of the following performance measures, as selected by the Committee: basic earnings per share, basic cash earnings per share, diluted earnings per share, core earnings per share, diluted cash earnings per share, core earnings per share, diluted cash earnings per share, net income or net income before taxes, cash earnings, net interest income, non-interest income, general and administrative expense to average assets ratio, cash general and administrative expense to average assets ratio, efficiency ratio, cash efficiency ratio, return onaverage assets, core return on average assets, cash return on average assets, core return on equity, return on average stockholders’ equity, cash return on average stockholders’ equity, return on average tangible stockholders’ equity, cash return on average tangible stockholders’ equity, core earnings, operating income, operating efficiency ratio, net interest margin, net interest rate margin or net interest rate spread, growth in assets, loans or deposits, loan production volume, net charge offs, non-performing loans, classified loans, cash flow, capital preservation (core or risk-based), interest rate risk exposure net portfolio value, interest rate risk sensitivity, strategic business objectives consisting of one or more objectives based upon meeting specified cost targets, business expansion goals and goals relating to acquisitions or divestitures, or goals relating to capital raising and capital management, stock price (including, but not limited to, growth measures and total shareholder return), operating expenses as a percentage of average assets, core deposits as a percentage of total deposits, net charge off percentage, average percentage past due, classified assets to total assets or any combination of the foregoing.Performance measures may be based on the performance of Kaiser Federal Financial Group, Inc. as a whole or of any one or more subsidiaries or business units of Kaiser Federal Financial Group, Inc. and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures.The terms of any award may provide that partial achievement of performance criteria may result in partial payment or vesting of the award.The Committee may adjust performance measures after they have been set, but only to the extent the Committee exercises negative discretion as permitted under applicable law for purposes of an exception to Section 162(m)of the Internal Revenue Code.In establishing the performance measures, the Committee may provide for the inclusion or exclusion of certain items.Additionally, the grant of an award intended to be “qualified performance-based compensation” and the establishment of any performance based measures shall be made during the period required by Section 162(m)of the Internal Revenue Code. 31 Vesting of Awards If the right to become vested in an award under the Equity Plan is conditioned on the completion of a specified period of service with Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank, without the achievement of performance measures or objectives, then unless otherwise determined by the Committee and evidenced in an award agreement, then the required period of service full vesting shall be determined by the Committee and evidenced in an award agreement, subject to acceleration of vesting in the event of death, disability, retirement, or involuntary or constructive termination of employment or service following a change in control. It is anticipated that stock options and restricted stock awards will generally be granted subject to a vesting schedule of 20% per year over a five year period or some other appropriate vesting schedule as determined by the Compensation Committee, commencing one year from the date of grant.Any restricted stock or restricted stock unit designated as qualified performance-based compensation will vest only on the achievement of one or more performance measures in whole or in part, which are predetermined.All awards would vest upon death, disability, or retirement (if specifically provided by the Committee, except in the case of awards subject to performance-based vesting conditions), or involuntary or constructive termination of employment or service following a change in control.The Committee may in its discretion elect to use a different vesting schedule or different performance measures set forth in the Equity Plan. Change in Control Unless otherwise stated in an award agreement, upon the occurrence of an involuntary or constructive termination of employment or service following a Change in Control of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank, all outstanding options then held by a participant will become fully exercisable, and all restricted stock awards and restricted stock units shall be fully earned and vested.For the purposes of the Equity Plan, a Change in Control occurs when: (a) a “person” (as defined under federal securities laws) is or becomes the beneficial owner, directly or indirectly, of securities of Kaiser Federal Financial Group, Inc. representing 25% or more of Kaiser Federal Financial Group, Inc.’s voting securities, except for securities purchased by the Kaiser Federal Bank Employee Stock Ownership Plan; (b) members of the board of directors of Kaiser Federal Financial Group, Inc. as of the date hereof (and any person who becomes a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the incumbent board) cease for any reason to constitute at least a majority the board; (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank or a similar transaction in which Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank is not the surviving institution occurs or is effected; (d) a proxy statement soliciting proxies from stockholders of Kaiser Federal Financial Group, Inc., by someone other than the current management of Kaiser Federal Financial Group, Inc. is distributed, seeking stockholder approval of a plan of reorganization, merger or consolidation of Kaiser Federal Financial Group, Inc. or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan are exchanged for, or converted into, cash, property or securities not issued by Kaiser Federal Financial Group, Inc.; or (e) a tender offer is made for 25% or more of the voting securities of Kaiser Federal Financial Group, Inc. and the shareholders beneficially owning 25% or more of the outstanding securities of Kaiser Federal Financial Group, Inc. have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror. 32 In the event of a Change in Control, any performance measure attached to an award under the Equity Plan shall be deemed satisfied as of the date of the Change in Control. Amendment and Termination The Board of Directors may, at any time, amend or terminate the Equity Plan or any award granted under the Equity Plan, provided that, other than as provided in the Equity Plan, no amendment or termination may adversely impair the rights of an outstanding award without the participant’s (or affected beneficiary’s) written consent.The Board of Directors may not amend the provision of the Equity Plan related to repricing, materially increase the original number of securities which may be issued under the Equity Plan (other than as provided in the Equity Plan), materially increase the benefits accruing to a participant, or materially modify the requirements for participation in the Equity Plan without approval of stockholders.Notwithstanding the foregoing, the Board may amend the Equity Plan at any time, retroactively or otherwise, to insure that the Equity Plan complies with current or future law without stockholder approval, and the Board of Directors may unilaterally amend the Equity Plan and any outstanding award, without participant consent, in order to maintain an exemption from, or to comply with, Section409A of the Internal Revenue Code, and its applicable regulations and guidance. Duration of Plan The Equity Plan will become effective upon approval by the stockholders at this annual meeting.The Equity Plan will terminate 10 years after its effective date or, if sooner, when all shares reserved under the Equity Plan have been issued.At any time, the Board of Directors may terminate the Equity Plan.However, any termination of the Equity Plan will not affect outstanding awards. Federal Income Tax Considerations The following is a summary of the U.S. federal income tax consequences that may arise in conjunction with participation in the Equity Plan. Non-Qualified Stock Options. The grant of a non-qualified option will not result in taxable income to the participant.Except as described below, the participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares acquired over the exercise price for those shares and we will be entitled to a corresponding deduction.Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of exercise. Incentive Stock Options. The grant of an incentive stock option will not result in taxable income to the participant.The exercise of an incentive stock option will not result in taxable income to the participant provided that the participant was, without a break in service, an employee of Kaiser Federal Financial Group, Inc. or Kaiser Federal Bank during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant is disabled, as that term is defined in the Internal Revenue Code). The excess of the fair market value of the shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised.For purposes of determining the participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the participant will have a basis in those shares equal to the fair market value of the shares at the time of exercise. 33 If the participant does not sell or otherwise dispose of the shares within two years from the date of the grant of the incentive stock option or within one year after the exercise of such stock, then, upon disposition of such shares, any amount realized in excess of the exercise price will be taxed as capital gain.A capital loss will be recognized to the extent that the amount realized is less than the exercise price. If the foregoing holding period requirements are not met, the participant will generally realize ordinary income at the time of the disposition of the shares, in an amount equal to the lesser of (i)the excess of the fair market value of the shares on the date of exercise over the exercise price, or (ii)the excess, if any, of the amount realized upon disposition of the shares over the exercise price, and we will be entitled to a corresponding deduction.If the amount realized exceeds the value of the shares on the date of exercise, any additional amount will be capital gain.If the amount realized is less than the exercise price, the participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares. Restricted Stock. A participant who has been granted a stock award will not realize taxable income at the time of grant, provided that the stock subject to the award is not delivered at the time of grant, or if the stock is delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for federal income tax purposes.Upon the later of delivery or vesting of shares subject to an award, the holder will realize ordinary income in an amount equal to the then fair market value of those shares and we will be entitled to a corresponding deduction.Gains or losses realized by the participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting.Dividends paid to the holder during the restriction period, if so provided, will also be compensation income to the participant and we will be entitled to a corresponding deduction.A participant who makes an election under Section 83(b) of the Internal Revenue Code will include the fair market value of the restricted stock award in taxable income in the year of the grant date fair market value. Restricted Stock Unit. A participant who has been granted a restricted stock unit will not realize taxable income as long as the award remains in the form of a restricted stock unit.When the restricted stock unit is extinguished and a stock award is issued, the tax consequences for restricted stock awards (see paragraph above) will be realized.A restricted stock unit does not have voting rights or dividend rights.Since no stock is transferred to the participant on the grant date of the restricted stock unit, an election to have the restricted stock unit taxed at the grant date cannot be made since Section 83(b) of the Internal Revenue Code requires a transfer of stock. Withholding of Taxes. We may withhold amounts from participants to satisfy withholding tax requirements.Except as otherwise provided by the Committee, participants may have shares withheld from awards or may tender previously owned shares to us to satisfy tax withholding requirements. Change in Control. Any acceleration of the vesting or payment of awards under the Equity Plan in the event of a Change in Control may cause part or all of the consideration involved to be treated as an “excess parachute payment” under Section 280G of the Internal Revenue Code, which may subject the participant to a 20% excise tax and preclude a deduction by us. Deduction Limits. Section 162(m) of the Internal Revenue Code generally limits our ability to deduct for tax purposes compensation in excess of $1.0 million per year for its chief executive officer and the three other most highly compensated executives (excluding the chief financial officer) named in the summary compensation table below (“covered employees”).Restricted stock awards and restricted stock units that are not subject to performance goals may be subject to this deduction limit if income recognized on the awards plus other compensation of the covered employee that is subject to the limit exceeds $1.0 million.Performance-based compensation that meets the requirements of Section 162(m) of the Internal Revenue Code (“qualified performance-based compensation”) is not subject to this limit and is fully deductible by us.“Qualified performance-based compensation” is compensation that is subject to a number of requirements such as stockholder approval of possible performance goals, and objective quantification of those goals in advance.Stock options available for award under the Equity Plan will be considered “qualified performance-based compensation” even if such awards vest solely due to the passage of time during the performance of services.Restricted stock awards or restricted stock units that vest upon the attainment of performance measurements may also qualify as qualified performance-based compensation.Accordingly, if an award is not exempt from Section 162(m) of the Internal Revenue Code, income recognized on such award by a covered employee will be subject to the $1.0 million deduction limit on compensation. 34 Tax Advice. The preceding discussion is based on U.S. tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the U.S. income tax aspects of the Equity Plan.Aparticipant may also be subject to state and local taxes in connection with the grant of awards under the Equity Plan.We suggest that participants consult with their individual tax advisors to determine the applicability of the tax rulesto the awards granted to them in their personal circumstances. Accounting Treatment Under Accounting Standards Codification (“ASC”) 718, Compensation-Stock Compensation and ASC 505-50, Equity Based Payment to Non-Employees, we are required to recognize compensation expense on its income statement over the requisite service period based on the grant date fair value of options and other equity-based compensation (such as restricted stock and restricted stock units). Awards to be Granted The Board of Directors has adopted the Equity Plan.If the Equity Plan is approved by stockholders, the Compensation Committee intends to meet promptly after such approval to determine the specific terms of the awards, including the allocation of awards to executive officers, employees and non-employee directors.At the present time, no specific determination has been made as to the allocation of awards. Required Vote and Recommendation of the Board In order to approve the Equity Plan, the proposal must receive the affirmative vote of a majority of the total shares present and voting at the annual meeting, in each case without regard to broker non-votes or proxies marked ABSTAIN.In the event at the time of the annual meeting there are not sufficient votes to approve the Equity Plan, the annual meeting may be adjourned in order to permit the further solicitation of proxies. The Board of Directors recommends a vote “FOR” the approval of the 2011 Equity Incentive Plan. PROPOSAL 3 —RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Our independent registered public accounting firm for the fiscal year ended June 30, 2011 was Crowe Horwath LLP. Our audit committee has approved the engagement of Crowe Horwath LLP to be our independent registered public accounting firm for the fiscal year ending June 30, 2012, subject to the ratification of the engagement by our stockholders. At the annual meeting, our stockholders will consider and vote on the ratification of the engagement of Crowe Horwath LLP for the fiscal year ending June 30, 2012. A representative of Crowe Horwath LLP is expected to attend the annual meeting and will have the opportunity to make a statement and respond to appropriate questions. Set forth below is certain information concerning aggregate fees billed for professional services rendered by Crowe Horwath LLP during the fiscal years ended June 30, 2011 and June 30, 2010, respectively. The aggregate fees included in the audit fees category were fees billed for the fiscal years for the audit of our annual financial statements and the review of our quarterly financial statements. The aggregate fees included in each of the other categories were fees billed in the noted fiscal years. Audit Fees $ $ Audit Related Fees $ $ Tax Fees $ — $ All Other Fees $ $ 35 Audit Fees. Audit fees of $191,000 and $187,500 in the fiscal years ended June 30, 2011 and 2010, respectively, were for the audit of our consolidated financial statements. These audit fees included fees for the review of the financial statements included in our annual and quarterly reports filed with the Securities and Exchange Commission and the internal controls attestation required under regulations of the Securities and Exchange Commission. Audit-Related Fees. Audit-related fees of $48,898 and $57,771 in the fiscal years ended June 30, 2011 and 2010, respectively, were for audit work performed in conjunction with the second-step stock offering. Tax Fees. Tax fees of $26,050 in the fiscal year ended June 30, 2010, were for services related to tax compliance and tax planning. All Other Fees. Other fees of $29,231 and $21,500 in the fiscal years ended June 30, 2011 and 2010 were for the annual software license fee for management’s assessment of internal controls over financial reporting as well as the audit of Kaiser Federal Financial Group, Inc.’s 401(k) Plan. Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accounting Firm. The audit committee has considered whether the provision of non-audit services, which relate primarily to tax consulting and other compliance services rendered, is compatible with maintaining the independence of Crowe Horwath LLP. The audit committee concluded that performing such services does not affect the independence of Crowe Horwath LLP in performing its function as independent registered public accounting firm of Kaiser Federal Financial Group, Inc. The audit committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The audit committee has delegated pre-approval authority to its chairman when expedition of services is necessary. The independent registered public accounting firm and management are required to periodically report to the full audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. In order to ratify the selection of Crowe Horwath LLP as the independent registered public accounting firm for the fiscal year ending June 30, 2012, the proposal must receive at least a majority of the votes cast, without regard to broker non-votes, either in person or by proxy, in favor of such ratification. The audit committee of the Board of Directors recommends a vote “FOR” the ratification of Crowe Horwath LLP as the independent registered public accounting firm for the fiscal year ending June 30, 2012. 36 PROPOSAL 4—ADVISORY VOTE ON EXECUTIVE COMPENSATION The compensation of our Principal Executive Officer, our Principal Financial Officer and our three other most highly compensated executive officers (“Named Executive Officers”) is described in “PROPOSAL 1—ELECTION OF DIRECTORS—Compensation Discussion and Analysis” and “Executive Compensation.” Stockholders are urged to read the Executive Compensation section of this proxy statement, which discusses our compensation policies and procedures with respect to our Named Executive Officers. In accordance with recently adopted changes to Section14A of the Exchange Act, stockholders will be asked at the annual meeting to provide their support with respect to the compensation of our Named Executive Officers by voting on the following advisory, non-binding resolution: RESOLVED, that the stockholders of Kaiser Federal Financial Group, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s Named Executive Officers described in the Executive Compensation section of the proxy statement, including the Compensation, Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures set forth in that section. This advisory vote, commonly referred to as a “say-on-pay” advisory vote, is non-binding on the Board of Directors. Although non-binding, the Board of Directors and the Compensation Committee value constructive dialogue on executive compensation and other important governance topics with our stockholders and encourages all stockholders to vote their shares on this matter. The Board of Directors and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding our executive compensation programs. The Board of Directors recommends that you vote “FOR” the resolution set forth in Proposal Four. 37 PROPOSAL 5—ADVISORY VOTE ON FREQUENCY OF FUTURE “SAY-ON-PAY” ADVISORY VOTES In accordance with recently adopted changes to Section14A of the Exchange Act, we are providing a stockholder advisory vote to approve the compensation of executives (the “say-on-pay” advisory vote in Proposal Four above) this year and will do so at least once every three years thereafter.Pursuant to recently adopted changes to Section14A of the Exchange Act, at the 2011 Annual Meeting, we are also asking stockholders to vote on whether future “say-on-pay” advisory votes on executive compensation should occur every year, every two years or every three years. After careful consideration, the Board of Directors recommends that future stockholder “say-on-pay” advisory votes on executive compensation be conducted every year.The determination was based upon the premise that Named Executive Officer compensation is evaluated, adjusted and approved on an annual basis by the Board of Directors upon a recommendation from the Compensation Committee and the belief that investor sentiment should be a factor taken into consideration by the Compensation Committee in making its annual recommendation. Although the Board of Directors recommends a “say-on-pay” vote every year, stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. Stockholders are not voting to approve or disapprove of the Board of Directors’ recommendation. Although this advisory vote regarding the frequency of “say-on-pay” votes is non-binding on the Board of Directors, the Board of Directors and the Compensation Committee will review the voting results and take them into consideration when deciding how often to conduct future “say-on-pay” stockholder advisory votes. The Board of Directors recommends that you vote “FOR” the One Year option. 38 ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED AT THE 2 Our Bylaws provide an advance notice procedure for certain business, or nominations to the Board of Directors, to be brought before an annual meeting of stockholders. In order for a stockholder to properly bring business before an annual meeting, or to propose a nominee to the Board of Directors, our Secretary must receive written notice not earlier than the 90th day nor later than the 80th day prior to date of the annual meeting; provided, however, that in the event that less than 90 days’ notice or prior public disclosure of the date of the annual meeting is provided to stockholders, then, to be timely, notice by the stockholder must be so received not later than the tenth day following the day on which public announcement of the date of such meeting is first made. The notice with respect to stockholder proposals that are not nominations for director must set forth as to each matter such stockholder proposes to bring before the annual meeting: (i)a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii)the name and address of such stockholder as they appear on our books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii)the class or series and number of shares of capital stock ofKaiser Federal Financial Group, Inc. which are owned beneficially or of record by such stockholder and such beneficial owner; (iv)a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business; and (v)a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. The notice with respect to director nominations must include (i) as to each individual whom the stockholder proposes to nominate for election as a director, (A) all information relating to such person that would indicate such person’s qualification under Article 2, Section 12 of our Bylaws, including an affidavit that such person would not be disqualified under the provisions of Article 2, Section 12 of the Bylaws and (B) all other information relating to such individual that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation; and (ii) as to the stockholder giving the notice, (A)the name and address of such stockholder as they appear on ourbooks and of the beneficial owner, if any, on whose behalf the nomination is made; (B)the class or series and number of shares of capital stock of Kaiser Federal Financial Group, Inc. which are owned beneficially or of record by such stockholder and such beneficial owner; (C)a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (D)a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (E)any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation14A under the Exchange Act or any successor rule or regulation.Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected. The 2012 annual meeting of stockholders is expected to be held on October 30, 2012.Advance written notice for certain business, or nominations to the Board of Directors, to be brought before the next annual meeting must be given to us no earlier than August 1, 2012 and no later than August 13, 2012.If notice is received outside of these dates, it will be considered untimely, and we will not be required to present the matter at the stockholders meeting. Nothing in this proxy statement shall be deemed to require us to include in our proxy statement and proxy relating to an annual meeting any stockholder proposal that does not meet all of the requirements for inclusion established by the Securities and Exchange Commission in effect at the time such proposal is received. 39 STOCKHOLDER PROPOSALS In order to be eligible for inclusion in our proxy materials for our 2012 Annual Meeting of Stockholders, any stockholder proposal to take action at such meeting must be received at Kaiser Federal Financial Group, Inc.’s executive office, 1359 North Grand Avenue, Covina, California 91724, at a reasonable time prior to the distribution of our proxy materials, which we deem to be no later than May 31, 2012.Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934, as amended. OTHER MATTERS As of the date of this document, the Board of Directors is not aware of any business to come before the annual meeting other than the matters described above in the proxy statement. However, if any matters should properly come before the annual meeting, it is intended that the holders of the proxies will act in accordance with their best judgment. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING The Notice, Proxy Statement, Proxy Card and Annual Report on Form 10-K are available at www.kffg.com. MISCELLANEOUS The cost of solicitation of proxies will be borne by Kaiser Federal Financial Group, Inc.We will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of common stock.In addition to solicitations by mail, directors, officers and regular employees of Kaiser Federal Financial Group, Inc. may solicit proxies personally, by facsimile or by telephone without additional compensation.Our 2011 Annual Report to Stockholders has been made available to all stockholders of record as of November 1, 2011.Any stockholder may obtain a copy of the Annual Report on Form 10-K through our website, by calling us or writing us at the address below.Such annual report is not to be treated as a part of the proxy solicitation material nor as having been incorporated herein by reference. Stockholder Relations Kaiser Federal Financial Group, Inc. 1359 North Grand Avenue Covina, California 91724 Phone:(800) 524-2274 Fax:(626) 646-2032 www.kffg.com BY ORDER OF THE BOARD OF DIRECTORS /s/ Rita H. Zwern Rita H. Zwern Secretary Covina, California November 21, 2011 40 Appendix A KAISER FEDERAL FINANCIAL GROUP, INC. 2 ARTICLE 1 – GENERAL Section 1.1Purpose, Effective Date and Term. The purpose of this Kaiser Federal Financial Group, Inc. 2011 Equity Incentive Plan (the “Plan”) is to promote the long-term financial success of Kaiser Federal Financial Group, Inc., a Maryland corporation (the “Company”), and its Subsidiaries, including Kaiser Federal Bank (the “Bank”), by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s stockholders.The “Effective Date” of the Plan is December 22, 2011, the expected date of the approval of the Plan by the Company’s stockholders. The Plan shall remain in effect as long as any Awards are outstanding; provided, however, that no Awards may be granted under the Plan after the ten-year anniversary of the Effective Date. Section 1.2Administration. The Plan shall be administered by the Compensation Committee of the Company’s Board of Directors (the “Committee”), in accordance with Section 5.1. Section 1.3Participation. Each Employee, Director or other service provider, including a director emeritus or advisory director, of the Company or any Subsidiary of the Company who is granted an Award in accordance with the terms of the Plan shall be a “Participant” in the Plan. Awards shall be limited to Employees and Directors of the Company or any Subsidiary. Section 1.4Definitions. Capitalized terms used in this Plan are defined in Article 8 and elsewhere in this Plan. ARTICLE 2 - AWARDS Section 2.1General. Any Award under the Plan may be granted singularly, in combination with another Award (or Awards), or in tandem whereby the exercise or vesting of one Award held by a Participant cancels another Award held by the Participant. Each Award under the Plan shall be subject to the terms and conditions of the Plan and such additional terms, conditions, limitations and restrictions as the Committee shall provide with respect to such Award and as evidenced in the Award Agreement. Subject to the provisions of Section 2.8, an Award may be granted as an alternative to or replacement of an existing Award under the Plan or any other plan of the Company or any Subsidiary or as the form of payment for grants or rights earned or due under any other compensation plan or arrangement of the Company or its Subsidiaries, including without limitation the plan of any entity acquired by the Company or any Subsidiary. The types of Awards that may be granted under the Plan include: (a)Stock Options. A Stock Option means a grant under Section 2.2 that represents the right to purchase shares of Stock at an Exercise Price established by the Committee. Any Stock Option may be either an Incentive Stock Option (an “ISO”) that is intended to satisfy the requirements applicable to an “Incentive Stock Option” described in Code Section 422(b), or a Non-Qualified Stock Option (a “Non-Qualified Option”) that is not intended to be an ISO; provided, however, that no ISOs may be granted: (i) after the ten-year anniversary of the Effective Date; or (ii) to a non-Employee. Unless otherwise specifically provided by its terms, any Stock Option granted to an Employee under this Plan shall be an ISO.Any ISO granted under this Plan that does not qualify as an ISO for any reason (whether at the time of grant or as the result of a subsequent event) shall be deemed to be a Non-Qualified Option.In addition, any ISO granted under this Plan may be unilaterally modified by the Committee to disqualify such Stock Option from ISO treatment such that it shall become a Non-Qualified Option; provided, however, that any such modification shall be ineffective if it causes the Award to be subject to Code Section 409A (unless, as modified, the Award complies with Code Section 409A). A-1 (b) Restricted Stock. Restricted Stock means a grant of shares of Stock under Section 2.3 for no consideration or such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan, subject to a vesting schedule or the satisfaction of market conditions or performance conditions. (c)Restricted Stock Units.A Restricted Stock Unit means a grant under Section 2.4 denominated in shares of Stock that is similar to a Restricted Stock Award except no shares of Stock are actually awarded on the date of grant of a Restricted Stock Unit.A Restricted Stock Unit is subject to a vesting schedule or the satisfaction of market conditions or performance conditions and shall be settled in shares of Stock, provided, however, that in the sole discretion of the Compensation Committee, determined at the time of settlement, a Restricted Stock Unit may be settled in cash. Section 2.2Stock Options (a)Grant of Stock Options.Each Stock Option shall be evidenced by an Award Agreement that shall: (i) specify the number of Stock Options covered by the Award; (ii) specify the date of grant of the Stock Option; (iii) specify the vesting period or conditions to vesting; and (iv) contain such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Service with the Company as the Committee may, in its discretion, prescribe. (b)Terms and Conditions.A Stock Option shall be exercisable in accordance with such terms and conditions and during such periods as may be established by the Committee. In no event, however, shall a Stock Option expire later than ten (10) years after the date of its grant (or five (5) years with respect to ISOs granted to an Employee who is a 10% Stockholder). The “Exercise Price” of each Stock Option shall not be less than 100% of the Fair Market Value of a share of Stock on the date of grant (or, if greater, the par value of a share of Stock); provided, however, that the Exercise Price of an ISO shall not be less than 110% of Fair Market Value of a share of Stock on the date of grant if granted to a 10% Stockholder; provided further, that the Exercise Price may be higher or lower in the case of Stock Options granted or exchanged in replacement of existing Awards held by an Employee or Director of, or service provider to, an acquired entity. The payment of the Exercise Price of a Stock Option shall be by cash or, subject to limitations imposed by applicable law, by such other means as the Committee may from time to time permit, including:(i)by tendering, either actually or constructively by attestation, shares of Stock valued at Fair Market Value as of the day of exercise; (ii)by irrevocably authorizing a third party, acceptable to the Committee, to sell shares of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option and to remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise; (iii) by a net settlement of the Stock Option using a portion of shares obtained on exercise in payment of the Exercise Price of the Stock Option;(iv) by personal, certified or cashiers’ check; (v)by other property deemed acceptable by the Committee; or (vi)by any combination thereof.The total number of shares that may be acquired upon the exercise of a Stock Option shall be rounded down to the nearest whole share. A-2 Section 2.3Restricted Stock. (a)Grant of Restricted Stock.Each Restricted Stock Award shall be evidenced by an Award Agreement that shall: (i) specify the number of shares of Stock covered by the Restricted Stock Award; (ii) specify the date of grant of the Restricted Stock Award; (iii) specify the vesting period; and (iv) contain such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Service with the Company, as the Committee may, in its discretion, prescribe. All Restricted Stock Awards (other than those subject to performance-based vesting conditions under Section 2.5 hereof) shall be in the form of issued and outstanding shares of Stock that shall be either: (x) registered in the name of the Participant and held by the Company, together with a stock power executed by the Participant in favor of the Company, pending the vesting or forfeiture of the Restricted Stock; or (y) registered in the name of, and delivered to, the Participant. In any event, the certificates evidencing the Restricted Stock Award shall at all times prior to the applicable vesting date bear the following legend: The Stock evidenced hereby is subject to the terms of an Award Agreement between Kaiser Federal Financial Group, Inc. and [Name of Participant] dated [Date], made pursuant to the terms of the Kaiser Federal Financial Group, Inc. 2011 Equity Incentive Plan, copies of which are on file at the executive offices of Kaiser Federal Financial Group, Inc., and may not be sold, encumbered, hypothecated or otherwise transferred except in accordance with the terms of such Plan and Award Agreement, or such other restrictive legend as the Committee, in its discretion, may specify.Performance-based Restricted Stock Awards may or may not be issued and outstanding, in the discretion of the Committee.Notwithstanding the foregoing, the Company may in its sole discretion issue Restricted Stock in any other approved format (e.g., electronically) in order to facilitate the paperless transfer of such Awards.In the event Restricted Stock is not issued in certificate form, the Company and the transfer agent shall maintain appropriate bookkeeping entries that evidence Participants’ ownership of such Awards.Restricted Stock that is not issued in certificate form shall be subject to the same terms and conditions of the Plan as certificated shares, including the restrictions on transferability and the provision of a stock power executed by the Participant in favor of the Company, until the satisfaction of the conditions to which the Restricted Stock Award is subject. (b) Terms and Conditions. Each Restricted Stock Award shall be subject to the following terms and conditions: (i) Dividends.Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant Award Agreement, any dividends or distributions declared and paid with respect to shares of Stock subject to the Restricted Stock Award, other than a stock dividend consisting of shares of Stock, shall be immediately distributed to the Participant.If the Committee determines to delay the distribution of dividends to a Participant until the vesting of an Award of Restricted Stock, the Committee shall cause the dividend (and any earnings thereon) to be distributed to the Participant no later than two and one-half months following the date on which the Restricted Stock vests.Any stock dividends declared on shares of Stock subject to a Restricted Stock Award shall be subject to the same restrictions and shall vest at the same time as the shares of Restricted Stock from which said dividends were derived.Notwithstanding the foregoing, no dividends shall be paid with respect to any Restricted Stock Awards subject to a performance-based vesting condition unless and until the Participant vests in such Restricted Stock Award.Upon the vesting of a performance-based Restricted Stock Award under Section 2.5, any dividends declared but not paid during the vesting period shall be paid within thirty (30) days following the vesting date. (ii) Voting Rights. Unless the Committee determines otherwise with respect to any Restricted Stock Award and specifies such determination in the relevant Award Agreement, voting rights appurtenant to the shares of Restricted Stock shall be exercised by the Participant in his or her discretion. (iii) Tender Offers and Merger Elections.Each Participant to whom a Restricted Stock Award is granted shall have the right to respond, or to direct the response, with respect to the related shares of Restricted Stock, to any tender offer, exchange offer, cash/stock merger consideration election or other offer made to, or elections made by, the holders of shares of Stock. Such a direction for any such shares of Restricted Stock shall be given by proxy or ballot (if the Participant is the beneficial owner of the shares of Restricted Stock for voting purposes) or by completing and filing, with the inspector of elections, the trustee or such other person who shall be independent of the Company as the Committee shall designate in the direction (if the Participant is not such a beneficial owner), a written direction in the form and manner prescribed by the Committee.If no such direction is given, then the shares of Restricted Stock shall not be tendered. A-3 Section 2.4Restricted Stock Units. (a)Grant of Restricted Stock Unit Awards. Each Restricted Stock Unit shall be evidenced by an Award Agreement which shall: (i) specify the number of Restricted Stock Units covered by the Award;(ii) specify the date of grant of the Restricted Stock Units; (iii) specify the vesting period or market conditions or performance conditions that must be satisfied in order to vest in the Award; and (iv) contain such other terms and conditions not inconsistent with the Plan, including the effect of termination of a Participant’s employment or Services with the Company, as the Committee may, in its discretion, prescribe. (b)Terms and Conditions. Each Restricted Stock Unit Award shall be subject to the following terms and conditions: (i)A Restricted Stock Unit Award shall be similar to Restricted Stock Award except that no shares of Stock are actually awarded to the recipient on the date of grant.Each Restricted Stock Unit Award shall be evidenced by an Award Agreement that shall specify the Restriction Period, the number of Restricted Stock Units granted, and such other provisions, including the effect of termination of a Participant’s employment or Service with the Company, as the Committee shall determine.The Committee shall impose such other conditions and/or restrictions on any Restricted Stock Unit Award granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Restricted Stock Unit, time-based restrictions and vesting following the attainment of performance measures set forth in Section 2.5(a) hereof, restrictions under applicable laws or under the requirements of any stock exchange or market upon which such shares may be listed, or holding requirements or sale restrictions placed by the Company upon vesting of such Restricted Stock Units. (ii)The Committee may, in connection with the grant of Restricted Stock Units, designate them as “performance based compensation” within the meaning of Code Section 162(m), in which event it shall condition the vesting thereof upon the attainment of one or more performance measures set forth in Section 2.5(a) hereof.Regardless of whether Restricted Stock Units are subject to the attainment of one or more performance measures, the Committee may also condition the vesting thereof upon the continued Service of the Participant.The conditions for grant or vesting and the other provisions of Restricted Stock Units (including without limitation any applicable performance measures) need not be the same with respect to each recipient. An Award of Restricted Stock Units shall be settled as and when the Restricted Stock Units vest or, in the case of Restricted Stock Units subject to performance measures, after the Committee has certified that the performance goals have been satisfied. (iii)Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of such Restricted Stock Unit Award for which such Participant’s continued Service is required (the “Restriction Period”), and until the later of (A)the expiration of the Restriction Period and (B)the date the applicable performance measures (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units. (iv)A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.No dividends shall be paid on Restricted Stock Units. Section 2.5Performance-Based Compensation. The vesting of any Restricted Stock Award or Restricted Stock Unit Award under the Plan that is intended to be “performance-based compensation” within the meaning of Code Section 162(m) shall be conditioned on the achievement of one or more objective performance measures, to the extent required by Code Section 162(m), as may be determined by the Committee.At the discretion of the Committee, the vesting of any Stock Options also may be subject to the achievement of one or more objective performance measures, although such performance-based vesting is not necessary to satisfy the requirement of Code Section 162(m) with respect to Stock Options.The grant of any Award and the establishment of performance measures that are intended to be performance-based compensation shall be made during the period required under Code Section 162(m) and shall comply with all applicable requirements of Code Section 162(m). A-4 (a)Performance Measures. Such performance measures may be based on any one or more of the following: (i) basic earnings per share; (ii) basic cash earnings per share; (iii)diluted earnings per share; (iv)core earnings per share; (v)diluted cash earnings per share; (vi)net income or net income before taxes; (vii)cash earnings; (viii)net interest income; (ix) non-interest income; (x) general and administrative expense to average assets ratio; (xi)cash general and administrative expense to average assets ratio; (xii)efficiency ratio; (xiii)cash efficiency ratio; (xiv)return on average assets; (xv)core return on average assets; (xvi)cash return on average assets; (xvii)core return on equity; (xviii)return on average stockholders’ equity; (xix)cash return on average stockholders’ equity; (xx)return on average tangible stockholders’ equity; (xxi)cash return on average tangible stockholders’ equity; (xxii)core earnings; (xxiii)operating income; (xxiv)operating efficiency ratio; A-5 (xxv)net interest margin; (xxvi)net interest rate margin or net interest rate spread; (xxvii)growth in assets, loans, or deposits; (xxviii)loan production volume; (xxix)net charge offs; (xxx)non-performing loans; (xxxi)classified loans; (xxxii)cash flow; (xxxiii)capital preservation (core or risk-based); (xxxiv)interest rate risk exposure net portfolio value; (xxxv)interest rate risk sensitivity; (xxxvi)strategic business objectives, consisting of one or more objectives based upon meeting specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures, or goals relating to capital raising and capital management; (xxxvii)stock price (including, but not limited to, growth measures and total shareholder return); (xxxviii)operating expenses as a percentage of average assets; (xxxix)core deposits as a percentage of total deposits; (xl) net charge off percentage; (xli)average percentage past due; (xlii) classified assets to total assets; or (xxviii) any combination of the foregoing. Performance measures may be based on the performance of the Company as a whole or on any one or more Subsidiaries or business units of the Company or a Subsidiary and may be measured relative to a peer group, an index or a business plan and may be considered as absolute measures or changes in measures.In establishing any performance measures, the Committee may provide for the exclusion of the effects of the following items, to the extent identified in the audited financial statements of the Company, including footnotes, or in the Management’s Discussion and Analysis section of the Company’s annual report or in the Compensation Discussion and Analysis Section, if any, of the Company’s annual proxy statement:(i)extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gains or losses on the disposition of a business; (iii) changes in tax or accounting principles, regulations or laws; or (iv) mergers or acquisitions. To the extent not specifically excluded, such effects shall be included in any applicable performance measure. A-6 (b)Adjustments. Pursuant to this Section 2.5, in certain circumstances the Committee may adjust performance measures; provided, however, no adjustment may be made with respect to an Award that is intended to be performance-based compensation within the meaning of Code Section 162(m), except to the extent the Committee exercises such negative discretion as is permitted under applicable law for purposes of an exception under Code Section 162(m).If the Committee determines that a change in the business, operations, corporate structure or capital structure of the Company or the manner in which the Company or its Subsidiaries conducts its business or other events or circumstances render current performance measures to be unsuitable, the Committee may modify such performance measures, in whole or in part, as the Committee deems appropriate.If a Participant is promoted, demoted or transferred to a different business unit during a performance period, the Committee may determine that the selected performance measures or applicable performance period are no longer appropriate, in which case, the Committee, in its sole discretion, may: (i) adjust, change or eliminate the performance measures or change the applicable performance period; or (ii) cause to be made a cash payment to the Participant in an amount determined by the Committee. (c)Treatment on Retirement. Notwithstanding anything herein to the contrary, no Restricted Stock Award or Restricted Stock Unit Award that is intended to be considered performance-based compensation under Code Section 162(m) shall be granted under terms that will permit its accelerated vesting upon Retirement or other termination of Service (other than death or Disability).Notwithstanding anything to the contrary herein, in the sole discretion of the Committee exercised at the time of grant of an Award under this Section 2.5, in the event of Retirement of a Participant during the performance period, the Award Agreement may provide for the vesting of all or a portion of such Award, so long as the vesting is not accelerated but shall occur at the end of the performance period, and will be prorated, based on the period of the Participant’s active employment and the level of achievement of the performance measures during the period of the Participant’s active employment. Section 2.6Vesting of Awards.The Committee shall specify the vesting schedule or conditions of each Award.Unless the Committee specifies a different vesting schedule at the time of grant, Awards under the Plan shall be granted with a vesting rate not exceeding twenty percent (20%) per year, with the first installment vesting one year after the date of grant.If the right to become vested in an Award under the Plan (including the right to exercise a Stock Option) is conditioned on the completion of a specified period of Service with the Company or its Subsidiaries, without achievement of performance measures or other performance objectives being required as a condition of vesting, and without it being granted in lieu of, or in exchange for, other compensation, then the required period of Service for full vesting shall be determined by the Committee and evidenced in the Award Agreement (subject to acceleration of vesting, to the extent permitted by the Committee, including in the event of the Participant’s death, disability, Retirement or Involuntary Termination of Employment (or Termination of Service for a Director) following a Change in Control).Unless otherwise provided by the Committee, Service as a director emeritus or advisory director, including Service as a director emeritus or advisory director after Termination of Service as a Director, shall constitute Service for purposes of vesting.Unless otherwise provided by the Committee, with respect to an Employee who is also a Director, continued Service as a Director following termination of employment shall constitute Service for purposes of vesting. Section 2.7 Deferred Compensation.If any Award would be considered “deferred compensation” as defined under Code Section 409A (“Deferred Compensation”), the Committee reserves the absolute right (including the right to delegate such right) to unilaterally amend the Plan or the Award Agreement, without the consent of the Participant, to maintain exemption from, or to comply with, Code Section 409A.Any amendment by the Committee to the Plan or an Award Agreement pursuant to this Section shall maintain, to the extent practicable, the original intent of the applicable provision without violating Code Section 409A.A Participant’s acceptance of any Award under the Plan constitutes acknowledgement and consent to such rights of the Committee, without further consideration or action.Any discretionary authority retained by the Committee pursuant to the terms of this Plan or pursuant to an Award Agreement shall not be applicable to an Award which is determined to constitute Deferred Compensation, if such discretionary authority would contravene Code Section 409A. Section 2.8 Prohibition Against Option Repricing. Except for adjustments pursuant to Section 3.3, and reductions of the Exercise Price approved by the Company’s stockholders, neither the Committee nor the Board shall have the right or authority to make any adjustment or amendment that reduces or would have the effect of reducing the Exercise Price of a Stock Option previously granted under the Plan, whether through amendment, cancellation (including cancellation in exchange for a cash payment in excess of the Stock Option’s in-the-money value or in exchange for Options or other Awards) or replacement grants, or other means. A-7 Section 2.9.Effect of Termination of Service on Awards.The Committee shall establish the effect of a Termination of Service on the continuation of rights and benefits available under an Award or the Plan and, in so doing, may make distinctions based upon, among other things, the cause of Termination of Service and type of Award.Unless otherwise specified by the Committee and set forth in an Award Agreement between the Company and the Participant or as set forth in an employment agreement entered into by and between the Company and/or the Bank and an Employee, the following provisions shall apply to each Award granted under this Plan: (a)Upon a Participant’s Termination of Service for any reason other than due to Disability, Retirement, death or termination for Cause, Stock Options shall be exercisable only as to those shares that were immediately exercisable by such Participant at the date of termination, and Stock Options may be exercised only for a period of three (3) months following termination, and any Restricted Stock Award and Restricted Stock Unit Award that has not vested as of the date of Termination of Service shall expire and be forfeited. (b)In the event of a Termination of Service for Cause, all Stock Options granted to a Participant that have not been exercised and all Restricted Stock Awards and Restricted Stock Unit Awards granted to a Participant that has not vested shall expire and be forfeited. (c)Upon Termination of Service for reason of Disability or death, and if specifically provided by the Committee,upon Retirement (except in the case of Awards subject to performance-based vesting conditions under Section 2.5 hereof) all Stock Options shall be exercisable as to all shares subject to an outstanding Award, whether or not then exercisable, and all Restricted Stock Awards and Restricted Stock Unit Awards shall vest as to all shares subject to an outstanding Award, whether or not otherwise immediately vested, at the date of Termination of Service.Vested Stock Options may be exercised for a period of one year following Termination of Service due to death, Disability or Retirement, provided, however, that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three months following Termination of Service due to Retirement or one year following Termination of Service due to Disability and provided, further, in order to obtain ISO treatment for Stock Options exercised by heirs or devisees of an optionee, the optionee’s death must have occurred while employed or within three (3) months of Termination of Service. (d)Notwithstanding anything herein to the contrary, no Stock Option shall be exercisable beyond the last day of the original term of such Stock Option. (e)Notwithstanding the provisions of this Section 2.9, the effect of a Change in Control on the vesting/exercisability of Stock Options, Restricted Stock and Restricted Stock Units is as set forth in Article 4. ARTICLE 3 - SHARES SUBJECT TO PLAN Section 3.1 Available Shares. The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued, currently held or, to the extent permitted by applicable law, subsequently acquired by the Company as treasury shares, including shares purchased in the open market or in private transactions. Section 3.2Share Limitations. (a)Share Reserve.Subject to the following provisions of this Section 3.2, the maximum number of shares of Stock that may be delivered to Participants and their beneficiaries under the Plan shall be equal to Eight Hundred Ninety-Two Thousand Five Hundred (892,500) shares of Stock, Six Hundred Thirty-Seven Five Hundred (637,500) shares of Stock of which are eligible to be delivered pursuant to the exercise of Stock Options (all of which may be granted as ISOs) and Two Hundred Fifty-Five Thousand (255,000) shares of Stock that may be issuedunder the Plan as Restricted Stock Awards or Restricted Stock Unit Awards.The aggregate number of shares available for grant under this Plan and the number of shares of Stock subject to outstanding awards shall be subject to adjustment as provided in Section 3.3. A-8 (b)Computation of Shares Available.For purposes of this Section 3.2 and in connection with the granting of Stock Options, Restricted Stock or Restricted Stock Units, the number of shares of Stock available for the granting of additional Stock Options, Restricted Stock and Restricted Stock Units shall be reduced by the number of shares of Stock in respect of which the Stock Options, Restricted Stock or Restricted Stock Units is granted or denominated.To the extent any shares of Stock covered by an Award (including Restricted Stock and Restricted Stock Units) under the Plan are not delivered to a Participant or beneficiary for any reason, including because the Award is forfeited or canceled or because a Stock Option is not exercised, then such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Stock available for delivery under the Plan.To the extent (i) a Stock Option is exercised by using an actual or constructive exchange of shares of Stock to pay the Exercise Price or (ii) shares of Stock are withheld to satisfy withholding taxes upon exercise or vesting of an Award granted hereunder, the number of shares of Stock available shall be reduced by the gross number of Stock Options exercised rather than by the net number of shares of Stock issued. (c)Grants to Employees.The maximum number of shares of Stock, in the aggregate, that may be subject to Stock Options granted to any one Employee pursuant to this Section 3.2 during any calendar year shall not exceed one hundred thousand (100,000). Section 3.3 Corporate Transactions. (a)General.In the event any recapitalization, forward or reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, or exchange of shares of Stock or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event, affects the shares of Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan and/or under any Award granted under the Plan, then the Committee shall, in an equitable manner, adjust any or all of (i) the number and kind of securities deemed to be available thereafter for grants of Stock Options, Restricted Stock and Restricted Stock Units in the aggregate to all Participants and individually to any one Participant, (ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Stock Options, Restricted Stock and Restricted Stock Units, and (iii) the Exercise Price of Stock Options.In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Stock Options, Restricted Stock and Restricted Stock Units (including, without limitation, cancellation of Stock Options, Restricted Stock and Restricted Stock Units in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution or exchange of Stock Options, Restricted Stock or Restricted Stock Units using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any parent or Subsidiary or the financial statements of the Company or any parent or Subsidiary, or in response to changes in applicable laws, regulations, or accounting principles. Unless otherwise determined by the Committee, any such adjustment to an Award intended to qualify as “performance-based compensation” shall conform to the requirements of Code Section 162(m) and the regulations thereunder then in effect. (b)Merger in which Company is Not Surviving Entity.In the event of any merger, consolidation, or other business reorganization (including, but not limited to, a Change in Control) in which the Company is not the surviving entity, unless otherwise determined by the Committee at any time at or after grant and prior to the consummation of such merger, consolidation or other business reorganization, any Stock Options granted under the Plan which remain outstanding shall be converted into Stock Options to purchase voting common equity securities of the business entity which survives such merger, consolidation or other business reorganization having substantially the same terms and conditions as the outstanding Stock Options under this Plan and reflecting the same economic benefit (as measured by the difference between the aggregate Exercise Price and the value exchanged for outstanding shares of Stock in such merger, consolidation or other business reorganization), all as determined by the Committee prior to the consummation of such merger; provided, however, that the Committee may, at any time prior to the consummation of such merger, consolidation or other business reorganization, direct that all, but not less than all, outstanding Stock Options be canceled as of the effective date of such merger, consolidation or other business reorganization in exchange for a cash payment per share of Stock equal to the excess (if any) of the value exchanged for an outstanding share of Stock in such merger, consolidation or other business reorganization over the Exercise Price of the Stock Option being canceled. A-9 Section 3.4 Delivery of Shares. Delivery of shares of Stock or other amounts under the Plan shall be subject to the following: (a) Compliance with Applicable Laws. Notwithstanding any other provision of the Plan, the Company shall have no obligation to deliver any shares of Stock or make any other distribution of benefits under the Plan unless such delivery or distribution complies with all applicable laws (including, the requirements of the Securities Act), and the applicable requirements of any securities exchange or similar entity. (b) Certificates. To the extent that the Plan provides for the issuance of shares of Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange. ARTICLE 4 - CHANGE IN CONTROL Section 4.1Consequence of a Change in Control.Subject to the provisions of Section 3.3(relating to the adjustment of shares), and except as otherwise provided in the Plan or as determined by the Committee and set forth in the terms of any Award Agreement or as set forth in an employment agreement entered into by and between the Company and/or the Bank and an Employee: (a)At the time of an Involuntary Termination of Employment (or as to a Director or other service provider, Termination of Service), all Stock Options then held by the Participant shall become fully exercisable (subject to the expiration provisions otherwise applicable to the Stock Option).All Stock Options may be exercised for a period of one year following the Participant’s Involuntary Termination of Employment (or as to a Director, Termination of Service as a Director), provided however that no Stock Option shall be eligible for treatment as an ISO in the event such Stock Option is exercised more than three (3) months following Involuntary Termination of Employment following a Change in Control. (b)At the time of an Involuntary Termination of Employment (or as to a Director or other service provider, Termination of Service), following a Change in Control, all Restricted Stock Awards and Restricted Stock Unit Awards then held by the Participant shall be fully earned and vested immediately.Notwithstanding the above, any Awards the vesting of which are based on satisfaction of performance-based conditions will be vested as specified in subsection (c) hereof. (c)In the event of a Change in Control, any performance measure attached to an Award under the Plan shall be deemed satisfied as of the date of the Change in Control. Section 4.2 Definition of Change in Control. For purposes of the Plan, unless otherwise provided in an Award Agreement, a “Change in Control” of the Bank or the Company shall mean a change in control of a nature that: (i) would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) results in a Change in Control of the Bank or the Company within the meaning of the Home Owners’ Loan Act, as amended, and applicable rules and regulations promulgated thereunder (collectively, the “HOLA”) as in effect at the time of the Change in Control; or (iii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company’s outstanding securities, except for any securities purchased by the Bank’s employee stock ownership plan or trust; or (b) individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this clause (b), considered as though he or she were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or the Company or similar transaction in which the Bank or Company is not the surviving institution occurs or is effected; or (d) a proxy statement soliciting proxies from stockholders of the Company, by someone other than the current management of the Company is distributed, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan are exchanged for or converted into cash or property or securities not issued by the Company; or (e) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror. A-10 Section 5.1Administration.The Plan shall be administered by the members of the Compensation Committee of the Company who are Disinterested Board Members.If the Committee consists of fewer than three Disinterested Board Members, then the Board shall appoint to the Committee such additional Disinterested Board Members as shall be necessary to provide for a Committee consisting of at least three Disinterested Board Members.Any members of the Committee who do not qualify as Disinterested Board Members shall abstain from participating in any discussion to make or administer Awards that are made to Participants who at the time of consideration for such Award: (i) are persons subject to the short-swing profit rules of Section 16 of the Exchange Act, or (ii) are reasonably anticipated to be Covered Employees during the term of the Award.The Board (or those members of the Board who are “independent directors” under the corporate governance statutes or rules of any national securities exchange on which the Company lists its securities) may, in its discretion, take any action and exercise any power, privilege or discretion conferred on the Committee under the Plan with the same force and effect under the Plan as if done or exercised by the Committee. Section 5.2Powers of Committee. The administration of the Plan by the Committee shall be subject to the following: (a)the Committee will have the authority and discretion to select from among the Company’s and its Subsidiaries’ Employees, Directors and other service providers, such as directors emeritus and/or advisory directors, those persons who shall receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by the Awards, to establish the terms, conditions, performance criteria, restrictions (including without limitation, provisions relating to non-competition, non-solicitation and confidentiality), and other provisions of such Awards (subject to the restrictions imposed by Article 6) to cancel or suspend Awards and to reduce, eliminate or accelerate any restrictions or vesting requirements applicable to an Award at any time after the grant of the Award. (b)The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan. (c)The Committee will have the authority to define terms not otherwise defined herein. (d)Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons. (e)In controlling and managing the operation and administration of the Plan, the Committee shall take action in a manner that conforms to the charter and bylaws of the Company and applicable corporate law. A-11 Section 5.3Delegation by Committee. Except to the extent prohibited by applicable law, the applicable rules of a stock exchange or the Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3 promulgated under the Exchange Act or Code Section 162(m), the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it, including:(a)delegating to a committee of one or more members of the Board who are not “outside directors” within the meaning of Code Section 162(m), the authority to grant Awards under the Plan to eligible persons who are not persons with respect to whom the Company wishes to comply with Code Section 162(m); and/or (b) delegating to a committee of one or more members of the Board who are not “non-employee directors,” within the meaning of Rule 16b-3, the authority to grant Awards under the Plan to eligible persons who are not then subject to Section 16 of the Exchange Act.The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report regularly to the Committee regarding the delegated duties and responsibilities and any Awards so granted.Any such allocation or delegation may be revoked by the Committee at any time. Section 5.4Information to be Furnished to Committee. As may be permitted by applicable law, the Company and its Subsidiaries shall furnish the Committee with such data and information as it determines may be required for it to discharge its duties. The records of the Company and its Subsidiaries as to a Participant’s employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined by the Committee to be manifestly incorrect. Subject to applicable law, Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the terms of the Plan. Section 5.5Committee Action.The Committee shall hold such meetings, and may make such administrative rules and regulations, as it may deem proper. A majority of the members of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at a meeting at which a quorum is present, as well as actions taken pursuant to the unanimous written consent of all of the members of the Committee without holding a meeting, shall be deemed to be actions of the Committee. Subject to Section 5.1, all actions of the Committee shall be final and conclusive and shall be binding upon the Company, Participants and all other interested parties. Any person dealing with the Committee shall be fully protected in relying upon any written notice, instruction, direction or other communication signed by a member of the Committee or by a representative of the Committee authorized to sign the same in its behalf. ARTICLE 6 - AMENDMENT AND TERMINATION Section 6.1General. The Board may, as permitted by law, at any time, amend or terminate the Plan, and may amend any Award Agreement, provided that no amendment or termination (except as provided in Section2.7, Section 3.3 and Section 6.2) may cause the Award to violate Code Section 409A, may cause the repricing of a Stock Option or, in the absence of written consent to the change by the affected Participant (or, if the Participant is not then living, the affected beneficiary), adversely impair the rights of any Participant or beneficiary under any Award granted under the Plan prior to the date such amendment is adopted by the Board; provided, however, that, no amendment may (a)materially increase the benefits accruing to Participants under the Plan, (b)materially increase the aggregate number of securities which may be issued under the Plan, other than pursuant to Section 3.3, or (c)materially modify the requirements for participation in the Plan, unless the amendment under (a), (b) or (c) above is approved by the Company’s stockholders. Section 6.2Amendment to Conform to Law and Accounting Changes. Notwithstanding any provision in this Plan or any Award Agreement to the contrary, the Committee may amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of (i) conforming the Plan or the Award Agreement to any present or future law relating to plans of this or similar nature (including, but not limited to, Code Section 409A), or (ii) avoiding an accounting treatment resulting from an accounting pronouncement or interpretation thereof issued by the Securities and Exchange Commission or Financial Accounting Standards Board subsequent to the adoption of the Plan or the making of the Award affected thereby, which, in the sole discretion of the Committee, may materially and adversely affect the financial condition or results of operations of the Company.By accepting an Award under this Plan, each Participant agrees and consents to any amendment made pursuant to this Section 6.2 or Section 2.7 to any Award granted under the Plan without further consideration or action. A-12 ARTICLE 7 - GENERAL TERMS Section 7.1 No Implied Rights. (a)No Rights to Specific Assets. Neither a Participant nor any other person shall by reason of participation in the Plan acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the shares of Stock or amounts, if any, payable or distributable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person. (b)No Contractual Right to Employment or Future Awards. The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating Employee the right to be retained in the employ of the Company or any Subsidiary or any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. No individual shall have the right to be selected to receive an Award under the Plan, or, having been so selected, to receive a future Award under the Plan. (c)No Rights as a Stockholder.Except as otherwise provided in the Plan, no Award under the Plan shall confer upon the holder thereof any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights. Section 7.2Transferability. Except as otherwise so provided by the Committee, ISOs under the Plan are not transferable except (i) as designated by the Participant by will or by the laws of descent and distribution, (ii) to a trust established by the Participant, if under Code Section 671 and applicable state law, the Participant is considered the sole beneficial owner of the Stock Option while held in trust, or (iii) between spouses incident to a divorce or pursuant to a domestic relations order, provided, however, in the case of a transfer within the meaning of this Section 7.2(iii), the Stock Option shall not qualify as an ISO as of the day of such transfer.The Committee shall have the discretion to permit the transfer of Stock Options (other than ISOs) under the Plan; provided, however, that such transfers shall be limited to Immediate Family Members of Participants, trusts and partnerships established for the primary benefit of such family members or to charitable organizations, and; provided, further, that such transfers are not made for consideration to the Participant. Awards of Restricted Stock and Restricted Stock Units shall not be transferable prior to the time that such Awards vest in the Participant. Section 7.3Designation of Beneficiaries. A Participant hereunder may file with the Company a written designation of a beneficiary or beneficiaries under this Plan and may from time to time revoke or amend any such designation (“Beneficiary Designation”).Any designation of beneficiary under this Plan shall be controlling over any other disposition, testamentary or otherwise (unless such disposition is pursuant to a domestic relations order); provided, however, that if the Committee is in doubt as to the entitlement of any such beneficiary to any Award, the Committee may determine to recognize only the legal representative of the Participant, in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone. Section 7.4Non-Exclusivity. Neither the adoption of this Plan by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including, without limitation, the granting of Restricted Stock, Restricted Stock Units or Stock Options otherwise than under the Plan or an arrangement that is or is not intended to qualify under Code Section 162(m), and such arrangements may be either generally applicable or applicable only in specific cases. A-13 Section 7.5Award Agreement. Each Award granted under the Plan shall be evidenced by an Award Agreement signed by the Participant.A copy of the Award Agreement, in any medium chosen by the Committee, shall be provided (or made available electronically) to the Participant. Section 7.6Form and Time of Elections/Notification Under Code Section 83(b). Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, shall be filed with the Company at such times, in such form, and subject to such restrictions and limitations, not inconsistent with the terms of the Plan, as the Committee shall require.Notwithstanding anything herein to the contrary, the Committee may, on the date of grant or at a later date, as applicable, prohibit an individual from making an election under Code Section 83(b).If the Committee has not prohibited an individual from making this election, an individual who makes this election shall notify the Committee of the election within ten (10) days of filing notice of the election with the Internal Revenue Service.This requirement is in addition to any filing and notification required under the regulations issued under the authority of Code Section 83(b). Section 7.7Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information upon which the person is acting considers pertinent and reliable, and signed, made or presented by the proper party or parties. Section 7.8Tax Withholding. Where a Participant is entitled to receive shares of Stock upon the vesting or exercise of an Award, the Company shall have the right to require such Participant to pay to the Company the amount of any tax that the Company is required to withhold with respect to such vesting or exercise, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of shares of Stock to cover the minimum amount required to be withheld. To the extent determined by the Committee and specified in an Award Agreement, a Participant shall have the right to direct the Company to satisfy the minimum required federal, state and local tax withholding by: (i) with respect to a Stock Option, reducing the number of shares of Stock subject to the Stock Option (without issuance of such shares of Stock to the Stock Option holder) by a number equal to the quotient of (a) the total minimum amount of required tax withholding divided by (b) the excess of the Fair Market Value of a share of Stock on the exercise date over the Exercise Price per share of Stock; and (ii) with respect to Restricted Stock or Restricted Stock Units, withholding a number of shares (based on the Fair Market Value on the vesting date) otherwise vesting that would satisfy the minimum amount of required tax withholding.Provided there are no adverse accounting consequences to the Company (a requirement to have liability classification of an award under Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718 (formerly, FAS 123R) is an adverse consequence), a Participant who is not required to have taxes withheld may require the Company to withhold in accordance with the preceding sentence as if the Award were subject to minimum tax withholding requirements. Section 7.9Action by Company or Subsidiary. Any action required or permitted to be taken by the Company or any Subsidiary shall be by resolution of its board of directors, or by action of one or more members of the Board (including a committee of the Board) who are duly authorized to act for the Board, or (except to the extent prohibited by applicable law or applicable rules of any stock exchange) by a duly authorized officer of the Company or such Subsidiary. Section 7.10Successors. All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business, stock, and/or assets of the Company. A-14 Section 7.11Indemnification. To the fullest extent permitted by law and the Company’s governing documents, each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom authority was delegated in accordance with Section 5.3, or an Employee of the Company, shall be indemnified and held harmless by the Company against and from any loss (including amounts paid in settlement), cost, liability or expense (including reasonable attorneys’ fees) that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute or regulation.The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. Section 7.12No Fractional Shares. Unless otherwise permitted by the Committee, no fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award.The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. Section 7.13 Governing Law. The Plan, all Awards granted hereunder, and all actions taken in connection herewith shall be governed by and construed in accordance with the laws of the State of California without reference to principles of conflict of laws, except as superseded by applicable federal law.The federal and state courts located within fifty (50) miles of the Company’s principal office, shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan.By accepting any award under this Plan, each Participant, and any other person claiming any rights under the Plan, agrees to submit himself, and any such legal action as he or she shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes. Section 7.14 Benefits Under Other Plans. Except as otherwise provided by the Committee or as set forth in a Qualified Retirement Plan, Awards to a Participant (including the grant and the receipt of benefits) under the Plan shall be disregarded for purposes of determining the Participant’s benefits under, or contributions to, any Qualified Retirement Plan, non-qualified plan and any other benefit plans maintained by the Participant’s employer.The term “Qualified Retirement Plan” means any plan of the Company or a Subsidiary that is intended to be qualified under Code Section 401(a). Section 7.15Validity. If any provision of this Plan is determined to be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision has never been included herein. Section 7.16Notice. Unless otherwise provided in an Award Agreement, all written notices and all other written communications to the Company provided for in the Plan or in any Award Agreement, shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile, email or prepaid overnight courier to the Company at its principal executive office.Such notices, demands, claims and other communications shall be deemed given: (a)in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery; (b)in the case of certified or registered U.S. mail, five (5) days after deposit in the U.S. mail; or (c)in the case of facsimile or email, the date upon which the transmitting party received confirmation of receipt; provided, however, that in no event shall any such communications be deemed to be given later than the date they are actually received, provided they are actually received. In the event a communication is not received, it shall only be deemed received upon the showing of an original of the applicable receipt, registration or confirmation from the applicable delivery service.Communications that are to be delivered by U.S. mail or by overnight service to the Company shall be directed to the attention of the Company’s Chief Operating Officer and to the Corporate Secretary. A-15 Section 7.17Forfeiture Events. (a)The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award.Such events include, but are not limited to, termination of employment for cause, termination of the Participant’s provisions of Services to the Company or any Subsidiary, violation of material Company or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct of the Participant that is detrimental to the business or reputation of the Company or any Subsidiary. (b)If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws, any Participant who is subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 shall reimburse the Company the amount of any payment in settlement of an Award earned or accrued during the twelve (12) month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document embodying such financial reporting requirement. In addition, in the event of an accounting restatement, the Committee, in its sole and exclusive discretion, may require that any Participant reimburse the Company for all or any part of the amount of any payment in settlement of any Award granted hereunder. ARTICLE 8 - DEFINED TERMS; CONSTRUCTION Section 8.1In addition to the other definitions contained herein, unless otherwise specifically provided in an Award Agreement, the following definitions shall apply: (a)“10% Stockholder” means an individual who, at the time of grant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company. (b)“Award” means any Stock Option, Restricted Stock or Restricted Stock Units or any or all of them, or any other right or interest relating to stock or cash, granted to a Participant under the Plan. (c)“Award Agreement” means the document (in whatever medium prescribed by the Committee) which evidences the terms and conditions of an Award under the Plan.Such document is referred to as an agreement, regardless of whether a Participant’s signature is required. (d)“Board” means the Board of Directors of the Company. (e)If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of termination for “Cause,” then, for purposes of this Plan, the term “Cause” shall have meaning set forth in such agreement.In the absence of such a definition, “Cause” means (i) the conviction of the Participant of a felony or of any lesser criminal offense involving moral turpitude; (ii) the willful commission by the Participant of a criminal or other act that, in the judgment of the Board, will likely cause substantial economic damage to the Company or any Subsidiary or substantial injury to the business reputation of the Company or any Subsidiary; (iii) the commission by the Participant of an act of fraud in the performance of his duties on behalf of the Company or any Subsidiary; (iv) the continuing willful failure of the Participant to perform his duties to the Company or any Subsidiary (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness) after written notice thereof; or (v) an order of a federal or state regulatory agency or a court of competent jurisdiction requiring the termination of the Participant’s Service with the Company. A-16 (f)“Change in Control” has the meaning ascribed to it in Section 4.2. (g)“Code” means the Internal Revenue Code of 1986, as amended, and any rules, regulations and guidance promulgated thereunder, as modified from time to time. (h)“Code Section 409A” means the provisions of Section 409A of the Code and any rules, regulations and guidance promulgated thereunder, as modified from time to time. (i)“Committee” means the Committee acting under Article 5. (j)“Covered Employee” has the meaning given the term in Code Section 162(m), and shall also include any other Employee who may become a Covered Employee before an Award vests, as the Committee may determine in its sole discretion. (k)“Director” means a member of the Board of Directors of the Company or a Subsidiary. (l)If the Participant is subject to a written employment agreement (or other similar written agreement) with the Company or a Subsidiary that provides a definition of “Disability” or “Disabled,” then, for purposes of this Plan, the terms “Disability” or “Disabled” shall have meaning set forth in such agreement.In the absence of such a definition, “Disability” shall be defined in accordance with the Bank’s long-term disability plan.To the extent that an Award hereunder is subject to Code Section 409A, “Disability” or “Disabled” shall mean that a Participant:(i)is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii)is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering the Company’s Employees.Except to the extent prohibited under Code Section 409A, if applicable, the Committee shall have discretion to determine if a termination due to Disability has occurred. (m)“Disinterested Board Member” means a member of the Board who: (a) is not a current Employee of the Company or a Subsidiary; (b) is not a former employee of the Company who receives compensation for prior Services (other than benefits under a tax qualified retirement plan) during the taxable year; (c) has not been an officer of the Company; (d) does not receive remuneration from the Company or a Subsidiary, either directly or indirectly, in any capacity other than as a Director except in an amount for which disclosure would not be required pursuant to Item 404 of SEC Regulation S-K in accordance with the proxy solicitation rules of the SEC, as amended or any successor provision thereto; and (e) does not possess an interest in any other transaction, and is not engaged in a business relationship for which disclosure would be required pursuant to Item 404(a) of SEC Regulation S-K under the proxy solicitation rules of the SEC, as amended or any successor provision thereto. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of Section 162(m) of the Code, Rule 16b-3 promulgated under the Exchange Act and the corporate governance standards imposed on compensation committees under the listing requirements imposed by any national securities exchange on which the Company lists or seeks to list its securities. (n)“Employee” means any person employed by the Company or any Subsidiary. Directors who are also employed by the Company or a Subsidiary shall be considered Employees under the Plan. (o)“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. A-17 (p) “Excluded Transaction” means a plan of reorganization, merger, consolidation or similar transaction that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving corporation or any parent thereof) at least 50% of the combined voting power of the Voting Securities of the entity surviving the plan of reorganization, merger, consolidation or similar transaction (or the parent of such surviving entity) immediately after such plan of reorganization, merger, consolidation or similar transaction. (q) “Exercise Price” means the price established with respect to a Stock Option pursuant to Section 2.2. (r) “Fair Market Value” means, with respect to a share of Stock on a specified date: (i)the final reported sales price on the date in question (or if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) as reported in the principal consolidated reporting system with respect to securities listed or admitted to trading on the principal United States securities exchange on which the shares of Stock are listed or admitted to trading, as of the close of the market in New York City and without regard to after-hours trading activity; or (ii) if the shares of Stock are not listed or admitted to trading on any such exchange, the closing bid quotation with respect to a share of Stock on such date, as of the close of the market in New York City and without regard to after-hours trading activity, or, if no such quotation is provided, on another similar system, selected by the Committee, then in use; or (iii)if (i) and (ii) are not applicable, the Fair Market Value of a share of Stock as the Committee may determine in good faith and in accordance with Code Section 422 and the applicable requirements of Code Section 409A and the regulations promulgated thereunder.For purposes of the exercise of a Stock Option, Fair Market Value on such date shall be the date a notice of exercise is received by the Company, or if not a day on which the market is open, the next day that it is open. (s)A termination of employment by an Employee Participant shall be deemed a termination of employment for “Good Reason”as a result of the Participant’s resignation from the employ of the Company or any Subsidiary upon the occurrence of any of the following events: (i) a material diminution in Participant’s base compensation; (ii) a material diminution in Participant’s authority duties or responsibilities; (iii)a requirement that Participant must report to a corporate officer or employee instead of reporting directly to the Board; (iv)a material diminution in the budget over which Participant retains authority; (v)a change in the geographic location at which Participant must perform his duties that is more than fifty (50) miles from the location of Participant’s principal workplace on the date of this Agreement; or (vi)any other action or inaction that constitutes a material breach by the Bank of this Agreement. (t)“Immediate Family Member” means with respect to any Participant: (a) any of the Participant’s children, stepchildren, grandchildren, parents, stepparents, grandparents, spouses, former spouses, siblings, nieces, nephews, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law, brothers-in-law or sisters-in-law, including relationships created by adoption; (b) any natural person sharing the Participant’s household (other than as a tenant or employee, directly or indirectly, of the Participant); (c) a trust in which any combination of the Participant and persons described in section (a) and (b) above own more than fifty percent (50%) of the beneficial interests; (d) a foundation in which any combination of the Participant and persons described in sections (a) and (b) above control management of the assets; or (e) any other corporation, partnership, limited liability company or other entity in which any combination of the Participant and persons described in sections (a) and (b) above control more than fifty percent (50%) of the voting interests. A-18 (u)“Incumbent Directors” means: (I) the individuals who, on the date hereof, constitute the Board; and (II)any new Director whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended: (a) by the vote of at least two-thirds (2/3) of the Whole Board, with at least two-thirds of the Incumbent Directors then in office voting in favor of such approval or recommendation; or (b) by a Nominating Committee of the Board whose members were appointed by the vote of at least two-thirds (2/3) of the Whole Board, with at least two-thirds of the Incumbent Directors then in office voting in favor of such appointments. (v)“Involuntary Termination of Employment” means the Termination of Service of a Participant by the Company or Subsidiary other than termination for Cause, or termination of employment by a Participant Employee for Good Reason. (w)“ISO” has the meaning ascribed to it in Section 2.1(a). (x)“Non-Qualified Option” means the right to purchase shares of Stock that is either (i) granted to a Participant who is not an Employee, or (ii) granted to an Employee and either is not designated by the Committee to be an ISO or does not satisfy the requirements of Section 422 of the Code. (y) “Participant” means any individual who has received, and currently holds, an outstanding Award under the Plan. (z)“Restricted Stock” has the meaning ascribed to it in Section 2.3. (aa)“Restricted Stock Unit Award” and “Restricted Stock Unit” has the meaning ascribed to them in Section 2.4. (bb)“Restricted Period” has the meaning ascribed to it in Section 2.4(b)(iii). (cc)“Retirement” means, unless otherwise specified in an Award Agreement, retirement from employment as an Employee on or after the attainment of age 65, or Termination of Service as a Director on or after the attainment of age 70, provided, however, that unless otherwise specified in an Award Agreement, an Employee who is also a Director shall not be deemed to have terminated due to Retirement until both Service as an Employee and Service as a Director has ceased.A non-Employee Director will be deemed to have terminated due to Retirement under the provisions of this Plan only if the non-Employee Director has terminated Service on the Board(s) of Directors of the Company and any Subsidiary or affiliate in accordance with applicable Company policy, following the provision of written notice to such Board(s) of Directors of the non-Employee Director’s intention to retire. (dd)“SEC” means the United States Securities and Exchange Commission. (ee) “Securities Act” means the Securities Act of 1933, as amended from time to time. (ff)“Service” means service as an Employee, service provider, or non-employee Director of the Company or a Subsidiary, as the case may be, and shall include service as a director emeritus or advisory director. (gg)“Stock” means the common stock of the Company, $0.01 par value per share. A-19 (hh)“Stock Option” means an ISO or a Non-Qualified Option. (ii)“Subsidiary” means any corporation, affiliate, bank or other entity which would be a subsidiary corporation with respect to the Company as defined in Code Section424(f) and, other than with respect to an ISO, shall also mean any partnership or joint venture in which the Company and/or other Subsidiary owns more than fifty percent (50%) of the capital or profits interests. (jj)“Termination of Service” means the first day occurring on or after a grant date on which the Participant ceases to be an Employee or Director of, or service provider to, the Company or any Subsidiary, regardless of the reason for such cessation, subject to the following: (i) The Participant’s cessation as an Employee or service provider shall not be deemed to occur by reason of the transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries. (ii) The Participant’s cessation as an Employee or service provider shall not be deemed to occur by reason of the Participant’s being on a bona fide leave of absence from the Company or a Subsidiary approved by the Company or Subsidiary otherwise receiving the Participant’s Services, provided such leave of absence does not exceed six months, or if longer, so long as the Employee retains a right to reemployment with the Company or Subsidiary under an applicable statute or by contract.For these purposes, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Employee will return to perform Services for the Company or Subsidiary.If the period of leave exceeds six months and the Employee does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six month period.For purposes of this sub-section, to the extent applicable, an Employee’s leave of absence shall be interpreted by the Committee in a manner consistent with Treasury Regulation Section 1.409A-1(h)(1). (iii)If, as a result of a sale or other transaction, the Subsidiary for whom Participant is employed (or to whom the Participant is providing Services) ceases to be a Subsidiary, and the Participant is not, following the transaction, an Employee of the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the Participant’s Termination of Service caused by the Participant being discharged by the entity for whom the Participant is employed or to whom the Participant is providing Services. (iv)A service provider whose Services to the Company or a Subsidiary are governed by a written agreement with the service provider will cease to be a service provider at the time the term of such written agreement ends (without renewal); and a service provider whose Services to the Company or a Subsidiary are not governed by a written agreement with the service provider will cease to be a service provider on the date that is ninety (90) days after the date the service provider last provides Services requested by the Company or any Subsidiary (as determined by the Committee). (v)Except to the extent Section 409A of the Code may be applicable to an Award, and subject to the foregoing paragraphs of this sub-section, the Committee shall have discretion to determine if a Termination of Service has occurred and the date on which it occurred. In the event that any Award under the Plan constitutes Deferred Compensation (as defined in Section 2.7 hereof), the term Termination of Service shall be interpreted by the Committee in a manner consistent with the definition of “Separation from Service” as defined under Code Section 409A and under Treasury Regulation Section 1.409A-1(h)(ii).For purposes of this Plan, a “Separation from Service” shall have occurred if the Bank and Participant reasonably anticipate that no further Services will be performed by the Participant after the date of the Termination of Service (whether as an employee or as an independent contractor) or the level of further Services performed will be less than 50% of the average level of bona fide Services in the 36 months immediately preceding the Termination of Service.If a Participant is a “Specified Employee,” as defined in Code Section 409A and any payment to be made hereunder shall be determined to be subject to Code Section 409A, then if required by Code Section 409A, such payment or a portion of such payment (to the minimum extent possible) shall be delayed and shall be paid on the first day of the seventh month following Participant’s Separation from Service. A-20 (vi)With respect to a Participant who is a director, cessation as a Director will not be deemed to have occurred if the Participant continues as a director emeritus or advisory director.With respect to a Participant who is both an Employee and a Director, termination of employment as an Employee shall not constitute a Termination of Service for purposes of the Plan so long as the Participant continues to provide Service as a Director or director emeritus or advisory director. (kk) “Voting Securities” means any securities which ordinarily possess the power to vote in the election of directors without the happening of any pre-condition or contingency. (ll)“Whole Board” means the total number of Directors that the Company would have if there were no vacancies on the Board at the time the relevant action or matter is presented to the Board for approval. Section 8.2 In this Plan, unless otherwise stated or the context otherwise requires, the following uses apply: (a)actions permitted under this Plan may be taken at any time and from time to time in the actor’sreasonable discretion; (b)references to a statute shall refer to the statute and any successor statute, and to all regulations promulgated under or implementing the statute or its successor, as in effect at the relevant time; (c)in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and the like) mean “to, but excluding”; (d)references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality; (e)indications of time of day mean Pacific Time; (f)“including” means “including, but not limited to”; (g)all references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Plan unless otherwise specified; (h)all words used in this Plan will be construed to be of such gender or number as the circumstances and context require; (i)the captions and headings of articles, sections, schedules and exhibits appearing in or attached to this Plan have been inserted solely for convenience of reference and shall not be considered a part of this Plan nor shall any of them affect the meaning or interpretation of this Plan or any of its provisions; (j)any reference to a document or set of documents in this Plan, and the rights and obligations of the parties under any such documents, shall mean such document or documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions or replacements thereof; and (k) all accounting terms not specifically defined herein shall be construed in accordance with GAAP. A-21 REVOCABLE PROXY KAISER FEDERAL FINANCIAL GROUP, INC. ANNUAL MEETING OF STOCKHOLDERS December 22, 2011 The undersigned hereby appoints the full Board of Directors, with full powers of substitution to act as attorneys and proxies for the undersigned to vote all shares of common stock of Kaiser Federal Financial Group, Inc. (the “Company”) which the undersigned may be entitled to vote at the Annual Meeting of Stockholders to be held at1359 North Grand Avenue, Covina, California, at 5:00 p.m. (pacific time) on Thursday, December 22, 2011 and at any adjournment or postponement thereof.The Board of Directors is authorized to cast all votes to which the undersigned is entitled as follows: FOR WITHHOLD FOR ALL EXCEPT 1.The election as Directors of all nominees listed below each to serve for a three-year term o o o John H. Cochrane, III Donald R. Voss INSTRUCTION:To withhold authority to vote for any individual nominee, mark “For All Except” and write that nominee’s name in the space provided below. FOR AGAINST ABSTAIN 2.Approval of theKaiser Federal Financial Group, Inc. 2011 Equity Incentive Plan o o o 3.The approval of Crowe Horwath LLPas the Company’s independent registered public accounting firm for the year ending June 30, 2012. o o o 4.An advisory, non-binding resolution with respect to our executive compensation. o o o ONE YEAR TWO YEARS THREE YEARS ABSTAIN 5.An advisory, non-binding vote with respect to the frequency of voting on our executive compensation. o o o o The Board of Directors recommends a vote “FOR” Proposals 1, 2, 3 and 4 and recommends that you vote for the “ONE YEAR” option in Proposal 5. THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE AND THE “ONE YEAR” OPTION IN PROPOSAL 5.IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE ABOVE-NAMED PROXIES AT THE DIRECTION OF A MAJORITY OF THE BOARD OF DIRECTORS.AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS Should the undersigned be present and elect to vote at the annual meeting or at any adjournment thereof and after notification to the Secretary of Kaiser Federal Financial Group, Inc. at the annual meeting of the stockholder’s decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.This proxy may also be revoked by sending written notice to the Secretary of Kaiser Federal Financial Group, Inc. at the address set forth on the Notice of Annual Meeting of Stockholders, or by the filing of a later proxy prior to a vote being taken on a particular proposal at the annual meeting. The undersigned acknowledges receipt from Kaiser Federal Financial Group, Inc. prior to the execution of this proxy of a notice of the annual meeting, audited financial statements and a proxy statement dated November 21, 2011. Dated: , 2011 o Check Box if You Plan to Attend Meeting PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER Please sign exactly as your name appears on this card.When signing as attorney, executor, administrator, trustee or guardian, please give your full title.If shares are held jointly, each holder should sign. Please complete and date this proxy and return it promptly in the enclosed postage-prepaid envelope.

Exhibit 10.1 Execution Version     SECURITIES PURCHASE AGREEMENT among PATTERSON-UTI ENERGY, INC., as the Buyer each of the parties listed on the signature pages hereto as a Seller, MULTI-SHOT, LLC as the Company and MS INCENTIVE PLAN HOLDCO, LLC as the Sellers Representative Dated as of September 4, 2017       TABLE OF CONTENTS             Page   ARTICLE I DEFINITIONS      1   Section 1.1    Certain Defined Terms      1   Section 1.2    Table of Definitions      9   ARTICLE II PURCHASE AND SALE      11   Section 2.1    Purchase and Sale of the Units      11   Section 2.2    Closing      11   Section 2.3    Closing Estimates      14   Section 2.4    Post-Closing Adjustment of Purchase Price      15   Section 2.5    Tax Treatment and Purchase Price Allocation      18   Section 2.6    Sellers Representative      19   Section 2.7    Withholding      20   ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS      20   Section 3.1    Organization and Qualification      21   Section 3.2    Authority      21   Section 3.3    No Conflict; Required Filings and Consents      21   Section 3.4    Units      22   Section 3.5    Acquisition of Buyer Common Shares      22   ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY      23   Section 4.1    Organization and Qualification      23   Section 4.2    Authority      23   Section 4.3         24   Section 4.4    Capitalization      25   Section 4.5    Equity Interests      25   Section 4.6    Financial Statements; No Undisclosed Liabilities      25   Section 4.7    Absence of Certain Changes or Events      26   Section 4.8    Compliance with Law; Permits      26   Section 4.9    Litigation      27   Section 4.10    Employee Benefit Plans      27   Section 4.11    Labor and Employment Matters      29   Section 4.12    Title to, Sufficiency and Condition of Assets      30   Section 4.13    Real Property      30   Section 4.14    Intellectual Property      31   Section 4.15    Taxes      32   Section 4.16    Environmental Matters      33   Section 4.17    Material Contracts      35   Section 4.18    Affiliate Interests and Transactions      37   Section 4.19    Insurance      38   Section 4.20    Privacy and Security      38     i TABLE OF CONTENTS (Continued) Page   Section 4.21    Customers and Suppliers      39   Section 4.22    Inventories      39   Section 4.23    Accounts Receivable      39   Section 4.24    Relations With Governments, etc.; Export Control Matters; Anti- Corruption Matters      40   Section 4.25    Brokers      41   Section 4.26         41   ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER      41   Section 5.1    Organization      41   Section 5.2    Authority      41   Section 5.3         42   Section 5.4    Capitalization      42   Section 5.5    Listing Exchange      43   Section 5.6    Financing      43   Section 5.7    Issuance of the Buyer Common Shares      43   Section 5.8    Brokers      43   Section 5.9    Investment Intent      43   Section 5.10    Financial Reports and Regulatory Filings      43   Section 5.11    Internal Controls      44   Section 5.12    Form S-3 Eligibility      44   Section 5.13    No Stockholder Approval      45   Section 5.14         45   ARTICLE VI COVENANTS      45   Section 6.1    Conduct of Business Prior to the Closing      45   Section 6.2    Covenants Regarding Information      47   Section 6.3    Exclusivity      49   Section 6.4    Notification of Certain Matters; Supplements to Disclosure Schedules      49   Section 6.5    Release      50   Section 6.6    Affiliate Arrangements      51   Section 6.7    Resignations      51   Section 6.8    Confidentiality      51   Section 6.9    Consents and Filings; Further Assurances      53   Section 6.10    Termination of Indebtedness      54   Section 6.11    Public Announcements      54   Section 6.12    Restrictions on Company Payments and Buyer Stock Splits and Dividends      54   Section 6.13    Books and Records      55     ii TABLE OF CONTENTS (Continued) Page   Section 6.14    Indemnification and Insurance      55   Section 6.15    Additional Listing Application      56   Section 6.16    Employee Matters      56   Section 6.17    Use of Certain Names      57   ARTICLE VII TAX MATTERS      57   Section 7.1    Tax Returns      57   Section 7.2    Cooperation      58   Section 7.3    Transfer Taxes      58   Section 7.4    Straddle Period Proration      59   Section 7.5    Pre-Closing Tax Indemnity      59   Section 7.6    Tax Proceedings      59   Section 7.7    Survival      60   ARTICLE VIII CONDITIONS TO CLOSING      60   Section 8.1    General Conditions      60   Section 8.2    Conditions to Obligations of the Sellers      60   Section 8.3    Conditions to Obligations of the Buyer      61   ARTICLE IX INDEMNIFICATION      62   Section 9.1    Survival      62   Section 9.2    Indemnification by the Sellers      63   Section 9.3    Indemnification by the Buyer      64   Section 9.4    Procedures      64   Section 9.5    Limits on Indemnification      66   Section 9.6    Remedies Not Affected by Investigation, Disclosure or Knowledge      67   Section 9.7    Materiality Qualifications      67   Section 9.8    Indemnity Escrow Fund      67   Section 9.9    No Double Recovery      68   Section 9.10    Exclusive Remedy; Waiver      68   Section 9.11    Mitigation      69   Section 9.12    Independent Investigation      69   ARTICLE X TERMINATION      70   Section 10.1    Termination      70   Section 10.2    Effect of Termination      71     iii TABLE OF CONTENTS (Continued) Page   ARTICLE XI GENERAL PROVISIONS      71   Section 11.1    Fees and Expenses      71   Section 11.2    Amendment and Modification      72   Section 11.3    Waiver      72   Section 11.4    Notices      72   Section 11.5    Interpretation      74   Section 11.6    Entire Agreement      74   Section 11.7    No Third-Party Beneficiaries      74   Section 11.8    Governing Law      75   Section 11.9    Submission to Jurisdiction      75   Section 11.10    Assignment; Successors      75   Section 11.11    Enforcement      75   Section 11.12    Currency      76   Section 11.13    Severability      76   Section 11.14    Waiver of Jury Trial      76   Section 11.15    Counterparts      76   Section 11.16    Facsimile or .pdf Signature      76   Section 11.17    Time of Essence      76   Section 11.18    No Presumption Against Drafting Party      76   Section 11.19    Role of Vinson & Elkins L.L.P.; Waiver of Conflicts and Privilege      77     iv Exhibit A    Form of Escrow Agreement Exhibit B    Form of Registration Rights Agreement   i SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT, dated as of September 4, 2017 (this “Agreement”), among Patterson-UTI Energy, Inc., a Delaware corporation (the “Buyer”), the undersigned holders of limited liability company interests of the Company (each, a “Seller” and, collectively, the “Sellers”), Multi-Shot, LLC, a Texas limited liability company (the “Company”), and MS Incentive Plan Holdco, LLC, a Delaware limited liability company, solely in its capacity as the Sellers Representative hereunder (the “Sellers Representative”). RECITALS A. The Sellers own 100% of the issued and outstanding limited liability company interests (the “Units”) of the Company. B. The Sellers wish to sell to the Buyer, and the Buyer wishes to purchase from the Sellers, the Units, upon the terms and subject to the conditions of this Agreement. C. Contemporaneously with the execution of this Agreement, each of Allen Neel, Paul Culbreth, and Ron Whitter (the “Key Employees”) have entered into a new Employment Agreement with the Company (collectively, the “Key Employment Agreements”), which shall become effective as of and contingent upon the Closing. AGREEMENT In consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties agree as follows: ARTICLE I DEFINITIONS Section 1.1 Certain Defined Terms. For purposes of this Agreement: “Action” means any claim, action, suit, inquiry, proceeding, demand, audit or investigation by or before any Governmental Authority, or any other arbitration, mediation or similar proceeding. “Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. “Aggregate Cash Closing Consideration” means $75,000,000 plus (i) the Estimated Cash, plus (ii) the Working Capital Overage, if any, minus (iii) the Estimated Indebtedness, minus (iv) the Working Capital Underage, if any, minus (v) the Estimated Transaction Expenses. “Aggregate Closing Consideration” means, collectively, the Aggregate Cash Closing Consideration, the Aggregate Stock Closing Consideration, and the Fractional Share Cash Amount. “Aggregate Stock Closing Consideration” means the Aggregate Stock Consideration minus the Indemnity Escrow Shares. “Aggregate Stock Consideration” means 8,798,391 Buyer Common Shares less the aggregate number of fractional share interests, if any, in respect of which Buyer will make a cash in lieu of payment pursuant to Section 2.2(b)(i)(B)(2) and Section 2.2(c). “Ancillary Agreements” means the Escrow Agreement and the Registration Rights Agreement. “Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in The City of New York. “Buyer Common Shares” means shares of common stock of Buyer, par value $0.01 per share. “Buyer Material Adverse Effect” means any event, change, circumstance, occurrence, effect, result or state of facts that, individually or in the aggregate, (a) is or would reasonably be expected to be materially adverse to the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Buyer or (b) materially impairs the ability of the Buyer to consummate, or prevents or materially delays, any of the transactions contemplated by this Agreement or the Ancillary Agreements or would reasonably be expected to do so; provided, however, that in the case of clause (a) only, Buyer Material Adverse Effect shall not include any event, change, circumstance, occurrence or effect resulting from (i) changes or developments generally affecting the industries in which the Buyer operates, or the economy or the financial or securities markets, in the United States, including effects on such industry, economy or markets resulting from any regulatory and political conditions or developments in general, including fluctuations in oil and natural gas prices, (ii) the outbreak or escalation of hostilities or any acts of war or terrorism, or (iii) changes in Law or GAAP; provided further, that, with respect to the foregoing clauses (i)-(iii), the impact of such event, change, circumstances, occurrence, effect or state of facts is not disproportionately adverse to the Buyer in comparison to other Persons in the Buyer’s industry. “Calculation Time” means 11:59 pm Central Time on the day immediately preceding the Closing Date. “Cash” means, as at a specified date, the aggregate amount of all cash and cash equivalents of the Company determined in accordance with GAAP, net of any Restricted Cash. “Company Operating Agreement” means the Fifth Amended and Restated Company Agreement of the Company, dated March 30, 2016, by and among the Company and the members of the Company party thereto, as subsequently amended or amended and restated from time to time.   2 “Compensation Costs” means (i) all liabilities with respect to any current employee, officer, current or former individual engaged as an independent contractor or manager of the Company that arise and become due and payable before or on, or are attributable to the period prior to, the Closing Date and that are unpaid as of the Closing with respect to deferred compensation, wage payments, any liabilities with respect to exclusion from participation in any Plan, and any employment Taxes or any penalties due and payable by the Company with respect to the foregoing that are unpaid as of to the Closing; and (ii) all liabilities with respect to any former employee, officer, individual engaged as an independent contractor or manager of the Company that arise and become due and payable before or on the Closing Date and that are unpaid as of to the Closing, including all liabilities with respect to any Plan, all accrued salary, fees, deferred compensation, severance and vacation obligations, all workers’ compensation claims, any liability in respect of accrued but unpaid bonuses for the prior fiscal year and for the period commencing on the first day of fiscal year and ending on the Closing Date, and any employment Taxes payable by the Company with respect to the foregoing that are unpaid as of the Closing, in each case except to the extent such liabilities are accrued and reflected as a current liability in the Closing Balance Sheet or otherwise included among the Transaction Expenses. “Contract” means any contract or agreement, whether written or oral. “control,” including the terms “controlled by” and “under common control with,” ownership of voting securities, as trustee or executor, as general partner or managing member, by Contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of managers, directors or similar body governing the affairs of such Person. “Credit Agreement” means that certain Credit Agreement, dated as of January 30, 2015, among the Company and the lenders party thereto, as amended from time to time. “Denham” means, Denham Capital Management LP, any funds or investment vehicles managed by Denham Capital Management LP or any of its Affiliates, and any portfolio companies of any of the foregoing (other than Denham Seller). “Denham Seller” means, Multi-Shot Holding Corporation, a Delaware corporation. “Encumbrance” means any charge, claim, limitation, equitable interest, mortgage, lien, option, pledge, security interest, easement, encroachment or right of first refusal, including any restriction on transfer or other assignment, as security or otherwise, of or relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other attribute of ownership.   3 under common control with the Company and that, together with the Company, is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code. “Escrow Agent” means Continental Stock Transfer & Trust Company, or its successor under the Escrow Agreement. “Escrow Agreement” means the Escrow Agreement to be entered into at the Closing by the Buyer, the Sellers Representative and the Escrow Agent, substantially in the form of Exhibit A. “Estimated Purchase Price” means the sum of (i) the Aggregate Cash Closing Consideration and (ii) the product of (a) the Aggregate Stock Consideration and (b) the Price Per Share. “Fraud” means an intentional and willful misrepresentation by a party with respect to the making of any representation or warranty expressly contained herein. “GAAP” means United States generally accepted accounting principles and practices as in effect on the date hereof. “Government Official” includes (i) any officer, employee or agent of any government or any other Governmental Authority (including any business or corporate Person owned, majority controlled, or managed by a government, such as a government-owned or government-controlled oil company or bank) thereof, or any Person acting in an official capacity or performing public duties or functions on behalf of any such government or Governmental Authority; (ii) any political party or official thereof; (iii) any candidate for public office; or (iv) any officer, employee or agent of a public international organization, including the United Nations, the International Monetary Fund or the World Bank. “Governmental Authority” means any United States or non-United States federal, national, supranational, state, provincial, local or similar government, governmental, regulatory or administrative authority, branch, agency or commission or any court, tribunal, or arbitral or judicial body (including any grand jury). “Immediate Family” means, with respect to any specified Person, such Person’s spouse, parents, children and siblings, including adoptive relationships and relationships through marriage, or any other relative of such Person that shares such Person’s home. “Inbound License Agreement” means any Contract granting to the Company any right under or with respect to any Intellectual Property owned by a third Person. “Indebtedness” means, without duplication (but before taking account the consummation of the transactions contemplated hereby), (i) the unpaid principal amount of accrued interest, premiums, penalties and other fees, expenses (if any), and other payment obligations and amounts due (including such amounts that would become due as a result of the consummation of the transactions contemplated by this Agreement) that would be required to be paid by the Company to a lender pursuant to a customary payoff letter, in each case, in respect of   4 (A) all indebtedness for borrowed money of the Company, (B) indebtedness of the Company evidenced by notes, debentures, bonds or other similar instruments, and (C) all obligations of the Company with respect to interest-rate hedging, swaps or similar financial arrangements (valued at the termination value thereof and net of all payments owed to the Company thereunder); (ii) all obligations under capitalized leases with respect to which the Company is liable, determined in accordance with GAAP; (iii) any amounts owed by the Company for the deferred purchase price of goods and services, including any earn out liabilities associated with past acquisitions; (iv) unpaid management fees owed by the Company to any Related Party of the Company; (v) all deposits and monies received in advance; (vi) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by the Company; (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons for the payment of which the Company is responsible or liable, as obligor, guarantor, surety or otherwise, including any guarantee of such obligations and (viii) $2,917,888.00, representing the Company’s estimate of its aggregate obligations with respect to the sales and use Tax audit conducted by the Comptroller of Public Accounts of the State of Texas with respect to the taxable period from 2008-2012, or such other amount of the Company’s actual obligations arising with respect to such Tax audit to the extent known on or prior to the Closing. “Indemnity Escrow Fund” means the Indemnity Escrow Shares deposited with the Escrow Agent, as such sum may be increased or decreased as provided in this Agreement and the Escrow Agreement, including any dividends or other amounts earned thereon. “Indemnity Escrow Shares” means 1,256,913 Buyer Common Shares. associated with the following, whether protected, created or arising under the laws of the United States or any other jurisdiction: (i) trade names, trademarks and service marks (registered and unregistered), domain names and other Internet addresses or identifiers, trade dress and similar rights, and applications (including intent to use applications and similar reservations of marks and all goodwill associated therewith) to register any of the foregoing (collectively, “Marks”); (ii) patents and patent applications (collectively, “Patents”); (iii) copyrights (registered and unregistered) and applications for registration (collectively, “Copyrights”); (iv) trade secrets, know-how, inventions, methods, processes and processing instructions, technical data, specifications, research and development information, technology, product roadmaps, customer lists and any other information, in each case to the extent any of the foregoing derives economic value (actual or potential) from not being generally known to other persons who can obtain economic value from its disclosure or use, excluding any Copyrights or Patents that may cover or protect any of the foregoing (collectively, “Trade Secrets”); and (v) moral rights, publicity rights, data base rights and any other proprietary or intellectual property rights of any kind or nature that do not comprise or are not protected by Marks, Patents, Copyrights or Trade Secrets. “Knowledge” means, (a) with respect to a Seller, his, her or its actual knowledge, (b) with respect to the Company, the actual knowledge of Allen Neel, Paul Culbreth, Ron Whitter and Morgan Culbreth, and (c) with respect to the Buyer, the actual knowledge of William Andrew Hendricks, Jr., John E. Vollmer, Kenneth N. Berns and Seth D. Wexler, in each case including the knowledge of such facts and other information that as of the date of determination would be imputed to such Persons upon reasonably due inquiry.   5 “Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or order of any Governmental Authority. “Leased Real Property” means all real property leased, subleased or licensed to the Company or which the Company otherwise has a right or option to use or occupy, together with all structures, facilities, fixtures, systems and improvements located thereon, or attached or appurtenant thereto, and all easements, rights and appurtenances relating to the foregoing. “Material Adverse Effect” means any event, change, circumstance, occurrence, effect, result or state of facts that, individually or in the aggregate, (a) is or would reasonably be expected to be materially adverse to the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Company or (b) materially impairs the ability of any Seller to affecting the industries in which the Company operates, or the economy or the adverse to the Company in comparison to other Persons in the Company’s industry. “Net Working Capital” means, as at a specified date and without duplication, an amount (which may be positive or negative) equal to (i) the current assets of the Company minus (ii) the current liabilities of the Company, in each case before taking into account the consummation of the transactions contemplated hereby, and calculated in accordance with the Applicable Accounting Principles; provided, however, for the avoidance of doubt, Net Working Capital shall exclude any amounts relating to or included in Cash (including Restricted Cash), Indebtedness and Transaction Expenses to the extent such amounts are reflected in the calculation of the Purchase Price (to avoid any double-counting with any other adjustments) and any current or deferred Tax assets or deferred Tax liabilities. “NGP” means, NGP Energy Capital Management, L.L.C., any funds or investment vehicles managed by NGP Energy Capital Management, L.L.C. or any of its Affiliates, and any portfolio companies of any of the foregoing (other than NGP Seller). “NGP Seller” means NGP MS Holdings, LLC, a Delaware limited liability company.   6 “Open Source Materials” means any software that is licensed, distributed or conveyed under a Contract that requires as a condition of its use, modification or distribution that it, or other software into which such software is incorporated or with which such software is distributed or that is derived from such software, be disclosed or distributed to third parties in source code form, delivered to third parties at no charge or be licensed, distributed or conveyed to third parties under the same terms as such Contract. “Outbound License Agreement” means any Contract under which the Company grants to a third party any rights under or with respect to any Intellectual Property owned by the Company, excluding any Contracts granting non-exclusive licenses in “Owned Real Property” means all real property owned by the Company, together with all structures, facilities, fixtures, systems and improvements located thereon, or attached or appurtenant thereto, and all easements, rights and appurtenances relating to the foregoing. company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing. “Pre-Closing Taxes” means (a) fifty percent (50%) of any Transfer Taxes, (b) any Taxes for which the Company is or could be liable with respect to any Pre-Closing Period or the pre-Closing portion of any Straddle Period and (c) fifty percent (50%) of any court costs and reasonable fees of attorneys, accountants and other experts and other reasonable costs and expenses incurred in connection with any claim with respect to any such Transfer Taxes. “Price Per Share” means $19.89. “Pro Rata Share” with respect to each Seller means the ratio of (a) the portion of the Aggregate Closing Consideration allocated to such Seller as set forth in the Sellers’ Allocation Schedule divided by (b) the Aggregate Closing Consideration, expressed as a percentage, in each case valuing the Aggregate Stock Consideration at the Price Per Share. “Purchase Price” means the Estimated Purchase Price, subject to adjustment in accordance with Section 2.4. “Registration Rights Agreement” means the Registration Rights Agreement to be entered into by the Company and each of the Sellers at the Closing, a form of which is attached hereto as Exhibit B. “Related Party,” with respect to any specified Person, means: (i) any Affiliate of such specified Person, or any director, manager, executive officer, general partner or managing member of such Affiliate; (ii) any Person who serves or within the past two years has served as a director, manager, executive officer, partner, member or in a similar capacity of such specified Person; (iii) any Immediate Family member of a Person described in clause (ii); or (iv) any other Person who holds, individually or together with any Affiliate of such other Person and any member(s) of such Person’s Immediate Family, more than 5% of the outstanding equity or ownership interests of such specified Person. Notwithstanding the foregoing, for purposes of this Agreement, no portfolio company of Denham or NGP shall be deemed to be a “Related Party” of the Company.   7 “Representatives” means, with respect to any Person, the officers, managers, directors, principals, employees, individuals engaged as an independent contractors, agents, auditors, advisors, bankers and other representatives of such Person. “Restricted Cash” means all Cash and Cash equivalents that are not freely useable and available to the Company because they are subject to restrictions or limitations on use or distribution either by contract or for regulatory or legal purposes other than restrictions or limitations on distribution pursuant to the Credit Agreement. “Subsidiary” means, with respect to any Person, any other Person controlled by such first Person, directly or indirectly, through one or more intermediaries. “Target Net Working Capital” means $30,440,000. “Tax” or “Taxes” means (i) any and all foreign, United States federal, state or local net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, personal property (tangible and intangible), real property (including general and special assessments), goods and services, value added, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, deed recording fee, occupation, premium, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty or addition thereto; (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law; and (iii) any liability for the payment of amounts described in clauses (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other written agreement to indemnify any other Person. “Tax Returns” means any return, report, information return or other document (including any related or supporting information) required to be filed with any Taxing Authority in connection with the determination, assessment, or collection of any Tax paid or payable by the Company. “Taxing Authority” means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such Governmental Authority. “Transaction Expenses” means the aggregate amount of any and all fees and expenses incurred by or on behalf of, or paid or to be paid directly by, the Company or any Person that the Company pays or reimburses or is otherwise legally obligated to pay or reimburse (including any such fees and expenses incurred by or on behalf of any Seller) in connection with the process of selling the Company or the negotiation, preparation or execution of this Agreement or the Ancillary Agreements or the performance or consummation of the transactions contemplated hereby or thereby, in each case to the extent incurred on or prior to the Closing and unpaid prior to the Closing, including (i) all fees and expenses of counsel, advisors, consultants, investment bankers, accountants, auditors and any other experts in connection with   8 the transactions contemplated hereby; (ii) all brokers’, finders’ or similar fees in connection with the transactions contemplated hereby; and (iii) any change of control payments, transaction incentive plan payments, bonuses, severance or termination obligations pursuant to a Plan and payable on or prior to Closing by the Company as a direct result of the transactions contemplated hereby, including any Taxes payable in connection therewith, including all payments by the Company, if any, under the Multi-Shot, LLC Transaction Incentive Plan and, in the case of each of the foregoing, any Taxes payable by the Company in connection therewith, regardless of how or when such amounts are paid, but not including any severance obligations payable on or after Closing as a result of a termination of employment caused by, or made at the direction of, Buyer or its Affiliates. “Transfer Taxes” means all transfer, sales, use, goods and services, value added, documentary, stamp duty, deed recording fee, gross receipts, excise, and conveyance Taxes and other similar Taxes, duties, fees or charges imposed by any Governmental Authority as a result of, or payable or collectible or incurred in connection with, the transaction contemplated by this Agreement. “Working Capital Overage” shall exist when (and shall be equal to the amount by which) the Estimated Net Working Capital exceeds the Target Net Working Capital. “Working Capital Underage” shall exist when (and shall be equal to the absolute amount by which) the Target Net Working Capital exceeds the Estimated Net Working Capital. Section 1.2 Table of Definitions. The following terms have the meanings set forth in the Sections referenced below:   Definition    Location Additional Listing Application    6.15 Agreement    Preamble Allocation    2.5 Applicable Accounting Principles    2.3 Buyer    Preamble Buyer Benefit Plans    6.16(a) Buyer Fundamental Representations    8.2(a) Buyer’s Notice of Disagreement    2.3 Cap Amount    6.13(d) CERCLA    4.16(f)(iii) Claim Notice    9.4(a) Closing    2.2(a) Closing Balance Sheet    2.4(a) Closing Cash    2.4(a) Closing Date    2.2(a) Closing Indebtedness    2.4(a) Closing Net Working Capital    2.4(a) Closing Transaction Expenses    2.4(a) Company    Preamble   9 Definition    Location Company Fundamental Representations    8.3(a) Company Registered IP    4.14(e) Confidential Information    6.7(b) Confidentiality Agreement    6.7(a) Continuing Employee    6.16(a) Current Representation    11.19(b) Debt Payoff Letter    2.2(d) Deductible    9.5 Designated Person    11.19(b) Direct Claim    9.4(d) Directors    6.12 Disclosure Schedules    Article III Environmental Laws    4.16(f)(i) Environmental Permits    4.16(f)(ii) ERISA    4.10(a)(i) Estimated Cash    2.3 Estimated Indebtedness    2.3 Estimated Net Working Capital    2.3 Estimated Transaction Expenses    2.3 Export Approvals    4.24(b)(i) Final Closing Statement    2.4(a) Financial Statements    4.6(a) Fractional Share Cash Amount    2.2(c) Hazardous Substances HSR Act    3.3(b) Incentive Units    2.1 Indemnified Party    9.4(a) Indemnifying Party    9.4(a) Independent Accounting Firm    2.4(c) Interim Financial Statements    4.6(a) IRS    4.10(b) Key Employees    Recitals Key Employment Agreements    Recitals Losses    9.2 Material Contracts    4.17(a) Multiemployer Plan    4.10(c) Multiple Employer Plan    4.10(c) NASDAQ    42 Net Adjustment Amount    2.4(f)(i) Notice of Disagreement    2.4(b) Payoff Indebtedness    2.2(b)(iii) Permits    4.8(b) Permitted Encumbrances    4.12(a) Personally Identifiable Information    4.20(b) Post-Closing Representation    11.19(b)   10 Definition    Location Pre-Closing Claims    6.5 Pre-Closing Matters    6.5 Pre-Closing Period    7.1 Preliminary Closing Balance Sheet    2.3 Preliminary Closing Statement    2.3 Privileged Communications    11.19(c) Purchase Price Allocation Schedule    2.5 Purchaser SEC Filings    5.8 Release    4.16(f)(iv) Released Parties    6.5 Remediation    4.16(f)(v) Securities Act    3.5 Seller    Preamble Seller Fundamental Representations    8.3(a) Sellers    Preamble Sellers Representative    Preamble Sellers’ Allocation Schedule    2.2(f) Straddle Period    7.1 Tax Allocation Purchase Price    2.5 Tax Proceeding    7.2 Third Party Claim    9.4(a) Transaction Expenses Payoff Instructions    2.2(e) Units    Recitals WARN Obligation    6.16(c) ARTICLE II PURCHASE AND SALE Section 2.1 Purchase and Sale of the Units. Upon the terms and subject to the conditions of this Agreement, at the Closing, the Sellers shall sell, assign, transfer, convey and deliver the Units to the Buyer, free and clear of all Encumbrances, and the Buyer, in reliance on the representations, warranties and covenants of the Sellers and the Company contained herein, shall purchase the Units from the Sellers in exchange for the payment of the Purchase Price as provided in this Article II. Effective as of the Closing, all Tier I, Tier II, Tier III and Tier IV Units of the Company (collectively, the “Incentive Units”) shall be cancelled without the payment of any consideration therefor. Prior to the Closing, the Company shall take all actions necessary to effectuate such cancellation. Section 2.2 Closing. (a) The sale and purchase of the Units shall take place at a closing (the “Closing”) to be held at the Houston, Texas offices of Gibson, Dunn & Crutcher LLP at 10:00 a.m., Houston time on the second Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver of all conditions to the obligations of the parties set forth in Article VIII (other than such conditions as may, by their   11 terms, only be satisfied at the Closing or on the Closing Date, but subject to the satisfaction or waiver of those conditions), or at such other place or at such other time or on such other date as the Sellers Representative and the Buyer mutually may agree in writing. The day on which the Closing takes place is referred to as the “Closing Date.” (b) At the Closing: (i) the Buyer shall issue or pay, as applicable, or cause to be issued or paid, as applicable, to each applicable Seller: (A) the Aggregate Stock Closing Consideration, free and clear of all Encumbrances (other than Encumbrances created by the applicable Seller or arising under applicable securities Laws); and (B) an amount equal to the sum of (1) the Aggregate Cash Closing Consideration and (2) the Fractional Share Cash Amount; (ii) the Buyer shall deposit or cause to be deposited the Indemnity Escrow Shares in an account with the Escrow Agent, to be managed and paid out by the Escrow Agent pursuant to the terms of the Escrow Agreement; (iii) the Buyer shall deliver or cause to be delivered on behalf of the Company the amount payable to each counterparty or holder of Indebtedness identified on Section 2.2(b)(iii) of the Disclosure Schedules (the “Payoff Indebtedness”) in order to fully discharge such Payoff Indebtedness and terminate all applicable obligations and liabilities of the Company and any of its Affiliates related thereto, as specified in the Debt Payoff Letters and in accordance with this Agreement; (iv) the Buyer shall deliver or cause to be delivered on behalf of the Company the amount payable to each Person who is owed a portion of the Estimated Transaction Expenses, as specified in the Transaction Expenses Payoff Instructions and in accordance with this Agreement; provided, that, notwithstanding the foregoing, the Buyer shall deliver or cause to be delivered to the Company any Estimated Transaction Expenses that constitute compensation income to any employee or former employee of the Company, and the Company shall pay such amounts, less any required Taxes, to the employee or former employee on the next regularly scheduled payroll date that is at least five Business Days following the Closing; (v) each Seller shall deliver or cause to be delivered to the Buyer duly endorsed assignments of its respective Units; (vi) the Buyer shall deliver to the Sellers Representative an executed counterpart of: (A) the Registration Rights Agreement; and (B) the Escrow Agreement;   12 (vii) each Seller shall deliver to the Buyer an executed counterpart of the Registration Rights Agreement; and (viii) the Sellers Representative shall deliver to the Buyer an executed counterpart of the Escrow Agreement. (c) At least two Business Days prior to the Closing Date, the Sellers Representative shall notify Buyer of the aggregate number of fractional share interests that would otherwise be issued to the Sellers Representative on behalf of the Sellers in exchange for the Units, and the Fractional Share Cash Amount to be delivered in lieu thereof. Notwithstanding anything to the contrary contained herein, no fractional Buyer Common Shares shall be issued to the Sellers Representative on behalf of the Sellers in exchange for Units, no dividend or distribution with respect to Buyer Common Shares shall be payable on or with respect to any fractional share, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a shareholder of the Buyer. In lieu of the issuance of any such fractional share, at Closing, the Buyer shall pay to the Sellers Representative, on behalf of and for delivery to each applicable Seller who otherwise would receive any such fractional share, an aggregate amount in cash (rounded to the nearest cent) determined by multiplying (i) the Price Per Share by (ii) the fraction of a Buyer Common Share (rounded to the nearest thousandth when expressed in decimal form) which the Seller would otherwise be entitled to receive pursuant to Section 2.2(b)(i)(A) (such aggregate amount, the “Fractional Share Cash Amount”). (d) At least two Business Days prior to the Closing Date, the Sellers Representative shall deliver to the Buyer a customary payoff letter duly executed by each holder of Payoff Indebtedness confirming the total payment required to be made as of the Closing Date to repay in full the applicable Payoff Indebtedness and including an agreement by the applicable payee (to the extent applicable to such Payoff Indebtedness) that upon payment of the amount specified in such payoff letter: (i) all outstanding obligations of the Company arising under or related to the applicable Payoff Indebtedness shall be repaid, discharged and extinguished in full; (ii) all Encumbrances in connection therewith shall be released; (iii) the payee shall take all actions reasonably requested by the Buyer to evidence and record such discharge and release as promptly as practicable; and (iv) the payee shall return to the Company all instruments evidencing the applicable Payoff Indebtedness (including all notes) and all collateral securing the applicable Payoff Indebtedness (each such payoff letter, a “Debt Payoff Letter”). (e) With respect to any Transaction Expenses which will not have been paid in full prior to the Closing Date, at least two Business Days prior to the Closing Date, the Sellers Representative shall submit to the Buyer reasonably satisfactory documentation setting forth an itemized list of all, and amounts of all, Transaction Expenses, including the identity of each payee, dollar amounts owed, wire instructions and any other information necessary to effect the final payment in full thereof, and copies of final invoices from each such payee (subject to redaction to preserve confidential information of the Sellers or attorney-client communications) (the “Transaction Expenses Payoff Instructions”).   13 (f) Following the Closing, the Aggregate Stock Closing Consideration, the Aggregate Cash Closing Consideration and the Fractional Share Cash Amount shall be distributed by the Sellers Representative to the Sellers in accordance with Article V of the Company Operating Agreement. The Sellers Representative will provide the Buyer with a schedule allocating the Aggregate Closing Consideration among the Sellers and setting forth each Seller’s Pro Rata Share at least three Business Days prior to the Closing Date (the “Sellers’ Allocation Schedule”). The Buyer shall have no responsibility for the accuracy of the allocations set forth in the Sellers’ Allocation Schedule. (g) Except as set forth in Section 2.2(b)(iv) above, all cash payments hereunder shall be made by wire transfer of immediately available funds in United States dollars to such account as may be designated to the payor by the payee at least two Business Days prior to the applicable payment date. Section 2.3 Closing Estimates. At least four Business Days prior to the anticipated Closing Date, the Sellers Representative shall prepare, or cause to be prepared, and deliver to the Buyer a written statement (the “Preliminary Closing Statement”) that shall include and set forth (i) an estimated balance sheet of the Company, as of the Calculation Time (the “Preliminary Closing Balance Sheet”), (ii) a good-faith estimate of (A) Net Working Capital based on the Preliminary Closing Balance Sheet (the “Estimated Net Working Capital”), (B) Indebtedness (the “Estimated Indebtedness”), (C) Cash (the “Estimated Cash”) and (D) all Transaction Expenses that are accrued or expected to be due and remain unpaid as of the Closing (the “Estimated Transaction Expenses”) (with each of Estimated Net Working Capital, Estimated Cash and Estimated Indebtedness determined as of the Calculation Time and, except for Estimated Transaction Expenses, without giving effect to the transactions contemplated herein) and (iii) on the basis of the foregoing, a calculation of the Estimated Purchase Price; provided, for the avoidance of doubt, that, in making such calculations, Estimated Net Working Capital shall exclude any amounts relating to or included in Estimated Cash, Estimated Indebtedness, and Estimated Transaction Expenses to avoid any double-counting of any particular adjustment. Estimated Net Working Capital, Estimated Indebtedness and Estimated Cash shall be calculated in accordance with GAAP applied on a basis consistent with the preparation of the Balance Sheet (provided, that in the event of a conflict between GAAP and consistent application thereof, GAAP shall prevail), subject to such differences in accounting principles, policies and procedures as are set forth on Section 2.3 of the Disclosure Schedules (GAAP as so modified pursuant to Schedule 2.3, the “Applicable Accounting Principles”). All calculations of Estimated Net Working Capital, Estimated Indebtedness, Estimated Cash and Estimated Transaction Expenses shall be accompanied by a certificate of a duly authorized officer of the Company certifying that such estimates have been calculated in good faith in accordance with this Agreement. Without limiting any of the Buyer’s other rights or remedies, the Buyer may object that any of the foregoing has not been calculated in good faith or in a manner consistent with the terms hereof by delivering to the Sellers Representative a written notice of its disagreement at least two Business Days prior to the anticipated Closing Date (the “Buyer’s Notice of Disagreement”), specifying in reasonable detail the nature of its objections to the   14 Sellers Representative’s estimates. The Sellers Representative and the Buyer in good faith shall seek to resolve in writing any objections set forth in the Buyer’s Notice of Disagreement prior to the Closing, and the Sellers Representative shall make such revisions to the disputed items as may be mutually agreed between the Sellers Representative and the Buyer; provided, that if and to the extent that the Buyer and the Sellers Representative have not resolved all such differences by the close of business on the Business Day prior to the anticipated Closing Date, the parties shall proceed to close based upon the Preliminary Closing Statement as prepared by the Sellers Representative (with such modifications as may have been mutually agreed between the Sellers Representative and the Buyer prior to the Closing Date in accordance with this Section 2.3) or as otherwise agreed to by the Sellers Representative and the Buyer before the Closing. For the avoidance of doubt, any failure of the Buyer to raise any objection or dispute in the Buyer’s Notice of Disagreement shall not in any way prejudice Buyer’s right to raise any matter in the Final Closing Statement. Section 2.4 Post-Closing Adjustment of Purchase Price. (a) Within 90 days after the Closing Date, the Buyer shall prepare, or cause to be prepared, and deliver to the Sellers Representative a written statement (the “Final Closing Statement”) that shall include and set forth (i) a balance sheet of the Company, as of the Calculation Time (the “Closing Balance Sheet”) and (ii) a calculation of the actual (A) Net Working Capital (the “Closing Net Working Capital”), (B) Indebtedness (the “Closing Indebtedness”), (C) Cash (the “Closing Cash”), and (D) Transaction Expenses (the “Closing Transaction Expenses”) (with each of Closing Net Working Capital, Closing Indebtedness and Closing Cash determined as of the Calculation Time and, except for Closing Transaction Expenses, without giving effect to the transactions contemplated herein); provided, for the avoidance of doubt, that, in making such calculations, Closing Net Working Capital shall exclude any amounts included in Closing Cash, Closing Indebtedness, and Closing Transaction Expenses to avoid any double-counting of any particular adjustment. Closing Net Working Capital, Closing Indebtedness and Closing Cash shall be calculated in accordance with the Applicable Accounting Principles. All calculations of Closing Net Working Capital, Closing Indebtedness, Closing Cash and Closing Transaction Expenses shall be accompanied by a certificate of a duly authorized officer of the Buyer certifying that such amounts have been prepared in good faith in accordance with this Agreement. If the Buyer does not deliver the Final Closing Statement to the Sellers Representative within 90 days after the Closing Date, then, at the election of the Sellers Representative (acting in its sole discretion), either (x) the Sellers Representative may prepare and present the Final Closing Statement within an additional 30 days thereafter or (y) the Preliminary Closing Statement will be deemed to be the Final Closing Statement in accordance with this Section 2.4(a). If the Sellers Representative elects to prepare the Final Closing Statement in accordance with the immediately preceding sentence, then all subsequent references in this Section 2.4 to the Buyer, on the one hand, and the Sellers Representative, on the other hand, will be deemed to be references to the Sellers Representative, on the one hand, and the Buyer, on the other hand, respectively.   15 (b) The Final Closing Statement shall become final and binding on the 30th day following delivery thereof, unless prior to the end of such period, the Sellers Representative delivers to the Buyer written notice of its disagreement (a “Notice of Disagreement”) specifying the nature and amount of any dispute as to the Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses, as set forth in the Final Closing Statement. The Sellers Representative and the Sellers shall be deemed to have agreed with all items and amounts of Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses not specifically referenced in the Notice of Disagreement, and such items and amounts shall not be subject to review in accordance with Section 2.4(c). (c) During the 15-day period following delivery of a Notice of Disagreement by the Sellers Representative to the Buyer, the parties in good faith shall seek to resolve in writing any differences that they may have with respect to the computation of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and/or Closing Transaction Expenses as specified therein. Any disputed items resolved in writing between the Sellers Representative and the Buyer within such 15-day period shall be final and binding with respect to such items, and if the Sellers Representative and the Buyer agree in writing on the resolution of each disputed item specified by the Sellers Representative in the Notice of Disagreement and the amount of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and Closing Transaction Expenses, the amounts so determined shall be final and binding on the parties for all purposes hereunder. If the Sellers Representative and the Buyer have not resolved all such differences by the end of such 15-day period, either party shall have the right to submit, in writing, to an independent public accounting firm (the “Independent Accounting Firm”), each item in the Final Closing Statement remaining in dispute after such 15th day. Within 10 days of submission of any such disputed amount to the Independent Accounting Firm, both the Buyer and the Sellers Representative shall enter into the Independent Accounting Firm’s standard engagement letter and shall instruct the Independent Accounting Firm to render its decision within 45 days of its referral. The Independent Accounting Firm shall make a written determination as to each such disputed item and the amount of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and Closing Transaction Expenses, which determination shall be final and binding on the parties for all purposes hereunder and shall not be subject to appeal or further review. The Independent Accounting Firm shall consider only those items and amounts in the Sellers Representative’s and the Buyer’s respective calculations of the Closing Net Working Capital, Closing Indebtedness, Closing Cash and Closing Transaction Expenses that are identified as being items and amounts to which the Sellers Representative and the Buyer have been unable to agree. In resolving any disputed item, the Independent Accounting Firm may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. The Independent Accounting Firm shall be KPMG LLP or, if such firm is unable or unwilling to act, such other independent public accounting firm as shall be agreed in writing by the Sellers Representative and the Buyer. If KPMG declines to accept such engagement and the Sellers Representative and the Buyer are unable to select an alternative Independent Accounting Firm within five Business Days of the expiration of the 15-day period referred to above, then either the Sellers Representative or the Buyer may thereafter request that the American Arbitration Association select an Independent Accounting Firm. The Sellers Representative and the Buyer shall use their commercially reasonable efforts to cause the Independent Accounting Firm to render a written decision resolving the matters submitted to it as promptly as practicable, and in any event within 30 days following the submission thereof. Judgment may be entered upon the written determination of the Independent Accounting Firm in accordance with Section 11.9. In acting under this Agreement, the Independent Accounting Firm will be entitled to the privileges and immunities of an arbitrator.   16 (d) The costs of any dispute resolution pursuant to Section 2.4(c), including the fees and expenses of the Independent Accounting Firm and of any enforcement of the determination thereof, shall be borne by the Sellers and the Buyer in inverse proportion as they may prevail on the matters resolved by the Independent Accounting Firm, which proportionate allocation shall be calculated on an aggregate basis based on the relative dollar values of the amounts in dispute and shall be determined by the Independent Accounting Firm at the time the determination of such firm is rendered on the merits of the matters submitted. The fees and disbursements of the Representatives of each party incurred in connection with the preparation or review of the Final Closing Statement and preparation or review of any Notice of Disagreement, as applicable, shall be borne by such party. (e) The Buyer and the Sellers Representative will, and will cause the Company to afford to the Buyer and its Representatives, in the case of the Sellers Representative, and to afford to the Sellers Representative and its Representatives, in the case of the Buyer, reasonable access, during normal business hours and upon reasonable prior notice, to the personnel, properties, books and records of the Company and to any other information reasonably requested for purposes of preparing and reviewing the calculations contemplated by this Section 2.4. Each party shall authorize its accountants to disclose work papers generated by such accountants in connection with preparing and reviewing the calculations of the Net Working Capital, Cash, Indebtedness and Transaction Expenses as specified in this Section 2.4; provided, that such accountants shall not be obligated to make any work papers available except in accordance with such accountants’ disclosure procedures and then only after the non-client party has signed an agreement relating to access to such work papers in form and substance acceptable to such accountants. (f) The Estimated Purchase Price shall be adjusted, upwards or downwards, as follows: (i) For the purposes of this Agreement, the “Net Adjustment Amount” means an amount, which may be positive or negative, equal to (A) the Closing Net Working Capital as finally determined pursuant to this Section 2.4 minus the Estimated Net Working Capital, plus (B) the Estimated Indebtedness minus the Closing Indebtedness as finally determined pursuant to this Section 2.4, plus (C) the Closing Cash as finally determined pursuant to this Section 2.4 minus the Estimated Cash, plus (D) the Estimated Transaction Expenses minus the Closing Transaction Expenses as finally determined pursuant to this Section 2.4. (ii) If the Net Adjustment Amount is positive, the Estimated Purchase Price shall be adjusted upwards in an amount equal to the Net Adjustment Amount. In such event, the Buyer shall pay the Net Adjustment Amount to the Sellers Representative, on behalf of and for delivery by the Sellers Representative to each applicable Seller.   17 (iii) If the Net Adjustment Amount is negative (in which case the “Net Adjustment Amount” for purposes of this clause (iii) shall be deemed to be equal to the absolute value of such amount), the Estimated Purchase Price shall be adjusted downwards in an amount equal to the Net Adjustment Amount. In such event, the Sellers shall each pay their Pro Rata Share of the Net Adjustment Amount to the Buyer. In the event that any Seller shall fail to pay such amount of such deficiency within the time period set forth in Section 2.4(g), the Buyer may, in its sole discretion, deliver written notice to the Escrow Agent and the Sellers Representative specifying such amount, and the Escrow Agent shall deliver a number Buyer Common Shares from the Indemnity Escrow Fund to the Buyer equal to (x) the amount of such deficiency divided by (y) the Price Per Share, in accordance with the terms of the Escrow Agreement; provided, that the defaulting Seller (A) shall promptly restore the Indemnity Escrow Fund to the extent any Buyer Common Shares are so distributed therefrom and (B) shall remain liable in the event the Indemnity Escrow Fund is insufficient to cover the amount of such deficiency. No failure on the part of the Buyer to deliver a notice as specified in the immediately preceding sentence shall relieve the Seller of the obligation to pay the amount of such deficiency to the Buyer. (g) Payments in respect of Section 2.4(f) shall be made in cash within three Business Days of final determination of the Net Adjustment Amount pursuant to the provisions of this Section 2.4 by wire transfer of immediately available funds to such account or accounts as may be designated in writing by the party entitled to such payment at least two Business Days prior to such payment date. Section 2.5 Tax Treatment and Purchase Price Allocation. The parties to this Agreement intend that the purchase by the Buyer and sale by the Sellers contemplated hereunder shall be treated for tax purposes in a manner consistent with Revenue Ruling 99-6, Situation 2. The Buyer shall prepare and provide to the Sellers Representative within 60 days after all adjustments to the Purchase Price pursuant to Section 2.4 have been completed in accordance with the terms thereof, a schedule (the “Purchase Price Allocation Schedule”) allocating the amounts paid and the liabilities assumed in connection with the transactions contemplated by this Agreement, adjusted as necessary to determine the purchase price of the Company assets Buyer is treated as purchasing hereunder for federal income tax purposes (the “Tax Allocation Purchase Price”), among such assets. The Purchase Price Allocation Schedule shall be prepared in accordance with the general principles of Section 1060 of the Code and the Treasury Regulations pursuant thereto or any successor provision. Unless the Sellers Representative objects to the Purchase Price Allocation Schedule within 30 days after receipt thereof, such Schedule shall become final. If the Sellers Representative objects to the Purchase Price Allocation Schedule within 30 days of receipt, then the Buyer and the Sellers Representative shall use commercially reasonable efforts to agree, within 30 days of the Sellers Representative’s objection to the Purchase Price Allocation Schedule, to an allocation of the Tax Allocation Purchase Price among the purchased assets hereunder for federal income tax purposes that is consistent with the allocation methodology provided by Section 1060 of the Code and the Treasury Regulations promulgated thereunder (the “Allocation”). If the Buyer and the Sellers Representative cannot agree on an appropriate Allocation within the time period specified in the preceding sentence, then the Buyer and the Sellers shall not be bound by the Allocation. If, however, the Allocation is agreed to by the Buyer and the Sellers Representative (including, for the avoidance of doubt, if the Sellers Representative does not   18 object to the Purchase Price allocation Schedule delivered Buyer within the period specified in this Section 2.5), then the Buyer and the Sellers agree to report based on the Allocation and shall file all Tax Returns that are required to be filed in connection with transactions contemplated by this Agreement in a manner consistent therewith, and neither the Buyer nor the Sellers shall take any position (whether in Tax proceedings, on Tax Returns, or otherwise) that is inconsistent with such allocation statement except as may be subsequently adjusted pursuant to an audit by IRS or by court decision. Section 2.6 Sellers Representative. (a) Each Seller, by his, her or its execution of this Agreement, hereby consents to the terms of this Section 2.6 and to the appointment of MS Incentive Plan Holdco, LLC as such Seller’s representative and attorney-in-fact, with full power of substitution to act on behalf of the Sellers to the extent and in the manner set forth in this Agreement and the Escrow Agreement. All decisions, actions, consents and instructions by the Sellers Representative with respect to this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby, including all decisions, actions, consents and instructions relating to the defense or settlement of any claims for indemnification, and the Sellers Representative’s allocation of the Aggregate Closing Consideration or any other payment made by the Buyer hereunder among the Sellers, shall be binding upon all Sellers. The provisions of this Section 2.6, including the power of attorney granted hereby, are independent and severable, are irrevocable and coupled with an interest and shall not be terminated by any act of any one or more Sellers, or by operation of Law, whether by death or other event. (b) In the event the Sellers Representative becomes unable to perform its responsibilities hereunder or resigns from such position, the Sellers (acting by the vote of the Sellers who immediately prior to the Closing held a projected interest in the Purchase Price equal to or greater than a majority of the projected Purchase Price) shall select another representative to fill the vacancy of the Sellers Representative, and such substituted representative shall be deemed to be the Sellers Representative for all purposes under this Agreement and the Ancillary Agreements. (c) The Buyer shall be entitled to rely on any decision, action, consent or instruction of the Sellers Representative in connection with this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby as being the decision, action, consent or instruction of the Sellers, and the Buyer is hereby relieved from any liability to any Person for acts done in accordance with any such decision, action, consent or instruction. The Buyer shall be entitled to unconditionally assume that any action taken or omitted, or any document executed by, MS Incentive Plan Holdco, LLC, purporting to act as the Sellers Representative under or pursuant to this Agreement or the Ancillary Agreements or in connection with any of the transactions contemplated by this Agreement, has been unconditionally authorized by Sellers to be taken, omitted to be taken, or executed on their behalf so that they will be legally bound thereby, and no Seller shall institute any claim, lawsuit, arbitration or other proceeding against the Buyer or any of its Affiliates alleging that MS Incentive Plan Holdco, LLC did not have the authority to act as the Sellers Representative on behalf of Sellers in connection with any such action, omission or execution. No modification or revocation of the power of attorney granted by the Sellers herein to MS Incentive Plan Holdco, LLC to serve as the Sellers   19 Representative shall be effective as against the Buyer until it has received a document signed by all Sellers effecting said modification or revocation. The Buyer and its Affiliates are hereby relieved from any liability to any Person for any acts done by the Sellers Representative and any acts done by the Buyer in accordance with any decision, act, consent or instruction of the Sellers Representative. (d) The Sellers Representative shall not be liable for any act done or omitted hereunder as the Sellers Representative while acting in good faith and in the exercise of reasonable judgment. The Sellers shall, severally (in proportions based on each Seller’s Pro Rata Share), indemnify the Sellers Representative and hold the Sellers Representative harmless against any loss, liability or expense incurred without gross negligence, bad faith or willful misconduct on the part of the Sellers Representative and arising out of or in connection with the acceptance or administration of the Sellers Representative’s duties under this Agreement and the Ancillary Agreements, including the reasonable fees and expenses of any legal counsel retained by the Sellers Representative. This right of indemnification shall survive the termination of this Agreement. Any Person dealing with the Sellers Representative is entitled to rely on the actions taken by, and consents and approvals given by, the Sellers Representative without the need for further investigation. A Person shall be entitled to rely on the Sellers Representative’s actions, consents and approvals notwithstanding any knowledge of the relying Person. No Person shall have any liability for relying on the Sellers Representative in the foregoing manner. Section 2.7 Withholding. The Buyer shall be entitled to deduct and withhold from any consideration otherwise payable to any Person pursuant to this Agreement such amounts as it determines it is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign Tax Law; provided, however, that to the extent doing so is reasonably practicable, the Buyer shall provide written notice to the Seller’s Representative prior to withholding any amounts under this Section 2.7 and the Buyer shall reasonably cooperate in good faith and at the Seller’s Representative’s expense with the Seller’s Representative’s efforts to minimize, to the extent permissible under applicable Law, the amount of any such deduction or withholding, including by providing any certificates or forms that are reasonably requested by the Seller’s Representative to establish an exemption from (or reduction in) any deduction or withholding. Any amounts that are so deducted and withheld shall be paid to the relevant Governmental Authority and shall be treated for all purposes of this Agreement as having been paid to the applicable Seller. ARTICLE III Except as set forth in the Disclosure Schedules attached hereto (collectively, the “Disclosure Schedules”), each Seller, severally as to himself, herself or itself and not jointly as to any other Seller, hereby represents and warrants to the Buyer as follows:   20 Section 3.1 Organization and Qualification. If such Seller is a legal entity, such Seller is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has full corporate, limited liability company or limited partnership (as applicable) power and authority to own and dispose of the Units owned by it. Section 3.2 Authority. If such Seller is a legal entity, such Seller has full corporate, limited liability company or limited partnership (as applicable) power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. If such Seller is a natural person, such Seller has legal capacity to execute and deliver this Agreement and each Ancillary Agreement to which it will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by such Seller of this Agreement and each of the Ancillary Agreements to which it will be a party and the consummation by such Seller of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate, limited liability company, limited partnership or spousal action. This Agreement has been, and upon their execution each of the Ancillary Agreements to which such Seller will be a party will have been, duly executed and delivered by such Seller and, assuming due execution and delivery by each of the other parties hereto and thereto, this Agreement constitutes, and upon their execution each of the Ancillary Agreements to which such Seller will be a party will constitute, the legal, valid and binding obligations of such Seller, enforceable against such Seller in accordance with their respective terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity). Section 3.3 No Conflict; Required Filings and Consents. (a) The execution, delivery and performance by such Seller of this Agreement and each of the Ancillary Agreements to which such Seller will be a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) if such Seller is a legal entity, conflict with or violate the organizational documents of such Seller; (ii) conflict with or violate any Law applicable to such Seller or by which the Units owned by such Seller are bound or affected, except, in the case of this clause (ii), for any such conflicts or violations that would not, individually or in the aggregate, materially impair the ability of such Seller to consummate, or prevent or materially delay, any of the transactions contemplated by this Agreement or the Ancillary Agreements or would reasonably be expected to do so; or (iii) conflict with or violate, result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, require any consent of or notice to any Person pursuant to, give to others any right of termination, amendment, modification, acceleration or cancellation of, allow the imposition of any fees or penalties under, require the offering or making of any payment or redemption under, give rise to   21 any increased, guaranteed, accelerated or additional rights or entitlements of any Person under, or otherwise adversely affect any rights of such Seller under, or result in the creation of any Encumbrance on any of the Units pursuant to, any Contract to which such Seller is bound, except, in the case of this clause (iii), for any such breaches, defaults or other occurrences that would not, individually or in the aggregate, materially impair the ability of such Seller to consummate, or prevent or materially delay, any of the transactions be expected to do so. (b) Except for (i) any filings required to be made under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (ii) such filings as may be required by any applicable federal or state securities or “blue sky” laws, such Seller is not required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by such Seller of this Agreement and each of the Ancillary Agreements to which such Seller will be a party or the consummation of the transactions contemplated hereby or thereby, other than those notices, authorizations, approvals, orders, permits or consents: (x) as have been given or obtained prior to the date hereof; (y) the failure of which to give or obtain would not reasonably be expected to impair in any material respect the ability of such Seller to perform such Seller’s obligations under this Agreement or any of the Ancillary Agreements to which such Seller is, or will be as of the Closing, a party, or prevent or materially delay consummation of the transactions contemplated hereby and thereby; or (z) as may be required solely as a result of the business activities of the Buyer or its Affiliates (other than the business activities of the Company prior to the Closing). Section 3.4 Units. Such Seller is the record and beneficial owner of the Units listed as owned by such Seller on Section 3.4 of the Disclosure Schedules, free and clear of any Encumbrance except as set forth in the Company Operating Agreement or those arising under securities Laws. Such Seller has the right, authority and power to sell, assign and transfer such Units to the Buyer. Upon delivery to the Buyer of such Units at the Closing and the Buyer’s payment of the Purchase Price, the Buyer shall acquire good, valid and marketable title to such Units, free and clear of any Encumbrance (except as set forth in the Company Operating Agreement or those arising under securities Laws or created by the Buyer). Section 3.5 Acquisition of Buyer Common Shares. Such Seller is acquiring the Buyer Common Shares for its own account, for investment purposes only and not with a view to the distribution of such Buyer Common Shares in violation of applicable securities Laws. Such Seller understands that the offering and issuance of the Buyer Common Shares hereunder has not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and that the Buyer Common Shares cannot be offered or re-sold until such offer and sale is subsequently registered under the Securities Act or unless an exemption from such registration is available to such Seller. Such Seller is an “accredited investor” as that term is defined in Rule 501(a) promulgated under the Securities Act. Such Seller acknowledges that the Buyer Common Shares issued hereunder will bear the following or substantially similar legend thereon:   22 “The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws. The shares have been acquired for investment and may not be sold or transferred in the absence of an effective registration statement for the shares under such Act unless, in the opinion of counsel satisfactory to the issuer, registration is not required under such Act or any applicable state securities laws.” ARTICLE IV Except as set forth in the Disclosure Schedules, the Company hereby represents and warrants to the Buyer as follows: Section 4.1 Organization and Qualification. (a) The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Texas, and has full limited liability company power and authority to own, lease and operate its properties and assets and to carry on its business as now conducted and as currently proposed to be conducted. The Company is duly qualified or licensed as a foreign limited liability company to do business, and is in good standing, in each jurisdiction where the character of the properties and assets occupied, owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for any such failures to be so qualified or licensed and in good standing that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. (b) The Company has furnished to the Buyer a complete and correct copy of the certificate of formation and limited liability company agreement, each as amended to date, of the Company. Such documents are in full force and effect and the Company is not in violation of any of the applicable provisions thereof. The minute books of the Company have been made available for inspection by the Buyer prior to the date hereof and are true and complete. Section 4.2 Authority. (a) The Company has full limited liability company power and authority to execute and deliver this Agreement and each of the Ancillary Agreements to which it is or will be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by the Company of this Agreement and each of the Ancillary Agreements to which it is or will be a party and the consummation by the Company of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary limited liability company or other action. This Agreement has been duly executed and delivered by the Company and, assuming due execution and delivery by each of the other parties hereto and thereto, this Agreement constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity). (b) No vote or approval by, or other action of, the holders of any equity interests of the Company is necessary under any Law or Contract in connection with the execution and delivery of this Agreement or the consummation of transactions contemplated hereby.   23 Section 4.3 No Conflict; Required Filings and Consents. (a) The execution, delivery and performance by the Company and the Sellers of this Agreement and each of the Ancillary Agreements to which the Sellers will be a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) conflict with or violate the certificate of formation and Company Operating Agreement; (ii) conflict with or violate any Law applicable to the Company or by which any property or asset of the Company is bound or affected, except for any such conflicts or violations that would not, individually or in the aggregate, reasonably be expected to be material to the Company; or the offering or making of any payment or redemption under, give rise to any increased, guaranteed, accelerated or additional rights or entitlements of any Person under, or otherwise adversely affect any rights of the Company under, or result in the creation of any Encumbrance on any property, asset or right of the Company pursuant to any Contract to which the Company is a party or by which the Company or any of its properties, assets or rights may be bound or affected, except for any such breaches, defaults or other occurrences that would not, individually or in the aggregate, reasonably be expected to be material to the Company. (b) Except for (i) any filings required to be made under the HSR Act and (ii) such filings as may be required by any applicable federal or state securities or “blue sky” laws, the Company is not required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by the Company or the Sellers of this Agreement and each of the Ancillary Agreements to which the Sellers will be a party or the consummation of the transactions contemplated hereby or thereby or in order to prevent the termination of any right, privilege, license or qualification of the Company, other than those notices, authorizations, approvals, orders, permits or consents: (x) as have been given or obtained prior to the date hereof; (y) the failure of which to give or obtain would not reasonably be expected to (A) impair in any material respect the ability of the Company to perform its obligations under this Agreement or prevent or materially delay consummation of the transactions contemplated hereby and thereby or (B) be material to the Company; or (z) as may be required as a result of the business activities of the Buyer or its Affiliates. (c) No “fair price,” “interested shareholder,” “business combination” or similar provision of any state takeover Law is applicable to the transactions contemplated by this Agreement or the Ancillary Agreements.   24 Section 4.4 Capitalization. Section 4.4 of the Disclosure Schedules sets forth a complete and accurate list, as of the date of this Agreement, of all record owners of the issued and outstanding limited liability company interests of the Company, indicating the respective number and class of Units held by each. Except for the Units set forth on Section 4.4 of the Disclosure Schedules, the Company has not issued or agreed to issue any: (a) limited liability company interests or other equity or ownership interests; (b) options, warrants or interests convertible into or exchangeable or exercisable for limited liability company interests or other equity or ownership interests; (c) stock appreciation rights, phantom stock, interests in the ownership or earnings of the Company or other equity equivalent or equity-based award or right; or (d) bonds, debentures or other Indebtedness having the right to vote or convertible or exchangeable for securities having the right to vote. Each outstanding limited liability company interest of the Company is duly authorized, validly issued, fully paid and nonassessable and was not issued in violation of any preemptive or other rights of any Person to acquire securities of the Company. All of the aforesaid limited liability company interests or other equity or ownership interests have been offered, sold and delivered by the Company in compliance with all applicable federal and state securities laws. Except for rights granted to the Buyer under this Agreement or as set forth in the Company Operating Agreement, there are no outstanding obligations of the Company to issue, sell or transfer or repurchase, redeem or otherwise acquire, or that relate to the holding, voting or disposition of or that restrict the transfer of, the issued or unissued limited liability company interests or other equity or ownership interests of the Company. Upon the cancellation of the Incentive Units prior to the Closing in accordance with Section 2.1, the Company will have no further obligations or liabilities with respect to the Incentive Units. No limited liability company interests or other equity or ownership interests of the Company have been issued in violation of any rights, agreements, arrangements or commitments under any provision of applicable Law, the certificate of formation or limited liability company agreement of the Company or any Contract to which the Company is a party or by which the Company is bound. No limited liability company interests or other equity or ownership interests of the Company are owned by the Company or held by the Company in treasury. There are no declared or accumulated but unpaid distributions in respect of any limited liability company interests or other equity or ownership interests of the Company. Section 4.5 Equity Interests. The Company does not own, directly or indirectly, any equity, partnership, membership or similar interest in, or any interest convertible into, exercisable for the purchase of or exchangeable for any such equity, partnership, membership or similar interest, or is under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital contribution or other investment in or assume any liability or obligation of, any Person. Section 4.6 Financial Statements; No Undisclosed Liabilities. (a) True and complete copies of the audited balance sheet of the Company as of December 31, 2016, 2015 and 2014 and the related audited statements of income, retained earnings, members’ equity and changes in financial position of the Company, together with all related notes and schedules thereto, accompanied by the reports thereon of the Company’s independent auditors (collectively referred to as the “Financial Statements”) and the unaudited balance sheet of the Company as at July 31, 2017 (the “Balance Sheet”), and the related monthly statements of income and cash flows of the Company,   25 together with all related notes and schedules thereto (collectively referred to as the “Interim Financial Statements”), are attached hereto as Section 4.6(a) of the Disclosure Schedules. Each of the Financial Statements and the Interim Financial Statements (i) have been prepared in accordance with the books and records of the Company, (ii) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (iii) fairly present, in all material respects, the financial position, results of operations and cash flows of the Company as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein and subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments that will not, individually or in the aggregate, be material, and the absence of footnotes thereto. (b) There are no liabilities of or with respect to the Company that would be required by GAAP to be reserved, reflected or otherwise disclosed on a consolidated balance sheet of the Company, other than (a) liabilities reserved, reflected, or otherwise disclosed in the Balance Sheet, (b) liabilities incurred in the ordinary course of business consistent with past practice since July 31, 2017, (c) fees and expenses incurred in connection with the transactions contemplated by this Agreement and the Ancillary Agreements that will be classified as Transaction Expenses or (d) liabilities that are not material to the Company. Section 4.7 Absence of Certain Changes or Events. From the date of the Balance Sheet: (a) the Company has conducted its business only in the ordinary course consistent with past practice; (b) there has not been any change, event or development that has had a Material Adverse Effect; (c) the Company has not suffered any casualty loss, damage, destruction or other casualty affecting any of its material properties or assets, whether or not covered by insurance and (d) the Company has not taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in Section 6.1(c), (d), (e), (f), (g), (k), (n), (o), (p), (q), (v) or (w). Section 4.8 Compliance with Law; Permits. (a) The Company is, and for three years prior to the date hereof has been, in compliance in all material respects with all Laws applicable to it. None of the Company nor any of its executive officers has received during the past three years, any notice, order, complaint or other communication from any Governmental Authority or any other Person that the Company is not in compliance in any material respect with any Law applicable to it. (b) Section 4.8(b) of the Disclosure Schedules sets forth a true and complete list of all permits, licenses, franchises, approvals, certificates, consents, waivers, concessions, exemptions, orders, registrations, notices or other authorizations of any Governmental Authority necessary for the Company to own, lease and operate its properties and to carry on its business in all material respects as currently conducted (the “Permits”). The Company is and has been in compliance in all material respects with all such Permits. No suspension, cancellation, modification, revocation or nonrenewal of any Permit is pending or, to the Knowledge of the Company, threatened. The consummation of the transactions contemplated hereby will not cause the termination or revocation of any of the Permits. No Permit is held in the name of any employee, individual engaged as an independent contractor, officer, manager, equityholder, agent or otherwise on behalf of the Company.   26 Section 4.9 Litigation. Except as set forth on Section 4.9 of the Disclosure Schedules, there is no Action pending or, to the Knowledge of the Company, threatened against the Company, or any material property or asset of the Company, or any of the employees, officers, individuals engaged as independent contractors or managers of the Company in regards to their actions as such. There is no Action pending or, to the Knowledge of the Company, threatened seeking to prevent, hinder, modify, delay or challenge the transactions contemplated by this Agreement or the Ancillary Agreements. There is no outstanding order, writ, judgment, injunction, decree, determination or award of, or pending or, to the Knowledge of the Company, threatened investigation by, any Governmental Authority relating to the Company, any of its properties or assets, or the transactions contemplated by this Agreement or the Ancillary Agreements. There is no material Action by the Company pending, or which the Company has commenced preparations to initiate, against any other Person. Section 4.10 Employee Benefit Plans. (a) Section 4.10(a) of the Disclosure Schedules sets forth a true and complete list of all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), whether or not subject to ERISA) and all bonus, equity option, equity purchase, restricted unit, vacation, leave of absence, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements to which the Company is a party, with respect to which the Company has or could have any obligation or which are maintained, contributed to, required to be contributed to or sponsored by the Company for the benefit of any current or former employee, officer, individual engaged as an independent contractor or manager of the Company (collectively, the “Plans”). (b) Each Plan is in writing or the Company has furnished to the Buyer a written description thereof. The Company has furnished to the Buyer a true and complete copy of each such Plan and has delivered to the Buyer a true and complete copy of each material document, if any, prepared in connection with each such Plan, including (i) a copy of each trust or other funding arrangement, (ii) each summary plan description and summary of material modifications, (iii) the two most recently filed Internal Revenue Service (“IRS”) Form 5500s, (iv) the most recently received IRS determination letter for each such Plan and (v) the most recently prepared actuarial report and financial statement in connection with each such Plan. (c) None of the Plans is a (i) multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA (a “Multiemployer Plan”), (ii) a single employer pension plan within the meaning of Section 4001(a)(15) of ERISA for which the Company could incur liability under Section 4063 or 4064 of ERISA (a “Multiple Employer Plan”), (iii) a “defined benefit plan” as defined in Section 3(35) of ERISA, or (iv) a pension plan subject to the funding standards of Section 302 of ERISA or Section 412 of the Code. Except as set forth on   27 Section 4.10(c) of the Disclosure Schedules, none of such Plans (A) provides for the payment of separation, severance, termination or similar-type benefits to any person, or (B) obligates the Company to make any payment or provide any benefit as a result of the transactions contemplated by this Agreement or the Ancillary Agreements. Except to the extent required pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), the corresponding provisions of ERISA or other applicable similar Laws, none of such Plans provides for or promises retiree medical, disability or life insurance benefits to any current or former employee, individual engaged as an independent contractor, officer or manager of the Company. Each of the Plans is subject only to the Laws of the United States or a political subdivision thereof. (d) Each Plan has been operated in all material respects in compliance with its terms and the requirements of all applicable Laws, including ERISA and the Code. The Company has performed all material obligations required to be performed by it and is not in any respect in default under or in violation under any Plan, nor to the Knowledge of the Company is any other party to any Plan in default or violation under any Plan. No Action is pending or, to the Knowledge of the Company, threatened, anticipated or expected to be asserted with respect to any Plan or any related trust or other funding medium thereunder or with respect to the Company or any ERISA Affiliate as the sponsor or fiduciary thereof, other than routine claims for benefits in the ordinary course, and no fact or event exists that would give rise to any such Action. (e) Each Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS or is maintained pursuant to a prototype document approved by the IRS that has received a favorable opinion letter issued by the IRS with respect to such prototype document, and has not been amended or operated in a manner that could adversely affect the qualified status of any such Plan. (f) There has not been any non-exempt prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, with respect to any Plan. The Company and its ERISA Affiliates have not incurred any liability under, arising out of or by operation of Title IV of ERISA, other than liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course, including any liability in connection with (i) the termination or reorganization of any employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no fact or event exists that would give rise to any such liability. (g) The Company and its ERISA Affiliates do not maintain any Plan which is a “group health plan,” as such term is defined in Section 5000(b)(1) of the Code, that has not been administered and operated in all material respects in compliance with the applicable requirements of Section 601 of ERISA, Section 4980B(b) of the Code, Section 4980D of the Code, and the Patient Protection and Affordable Care Act, as amended. The Company is not subject to any material liability, including additional contributions, taxes, fines, penalties or loss of tax deduction as a result of such administration and operation. (h) With respect to each Plan that is a “nonqualified deferred compensation plan” (as defined for purposes of Section 409A(d)(1) of the Code), such plan is in compliance with Section 409A of the Code and all applicable IRS guidance promulgated thereunder and so as to avoid any tax, interest or penalty thereunder to the extent such plan or arrangement is subject to Section 409A of the Code. The Company has no obligation to compensate any Person for any excise taxes that may be incurred by such Person under Section 409A of the Code.   28 (i) The Company is not obligated to make any payments, including under any Plan, that reasonably could be expected to be “excess parachute payments” pursuant to Section 280G of the Code and the Company has no obligation to compensate any Person for any excise taxes that may be incurred by such Person under Section 4999 of the Code. Section 4.11 Labor and Employment Matters. (a) Section 4.11(a) of the Disclosure Schedules sets forth a complete and accurate list of each employee of the Company, and (i) his or her (A) name; (B) title or position (including whether full or part time); (C) employment location, (D) status as exempt or non-exempt, (E) hire date (and adjusted hire date, if applicable); (F) current base salary or hourly wage; (G) commission, bonus or other incentive-based compensation arrangement (including target bonus, if applicable); (H) a description of the fringe benefits provided to each such individual as of the date hereof; and (I) whether such individual is currently on a leave of absence and, if so, the expected return to work date (if known). (b) The Company is not a party to any labor or collective bargaining Contract applicable to employees of the Company. There are no, and during the three years prior to the date hereof, there have been no, union organizing activities or collective bargaining arrangements pending or under discussion with respect to employees of the Company. There are no, and during the three years prior to the date hereof have been no, labor disputes, strikes, slowdowns, work stoppages or lockouts pending or, to the Knowledge of the Company, threatened against or affecting the Company. There are no pending or, to the Knowledge of the Company, threatened union grievances or union representation questions involving employees of the Company. (c) The Company is, and during the three years prior to the date hereof, has been, in compliance in all material respects with all applicable Laws respecting employment, including discrimination or harassment in employment, terms and conditions of employment, termination of employment, wages, overtime classification, hours, occupational safety and health, employee whistle-blowing, immigration, employee privacy, employment practices and classification of employees, consultants and independent contractors. The Company is not engaged in any unfair labor practice, as defined in the National Labor Relations Act. Except as set forth on Section 4.11(c) of the Disclosure Schedules, no unfair labor practice or labor charge or complaint is pending or, to the Knowledge of the Company, threatened with respect to the Company before the National Labor Relations Board, the Equal Employment Opportunity Commission or any other Governmental Authority. (d) The Company has withheld and paid to the appropriate Governmental Authority or is holding for payment not yet due to such Governmental Authority all amounts required to be withheld from employees of the Company and is not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any applicable Laws relating to the employment of labor.   29 (e) No Company is a party to, or otherwise bound by, any consent decree with, or citation from, any Governmental Authority relating to employees or employment practices. Neither the Company nor any of its officers or managers have received during the three years prior to the date hereof any notice of intent by any Governmental Authority responsible for the enforcement of labor or employment laws to conduct an investigation relating to the Company and, to the Knowledge of the Company, no such investigation is in progress. Section 4.12 Title to, Sufficiency and Condition of Assets. The Company has good and valid title to or a valid leasehold interest in all of its tangible assets, including all of the tangible assets reflected on the Balance Sheet or acquired in the ordinary course of business since the date of the Balance Sheet, except those sold or otherwise disposed of for fair value since the date of the Balance Sheet in the ordinary course of business consistent with past practice. The tangible assets owned or leased by the Company constitute all of the tangible assets necessary for the Company to carry on its business as currently conducted in all material respects. None of the assets owned or leased by the Company is subject to any Encumbrance, other than (i) liens for Taxes not yet past due and for which adequate reserves have been established in accordance with GAAP, (ii) mechanics’, workmen’s, repairmen’s, warehousemen’s and carriers’ liens arising in the ordinary course of business of the Company consistent with past practice, (iii) Encumbrances arising in the ordinary course of business by operation of law with respect to any liability that is not yet delinquent or that is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (iv) in the case of real property, any such matters of record, Encumbrances and other imperfections of title that do not, individually or in the aggregate, materially impair the continued ownership, use and operation of the property to which they relate, (v) zoning, planning and other similar limitations and restrictions imposed by Governmental Authorities to regulate any real property that are not violated by the use and operation of such real property, (vi) purchase money liens limited to the specific property acquired with such purchase money, (vii) the rights of licensors and licensees under software licenses executed in the ordinary course of business, (viii) liens contained in the organizational documents of the Company, (ix) liens affecting a landlord’s interest in property leased to the Company so long as such liens do not breach and are not reasonably likely to breach a customary covenant of quiet enjoyment (due to the existence of a non-disturbance agreement or other arrangement in which the tenant’s interest is recognized and protected) and (x) Encumbrances arising under the Credit Agreement that will be extinguished at Closing (collectively, “Permitted Encumbrances”). Section 4.13 Real Property. (a) Section 4.13(a) of the Disclosure Schedules sets forth a true and complete list of all Owned Real Property and all Leased Real Property. The Company has (i) good and marketable title in fee simple to all Owned Real Property and (ii) good and marketable leasehold title to all Leased Real Property, in each case, free and clear of all Encumbrances except Permitted Encumbrances. No parcel of Owned Real Property or Leased Real Property is subject to any governmental decree or order to be sold and the Company has not received notice that any parcel of Owned Real Property or Leased Real Property is being condemned, expropriated, re-zoned or otherwise taken by any public authority with or without payment of compensation therefore, nor, to the Knowledge of the Company, has any such condemnation, expropriation or taking been proposed. The Company has delivered or made available to the Buyer true and   30 complete copies of all leases of Leased Real Property and all amendments and modifications thereto, and all such leases as amended or modified are in full force and effect, and there exists no default under any such lease by the Company or, to the Knowledge of the Company, any other party thereto, nor any event which, with notice or lapse of time or both, would constitute a default thereunder by the Company or, to the Knowledge of the Company, any other party thereto. The consummation of the transactions contemplated hereby will not affect any party’s obligations under, or the binding nature of, the leases of Leased Real Property. (b) There are no contractual or legal restrictions that preclude or restrict the ability of the Company to use any Owned Real Property or Leased Real Property by the Company for the current by the Company. All plants, warehouses, distribution centers, structures and other buildings on the Owned Real Property or Leased Real Property are in good operating condition and repair for the requirements of the business of the Company as currently conducted in accordance with customary industry standards. Section 4.14 Intellectual Property. (a) Section 4.14 of the Disclosure Schedules sets forth a true and complete list of all registered and material unregistered Marks, Patents and registered Copyrights, including any pending applications to register any of the foregoing, owned (in whole or in part) by or exclusively licensed to the Company. The Company owns or has a right or license to use all material Intellectual Property used in the business of the Company as currently conducted. (b) No registered Mark identified on Section 4.14 of the Disclosure Schedules has been or is now involved in any opposition or cancellation proceeding and, to the Knowledge of the Company, no such proceeding is or has been threatened with respect to any of such Marks. No Patent identified on Section 4.14 of the Disclosure Schedules has been or is now involved in any interference, reissue or reexamination proceeding and, to the Knowledge of the Company, no such proceeding is or has been threatened with respect thereto any of such Patents. (c) The Company owns, free and clear of any and all Encumbrances other than Outbound License Agreements, all Intellectual Property identified on Section 4.14 of the Disclosure Schedules. The Company has not received any notice or claim challenging the Company’s ownership of any of the Intellectual Property owned (in whole or in part) by the Company, nor to the Knowledge of the Company is there a reasonable basis for any claim that the Company does not so own any of such Intellectual Property. (d) The Company has taken commercially reasonable steps in accordance with standard industry practices to maintain the confidentiality of all information that constitutes or constituted a Trade Secret of the Company. All employees of the Company who have been employed by the Company at any time since January 1, 2015 and have participated in the creation or development of any material Intellectual Property owned or purported to be owned by the Company, or who have been granted access to any of the Company’s material Trade Secrets, have executed and delivered proprietary information, confidentiality and assignment agreements substantially in the Company’s standard forms, and the Company has delivered or made available to the Buyer true and complete copies of such standard form.   31 (e) All registered Marks, issued Patents and registered Copyrights identified on Section 4.14 of the Disclosure Schedules (“Company Registered IP”) are subsisting and, to the Knowledge of the Company, valid and enforceable, and the Company has not received any written notice or claim challenging the validity or enforceability of any Company Registered IP or alleging any misuse by the Company of such Company Registered IP. To the Knowledge of the Company, the Company has not taken any action or failed to take any action that could reasonably be expected to result in the abandonment, cancellation, forfeiture, relinquishment, invalidation or unenforceability of any material Company Registered IP (including the failure to pay any filing, examination, issuance, post registration and maintenance fees, annuities and the like and the failure to disclose any known material prior art in connection with the prosecution of patent applications). (f) The development, manufacture, sale, distribution or other commercial exploitation of products, and the provision of any services, by or on behalf of the Company, and all of the other activities or operations conducted by the Company, have not infringed upon, misappropriated, violated, diluted or constituted the unauthorized use of, any Intellectual Property of any third party, and the Company has not received any written notice or claim asserting or suggesting that any such infringement, misappropriation, violation, dilution or unauthorized use is or may be occurring or has or may have occurred, nor to the Knowledge of the Company, is there a reasonable basis therefor. No Intellectual Property owned by the Company is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use or licensing thereof by the Company. To the Knowledge of the Company, no third party is misappropriating, infringing, diluting or violating any Intellectual Property owned by or exclusively licensed to the Company. (g) The execution, delivery and performance by each Seller of this Agreement and the Ancillary Agreements, and the consummation of the transactions contemplated hereby, will not give rise to any right of any third party to terminate or re-price or otherwise modify any of the Company’s rights or obligations under any agreement under which any material right or license of or under Intellectual Property is granted to or by the Company. (h) The Company takes reasonable measures, directly or indirectly, to ensure the confidentiality, privacy and security of customer, employee and other confidential information. Section 4.15 Taxes. (a) All Tax Returns required to be filed by the Company have been timely filed (taking into account any extensions properly obtained) and each such Tax Return is accurate, correct and complete in all material respects. The Company has timely paid all Taxes due and payable by it (whether or not such Taxes were shown or reportable on any Tax Return). (b) (i) No Tax Return of the Company is under audit or examination by any Taxing Authority, and no written or oral notice of such an audit or examination has been received by the Company, (ii) there is no deficiency or refund administrative proceeding or litigation with respect to any Taxes due and owing by the Company pending before any Taxing Authority or court, and (iii) any deficiency resulting from any completed audit or examination relating to Taxes by any Taxing Authority has been timely paid.   32 (c) There are no waivers or extensions of any applicable statute of limitations for the assessment or collection of material Taxes of the Company that remain in effect. (d) There are no Encumbrances for Taxes upon the assets of the Company, other than statutory liens for Taxes not yet past due and for which adequate reserves have been established in accordance with GAAP. (e) (i) The Company has withheld and paid to the proper Taxing Authority all Taxes that they were required to withhold and pay over and (ii) the Company is in compliance with all applicable information reporting and withholding requirements under all applicable Tax laws. (f) The Company is and always has been classified as a partnership for U.S. (g) (i) No written claim has been made by any Taxing Authority in any jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to Tax by that jurisdiction, (ii) the Company is not currently the beneficiary of any extension of time within which to file a Tax Return, and (iii) no power of attorney has been executed by or on behalf of the Company with respect to Taxes that is currently in force. (h) The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date, by virtue of a change in method of accounting made prior to the Closing, a “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local, or foreign law) entered into prior to the Closing, an installment sale or open transaction effected prior to the Closing, or a prepaid amount received prior to the Closing. (i) The Company does not have any liability for Taxes of any Person (i) under Treasury Regulations Section 1.1502-6 or any corresponding provision of state, local or foreign income Tax law, (ii) as transferee or successor or (iii) by written contract. All references to the Company in this Section 4.15 shall include references to any Person which merged with and into or liquidated into the Company. Section 4.16 Environmental Matters. (a) The Company is, and during the three years prior to the date hereof has been, in compliance in all material respects with all applicable Environmental Laws. Neither the Company nor any of its executive officers has received during the three years prior to the date hereof, any written notice, request for information, communication or complaint from a Governmental Authority or other Person alleging that the Company has any material liability under any Environmental Law or is not in compliance with any Environmental Law, which notice remains pending or unresolved.   33 (b) To the Knowledge of the Company, there is and during the three years prior to the date hereof has been no Release of Hazardous Substances on, in, at or under any properties (including any buildings, structures, improvements, soils or subsurface strata, surface water bodies or drainage ways, and ground waters thereof) owned, leased or operated by or for the Company or any predecessor company during the three years prior to the date hereof, which Release requires material Remediation by the Company that has not been completed to the satisfaction of the relevant Governmental Authority. No underground treatment or storage tank or water, gas or oil well, in each case containing Hazardous Substances, is or, to the Knowledge of the Company, has been located on any property described in the foregoing sentence. (c) To the Knowledge of the Company, the Company is not subject to any material, unfulfilled remedial or corrective action obligation imposed under any Environmental Laws as a result of any unauthorized Release of Hazardous Substances or otherwise. (d) The Company has not received written notice of any pending or, to the Knowledge of the Company, threatened investigation by any Governmental Authority, nor any pending or, to the Knowledge of the Company, threatened Action with respect to the Company relating to Hazardous Substances or otherwise under any Environmental Law, which notice remains pending or unresolved. (e) The Company holds all Environmental Permits necessary for its operations as presently conducted, and is and has been in material compliance therewith. (f) The Company has provided to the Buyer all “Phase I,” “Phase II” or other material environmental reports addressing the Company’s compliance with Environmental Laws and material Remediation obligations that are in their possession and that have been prepared within the five years preceding the date of this Agreement. (g) For purposes of this Agreement: (i) “Environmental Laws” means: any Laws of any Governmental Authority relating to (A) Releases or threatened Releases of Hazardous Substances; (B) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances; or (C) pollution or protection of the environment, occupational health, workplace safety or natural resources. (ii) “Environmental Permits” means all Permits required under any Environmental Law. (iii) “Hazardous Substances” means: (A) those substances regulated under the federal Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Toxic Substances Control Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act, and their state counterparts, as each may be amended from time to time, and all regulations thereunder; (B) petroleum and petroleum products, including crude oil and any fractions thereof; (C) natural gas, synthetic gas, and any mixtures thereof; (D) lead, polychlorinated biphenyls, asbestos and radon; (E) any other pollutant or contaminant; and (F) any substance, material or waste regulated by any Governmental Authority pursuant to any Environmental Law.   34 (iv) “Release” has the meaning set forth in Section 101(22) of CERCLA (42 U.S.C. § 9601(22)), but not subject to the exceptions in Subsections (A) and (D) of 42 U.S.C. § 9601(22). (v) “Remediation” means (A) any remedial action, remedy, response or removal action as those terms are defined in 42 U.S.C. § 9601, (B) any corrective action as that term has been construed pursuant to 42 U.S.C. § 6924, and (C) any measures or actions required or necessary to investigate, assess, evaluate, monitor, or otherwise delineate the presence or Release of any Hazardous Substance in or into the environment or to prevent, clean up or minimize a Release or threatened Release of Hazardous Substances. (h) The representations and warranties set forth in this Section 4.16 constitute the sole and exclusive representations and warranties of the Company with respect to environmental matters, and no other provision of this Agreement shall be deemed to address or include such matters. Section 4.17 Material Contracts. (a) Except as set forth in Section 4.17(a) of the Disclosure Schedules, the Company is not a party to or bound by any Contract of the following nature (such Contracts as are required to be set forth in Section 4.17(a) of the Disclosure Schedules being “Material Contracts”): (i) any Contract with an outstanding obligation with respect to the purchase of materials, supplies or services involving payment of more than $100,000 in the case of any single Contract or, in the case of all such Contracts, annual payments of more than $200,000; (ii) any Contract relating to or evidencing Indebtedness; (iii) any Contract pursuant to which the Company has provided funds to or made any loan, capital contribution or other investment in, or assumed any liability or obligation of, any Person, including take-or-pay contracts or keepwell agreements; (iv) any Contract with any Governmental Authority; (v) any Contract with any Related Party of the Company; (vi) any employment or consulting Contract, other than Contracts for employment covered in clause (v), that involves aggregate liabilities in excess of $100,000; (vii) any Contract that limits, or purports to limit, the ability of the Company to compete in any line of business or with any Person or in any geographic area or during any period of time, or that restricts the right of the Company to sell to or purchase from any Person or to hire any Person, or that grants the other party or any third person “most favored nation” status;   35 (viii) any Contract that requires a consent to or otherwise contains a provision relating to a “change of control,” or that would reasonably be expected to prohibit or delay the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements; (ix) any Contract pursuant to which the Company is the lessee or lessor of, or holds, uses, or makes available for use to any Person (other than the Company), (A) any real property or (B) any tangible personal property and, in the case of clause (B), that involves an aggregate future or potential liability or receivable, as the case may be, in excess of $50,000; (x) any Contract for the sale or purchase of any real property, or for the sale or purchase of any tangible personal property in an amount in excess of $50,000; (xi) any Contract providing for indemnification to or from any Person with respect to liabilities relating to any current or former business of the Company or any predecessor Person, excluding indemnification provided by the Company to customers in the ordinary course of business; (xii) any (A) Inbound License Agreement other than (1) a license of commercially available “off-the-shelf” software for an aggregate license fee of no more than $25,000, (2) a license for Open Source Materials, and (3) Contracts that contain a license from a customer to use its information or data in the course of performing services for the customer, including any such Contracts that grant the Company a license to any rights to Intellectual Property in and to any portion of the work product or other deliverables prepared for the customer; (B) Outbound License Agreement; or (C) Contract that limits the Company’s rights to enforce or register Intellectual Property owned by the Company, including covenants not to sue and co-existence agreements; (xiii) any Contract relating to any joint venture or partnership; (xiv) any Contract providing for any merger, acquisition or disposition transaction involving any Person or any business unit or division thereof, or any other assets or liabilities that are material to the Company; (xv) any Contract with any labor union; (xvi) any Contract relating to settlement or other final disposition of any Action since January 1, 2012; (xvii) any hedging, futures, options or other derivative Contract; (xviii) any Contract for the purchase of any debt or equity security or other ownership interest of any Person, or for the issuance of any debt or equity security or other ownership interest, or the conversion of any obligation, instrument or security into debt or equity securities or other ownership interests of, the Company;   36 (xix) any Contract that results in any Person holding a power of attorney from the Company that relates to the Company or its business; and (xx) any other Contract, whether or not made in the ordinary course of business that involves a future or potential liability or receivable, as the case may be, in excess of $300,000 over the current Contract term (other than potential liabilities or receivables entered into with customers of the Company in the ordinary course of business). (b) Each Material Contract is a legal, valid, binding and enforceable agreement and is in full force and effect and will continue to be in full force and effect on identical terms immediately following the Closing Date (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity). None of the Company or, to the Knowledge of the Company, any other party to such Material Contract is in breach or violation of, or (with or without notice or lapse of time or both) default under, any Material Contract, nor has the Company received any claim of any such breach, violation or default. The Company has delivered or made available to the Buyer true and complete copies of all Material Contracts, including any amendments thereto. Section 4.18 Affiliate Interests and Transactions. (a) No Related Party of the Company: (i) owns any equity or other financial or voting interest in any material competitor, supplier, licensor, lessor, distributor, independent contractor or customer of the Company or its business; (ii) owns, directly or indirectly, or has any interest in any property (real or personal, tangible or intangible) that the Company uses in or pertaining to the business of the Company; or (iii) has any business dealings or a financial interest in any transaction with the Company or involving any assets or property of the Company, other than business dealings or transactions conducted in the ordinary course of business at prevailing market prices and on prevailing market terms. Ownership of securities that are registered under the Securities Exchange Act of 5% or less of any class of such securities shall not be deemed to be a financial interest for purposes of this Section 4.18. Section 4.18(a) of the Disclosure Schedules sets forth for each officer of the Company, any other employee, officer, individual engaged as an independent contractor or manager of the Company that is a Related Party of such officer. (b) Except for this Agreement, the Company Operating Agreement and the Plans, there are no Contracts by and between the Company, on the one hand, and any Related Party of the Company, on the other hand, pursuant to which such Related Party provides or receives any information, assets, properties, support or other services to or from the Company (including Contracts relating to billing, financial, tax, accounting, data processing, human resources, administration, legal services, information technology and other corporate overhead matters). Immediately following the Closing, the Company will own or have a valid license to all material assets, properties and rights currently used in the conduct or operation of its business.   37 (c) There are no outstanding notes payable to, accounts receivables from or advances by the Company to, and the Company is not otherwise a debtor or creditor of, or has any liability to, any Related Party of the Company. Since the date of the Balance Sheet, the Company has not incurred any obligation or liability to, or entered into or agreed to enter into any transaction with or for the benefit of, any Related Party of the Company, other than the transactions contemplated by this Agreement and the Ancillary Agreements. Section 4.19 Insurance. Section 4.19 of the Disclosure Schedules sets forth a true and complete list of all casualty, directors and officers liability, general liability, workers compensation, product liability and all other types of insurance policies maintained with respect to the Company, together with the carriers and liability limits for each such policy, and any claims made under each such policy during the three years prior to the date hereof. All such policies are in full force and effect and no application therefor included a material misstatement or omission. All premiums with respect thereto have been paid to the extent due. The Company has not received notice of, nor to the Knowledge of the Company is there threatened, any cancellation, termination, reduction of coverage or material premium increases with respect to any such policy. Section 4.19 of the Disclosure Schedules identifies which insurance policies are “occurrence” or “claims made” and which Person is the policy holder. The consummation of the transactions contemplated by this Agreement and the Ancillary Agreements will not cause a cancellation or reduction in the coverage of such policies. Section 4.20 Privacy and Security. (a) The Company has at all times complied in all material respects with its privacy policies relating to privacy, data protection and the collection and use of Personally Identifiable Information gathered or accessed in the course of its operations, and maintains reasonable administrative, technical and physical processes and policies designed to safeguard the integrity of Personally Identifiable Information and to prevent unauthorized access to, misuse or alteration of, such data necessary to comply with applicable Law and the applicable terms of any Contract to which it is a party. No claims have been asserted in writing or, to the Knowledge of the Company, threatened against the Company alleging an improper use of Personally Identifiable Information. (b) No claims have been asserted in writing or, to the Knowledge of the Company, threatened against the Company alleging an improper use of Personally Identifiable Information. The execution and delivery of this Agreement or any Ancillary Agreement and the consummation of the transactions contemplated hereby and thereby will not breach or otherwise cause any material violation of any privacy policy of the Company. (c) For purposes of this Agreement, “Personally Identifiable Information” means data in control of the Company that identifies a particular individual, including, but not limited to, the name, address, telephone number, electronic mail address, social security number, bank account number or credit card number of an individual.   38 Section 4.21 Customers and Suppliers. (a) Section 4.21(a) of the Disclosure Schedules sets forth a true and complete list of (i) the names and addresses of all customers of the Company with a billing for each such customer of $1,000,000 or more during the 12 months ended June 30, 2017 and (ii) the amount for which each such customer was invoiced during such period. As of the date hereof, the Company has not received any notice from any of the Company’s top six customers (measured based on aggregate billings for each such customer during the six months ended June 30, 2017) that such customer has ceased or substantially reduced, or will cease or substantially reduce, use of services of the Company. (b) Section 4.21(b) of the Disclosure Schedules sets forth a true and complete list of (i) all suppliers of the Company from which the Company ordered supplies or services with an aggregate purchase price for each such supplier of $1,000,000 or more for the 12 months ended June 30, 2017 and (ii) the amount for which each such supplier invoiced the Company during such period. As of the date hereof, the Company has not received any written notice from any such supplier identified on Section 4.21(b) of the Disclosure Schedules (i) regarding any material adverse change in the price of such supplies or services provided by any such supplier, or (ii) that any such supplier will not sell supplies or services to the Company at any time after the Closing Date on terms and conditions substantially the same as those used in its current sales to the Company, subject to general and customary price increases. Section 4.22 Inventories. The inventories of the Company, whether reflected on the Balance Sheet or subsequently acquired, are generally of a quality usable and/or salable in the ordinary course of business, subject to any reserves reflected on the Balance Sheet or the Closing Balance Sheet. The inventories of the Company are reflected on the Balance Sheet and in the books and records of the Company in accordance with GAAP applied on a basis consistent with past practice (except as described in the notes to the Balance Sheet). The Company’s inventory levels as of the date hereof are not in excess of inventory levels of the Company as reflected in the Balance Sheet. Section 4.23 Accounts Receivable. All accounts receivable reflected on the Balance Sheet or to be reflected on the Closing Balance Sheet represent or will represent bona fide and valid obligations arising from sales actually made or services actually performed in the ordinary course of business. There is no contest, claim or right of set-off, other than returns in the ordinary course of business, under any Contract with any obligor of any accounts receivable related to the amount or validity of such accounts receivable, and no bankruptcy, insolvency or similar proceedings have been commenced by or against any such obligor, in each case except to the extent a reserve or accrual specifically related thereto has been reflected in the Closing Balance Sheet.   39 Section 4.24 Relations With Governments, etc.; Export Control Matters; Anti- Corruption Matters. (a) The Company and its employees, officers, individuals engaged as independent contractors, managers, agents or other Representatives, and its equityholders while acting on behalf of the Company, have not during the past five years taken any action, directly or indirectly, in violation of: the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder; or any analogous anticorruption Laws applicable to the Company. The Company and its employees, officers, individuals engaged as independent contractors, managers, agents or other Representatives, and its equityholders while acting on behalf of the Company, have not during the past five years directly or indirectly offered, paid, promised to pay or authorized the payment of anything of value, including cash, checks, wire transfers, tangible and intangible gifts, favors and services, to a foreign Government Official or any other Person while knowing or having a reasonable belief that all or some portion would be used for the purpose of: (A) influencing any act or decision of a foreign Government Official in his official capacity, including a decision to fail to perform official functions, (B) inducing any foreign Government Official in his official capacity to do or omit to do any act in violation of the lawful duty of such official, or (C) inducing any foreign Government Official to use influence with any Governmental Authority in order to assist the Company in obtaining or retaining business with, or directing business to any Person or otherwise securing for any person an improper advantage. (b) The Company and, to the Company’s Knowledge, its employees, officers, individuals engaged as independent contractors, managers, agents or other Representatives have not during the past five years materially violated, or taken any action that would cause the Company to have materially violated, any applicable Laws related to (1) the export, re-export, transfer, transshipment, lease, sale or supply of commodities, technology, software or services administered by the Bureau of Industry and Security, U.S. Department of Commerce, the Office of Foreign Assets Control, U.S. Department of the Treasury, and the Directorate of Defense Trade Controls, U.S. Department of State, or (2) compliance with unsanctioned international boycotts as detailed in Part 760 of the Export Administration Regulations (collectively, “Export Control Laws”). Without limiting the foregoing: (i) the Company has obtained all required export licenses and other consents, notices, waivers, approvals, orders, authorizations, registrations, and classifications from, and submitted all required export clearance documentation, including all Electronic Export Information to, any Governmental Authority for the export of commodities, technology, software or services (collectively, “Export Approvals”); and (ii) the Company is in compliance with the terms of any Export Approvals. (c) No Action by or before the U.S. Government or any other Governmental Authority involving the Company or any of its employees, officers, individuals engaged as independent contractors, managers or agents with respect to any Export Control Laws is pending or, to the Knowledge of the Company, threatened. No civil or criminal penalties have been imposed on the Company with respect to violations of any Export Control Laws nor have any disclosures been submitted to the U.S. Government or any other Governmental Authority with respect to violations of any Export Control Laws.   40 Section 4.25 Brokers. Except for Piper Jaffray & Co., the fees and expenses of which will constitute Transaction Expenses and be paid at Closing or otherwise paid by the Sellers, no broker, finder or investment banker is entitled to any transactions contemplated hereby based upon arrangements made by or on behalf of the Sellers or the Company. The Company has furnished to the Buyer a complete and correct copy of all agreements between the Company and Piper Jaffray & Co. pursuant to which such firm would be entitled to any payment from or on behalf of the Company relating to the transactions contemplated hereby. Section 4.26 No Other Representations or Warranties. Except for the representations and warranties of the Sellers and the Company set forth in this Agreement, the Ancillary Agreements and any schedule, certificate or other document delivered pursuant hereto or thereto or in connection with the transactions contemplated hereby, none of the Sellers, the Company or any other Person, whether or not acting on behalf of any of the foregoing, makes any other representation or warranty, express or implied, either written or oral, regarding the Sellers, the Company or otherwise in connection with this Agreement and the transactions contemplated hereby. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER Except as set forth in any Buyer SEC Filing (as defined below) that is publicly available prior to the date of this Agreement (excluding any disclosures set forth in any such Buyer SEC Filing in any risk factor section, any forward-looking disclosure in any section relating to forward-looking statements or any other statements that are non-specific, cautionary, predictive or forward-looking in nature, other than historical facts included therein), the Buyer hereby represents and warrants to each Seller as follows: Section 5.1 Organization. The Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has full corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. Section 5.2 Authority. The Buyer has full corporate power and authority to it will be a party, to perform its obligations hereunder and thereunder and to delivery and performance by the Buyer of this Agreement and each of the Ancillary Agreements to which it will be a party and the consummation by the Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action. This Agreement has been, and upon their execution each of the Ancillary Agreements to which the Buyer will be a party will have been, duly executed and delivered by the Buyer and, thereto, this Agreement constitutes, and upon their execution each of the Ancillary Agreements to which the Buyer will be a party will constitute, the legal, valid and binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms.   41 Section 5.3 No Conflict; Required Filings and Consents. (a) The execution, delivery and performance by the Buyer of this Agreement and each of the Ancillary Agreements to which the Buyer will be a party, and the will not: (i) conflict with or violate the certificate of incorporation or bylaws of the Buyer; (ii) conflict with or violate any Law applicable to the Buyer; or (iii) result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under or require any consent of any Person pursuant to, any note, bond, mortgage, indenture, agreement, lease, license, permit, franchise, instrument, obligation or other Contract to which the Buyer is a party; except for any such conflicts, violations, breaches, defaults or other occurrences that do not, individually or in the aggregate, have a Buyer Material Adverse Effect or would reasonably be expected to do so. (b) The Buyer is not required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by the Buyer of this Agreement and each of the Ancillary Agreements to which it will be party or the consummation of the transactions contemplated hereby or thereby, except for (i) any filings required to be made under the HSR Act, (ii) any filings under the U.S. federal securities laws required by the Registration Rights Agreement, (iii) any filings or listing applications with a national securities exchange with respect to the issuance of the Buyer Common Shares hereunder, and (iv) such other notices, authorizations, approvals, orders, permits or consents the failure of which to be obtained or made, individually or in the aggregate, have not had and would not reasonably be expected to have a Buyer Material Adverse Effect. Section 5.4 Capitalization. (a) As of August 31, 2017, the authorized capital of the Buyer consisted solely of (i) 300,000,000 shares of common stock, par value $0.01 per share (“Buyer Common Stock”), of which 213,619,862 shares were issued and outstanding and (ii) 1,000,000 shares of preferred stock, par value $0.01 per share, of which no shares were issued and outstanding. (b) All of the issued and outstanding shares of Buyer Common Stock are duly authorized and validly issued in accordance with the organizational documents of the Buyer, are fully paid and non-assessable, and were not issued in violation of any preemptive rights, rights of first refusal or other similar rights of any Person. (c) There are no preemptive rights or, except as disclosed in the Buyer SEC Filings (as defined below), other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, subscription agreements, commitments or rights of any kind that obligate the Buyer to issue or   42 convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any equity interests in the Buyer, and, except as disclosed in the Buyer SEC Filings, no securities or obligations evidencing such rights are authorized, issued or outstanding. (d) The Buyer does not have any outstanding bonds, debentures, notes, or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the holders of equity interests in the Buyer on any matter pursuant to such outstanding bonds, Section 5.5 Listing Exchange. The Buyer Common Stock is listed on the NASDAQ Global Select Market (the “NASDAQ“), and the Buyer has not received any notice of delisting from the NASDAQ. No judgment, order, ruling, decree, injunction, or award of any securities commission or similar securities regulatory authority or any other Governmental Authority, or of the NASDAQ, preventing or suspending trading in any securities of the Buyer has been issued, and no proceedings for such purpose are, to the Buyer’s knowledge, pending, contemplated or threatened. The Buyer has taken no action that is designed to terminate the registration of the Buyer Common Stock under the Exchange Act of 1934 (the “Exchange Act”). Section 5.6 Financing. The Buyer has sufficient funds to permit the Buyer to consummate the transactions contemplated by this Agreement and the Ancillary Agreements. Section 5.7 Issuance of the Buyer Common Shares. The Aggregate Stock Closing Consideration to be issued hereunder will, when issued pursuant to the terms of this Agreement, be duly authorized, validly issued, fully paid and nonassessable, and free and clear of all Encumbrances (other than those arising under securities Laws or created by the Sellers), and will not be issued in violation of any preemptive right, purchase option, call option, right of first refusal or similar options or rights or, assuming the accuracy of the representations in Section 3.5, in violation of the Securities Act and any applicable state securities Laws. The Buyer has and on the Closing Date will have a sufficient number of Buyer Common Shares authorized for issuing the Aggregate Stock Closing Consideration. Section 5.8 Brokers. No broker, finder or investment banker is entitled to any the Buyer. Section 5.9 Investment Intent. The Buyer is acquiring the Units for its own account for investment purposes only and not with a view to any public distribution thereof or with any intention of selling, distributing or otherwise disposing of the Units in a manner that would violate the registration requirements of the Securities Act. Section 5.10 Financial Reports and Regulatory Filings. The Buyer has timely filed or furnished with the United States Securities and Exchange Commission (the “SEC”) all reports, schedules, forms, statements, and other documents (including exhibits and other information incorporated therein) required to be filed or furnished by it since January 1, 2015 under the Exchange Act. The Buyer’s Annual Reports on Form 10-K for the years ended December 31,   43 2014, 2015 and 2016, and all other reports, registration statements, definitive proxy statements or information statements filed by it subsequent to December 31, 2016 under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed or as thereafter amended prior to the date hereof (collectively, the “Buyer SEC Filings“) with the SEC as of the date filed or amended prior to the date hereof, as the case may be, (i) complied in all material respects as to form with the applicable requirements under the Exchange Act, as the case may be, and (ii) did not contain any untrue statement of a which they were made, not misleading. The audited or unaudited financial statements included in the Buyer SEC Filings, including any notes thereto or schedules, (x) were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or the omission of notes to the extent permitted by Regulation S-K or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and subject, in the case of interim financial statements, to normal and recurring year-end adjustments, and (y) fairly present in all material respects the financial position, results of operations and cash flows of the Buyer as at the respective dates thereof and for the respective periods indicated therein. Section 5.11 Internal Controls. (a) The Buyer has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act, such disclosure controls and procedures are reasonably designed to ensure that material information required to be disclosed by the Buyer in the reports it files or submits to the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such material information is accumulated and communicated to the Buyer’s management as appropriate to allow timely decisions regarding required disclosure. (b) Since January 1, 2015, (i) there have not been any changes in the Buyer’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that are reasonably likely to materially affect the Buyer’s internal control over financial reporting; (ii) the Buyer has disclosed, based on the most recent evaluation of its chief executive officer and its chief financial officer prior to the date of this Agreement, to the Buyer’s outside auditors and the audit committee of the Buyer’s board of directors any “significant deficiency” or “material weakness” in the design or operation of the Buyer’s internal control over financial reporting which are reasonably likely to adversely affect in any material respect the Buyer’s (iii) none of the Buyer, the Buyer’s outside auditors or the audit committee of the board of directors of the Buyer has received any oral or written notification of any fraud, whether or not material, that involves management or other employees of the Buyer who have a significant role in the Buyer’s internal control over financial reporting. Section 5.12 Form S-3 Eligibility. As of the date of this Agreement, the Buyer is (a) eligible to register the resale of the Buyer Common Shares issuable in the transactions contemplated hereby for resale by the Sellers under Form S-3 promulgated under the Securities Act and (b) a “well-known seasoned issuer” as defined in Rule 405 promulgated under the Securities Act.   44 Section 5.13 No Stockholder Approval. The transactions contemplated hereby and in the Ancillary Agreements, taken together with any transactions consummated by the Buyer as permitted by Article VI, do not require any vote of the stockholders of the Buyer under applicable Law, the rules and regulations of the NASDAQ (or other national securities exchange on which the Buyer Common Stock is then listed) or the organizational documents of the Buyer. Section 5.14 No Other Representations or Warranties. Except for the representations and warranties of the Buyer set forth in this Agreement, the Ancillary Agreements and any schedule, certificate or other document delivered pursuant hereto or thereto or in connection with the transactions contemplated hereby, neither the Buyer nor any other Person, whether or not acting on behalf of any of the foregoing, makes any other representation or warranty, express or implied, either written or oral, regarding the Buyer, the Buyer Common Shares or otherwise in connection with this Agreement and the transactions contemplated hereby. ARTICLE VI COVENANTS Section 6.1 Conduct of Business Prior to the Closing. Between the date of this Agreement and the Closing, unless the Buyer shall otherwise agree in writing, the Company shall conduct its business only in the ordinary course of business consistent with past practice, and shall use commercially reasonable efforts to (i) preserve substantially intact the Company’s business organization and assets; (ii) preserve the current relationships of the Company with customers, suppliers, officers, employees and individuals engaged as independent contractors the loss of which would be material to the Company and other persons with which the Company has significant business relations; and (iii) keep and maintain the Company’s assets and properties in good repair and normal operating condition, wear and tear excepted. By way of amplification and not limitation, between the date of this Agreement and the Closing Date, the Company shall not do, directly or indirectly, any of the following without the prior written consent of the Buyer, or except as required by applicable Law or as set forth in Section 6.1 of the Disclosure Schedules: (a) amend or otherwise change its certificate of formation or limited liability company agreement; (b) issue, sell, pledge, transfer, dispose of or otherwise subject to any Encumbrance (i) any equity or ownership interests of the Company, (ii) any options, warrants, convertible securities or other rights of any kind to acquire any equity or ownership interests of the Company, (iii) any properties or assets of the Company, other than sales or transfers of inventory and obsolete equipment in the ordinary course of business consistent with past practice or (iv) any stock appreciation rights, phantom stock, interests in the ownership or earnings of the Company; (c) declare, set aside, make or pay any non-cash dividend or other non-cash distribution on or with respect to any of its equity or ownership interest;   45 (d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its equity or ownership interest, or make any other change with respect to its capital structure except as expressly contemplated by this Agreement; (e) directly or indirectly acquire any corporation, partnership, limited liability company, other business organization or division thereof or any material amount of assets (other than parts and accessories necessary for the ongoing operation of the business of the Company or other assets that are included in inventory of the Company, in each case in the ordinary course of business of the Company consistent with past practice), or enter into any joint venture, strategic alliance, exclusive dealing, noncompetition or similar contract or arrangement; (f) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company, or otherwise alter the Company’s capital structure; (g) incur any Indebtedness or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any loans or advances, other than borrowings under the Credit Agreement and purchase money credit or deferred purchase price credit extended to the Company by vendors and suppliers in the ordinary course of business of the Company (h) (i) amend, waive, modify or consent to the termination of any Material Contract, (ii) amend, waive, modify or consent to the termination of the Company’s rights thereunder, or (iii) enter into any Contract that would be a Material Contract if entered into prior to the date hereof, provided that this clause (iii) shall not prohibit the entry into any Contract described in Section 4.17(a)(i) following the date of this Agreement if the obligations under such Contract would be expressly permitted by Section 6.1(i); (i) authorize, or make any commitment with respect to, any single capital expenditure or other purchase of equipment or inventory that is in excess of $1,000,000 or capital expenditures or other purchases of equipment or inventory that are, in the aggregate, in excess of $5,000,000 for the Company; (j) enter into any lease of real or personal property or any renewals thereof involving a term of more than six months or rental obligation exceeding $50,000 per year in any single case; (k) except as required by a Plan in existence as of the date of this Agreement, (i) increase the compensation payable or to become payable or the benefits provided to its employees, individuals engaged as independent contractors, officers or managers, (ii) grant any severance or termination payment to, or pay, loan or advance any amount to, any employee, individual engaged as an independent contractor, officer or manager of the Company, or (iii) establish, adopt, enter into or amend any Plan, except as would not result in any additional liability or obligations to the Company; (l) enter into any collective bargaining agreement with any labor organization; (m) enter into any Contract with any Related Party of the Company;   46 (n) make any change in any method of accounting or accounting practice or policy, except as required by GAAP; (o) make, revoke or modify any material Tax election, settle or compromise any material Tax liability or file any Tax Return other than on a basis consistent with past practice; (p) pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations (i) in the ordinary course of business consistent with past practice or as required by their terms as in effect on the date of this Agreement or incurred since the date of this Agreement in the ordinary course of business consistent with past practice or (ii) outside of the ordinary course of business involving aggregate consideration of less than $200,000 in the aggregate; (q) cancel, compromise, waive or release any right or claim with a value in excess of $200,000; (r) permit the lapse of any existing policy of material insurance relating to the business or assets of the Company; (s) permit the lapse of any right relating to any material Intellectual Property or any other material intangible asset used in the business of the Company; (t) accelerate the collection of or discount any accounts receivable, delay the payment of accounts payable or defer expenses, or reduce inventories, in each case except in the ordinary course of business consistent with past practice; (u) conduct a “plant closing” or “mass layoff” (as those terms are defined under the WARN Act); (v) commence or settle any Action (other than Actions related to worker compensation claims); (w) enter into any new line of business; or (x) announce an intention, enter into any formal or informal agreement, or otherwise make a commitment to do any of the foregoing. Section 6.2 Covenants Regarding Information. (a) Upon receipt of reasonable advance notice, the Company shall afford the Buyer and its Representatives reasonable access (including for inspection and copying) from the date hereof through the Closing Date, during normal business hours, solely in furtherance of the Buyer’s investigation of the Company, to the Representatives, properties, offices, plants and other facilities, books and records of the Company, and shall furnish the Buyer with such financial, operating and other data and information as the Buyer may reasonably request; provided, however, that (a) the provisions of this Section 6.2 shall be carried out in accordance with   47 applicable Law relating to the exchange of information, and (b) notwithstanding anything to the contrary in this Agreement, the Company shall not be required to provide access to or disclose information where such access or disclosure would waive attorney-client privilege of such party or contravene any Law or binding agreement entered into prior to the date of this Agreement, provided that the Company shall use its reasonable best efforts to provide substitute disclosure that would not result in such a waiver or contravention. All investigations, including environmental due diligence investigations, conducted by the Buyer or any of the Buyer’s Representatives shall be conducted at the Buyer’s sole cost, risk and expense, and any conclusions made from such investigations done by the Buyer or the Buyer’s Representatives shall result from the Buyer’s own independent review and judgment. The Buyer shall coordinate its access rights and physical inspections of the real property and the other assets of the Company with the Sellers Representative to reasonably minimize any inconvenience to or interruption of the conduct of the business of the Company. The Buyer’s environmental due diligence shall be limited to a visual site inspection and limited environmental compliance evaluation of the assets, the real property, and the operations of the Company, and in no event shall the Buyer perform any invasive testing or sampling of the ambient air, soil, surface water or ground water absent the express written consent of the Sellers Representative, which may be withheld solely within the Sellers Representative’s discretion. The Buyer shall, and shall cause its Representatives to, abide by the operating safety rules, regulations and operating policies of the Company and any third Person operator of any Company’s assets. Notwithstanding the foregoing, (i) the Buyer shall have no right of access to, and the Sellers Representative or the Sellers shall have no obligation to provide or make available to the Buyer information relating to bids received from others in connection with the transactions contemplated by this Agreement and the Ancillary Agreements and information and analysis (including financial analysis) relating to such bids; (ii) without the prior written consent of the Sellers Representative (which will not be unreasonably withheld, conditioned or delayed), the Buyer shall not contact any suppliers to, or customers of, the Company with respect to the transactions contemplated by this Agreement and the Ancillary Agreements; and (iii) the Seller’s obligation to provide access to the Buyer and its Representatives under this Section 6.2(a), including for the purpose of conducting any environmental due diligence investigation, is subject in all cases to the Company’s obtaining any required consents of third Persons, including landlords for Leased Real Property and third Person operators of any assets of the Company (with respect to which consents the Company will use commercially reasonable efforts to obtain, it being understood that such commercially reasonable efforts do not include the payment of money or any other consideration). (b) The Buyer hereby agrees to defend, indemnify and hold harmless each of the operators of the assets of the Company and each of the Seller Indemnified Parties from and against any and all Losses attributable to personal injury, death or physical or other property damage, or violation of the Sellers’ or the Sellers’ Affiliates’ or any third Person operator’s rules, regulations or operating policies of which the Buyer or the representatives of the Buyer associated with the Losses had been informed, to the extent arising out of, resulting from or relating to any field visit, environmental property assessment or other due diligence activity conducted by the Buyer or any of its representatives with respect to the real property or other assets of the Company, EVEN IF SUCH LOSSES ARISE OUT OF OR RESULT FROM, SOLELY OR IN PART, THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY ANY OF THE SELLER INDEMNIFIED PARTIES, EXCEPTING ONLY LOSSES ACTUALLY RESULTING ON THE ACCOUNT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE SELLER INDEMNIFIED PARTIES.   48 (c) All information obtained pursuant to this Section 6.2 shall be “Confidential Information” as such term is used in Section 6.8 of this Agreement and shall be subject to the terms thereof. Notwithstanding anything to the contrary in this Agreement, prior to the Closing the Buyer shall not approach or discuss the business of the Company, its real property or other assets, or the Sellers with any Governmental Authority with responsibility for Environmental Laws without the prior written authorization of the Sellers Representative. Section 6.3 Exclusivity. Between the date of this Agreement and the earlier of the Closing and the termination of this Agreement, the Company and the Sellers shall not, and shall take all action necessary to ensure that none of their respective Affiliates or Representatives shall, directly or indirectly: (a) solicit, initiate, consider, encourage or adopt any other proposals or offers from any Person (i) relating to any direct or indirect acquisition or purchase of all or any portion of the capital stock or other equity or ownership interest of the Company or assets of the Company, other than inventory or obsolete equipment to be sold in the ordinary course of business consistent with past practice, (ii) to enter into any merger, consolidation or other business combination relating to the Company or (iii) to enter into a recapitalization, reorganization or any other extraordinary business transaction involving or otherwise relating to the Company; or (b) participate in any discussions, conversations, negotiations or other communications regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any other Person to seek to do any of the foregoing. The Sellers immediately shall cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons conducted heretofore with respect to any of the foregoing. The Sellers or the Company shall notify the Buyer promptly, but in any event within 24 hours, orally and in writing if any such proposal or offer, or any inquiry or other contact with any Person with respect thereto, is made. Any such notice to the Buyer shall indicate in reasonable detail the identity of the Person making such proposal, offer, inquiry or other contact and the terms and conditions of such proposal, offer, inquiry or other contact. Section 6.4 Notification of Certain Matters; Supplements to Disclosure Schedules. (a) The Company and each Seller shall give prompt written notice to the Buyer of (i) the occurrence or non-occurrence of any change, condition or event, the occurrence or non-occurrence of which would render any representation or warranty of the Sellers or the Company contained in this Agreement or any Ancillary Agreement, if made on or immediately following the date of such event, untrue or inaccurate, (ii) any failure to comply with or satisfy any covenant or agreement to be complied with or satisfied by it hereunder, (iii) any event or condition that would result in the nonfulfillment of any of the conditions to the Buyer’s obligations hereunder, (iv) any notice or other communication from any Person alleging that the consent of such Person   49 is or may be required in connection with the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements or (v) any Action pending or, to the Knowledge of the Company, threatened against a party relating to the transactions contemplated by this Agreement or the Ancillary Agreements. (b) The Buyer shall give prompt written notice to the Company and the Sellers Representative of (i) the occurrence or non-occurrence of any change, condition or event, the occurrence or non-occurrence of which would render any representation or warranty of the Buyer contained in this Agreement or any the Sellers’ obligations hereunder, (iv) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements or (v) any Action pending or, to the Knowledge of the Buyer, threatened against a party relating to the transactions Section 6.5 Release. Subject to the limitations set forth in the last sentence of this Section 6.5, each of the Sellers hereby unconditionally and irrevocably releases and forever discharges, effective contingent upon, as of and forever after the Closing, to the fullest extent applicable Law permits, the Buyer and all past, present and future Affiliates of the Buyer (including the Company) and all past, present and future Representatives of the Buyer and such Affiliates (collectively, the “Released Parties“) from any and all debts, liabilities, obligations, claims, demands, actions or causes of action, suits, judgments or controversies of any kind whatsoever (collectively, “Pre-Closing Claims“) against the Company, based on any agreement or understanding or act or failure to act (including any act or failure to act that constitutes ordinary or gross negligence or reckless or willful, wanton misconduct), misrepresentation, omission, transaction, fact, event or other matter occurring prior to the Closing (whether at law or in equity or otherwise, foreseen or unforeseen, matured or unmatured, known or unknown, accrued or not accrued) (collectively, “Pre-Closing Matters“), including: (i) claims by the Sellers with respect to repayment of loans or indebtedness; (ii) any rights, titles and interests in, to or under any agreements, arrangements or understandings to which such Seller is a party; and (iii) claims by such Seller with respect to dividends, violation of preemptive rights, such Seller’s status as an officer, director, manager or equityholder of the Company or otherwise (but, in each case, excluding any and all claims in respect of (A) accrued and unpaid cash compensation owing to such Seller at the rates or in the amounts, as the case may be, set forth in the list described on Section 4.11(a) of the Disclosure Schedule and (B) benefits accrued under each Plan, the existence of which is disclosed on Section 4.10(a) of the Disclosure Schedule). Each of the Sellers also agrees not to file or bring any Action on the basis of or respecting any Pre-Closing Claim concerning any Pre-Closing Matter against any Released Party. Each of the Sellers (i) acknowledges that such Seller fully comprehends and understands all the terms of this Section 6.5 and their legal effects and (ii) expressly represents and warrants that (A) such Seller is competent to effect the release made in this Section 6.5 knowingly and voluntarily and without reliance on any statement or representation of any Released Party or its Representatives and (B) such Seller had the opportunity to consult with an attorney of such Seller’s choice regarding this   50 Section 6.5. This Section 6.5 shall not constitute a release of claims with respect to (1) the rights of the Sellers under this Agreement or any Ancillary Agreement, including payments to the Sellers of such Seller’s portion of the Purchase Price, to which such Seller is entitled pursuant to the terms and conditions of this Agreement, (2) if such Seller is an officer or manager of the Company, any claims that such Seller may have for indemnification under (x) any insurance policy available to such Seller at the Closing or (y) the Company’s organizational documents, including the Company Operating Agreement, provided that the basis for such indemnification claim does not arise from a breach of such Seller’s or the Company’s representations and warranties in this Agreement and (3) any claims arising out of or in connection with any Seller’s employment with the Company or the cessation of that employment. Notwithstanding the foregoing, nothing in this Agreement shall prohibit any employee of the Company from reporting possible violations of federal Law to any Governmental Authority or making other disclosures that are protected under whistleblower provisions of Law. Section 6.6 Affiliate Arrangements. All accounts or contracts between the Company, on the one hand, and any Seller or any Related Party of the Company, on the other hand, shall be cancelled without any consideration or further liability to any party and without the need for any further documentation, immediately prior to the Closing. Section 6.7 Resignations. The Company will deliver at the Closing the resignation of all of the managers of the Company, effective as of the Closing. Section 6.8 Confidentiality. (a) Each of the parties shall hold, and shall undertake commercially reasonable efforts to cause its Representatives to hold, in confidence all documents and information furnished to it by or on behalf of the other party in connection with the transactions contemplated hereby pursuant to the terms of the confidentiality agreement dated May 10, 2017 between the Buyer and the Company (the “Confidentiality Agreement”), which shall continue in full force and effect until the Closing Date, at which time such Confidentiality Agreement and the obligations of the parties under this Section 6.8(a) shall terminate. If for any reason this Agreement is terminated prior to the Closing Date, the Confidentiality Agreement shall nonetheless continue in full force and effect in (b) For a period of two years following the Closing Date, the Sellers shall not, and each Seller shall cause its Affiliates and shall undertake commercially reasonable efforts to cause the respective Representatives of such Seller and its Affiliates not to, disclose to any third party, any Confidential Information; provided, however, that each Seller or its Affiliates may furnish such portion (and only such portion) of the Confidential Information as such Seller or such Affiliate reasonably determines it is legally obligated to disclose if: (i) it receives a request to disclose all or any part of the Confidential Information under the terms of a subpoena, civil investigative demand or order issued by a Governmental Authority; (ii) to the extent not inconsistent with such request or except in the case of a request for information from regulators pursuant to a routine audit, it notifies the Buyer of the existence, terms and circumstances surrounding such request and consults with the Buyer on the advisability of taking steps available under applicable Law to resist or narrow such request; (iii) it exercises its commercially   51 reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to the disclosed Confidential Information; and (iv) disclosure of such Confidential Information is required to prevent such Seller or such Affiliate from being held in contempt or becoming subject to any other penalty under applicable Law. For purposes of this Agreement, “Confidential Information” consists of all information and data relating to the Company or the transactions contemplated hereby, other than data or information that is or becomes available to the public other than as a result of a breach of this Section 6.8 or that was independently developed by such Person without use or reference to Confidential Information or was in their rightful possession before the disclosure of the applicable Confidential Information to them. Notwithstanding the foregoing, (i) any individual Seller may disclose Confidential Information to the extent reasonably required in the performance of its duties as an employee of the Company or its Affiliates following the Closing and (ii) each Seller and its Affiliates may disclose Confidential Information in connection with disclosures of a general nature regarding general financial information, return on investment and similar information, including (A) in connection with communications to direct and indirect beneficial owners of interests in any Seller or any Affiliate of a Seller and general marketing efforts, (B) in connection with communications to investors or prospective investors in private equity funds or investment funds managed by any Seller or its Affiliates of information customarily provided thereto and (C) to comply with applicable Law or the rules and regulations of any governmental, regulatory or self-regulatory organization or stock exchange. Notwithstanding anything to the contrary in the foregoing, the Buyer acknowledges that NGP and Denham manage a variety of private equity funds that currently own, and may in the future acquire, interests in portfolio companies in the oilfield services business and that none of the terms of this Section 6.8(b) shall apply to NGP, Denham or to any members, owners, officers, managers, directors, partners, employees, agents or representatives of NGP or Denham, unless Confidential Information has been actually disclosed to any such fund or portfolio company of NGP or Denham, as applicable, in which case the provisions hereof shall only apply to such fund or portfolio company. For purposes hereof, the fact that a representative of NGP or Denham serves as a member of the board of directors or equivalent governing body of any private equity fund or portfolio company shall not, in and of itself, constitute actual disclosure of Confidential Information to such fund or portfolio company, and the use of mental impressions (i.e. impressions not written or otherwise reduced to record) by NGP or Denham or any of their members, owners, officers, managers, directors, partners, employees, agents or representatives shall not be a violation of this Section 6.8(b). (c) Effective as of the Closing, each Seller hereby assigns to the Buyer all of such Seller’s right, title and interest in and to any confidentiality agreements entered into by such Seller (or its Affiliates or Representatives) and each Person (other than the Buyer and its Affiliates and Representatives) who entered into any such agreement or to whom Confidential Information was provided in connection with a business combination involving the Company or its Affiliates. From and after the Closing, each Seller will take all actions reasonably requested by the Buyer in order to assist in enforcing the rights so assigned. Each Seller shall use its commercially reasonable efforts to cause any such Person to return to such Seller any documents, files, data or other materials constituting Confidential Information that was provided to such Person in connection with the consideration of any such business combination.   52 Section 6.9 Consents and Filings; Further Assurances. (a) The Sellers, the Company and the Buyer shall use all commercially reasonable efforts to take, or cause to be taken, all appropriate action to do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements as promptly as practicable, including to (i) obtain from Governmental Authorities and other Persons all consents, approvals, authorizations, qualifications and orders as are necessary for the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, (ii) promptly make all necessary filings, and thereafter make any other required submissions, with respect to this Agreement required under the HSR Act or any other applicable Law and (iii) have vacated, lifted, reversed or overturned any order, decree, ruling, judgment, injunction or other action (whether temporary, preliminary or permanent) that is then in effect and that enjoins, restrains, conditions, makes illegal or otherwise restricts or prohibits the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements. In furtherance and not in limitation of the foregoing, the Sellers and the Company shall permit the Buyer reasonably to participate in the defense and settlement of any claim, suit or cause of action relating to this Agreement or the transactions contemplated hereby, and the Sellers and the Company shall not settle or compromise any such claim, suit or cause of action without the Buyer’s written consent. (b) The Sellers and the Buyer agree that, in the event that any consent, approval or authorization necessary or desirable to preserve for the Company any right or benefit under any lease, license, commitment or other Contract to which the Company is a party is not obtained prior to the Closing, the Sellers shall, subsequent to the Closing, cooperate with the Buyer or the Company in attempting to obtain such consent, approval or authorization as promptly thereafter as practicable. (c) From time to time after the Closing, and for no further consideration, each of the parties shall execute, acknowledge and deliver such assignments, transfers, consents, assumptions and other documents and instruments and take such other actions as may be reasonably necessary or desirable to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements. (d) Notwithstanding anything herein to the contrary, the Buyer shall not be required by this Section to take or agree to undertake any action, including entering into any consent decree, hold separate order or other arrangement, that would (A) require the divestiture of any assets of the Buyer, the Company or any of their respective Affiliates, (B) limit the Buyer’s freedom of action with respect to, or its ability to consolidate and control, the Company or any of its assets or businesses or any of the Buyer’s or its Affiliates’ other assets or businesses or (C) limit the Buyer’s ability to acquire or hold, or exercise full rights of ownership with respect to, the Units. (e) The Buyer and the Company shall each be responsible for one-half of the cost of all filing or application fees payable to any Governmental Authority under the HSR Act, regardless of whether the Buyer, the Company or any of the Seller or any of their respective Affiliates is required to make the payment, provided that any such amount required to be paid by the Company prior to Closing that remains unpaid at the Closing shall be deemed a Transaction Expense for purposes of this Agreement.   53 Section 6.10 Termination of Indebtedness. The Company shall use commercially reasonable efforts to negotiate the Debt Payoff Letters for all Payoff Indebtedness. The Company shall deliver all notices and take all other actions reasonably requested by the Buyer to facilitate the termination of all Contracts relating to Payoff Indebtedness, the termination of the commitments provided thereunder, the repayment in full of all obligations then outstanding thereunder (using funds provided by the Buyer) and the release of all Encumbrances in connection therewith on the Closing Date; provided, however, that in no event shall this Section 6.10 require the Company to cause the termination of any Contracts relating to Payoff Indebtedness other than as part of the Closing. Section 6.11 Public Announcements. (a) No Seller shall, and each shall cause its respective Affiliates (including prior to the Closing, the Company) and its and their Representatives not to, issue any press release or make any other public statement with respect to this Agreement or the transactions contemplated hereby without first consulting with the Buyer, giving the Buyer a reasonable opportunity to review and comment upon such proposed disclosure, and obtaining the prior written consent of the Buyer to such proposed disclosure. (b) The Buyer shall, and shall cause its Affiliates and its Representatives not to, issue any press release or make any other public statement with respect to this Agreement or the transactions contemplated hereby without first consulting with the Sellers Representative and giving the Sellers Representative a reasonable opportunity to review and comment upon such proposed disclosure; provided that the Buyer’s obligation to consult with the Sellers Representative, and the Sellers Representative’s right to review, shall not apply to any such press release or other public statement which is consistent with and does not contain any information in excess of any press release or other public statement that was previously reviewed by the Sellers Representative. Section 6.12 Restrictions on Company Payments and Buyer Stock Splits and Dividends. (a) Following the Calculation Time, the Company shall not (a) declare, set aside, make or pay any dividend or other distribution on or with respect to any of its equity or ownership interest or (b) pay any Transaction Expenses. (b) Prior to Closing, each Seller shall, severally and not jointly, in accordance with such Seller’s Pro Rata Share, take all necessary actions (including contributing Cash to the Company or paying Indebtedness or Transaction Expenses on behalf of the Company) to cause the Aggregate Cash Closing Consideration as calculated at the Closing pursuant to the terms of this Agreement to be greater than or equal to $0.   54 (c) Between the date of this Agreement and the Closing, unless the Sellers Representative shall otherwise agree in writing, the Buyer shall not (i) reclassify, combine, split or subdivide the Buyer Common Shares, or (ii) declare, set aside, make or pay any cash or non-cash dividend or other distribution on or with respect to the Buyer Common Shares, provided that the foregoing restriction shall not restrict the Buyer from declaring, setting aside, making or paying quarterly cash dividends on Buyer Common Shares of up to $0.02 per share per quarter with declaration, record and payment dates consistent with the Buyer’s past practice and in accordance with the Buyer’s current dividend policy. Section 6.13 Books and Records. Each Seller acknowledges and agrees that from and after the Closing, the Buyer will be entitled to the originals of all books and records of the Company. At the Closing, the Sellers will promptly deliver to the Buyer such originals or copies of all books and records of the Company or otherwise confirm such books and records are located at the offices of the Company, as requested by the Buyer. The Buyer agrees that it shall, and shall cause the Company to, use reasonable best efforts to preserve and keep the books and records of the Company in existence as of the Closing for a period of six years after the Closing Date. The Buyer shall cooperate in all reasonable respects with the Sellers and will make available to the Sellers, during normal business hours, the books and records of the Company which relate to any period that includes or precedes the Closing Date and which are necessary in connection with the preparation or filing of any Tax Return, audit or similar investigation or any dispute, arbitration or litigation, or in order to enable any Seller to comply with its obligations under this Agreement or the Ancillary Agreements. Section 6.14 Indemnification and Insurance. (a) The Buyer agrees that all rights to indemnification for acts or omissions occurring prior to the Closing Date now existing in favor of the current or former directors, officers and other fiduciaries of the Company (collectively, the “Directors“) as provided as of the date hereof in the Company Operating Agreement or in any contractual indemnification agreements or other indemnification arrangements between the Company and any Director shall survive the transactions contemplated by this Agreement and the Ancillary Agreements and shall continue in full force and effect in accordance with their terms for a period of not less than six years from the Closing Date. The Buyer shall not, and shall cause its Affiliates (including the Company after the Closing) not to, repeal such Contracts or arrangements in any manner that would adversely affect the rights of the Directors thereunder. (b) In the event the Buyer or the Company or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either such case, proper provision shall be made so that the successors and assigns of the Buyer or the Company, as the case may be, shall assume all of the obligations set forth in this Section 6.14 as a condition to the consummation of any such transaction. (c) The obligations of the Buyer under this Section 6.14 shall not be terminated or modified in such a manner as to adversely affect any Director to whom this Section 6.14 applies without the consent of such Director so adversely affected.   55 (d) The Company shall cause to be put in place prior to the Closing, and the Company shall fully prepay immediately prior to the Closing (which expense shall be a Transaction Expense for purposes of this Agreement if not paid prior to Closing), “tail” insurance policies with a claims period of at least six years from the Closing from an insurance carrier with the same or better credit rating as the Company’s current insurance carrier with respect to directors’ and officers’ liability insurance in an amount and scope at least as favorable as the Company’s existing policies with respect to matters, acts or omissions existing or occurring at or prior to the Closing; provided, however, that the Company may elect in its sole discretion to, but shall not be required to, spend more than 300% (the “Cap Amount“) of the last annual premium paid by the Company prior to the date hereof for the six years of coverage under such tail policy; provided, further, that if the cost of such insurance exceeds the Cap Amount, and the Company elects not to spend more than the Cap Amount for such purpose, then the Company shall purchase as much coverage as is obtainable for the Cap Amount. Section 6.15 Additional Listing Application. As promptly as practicable after the date of this Agreement, but in any event after taking into consideration the rules and regulations of the NASDAQ with respect to the timing of the Additional Listing Application (as hereinafter defined) and the supporting documents required to accompany the Additional Listing Application, the Buyer shall submit to the NASDAQ an additional listing application relating to the Aggregate Stock Consideration (the “Additional Listing Application“) and shall use its commercially reasonable efforts to secure the NASDAQ’s approval of the Additional Listing Application, subject to official notice of issuance. Section 6.16 Employee Matters. (a) For purposes of eligibility to participate, vesting, benefit accrual and level of benefits under defined contribution retirement, medical, dental, life insurance, vacation, long-service leave or other leave entitlements, severance or separation pay plans or arrangements that are provided, sponsored, maintained or contributed to by the Buyer or its Affiliates (collectively, “Buyer Benefit Plans”) in which any individual who is an employee of the Company immediately prior to the Closing (each, a “Continuing Employee”) is eligible to participate on or after the Closing Date, the Buyer shall, and shall cause its Affiliates to, recognize all service of such Continuing Employee with the Company and any predecessor employer as if such service were with the Buyer and its Affiliates; provided, however, that such service shall not be recognized to the extent that (i) such recognition would result in a duplication of benefits for the same period of service (ii) such service was not recognized under the corresponding Plan prior to the Closing Date, (iii) such service was with the industry as a whole (as opposed to the Company, any predecessor legal entity, or any entity previously acquired by the Company), or (iv) such service is not set forth on Section 4.11(a) of the Disclosure Schedules, which Sellers shall update and provide to the Buyer as of immediately prior to the Closing. (b) In the event of any change in the group health benefits provided to Continuing Employees in the plan year in which the Closing occurs, the Buyer shall, and shall cause its Affiliates to use commercially reasonable efforts to cause its third party administrators and third party insurance providers to: (i) waive all pre-existing condition limitations, waiting period provisions, payments required to avoid a waiting period, actively-at-work requirements and any other restriction that would prevent immediate or full participation by any Continuing   56 Employee, and (ii) provide full credit for all co-payments, deductibles, and similar payments made by the Continuing Employees prior to the Closing when determining any deductible and maximum out-of-pocket limits under the applicable Buyer Benefit Plans for the plan year in which the Closing occurs. (c) To the extent that any obligations under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Section 2101 et. seq., the regulations and rules thereunder, or under any similar provision of any federal, state, foreign or local law, rule or regulation (collectively, a “WARN Obligation“) arise with respect to any loss of employment by any Continuing Employee on or after the Closing, the Buyer shall be solely responsible for such WARN Obligation. On the Closing Date, the Company shall provide the Buyer with a list of any employment losses by employees of the Company that occurred during the 90-day period ending on the Closing Date that could potentially trigger a WARN Obligation hereunder. (d) This Section 6.16 shall be binding upon and inure solely to the benefit of each of the Parties, and nothing in this Section 6.16, express or implied, shall confer upon any other Person any rights or remedies of any nature whatsoever, including any right to compensation or benefits of any nature or kind, under or by reason of this Section 6.16. Nothing contained herein, express or implied, shall be construed to (i) establish, amend or modify any employee benefit plan or other compensatory plan, program or arrangement, or be deemed to obligate the Buyer or its Affiliates to adopt, enter into or maintain any employee benefit plan or other compensatory plan program or arrangement at any time and no Person shall have any claim or cause of action, under ERISA or otherwise, in respect of any provision of this Agreement as it relates to any such employee benefit plan or otherwise, or (ii) interfere with the right of the Buyer or its Affiliates to terminate the employment of any of the Continuing Employees at any time, with or without cause. Section 6.17 Use of Certain Names. Within fifteen Business Days following Closing, Multi-Shot Holding Corporation shall change its name to a name that does not contain the word “Multi-Shot” or any other Mark set forth on Section 4.14 of the Disclosure Schedules. ARTICLE VII TAX MATTERS Section 7.1 Tax Returns. Following the Closing, the Buyer shall cause to be timely filed all Tax Returns required to be filed by the Company after the Closing Date that relate to taxable periods (or portions thereof) ending on or prior to the Closing Date; provided, that the Sellers Representative shall be responsible for preparing and filing any U.S. federal income tax partnership returns of the Company and any state income tax partnership returns of the Company to the extent neither the Company nor the Buyer would have any liability or potential liability for any Taxes reflected on such returns, in each case to the extent such returns relate to taxable periods (or portions thereof) ending on or prior to the Closing Date. In preparing such Tax Returns, the Transaction Expenses shall be treated as having accrued on or before the Closing Date. The Sellers shall be responsible, severally and not jointly, in accordance with such Seller’s Pro Rata Share, for all Taxes that are shown as due on any such Tax Return (a) relating to any taxable year or other taxable period that ends on or prior to the Closing Date (“Pre-Closing   57 Period“) or (b) attributable to the pre-Closing portion of any taxable period beginning on or before and ending after the Closing Date (a “Straddle Period“). No later than five Business Days prior to the due date of any such Tax Return, each Seller shall pay to the Buyer the amount of Taxes that are its responsibility with respect to such Tax Return under the prior sentence, except to the extent that all or a portion of the amount of such Taxes (together with interest and penalties relating thereto, if any) is reflected in the Closing Net Working Capital as finally determined pursuant to Section 2.4 in a manner that actually reduces the Purchase Price. Except as otherwise required by applicable law, such Tax Returns shall be prepared in accordance with past practices of the Company, and submitted (with copies of any relevant schedules, work papers and other documentation then available) to the Sellers Representative for the Sellers Representative’s approval (which approval shall not be unreasonably withheld, conditioned or delayed) not less than thirty days prior to the due date for the filing of such Tax Return, or, for any Tax Return due to be filed within thirty days after the Closing Date, as soon as practicable after Closing. If the Sellers Representative disputes any item on any Tax Return delivered to it under this Section 7.1, shall notify the Buyer of such disputed item (or items) within fifteen days and shall provide an explanation of the reason for its objection. The Buyer and the Sellers Representative shall act in good faith to resolve any such dispute prior to the date on which the relevant Tax Return is required to be filed. If the Buyer and the Sellers Representative cannot resolve any disputed item, the question shall be resolved by the Independent Accounting Firm, and the fees of the Independent Accounting Firm shall be borne equally by the Seller and the Buyer. If any disputed item has not been resolved by the time a Tax Return is required to be filed, or the Sellers Representative’s period for review and objection to such Tax Return has not expired by the time a Tax Return is required to be filed, the Tax Return shall be filed as prepared by the Buyer, and if the disputed item is resolved thereafter in a manner different than as reflected on such Tax Return, the Buyer shall file an amended Tax Return that reflects such resolution. Section 7.2 Cooperation. The Buyer and the Sellers Representative shall cooperate fully, and shall cause their respective Affiliates to cooperate fully, as and to the extent reasonably requested by either the Buyer or the Sellers Representative, in connection with the filing of Tax Returns pursuant to this Article VII and any audit, litigation or other proceeding (each a “Tax Proceeding“) with respect to such Tax Returns. Such cooperation shall include the retention and (upon the Buyer’s or the Sellers Representative’s request) the provision of records and information which are reasonably relevant to any such Tax Proceeding and making employees available on a mutually convenient basis to hereunder. Section 7.3 Transfer Taxes. In the event that any Transfer Taxes (but, for the avoidance of doubt, not any Taxes based on or measured by income) are payable in connection with this Agreement or the transactions contemplated hereby, the Sellers, severally and not jointly, in accordance with each such Seller’s Pro Rata Share, on the one hand, and the Buyer, on the other hand, shall each be liable for fifty percent of any and all Transfer Taxes. The Sellers Representative and the Buyer agree to cooperate in the execution and delivery of all instruments and certificates reasonably necessary to remit and/or minimize the amount of any Transfer Taxes. If any Seller is required by Law to pay any such Transfer Taxes, the Buyer shall promptly reimburse such Seller within ten days of receipt of written request from such Seller for fifty percent of such Transfer Taxes. If the Buyer is required by Law to pay any such Transfer   58 Taxes, the Sellers, severally and not jointly, in accordance with each such Seller’s Pro Rata Share, shall promptly reimburse the Buyer within ten days of receipt of written request from the Buyer for fifty percent of such Transfer Taxes. The Buyer shall timely file any Tax Returns for Transfer Taxes as required by Law and shall notify the Sellers Representative when such filings have been made. The Sellers Representative and the Buyer shall cooperate and consult with each other prior to filing any Tax Returns for Transfer Taxes to ensure that all such Tax Returns are filed in a consistent manner. Section 7.4 Straddle Period Proration. For purposes of this Agreement, in the case of any Straddle Period, (i) any property Taxes for the portion of the Straddle Period ending on the Closing Date shall be equal to the amount of such property Taxes for such entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the number of days in the Straddle Period; and (ii) all other Taxes for the portion of the Straddle Period ending on the Closing Date shall be determined based on an actual closing of the books used to calculate such Taxes as if such Tax period ended as of the close of business on the Closing Date. In the case of clause (ii), exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions computed as if the Closing Date was the last day of the Straddle Period) shall be allocated between the portion of the Straddle Period ending on the Closing Date and the portion of the Straddle Period thereafter in proportion to the number of days in each such portion. Section 7.5 Pre-Closing Tax Indemnity. Notwithstanding anything to the contrary in this Agreement, except to the extent that Taxes are reflected in the Closing Net Working Capital as finally determined pursuant to Section 2.4 or in the calculation of “Indebtedness” in a manner that actually reduces the Purchase Price, each Seller shall be liable for, and shall pay, and each Seller agrees to indemnify and hold the Buyer and its Affiliates (including the Company) harmless from and against all Pre-Closing Taxes, in each case severally and not jointly, in accordance with such Seller’s Pro Rata Share. Payment by each Seller of any amount due under this Section 7.5 shall be made within ten days following written notice from the Buyer. For the avoidance of doubt, the Sellers’ indemnification obligations under this Section 7.5 shall not be subject to any of the limits on indemnification set forth in Article IX. Section 7.6 Tax Proceedings. With respect to any Tax for which the Sellers are responsible under Section 7.1 or Section 7.5 with respect to a Pre-Closing Period, the Sellers Representative shall have the right, at the Sellers’ sole cost and expense, to control the prosecution, settlement or compromise of any proceeding involving such Tax, provided, however, that to the extent that any such proceeding could reasonably be expected to have an adverse post-Closing impact on the Buyer or the Company (a) the Buyer shall be entitled to participate in any such proceeding at its sole cost and expense if such adverse post-Closing impact is reasonably expected to be material and (b) the Sellers Representative shall not settle or otherwise compromise any such proceeding without the Buyer’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed, if such settlement or compromise will have a material adverse post-Closing impact on the Buyer or on the Company.   59 Section 7.7 Survival. Notwithstanding anything to the contrary in this Agreement, the obligations of Sellers set forth in this Article VII shall survive until sixty days following the expiration of the statute of limitations for the Tax liability in question. ARTICLE VIII CONDITIONS TO CLOSING Section 8.1 General Conditions. The obligation of each party to effect the transactions contemplated by this Agreement and by the Ancillary Agreements is subject to the satisfaction or waiver by all parties at or prior to the Closing of the following conditions: (a) No Injunction or Prohibition. No temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition by any Governmental Authority shall be in effect, and no Law shall have been enacted, entered, promulgated, enforced or deemed applicable by any Governmental Authority that, in any such case, enjoins, restrains, conditions, makes illegal or otherwise prohibits the consummation of the transactions contemplated hereby and by the Ancillary Agreements. (b) HSR Act. Any waiting period (and any extension thereof) under the HSR Act applicable to the transactions contemplated by this Agreement and the Ancillary Agreements shall have expired or shall have been terminated. Section 8.2 Conditions to Obligations of the Sellers. The obligations of the Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by the Sellers Representative in its sole discretion: (a) Representations and Warranties. (i) Each of the representations and warranties of the Buyer set forth in Section 5.1, Section 5.2, Section 5.3(a)(i), Section 5.4, Section 5.5, Section 5.7 and Section 5.8 (the “Buyer Fundamental Representations“) shall be, except for any de minimis inaccuracies, true and correct in all respects as of the date of this Agreement and as of the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case as of such earlier date), and (ii) each of the representations and warranties of the Buyer set forth in this Agreement or any Ancillary Agreement or in any schedule, certificate or other document delivered pursuant hereto or thereto (without giving effect to any qualification by or reference to materiality, material respects or Buyer Material Adverse Effect set forth therein), other than the Buyer Fundamental Representations, shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case as of such earlier date), other than in the case of this clause (ii) for any such failure to be so true and correct as would not have a Buyer Material Adverse Effect.   60 (b) Performance of Obligations of the Buyer. The Buyer shall have performed all obligations and agreements and complied in all material respects with all covenants and conditions required by this Agreement or any Ancillary Agreement to be performed or complied with by it prior to or at the Closing. (c) No Buyer Material Adverse Effect. Since the date hereof, there shall not have occurred any change, event or development that has had Buyer Material Adverse Effect. (d) Officer’s Certificate. The Sellers Representative shall have received from the Buyer a certificate certifying to the matters set forth in Section 8.2(a), Section 8.2(b) and Section 8.2(c), signed by a duly authorized officer of the Buyer. (e) Ancillary Agreements. The Sellers Representative shall have received an executed counterpart of each of the Ancillary Agreements signed by the Buyer. (f) Minimum Aggregate Cash Closing Consideration. The Aggregate Cash Closing Consideration as calculated pursuant to the terms of this Agreement shall be (g) Additional Listing Application. The Additional Listing Application shall have been approved and the Aggregate Stock Consideration shall have been approved for listing on the NASDAQ. Section 8.3 Conditions to Obligations of the Buyer. The obligations of the Buyer to consummate the transactions contemplated by this Agreement shall be subject conditions, any of which may be waived in writing by the Buyer in its sole discretion: warranties of the Sellers and the Company set forth in (A) Section 3.1, Section 3.2, Section 3.3(a)(i) and Section 3.4 (the “Seller Fundamental Representations”) and (B) Section 4.1, Section 4.2, Section 4.3(a)(i), Section 4.3(c), Section 4.4, Section 4.5 and Section 4.25 (the “Company Fundamental Representations”) shall be, except for any de minimis inaccuracies, true and correct in all respects as of the date of this Agreement and as of the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case as of such earlier date), (ii) each of the Agreement or any Ancillary Agreement or in any schedule, certificate or other document delivered pursuant hereto or thereto (without giving effect to any qualification by or reference to materiality, material respects or Material Adverse Effect set forth therein, other than the representations and warranties set forth in Section 4.7(b)), other than the Seller Fundamental Representations, the Company Fundamental Representations and the representations and warranties of the Company in the first sentence of Section 4.12 (Title to Assets), shall be an earlier date, in which case as of such earlier date), other than in the case of this clause (ii) for any such failure to be so true and correct as would not have a Material Adverse Effect, and (iii) the representations and warranties of the Company in the first sentence of Section 4.12 (Title to Assets) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date.   61 (b) Performance of Obligations of the Sellers and the Company. The Sellers and the Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing. (c) No Material Adverse Effect. Since the date hereof, there shall not have occurred any change, event or development that has had a Material Adverse Effect. (d) Officer’s Certificate. The Buyer shall have received from the Company a certificate certifying to the matters set forth in Section 8.3(a), Section 8.3(b) and Section 8.3(c), signed by the Chief Executive Officer of the Company. (e) Consents and Approvals. All authorizations, consents, orders and approvals of Governmental Authorities and officials and third parties listed on Section 8.3(e)1 of the Disclosure Schedules shall have been received and shall be satisfactory in form and substance to the Buyer in its sole discretion. (f) Ancillary Agreements. The Buyer shall have received an executed counterpart of each of the Ancillary Agreements, signed by each party other than the Buyer. (g) Resignations. The Buyer shall have received letters of resignation from the managers of the Company. (h) Tax Certificate. Each Seller shall have delivered to the Buyer a certificate of such Seller dated as of the Closing Date certifying that such Seller is not a foreign person, which certificate complies with the requirements of Section 1445 of the Code and with Section 1.1445-2(b) of the Treasury Regulations promulgated under the Code. (i) Key Employment Agreements. No Key Employee shall have provided notice of his intent not to assume employment pursuant to his Key Employment Agreement as of the Closing Date. ARTICLE IX INDEMNIFICATION Section 9.1 Survival. (a) The representations and warranties of the Sellers, the Company and the Buyer contained in this Agreement and any schedule, certificate or other document delivered pursuant hereto or thereto or in connection with the transactions contemplated hereby shall survive the Closing until the first anniversary of the Closing Date; provided, however, that: (i) the Seller Fundamental Representations, the representations and warranties set forth in Section 4.15 (Taxes) and the Buyer Fundamental Representations shall survive until the expiration of the applicable statute of limitations with respect to the matters subject to such representations and warranties (giving effect to any waiver, mitigation or extension thereof); and   1  NTD: Schedule to include Conroe and Fort Worth leases.   62 (ii) the representations and warranties set forth in Section 4.10 (Employee Benefit Plans), Section 4.11 (Labor and Employment Matters), the first sentence of Section 4.12 (Title to Assets), Section 4.14 (Intellectual Property), Section 4.16 (Environmental Matters) and Section 4.24 (Relations with Governments, etc.; Export Control Matters; Anti-Corruption Matters), the Company Fundamental Representations and the indemnification obligation set forth in Section 9.2(a)(iii)(C) shall survive the closing until the second anniversary of the Closing Date. (b) The respective covenants and agreements of the Sellers, the Company and the Buyer contained in this Agreement shall survive the Closing until the expiration of the statute of limitations following the date all performance thereunder was due to be performed; provided, however, that the covenants of the Company and the Buyer to be performed at or prior to the Closing shall terminate on the second anniversary of the Closing Date. (c) Neither the Sellers nor the Buyer shall have any liability with respect to any representations, warranties, covenants or agreements unless written notice of an actual or threatened claim, or of discovery of any facts or circumstances that the Sellers or the Buyer, as the case may be, reasonably believes may result in a claim, hereunder is delivered to the other party prior to the expiration of the survival period, if any, for such representation, warranty, covenant or agreement, in which case such representation, warranty, covenant or agreement shall survive as to such claim until such claim has been finally resolved, without the requirement of commencing any Action in order to extend such survival period or preserve such claim. (d) This Section 9.1 does not relate to the Ancillary Agreements, the provisions of each of which shall survive in accordance with their terms. (e) Notwithstanding anything to the contrary in the foregoing, nothing in this Section 9.1 will limit or otherwise restrict in any respect any claim for Fraud. (f) In the event of any conflict between this Section 9.1 and Article VII, Article VII shall govern. Section 9.2 Indemnification by the Sellers. (a) From and after the Closing, each Seller, severally and not jointly, in accordance with such Seller’s Pro Rata Share, shall save, defend, indemnify and hold harmless the Buyer and its Affiliates (including the Company) and the respective Representatives, successors and assigns of each of the foregoing (the “Buyer Indemnified Parties”) from and against, and shall reimburse each of the foregoing for, except as otherwise set forth herein, any and all losses, penalties, costs and expenses (including reasonable attorneys’ fees, costs and other out-of-pocket expenses incurred in investigating, preparing or defending the foregoing) (hereinafter collectively, “Losses”), incurred, sustained or suffered by any of the foregoing as a result of, arising out of or relating to: (i) any breach of any representation or warranty made by the Company contained in this Agreement or any schedule, certificate or other document delivered pursuant hereto or in connection with the transactions contemplated hereby or thereby;   63 (ii) any breach of any covenant or agreement of the Company contained in this Agreement that by its terms is to be performed by the Company at or prior to the Closing; and (iii) any (A) Transaction Expenses charged to the Buyer, the Company or any of their Affiliates, (B) Indebtedness incurred by the Company prior to Closing or (C) any Compensation Costs, in each case that shall not have been reflected in the Final Closing Statement. (b) From and after the Closing, each Seller shall be liable for, and shall solely save, defend, indemnify and hold harmless the Buyer Indemnified Parties from and against any and all Losses asserted against, incurred, sustained or and shall compensate and reimburse each of the foregoing for: (i) any breach of any representation or warranty made by such Seller in Article III; and (ii) any breach of any covenant or agreement of such Seller contained in this Agreement. Section 9.3 Indemnification by the Buyer. From and after the Closing, the Buyer shall save, defend, indemnify and hold harmless each Seller and its Affiliates, and their respective Representatives, successors and assigns of each of the foregoing (the “Seller Indemnified Parties”) from and against, and shall reimburse each of the foregoing for, except as otherwise set forth herein, any and all Losses incurred, sustained or suffered by any of the foregoing as a result of, arising out of or relating to: (a) any breach of any representation or warranty made by the Buyer contained in this Agreement or any schedule, certificate or other document delivered pursuant hereto or in connection with the transactions contemplated hereby or thereby; and (b) any breach of any covenant or agreement by the Buyer contained in this Agreement. Section 9.4 Procedures. (a) A party seeking indemnification (the “Indemnified Party”) in respect of, arising out of or involving a Loss or a claim or demand made by any person against the Indemnified Party (a “Third Party Claim”) shall deliver notice thereof (a “Claim Notice”) to the Sellers (by means of delivery to the Sellers Representative) or the Buyer, as applicable (the Sellers or the Buyer in such case are referred to herein as the “Indemnifying Party”) with reasonable promptness after receipt by such Indemnified Party of notice of the Third Party Claim, and shall provide the Indemnifying Party with such information with respect thereto as the Indemnifying Party may reasonably request; provided, however, that with respect to any claim for which any Seller may be liable as an Indemnifying Party under Section 9.2(b), any such Claim Notice shall be delivered to such Seller (as opposed to the Sellers Representative) and such Seller shall have the rights and obligations of an Indemnifying Party described in this Section 9.4. The failure to deliver a Claim Notice, however, shall not release the Indemnifying Party from any of its obligations under this Article IX except to the extent that the Indemnifying Party is materially prejudiced by such failure.   64 (b) If an Indemnified Party delivers a Claim Notice in respect of a Third Party Claim, the Indemnifying Party shall be entitled to participate in the defense of such Third Party Claim. If the Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party against any and all Losses that may result from a Third Party Claim that is exclusively for civil monetary damages at law pursuant to the terms of this Agreement, the Indemnifying Party shall have the right, upon written notice to the Indemnified Party within 30 days of receipt of a Claim Notice from the Indemnified Party in respect of such Third Party Claim, to assume the defense of such Third Party Claim; provided, however, the Indemnifying Party shall not be entitled to assume the defense of any such Third Party Claim if the reasonably likely Loss related to such Third with respect to such Third Party Claim unless first consented to in the sole discretion of the Indemnified Party. For the avoidance of doubt, the Indemnifying Party shall not be entitled to assume the defense of any Third Party Claim to the extent equitable or permanent injunctive relief is sought by such Third Party Claim or such Third Party Claim would impose criminal liability on any Indemnified Party, and the Indemnified Party shall have the right to defend, at the expense of the Indemnifying Party, any such Third Party Claim. If the Indemnifying Party elects to assume the defense of any Third Party Claim, the Indemnified Party shall cooperate with the Indemnifying Party with respect thereto, including, upon reasonable request and at the expense of the Indemnifying Party, providing access to information, making documents available for inspection and copying and making employees available for interviews, depositions and trial. (c) If the Indemnifying Party elects to assume the defense of a Third Party Claim, then: (i) the Indemnified Party shall have the right to employ separate counsel and to shall be at the expense of the Indemnified Party unless (A) the employment of such counsel shall have been specifically authorized in writing by the Indemnifying Party or (B) the named parties to the Third Party Claim (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party reasonably determines that representation by counsel to the Indemnifying Party of both the Indemnifying Party and the Indemnified Party may present such counsel to the Indemnified Party with a conflict of interest; and (ii) the Indemnified Party shall make reasonably available to the Indemnifying Party all pertinent books, records and other documents and materials in the Indemnified Party’s possession or under its or its Affiliates’ control as are reasonably required by the Indemnifying Party for the defense of such Third Party Claim, and shall execute such documents and use commercially reasonable efforts to take such other actions as the Indemnifying Party may reasonably request for the purpose of facilitating the defense of, or any settlement, compromise or adjustment relating to, such Third Party Claim, and shall otherwise cooperate as reasonably requested by Indemnifying Party in the defense of such Third Party   65 Claim; provided that notwithstanding anything herein to the contrary, if the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnifying Party shall not, without the prior written consent of the Indemnified Party, enter into any settlement or compromise or consent to the entry of any judgment with respect to such Third Party Claim if such settlement, compromise or judgment (A) involves a finding or admission of criminal wrongdoing, (B) does not include an unconditional written release by the claimant or plaintiff of the Indemnified Party and its Affiliates from all liability in respect of such Third Party Claim or (C) imposes equitable remedies or any obligation on the Indemnified Party or any of its Affiliates other than solely the payment of money damages for which the Indemnified Party and its Affiliates will be indemnified hereunder. (d) An Indemnified Party seeking indemnification in respect of, arising out of or involving a Loss or a claim or demand hereunder that does not involve a Third Party Claim being asserted against or sought to be collected from such Indemnified Party (a “Direct Claim”) shall deliver a Claim Notice in respect thereof to the Indemnifying Party with reasonable promptness after becoming aware of facts supporting such Direct Claim, and shall provide the Indemnifying Party with such information with respect thereto as the Indemnifying Party may reasonably request. The failure to deliver a Claim Notice, however, shall not such failure and shall not relieve the Indemnifying Party from any other obligation or liability that it may have to the Indemnified Party or otherwise than pursuant to this Article IX. (e) Notwithstanding the provisions of Section 11.9, each Indemnifying Party hereby consents to the nonexclusive jurisdiction of any court in which an Action in respect of a Third Party Claim is brought against any Indemnified Party for purposes of any claim that an Indemnified Party may have under this Agreement with respect to such Action or the matters alleged therein and agrees that process may be served on each Indemnifying Party with respect to such claim anywhere. Section 9.5 Limits on Indemnification. Notwithstanding anything to the contrary contained in this Agreement (other than Article VII): (a) an Indemnifying Party shall not be liable for any claim for indemnification pursuant to Section 9.2(a)(i), Section 9.2(b)(i) or Section 9.3(a) for any Losses relating to or arising out of any individual event, matter or occurrence, or series of related events, matters or occurrences, unless and until the aggregate amount of such Losses exceeds $50,000 (and any such Losses relating to or arising out of any individual event, matter or occurrence, or series of related events, matters or occurrences for an amount less than or equal to $50,000 shall not be considered “Losses” for purposes of this Agreement and shall be excluded from the calculation of Losses for purposes of determining whether or not Losses exceeding the Deductible has occurred for purposes of Section 9.5(b), but the amount of any Losses relating to or arising out of any individual event, matter or occurrence, or series of related events, matters or occurrences for an amount greater than $50,000 shall be considered Losses for their full amount), (b) an Indemnifying Party shall not be liable for any claim for indemnification pursuant to Section 9.2(a)(i), Section 9.2(b)(i) or Section 9.3(a) unless and until the aggregate amount of indemnifiable Losses for claims which may be recovered from the Indemnifying Party under Section 9.2(a)(i), Section 9.2(b)(i) and Section 9.3(a) exceeds $1,500,000 (the “Deductible”), in which case the Indemnifying Party shall be liable   66 only for the amount of such Losses in excess thereof, and (c) the maximum aggregate amount of indemnifiable Losses which may be recovered from an Indemnifying Party arising out of or relating to the causes set forth in Section 9.2(a)(i), Section 9.2(a)(ii), Section 9.2(a)(iii)(C), Section 9.2(b)(i) and Section 9.3(a) shall be an amount equal to $25,000,000, provided, that the foregoing clauses (a)-(c) shall not apply to Losses arising out of or relating to the inaccuracy or breach of any Buyer Fundamental Representation, any Seller Fundamental Representation, any Company Fundamental Representation, the first sentence of Section 4.12 (Title to Assets) or Section 4.15 (Taxes), or to any claim for Fraud. For purposes of this Section 9.5, the amount of indemnifiable Losses recovered by the Buyer with respect to any distribution of Indemnity Escrow Shares to the Buyer from the Indemnity Escrow Fund shall be deemed to equal (x) the Price Per Share multiplied by (y) the number of Indemnity Escrow Shares distributed to the Buyer from the Indemnity Escrow Fund. The amount of any and all Losses under this Article IX shall be determined net of (i) any net Tax benefit actually realized (including as the result of any refund, deduction or credit) by the Indemnified Party or any of its Affiliates as a result of such Losses in the year of the applicable Loss or in the following year and (ii) any insurance or other recoveries actually received by the Indemnified Party or its Affiliates in connection with the facts giving rise to the right of indemnification, less any costs incurred to recover such amounts and any increase in premiums resulting from such claim. Section 9.6 Remedies Not Affected by Investigation, Disclosure or Knowledge. If the transactions contemplated hereby are consummated, the Buyer expressly reserves the right to seek indemnification for any Losses arising out of or relating to any breach of any representation, warranty or covenant contained herein, notwithstanding any investigation by, disclosure to, knowledge or imputed knowledge of the Buyer or any of its Representatives in respect of any fact or circumstance that reveals the occurrence of any such breach, whether before or after the execution and delivery hereof. In furtherance of the foregoing, the Sellers agree that knowledge or lack of reliance shall not be a defense in law or equity to any claim of any breach by the Sellers or the Company of any representation, warranty or covenant of the Sellers or the Company herein. Section 9.7 Materiality Qualifications. Both for purposes of determining breach and for calculating the amount of any Loss arising from a breach of any representation or warranty subject to indemnification under Section 9.2(a)(i) or Section 9.2(b)(i) (other than the representations and warranties set forth in Sections 4.6, 4.7(b), 5.10 and 5.11), all “material,” “materially,” “in all material respects,” “Material Adverse Effect,” and other like qualifications shall be disregarded (including any such qualification included in any schedule, certificate or other document delivered pursuant hereto and in any representations or warranties subject to any such schedule, certificate or other document). Section 9.8 Indemnity Escrow Fund. (a) The Indemnity Escrow Shares shall be the sole and exclusive source of recovery for the Buyer Indemnified Parties with respect to the Sellers’ indemnification obligations under Section 9.2(a)(i), Section 9.2(a)(ii), Section 9.2(a)(iii)(C) and Section 9.2(b)(i), other than with respect to claims for Losses as a result of, arising out of or relating to a breach of the Seller Fundamental Representations, the Company Fundamental Representations or the first sentence of Section 4.12 (Title to Assets) or to any claim for Fraud. To the extent that a Seller is   67 required to make an indemnification payment pursuant to Section 7.5 or this Article IX, the first method of satisfaction of such payment, and the initial recourse to recover for such indemnification payment, shall be the release of Indemnity Escrow Shares in the Indemnity Escrow Fund in the manner provided in this Section 9.8 and the Escrow Agreement; and then, to the extent any amounts remain owing (subject to the limitations contained in this Article IX), such amounts shall be payable directly by the applicable Seller in cash. The Indemnity Escrow Shares to be deposited into the Indemnity Escrow Fund will be issued in the names of the Sellers, whether in book-entry or certificated form, with each Seller being issued such Seller’s Pro Rata Share of the Indemnity Escrow Shares. Whenever any disbursement of Indemnity Escrow Shares is made, such disbursement shall be comprised of Indemnity Escrow Shares registered in the name of the Seller that is required to satisfy an indemnity obligation or entitled to take receipt of such Indemnity Escrow Shares, as applicable, and in each case pursuant to this Article IX and the Escrow Agreement. Notwithstanding anything herein to the contrary, no fractional Buyer Common Shares shall be disbursed from the Indemnity Escrow Fund, and, to the extent that any such fractional security would be required to be so disbursed but for this sentence, such fractional security shall be rounded up or down to the nearest whole number of the applicable securities.2 (b) Anything in this Article IX to the contrary notwithstanding, the rights and obligations of the parties with respect to indemnification for any and all Tax matters shall be governed by Article VII to the extent this Article IX is inconsistent with Article VII. Section 9.9 No Double Recovery. Notwithstanding the fact that any Indemnified Party may have the right to assert claims for indemnification under or in respect of more than one provision of this Agreement in respect of any fact, event, condition or circumstance, no Indemnified Party shall be entitled to recover the amount of any Losses suffered by such Person more than once, regardless of whether such Losses may be as a result of a breach of more than one representation or warranty or covenant. Notwithstanding anything to the contrary, any item included in the calculation of Closing Net Working Capital, Closing Transaction Expenses or Closing Indebtedness, in each case, that resulted in an actual reduction to the Purchase Price or was otherwise accrued as a specific payable, reserve or expense on the Closing Balance Sheet shall not, to the extent of such reduction or accrual, form the basis for a claim for Section 9.10 Exclusive Remedy; Waiver. (a) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IF THE CLOSING OCCURS AND EXCEPT (I) AS PROVIDED IN THIS ARTICLE IX OR (II) IN THE CASE OF FRAUD, NO PARTY SHALL HAVE ANY LIABILITY, AND NO PARTY SHALL MAKE ANY CLAIM, FOR ANY LOSS OR OTHER MATTER (AND THE PARTIES HEREBY WAIVE ANY RIGHT OF CONTRIBUTION AGAINST EACH OTHER AND THEIR RESPECTIVE AFFILIATES), UNDER, ARISING   2  Buyer Note: Escrow distribution mechanic to be reflected in the Escrow Agreement. Escrow Agreement to provide for 50% of the Indemnity Escrow Shares (less any shares reserved for disputed claims and any amounts previously released to satisfy indemnity claims) to be released on the first anniversary of the Closing Date and the remaining Indemnity Escrow Shares (less any shares reserved for disputed claims) to be released on the second anniversary of the Closing Date.   68 OUT OF OR RELATING TO THIS AGREEMENT, ANY CERTIFICATE DELIVERED PURSUANT TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, ENVIRONMENTAL OR OTHER LAWS OR OTHERWISE. (b) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PARTY SHALL BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES OR DAMAGES BASED UPON DIMINUTION OF VALUE, EXCEPT TO THE EXTENT, WITH RESPECT TO SPECIAL OR CONSEQUENTIAL DAMAGES OR DAMAGES BASED UPON DIMINUTION IN VALUE, THEY ARE THE NATURAL AND REASONABLY FORESEEABLE RESULT OF THE RELATED BREACH, PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION 9.10(B) SHALL PREVENT A PARTY FROM RECOVERING ANY SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES PAYABLE TO A THIRD PARTY IN CONNECTION WITH A THIRD-PARTY CLAIM. Section 9.11 Mitigation. To the extent required by Law, the Buyer Indemnified Parties and the Seller Indemnified Parties, as the case may be, will use commercially reasonable efforts to mitigate Losses that, if and to the extent not mitigated, would be indemnifiable under this Article IX. Section 9.12 Independent Investigation. (a) THE BUYER ACKNOWLEDGES AND AGREES THAT: (I) THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE III AND ARTICLE IV OR ANY SCHEDULE, CERTIFICATE OR OTHER DOCUMENT DELIVERED PURSUANT HERETO CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES BY THE SELLERS AND THE COMPANY IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; (II) EXCEPT FOR SUCH REPRESENTATIONS AND WARRANTIES, THERE ARE NO REPRESENTATIONS OR WARRANTIES OF ANY SELLER OR THE COMPANY REGARDING ANY SELLER OR THE COMPANY; AND (III) THE BUYER HAS CONDUCTED AND RELIED UPON (AMONG OTHER THINGS), ITS OWN INDEPENDENT REVIEW AND ANALYSIS OF THE BUSINESS, OPERATIONS, ASSETS, LIABILITIES, RESULTS OF OPERATIONS, FINANCIAL CONDITION, TECHNOLOGY AND PROSPECTS OF THE COMPANY AND HAS BEEN PROVIDED ADEQUATE ACCESS TO PERSONNEL, PROPERTIES, PREMISES AND RECORDS OF THE COMPANY FOR SUCH PURPOSE. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE III AND ARTICLE IV OR ANY SCHEDULE, CERTIFICATE OR OTHER DOCUMENT DELIVERED PURSUANT HERETO, EACH SELLER DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR (AND THE BUYER DISCLAIMS ANY RELIANCE ON) ANY REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO THE BUYER OR ANY OTHER PERSON OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING WITH RESPECT TO THE DISTRIBUTION OF, OR ANY PERSON’S RELIANCE ON, ANY INFORMATION OR OTHER MATERIAL MADE AVAILABLE TO THE BUYER OR ANY OF ITS   69 REPRESENTATIVES IN ANY DATA ROOM, ELECTRONIC DATA ROOM, MANAGEMENT PRESENTATION OR IN ANY OTHER FORM IN EXPECTATION OF, OR IN CONNECTION WITH, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE ANCILLARY AGREEMENTS). (b) EACH SELLER ACKNOWLEDGES AND AGREES THAT: (I) THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE V OR ANY SCHEDULE, CERTIFICATE OR OTHER DOCUMENT DELIVERED BY THE BUYER PURSUANT HERETO CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES BY THE BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; (II) EXCEPT FOR SUCH REPRESENTATIONS AND WARRANTIES, THERE ARE NO REPRESENTATIONS OR WARRANTIES OF THE BUYER REGARDING THE BUYER; AND (III) SUCH SELLER HAS CONDUCTED AND RELIED UPON (AMONG OTHER THINGS), ITS OWN INDEPENDENT REVIEW AND ANALYSIS OF THE BUSINESS, OPERATIONS, ASSETS, LIABILITIES, RESULTS OF OPERATIONS, FINANCIAL CONDITION, TECHNOLOGY AND PROSPECTS OF THE BUYER AND HAS BEEN PROVIDED ADEQUATE ACCESS TO PERSONNEL, PROPERTIES, PREMISES AND RECORDS OF THE BUYER FOR SUCH PURPOSE. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE V OR ANY SCHEDULE, CERTIFICATE OR OTHER DOCUMENT DELIVERED BY THE BUYER PURSUANT HERETO, THE BUYER DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR (AND EACH SELLER DISCLAIMS ANY RELIANCE ON) ANY REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO THE SELLERS OR ANY OTHER PERSON OR ITS AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING WITH RESPECT TO THE DISTRIBUTION OF, OR ANY PERSON’S RELIANCE ON, ANY INFORMATION OR OTHER MATERIAL MADE AVAILABLE TO THE BUYER OR ANY OF ITS REPRESENTATIVES IN ANY DATA ROOM, ELECTRONIC DATA ROOM, MANAGEMENT PRESENTATION OR IN ANY OTHER FORM IN EXPECTATION OF, OR IN CONNECTION WITH, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE ANCILLARY AGREEMENTS). ARTICLE X TERMINATION Section 10.1 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by mutual written consent of the Buyer and the Sellers Representative; (b) (i) by the Sellers Representative, if no Seller or the Company is then in material breach of its obligations under this Agreement and the Buyer breaches or fails to perform in any respect any of its representations, warranties or covenants contained in this Agreement and such breach or failure to perform (A) would give rise to the failure of a condition set forth in Section 8.2, (B) cannot be or has not been cured within 15 days following delivery to the Buyer of written notice of such breach or failure to perform and (C) has not been waived by the Sellers   70 Representative or (ii) by the Buyer, if the Buyer is not then in material breach of its obligations under this Agreement and any Seller or the Company breaches (A) would give rise to the failure of a condition set forth in Section 8.3, Sellers Representative of written notice of such breach or failure to perform and (C) has not been waived by the Buyer; (c) by either the Sellers Representative or the Buyer if the Closing shall not have occurred by November 3, 2017; provided, that the right to terminate this Agreement under this Section 10.1(c) shall not be available if the failure of the party so requesting termination to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date; (d) by either the Sellers Representative or the Buyer in the event that any Governmental Authority shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; provided, that the party so requesting termination shall have used its commercially reasonable efforts, in accordance with Section 6.8, to have such order, decree, ruling or other action vacated; (e) by the Buyer, if between the date hereof and the Closing, an event or condition occurs that has had a Material Adverse Effect; or (f) by the Sellers Representative, if between the date hereof and the Closing, an event or condition occurs that has had a Buyer Material Adverse Effect. The party seeking to terminate this Agreement pursuant to this Section 10.1 shall give prompt written notice of such termination to the other party. Section 10.2 Effect of Termination. In the event of termination of this Agreement as provided in Section 10.1, this Agreement shall forthwith become void and there shall be no liability on the part of either party except (a) for the provisions of Section 6.7 relating to confidentiality, Section 6.10 relating to public announcements, this Section 10.2 and Article XI shall survive the termination hereof and (b) that nothing herein shall relieve either party from liability for any breach of this Agreement or from fraud, in which case the non-breaching party shall be entitled to all rights and remedies available at ARTICLE XI GENERAL PROVISIONS Section 11.1 Fees and Expenses. Except as otherwise provided herein, all fees and expenses incurred in connection with or related to this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby shall be paid by the party incurring such fees or expenses, whether or not such transactions are consummated; provided, that if the transactions contemplated hereby are consummated, Transaction Expenses shall be borne and paid as provided in this Agreement. In the event of termination of this Agreement, the obligation of each party to pay its own expenses will be subject to any rights of such party arising from a breach of this Agreement by the other.   71 Section 11.2 Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each party. Section 11.3 Waiver. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. Any agreement on the part of either party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party. Section 11.4 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by e-mail, upon written confirmation of receipt by e-mail or otherwise, (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:     (i) if to the Sellers or the Company, in each case prior to the Closing, to: Multi-Shot, LLC 3335 Pollok Drive Conroe, TX 77303 Attention: Allen R. Neel E-mail: [email protected] Multi-Shot Holding Corporation 600 Travis Street, Suite 2310 Houston, TX 77002 Attention: Paul Winters E-mail: [email protected] NGP MS Holdings, LLC 5221 N. O’Connor Blvd. Suite 1100 Irving, TX 75039 Attention: General Counsel Email: [email protected]   72 1001 Fannin St. Suite 2500 Houston, TX 77002 Attention: W. Matthew Strock Email: [email protected]     (ii) if to the Buyer, to: Patterson-UTI Energy, Inc. 10713 W. Sam Houston Pkwy N, Suite 800 Houston, Texas 77064 Attention: General Counsel E-mail: [email protected] 1221 McKinney Street, 37th Floor Houston, Texas 77010-2046 Attention: Tull R. Florey Email: [email protected]     (iii) if to the Sellers Representative, or, after the Closing, to the Sellers, to: MS Incentive Plan Holdco, LLC c/o NGP MS Holdings, LLC Suite 1100 Irving, TX 75039 Attention: General Counsel and c/o Multi-Shot Holding Corporation Houston, TX 77002 Attention: Paul Winters 1001 Fannin St. Suite 2500 Houston, TX 77002   73 Section 11.5 Interpretation. When a reference is made in this Agreement to a Section, Article, Exhibit or Schedule such reference shall be to a Section, Article, Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Exhibit or Schedule are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. The word “will” References to days mean calendar days unless otherwise specified. References to documents or other materials “provided” or “made available” to Buyer shall mean that such documents or other materials were present at least two Business Days prior to the date of this Agreement in the on-line data room maintained by the Sellers and the Company for purposes of the transactions contemplated herein and accessible by Buyer. Any item or matter disclosed or listed on any particular Disclosure Schedule is deemed to be disclosed or listed on any other Disclosure Schedule to the extent it is reasonably apparent that such item relates or is applicable to, or is properly disclosed under, such other Disclosure Schedule or the section of this Agreement to which such other Disclosure Schedule corresponds, notwithstanding the fact that the Disclosure Schedules are arranged to correspond to the sections of this Agreement, that a particular section of this Agreement makes reference to a particular Disclosure Schedule, or that a particular representation, warranty or covenant in this Agreement may not make reference to a Disclosure Schedule. Section 11.6 Entire Agreement. This Agreement (including the Exhibits and Schedules hereto), the Ancillary Agreements and the Confidentiality Agreement constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings Notwithstanding any oral agreement or course of conduct of the parties or their Representatives to the contrary, no party to this Agreement shall be under any legal obligation to enter into or complete the transactions contemplated hereby unless and until this Agreement shall have been executed and delivered by each of the parties. Section 11.7 No Third-Party Beneficiaries. Except as provided in Section 6.5 and Article IX, nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement.   74 Section 11.8 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Texas, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Texas. Section 11.9 Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its successors or assigns against the other party shall be brought and determined any Texas state or federal court sitting in Harris County, Texas (or, if such court lacks subject matter jurisdiction, in any appropriate Texas state or federal court), and each of the parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above in Texas, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Texas as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Texas as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Notwithstanding the foregoing, the parties agree that disputes with respect to the matters referenced in Section 2.4 shall be resolved by the Independent Accounting Firm as provided therein. Section 11.10 Assignment; Successors. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by either party without the prior written consent of the other party, and any such assignment without such prior written consent shall be null and void; provided, however, that (i) the Buyer may assign this Agreement to any Affiliate of the Buyer without the prior consent of the Seller and (ii) one or more Sellers may assign their respective rights, interests or obligations under this Agreement to the Seller Representative; provided further, that no assignment shall relieve or limit the assignor’s obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. Section 11.11 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to   75 prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Texas state or federal court sitting in Harris County, Texas (or, if such court lacks subject matter jurisdiction, in any appropriate Texas state or federal court), this being in addition to any other remedy to which such party is entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any law to post security as a prerequisite to obtaining equitable relief. Section 11.12 Currency. All references to “dollars” or “$” or “US$” in this Agreement or any Ancillary Agreement refer to United States dollars, which is the currency used for all purposes in this Agreement and any Ancillary Agreement. Section 11.13 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such or portion of any provision in such jurisdiction, and this Agreement shall be illegal or unenforceable provision or portion of any provision had never been contained herein. Section 11.14 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Section 11.15 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party. Section 11.16 Facsimile or .pdf Signature. This Agreement may be executed by facsimile or .pdf signature and a facsimile or .pdf signature shall constitute an original for all purposes. Section 11.17 Time of Essence. Time is of the essence with regard to all dates and time periods set forth or referred to in this Agreement. Section 11.18 No Presumption Against Drafting Party. The Buyer and each of the Sellers acknowledges that each party to this Agreement has been represented by legal counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.   76 Section 11.19 Role of Vinson & Elkins L.L.P.; Waiver of Conflicts and Privilege. (a) Each of the parties acknowledges and agrees that in connection with the matters related to this Agreement, Vinson & Elkins L.L.P. solely represented the Company and did not represent any officer, employee or director of the Company individually. (b) The Buyer waives and will not assert, and agrees to cause the Company to waive and to not assert, any conflict of interest arising out of or relating to the potential representation, after the Closing (the “Post-Closing Representation”), of any Seller or any officer, employee, director or manager of any Seller or the Company (any such Person, a “Designated Person”) in any matter involving this Agreement or the transactions contemplated hereby, by any legal counsel (including Vinson & Elkins L.L.P.) currently representing the Company in connection with this Agreement or the transactions contemplated by the Ancillary Agreements (the “Current Representation”). (c) The parties agree that, following the Closing, with respect to any communication between any legal counsel (including Vinson & Elkins L.L.P.) or other advisor, on the one hand, and any Seller, the Company or any Designated Person or their respective Affiliates, on the other hand, occurring during the Current Representation in connection with this Agreement, the Ancillary Agreement or the transactions contemplated hereby or thereby (collectively, the “Privileged Communications”), the attorney-client privilege and expectation of client confidence shall be exclusively vested in and belong to, and may controlled exclusively by, the Sellers and shall not pass to or be claimed by the Buyer or the Company. Accordingly, following the Closing, (i) the Buyer and the Company will not have access to any such communications or the files of any such legal counsel or other advisor relating to the Current Representation, (ii) to the extent such files constitute property of the client during the Current Representation, only the Sellers (and not the Company) shall hold such property rights, (iii) such legal counsel or other advisor shall have no duty to reveal or disclose any such Privileged Communications to Buyer or the Company by reason of any Post-Closing Representation, (iv) Sellers may use the Privileged Communications in any dispute that relates in any way to this Agreement, the Ancillary Agreement or the transactions contemplated hereby or thereby (including in any claim for indemnification brought by the Buyer or its Representatives) and (v) neither the Buyer nor the Company may use or rely on any of the Privileged Communications in any action against or involving any of the parties or seek to obtain such communications (whether by seeking a waiver of the attorney-client privilege or through other means). The Buyer waives and will not assert, and agrees to cause the Company to waive and to not assert, any attorney-client privilege in connection with any Post-Closing Representation relating to the Current Representation, including in connection with a dispute with the Buyer and, following the Closing, with the Company. Notwithstanding the foregoing, in the event that a dispute arises after Closing between Buyer or the Company, on the one hand, and a third party (other than a party to this Agreement), on the other hand, the Company may assert the attorney-client privilege to prevent disclosure of Privileged Communications by counsel to such third party; provided that the Company may not waive such privilege without the prior written consent of the Sellers Representative.   77 the date first written above by their respective officers thereunto duly authorized.   BUYER PATTERSON-UTI ENERGY, INC. By:   /s/ John E. Vollmer III   Name: John E. Vollmer III   Title: Executive Vice President-Corporate             Development, Chief Financial Officer           and Treasurer   COMPANY MULTI-SHOT, LLC By:   /s/ Allen R. Neel   Name: Allen R. Neel   Title: Chairman & CEO SELLERS   /s/ ALLEN NEEL   ALLEN NEEL   /s/ PAUL CULBRETH   PAUL CULBRETH   /s/ RON WHITTER   RON WHITTER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT MULTI-SHOT HOLDING CORPORATION By:   /s/ Geer Blolock   Name: Geer Blalock   Title: Vice President NGP MS HOLDINGS, LLC By: NGP X US HOLDINGS, L.P., its managing member By: NGP X HOLDINGS GP, L.L.C., its general partner By:   /s/ Richard L. Covington   Name: Richard L. Covington   Title: Authorized Signatory SELLERS REPRESENTATIVE MS INCENTIVE PLAN HOLDCO, LLC By:     Name: Allen R. Neel   Title: Authorized Person   Exhibit A Form of Escrow Agreement ESCROW AGREEMENT ESCROW AGREEMENT, dated as of [            ], 2017 (this “Agreement”), among Patterson-UTI Energy, Inc., a Delaware corporation (the “Buyer”), MS Incentive Plan Holdco, LLC, a Delaware limited liability company (the “Sellers Representative”), and Continental Stock Transfer & Trust Company, a corporation having an office at 17 Battery Place, New York, New York (the “Escrow Agent” and, together with the Buyer and Sellers Representative, the “Parties”). RECITALS   A. In connection with the Securities Purchase Agreement, dated September 4, 2017, (the “Purchase Agreement”), among the Buyer, Multi-Shot, LLC, a Texas limited liability company (the “Company”), the holders of limited liability company interests of the Company a party thereto (collectively, the “Sellers”) and the Sellers Representative, the Sellers agreed to sell to the Buyer, and the Buyer agreed to purchase from the Sellers, 100% of the issued and outstanding limited liability company interests of the Company.   B. Pursuant to Section 2.2(b)(ii) of the Purchase Agreement, the Parties agreed to enter into this Agreement with respect to the Escrowed Shares (as defined below). NOW THEREFORE in consideration of the premises and mutual agreements and covenants herein contained, and other good and valuable consideration, the follows: ARTICLE 1 DEFINITIONS   1.1 Definitions Capitalized terms used herein shall, unless indicated otherwise herein, have the same meanings as are ascribed to them in the Purchase Agreement. ARTICLE 2 APPOINTMENT OF ESCROW AGENT   2.1 Appointment of Escrow Agent The Buyer and the Sellers Representative, on behalf of the Sellers, hereby appoint the Escrow Agent to act as escrow agent for the purposes and on the terms and conditions set forth in this Agreement and the Escrow Agent accepts such appointment on such terms and conditions.   - 1 - ARTICLE 3 PROVISIONS RELATING TO ESCROWED SHARES   3.1 Delivery of Escrowed Shares Pursuant to the terms of the Purchase Agreement, concurrently with the execution of this Agreement the Buyer is depositing 1,256,913 Buyer Common Shares (the “Escrowed Shares”) with the Escrow Agent to be held by the Escrow Agent pursuant to and in accordance with the provisions of the Purchase Agreement and this Agreement. For the purposes of the foregoing, the Sellers Representative hereby directs that the Escrowed Shares be registered in the name of “CONTINENTAL STOCK TRANSFER & TRUST, AS ESCROW AGENT UNDER THE ESCROW AGREEMENT DATED [•], 2017”. The Escrow Agent hereby acknowledges that the Escrowed Share Amount (as defined below) is held in trust for the benefit of the Sellers.   3.2 Set-off Against Escrow Amount The Buyer and the Sellers Representative hereby agree that:     (a) the Buyer shall be entitled to, through the release of the Escrowed Shares to the Buyer and cancellation thereof and/or the release to the Buyer of amounts in respect of the Cash Portion (as defined below) (the Escrowed Shares and the Cash Portion together, the “Escrowed Share Amount”), any amounts that the Buyer is entitled to recover from the Sellers pursuant to the Purchase Agreement provided such amounts are mutually agreed to or finally determined in accordance with the Purchase Agreement;     (b) if the Buyer is entitled to recover any portion of the Escrowed Share Amount in accordance with the Purchase Agreement, then the Buyer and the Sellers Representative shall authorize and direct the Escrow Agent to return to the Buyer out of the Escrowed Share Amount (if there are sufficient Escrowed Shares or Cash Portion remaining to do so and until the Escrowed Share Amount is exhausted), the amount of the award or agreed amount payable to the Buyer as a set-off against Losses; provided, however, that in no event shall Buyer be entitled to recover any portion of the Escrowed Share Amount with respect to indemnity obligations of a Seller in excess of such Seller’s Pro Rata Share (as defined in the Purchase Agreement) of the Escrowed Share Amount;     (c) for the purposes of any release and cancellation of Escrowed Shares pursuant to the mechanics described in Section 3.2(a), the Buyer and the Sellers Representative agree that each Escrowed Share shall be valued at a price of $19.89 per share;     (d) any fractional Escrowed Shares released from escrow pursuant to the terms of this Agreement shall be rounded up or down, as applicable, to the nearest whole share; and   - 2 -   (e) the Buyer and the Sellers Representative shall direct the Escrow Agent in the performance of its duties hereunder in order to give effect to this Section 3.2.   3.3 Protection of Escrowed Share Amount     (a) The Escrow Agent shall hold, safeguard and deliver the Escrowed Share Amount in accordance with the terms of this Agreement.     (b) Should any cash form part of the Escrowed Share Amount (the “Cash Portion”) as a result of the terms of this Agreement, including pursuant to Section 3.7, the Escrow Agent shall cause the Cash Portion to be deposited in an account with a bank in accordance with its practices for handling trust funds, provided that any such bank shall have capital and surplus of at least $500,000,000. The interest earned on the investment of the Cash Portion, if any, shall be held and reinvested from time to time in accordance with the foregoing provisions. Except as otherwise provided in this Section 3.3(b), the Party entitled to the Escrowed Share Amount or any part thereof in accordance with the provisions of the Purchase Agreement shall also be entitled to the interest earned on the Cash Portion, or such part thereof, as the case may be. The Parties agree that the Buyer shall be treated as the owner of the Cash Portion for income tax purposes, and will report all income, if any, that is earned on, or derived from, the Cash Portion, as the income of the Buyer in the taxable year in which income is properly includable. The Buyer shall be responsible for paying taxes on all income earned on the Cash Portion and for filing all necessary tax returns with respect to such income. The Buyer may, at any time and from time to time prior to the release of the Escrow Share Amount in accordance with Section 3.4, by written notice to the Escrow Agent with a copy to the Sellers Representative specify the amount (the “Tax Amount”) of any taxes reasonably anticipated to be paid by the Buyer in respect of income earned on, or derived from, the Cash Portion (without duplication to any taxes the Buyer previously gave notice of and received payment for hereunder), and the Escrow Agent shall within ten Business Days following receipt thereof pay to the Buyer out of the Cash Portion the Tax Amount specified in such notice.   3.4 Release of Escrowed Share Amount The Escrowed Share Amount shall be held, administered and released by the Escrow Agent as follows:     (a) On the first anniversary of the Closing Date (the “First Anniversary”), the Buyer and the Sellers Representative shall deliver to the Escrow Agent a written direction signed by the Buyer and the Sellers Representative, subject to this Section 3.4, instructing the Escrow Agent to release fifty percent (50%) of the number of Escrowed Shares originally deposited hereunder to the Sellers Representative in accordance with Section 3.4(d), less (i) such number of Escrowed Shares as is equal to the aggregate of: (A) the number of Escrowed Shares (if any) previously released from escrow to the Buyer for cancellation; (B)   - 3 -   the aggregate portion of the Escrowed Share Amount (if any) being held by the Escrow Agent, as at such date, in accordance with Section 3.4(c) on account of outstanding Claims, and (C) the number of Escrowed Shares which have been previously released by the Escrow Agent for any reason not specified in paragraphs (A) and (B) of this Section 3.4(a); provided, that, if the amount of Escrowed Shares to be released in accordance with this Section 3.4(a) would be negative, no Escrowed Shares shall be released.     (b) On the second anniversary of the Closing Date (the “Second Anniversary”), the Buyer and the Sellers Representative shall deliver to the Escrow Agent a written direction signed by the Buyer and the Sellers Representative, subject to this Section 3.4, instructing the Escrow Agent to release the remaining Escrowed Share Amount to the Sellers Representative in accordance with Section 3.4(d), less the aggregate portion of the Escrowed Share Amount (if any) being held by of outstanding Claims.     (c) If at any time prior to the Second Anniversary, the Escrow Agent receives notice from the Buyer of a claim against the Sellers pursuant to Section 2.4(f)(iii) or Article 9 under the Purchase Agreement (each, a “Claim”), then all or a portion of the Escrowed Share Amount then held by the Escrow Agent (up to the maximum amount that is sufficient to cover the amount of such Claim as stated in such notice) will not be released on the First Anniversary or the Second Anniversary, as applicable, but will continue to be held by the Escrow Agent and only released in accordance with Section 3.4(d).     (d) Any portion of the Escrowed Share Amount retained by the Escrow Agent on account of any outstanding Claims in accordance with Section 3.4(c) shall only be released by the Escrow Agent where:     (i) either Buyer or the Sellers Representative deliver to the Escrow Agent a notarized copy of a judgment or award of a court of competent jurisdiction (all customary rights to appeal having been exhausted or waived or the time for appealing having expired) confirming either the Buyer’s right to indemnification under the Purchase Agreement or the dismissal of any claim for such indemnification; or     (ii) a written joint direction of the Buyer and the Sellers Representative with respect to the release and registration of the Escrowed Share Amount has been delivered to the Escrow Agent.     (e) Any Escrowed Shares or Cash Portion released to the Sellers in accordance with this Agreement shall be released directly to the Sellers Representative on behalf of the Sellers, and shall be titled in the name of the Sellers Representative and/or the Sellers, as directed by the Sellers Representative in a written instruction to the Escrow Agent.   - 4 - 3.5 Restrictions on Dealing with Escrowed Share Amount No portion of the Escrowed Share Amount, and no direct or indirect interest in, control or direction over or certificate evidencing the Escrowed Share Amount, may, directly or indirectly, be sold, assigned, transferred, redeemed, surrendered for consideration, mortgaged, hypothecated, charged, pledged, encumbered or otherwise dealt with in any manner except as provided in this Agreement.   3.6 Voting of Escrowed Shares This Agreement will not impair any right of the Sellers to exercise voting rights attaching to the Escrowed Shares, if any, or any shareholder remedies provided by applicable Law, and the Escrow Agent hereby agrees to exercise any such right on the Sellers’ behalf upon direction from the Sellers Representative on behalf of each applicable Seller.   3.7 Dividends on Escrowed Share Amount If any dividend or distribution is declared on any Escrowed Shares while such shares continue to be held in escrow under this Agreement, such dividend or distribution shall be retained by the Escrow Agent, and shall form part of the Cash Portion of the Escrowed Share Amount (to be dealt with in accordance with Section 3.3(b)).   3.8 Exercise of Other Rights Attaching to Escrowed Shares This Agreement will not impair any right of the Sellers, as beneficial owners, to exercise a right attaching to any Escrowed Share(s) that entitles such Seller to purchase or otherwise acquire another security or to exchange or convert such Escrowed Share(s) for or into another security, provided that the securities so acquired on exchange or conversion of the Escrowed Share(s) are deposited in escrow with the Escrow Agent to be released mutatis mutandis on the same terms as the Escrowed Shares to which the right attached. The Escrow Agent hereby agrees to exercise any such rights on each Sellers behalf upon direction from the Sellers Representative. ARTICLE 4 TERMINATION   4.1 Termination of this Agreement This Agreement shall terminate when the full Escrowed Share Amount has been released by the Escrow Agent pursuant to the provisions of Section 3.4 or upon the written agreement of the Parties.   - 5 - ARTICLE 5 BUSINESS COMBINATION   5.1 Business Combination     (a) This Article 5 applies to the following (a “business combination”):     (i) a formal tender offer or similar offer for any outstanding equity securities of the Buyer which, if successful, would result in a change of control of the Buyer;     (ii) a merger involving the Buyer, if the Buyer is not the surviving entity or if holders of outstanding equity securities of the Buyer receive equity securities of a different entity or cash or other property in exchange for their outstanding equity securities of the Buyer; and     (iii) any transaction or reorganization that has an effect similar to any of the foregoing.     (b) The Escrow Agent shall tender the Escrowed Shares of a Seller to a person or company in a business combination if:     (i) at least fifteen business days prior to the date the Escrowed Shares must be tendered under the business combination, the Buyer notifies the Sellers Representative in writing of such business combination; and     (ii) at least five business days prior to the date the Escrowed Shares must be tendered under the business combination, the Sellers Representative delivers to the Escrow Agent:     (A) (1) written instructions signed by the Sellers Representative that directs the Escrow Agent to deliver to the paying, exchange or transfer agent or other depository acting in connection with the business combination any certificates or other evidence of the Escrowed Shares, (2) a completed and executed letter of transmittal or similar document and, where required, a transfer power of attorney completed and executed and (3) any other documentation specified or provided by the Sellers Representative and to be delivered in accordance with the instructions from such paying, exchange or transfer agent or other depository set forth in such letter of transmittal or similar document, in the case of the foregoing (2) and (3), as applicable; and     (B) any other information concerning the business combination as the Escrow   - 6 -   (c) As soon as reasonably practicable, and in any event no later than one Business Day after the Escrow Agent receives the documents and information required under paragraph (b) above, the Escrow Agent shall deliver to the paying, exchange or transfer agent or other depository acting in connection with the business combination, in accordance with the written instructions, any certificates or other evidence of the Escrowed Shares, any other documentation to be provided pursuant to Section 5.1(b)(ii)(A) and Section 5.1(b)(ii)(B) and a letter addressed to the depositary under the business combination that:     (i) identifies the Escrowed Shares that are being exchanged, submitted or tendered in connection with the business combination;     (ii) states that the Escrowed Shares are held in escrow; and     (iii) states that the Escrowed Shares are delivered only for the purposes of the business combination and that they will be released from escrow only after one of the conditions described in paragraph (d) below is met;     (d) The Escrow Agent shall release from escrow and deliver to the paying, exchange or transfer agent or other depository acting in connection with the business combination the applicable Escrowed Shares when the Escrow Agent receives notification from the Sellers Representative that:     (i) the terms and conditions of the business combination have been met or waived; and/or     (ii) the Escrowed Shares have either been accepted and paid for or are subject to an unconditional obligation to be accepted and paid for under the business combination.     (e) If a Seller receives securities (“new securities”) of another issuer (“successor issuer”) in exchange for Escrowed Shares pursuant to a business combination, the new securities will be subject to and form part of the Escrowed Share Amount.     (f) Any securities issued by the Buyer in exchange for the Escrowed Shares pursuant to a business combination or a consolidation, subdivision or other capital reorganization of the Buyer shall be deposited in escrow under this Escrow Agreement in substitution or in addition to, as the case may be, the Escrowed Shares, and released in accordance with the terms of this Agreement, mutatis mutandis.     (g) Any cash amount to which a Seller is entitled in exchange for Escrowed Shares pursuant to a business combination shall form part of the Escrowed Share Amount (to be dealt with in accordance with Section 3.3(b)).   - 7 - ARTICLE 6 ESCROW AGENT   6.1 Fees Subject to Section 6.4(c) hereof, the Buyer and Sellers Representative agree with the Escrow Agent that each will pay or cause to be paid to the Escrow Agent one-half of the fees, costs and expenses of the Escrow Agent for acting as escrow agent hereunder, as set forth in Schedule A hereto. The Escrowed Share Amount shall not be subject to any liens or encumbrances for any unpaid fees incurred on behalf of the Escrow Agent.   6.2 Indemnification of Escrow Agent The Escrow Agent shall not, by reason of its execution of this Agreement, assume or be deemed to have assumed any responsibility or liability for any transactions between the other Parties other than for the performance of its obligations with respect to the Escrowed Share Amount in accordance with this Agreement. The Party on whose behalf, or pursuant to whose direction, the Escrow Agent acts shall indemnify and hold harmless the Escrow Agent and its partners, associates, officers, directors, employees and agents from and against any and all claims, demands, losses, penalties, costs, expenses, fees and liabilities, including, without limitation, legal fees and expenses, directly or indirectly, sustained or incurred by the Escrow Agent as a result of the taking of such action, except where such action or omission involves the wilful misconduct, gross negligence or bad faith of the Escrow Agent, and in the exercise of its reasonable judgment and any act done or omitted by it pursuant to the advice of any legal counsel it may employ shall be conclusive evidence of such good faith. This indemnity shall survive the termination of this Agreement.   6.3 Duties of Escrow Agent The Escrow Agent shall have no duties or responsibilities except as expressly provided in this Agreement and shall not be obligated to recognize, nor have any liability or responsibility arising under, any other agreement to which the Escrow Agent is not a party (including the Purchase Agreement), notwithstanding that reference thereto may be made herein.   6.4 Responsibilities of Escrow Agent     (a) The Escrow Agent shall not be responsible for the sufficiency, genuineness or validity of any property deposited with the Escrow Agent hereunder.     (b) The Escrow Agent may, acting reasonably, rely upon any instrument in writing believed by the Escrow Agent to be genuine and sufficient and properly presented in accordance with the terms of this Agreement and the Escrow Agent shall not be liable or responsible for any action taken or omitted to be taken in accordance with the provisions hereof.   - 8 -   (c) The Escrow Agent may employ or retain such counsel or other experts or advisors or agents as it may reasonably require for the purpose of discharging its duties hereunder, and the Escrow Agent’s reasonable costs associated therewith will be borne one-half by the Buyer, on the one hand, and one-half by the Sellers Representative, on the other hand.     (d) In case any property held by the Escrow Agent hereunder shall be attached, garnisheed or levied upon under any order of a court or the delivery thereof shall be stayed or enjoined by any order of any court or any other order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, the Escrow Agent is hereby expressly authorized in its sole discretion to obey and comply with all writs, orders, final judgments or decrees so entered or issued and in case the Escrow Agent complies with any such writ, order, final judgment or decree the Escrow Agent shall not be liable to any of the other Parties, their heirs, executors, legal representatives, successors or assigns or to any other person, firm or corporation by reason of such compliance.   6.5 Replacement of Escrow Agent The Escrow Agent may resign and be discharged from all further duties and liabilities hereunder by giving to the Buyer and the Sellers Representative 60-days’ advance notice in writing which resignation will take effect on the appointment of, and acceptance by, a successor in accordance with this Agreement. In the event of the Escrow Agent resigning as aforesaid, a replacement escrow agent shall be appointed by the other Parties jointly and failing such appointment the retiring Escrow Agent may apply to a court of competent jurisdiction on such notice as such justice may direct, for the appointment of a new escrow agent. Any escrow agent appointed in accordance with this Section 6.5 shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as escrow agent, without any further assurance, conveyance, act or deed, and the expression “Escrow Agent” herein shall include such replacement escrow agent. If a new escrow agent is appointed by a court of competent jurisdiction, the new Escrow Agent will be entitled to receive a reasonable fee for its services, which may be different from the fees payable to the retiring Escrow Agent, as may be approved by such court or agreed by the Buyer and the Sellers Representative. At the time of appointment of the successor escrow agent, the Escrow Agent will deliver the Escrowed Share Amount to such successor.   6.6 No Agency or Trust Relationship The Buyer and the Sellers Representative acknowledge that the Escrow Agent is acting solely at their request and for their convenience and the Escrow Agent shall not be deemed to be the agent or trustee of any Party in respect of the escrow herein referred to, and the duties of the Escrow Agent hereunder are purely mechanical in nature and shall not give rise to any fiduciary obligation to any Party.   - 9 - 6.7 Exoneration of Liability The Escrow Agent shall not be liable for any action taken or omitted to be taken by it in good faith except where such action or omission involves the wilful misconduct, gross negligence or bad faith of the Escrow Agent. The Escrow Agent may act pursuant to the advice of counsel with respect to any matter relating to this Agreement and will not be liable for any action taken or omitted by it in good faith in accordance with such advice.   6.8 Limitation of Responsibility The Escrow Agent shall have no duty to know or determine the performance or non-performance of any provision of this Agreement or any other agreement except as expressly required or contemplated in the performance by the Escrow Agent of the functions contemplated to be performed by it under this Agreement. The duties and responsibilities of the Escrow Agent are limited to those expressly stated herein. The provisions of this Section 6.8 are not intended to and shall not restrict or remove any other rights which the Escrow Agent may have at law or in equity to seek relief or direction a court of competent jurisdiction in addition to such as are expressly set forth herein. Except as otherwise expressly provided herein, the Escrow Agent is hereby authorized to disregard any and all notices or other communication, other than written notices given by any of the other Parties, and is hereby expressly authorized to comply with any and all processes, orders, judgments or decrees of any court of competent jurisdiction and shall not be liable to any of the other Parties for such compliance. If the Escrow Agent complies with any such process, order, judgment or decrees of any court, it shall not be liable to any of the other Parties for compliance, notwithstanding any such process, order, judgment or decree being subsequently reversed, modified, annulled, set aside, or vacated, or being subsequently found to have been issued or entered without jurisdiction. The Escrow Agent shall be under no duty or obligation to ascertain the identity, authority, or rights of the Parties (or their agents) executing or delivering or purporting to execute or deliver this Agreement, or any instruments, documents, or papers related hereto or funds deposited or called for hereunder. The Escrow Agent shall not be liable for any reasonable error of judgment or any act or omission or any mistake or fact or law.   6.9 Dispute In the event of any conflicting demands or claims with respect to the subject matter of this Agreement, the Escrow Agent shall have the right to discontinue all further acts until such conflicts are resolved, and the further right to commence or defend any action or proceeding for the determination of such conflict, including, without limitation of the foregoing, a suit or action in interpleader. In the event that the Escrow Agent should commence any action to determine any such conflict between the Parties, including but not limited to an action in the nature of an interpleader, the Escrow Agent shall, upon deposit of the Escrowed Share Amount held hereunder with a court of competent jurisdiction, be ipso facto released and discharged from any and all duties and obligations imposed upon the Escrow Agent hereunder with respect to the subject matter of such action.   - 10 - 6.10 Anti-Money Laundering/Anti-Terrorist Legislation     (a) Each Party hereby represents to the Escrow Agent that any account to be opened by, or interest to be held by, the Escrow Agent in connection with this Agreement, for or to the credit of such Party, either (i) is not intended to be used by or on behalf of any third party or (ii) is intended to be used by or on behalf of a third party in which case such third party will complete and execute forthwith a declaration in the Escrow Agent’s prescribed form as to the particulars of such third party.     (b) The Escrow Agent retains the right not to act and will not be liable for refusing to act if, due to lack of information or for any other reason whosoever, the Escrow Agent, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, if the Escrow Agent, in its sole judgment, determines at any time that its acting under this Agreement has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it will have the right to resign on ten Business Days written notice to the other Parties to this Agreement, provided:     (i) the Escrow Agent’s written notice describe the circumstance of such non-compliance; and     (ii) if such circumstance is rectified to the Escrow Agents’ satisfaction within such ten Business Days period, the such resignation will not be effective. ARTICLE 7 GENERAL   7.1 Assignment None of the Parties may assign in whole or in part its rights or obligations under this Agreement without the prior written consent of the Buyer and the Sellers Representative.   7.2 Independent Legal Advice Each of the Parties acknowledges having been encouraged to seek and having had the opportunity to obtain independent legal advice with respect to the terms of this Agreement.   7.3 Entire Agreement This Agreement and, subject to Section 7.12, the Purchase Agreement and the other Ancillary Agreements (as defined in the Purchase Agreement) constitute the communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings between the Parties with respect to the subject   - 11 - matter hereof and thereof. None of the Parties shall be bound or charged with any oral or written agreements, representations, warranties, statements, promises, information, arrangements or understandings not specifically set forth or referenced in this Agreement and, subject to Section 7.12, the Purchase Agreement and the other Ancillary Agreements.   7.4 Further Assurances Each of the Parties will from time to time after the Closing Date at the request of the other Parties and without further consideration, execute and deliver such other instruments of transfer, conveyance and assignment and take such further action as the other Parties may reasonably require to give effect to any matter provided for herein.   7.5 Severability If any provision of this Agreement or portion thereof or the application thereof to any Person or circumstance shall to any extent be illegal, invalid or unenforceable: (a) the remainder of this Agreement or the application of such provision or portion thereof to any other Person or circumstance shall not be affected thereby; and (b) the Parties will negotiate in good faith to amend this Agreement to implement the intentions set forth in this Agreement. Each provision of this Agreement shall be legal, valid and enforceable to the fullest extent permitted by Law.   7.6 Governing Law THIS AGREEMENT AND ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.   7.7 Submission to Jurisdiction; Waiver of Jury Trial     (a) EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN DELAWARE, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH OF THE PARTIES WAIVES ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY, OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT THERETO. ANY PARTY MAY MAKE SERVICE ON ANY OTHER PARTY BY SENDING OR DELIVERING   - 12 - A COPY OF THE PROCESS TO THE PARTY TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 7.10 BELOW. NOTHING IN THIS SECTION 7.7(a), HOWEVER, SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AT EQUITY. EACH PARTY AGREES THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR AT EQUITY.     (b) EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH OF THE PARTIES (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (II) ACKNOWLEDGES THAT SUCH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.   7.8 Successors and Assigns This Agreement shall accrue to the benefit of and be binding upon each of the Parties and their respective heirs, executors, administrators, permitted assigns and successors including any successor resulting from any amalgamation, merger, arrangement or other reorganization or any continuance under the laws of another jurisdiction.   7.9 Time of Essence Time is of the essence hereof.   7.10 Notices All notices and other communications required or permitted to be given hereunder shall be in writing and shall be effectively given if (i) delivered personally, (ii) sent prepaid courier service or mail, or (iii) sent by e-mail or other similar means of electronic communication addressed as follows: in the case of notice to the Buyer: Houston, Texas 77064 Attention: General Counsel   - 13 - Houston, Texas 77010 E-mail: [email protected] in the case of notice to the Sellers Representative: Suite 1100 Irving, TX 75039 Attention: General Counsel Vinson & Elkins LLP W. Matthew Strock 1001 Fannin Street Suite 2500 Houston, Texas 77002 E-mail: [email protected] in the case of the Escrow Agent: Continental Stock Transfer & Trust Company 17 Battery Place Attention: _______________ E-mail: _______________ Any notice, designation, communication, request, demand or other document given or sent or delivered as aforesaid shall:     (a) if delivered or sent by prepaid courier, be deemed to have been given, sent, delivered and received on the date of delivery;   - 14 -   (b) if sent by mail, be deemed to have been given, sent, delivered and received on the fourth Business Day following the date of mailing, unless at any time between the date of mailing and the fourth Business Day thereafter there is a discontinuance or interruption of regular postal service, whether due to strike or lockout or work slowdown, affecting postal service at the point of dispatch or delivery or any intermediate point, in which case the same shall be deemed to have been given, sent, delivered and received in the ordinary course of the mail, allowing for such discontinuance or interruption of regular postal service; and     (c) if sent by e-mail, upon written confirmation of receipt by e-mail or otherwise.   7.11 Headings The headings set forth in this Agreement are for convenience only and shall not affect the interpretation hereof.   7.12 Conflict with Purchase Agreement In the event of a conflict between this Agreement and the Purchase Agreement, the applicable provisions of this Agreement shall prevail.   7.13 Interpretation not Affected by Party Drafting The Parties have participated, directly and through their respective legal counsel, collectively in the negotiation, preparation and drafting of this Agreement. If in connection with the construction of this Agreement any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favouring or disfavouring any Party by virtue of the authorship of any provision of this Agreement, and the Parties agree that any rule of construction to the effect that any ambiguity is to be resolved against the drafting Party shall not be applicable.   7.14 Waiver Any Party which is entitled to the benefits of this Agreement may, and has the right to, unless otherwise provided, waive any term or condition hereof at any time, provided however that such waiver shall be evidenced by written instrument duly executed on behalf of such Party.   7.15 Amendments No amendment, modification or supplement to this Agreement shall be effective unless provided in writing and signed by all the Parties and approved by all necessary governmental regulatory authorities.   - 15 - 7.16 Remedies Cumulative The rights and remedies of the Parties under this Agreement are cumulative and in addition to and not in substitution for any rights or remedies provided by law. Any single or partial exercise by any Party of any right or remedy for default or breach of any term, covenant or condition of this Agreement does not waive, alter, affect or prejudice any other right or remedy to which such Party may be lawfully entitled for the same default or breach.   7.17 Counterparts This Agreement may be executed in several counterparts (by original, facsimile, pdf or other electronic signature), each of which when so executed shall be deemed to be an original and each of such counterparts, if executed by each of the Parties, shall constitute a valid and enforceable agreement among the Parties. [Signature pages follow.]   - 16 - IN WITNESS THEREOF, this Agreement has been executed by the Parties as of the   BUYER:   PATTERSON-UTI ENERGY, INC. By:     Name: Title:   [        ] [        ] [Signature Page to Escrow Agreement] SELLERS REPRESENTATIVE:   MULTI-SHOT HOLDCO, LLC By:     Name: Title:   [        ] [        ] ESCROW AGENT:   CONTINENTAL STOCK & TRUST COMPANY By:     Name: Title:   [        ] [        ] [Schedule A] Exhibit B   REGISTRATION RIGHTS AGREEMENT between and THE SELLERS PARTY HERETO Dated as of [            ], 2017     TABLE OF CONTENTS          Page   ARTICLE I DEFINITIONS      1   Section 1.1   Definitions      1   Section 1.2   Registrable Securities      4   ARTICLE II REGISTRATION RIGHTS      4   Section 2.1   Shelf Registration      4   Section 2.2   Piggyback Registration      6   Section 2.3   Sale Procedures      8   Section 2.4   Cooperation by Holders      10   Section 2.5   Restrictions on Public Sale by Holders of Registrable Securities      10   Section 2.6   Expenses      11   Section 2.7   Indemnification      11   Section 2.8   Transfer or Assignment of Registration Rights      13   Section 2.9   Aggregation of Registrable Securities      13   ARTICLE III MISCELLANEOUS      14   Section 3.1   Communications      14   Section 3.2   Successors and Assigns      14   Section 3.3   Assignment of Rights      14   Section 3.4   Recapitalization (Exchanges, etc. Affecting the Common Stock)      15   Section 3.5   Enforcement      15   Section 3.6   Counterparts      15   Section 3.7   Governing Law, Submission to Jurisdiction      15   Section 3.8   Waiver of Jury Trial      16   Section 3.9   Severability of Provisions      16   Section 3.10   Entire Agreement      16   Section 3.11   Amendment      16   Section 3.12   No Presumption Against the Drafting Party      16   Section 3.13   Interpretation      16     i REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of [        ], 2017 (this “Agreement”), among Patterson-UTI Energy, Inc., a Delaware corporation (the “Company”), and the Persons identified on Schedule A hereto (each, a “Seller” and, collectively, the “Sellers”). WHEREAS, the Company and the Sellers are parties to a Securities Purchase Agreement, dated as of September 4, 2017 (the “Purchase Agreement”), pursuant to which the Sellers are selling to the Company, and the Company is purchasing from the Sellers, 100% of the issued and outstanding limited liability company interests in Multi-Shot, LLC, a Texas limited liability company (the “Sale”); WHEREAS, in accordance with Section 2.2 of the Purchase Agreement, as consideration for and at the closing of the Sale, the Company is (i) issuing 7,541,478 shares of Common Stock to the Sellers and (ii) depositing 1,256,913 shares of Common Stock with Continental Stock Transfer & Trust Company (the “Escrow Agent”) to be held and distributed by the Escrow Agent in accordance with the terms of the Escrow Agreement (all such shares that are distributed to the Sellers in accordance with the Escrow Agreement, together with the shares of Common Stock described in the foregoing clause (i), the “Shares”); forth in this Agreement for the benefit of the Sellers pursuant to the Purchase Agreement; and WHEREAS, it is a condition to the obligations of the Company and the Sellers under the Purchase Agreement that this Agreement be executed and delivered; which are hereby acknowledged by each party hereto, the parties hereby agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. The terms set forth below are used herein as so defined: “Agreement” has the meaning specified therefor in the introductory paragraph. “Automatic Shelf Registration Statement” means an “automatic shelf registration statement” as defined in Rule 405 promulgated under the Securities Act. York.   1 “Closing” has the meaning specified in the Purchase Agreement. “Closing Date” has the meaning specified in the Purchase Agreement. “Common Stock” means the common stock, par value $0.01 per share, of the Company. “Company” has the meaning specified therefor in the introductory paragraph of this Agreement. “Effective Date” means the date of effectiveness of a Shelf Registration Statement filed pursuant to Section 2.1(a). “Effectiveness Period” has the meaning specified therefor in Section 2.1(a). “Escrow Agent” has the meaning specified therefor in the Recitals of this Agreement. “Escrow Agreement” has the meaning specified in the Purchase Agreement. to time, and the rules and regulations of the Commission promulgated thereunder. “Filing Date” has the meaning specified therefore in Section 2.1(a). “Governmental Authority” has the meaning set forth in the Purchase Agreement. “Included Registrable Securities” has the meaning specified therefor in Section 2.2(a). “Law” has the meaning set forth in the Purchase Agreement. “Liquidated Damages” has the meaning specified therefor in Section 2.1(c). “Liquidated Damages Multiplier” has the meaning specified therefor in Section 2.1(c). “Losses” has the meaning specified therefor in Section 2.7(a). book running lead manager of such Underwritten Offering. “NASDAQ” means the NASDAQ Global Select Market. “Other Holder” has the meaning specified in Section 2.2(b).   2 “Piggyback Opt-Out Notice” has the meaning specified therefor in Section 2.2(a). “Piggyback Registration” has the meaning specified therefor in Section 2.2(a). “Purchase Agreement” has the meaning specified therefor in the Recitals of this Agreement. “Purchased Share Price” means $19.89 per share. “Registrable Securities” means (a) the Shares and (b) any shares of Common Stock issued or issuable with respect to the Shares by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Stock (it being understood that, for purposes of this Agreement, a Person shall be deemed to be a Holder whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected). “Registration Expenses” has the meaning specified therefor in Section 2.6(a). “Resale Opt-Out Notice” has the meaning specified therefor in Section 2.1(b). and the rules and regulations of the Commission promulgated thereunder. “Seller” or “Sellers” has the meaning set forth in the introductory paragraph of this Agreement. “Selling Expenses” has the meaning specified therefor in Section 2.6(a). “Shares” has the meaning specified therefor in the Recitals of this Agreement. “Shelf Registration Statement” means a registration statement under the Securities Act to permit the public resale of the Registrable Securities from time to time as permitted by Rule 415 of the Securities Act (or any similar provision then in force under the Securities Act). “Target Effective Date” has the meaning specified therefor in Section 2.1(c). Shelf Registration Statement) in which Common Stock is sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a “bought deal” with one or more investment banks. For the avoidance of doubt, any offering or sale of Common Stock by the Company pursuant to an “at-the-market” offering as defined in Rule 415(a)(4) of the Securities Act shall not be considered an Underwritten Offering hereunder.   3 “WKSI” means a well-known seasoned issuer (as defined in the rules and regulations of the Commission). Section 1.2 Registrable Securities. Any Registrable Security will cease to be a Registrable Security at the earliest of the following: (a) when a registration statement covering such Registrable Security has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) when such Registrable Security has been disposed of pursuant to any section of Rule 144 (or any similar provision then in force) under the Securities Act; (c) when such Registrable Security is held by the Company or one of its subsidiaries; (d) when such Registrable Security has been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities; and (e) as to Registrable Securities beneficially owned by a Holder, the date on which all Registrable Securities beneficially owned by such Holder may be sold in a single sale pursuant to any section of Rule 144 under the Securities Act (or any similar provision then in force under the Securities Act) without any restriction or other requirement that must be satisfied by such Holder or the Company. ARTICLE II REGISTRATION RIGHTS Section 2.1 Shelf Registration. (a) Shelf Registration. As soon as practicable following the Closing, but in no event more than 30 days following the Closing Date, the Company shall use its commercially reasonable efforts to prepare and file a Shelf Registration Statement under the Securities Act covering the Registrable Securities. The Company shall use its commercially reasonable efforts to cause such Shelf Registration Statement to become effective as promptly as practicable after the date of filing of such Shelf Registration Statement (the “Filing Date”). The Company will use its commercially reasonable efforts to cause such Shelf Registration Statement filed pursuant to this Section 2.1(a) to be continuously effective under the Securities Act until the earliest of (i) all Registrable Securities covered by the Shelf Registration Statement have been distributed in the manner set forth and as contemplated in such Shelf Registration Statement, (ii) there are no longer any Registrable Securities outstanding or (iii) three years from the Effective Date (the “Effectiveness Period”). A Shelf Registration Statement filed pursuant to this Section 2.1(a) shall be on such appropriate registration form of the Commission as shall be selected by the Company; provided, however, that if the Company is a WKSI at the time a Shelf Registration Statement is required to be filed hereunder, such Shelf Registration Statement shall be filed as an Automatic Shelf Registration Statement. A Shelf Registration Statement when declared effective (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit statements therein not misleading (and, in the case of any prospectus contained in such Shelf Registration Statement, in the light of the circumstances under which a statement is made). As soon as practicable following the date that   4 a Shelf Registration Statement filed pursuant to this Section 2.1(a) becomes effective, but in any event within five Business Days of such date, the Company shall provide the Holders with written notice of the effectiveness of a Shelf Registration Statement; provided that no such notice shall be required if such Shelf Registration Statement is an Automatic Shelf Registration Statement. (b) Resale Registration Opt-Out. Any Holder may deliver advance written notice (a “Resale Opt-Out Notice”) to the Company requesting that such Holder not be included in a Shelf Registration Statement filed pursuant to Section 2.1(a). Following receipt of a Resale Opt-Out Notice from a Holder, the Company shall not be required to include the Registrable Securities of such Holder in such Shelf Registration Statement. (c) Failure to Become Effective. If a Shelf Registration Statement required by Section 2.1(a) does not become or is not declared effective within 120 days after the Filing Date (the “Target Effective Date”), then the Holders shall be entitled to a payment (with respect to each of the Holder’s Registrable Securities which are included in such Shelf Registration Statement), as liquidated damages and not as a penalty, (i) for each non-overlapping 30-day period for the first 60 days following the Target Effective Date, an amount equal to (A) 0.25% times (B) the product of (x) the Purchased Share Price times (y) the number of Registrable Securities, then held by such Holder and included on such Shelf Registration Statement (such product of (x) and (y) being the “Liquidated Damages Multiplier”), and (ii) for each non-overlapping 30-day period beginning on the 61st day following the Target Effective Date, with such payment amount increasing by an additional amount equal to 0.25% times the Liquidated Damages Multiplier per non-overlapping 30-day period for each subsequent 60 days (i.e., 0.5% for 61-120 days, 0.75% for 121-180 days, and 1.0% thereafter) up to a maximum amount equal to 1.0% times the Liquidated Damages Multiplier per non-overlapping 30-day period (the “Liquidated Damages”), until such time as the Shelf Registration Statement is declared effective or there are no longer any Registrable Securities outstanding. The Liquidated Damages shall accrue on a daily basis and be paid to the Sellers in cash within ten Business Days of the end of such 30-day period. Any Liquidated Damages shall be paid to the Sellers in immediately available funds. For the avoidance of doubt, nothing in this Section 2.1(c) shall relieve the Company from its obligations under Section 2.1(a). (d) Waiver of Liquidated Damages. If the Company is unable to cause a Shelf Registration Statement to become effective by the Target Effective Date as a result of an acquisition, merger, reorganization, disposition or other similar transaction, then the Company may request a waiver of the Liquidated Damages, which may be granted by the consent of the majority of Holders that have been included on such Shelf Registration Statement, in their sole discretion, and which such waiver shall apply to all the Holders included on such Shelf Registration Statement. (e) Delay Rights. Notwithstanding anything to the contrary contained herein, the Company may delay the filing of a Shelf Registration Statement required by Section 2.1(a) and may, upon written notice to any Selling Holder whose Registrable Securities are included in the Shelf Registration Statement, suspend such Selling Holder’s use of any prospectus which is a part of the Shelf Registration Statement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to the Shelf Registration Statement) if (i) the   5 similar transaction and the Company determines in good faith that the Company’s ability to pursue or consummate such a transaction would be materially and adversely affected by any required disclosure of such transaction in the Shelf Registration Statement or (ii) the Company has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of the Company, would materially and adversely affect the Company; provided, however, that in no event shall the Selling Holders be suspended from selling Registrable Securities pursuant to the Shelf Registration Statement for a period that exceeds an aggregate of 60 days in any 180 day period. Upon Registrable Securities are included in the Shelf Registration Statement, and shall promptly terminate any suspension of sales it has put into effect and shall take such other actions necessary or appropriate to permit registered sales of Registrable Securities as contemplated in this Agreement. Section 2.2 Piggyback Registration. (a) Participation. If the Company proposes to file (A) a registration statement under the Securities Act providing for the public offering of Common Stock, for its own account or for the account of a selling stockholder, for sale to the public in an Underwritten Offering, excluding a registration statement on Form S-4 or Form S-8 promulgated under the Securities Act (or any successor forms thereto), a registration statement for the sale of Common Stock issued upon conversion of debt securities or any other form not available for registering the Registrable Securities for sale to the public, or (B) a prospectus supplement to an effective Shelf Registration Statement, so long as the Company is a WKSI at such time or, whether or not the Company is a WKSI, so long as the Registrable Securities were previously included in the underlying Shelf Registration Statement, then, in each case with respect to an Underwritten Offering of Common Stock, the Company will notify each Holder of the proposed filing and afford each Holder an opportunity to include in such Underwritten Offering all or any part of the Registrable Securities then held by such Holder (the “Included Registrable Securities”) that may properly be offered on such registration statement (a “Piggyback Registration”). Each Holder of Registrable Securities agrees that the fact that such a notice has been delivered shall constitute confidential information and such Holder agrees not to disclose that such notice has been delivered or effect any public sale or distribution of Common Stock until the earlier of (i) the date that the applicable registration statement or prospectus supplement has been filed with the Commission and (ii) 20 days after the date of such notice. Each Holder desiring to include in such Piggyback Registration all or part of such Registrable Securities held by such Holder that may be included in such Piggyback Registration shall, within three Business Days after receipt of the above-described notice from the Company in the case of a filing of a registration statement and within two Business Days after the day of receipt of the above-described notice from the Company in the case of a filing of a prospectus supplement to an effective Shelf Registration Statement with respect to a Piggyback Registration, so notify the Company in writing, and in such notice shall inform the Company of the number of shares of Registrable Securities such Holder wishes to include in such Piggyback Registration and provide the Company with such information with respect to such Holder as shall be reasonably necessary in order to assure compliance with federal and applicable state securities Laws. If no request for inclusion from a Holder is received within the time period specified in this Section 2.2(a), such Holder shall have   6 no further right to participate in such Piggyback Registration. For the avoidance of doubt, the Company shall not be required to register any Registrable Securities upon the request of any Holder pursuant to a Piggyback Registration, or to permit the related prospectus or prospectus supplement to be used, in connection with any offering or transfer of Registrable Securities by a Holder other than pursuant to an Underwritten Offering. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, the Company shall determine for any reason not to undertake or to delay such Underwritten Offering, the Company may, at its election, give written notice of such determination to the Selling Holders and (x) in the case of a determination not to undertake such same period as the delay in the Underwritten Offering. Any Holder may deliver written notice (a “Piggyback Opt-Out Notice”) to the Company requesting that such Holder not receive notice from the Company of any proposed Underwritten Offering; provided, however, that such Holder may later revoke any such Piggyback Opt-Out Notice in writing. Following receipt of a Piggyback Opt-Out Notice from a Holder (unless subsequently revoked), the Company shall not be required to deliver any notice to such Holder pursuant to this Section 2.2(a) and such Holder shall no longer be entitled to participate in Underwritten Offerings by the Company pursuant to this Section 2.2(a). (b) Priority of Piggyback Registration. If the Managing Underwriter or Underwriters of any proposed Underwritten Offering of shares of Common Stock included in a Piggyback Registration advise the Company that the total shares of Common Stock which the Selling Holders and any other Persons intend to include in such offering exceeds the number which can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of Common Stock offered or the market for the Common Stock, then the Common Stock to be included in such Underwritten Offering shall include the number of shares of Common Stock that such Managing Underwriter or Underwriters advise the Company can be sold without having such adverse effect, with such number to be Holders and any other Persons who have been or are granted registration rights on or after the date of this Agreement (the “Other Holders”) who have requested participation in the Piggyback Registration (based, for each such Selling Holder or Other Holder, on the percentage derived by dividing (A) the number of shares of Common Stock proposed to be sold by such Selling Holder or such Other Holder in such offering; by (B) the aggregate number of shares of Common Stock proposed to be sold by all Selling Holders and all Other Holders in the Piggyback Registration). (c) General Procedures. In connection with any Underwritten Offering, the Company shall be entitled to select the Managing Underwriter or Underwriters. In connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, each Selling Holder shall be obligated to enter into an underwriting agreement with the Managing Underwriter or Underwriters which contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of equity securities. No Selling Holder may participate in such and executes all questionnaires,   7 powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. No Selling Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Selling Holder and its ownership of the securities being registered on its behalf and its intended method of distribution and any other representation required by Law. If any Selling Holder disapproves of the terms of an Underwritten Offering, such Selling Holder may elect to withdraw therefrom by notice to the Company and the Managing Underwriter; provided, however, that such withdrawal must be made at least one Business Day prior to the time of pricing of such Underwritten Offering to be effective. No such withdrawal or abandonment shall affect the Company’s obligation to pay Registration Expenses. Section 2.3 Sale Procedures. In connection with its obligations under this Article II, the Company will, as promptly as practicable: (a) subject to Section 2.1(e), prepare and file with the Commission such amendments and supplements to the Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep a Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by a Shelf Registration Statement; practicable before filing a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto (other than any amendment or supplement resulting from the filing of a document incorporated by reference therein), upon request, copies of reasonably complete drafts of all such documents proposed to be filed (excluding exhibits and any document incorporated by reference therein), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing such Shelf Registration Statement or such other registration statement and the prospectus included therein or any such supplement or amendment thereto, and (ii) such number of copies of such Shelf included therein and any such supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Shelf Registration Statement or any other registration statement; (c) if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by a Shelf Registration Statement or securities or blue sky laws of such jurisdictions as the Selling Holders shall reasonably request, provided that the Company will not be required to qualify   8 (d) promptly notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the filing of a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any prospectus included therein or any amendment or supplement thereto (other than any amendment or supplement resulting from the filing of a document incorporated by reference therein), and, with respect to such Shelf Registration Statement or any other registration statement or any post-effective amendment thereto, in each case other than an Automatic Shelf Registration Statement, when the same has become effective; and (ii) the receipt of any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to such Shelf Registration Statement or any other (e) immediately notify each Selling Holder, at any time when a prospectus (i) the happening of any event as a result of which the prospectus contained in a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplemental amendment thereto, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice but subject to Section 2.1(e), the Company agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to statements therein not misleading in the light of the circumstances then existing and to take such other action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto; (f) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first full calendar month after the Effective Date of such registration statement, which earnings statement shall satisfy the provisions of Section l1(a) of the Securities Act and Rule 158 promulgated thereunder; (g) make available to the appropriate representatives of the Selling Holders access to such information and the Company personnel as is reasonable and customary to enable such parties and their representatives to establish a due diligence defense under the Securities Act; provided that the Company need not disclose any non-public information to any such representative unless and until the Selling Holders and such representatives have entered into a confidentiality agreement with the Company; (h) use all commercially reasonable efforts to procure customary legal opinions and auditor “comfort” letters in connection with the sale of Registrable Securities by any Selling Holder utilizing the Shelf Registration Statement;   9 (i) cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by the Company are then listed; (j) use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Selling Holders to consummate the disposition of such Registrable Securities; (k) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the Effective Date; and (l) if reasonably requested by a Selling Holder, (i) incorporate in a prospectus supplement or post-effective amendment such information as such Selling Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities by such Selling Holder, including information with Registrable Securities to be sold in such offering; and (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment. any event of the kind described in subsection (e) of this Section 2.3, shall contemplated by subsection (e) of this Section 2.3 or until it is advised in Holder will deliver to the Company (at the Company’s expense) all copies in its Holder’s possession, of the prospectus and any prospectus supplement covering Section 2.4 Cooperation by Holders. The Company shall have no obligation to include Registrable Securities of a Holder in the Shelf Registration Statement or in an Underwritten Offering under Article II of this Agreement if such Selling Holder has failed to timely furnish such information which, in the opinion of counsel to the Company, is reasonably required in order for the registration statement or prospectus supplement, as applicable, to comply with the Securities Act. Section 2.5 Restrictions on Public Sale by Holders of Registrable Securities. Regardless of whether a Holder elects to include shares of Common Stock that constitute Registrable Securities in an Underwritten Offering, each Holder of Registrable Securities hereby agrees that it shall not, to the extent requested by the Company or an underwriter of securities of the Company, directly or indirectly sell, offer to sell (including any short sale or hedging or similar transaction with the same economic effect as a sale), grant any option or otherwise transfer or dispose of any Registrable Securities or other securities of the Company or any securities convertible into or exchangeable or exercisable for Common Stock of the Company   10 then owned by such Holder during the period beginning 14 days prior to the expected date of “pricing” of such offering and continuing for a period not to exceed 90 days following the effective date of a registration statement for an Underwritten Offering or the date of a prospectus supplement filed with the Commission with respect to the pricing of an Underwritten Offering, other than the sale or distribution of shares of Common Stock that constitute Registrable Securities in such Underwritten Offering; provided, however, that such period shall in no event be greater than that which applies to executive officers and directors of the Company. In order to enforce the foregoing covenant, the Company shall have the right to impose stop transfer instructions with respect to the Registrable Securities and such other securities of each Holder (and the securities of every other Person subject to the foregoing restriction) until the end of such period. Section 2.6 Expenses. (a) Certain Definitions. “Registration Expenses” means all expenses incident to the Company’s performance under or compliance with this Agreement to effect the registration of Registrable Securities in a Shelf Registration Statement pursuant to Section 2.1 or a Piggyback Registration pursuant to Section 2.2, and the disposition of such securities, including, without limitation, all registration, filing, securities exchange listing and NASDAQ fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of the Financial Industry Regulatory Authority, including, transfer taxes and fees of transfer agents and registrars, all word processing, duplicating and printing expenses, the fees and in Section 2.7, the Company shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights hereunder. In addition, the Company shall not be responsible for any “Selling Expenses,” which means all underwriting fees, discounts and selling commissions and transfer taxes allocable to the sale of the Registrable Securities. (b) Expenses. The Company will pay all reasonable Registration Expenses in connection with a Shelf Registration Statement or a Piggyback Registration, whether or not any sale is made pursuant to such Shelf Registration Statement or Piggyback Registration. Each Selling Holder shall pay all Selling Expenses in connection with any sale of its Registrable Securities hereunder. Section 2.7 Indemnification. (a) By the Company. In the event of a registration of any Registrable Securities whether commenced or threatened, in respect   11 thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in light of the circumstances under which such statement is made) contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any free writing prospectus related thereto, or any amendment or supplement each such Selling Holder, its directors and officers and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that the Company will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder or such controlling Person in writing expressly for inclusion in the Shelf Registration Statement or such other registration statement, or prospectus supplement, as applicable. (b) By Each Selling Holder. Each Selling Holder agrees to, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, employees and agents and each Person, if any, who controls the Company within the meaning of the Securities Act or of the Exchange Act to the same extent as the foregoing indemnity from the Company to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Shelf Registration Statement or prospectus supplement relating to the Registrable Securities, or any amendment or supplement thereto. (c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under this Section 2.7(c) except to the extent that the indemnifying party is materially prejudiced by such failure. In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof. The indemnifying party shall be entitled to shall not be liable to such indemnified party under this Section 2.7(c) for any indemnifying party has failed to assume the defense and employ counsel or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded   12 party as incurred. Notwithstanding any other provision of this Agreement, the obligation on, includes a complete release from liability of, and does not contain any admission of wrong doing by, the indemnified party. (d) Contribution. If the indemnification provided for in this Section 2.7 is to the Company or any Selling Holder or is insufficient to hold them harmless in payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of such Selling Holder on the other in connection with the statements or considerations. The relative fault of the Company on the one hand and each Selling Holder on the other shall be determined by reference to, among other omission or alleged omission to state a material fact has been made by, or account of the equitable considerations referred to in the first sentence of this paragraph. The amount paid by an indemnified party as a result of the party in connection with investigating or defending any Loss which is the subject of this paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to misrepresentation. (e) Other Indemnification. The provisions of this Section 2.7 shall be in addition to any other rights to indemnification or contribution which an Section 2.8 Transfer or Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities granted to the Sellers by the Company under this Article II may be transferred or assigned by each Seller only to one or more transferee(s) or assignee(s) of such Registrable Securities who are Affiliates of such Seller. The Company shall be given written notice prior to any said transfer or assignment, stating the name and address of each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned, and each such transferee shall assume in writing responsibility for its obligations of such Seller under this Agreement. Section 2.9 Aggregation of Registrable Securities. All Registrable Securities   13 ARTICLE III MISCELLANEOUS Section 3.1 Communications. All notices and demands provided for hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, e-mail, air courier guaranteeing overnight delivery or personal delivery to the following addresses:     (a) If to a Seller, to such address indicated on Schedule A attached hereto. Vinson & Elkins LLP 1001 Fannin Street Suite 2500 Houston, Texas 77002     (b) If to the Company: Houston, Texas 77064 Attention: ________________ E-mail: _________________ or, if to a transferee of a Seller, to the transferee at the address provided pursuant to Section 2.8. All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; upon actual receipt if sent by certified or registered mail, return receipt requested, or regular mail, if mailed; upon actual receipt if sent via e-mail; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery. Section 3.2 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein. Section 3.3 Assignment of Rights. All or any portion of the rights and obligations of any Seller under this Agreement may be transferred or assigned by such Seller in accordance with Section 2.8.   14 Section 3.4 Recapitalization (Exchanges, etc. Affecting the Common Stock). The with respect to any and all shares of capital stock of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of this Agreement. Section 3.5 Enforcement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Texas state or federal court sitting in Harris County, Texas (or, if such court lacks subject matter jurisdiction, in any appropriate Texas state or federal court), this being in addition to any other remedy to which such party is entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any law to post security as a prerequisite to obtaining equitable relief. Section 3.6 Counterparts. This Agreement may be executed in two or more Section 3.7 Governing Law, Submission to Jurisdiction. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Texas, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Texas. Each of the parties irrevocably agrees Agreement or the transactions contemplated hereby. Each of the parties agrees notice, attachment prior to   15 judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Section 3.8 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY CONTEMPLATED HEREBY. Section 3.9 Severability of Provisions. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. Section 3.10 Entire Agreement. This Agreement and the Purchase Agreement Section 3.11 Amendment. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of the Company and a majority of Holders. Section 3.12 No Presumption Against the Drafting Party. The Company and each of the Sellers acknowledges that each party to this Agreement has been represented by legal counsel in connection with this Agreement and the transactions Section 3.13 Interpretation. When a reference is made in this Agreement to a Section or Article such reference shall be to a Section or Article of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for convenience or reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” References to days mean calendar days unless otherwise specified.   16 first written above.   By:     Name:   Title:   THE SELLERS: By:           Name:   Title:   [Signature Page to Registration Rights Agreement]   Schedule A The Sellers [To come, with addresses] Schedule A  

EXHIBIT CERTIFICATION I, Larry Wei Fan, Chief Financial Officer, certify that: 1. I have reviewed this quarterly report on Form 10-Q of China World Trade Corporation (the "registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to affect ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. May 15, 2008 /s/ Larry Wei Fan Larry Wei Fan Chief Financial Officer

Exhibit 10.3 THIS NONSTATUTORY STOCK OPTION AGREEMENT (“Agreement”) is made and entered into as of January 17, 2011(the “Effective Date”) by and between New Energy Technologies, Inc. a Nevada corporation (the “Company”), andAlastair Livesey(“Recipient”): In consideration of the covenants herein set forth, the parties hereto agree as follows: 1. Option Grant (a) Date option grant authorized: December 23, 2010 (c) Number of shares: (d) Exercise Price: 2. Acknowledgements. (a)Recipient is a director of the Company (the “Company/Recipient Relationship”). (b)The Board has this day approved the granting of this Option subject to the execution and delivery of this Agreement; and (c)The Board has authorized the granting to Recipient of a non-statutory stock option (“Option”) to 50,000 purchase shares (the “Option Shares”) of common stock of the Company (“CommonStock”) upon the terms and conditions hereinafter stated and pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”). 3. Option Shares; Price. The Company hereby grants to Recipient the right to purchase, upon and subject to the terms and conditions herein stated, the Option Shares for cash (or other consideration as is authorized hereunder) at the price per Option Share set forth inSection 1 above (the “Exercise Price”), such price being not less than [e.g., 100%] of the fair market value per share of the Option Shares covered by this Option as of the date of grant.For purposes of the Options, the “fair market value” of the Company’s common stock is the closing price of the common stock as quoted on the OTCBB on December 23, 2010 or, if the Company’s common stock is not traded on the date of grant, the first day of active trading following the date of grant. 4. Term of Options; Continuation of Service. Subject to the early termination provisions set forth inSections 7 and 8of this Agreement, these Options shall expire, and all rights hereunder to purchase the Option Shares shall terminate 10 years from the Effective Date. Nothing contained herein shall be construed to interfere in any way with the right of the Company, or its shareholders, or the Board, to remove or not elect Recipient as an officer and or a director of the Company, or to increase or decrease the compensation of Directors from the rate in effect at the date hereof. 5. Vesting of Option and Filing of Form S-8. Subject to the provisions ofSections 7 and 8of this Agreement, these Options shall become exercisable during the term that Recipient serves in the Company/Recipient Relationship as follows: (a)As to 20,000 shares, at any time from January 17, 2011 through January 16, 2020; (b)As to 15,000 shares, at any time from January 17, 2012 through January 16, 2020; and (c)As to 15,000 shares, at any time from January 17, 2013 through January 16, 2020. All determinations and calculations with respect to the satisfaction of the conditions to the vesting of any of the foregoing options shall be made by the Board or any committee thereof to which the Board has delegated such authority, in good faith in accordance with applicable law, the Articles of Incorporation and By-laws of the Company, in its sole discretion, and shall be final, conclusive and binding on all persons, including you and the personal representative of your estate. (ii) Form S-8. The Company shall as soon as practicable following the date hereof and subject to satisfaction of any and all applicable regulatory requirements and shareholder approval, file a registration statement on Form S-8 with the Securities and Exchange Commission registering the shares of common stock issuable upon exercise of the Options and keep such registration statement in effect until the sale of all shares of common stock issuable under the Options or expiration of the 10-year term. 6. Exercise. (a)These Options shall be exercised, as to the vested shares, by delivery to the Company of (a) written notice of exercise stating the number of Option Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Exhibit A hereto, (b) a check or cash in the amount of the Exercise Price of the Option Shares covered by the notice, unless Recipient elects to exercise the cashless exercise option set forth in Section 6(b) below, in which case no payment will be required (or such other consideration as has been approved by the Board of Directors consistent with the Plan).These Options shall are not assignable or transferable, except by will or by the laws of descent and distribution, and shall be exercisable only by Recipient during his or her lifetime. (b)Anything herein to the contrary notwithstanding, to the extent and only to the extent vested, the Options may also be exercised (as to the Option Shares vested) at such time by means of a “cashless exercise” in which the Recipient shall be entitled to receive a certificate for the number of Option Shares equal to the quotient obtained by dividing: 2 [(A-B) (X)] by (A) , where: (A)equals the average of the closing price of the Company’s Common Stock, as reported (in order of priority) on the Trading Market on which the Company’s Common Stock is then listed or quoted for trading on the Trading Date preceding the date of the election to exercise; or, if the Company’s Common Stock is not then listed or traded on a Trading Market, then the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Recipient and the Company, the fees and expenses of which shall be paid by the Company for the three (3) Trading Days immediately preceding the date of such election; (B)equals the Exercise Price of the Option, as adjusted from time to time in accordance herewith; and (X)equals the number of vested Option Shares issuable upon exercise of these Options in accordance with the terms of the Options by means of a cash exercise rather than a cashless exercise (or, if the Option is being exercised only as to a portion of the shares as to which it has vested, the portion of the Options being exercised at the time the cashless exercise is made pursuant to thisSection 6). For purposes of this Agreement: “Trading Day” means a day on which the Common Stock is traded on a Trading Market. “Trading Market” means, in order of priority, the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board or the Pink Sheets. (c)No fractional shares shall be issued upon exercise of this Option. The Company shall, in lieu of issuing any fractional share, pay the Recipient entitled a sum in cash equal to such fraction multiplied by the then effective Exercise Price. 7. Termination of Service. If the Employment Agreement is terminated, the Company agrees that all vested options may continue to be exercised until 5:00pm New York on the date of the second anniversary of the termination date of the Employment Agreement (the “Termination Date”). All unvested Options shall terminate and this Agreement shall be of no further force or effect as of the Termination Date. 8. Death of Recipient. If the Recipient shall die during the term of the Employment Agreement, Recipient’s personal representative or the person entitled to Recipient’s rights hereunder may at any time within the then remaining exercise period, exercise this Option and purchase Option Shares to the extent, but only to the extent, that Recipient could have exercised this Option as of the date of Recipient’s death; following the expiration of the aforesaid then remaining exercise period, this Agreement shall terminate in its entirety and be of no further force or effect. 3 9. No Rights as Shareholder. Recipient shall have no rights as a shareholder with respect to the Option Shares covered by any installment of this Option until the effective date of issuance of the Option Shares following exercise of this Option, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates. 10.Recapitalization. (a) Subdivision or consolidation of shares. Subject to any required action by the shareholders of the Company, the number of Option Shares covered by this Option, and the Exercise Price thereof, shall be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company shall not be deemed having been “effected without receipt of consideration by the Company.” (b) Reorganizations, Mergers etc. (i) In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a “ Reorganization”): (1) then, subject to Clause (b)(ii) below, any and all shares as to which the Option had not yet vested shall vest upon the date (the “Reorganization Vesting Date”) that the Company provides the Recipient with the Reorganization Notice (as defined below); and provided, however, that there has been no termination of the Employment Agreement Recipient shall have the right to exercise this Option to the extent of all shares subject to the Option, for a period commencing on the Reorganization Vesting Date and terminating on the date of the consummation of such Reorganization. Unless otherwise agreed to by the Company. The Option shall terminate upon the consummation of the Reorganization and may not be exercised thereafter as to any shares subject thereto. The Company shall notify Recipient in writing (the “Reorganization Notice”), at least 30 days prior to the consummation of such Reorganization, of its intention to consummate a Reorganization. (2) Anything herein to the contrary notwithstanding, the exercise of the Option or any portion thereof pursuant to this Section 10(b) will be consummated simultaneously with the consummation of the Reorganization. If after the Company provides the Reorganization Notice to the Recipient the Company provides the Recipient with a further written notice notifying the Recipient that the Reorganization will not be consummated, then the Option will return to its status prior to the Reorganization Notice and the shares as to which the Option vested solely by virtue of this Section 10(b) (i) will revert to an unvested status. 4 (ii) Subject to any required action by the shareholders of the Company, if the Company shall be the surviving entity in any merger or consolidation, these Options thereafter shall pertain to and apply to the securities to which a Recipient of Option Shares equal to the Option Shares subject to these Options would have been entitled by reason of such merger or consolidation, and the installment provisions of Section 5 shall continue to apply. (iii)In the event of a change in the shares of the Company as presently constituted, which is limited to a change of all of its authorized Stock without par value into the same number of shares of Stock with a par value, the shares resulting from any such change shall be deemed to be the Option Shares within the meaning of these Options. (iv)To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as hereinbefore expressly provided, Recipient shall have no rights by reason of any subdivision or consolidation of shares of Stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of Option Shares subject to this Option shall not be affected by, and no adjustments shall be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class. (v) The grant of these Options shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets. 11.Taxation upon Exercise of Option. Recipient understands that, upon exercise of these Options, Recipient may recognize income, for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Option Shares, determined as of the date of exercise, exceeds the Exercise Price. The acceptance of the Option Shares by Recipient shall constitute an agreement by Recipient to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount of such income and corresponding deduction to the Company for its income tax purposes. Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Recipient’s then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Recipient to make a cash payment to cover such liability as a condition of the exercise of these Options. 12.Modification, Extension and Renewal of Options. The Board or a duly appointed committee thereof, may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Code and applicable securities laws. Notwithstanding the foregoing provisions of this Section 12 , no modification shall, without the consent of the Recipient, alter to the Recipient’s detriment or impair any rights of Recipient hereunder. 5 13.Investment Intent; Restrictions on Transfer. Unless and until the Option Shares represented by this Option are registered under the Securities Act, (a)all certificates representing the Option Shares and any certificates subsequently issued in substitution therefore and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event shall bear legends in substantially the following form: “THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’) OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM. THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED DECEMBER XX, 2” and/or such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Option Shares have been placed with the Company’s transfer agent. (b)Recipient represents and agrees that if Recipient exercises this Option in whole or in part, Recipient will in each case acquire the Option Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part Recipient (or any person or persons entitled to exercise this Option under the provisions of Sections 7 and 8 of this Agreement) shall furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Option Shares represented this Option are registered under the Securities Act, either before or after the exercise this Option in whole or in part, the Recipient shall be relieved of the foregoing investment representation and agreement and shall not be required to furnish the Company with the foregoing written statement. 14.Stand-off Agreement. Recipient agrees that, in connection with any registration of the Company’s securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company’s securities, Recipient shall not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Option Shares (other than Option Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period (the “ Restrictive Period ”) as may be specified by the Company or such underwriter or managing underwriter;provided , however, that the Restrictive Period shall not exceed one year following the effective date of registration of such offering. 6 15.Construction. You and the Company have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by you and the Company and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. The headings in this Agreement are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Agreement. 16.Notices.Any and all notices (including, but not limited to the Notice of Exercise) or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2 nd Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 17.Agreement Not Subject to Plan; Applicable Law.These Options are not granted pursuant to the Plan and shall be interpreted to comply therewith. A copy of such Plan is available to Recipient, at no charge, at the principal office of the Company. Any provision of this Option inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. This Option has been granted, executed and delivered in the State of Nevada, and the interpretation and enforcement shall be governed by the laws thereof and subject to the exclusive jurisdiction of the courts therein. [SIGNATURE PAGE FOLLOWS] 7 IN WITNESS WHEREOFthe parties hereto have executed this Stock Option Agreement as of the date first above written. New Energy Technologies, Inc. By: Name: John A. Conklin Title: President and Chief Executive Officer Address and Facsimile For Notices: 9192 Red Branch Rd., Suite 110 Columbia, MD 21045 Facsimile: (240) 390-0603 Recipient Alastair Livesey Address: 8 Exhibit A NOTICE OF EXERCISE OF STOCK OPTION TO: NEW ENERGY TECHNOLOGIES, INC. 9192 Red Branch Rd., Suite 110 Columbia, MD 21045 ATTENTION: President and Chief Executive Officer The undersigned hereby elects to purchase shares (the “Purchased Option Shares”) of the Company pursuant to the terms of the Stock Option Agreement Dated December XX, 2010 between the undersigned and New Energy Technologies, Inc. and the undersigned (the “Option Agreement”), herewith tenders payment of the aggregate exercise price in full, together with all applicable transfer taxes, if any, for the Purchased Option Shares, by(check applicable box): o in lawful money of the United States; or o[if permitted] the cancellation of such number of Option Shares as is necessary, in accordance with the formula set forth in Section 6(b) of the Option Agreement with respect to the maximum number of Option Shares purchasable pursuant to the cashless exercise procedure set forth Section 6(b). Please issue a certificate or certificates representing said Option Shares in the name of the undersigned as is specified below and forward the same to the address set forth below. Signature of Recipient Print Name of Recipient: Alaistair Livesey Address For Delivery of Option Shares: 9

Exhibit 10.7 AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT This Amendment No. 2 to Employment Agreement entered into as of December 15, 2010 (this “Amendment”), between Ronald H. Spair (“Employee”) and OraSure WHEREAS, the parties have previously entered into an Employment Agreement, dated as of July 1, 2004, as amended (the “Original Agreement”); and WHEREAS, Section 409A of the Internal Revenue Code of 1986 (the “Code”) and the guidance issued thereunder imposes certain rules and regulations on arrangements that provide for the payment of non-qualified deferred compensation; and WHEREAS, the Original Agreement provides for the payment of non-qualified deferred compensation and therefore must comply with the requirements of Code Section 409A as revised from time to time; and WHEREAS, the parties desire to amend the Original Agreement as more fully set forth herein to ensure compliance with Section 409A of the Code and the rules and regulations thereunder. NOW, THEREFORE, intending to be legally bound, the parties hereby agree as follows: 1. Expenses. Section 6.8.2 of the Original Agreement is hereby amended to restate the last sentence of the first paragraph of such Section as follows: “Subject to Section 6.10, all payments will be made (or commenced) under this Section 6.8 on the 90th day after termination of employment hereunder.” 2. Effect of Amendment. Except as amended hereby, the Original Agreement shall remain in full force and effect. All references to the “Agreement” shall hereafter be deemed to mean the Original Agreement as amended by this Amendment. 3. Counterparts and Facsimiles. This Amendment may be executed, including execution by facsimile signature, in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one 4. Governing Law. This Amendment shall be governed by, and enforced in accordance with, the laws of the Commonwealth of Pennsylvania without regards to the application of the principles of conflicts of laws. The parties have executed this Amendment as of the date indicated above.       ORASURE TECHNOLOGIES, INC. /s/ Ronald H. Spair     By:   /s/ Douglas A. Michels Ronald H. Spair       Title:     President & CEO       Name:     Douglas A. Michels

As filed with the Securities and Exchange Commission on September 29, 2011 Registration No.333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GRAPHON CORPORATION (Exact name of registrant as specified in its charter) Delaware 13-3899021 (State of Incorporation) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) 5400 Soquel Avenue, Suite A-2 Santa Cruz, California 95062 (800) 472-7466 (Address and telephone number of registrant’s principal executive offices) William Swain Secretary and Chief Financial Officer GraphOn Corporation 5400 Soquel Avenue, Suite A2 Santa Cruz, California 95062 (800) 472-7466 (Name, Address and Telephone Number of Agent for Service) Copy to: Ira I. Roxland Joseph H. Schmitt SNR Denton US LLP Two World Financial Center New York, New York 10281 Telephone:(212) 768-6700 Fax:(212) 768-6800 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act: o Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company CALCULATION OF REGISTRATION FEE Title of Class of Securities to be Registered Amount to be Registered (1) Proposed Maximum Offering Price Per Share (2) Proposed Maximum Aggregate Offering Price Amount of Registration Fee Common stock, par value $0.0001 per share 58,575,000 shares $ 0.225 $ 13,179,375 $ 1,530.13 Pursuant to Rule 416(a) under the Securities Act of 1933, this registration statement also covers any additional securities that may be offered or issued in connection with any stock split, stock dividend or similar transaction. Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule457 under the Securities Act of 1933. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. The information contained in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities andthe selling stockholders arenot soliciting offers to buy these securities in any state where the offer or sale of these securities is not permitted. SUBJECT TO COMPLETION, DATED SEPTEMBER 29, 2011 Preliminary Prospectus GRAPHON CORPORATION 58,575,000 Shares of Common Stock This prospectus relates to the sale or other disposition from time to time of up to an aggregate of 58,575,000 shares of our common stock by the persons described in this prospectus, whom we call the “selling stockholders,” identified in the section entitled “Selling Stockholders” in this prospectus, or their transferees. Of such 58,575,000 shares, 35,500,000 shares are currently outstanding and 23,075,000 shares are issuable upon exercise of warrants held by the selling stockholders. We are registering these shares as required by the terms of registration rights agreements between the selling stockholders and us. Such registration does not mean that the selling stockholders will actually offer or sell any of these shares. We will not receive any proceeds from the sale or other disposition of the shares of common stock offered by the selling stockholders. We will, however, receive the exercise price of any warrants exercised for cash. To the extent that we received cash upon exercise of any warrants, we expect to use that cash for working capital and general corporate purposes. The selling stockholders may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. For additional information, you should refer to the section entitled “Plan of Distribution” of this prospectus. We are contractually obligated to pay all expenses of registration incurred in connection with this offering, except any underwriting discounts and commissions incurred by the selling stockholders. Our common stock is currently quoted on the OTC Bulletin Board under the symbol “GOJO.” The closing sales price of our common stock on September 26, 2011 was $0.22 per share. This investment involves risks. You should refer to the discussion of risk factors, beginning on page4 of this prospectus. Neither the Securities and Exchange Commission nor anystate securities commissionhas approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. [], 2011 TABLE OF CONTENTS Page FORWARD-LOOKING INFORMATION i PROSPECTUS SUMMARY 1 RISK FACTORS 4 USE OF PROCEEDS 9 PRICE RANGE OF OUR COMMON STOCK 9 DIVIDEND POLICY 9 SELLING STOCKHOLDERS 10 PLAN OF DISTRIBUTION 12 DESCRIPTION OF OUR SECURITIES 14 LEGAL MATTERS 16 EXPERTS 16 WHERE YOU CAN FIND MORE INFORMATION 16 As permitted under the rules of the Securities and Exchange Commission, or the SEC, this prospectus incorporates important business information about GraphOn Corporation that is contained in documents that we file with the SEC, but that are not included in or delivered with this prospectus. You may obtain copies of these documents, without charge, from the website maintained by the SEC at www.sec.gov, as well as other sources. See “Where You Can Find More Information” in this prospectus. You should rely only on the information contained in or incorporated by reference into this prospectus. We have not authorized anyone to provide you with additional or different information from that contained in or incorporated by reference into this prospectus. You should assume that the information contained in or incorporated by reference into this prospectus is accurate only as of any date on the front cover of this prospectus or the date of the document incorporated by reference, as applicable, regardless of the time of delivery of this prospectus or any exercise of the subscription rights. Our business, financial condition, results of operations and prospects may have changed since those dates. FORWARD-LOOKING INFORMATION This prospectus includes, in addition to historical information, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. This act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about themselves so long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact we make in this prospectus are forward-looking statements. In particular, the statements regarding industry prospects and our future results of operations or financial position are forward-looking statements. Such statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ significantly from those described in the forward looking statements. Factors that may cause such a difference include the following: · the success of our new GO-Global products depends on a number of factors including market acceptance and our ability to manage the risks associated with product introduction; · our revenue could be adversely impacted if any of our significant customers reduces its order levels or fails to order during a reporting period; · factors set forth in this prospectus under “Risk Factors” as well as elsewhere in this prospectus; and · factors set forth in documents incorporated by reference in this prospectus. Statements included in this prospectus are based upon information known to us as of the date that this prospectus is filed with the SEC, and we assume no obligation to update or alter our forward-looking statements made in this prospectus, whether as a result of new information, future events or otherwise, except as otherwise required by applicable federal securities laws. i Table of Contents PROSPECTUS SUMMARY This following summary does not contain all of the information you should consider in making your investment decision to acquire our common stock. For a more complete understanding of our company and our common stock, you should read the more detailed information, including our financial statements and related notes, included elsewhere in this prospectus or incorporated by reference in this prospectus. You should carefully consider, among other things, the matters discussed in “Risk Factors.” Overview We are developers of cloud application delivery software for multiple computer operating systems, including Windows, UNIX and several Linux-based variants. Our immediate focus is on Web-enabling applications for use and/or resale by independent software vendors (ISVs), corporate enterprises, governmental and educational institutions, and others who wish to take advantage of cross-platform remote access, and developing software-based secure, private cloud environments. We have also made significant investments in intellectual property. Our operations are conducted and managed in two business segments - “Software” and “Intellectual Property.” Cloud application delivery is a broad-based term that describes software technologies that can create or enhance the portability, manageability and/or compatibility of a software application or program. A public cloud refers to a system that is generally externally sited from a particular enterprise and whose resources are accessible over the Internet to anyone willing to purchase such services. A private cloud refers to a system that is contained entirely within a private network, e.g., within an enterprise, a department within an enterprise or hosted on dedicated rented machines. Cloud application delivery software is sometimes referred to, or categorized, as thin-client computing or server-based computing. It is a software model wherein traditional desktop software applications are relocated to run entirely on a server, or host computer. This centralized deployment and management of applications reduces the complexity and total costs associated with enterprise computing. Our software architecture provides application developers with the ability to relocate their desktop applications to a host computer from where they can be quickly accessed by a wide range of computer and display devices over a variety of connections. Applications can be Web-enabled without the need to modify the original Windows, UNIX or Linux application’s software. Secure private cloud environments can be implemented where the applications and data remain centralized behind a secure firewall and are accessed from remote locations. We are a Delaware corporation, founded in May 1996. Our headquarters are located at 5400 Soquel Avenue, Suite A2, Santa Cruz, California, 95062 and our phone number is 1-800-GRAPHON (1-800-472-7466). We also have offices in Concord, New Hampshire, Irvine, California, and Charlotte, North Carolina. Additionally, we have remote employees located in various states, as well as internationally in England and Israel. Our Internet Website is http://www.graphon.com. The information on our Website is not part of this prospectus. Our Products Our primary product offerings can be categorized into product families as follows: GO-Global Host: Host products allow access to applications from remote locations and a variety of connections, including the Internet and dial-up connections. Such access allows applications to be run via a Web browser, over many types of data connections, regardless of the bandwidth or operating system. Web-enabling is achieved without modifying the underlying application’s code or requiring add-ons. Host family products include Table of Contents GO-Global Windows Host 4 and all currently available versions of our legacy GO-Global products (GO-Global for Windows 3.2 and GO-Global for UNIX 2.2). GO-Global Cloud: Cloud products offera centralized management suite that gives users the ability to access and share applications, files and documents on Windows, UNIX and Linux computers via simple hyperlinks. They give administrators extensive control over user rights and privileges, and allow them to monitor and manage clusters of GO-Global Hosts that support thousands of users. GO-Global Cloud products give application developers the ability to integrate Windows, UNIX and Linux applications into their Web-based enterprise and workflow applications. GO-Global Cloud products include GO-Global Host capabilities. We released GO-Global Cloud for Windows in March 2011 and expect to release GO-Global Cloud for UNIX in the second half of 2011. GO-Global Client: We plan to develop Client products for portable and mobile devices. We released GO-Global iPad Client, our first product within this product family, during June 2011. Recent Developments On August 9, 2011, we appointed John Cronin and Steven Ledger to our board of directors. John Cronin is the founder, managing director and chairman of ipCapital Group, Inc., an intellectual property strategy firm. Steven Ledger founded and has been since 2002 managing partner of Tamalpais Partners LLC, an investor in, and advisor to, emerging growth companies. On August 9, 2011, we announced the appointment of Eldad Eilam as our Chief Technology Officer. Mr. Eilam has served as a consultant to our company since June 2010. From July 2006 to March 2009, Mr. Eilam was President of GraphOn Research Labs, Limited, our Israeli subsidiary. On September 1, 2011, we completed a sale of 35,500,000 million shares of our common stock in a private placement to a group of retail and institutional investors. We also issued five year warrants to the investors to purchase an additional 17,750,000 shares of common stock at an exercise price of $0.20 per share. The total gross proceeds of the financing were $7.1 million and net proceeds, after deducting placement agent fees and other expenses, were approximately $6.25 million. We intend to use the proceeds for the development, commercialization and exploitation of our present and future intellectual property and working capital purposes. In connection with the private placement, the placement agent was issued warrants to purchase 3,550,000 shares of our common stock at $0.20 per share and warrants to purchase 1,775,000 shares of our common stock at $0.26 per share. 2 Table of Contents The Offering Common stock offered for sale by the selling stockholders 58,575,000 shares (1) Common stock to be outstanding after this offering 104,581,625 shares (1)(2) Use of Proceeds We will not receive any proceeds from the sale or other disposition of the shares of common stock offered by the selling stockholders. We will, however, receive the exercise price of any warrants exercised for cash. To the extent that we received cash upon exercise of any warrants, we expect to use that cash for working capital and general corporate purposes. Risk Factors See the section entitled “Risk Factors” beginning on page 4 and other information included in this prospectus or incorporated by reference for a discussion of factors you should consider before making an investment decision OTC Bulletin Board symbol GOJO Includes 23,075,000 shares issuable upon the exercise of warrants held by the selling stockholders. Based upon our issued and outstanding shares of common stock as of September 14, 2011. This number excludes 10,134,301 shares of our common stock, which are issuable upon exercise of our outstanding options. An additional 10,240,699 shares are reserved for future grants under our stock option plans. 3 Table of Contents RISK FACTORS Investing in our securities involves risks. Before investing in our securities, you should carefully consider the risks described below as well as the other information included in, and incorporated by reference in, this prospectus. We have a history of operating losses and expect these losses to continue, at least for the near future. We have experienced significant operating losses since we began operations. We incurred operating losses of $835,600 and $1,833,600 for the years ended December 31, 2010 and 2009, respectively. We expect that both our Software and Intellectual Property segments will incur operating losses in 2011; consequently, we expect to report an operating loss on a consolidated basis for 2011. In subsequent reporting periods, if revenues grow more slowly than anticipated, or if aggregate operating expenses exceed expectations, we will continue to be unprofitable. Even if we become profitable, we may be unable to sustain such profitability. Weak economic conditions could adversely affect our business, results of operations, financial condition, and cash flows. The current weak economic conditions, coupled with continued uncertainty as to its duration and severity, could negatively impact our current and prospective customers, resulting in delays or reductions in their technology purchases. As a result, we could experience fewer new orders, fewer renewals, longer sales cycles, the impact of the slower adoption of newer technologies, increased price competition, and downward pressure on our pricing during contract renewals, any of which could have a material and adverse impact on our business, results of operations, financial condition, and cash flows. These weak economic conditions also may negatively impact our ability to collect payment for outstanding debts owed to us by our customers or other parties with whom we do business. We can not predict the timing or strength of any subsequent recovery. Our revenue is typically generated from a limited number of significant customers. A material portion of our revenue during any reporting period is typically generated from a limited number of significant customers, all of which are unrelated third parties. We categorize our customers into three broad categories for revenue recognition purposes: stocking resellers, non-stocking resellers and direct end users. If any of our significant non-stocking resellers or direct end users reduce their order level or fail to order during a reporting period, our revenue could be materially adversely impacted as we recognize revenue on sales to these customers upon product delivery, assuming all other revenue recognition criteria have been met. Our significant stocking resellers are typically ISVs who have bundled our products with theirs to sell as Web-enabled versions of their products. These customers maintain inventories of our products for resale, and we do not recognize revenue until our products are resold to end-users, assuming all other revenue recognition criteria have been met. If these customers determine to maintain a lower level of inventory in the future and/or they are unable to sell their inventory to end-users as quickly as they have in the past, our revenue and business could be materially adversely impacted. 4 Table of Contents If we are unable to develop new products and enhancements to our existing products, our business, results of operations and financial condition could be materially adversely impacted. The market for our products and services are characterized by: · frequent new product and service introductions and enhancements; · rapid technological change; · evolving industry standards; · fluctuations in customer demand; and · changes in customer requirements. Our future success depends on our ability to continually enhance our current products and develop and introduce new products that our customers choose to buy. If we are unable to satisfy our customers’ demands and remain competitive with other products that could satisfy their needs by introducing new products and enhancements, our business, results of operations, financial condition, and cash flows could be materially adversely impacted. Our future success could be hindered by: · the amount of cash we have available to fund investment in new products and enhancements; · delays in our introduction of new products and/or enhancements of existing products; · delays in market acceptance of new products and/or enhancements of existing products; and · a competitor’s announcement of new products and/or product enhancements or technologies that could replace or shorten the life cycle of our existing products. For example, sales of our GO-Global Windows Host software could be affected by the announcement from Microsoft of the intended release, and the subsequent actual release, of a new Windows-based operating system, or an upgrade to a previously released Windows-based operating system version. These new or upgraded systems may contain similar features to our products or they could contain architectural changes that would temporarily prevent our products from functioning properly within a Windows-based operating system environment. Sales of products within our GO-Global product families constitute a substantial majority of our revenue. We anticipate that sales of products within our GO-Global product families, and related enhancements, will continue to constitute a substantial majority of our revenue for the foreseeable future. The success of our new GO-Global products depends on a number of factors including market acceptance of the new GO-Global products and our ability to manage the risks associated with product introduction. Declines in demand for our GO-Global products could occur as a result of: · lack of success with our strategic partners; · new competitive product releases and updates to existing competitive products; · decreasing or stagnant information technology spending levels; · price competition; · technological changes, or; · general economic conditions in the market in which we operate. 5 Table of Contents If our customers do not continue to purchase GO-Global products as a result of these or other factors, our revenue would decrease and our results of operations, financial condition, and cash flows would be adversely affected. Our operating results in one or more future periods are likely to fluctuate significantly and may fail to meet or exceed the expectations of investors. Our operating results are likely to fluctuate significantly in the future on a quarterly and annual basis due to a number of factors, many of which are outside our control. Factors that could cause our revenues to fluctuate include the following: · our ability to maximize the revenue opportunities of our patents; · variations in the size of orders by our customers; · increased competition; and · the proportion of overall revenues derived from different sales channels such as distributors, original equipment manufacturers (OEMs) and others. In addition, our royalty and license revenues are impacted by fluctuations in OEM licensing activity from quarter to quarter, which may involve one-time orders from non-recurring customers, or customers who order infrequently. Our expense levels are based, in part, on expected future orders and sales; therefore, if orders and sales levels are below expectations, our operating results are likely to be materially adversely affected. Additionally, because significant portions of our expenses are fixed, a reduction in sales levels may disproportionately affect our net income. Also, we may reduce prices or increase spending in response to competition or to pursue new market opportunities. Because of these factors, our operating results in one or more future periods may fail to meet or exceed the expectations of investors. In that event, the trading price of our common stock would likely be adversely affected. We will encounter challenges in recruiting, hiring and retaining replacements for any members of key management or other personnel who depart. Our success and business strategy is dependent in large part on our ability to attract and retain key management and other personnel in certain areas of our business. If any of these employees were to leave, we would need to attract and retain replacements for them. Without a successful replacement, the loss of the services of one or more key members of our management group and other key personnel could have a material adverse effect on our business. We do not have long-term employment agreements with any of our key personnel and any officer or other employee can terminate their relationship with us at any time. We may also need to add key personnel in the future, in order to successfully implement our business strategies. The market for such qualified personnel is competitive and it includes other potential employers whose financial resources for such qualified personnel are more substantial than ours. Consequently, we could find it difficult to attract, assimilate or retain such qualified personnel in sufficient numbers to successfully implement our business strategies. Our failure to adequately protect our proprietary rights may adversely affect us. Our commercial success is dependent, in large part, upon our ability to protect our proprietary rights. We rely on a combination of patent, copyright and trademark laws, and on trade secrets and confidentiality provisions and other contractual provisions to protect our proprietary rights. These measures afford only limited protection. We cannot assure you that measures we have taken will be 6 Table of Contents adequate to protect us from misappropriation or infringement of our intellectual property. Despite our efforts to protect proprietary rights, it may be possible for unauthorized third parties to copy aspects of our products or obtain and use information that we regard as proprietary. In addition, the laws of some foreign countries do not protect our intellectual property rights as fully as do the laws of the United States. Furthermore, we cannot assure you that the existence of any proprietary rights will prevent the development of competitive products. The infringement upon, or loss of any proprietary rights, or the development of competitive products despite such proprietary rights, could have a material adverse effect on our business. Our business significantly benefits from strategic relationships and there can be no assurance that such relationships will continue in the future. Our business and strategy relies to a significant extent on our strategic relationships with other companies. There is no assurance that we will be able to maintain or develop any of these relationships or to replace them in the event any of these relationships are terminated. In addition, any failure to renew or extend any licenses between any third party and us may adversely affect our business. We rely on indirect distribution channels for our products and may not be able to retain existing reseller relationships or to develop new reseller relationships. Our products are primarily sold through several distribution channels. An integral part of our strategy is to strengthen our relationships with resellers such as OEMs, systems integrators, VARs, distributors and other vendors to encourage these parties to recommend or distribute our products and to add resellers both domestically and internationally. We currently invest, and intend to continue to invest, significant resources to expand our sales and marketing capabilities. We cannot assure you that we will be able to attract and/or retain resellers to market our products effectively. Our inability to attract resellers and the loss of any current reseller relationships could have a material adverse effect on our business, results of operations, financial condition, and cash flows. Additionally, we cannot assure you that resellers will devote enough resources to provide effective sales and marketing support to our products. The market in which we participate is highly competitive and has more established competitors. The market we participate in is intensely competitive, rapidly evolving and subject to technological changes. We expect competition to increase as other companies introduce additional competitive products. In order to compete effectively, we must continually develop and market new and enhanced products and market those products at competitive prices. As markets for our products continue to develop, additional companies, including companies in the computer hardware, software and networking industries with significant market presence, may enter the markets in which we compete and further intensify competition. A number of our current and potential competitors have longer operating histories, greater name recognition and significantly greater financial, sales, technical, marketing and other resources than we do. We cannot give any assurance that our competitors will not develop and market competitive products that will offer superior price or performance features, or that new competitors will not enter our markets and offer such products. We believe that we will need to invest increased financial resources in research and development to remain competitive in the future. Such financial resources may not be available to us at the time or times that we need them, or upon terms acceptable to us. We cannot assure you that we will be able to establish and maintain a significant market position in the face of our competition and our failure to do so would adversely affect our business. 7 Table of Contents Our stock is thinly traded and its price has been historically volatile. Our common stock is quoted on the OTC Bulletin Board and is thinly traded. As such, holders of our stock are subject to a high risk of illiquidity, e.g., you may not be able to sell as many shares at the price you would like, or you may not be able to purchase as many shares at the price you would like, due to the low average daily trading volume of our stock. Additionally, the market price of our stock has historically been volatile; it has fluctuated significantly to date. The trading price of our stock is likely to continue to be highly volatile and subject to wide fluctuations. Your investment in our stock could lose value. If a substantial number of shares of our common stock are sold into the public market, the price of our common stock could fall. As of September 14, 2011, we had 81,506,625 shares of common stock outstanding. This prospectus relates to the sale or other disposition from time to time of up to 58,575,000 shares of our common stock by the selling stockholders or their transferees. Of such 58,575,000 shares, 35,500,000 shares are currently outstanding and 23,075,000 shares are issuable upon exercise of warrants held by the selling stockholders. As the outstanding shares held by the selling stockholders will be freely tradable as of the date of this prospectus and the shares issuable upon exercise of the warrants held by the selling stockholders will be freely tradable on the date of exercise of such warrants, the sale of a substantial number of such shares into the public market may cause the price of our common stock to fall. 8 Table of Contents USE OF PROCEEDS We will not receive any proceeds from the sale or other disposition of the shares of common stock offered by the selling stockholders. We will, however, receive the exercise price of any warrants exercised for cash. To the extent that we received cash upon exercise of any warrants, we expect to use that cash for working capital and general corporate purposes. PRICE RANGE OF OUR COMMON STOCK Our common stock is quoted on the OTC Bulletin Board under the symbol “GOJO”. The following table sets forth, for the periods indicated, the high and low closing sales price of our common stock. High Low 2011: First Quarter $ $ Second Quarter Third Quarter (through September 14, 2011) 2010: First Quarter $ $ Second Quarter Third Quarter Fourth Quarter 2009: First Quarter $ $ Second Quarter Third Quarter Fourth Quarter The above quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. On September 14, 2011, there were approximately 177 holders of record of our common stock. The number of record holders of our common stock does not include beneficial owners holding shares through nominee names. On September 26, 2011, the closing sales price of our common stock was $0.22 per share. DIVIDEND POLICY We have never declared or paid dividends on our common stock, nor do we anticipate paying any cash dividends for the foreseeable future. We currently intend to retain future earnings, if any, to finance the operations and expansion of our business. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon the earnings, financial condition, operating results, capital requirements and other factors as deemed necessary by the Board of Directors. 9 Table of Contents SELLING STOCKHOLDERS On September 1, 2011, we entered into a securities purchase agreement with a limited number of institutional and retail investors, all of whom were “accredited investors” within the meaning of Rule 501 promulgated under the Securities Act of 1933, pursuant to which we issued and sold for cash 35,500,000 shares of our common stock at a purchase price of $0.20 per share, resulting in our receipt of gross proceeds of $7.1 million. We also issued warrants to the investors for no additional consideration to purchase an aggregate of 17,750,000 shares of common stock at an exercise price of $0.26 per share from September 1, 2011 through September 1, 2016. The closing sales price of our common stock on August 31, 2011 and September 1, 2011 was $0.1998 and $0.185 per share, respectively. MDB Capital Group, LLC acted as our exclusive placement agent in connection with this transaction, for which it received, among other consideration, warrants to purchase 3,550,000 and 1,775,000 shares of our common stock at $0.20 and $0.26 per share, respectively. This prospectus relates to our registration, for the account of such investors, as well as MDB Capital Group, LLC and its affiliates, of an aggregate of 58,575,000 shares of our common stock, including warrants to purchase 23,075,000 shares of our common stock. We are registering these shares as required by the terms of registration rights agreements between these selling stockholders and us. We have agreed to pay all expenses and costs to comply with our obligation to register the selling stockholders’ shares of common stock. We have also agreed to indemnify and hold harmless the selling stockholders against certain losses, claims, damages or liabilities, joint or several, arising under the Securities Act of 1933. The information in the table and the footnotes to the table have been provided to us by the selling stockholders. The last column of this table assumes the sale of all of the shares of common stock offered by this prospectus.The registration of the offered shares does not mean that any or all of the selling stockholders will offer or sell any of these shares. Except as set forth in the notes to this table, there is not nor has there been a material relationship between us and any of the selling stockholders within the past three years. Name of Selling Stockholder Number of Shares Beneficially Owned Common Stock Offered by Selling Stockholder (1) Shares Beneficially Owned After Offering Number Percent Special Situations Technology Fund, L.P. (2) — — Special Situations Technology Fund II, L.P. (2) — — Aaron Grunfeld — — ACT Capital Management LLLP (3) — — ACT Capital Partners LP (3) * Amir L. Ecker 1.8% Compass Global Management, Ltd. (4) — — David R. Morgan — — David R. Wilmerding, III — — Del Rey Management, L.P. (5) — — Equity Trust Company Custodian FBO Robert C. Clifford (6) — — Erick Richardson Jr. — — Gary Schuman — — Goldman Capital Inc. Money Purchase Plan (7) — — James Tierney — — Jon C. Baker Family, LLC (8) — — Kepmen Capital (9) — — Kleeman Family 2004 Revocable Trust (10) — — London Family Trust, Robert S. London TTEE (11) — — Nicholas A. Foley — — Nicholas Lewin — — NTC & Co. FBO: John P. Francis (12) — — Ponte Vedra Partners, Ltd. (13) — — Proximity Fund (14) — — R & A Chade Family Trust DTD May 26-1999, Richard and Anthea Chade TTEES (15) — — Rodney Baber — — Strome Alpha Offshore Limited (16) — — Tamalpais Master Fund Ltd. (17) — — Thomas L. Wallace — — Wall Street Capital Partners, L.P. (18) — — Wiley Pickett — — William S. Lapp — — Yellowstone Pioneer Enterprises, LLC (19) — — MDB Capital Group LLC (20) 2,662,500 (22) 2,662,500 (22) — — Peter Conley (21) 1,230,000 (22) 1,230,000 (22) — — Anthony DiGiandomenico (21) 532,500 (22) 532,500 (22) — — Robert Clifford (21) 397,500 (22) 397,500 (22) — — Kevin Cotter (21) 234,375 (22) 234,375 (22) — — George Brandon (21) 234,375 (22) 234,375 (22) — — Gary Schuman (21) 18,750 (22) 18,750 (22) — — Alex Zapanta (21) 15,000 (22) 15,000 (22) — — *Denotes less than 1% 10 Table of Contents Except for the common stock being offered by the selling stockholders identified as MDB Capital Group LLC and Messrs. Conley, DiGiandomenico, Clifford, Cotter, Brandon, Schuman and Zapanta, one-third of the number of shares of common stock being offered by each of the other selling stockholders listed in this table consists of shares issuable upon exercise of warrants owned by the respective selling stockholder. Austin Marxe and David Greenhouse have shared voting and dispositive power over such shares. Amir Ecker and Carol Frankenfield have shared voting and dispositive power over such shares. Thomas Wallace has voting and dispositive power over such shares. Gregory Bied has voting and dispositive power over such shares. Robert Clifford has voting and dispositive power over such shares. Neal Goldman has voting and dispositive power over such shares. Jon Baker has voting and dispositive power over such shares. Martin Regan has voting and dispositive power over such shares. Stephen Kleeman has voting and dispositive power over such shares. Robert London has voting and dispositive power over such shares. John Francis has voting and dispositive power over such shares. Peter Massanisso has voting and dispositive power over such shares. Geoffrey Crosby has voting and dispositive power over such shares. Richard and Anthea Chade have shared voting and dispositive power over such shares. Mark Strome has voting and dispositive power over such shares. Steven Ledger has voting and dispositive power over such shares. Mr. Ledger is a director of our company. Jeffrey Kone has voting and dispositive power over such shares. Linda Rosen has voting and dispositive power over such shares. Christopher Marlett, Chairman and Chief Executive Officer of MDB Capital Group LLC, has voting and dispositive power over such shares. MDB Capital Group LLC, a broker-dealer, was the placement agent of the private placement that we completed on September 1, 2011. The selling stockholder is an affiliate of MDB Capital Group LLC, a broker-dealer. All of such shares are issuable upon exercise of warrants owned by the selling stockholder. 11 Table of Contents PLAN OF DISTRIBUTION The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein: ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; purchases by a broker-dealer as principal and resale by the broker-dealer for its account; an exchange distribution in accordance with the rules of the applicable exchange; in the over-the-counter market; privately negotiated transactions; short sales effected after the date the registration statement of which this Prospectus is part is declared effective by the SEC; through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; broker-dealers may agree with the selling stockholders to sell a specificed number of each shres at a stipulated price per share; a combination of any such methods of sale; and any other method permitted by applicable law. The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell 12 Table of Contents pursuant to this prospectus (as supplemented or amended to reflect such transaction). The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will receive the exercise price of the warrants - up to $5,786,500 if all of the warrants are exercised for cash. We intend to use such proceeds, if any, for working capital and general corporate purposes. The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule. The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters" within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who are "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus. In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with. We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus. We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which all of the shares may be sold without restriction pursuant to Rule 144 of the Securities Act. 13 Table of Contents DESCRIPTION OF OUR SECURITIES Common Stock We are currently authorized to issue up to 195,000,000 shares of our common stock, $0.0001 par value. As of September 14, 2011, 81,506,625 shares of our common stock were issued and outstanding, and held of record by approximately 177 persons. We estimate that there are in excess of 1,400 beneficial owners of our common stock. Holders of shares of our common stock are entitled to such dividends as may be declared from time to time by the board in its discretion, on a ratable basis, out of funds legally available therefrom, and to a pro rata share of all assets available for distribution upon liquidation, dissolution or other winding up of our affairs. All of the outstanding shares of our common stock are fully paid and non-assessable. Warrants The material terms of the warrants issued to the selling stockholders are as follows: · warrants to purchase an aggregate of 19,525,000 shares of our common stock are exercisable at $0.26 per share and expire on September 1, 2016; and · warrants to purchase an aggregate of 3,550,000 shares of our common stock are exercisable at $0.20 per share and expire on September 1, 2016; and The exercise prices of the warrants are subject to adjustment upon the occurrence of certain events, including the issuance of our common stock at a price below the exercise price of the warrants or a split-up or combination of our common stock and a reorganization or merger to which we are a party. Limitation of Liability As permitted by the General Corporation Law of the State of Delaware, our restated certificate of incorporation provides that our directors shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability: · for any breach of the director’s duty of loyalty to us or our stockholders; · for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; · under section 174 of the Delaware law, relating to unlawful payment of dividends or unlawful stock purchases or redemption of stock; and · for any transaction from which the director derives an improper personal benefit. As a result of this provision, we and our stockholders may be unable to obtain monetary damages from a director for breach of his or her duty of care. Our restated certificate of incorporation provides for the indemnification of our directors and officers, and, to the extent authorized by our board in its sole and absolute discretion, employees and agents, to the full extent authorized by, and subject to the conditions set forth in the Delaware law. 14 Table of Contents Delaware Anti-Takeover Law We are subject to the provisions of section 203 of the Delaware law. Section 203 prohibits publicly held Delaware corporations from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation’s voting stock. These provisions could have the effect of delaying, deferring or preventing a change of control of us or reducing the price that certain investors might be willing to pay in the future for shares of our common stock. Transfer Agent The transfer agent for our common stock is American Stock Transfer & Trust Company, 6201 15th Avenue, Brooklyn, New York 10038. 15 Table of Contents LEGAL MATTERS The validity of the shares of our common stock covered by this prospectus has been passed upon by SNR Denton US LLP, New York, New York. EXPERTS The consolidated financial statements of GraphOn Corporation at December 31, 2010 and 2009 and for each of the years in the two-year period ended December 31, 2010, have been incorporated by reference in this prospectus in reliance upon the report of Macias Gini & O’Connell LLP, independent registered public accounting firm, incorporated by reference in this prospectus and upon authority of said firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934 and, therefore, we file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. Copies of such periodic reports, proxy statements and other information are available for inspection without charge at the public reference room maintained by the SEC, located at 100 FStreet, N.E., Washington, D.C. 20549, and copies of all or any part of these filings may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. The SEC allows us to incorporate by reference the information we have filed with it, which means that we can disclose important information to you by referring you to those documents. Our SEC File Number is 0-21832. The information incorporated by reference is considered to be part of this prospectus. The documents we are incorporating by reference are as follows: · our Annual Report on Form10-K for the year ended December 31, 2010, filed with the SEC on March 31, 2011; · our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, filed with the SEC on May 16, 2011; · our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, filed with the SEC on August 15, 2011; · our Current Report on Form8-K, dated April 25, 2011, filed with the SEC on April 26, 2011; · our Current Report on Form8-K, dated May 11, 2011, filed with the SEC on May 17, 2011; · our Current Report on Form8-K, dated August 8, 2011, filed with the SEC on August 11, 2011; · our Current Report on Form8-K, dated August 9, 2011, filed with the SEC on August 15, 2011; · our Current Report on Form8-K, dated September 1, 2011, filed with the SEC on September 8, 2011, and Amendment No. 1 thereto, filed with the SEC on September 13, 2011; · our Current Report on Form8-K, dated September 2, 2011, filed with the SEC on September 6, 2011; · the description of our common stock contained in our registration statement on Form8-A, filed with the SEC on November 6, 1996. 16 Table of Contents We will provide without charge to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, upon written or oral request, a copy of any or all of the foregoing documents which we incorporate by reference in this prospectus (not including exhibits to such documents unless such exhibits are specifically incorporated by reference to such documents). Requests should be directed to: GraphOn Corporation, 5400 Soquel Avenue, Suite A-2, Santa Cruz, California, 95062; our phone number is 1-800-GRAPHON (1-800-472-7466). 17 Table of Contents PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution The following table sets forth various expenses that will be incurred in connection with this offering as it relates to this Registration Statement: SEC Filing Fee $ State Securities Filing Fees * Legal Fees and Expenses * Accounting Fees and Expenses * Printing Expenses * Miscellaneous Expenses Total $ * * Estimated Item 14. Indemnification of Directors and Officers Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee of or agent to the Registrant. The statute provides that it is not exclusive of other rights to which those seeking indemnification may be entitled under any by-law, agreement, or vote of stockholders or disinterested directors or otherwise. The Registrant’s Bylaws provide that any person made a party to an action by or in the right of the Registrant to procure a judgment in its favor by reason of the fact that he, his testator or intestate, is or was a director or officer of the Registrant shall be indemnified by the Registrant against the reasonable expenses, including attorneys fees, actually and necessarily incurred by him in connection with the defense of such action or in connection with an appeal therein, to the fullest extent permitted by the General Corporation Law or any successor thereto. The Registrant’s Bylaws provide that any person made or threatened to be made a party to an action or proceeding other than one by or in the right of the Registrant to procure a judgment in its favor, whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, which any director or officer of the Registrant served in any capacity at the request of the Registrant, by reason of the fact that he, his testator or intestate, was a director or officer of the Registrant, or served such other corporation in any capacity, shall be indemnified by the Registrant against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, if such director or officer acted in good faith for a purpose which he reasonably believed to be in the best interests of the Registrant and, in criminal actions or proceedings, in which he had no reasonable cause to believe that his conduct was unlawful. II-1 Table of Contents Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for payments of unlawful dividends or unlawful stock repurchases or redemptions, or (iv) for any transaction from which the director derived an improper personal benefit. The Registrant’s certificate of incorporation provides for such limitation of liability. Item 15. Recent Sales of Unregistered Securities Since June 30, 2008, the Registrant has issued the following securities that were not registered under the Securities Act of 1933 (the “Securities Act”): On September 1, 2011, the Registrant issued 35,500,000 shares of its common stock at $0.20 per share to 33 accredited investors for an aggregate purchase price of $7.1 million. The Registrant also issued to the investors for no additional consideration warrants to purchase an aggregate of 17,750,000 shares of common stock at an exercise price of $0.26 per share. The Registrant issued to the placement agent of this transaction a warrant to purchase 3,550,000 shares of common stock exercisable at an exercise price of $0.20 per share and a warrant to purchase 1,775,000 shares of common stock exercisable at an exercise price of $0.26 per share. Each of the warrants is exercisable between September 1, 2011 and September 1, 2016. The issuance of such common stock and warrants was not registered under the Securities Act of 1933 because such securities were offered and sold in transactions not involving a public offering, exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) and in compliance with Rule 506 thereunder. During the three year period ended September 14, 2011, the Registrant issued options to purchase 5,533,666 shares of its common stock, at exercise prices ranging from $0.05 to $0.38 per share, to various employees and directors pursuant to its various employee benefit plans. The granting of such stock options and awarding of such restricted stock to the employees and directors was not registered under the Securities Act of 1933 because the stock options and restricted stock either did not involve an offer or sale for purposes of Section 2(a)(3) of the Securities Act of 1933, in reliance on the fact that the stock options and restricted stock were granted for no consideration, or were offered and sold in transactions not involving a public offering, exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) and in compliance with Rule 506 thereunder. Item 16. Exhibits The following is a list of exhibits filed herewith as part of the registration statement: Exhibit Number Description of Exhibit Amended and Restated Certificate of Incorporation of Registrant, as amended (1) Second Amended and Restated Bylaws of Registrant (2) Form of certificate evidencing shares of common stock of Registrant (3) Form of Warrant issued on September 1, 2011 (4) II-2 Table of Contents Opinion of SNR Denton US LLP * Lease Agreement between Registrant and Central United Life Insurance, dated as of October 24, 2003 (5) Fourth Amendment to Lease Agreement between Registrant and Central United Life Insurance, dated as of September 15, 2009 (2) 1996 Stock Option Plan of Registrant (3) 1998 Stock Option/Stock Issuance Plan of Registrant (6) 2005 Equity Incentive Plan (7) Stock Option Agreement, dated January 29, 2005 by and between Registrant and Gary Green (8) Employment Agreement, dated February 11, 2000, by and between Registrant and William Swain (9) Director Severance Plan (10) Key Employee Severance Plan (10) 2008 Equity Incentive Plan, as amended September 8, 2008 (11) Securities Purchase Agreement, dated September 1, 2011 (4) Form of Registration Rights Agreement, dated September 1, 2011 (4) Subsidiaries of Registrant (12) Consent of Macias Gini & O’Connell LLP Consent of SNR Denton US LLP (contained in their opinion included under Exhibit5.1) * *To be filed in an amendment to this registration statement Filed on April 2, 2007 as an exhibit to Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2006, and incorporated herein by reference. Filed on March 31, 2010 as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-11165), and incorporated herein by reference; Exhibit 4.1 was filed on September 19, 1996 and Exhibit 10.3 was filed on August 30, 1996 Filed on September 8, 2011 as an exhibit to the Registrant’s Current Report on Form 8-K, dated September 1, 2011, and incorporated herein by reference Filed on March 30, 2004 as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003, and incorporated herein by reference Filed on June 23, 2000 as an exhibit to the Registrant’s Registration Statement on Form S-8 (File No. 333-40174) and incorporated herein by reference Filed on November 25, 2005 as an exhibit to Registrant’s definitive Proxy Statement for the Registrant’s 2005 Annual Meeting, and incorporated herein by reference Filed on April 17, 2006 as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2005, and incorporated herein by reference II-3 Table of Contents Filed on February 7, 2007 as an exhibit to Post-Effective Amendment No. 4 to the Registrant’s Registration Statement to Form S-1 on Form SB-2 (File No. 333-124791), and incorporated herein by reference Filed on August 14, 2008 as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, and incorporated herein by reference Filed on September 29, 2011 as an exhibit to the Registrant’s Registration Statement on Form S-8, and incorporated herein by reference Filed on March 31, 2009 as an exhibit to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference. Item 17. Undertakings The undersigned registrant hereby undertakes: (1)That for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule430A and contained in a form of prospectus filed by Registrant pursuant to Rule424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2)That for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (a) To include any prospectus required by Section10(a)(3) of the Securities Act; (b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in “Calculation of Registration Fee” table in the effective registration statement; (c) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (4)That for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 Table of Contents (5)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of Registrant as described in Item 14 of this Part II to the registration statement, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-5 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Cruz, State of California, on the 29th day of September 2011. GRAPHON CORPORATION By: /s/ William Swain William Swain Secretary and Chief Financial Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints and hereby authorizes Robert Dilworth and William Swain, severally, such person's true and lawful attorneys-in-fact, with full power of substitution or resubstitution, for such person and in such person's name, place and stead, in any and all capacities, to sign on such person's behalf, individually and in each capacity stated below, any and all amendments, including post-effective amendments to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated. SIGNATURE TITLE DATE /s/ Robert Dilworth Chairman and Chief Executive Officer (Principal Executive Officer) September 29, 2011 Robert Dilworth /s/ William Swain Secretary and Chief Financial Officer (Principal Financial and Accounting Officer) September 29, 2011 William Swain /s/ August P. Klein Director September 29, 2011 August P. Klein /s/ Gordon Watson Director September 29, 2011 Gordon Watson /s/ John Cronin Director September 29, 2011 John Cronin /s/ Steven Ledger Director September 29, 2011 Steven Ledger II-6 EXHIBIT INDEX Exhibit Number Description of Exhibit Amended and Restated Certificate of Incorporation of Registrant, as amended (1) Second Amended and Restated Bylaws of Registrant (2) Form of certificate evidencing shares of common stock of Registrant (3) Form of Warrant issued on September 1, 2011 (4) Opinion of SNR Denton US LLP * Lease Agreement between Registrant and Central United Life Insurance, dated as of October 24, 2003 (5) Fourth Amendment to Lease Agreement between Registrant and Central United Life Insurance, dated as of September 15, 2009 (2) 1996 Stock Option Plan of Registrant (3) 1998 Stock Option/Stock Issuance Plan of Registrant (6) 2005 Equity Incentive Plan (7) Stock Option Agreement, dated January 29, 2005 by and between Registrant and Gary Green (8) Employment Agreement, dated February 11, 2000, by and between Registrant and William Swain (9) Director Severance Plan (10) Key Employee Severance Plan (10) 2008 Equity Incentive Plan, as amended September 8, 2011 (11) Securities Purchase Agreement, dated September 1, 2011 (4) Form of Registration Rights Agreement, dated September 1, 2011 (4) Subsidiaries of Registrant (12) Consent of Macias Gini & O’Connell LLP Consent of SNR Denton US LLP (contained in their opinion included under Exhibit5.1) * *To be filed in an amendment to this registration statement Filed on April 2, 2007 as an exhibit to Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2006, and incorporated herein by reference. Filed on March 31, 2010 as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference Filed as an exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-11165), and incorporated herein by reference; Exhibit 4.1 was filed on September 19, 1996 and Exhibit 10.3 was filed on August 30, 1996 Filed on September 8, 2011 as an exhibit to the Registrant’s Current Report on Form 8-K, dated September 1, 2011, and incorporated herein by reference Filed on March 30, 2004 as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2003, and incorporated herein by reference EI-1 Filed on June 23, 2000 as an exhibit to the Registrant’s Registration Statement on Form S-8 (File No. 333-40174) and incorporated herein by reference Filed on November 25, 2005 as an exhibit to Registrant’s definitive Proxy Statement for the Registrant’s 2005 Annual Meeting, and incorporated herein by reference Filed on April 17, 2006 as an exhibit to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2005, and incorporated herein by reference Filed on February 7, 2007 as an exhibit to Post-Effective Amendment No. 4 to the Registrant’s Registration Statement to Form S-1 on Form SB-2 (File No. 333-124791), and incorporated herein by reference Filed on August 14, 2008 as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008, and incorporated herein by reference Filed on September 29, 2011 as an exhibit to the Registrant’s Registration Statement on Form S-8, and incorporated herein by reference Filed on March 31, 2009 as an exhibit to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference. EI-2

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 9, 2010 NEONODE, INC. (Exact name of issuer of securities held pursuant to the plan) 0-8419 Commission File Number Delaware 94-1517641 (State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.) Sweden -Linnegatan 89, SE-tockholm USA - 651 Byrdee Way, Lafayette, CA. 94549 (Address of principal executive offices, including Zip Code) Sweden + 46 8 USA + 1 (Registrant’s telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ¨ Written communications pursuant to Rule425 under the Securities Act (17 CFR 230.425) ¨ Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12) ¨ Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ¨ Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) TABLE OF CONTENTS Item 5.07Submission of Matters to a Vote of Securities Holders Signatures Section 5 — Submission of Matters to a Vote of Securities Holders Item 5.07 Submission of Matters to a Vote of Securities Holders On December 9, 2010, the Company held a Special Meeting of the Stockholders. The stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation (a) to increase the number of authorized shares from 700,000,000 to 850,000,000, and (b) to increase the number of authorized shares of common stock from 698,000,000 to 848,000,000. The results of the vote were as follows: Proposal Votes For Votes Against/Withheld Abstentions Broker Non-Votes Approval of an amendment to our Amended and Restated Certificate of Incorporation (a) to increase the number of authorized stock from 700,000,000to 850,000,000 shares, and (b) to increase the number of shares of our common stock authorized for issuance from 698,000,000to 848,000,000 shares. 1 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NEONODE, INC. Date: December 13, 2010 By: /s/David W. Brunton Name:David W. Brunton Title: Chief Financial Officer 2

Name: Commission Implementing Regulation (EU) 2019/921 of 3 June 2019 concerning the classification of certain goods in the Combined Nomenclature Type: Implementing Regulation Subject Matter: tariff policy; foodstuff Date Published: nan 6.6.2019 EN Official Journal of the European Union L 148/1 COMMISSION IMPLEMENTING REGULATION (EU) 2019/921 of 3 June 2019 concerning the classification of certain goods in the Combined Nomenclature THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (1), and in particular Article 57(4) and Article 58(2) thereof, Whereas: (1) In order to ensure uniform application of the Combined Nomenclature annexed to Council Regulation (EEC) No 2658/87 (2), it is necessary to adopt measures concerning the classification of the goods referred to in the Annex to this Regulation. (2) Regulation (EEC) No 2658/87 has laid down the general rules for the interpretation of the Combined Nomenclature. Those rules apply also to any other nomenclature which is wholly or partly based on it or which adds any additional subdivision to it and which is established by specific provisions of the Union, with a view to the application of tariff and other measures relating to trade in goods. (3) Pursuant to those general rules, the goods described in column (1) of the table set out in the Annex should be classified under the CN code indicated in column (2), by virtue of the reasons set out in column (3) of that table. (4) It is appropriate to provide that binding tariff information issued in respect of the goods concerned by this Regulation which does not conform to this Regulation may, for a certain period, continue to be invoked by the holder in accordance with Article 34(9) of Regulation (EU) No 952/2013. That period should be set at three months. (5) The measures provided for in this Regulation are in accordance with the opinion of the Customs Code Committee, HAS ADOPTED THIS REGULATION: Article 1 The goods described in column (1) of the table set out in the Annex shall be classified within the Combined Nomenclature under the CN code indicated in column (2) of that table. Article 2 Binding tariff information which does not conform to this Regulation may continue to be invoked in accordance with Article 34(9) of Regulation (EU) No 952/2013 for a period of three months from the date of entry into force of this Regulation. Article 3 This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 3 June 2019. For the Commission, On behalf of the President, Stephen QUEST Director-General Directorate-General for Taxation and Customs Union (1) OJ L 269, 10.10.2013, p. 1. (2) Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ L 256, 7.9.1987, p. 1). ANNEX Description of the goods Classification (CN code) Reasons (1) (2) (3) A product in the form of a tablet, containing 400 mg of S-Adenosyl “L-Methionine disulfate p-toluenesulfonate, of which S-Adenosyl “L-Methionine (SAMe) is the active ingredient. The product contains also minor quantities of microcrystalline cellulose, magnesium hydroxide, stearic acid, magnesium stearate, colloidal silica anhydrous, calcium oxide and coating components. The product is presented to be used as a food supplement that facilitates normal function of the liver, helps body detox processes and generally supports good emotional health. The recommended daily dosage is one tablet. The product is presented in bulk. 2106 90 92 Classification is determined by general rules 1 and 6 for the interpretation of the Combined Nomenclature, additional note 5 to Chapter 21 and the wording of CN codes 2106 , 2106 90 and 2106 90 92 . The content of the active ingredient, SAMe, per tablet is not suitable for the prevention and treatment of diseases or ailments. Classification under heading 3004 is therefore excluded. Consequently, the product is a food preparation not elsewhere specified or included (see also the Harmonized System Explanatory Notes to heading 2106 , second paragraph, point (16)). The product is therefore to be classified under CN code 2106 90 92 as a food preparation not elsewhere specified or included.

Exhibit 10.35   CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE COMMISSION.  THE OMITTED PORTIONS ARE INDICATED BY [**].   EXECUTION COPY   TRANSFER AND ADMINISTRATION AGREEMENT     by and among   UNITED STATIONERS RECEIVABLES, LLC,   UNITED STATIONERS SUPPLY CO., as Originator,   UNITED STATIONERS FINANCIAL SERVICES LLC, as Seller and Servicer,   ENTERPRISE FUNDING COMPANY LLC, as a Conduit Investor,   MARKET STREET FUNDING LLC,   as Agent, as a Class Agent and as an Alternate Investor,   as a Class Agent and as an Alternate Investor,   and   THE OTHER ALTERNATE INVESTORS FROM TIME TO TIME PARTIES HERETO     Table of Contents         Page         Article I Definitions   1 Section 1.1 Certain Defined Terms   1 Section 1.2 Other Terms   21 Section 1.3 Computation of Time Periods; Calculations   21         Article II Purchases and Settlements   22 Section 2.1 Transfer of Affected Assets; Intended Characterization   22 Section 2.2 Purchase Price   23 Section 2.3 Investment Procedures   23 Section 2.4 IS SPECIFIED IN SCHEDULE I, WHICH IS INCORPORATED HEREIN BY REFERENCE   26 Section 2.5 Yield, Fees and Other Costs and Expenses   26 Section 2.6 Deemed Collections   26 Section 2.7 Reductions in Net Investment; Payments and Computations, Etc.   27 Section 2.8 Reports   27 Section 2.9 Collection Account   28 Section 2.10   28 Section 2.11 Right of Setoff   29         Article III Additional Alternate Investor Provisions   29 Section 3.1 Assignment to Alternate Investors   29 Section 3.2 Downgrade of Alternate Investor   31 Section 3.3 Non-Renewing Alternate Investors   33 Section 3.4 New Alternate Investors and Liquidity Banks   34         Article IV Representations and Warranties   34 Section 4.1 Representations and Warranties of the Originator, the SPV, the Seller and the Servicer   34 Section 4.2 Additional Representations and Warranties of the Servicer   41         Article V Conditions Precedent   41 Section 5.1 Conditions Precedent to Closing   41 Section 5.2 Conditions Precedent to All Investments and Reinvestments   45         Article VI Covenants   46 Section 6.1 Affirmative Covenants of the SPV and Servicer   46 Section 6.2 Negative Covenants of the SPV and Servicer   51 Section 6.3 IS SPECIFIED IN SCHEDULE 6.3, WHICH IS INCORPORATED HEREIN BY REFERENCE   53         Article VII Administration and Collections   53 Section 7.1 Appointment of Servicer   53 Section 7.2 Duties of Servicer.   55   i   Section 7.3 Blocked Account Arrangements   56 Section 7.4 Enforcement Rights After Designation of New Servicer   56 Section 7.5 Servicer Default   57 Section 7.6 Servicing Fee   58 Section 7.7 Protection of Ownership Interest of the Investors   58         Article VIII Termination Events   59 Section 8.1 Termination Events   59 Section 8.2 Termination   62         Article IX Indemnification; Expenses; Related Matters   62 Section 9.1 Indemnities by the SPV and the Servicer   62 Section 9.2 Indemnity for Taxes, Reserves and Expenses   65 Section 9.3 Taxes   67 Section 9.4 Other Costs and Expenses; Breakage Costs   67 Section 9.5 [Reserved]   68 Section 9.6 Indemnities by the Servicer   68 Section 9.7 Accounting Based Consolidation Event   68         Article X The Agent   69 Section 10.1 Appointment and Authorization of Agent   69 Section 10.2 Delegation of Duties   69 Section 10.3 Liability of Agent   69 Section 10.4 Reliance by Agent   70 Section 10.5 Notice of Termination Event, Potential Termination Event or Servicer Default   70 Section 10.6 Credit Decision; Disclosure of Information by the Agent   71 Section 10.7 Indemnification of the Agent   71 Section 10.8 Agent in Individual Capacity   72 Section 10.9 Resignation of Agent   72 Section 10.10 Payments by the Agent   72 Section 10.11 Appointment and Authorization of Class Agents   73 Section 10.12 Delegation of Duties   73 Section 10.13 Reliance by Class Agents   73 Section 10.14   74 Section 10.15 Credit Decision; Disclosure of Information by the Class Agents   74 Section 10.16 Indemnification of the Class Agent   75 Section 10.17 Class Agent in Individual Capacity   75 Section 10.18 Resignation of Class Agent   76 Section 10.19 Liability of Agent and the Class Agents   76         Article XI Miscellaneous   76 Section 11.1 Term of Agreement.   76 Section 11.2 Waivers; Amendments   77 Section 11.3 Notices; Payment Information   77   ii   Section 11.4 Governing Law; Submission to Jurisdiction; Appointment of Service Agent   78 Section 11.5 Integration   79 Section 11.6 Severability of Provisions   79 Section 11.7 Counterparts; Facsimile Delivery   79 Section 11.8 Successors and Assigns; Binding Effect   79 Section 11.9 Waiver of Confidentiality   82 Section 11.10 Confidentiality Agreement   82 Section 11.11 No Bankruptcy Petition Against the Conduit Investors   83 Section 11.12 No Recourse Against Conduit Investors   83   Schedules   Schedule I Yield and Rate Periods Schedule II Specified Ineligible Receivables Schedule III Settlement Procedures Schedule 4.1(g) List of Actions and Suits Schedule 4.1(i) Location of Certain Offices and Records Schedule 4.1(j) List of Subsidiaries, Divisions and Tradenames; FEIN Schedule 4.1(r) List of Blocked Account Banks and Blocked Accounts Schedule 4.1(bb) Disclosure Representations and Covenants Schedule 6.3 Financial Covenants Schedule 11.3 Address and Payment Information   Exhibits   Exhibit A Exhibit B [Reserved] Exhibit C Credit and Collection Policies and Practices Exhibit D Form of Investment Request Exhibit E Form of Blocked Account Agreement Exhibit F Form of Servicer Report Exhibit G Form of SPV Secretary’s Certificate Exhibit H Forms of Originator/Servicer/Seller Secretary’s Certificate Exhibit I Form of Opinion of Counsel for the SPV, Originator, Seller and Servicer Exhibit J Scope of Agreed Upon Procedures Exhibit K Form of Compliance Certificate   iii   TRANSFER AND ADMINISTRATION AGREEMENT   This TRANSFER AND ADMINISTRATION AGREEMENT (as amended, modified, supplemented, restated or replaced, this “Agreement”), dated as of March 3, 2009, by and among United Stationers Receivables, LLC, an Illinois limited liability company (the “SPV”), United Stationers Supply Co., an Illinois corporation (the “Originator”), United Stationers Financial Services LLC, an Illinois limited liability company (the “Seller”) and as Servicer, Enterprise Funding Company LLC, a Delaware limited liability company (“Enterprise Funding”), as a Conduit Investor, Market Street Funding LLC, a Delaware limited liability company (“Market Street”, each of Enterprise Funding and Market Street a “Conduit Investor” and, collectively, the “Conduit Investors”), Bank of America, National Association, a national banking association (“Bank of America”), as Agent, as a Class Agent and as an Alternate Investor, PNC Bank, National Association (“PNC Bank”), as a Class Agent and as an Alternate Investor, and the financial institutions from time to time parties hereto as Alternate Investors.   ARTICLE I   DEFINITIONS   SECTION 1.1                                   CERTAIN DEFINED TERMS.   (such meanings to be equally applicable to both the singular and plural forms of the terms defined):   Accounting Based Consolidation Event: Solely to the extent such entity is not consolidated with such Indemnified Party on or prior to the date hereof, the consolidation, for financial and/or regulatory accounting purposes, of all or any portion of the assets and liabilities of any Conduit Investor that is the subject of this Agreement or any other Transaction Document with all or any portion of the assets and liabilities of the Agent or any Alternate Investor in such Conduit Investor’s Class or any of their Affiliates as the result of the occurrence of any change after the date hereof in accounting standards or the issuance of any pronouncement, interpretation or release, by any accounting body or any other governmental body charged with the promulgation or administration of accounting standards, including the Financial Accounting Standards Board, the International Accounting Standards Board, the American Institute of Certified Public Accountants, the Federal Reserve Board of Governors and the Securities and Exchange Commission.   Additional Costs:  As defined in Section 9.2(d).   Adverse Claim:  Except for Permitted Liens, any lien, security interest, charge or encumbrance, or other right or claim in, of or on any Person’s assets or properties in favor of any other Person.   Advertising Receivable: Any Receivable which arises from the Originator’s business of selling catalogs and related advertising materials to its customers, which Receivables are indicated as “advertising” on the Originator’s receivables aging books and records.   Affected Assets:  Collectively, (i) the Receivables, (ii) the Related Security, (iii) all rights and remedies of the SPV under the Second Tier Agreement, together with all financing statements     filed by the SPV against the Originator and the Seller in connection therewith, (iv) all Blocked Accounts and all funds and investments therein and all Blocked Account Agreements, and (v) all proceeds of the foregoing.   Affiliate:  As to any Person, any other Person which, directly or indirectly, Person, in each case whether beneficially, or as a trustee, guardian or other fiduciary.  A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the other Person, whether through the ownership of voting securities or membership interests, by contract, or otherwise.   Agent:  Bank of America, in its capacity as agent for the Investors, and any successor thereto appointed pursuant to Article X.   Agent-Related Persons:  The Agent, or any Class Agent, as the case may be, together with its Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and their respective Affiliates.   Aggregate Unpaids:  At any time, an amount equal to the sum of (i) the aggregate unpaid Yield accrued and to accrue to maturity with respect to all Rate Periods at such time, (ii) the Net Investment at such time and (iii) all other amounts owed (whether or not then due and payable) hereunder and under the other Transaction Documents by the SPV, the Seller and the Originator to the Agent, the Class Agents, the Investors or the Indemnified Parties at such time.   Agreement:  As defined in the Preamble.   Alternate Investor Percentage:  At any time with respect to any Alternate Investor, the percentage equivalent of a  fraction the numerator of which is equal to the Commitment of such Alternate Investor on such day and the denominator of which is equal to the related Class Facility Limit on such day.   Alternate Investors:  With respect to (a) the Enterprise Funding Class, Bank of America and each other financial institution identified as a member of the Enterprise Funding Class on the signature pages hereof and any other financial institution that shall become a party to this Agreement pursuant to Section 11.8 and who are identified as a being a member of the Enterprise Funding Class, (b) the Market Street Class, PNC Bank and each other financial institution identified as a member of the Market Street Class on the signature pages hereof and any other financial institution that shall become a party to this Agreement pursuant to Section 11.8 and who are identified as a being a member of the Market Street Class and (c) any other Class, each financial institution identified as a member of such Class on the signature pages hereof and any other financial institution that shall become a party to this Agreement pursuant to Section 11.8 and who are identified as a being a member of such Class.   Alternate Rate:  As defined in Section 2.4.   Asset Interest:  As defined in Section 2.1(b).   2   Assignment Amount:  With respect to an Alternate Investor at the time of any assignment pursuant to Section 3.1, an amount equal to the least of (i) such Alternate Investor’s Alternate Investor Percentage of the portion of the related Class Net Investment requested by the related Conduit Investor to be assigned at such time; (ii) such Alternate Investor’s unused Commitment (minus the unrecovered principal amount of such Alternate Investor’s investments in the Asset Interest pursuant to the Program Support Agreement to which it is a party); and (iii) in the case of an assignment on or after the Conduit Investment Termination Date, such Alternate Investor’s Alternate Investor Percentage of the Investor Percentage of the related Conduit Investor of the sum of (A) the aggregate Unpaid Balance of the Receivables (other than Defaulted Receivables), plus (B) all Collections received by the Servicer but not yet remitted by the Servicer to the Agent, plus (C) any amounts in respect of Deemed Collections required to be paid by the SPV at such time.   Assignment and Assumption Agreement:  An Assignment and Assumption Agreement   Assignment Date:  As defined in Section 3.1(a).   Bank of America:  As defined in the Preamble.   Bankruptcy Code:  The Bankruptcy Reform Act of 1978, 11 U.S.C.  §§ 101 et seq.   Base Rate:  As defined in Section 2.4.   Blocked Account:  Any account maintained by the SPV at a Blocked Account Bank into which Collections are received or deposited, as set forth in Schedule 4.1(s), or any account added as a Blocked Account pursuant to and in accordance with Section 4.1(s) and which, if not maintained at and in the name of the Agent, is subject to a Blocked Account Agreement.   Blocked Account Agreement:  An agreement among the SPV, the Agent and a Blocked Account Bank in substantially the form of Exhibit E or in form and substance reasonably satisfactory to the Agent.   Blocked Account Bank:  Each of the banks set forth in Schedule 4.1(s), as such Schedule 4.1(s) may be modified pursuant to Section 4.1(s).   Business Day:  Any day excluding Saturday, Sunday and any day on which banks in New York, New York and Charlotte, North Carolina, are authorized or required by law to close, and, when used with respect to the determination of any Offshore Rate or any notice with respect thereto, any such day which is also a day for trading by and between banks in United States dollar deposits in the London interbank market.   Capitalized Lease:  Of a Person, means any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.   Charged-off Receivable:  Any Receivable that is, or should have been, charged-off in accordance with the Credit and Collection Policy.   3   Class: Each group of Investors consisting of the related Class Agent, one or more related Conduit Investors and the related Alternate Investors, and their respective successors and permitted assigns.  Initially, there are 2 classes, the Enterprise Funding Class and the Market Street Class.   Class Agent:  With respect to (i) the Enterprise Funding Class, Bank of America and its successors and permitted assigns and (ii) the Market Street Class, PNC Bank and its successors and permitted assigns, and (iii) any other Class, the Person specified in any supplement to this Agreement as the class agent for such Class and such Person’s successors and permitted assigns.   Class Facility Limit:  With respect to the Enterprise Funding Class, $102,000,000, (ii) with respect to the Market Street Class, $51,000,000 and (iii) with respect to any other Class, the amount specified in any supplement to this Agreement as the Class Facility Limit for such Class; provided, however, that the Class Facility Limit with respect to any Class shall not at any time exceed the aggregate Commitments for the related Alternate Investors.   Class Maximum Net Investment:  At any time for any Class, an amount equal to the related Class Facility Limit divided by 1.02.   Class Net Investment:  At any time with respect to any Class, the excess, if any of (a) the sum, without duplication, of (i) the cash amounts paid by the related Class Agent on behalf of the Investors in the related Class to the SPV pursuant to Sections 2.2 and 2.3 and (ii) the amount of any funding under a Program Support Agreement related to such Class that is allocated to the Interest Component related to such Class at the time of such funding over (b) the aggregate amount of Collections theretofore received and applied by such Class Agent to reduce the related Class Net Investment pursuant to Section 2.12; provided that the Class Net Investment of a Class shall be restored and reinstated in the amount of any Collections so received and applied if at any time the distribution of such Collections is rescinded or must otherwise be returned for any reason; provided further, that the Class Net Investment of a Class shall be increased by the amount described in Section 3.1(b) as described therein.   Class Pro Rata Share: With respect to any Class on any date, the percentage equivalent of a fraction, the numerator of which is the related Class Facility Limit as of such date and the denominator of which is the Facility Limit as of such date.   Class Termination Date:  For any Class, unless the related Class Agent elects otherwise, the date of termination of the commitment of any Program Support Provider under a Program Support Agreement with respect to such Class, it being understood that as of the Closing Date, the commitment termination dates for the Liquidity Agreements for each Class are the Commitment Termination Date.   Closing Date:  March 3, 2009.   Code:  The Internal Revenue Code of 1986, as amended.   Collateral Agent:  Bank of America, as collateral agent for any Program Support Provider, the holders of Commercial Paper and certain other parties.   Collection Account:  As defined in Section 2.9.   4   Collections:  With respect to any Receivable, all cash collections and other cash proceeds of such Receivable, including (i) all scheduled interest and principal payments, and any applicable late fees, in any such case, received and collected on such Receivable, (ii) all proceeds received by virtue of the liquidation of such Receivable, net of necessary and reasonable expenses incurred in connection with such liquidation, (iii) all proceeds received (net of any such proceeds which are required by law to be paid to the applicable Obligor) under any damage, casualty or other insurance policy with respect to such Receivable, (iv) all cash proceeds of the Related Security related to or otherwise attributable to such Receivable, (v) any repurchase payment received with respect to such Receivable pursuant to any applicable recourse obligation of the Servicer, the Seller or the Originator under this Agreement or any other Transaction Document and (vi) all Deemed Collections received with respect to such Receivable.   Commercial Paper:  The promissory notes issued or to be issued by any Conduit Investor (or its related commercial paper issuer if any Conduit Investor does not itself issue commercial paper) in the commercial paper market.   Commitment:  With respect to each Alternate Investor, as the context requires, (i) the commitment of such Alternate Investor to make Investments and to pay Assignment Amounts in accordance herewith in an amount not to exceed the amount described in the following clause (ii), and (ii) the dollar amount set forth opposite such Alternate Investor’s signature on the signature pages hereof under the heading “Commitment” (or in the case of an Alternate Investor which becomes a party hereto pursuant to an Assignment and Assumption Agreement, as set forth in such Assignment and Assumption Agreement), minus the dollar amount of any Commitment or portion thereof assigned by such Alternate Investor pursuant to an Assignment and Assumption Agreement, plus the dollar amount of any increase to such Alternate Investor’s Commitment consented to by such Alternate Investor prior to the time of determination; provided, however, that, except as otherwise provided in Section 3.3(b), in the event that the Facility Limit is reduced, the Commitment of each Alternate Investor shall be reduced by a pro rata amount of such reduction.   Commitment Termination Date:  November 23, 2009, or such later date to which the Commitment Termination Date may be extended by the SPV, the Agent, the Class Agents and some or all of the Alternate Investors (in their sole discretion).   Concentration Factor:  On any day, the product of (a) 5 and (b) the percentage set forth in the definition of Concentration Limit for Non-Investment Grade Obligors.   Concentration Limit:  The aggregate amount of Receivables with respect to a single Obligor and such Obligor’s Subsidiaries and Affiliates that constitute more than 4.05% of the aggregate amount of Eligible Receivables; provided, however, that individual Obligor concentration limits may exceed 4.05%, subject to specific Obligor ratings as set forth below:     Concentration Limits           AA-/Aa3 or better   10.0 %           10.0 %         BBB+/Baa1 or better   9.0 %         BBB-/Baa3 or better   6.75 %         Non-Investment Grade Obligors   4.05 %   5   provided, further, that (i) if any Obligor is rated by both Moody’s and S&P, the rating for determining the applicable Concentration Limit will be the lower of the two ratings and (ii) if any Obligor is not rated by either S&P or Moody’s, the applicable Concentration Limit shall be the Concentration Limit applicable to Non-Investment Grade Obligors.   Conduit Assignee:  With respect to any Class, any special purpose entity that finances its activities directly or indirectly through asset backed commercial paper and is administered by the Class Agent for such Class and designated by such Class Agent from time to time to accept an assignment from the related Conduit Investor of all or a portion of the portion of the related Class Net Investment funded by such Conduit Investor.   Conduit Investment Termination Date:  With respect to any Conduit Investor, the date of the delivery by such Conduit Investor to the SPV of written notice that such Conduit Investor elects, in its sole discretion, to commence the amortization of the related Class Net Investment funded by it or otherwise liquidate its interest in the Asset Interest.   Conduit Investors:  Enterprise Funding, Market Street, any other special purpose entity that finances its activities directly or indirectly through asset backed commercial paper that becomes a party to this Agreement  in accordance with the terms hereof and any Conduit Assignee of any of the foregoing.   Contract:  In relation to any Receivable, any and all contracts, instruments, agreements, leases, invoices, notes, or other writings pursuant to which such Receivable arises or which evidence such Receivable or under which an Obligor becomes or is obligated to make payment in respect of such Receivable.   Contractual Dilution:  With respect to any Receivable and any Obligor, the portion of the Unpaid Balance of such Receivable that is subject to reduction as a result of any rebate, discount or other reduction pursuant to any provision of the related Contract or otherwise pursuant to any program of the Originator or the Seller that is in effect on or before the date such Receivable is acquired by the SPV, regardless of whether the Originator, the Seller, the SPV or the Servicer has accrued or established a reserve therefor.  For the avoidance of doubt, (i) any reference in this Agreement or any other Transaction Document to the amount of any Contractual Dilution shall be to the greater of the reduction that may apply to such Receivable and the accrual or reserve established by the Originator, the Seller, the Servicer or the SPV, as applicable, in respect of any such reduction and (ii) Contractual Dilutions do not include any reduction in the Unpaid Balance of any Receivable to the extent such reduction is a Dilution.   CP Rate:  As defined in Section 2.4.   6   Credit and Collection Policy:  The Originator’s credit and collection policy or policies and practices, relating to Contracts and Receivables as in effect on the Closing Date and set forth in Exhibit C, as modified, from time to time, in compliance with Sections 6.1(a)(vii) and 6.2(c).   Days Sales Outstanding:  For any Monthly Period means the number of calendar days equal to the product of (a) 91 and (b) the amount obtained by dividing (i) the aggregate Unpaid Balance of Receivables as of the last day of the immediately preceding Monthly Period by (ii) the aggregate amount of sales by the Originator giving rise to Receivables during the three (3) consecutive Monthly Periods immediately preceding such monthly Report Date.   Deemed Collections:  Any Collections on any Receivable deemed to have been received pursuant to Sections 2.6.   Default Rate:  On any day, a rate per annum equal to the Base Rate plus 2.00%.   Default Ratio:  For any Monthly Period, the ratio (expressed as a percentage) computed as of the related Month End Date next preceding the first day of such Monthly Period by dividing (i) the sum of (a) the aggregate Unpaid Balance of all Receivables which are 61-90 days past due as of such Month End Date and (b) the aggregate Unpaid Balance of all Receivables which became Charged-off Receivables during such Monthly Period, by (ii) the aggregate amount of sales by Originator giving rise to Receivables for the 3rd preceding month.   Defaulted Receivable:  Without double counting for any Charged-off Receivable, a Receivable (i) as to which any payment, or part thereof, remains unpaid for more than 60 days from the original due date for such Receivable; (ii) as to which an Event of Bankruptcy has occurred and is continuing with respect to the Obligor thereof; (iii) which has been identified by the SPV, the Originator or the Servicer as uncollectible; or (iv) which, consistent with the Credit and Collection Policy, should be written off as uncollectible; provided, however, a Receivable that is a Charged-off Receivable shall not be a Defaulted Receivable.   Defaulting Alternate Investor:  As defined in Section 2.3(f).   Delinquency Ratio:  For any Monthly Period, the ratio (expressed as a percentage) computed as of the related Month End Date next preceding the first day of such Monthly Period by dividing (i) the aggregate Unpaid Balance of all Delinquent Receivables and Disputed Receivables at such time, by (ii) the aggregate Unpaid Balance of all Receivables at such time.   Delinquent Receivable:  A Receivable:  (i) as to which any payment, or part thereof, remains unpaid for more than sixty (60) days from the original due date for such Receivable and (ii) which is not a Disputed Receivable.   Dilution:  With respect to any Receivable on any date, an amount equal to the sum, without duplication, of the aggregate reduction effected on such day in the Unpaid Balance of such Receivable attributable to any non-cash items including credits, rebates, billing errors, sales or similar taxes, cash discounts, volume discounts, allowances, disputes (it being understood that a Receivable is “subject to dispute” only if and to the extent that, in the reasonable good faith judgment of the Originator (which shall be exercised in the ordinary course of business) the Obligor’s obligation in respect of such Receivable is reduced on account of any performance   7   failure on the part of the Originator), set-offs, counterclaims, chargebacks, returned or repossessed goods, sales and marketing discounts, warranties, any unapplied credit memos and other adjustments that are made in respect of Obligors; provided, that Contractual Dilutions, Charged-off Receivables, Disputed Receivables, Advertising Receivables and other write-offs related to an Obligor’s bad credit shall not constitute Dilutions.   Dilution Horizon Ratio:  For any Monthly Period, the ratio (expressed as a percentage) computed as of the related Month End Date immediately preceding the first day of such Monthly Period by dividing (a) the aggregate amount of sales by Originator giving rise to Receivables for the most recent 2 months, by (ii) the aggregate Unpaid Balance of all Eligible Receivables as of such Month End Date.   Dilution Ratio:  For any Monthly Period, the ratio (expressed as a percentage) computed as of the Month End Date immediately preceding the first day of such Monthly Period by dividing (a) the aggregate Dilutions incurred during the month ended on such Month End Date by (b) the aggregate amount of sales by the  Originator giving rise to Receivables in the month that occurs prior to the month ended on such Month End Date.   Dilution Reserve Ratio:  For any Monthly Period, the sum of (a) the product of (i) the Stress Factor and (ii) the Expected Dilution Ratio and (b) the product of (i) the excess, if any, of the Dilution Spike over the Expected Dilution Ratio, (ii) the Dilution Spike divided by the Expected Dilution Ratio multiplied by (c) the Dilution Horizon Ratio, in each case, for such Monthly Period.   Dilution Spike:  For any Monthly Period, the highest one-month Dilution Ratio for the twelve months ending on the Month End Date next preceding the first day of such Monthly Period.   Disputed Receivable:  A Receivable (other than a Delinquent Receivable, a Defaulted Receivable or a Receivable subject to a Contractual Dilution), as to which, in the reasonable good faith judgment of the Originator, the Seller or the Servicer (which shall be exercised in the ordinary course of business), the Unpaid Balance thereof has been reduced (or should be reduced) on account of any performance failure on the part of the Originator, the Seller or the Servicer.  For the avoidance of doubt, (i) any reference in this Agreement or any other Transaction Document to the amount of any Disputed Receivable shall be to the greater of the reduction that may apply to such Receivable and the accrual or reserve established by the Originator, the Seller, the Servicer or the SPV, as applicable, in respect of any such reduction and (ii) Disputed Receivable does not include any reduction in the Unpaid Balance of any Receivable to the extent such reduction is a Dilution.   Dollar or $:  The lawful currency of the United States.   Downgrade Collateral Account:  As defined in Section 3.2(a).   Downgrade Draw:  As defined in Section 3.2(a).   Eligible Investments:  Highly rated short-term debt or the other highly rated liquid investments in which the Conduit Investors are permitted to invest cash pursuant to their respective commercial paper program documents.   8   Eligible Receivable:  At any time, any Receivable:   (i)                                     which was originated by the Originator in the ordinary course of its business;   (ii)                                  (A)                              which, arises pursuant to a Contract with respect to which each of the Originator and the SPV has performed all obligations required to be performed by it thereunder, including shipment of the merchandise and/or the performance of the services purchased thereunder; (B) which has been billed to the relevant Obligor; and (C) which according to the Contract related thereto, is required to be paid in full within 51 days of the original billing date therefor;   (iii)                               which satisfies all applicable requirements of the Credit and Collection Policy;   (iv)                              which has been sold or contributed to the SPV pursuant to (and in accordance with) the Second Tier Agreement, and by the Originator to the Seller pursuant to (and in accordance with) the First Tier Agreement (other than the Receivables acquired by the Seller in respect of the termination of the existing receivables securitization on or prior to the date of the initial funding hereunder) which does not arise from the sale of any inventory subject to any Adverse Claim unless such Receivable has upon the transfer thereof been released from such Adverse Claim and to which the SPV has good and marketable title, free and clear of all Adverse Claims;   (v)                                 the Obligor of which is a United States resident, is not an Affiliate or employee of any of the parties hereto, and is not an Official Body;   (vi)                              as to which amount due on such Receivable has not been extended;   (vii)                           the Obligor of which has been directed to make all payments to a Blocked Account;   (viii)                        which under the related Contract and applicable Law is assignable without the consent of, or notice to, the Obligor thereunder unless such consent has been obtained and is in effect or such notice has been given;   (ix)                                which, together with the related Contract, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms and is not subject to any litigation, dispute, offset, counterclaim or other defense;   (x)                                   which is denominated and payable only in Dollars in the United States;   (xi)                                which is neither a Defaulted Receivable nor a Charged-off Receivable;   (xii)                             which is not due from an Obligor which is more than 60 days past due on more than twenty-five percent (25%) of the aggregate Unpaid Balances of Receivables of which it is the Obligor;   9   (xiii)                          which has not been compromised, adjusted or modified (including by the extension of time for payment or the granting of any discounts, allowances or credits); provided, however, that only such portion of such Receivable that is the subject of such compromise, adjustment or modification shall be deemed to be ineligible pursuant to the terms of this clause (xiii);   (xiv)                         which is an “account” and is not evidenced by an instrument within the meaning of Article 9 of the UCC of all applicable jurisdictions;   (xv)                            which is an “eligible asset” as defined in Rule 3a-7 under the Investment Company Act of 1940;   (xvi)                         which, together with the Contract related thereto, does not contravene in any material respect any Laws applicable thereto (including Laws relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy);   (xvii)                      the assignments of which under the First Tier Agreement by the Originator to the Seller, the Second Tier Agreement by the Seller to the SPV and hereunder by the SPV to the Agent do not violate, conflict or contravene any applicable Law or any contractual or other restriction, limitation or encumbrance;   (xviii)                   which (together with the Related Security related thereto) has been the subject of either a valid transfer and assignment from, or the grant of a first priority perfected security interest therein by, the SPV to the Agent, on behalf of the Investors, of all of the SPV’s right, title and interest therein (unless repurchased by the SPV at an earlier date pursuant to this Agreement)   (ixx)                           which is not a Specified Ineligible Receivable, an Advertising Receivable or a Set Aside Receivable; and   (xx)                              which has been sold or contributed to the Seller pursuant to the First Tier Agreement in a “true sale” or “true contribution” transaction and which has been  subsequently sold or contributed by the Seller to the SPV in a “true sale” or “true contribution” transaction.   Enterprise Funding:  As defined in the Preamble.   Enterprise Funding Class:  The Class initially consisting of Enterprise Funding and Bank of America (in its capacities as a Class Agent and an Alternate Investor) and their respective successors and assigns.   ERISA:  The U.S.  Employee Retirement Income Security Act of 1974, as amended and any regulations promulgated and rulings issued thereunder.   ERISA Affiliate:  With respect to any Person, any corporation, partnership, trust, sole proprietorship or trade or business which, together with such Person, is treated as a single   10   employer under Section 414(b) or (c) of the Code or, with respect to any liability for contributions under Section 302(c) of ERISA, Section 414(m) or Section 414(o) of the Code.   Eurocurrency Liabilities:  As defined in Section 2.4.   Event of Bankruptcy:  With respect to any Person or Performance Guarantor, (i) that such Person or Performance Guarantor (A) shall generally not pay its debts as such debts become due or (B) shall admit in writing its inability to pay its debts generally or (C) shall make a general assignment for the benefit of creditors; (ii) any proceeding shall be instituted by or against such Person or Performance Guarantor seeking to adjudicate it as bankrupt or insolvent, or protection, relief or composition of it or its debts under any law relating to entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property; or (iii) such Person or Performance Guarantor shall take any corporate, partnership or other similar appropriate action to authorize any of the actions set forth in the preceding clauses (i) or (ii).   Exception Funding Period: As defined in Section 5.2.   Excluded Taxes:  As defined in Section 9.3.   Expected Dilution Ratio:  For any Monthly Period, the average of the Dilution Ratios for the twelve months ending on the Month End Date next preceding the first day of such Monthly Period.   Facility Fee: (i) With respect to the Enterprise Funding, the fee payable by the SPV to Bank of America, the terms of which are set forth in the related Fee Letter; (ii) with respect to the Market Street Class, the fee payable by the SPV to PNC Bank, the terms of which are set forth in the related Fee Letter; and (iii) with respect to any other Class, the fee specified in any supplement to this Agreement or any separate fee letter as the facility fee payable by the SPV to the related Class Agent.   Facility Limit:  As of any date, the sum of the Class Facility Limits as of such date, which amount shall not exceed $153,000,000.   Federal Funds Rate:  As defined in Section 2.4.   Fee Letter:  As the context may require, any or all of: (i) with respect to the Enterprise Funding Class, a confidential letter agreement, among the SPV, the Originator, the Servicer, Enterprise Funding, and the related Class Agent with respect to the fees to be paid by the SPV, the Servicer and the Originators; (ii) with respect to the Market Street Class, a confidential letter agreement, among the SPV, the Originator, the Servicer, Market Street, and the related Class Agent with respect to the fees to be paid by the SPV, the Servicer and the Originators; and (iii) with respect to any other Class, a confidential letter agreement with respect to the fees to be paid by the SPV, the Servicer and the Originators.   11   Final Payout Date:  The date, after the Termination Date, on which the Net Investment has been reduced to zero, all accrued Servicing Fees have been paid in full and all other Aggregate Unpaids have been paid in full in cash.   First Tier Agreement:  The sale agreement dated as of the date hereof between the Originator and the Seller, as amended, modified, supplemented, restated or   Fitch: Fitch Ratings, Inc. or any successor that is a nationally recognized statistical rating organization.   GAAP:  Generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board in effect from time to time.   Guaranty:  With respect to any Person, any agreement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon, the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person or otherwise assures any other creditor of such other Person against loss, including any comfort letter, operating agreement or take-or-pay contract and shall include the contingent liability of   Indebtedness:  Without duplication, with respect to any Person such Person’s (i) obligations for borrowed money, (ii) obligations representing the deferred purchase price of property other than accounts payable arising in the ordinary course of such Person’s business on terms customary in the trade, (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or products of property now or hereafter owned or acquired by such Person, (iv) obligations which are evidenced by notes, acceptances (including bankers acceptances), or other instruments, (v) Capitalized Lease obligations, (vi) obligations for which such Person is obligated pursuant to a Guaranty, (vii) reimbursement obligations with respect to any letters of credit and (viii) any other liabilities which would be treated as indebtedness in accordance with GAAP.   Indemnified Amounts:  As defined specified in Section 9.1.   Indemnified Parties:  As defined in Section 9.1.   Intercreditor Agreement:  The Intercreditor Agreement, dated as of October 15, 2007, by and among JPMorgan Chase Bank, N.A., the Noteholders (as defined therein) and the Lenders (as defined therein) and acknowledged by the Performance Guarantor and the Originator.   Interest Component:  At any time of determination, the aggregate Yield accrued and to accrue through the end of the current Rate Period for the Portion of Investment accruing Yield calculated by reference to the CP Rate at such time (determined for such purpose using the CP Rate most recently determined by the related Class Agent).   Investment:  As defined in Section 2.2(a).   12   Investment Date:  As defined in Section 2.3(a).   Investment Deficit:  As defined in Section 2.3(f).   Investment Request:  Each request substantially in the form of Exhibit D.   Investor:  The Conduit Investors and/or the Alternate Investors, as the context may require.   Investor Percentage:  At any time with respect to any Investor, the percentage equivalent of a fraction the numerator of which is equal to the portion of the Net Investment owned by such Investor on such day and the denominator of which is equal to the Net Investment on such day.   Law:  Any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree, judgment or award of any Official Body.   Liquidity Agreement:  For any Class, any agreement entered into by any related Conduit Investor (or any commercial paper issuer that finances such Conduit) providing for the sale by such Conduit Investor (or any commercial paper issuer that finances such Conduit) of interests in its investment in the Asset Interest and the portion of the Class Net Investment funded by such Conduit Investor (or any commercial paper issuer that finances such Conduit) (or portions thereof), or the making of loans or other extensions of credit to such Conduit Investor (or any commercial paper issuer that finances such Conduit) secured by security interests such Conduit Investor’s (or any commercial paper issuer that finances such Conduit) interest in the Asset Interest and the portion of the Class Net Investment funded by such Conduit Investor, to support all or part of such Conduit Investor’s (or any commercial paper issuer that finances such Conduit) payment obligations under its Commercial Paper or to provide an alternate means of funding such Conduit Investor’s investments in accounts receivable or other financial assets, in each case as amended, modified, supplemented, restated or   Liquidity Bank:  Includes the various financial institutions that are, or may become, parties to a Liquidity Agreement, as a purchaser or lender thereunder.   Loss Horizon Ratio:  For any Monthly Period, the ratio, expressed as a percentage, of (a) the aggregate amount of sales by Originator giving rise to Receivables for the most recent 5 months preceding the related Month End Date, divided by (b) the aggregate Unpaid Balance of all Eligible Receivables as of such recent Month End Date.   Loss Reserve Ratio:  For any Monthly Period, the product of (i) Stress Factor, (ii) the highest three-month average Default Ratio during the most recent 12 month period, and (iii) the Loss Horizon Ratio for such Monthly Period.   Majority Investors:  At any time, those Alternate Investors which hold Commitments aggregating in excess of 2/3 of the Facility Limit as of such date; provided that at any time when there is 2 or fewer Conduit Investors, shall mean 100% of the Alternate Investors.   Market Street:  As defined in the Preamble.   13   Market Street Class:  The Class consisting initially of Market Street and PNC Bank (in its capacities as a Class Agent and an Alternate Investor) and their   Master Note Purchase Agreement:  The Master Note Purchase Agreement, dated as of October 15, 2007, by and among the Performance Guarantor, the Originator and the Purchasers (as defined therein).   Material Adverse Effect:  With respect to any Person, any event or condition which is reasonably likely to have a material adverse effect on (i) the collectibility of the Receivables, (ii) the condition (financial or otherwise), businesses or properties of the SPV, the Servicer or the Originator, (iii) the ability of the SPV, the Servicer or the Originator to perform its respective obligations under the Transaction Documents to which it is a party, or (iv)  the status, perfection or priority of the security interests of the Agent, any Class Agent or any Investors under the Transaction Documents.   Material Subsidiary: At any time, shall mean Lagasse, Inc and ORS Nasco, Inc.   Maturity Date:  November 23, 2013.   Maximum Net Investment:  At any time, an amount equal to the Facility Limit divided by 1.02.   Minimum Reserve Ratio:  For any Monthly Period, the sum of (a) the Concentration Factor for such Monthly Period and (b) the product of the (i) the Expected Dilution Ratio for such Monthly Period and (ii) the Dilution Horizon Ratio for such Monthly Period.   Month End Date:  The last day of each calendar month.   Monthly Period:  The period from the Closing Date to and including the first Month End Date after the Closing Date and each subsequent calendar month until the Final Payout Date.   Moody’s:  Moody’s Investors Service, Inc., or any successor that is a nationally recognized statistical rating organization.   Multiemployer Plan:  As defined in Section 4001(a)(3) of ERISA.   Net Investment:  At any time, the sum of the Class Net Investments on such day.   Net Pool Balance:  At any time, (i) the aggregate Unpaid Balances of Eligible Receivables at such time, minus (ii) the sum of (a) the aggregate amount of the portion of the Unpaid Balances of Eligible Receivables in excess of the applicable Concentration Limits, (b) the then-current aggregate amount of Contractual Dilutions related to all Eligible Receivables, (c) the then-current aggregate amount of all sales and other taxes included in the Unpaid Balances of all Eligible Receivables, (d) the then-current amount of reductions to the Unpaid Balance of all Receivable that are Disputed Receivables and (e) the aggregate amount of all offsetting specific  reserves established by any of the Originator, the Seller, the Servicer and the SPV in respect of all Eligible Receivables that are Reserve Receivables.   14   Non-Defaulting Alternate Investor:  As defined in Section 2.3(f).   Obligor:  With respect to any Receivable, the Person obligated to make payments in respect of such Receivable pursuant to a Contract.   Official Body:  Any government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of any such government or political subdivision, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.   Offshore Rate:  As defined in Section 2.4.   Opinion:  That certain opinion of Mayer Brown LLP, special counsel to the SPV, the Seller, the Performance Guarantor and the Originator, dated the Closing Date and delivered with respect to the transactions contemplated by this Agreement and covering certain bankruptcy and insolvency matters i.e.  “true sale” and nonconsolidation.   Originator:  As defined in the Preamble.   Other SPV:  Any Person other than the SPV that has entered into a receivables purchase agreement, loan and security agreement, note purchase agreement, transfer and administration agreement or any other similar agreement with the Conduit Investors.   Pension Plan:  An employee pension benefit plan as defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer Plan) and to which the Originator, the SPV or an ERISA Affiliate of either has, or is reasonably expected to have, any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.   Performance Guarantee: The Performance Guarantee Agreement, dated as of the date hereof, by the Performance Guarantor and the SPV, as amended, modified,   Performance Guarantor:  United Stationers, Inc, an Delaware corporation.   Permitted Investment Date:  Any Business Day prior to the Termination Date.   Permitted Liens: Any of (i) the liens of the Agent, on behalf of the Investors, created pursuant to the Transaction Documents and (ii) liens created with the consent of the Agent and Majority Investors.   Person:  An individual, partnership, limited liability company, corporation, joint stock company, trust (including a business trust), unincorporated association, joint venture, firm, enterprise, Official Body or any other entity.   15   Pledge Agreement:  The Pledge Agreement, dated as of May 21, 2003, by and among the Originator, the Performance Guarantor and other Subsidiaries of the Performance Guarantor (as set forth on the signature page thereto) and Bank One, NA.   PNC Bank:  As defined in the Preamble.   Portion of Investment:  As defined in Section 2.4(a).   Potential Termination Event:  An event which but for the lapse of time or the giving of notice, or both, would constitute a Termination Event.   Principal Collections:  For any Monthly Period, (i) all Collections received during such Monthly Period other than finance charges and (ii) all payments received on Eligible Investments for such Monthly Period.   Pro Rata Share:  For any Alternate Investor, the Commitment of such Alternate Investor, divided by the sum of the Commitments of all Alternate Investors (or, if the Commitments shall have been terminated, its pro rata share of the Alternate Investor Percentage of the related Class Net Investment).   Program Fee: As defined in the Fee Letter.   Program Support Agreement:  Any agreement, including any Liquidity Agreement, entered into by any Program Support Provider providing for the issuance of one or more letters of credit for the account of a Conduit Investor (or any related commercial paper issuer that finances the Conduit Investor), the issuance of one or more surety bonds for which any Conduit Investor (or such related issuer) is obligated to reimburse the applicable Program Support Provider for any drawings thereunder, the sale by any Conduit Investor (or such related issuer) to any Program Support Provider of the Asset Interest (or portions thereof or participations therein) and/or the making of loans and/or other extensions of credit to any Conduit Investor (or such related issuer) in connection with such Conduit Investor’s commercial paper program, together with any letter of credit, surety bond or other instrument issued thereunder.   Program Support Provider:  Any Person, including any Liquidity Bank, now or hereafter extending credit or having a commitment to extend credit to or for the account of, or to make purchases from, any Conduit Investor (or any related commercial paper issuer that finances the Conduit Investor) or issuing a letter of credit, surety bond or other instrument to support any obligations arising under or in connection with such Conduit Investor’s (or such related issuer’s) commercial paper program.   Purchase Termination Date:  As defined in Section 8.1 of the Second Tier Agreement.   Rate Period:  As defined in Section 2.4.   Rate Type:  As defined in Section 2.4.   Rating Agencies:  Collectively, Fitch, Moody’s and S&P.   16   Receivable:  Any indebtedness and other obligations owed by any Obligor to the Originator (without giving effect to any transfer under the First Tier Agreement and Second Tier Agreement) under a Contract or any right of the SPV to payment from or on behalf of an Obligor, whether constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale or lease of goods or the rendering of services, in either case, by the Originator, and includes the obligation to pay any finance charges, fees and other charges with respect thereto.   Recipient:  As defined in Section 2.10.   Records:  All Contracts and other documents, purchase orders, invoices, agreements, books, records and any other media, materials or devices for the storage of information (including tapes, disks, punch cards, computer programs and databases and related property) maintained by the SPV, the Originator or the Servicer with respect to the Receivables, any other Affected Assets or the Obligors.   Reinvestment:  As defined in Section 2.2(b).   Reinvestment Period:  The period commencing on the Closing Date and ending on the Termination Date.   Related Security:  With respect to any Receivable, all of the Originator’s (without giving effect to any transfer under the First Tier Agreement and the Second Tier Agreement) or the SPV’s rights, title and interest in, to and under:   (i)                                     all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and other filings signed by an Obligor relating thereto;   (ii)                                  the Contract and all guarantees, indemnities, warranties, insurance (and proceeds and premium refunds thereof) or other agreements or arrangements of any kind from time to time supporting or securing payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise;   (iii)                              all Records related to such Receivable; and   (iv)                              all Collections on and other proceeds of any of the foregoing.   Reportable Event:  Any event, transaction or circumstance which is required to be reported with respect to any Pension Plan under Section 4043 of ERISA and the applicable regulations thereunder.   Reporting Date:  As defined in Section 2.8.   Required Downgrade Assignment Period:  As defined in Section 3.2(a).   17   Required Notice Days:  With respect to any reduction of the Net Investment pursuant to the provisions of Section 2.7(a) or Section 2.13, (i) two (2) Business Days in the case of a reduction of Net Investment of less than $10,000,000 and (ii) five (5) Business Days in the case of a reduction of Net Investment of at least $20,000,000.   Required Reserves:  At any time other than during an Exception Funding Period, the sum of (i) the Net Pool Balance on such date of calculation multiplied by the greater of (a) the sum of the Loss Reserve Ratio on such date of calculation and the Dilution Reserve Ratio on such date of calculation; and (b) the Minimum Reserve Ratio on such date of calculation; (ii) the Yield Reserve on such date of calculation; and (iii) the Servicing Fee Reserve on such date of calculation (such sum, the “Standard Reserves”).  At any time during an Exception Funding Period, the greater of (i) the Standard Reserves on such date of calculation and (ii) 50% of the Net Pool Balance on such date of calculation.   Reserve Receivable:  Any Receivable for which the Originator, the Seller, the Servicer or the SPV has established an offsetting specific reserve for such Receivable or the related Obligor.   Responsible Officer:  With respect any Person, the Chairman of the Board, President, Chief Financial Officer, any Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of such Person.   Restricted Payments:  As defined in Section 6.2(k).   Revolving Credit Agreement:  As defined in Section 6.3.   Sale Termination Date:  As defined in Section 8.1 of the First Tier Agreement.   Second Tier Agreement:  The purchase agreement dated as of the date hereof between the Seller and SPV, as amended, modified, supplemented, restated or   Seller: As defined in the Preamble.   Servicer:  As defined in Section 7.1.   Servicer Default:  As defined in Section 7.5.   Servicer Report:  A report, in substantially the form attached hereto as Exhibit F or in such other form as is mutually agreed to by the SPV, the Servicer and the Agent, furnished by the Servicer pursuant to Section 2.8.   Servicing Fee:  The fees payable to the Servicer from Collections, in an amount equal to either (a) at any time when the Servicer is the Seller or any of its Affiliates, the Servicing Fee Rate on (i) the sum of (x) the Unpaid Balance of Receivables as of the last day of the current calendar month, plus (y) the Unpaid Balance of Receivables as of the last day of the immediately preceding calendar month, divided by (ii) 2, or (b) at any time when the Servicer is not the Seller or any of its Affiliates, the amount agreed between such Servicer and the Agent, payable in arrears on each Settlement Date from Collections pursuant to, and subject to the priority of payments set forth in, Section 2.12.  With respect to any Portion of Investment, the Servicing Fee   18   allocable thereto shall be equal to the Servicing Fee determined as set forth above, times a fraction, the numerator of which is the amount of such Portion of Investment and the denominator of which is the Net Investment.   Servicing Fee Rate: 1.0% per annum   Servicing Fee Reserve:  At any time, an amount equal to the product of (i) the Servicing Fee Rate (ii) a fraction having Days Sales Outstanding as the numerator, and 360 as the denominator and (iii) the aggregate Unpaid Balance of all Receivables on such date of calculation.   Set-Aside Receivable:  Any Receivable with respect to which the Originator, the Seller or the Servicer at any time evidences the payment obligation of the related Obligor by a note or other instrument and agrees to any extended payment date.   Settlement Date:  (i) Prior to the Termination Date, the 20th day of each calendar month (or, if such day is not a Business Day, the immediately succeeding Business Day) or such other day as the SPV and the Agent may from time to time mutually agree, and (ii) for any Portion of Investment for any Class on and after the Termination Date, each day selected from time to time by the related Class Agent (it being understood that the Class Agents may select such Settlement Dates to occur as frequently as daily) or, in the absence of any such selection, the date which would be the Settlement Date for such Portion of Investment pursuant to clause (i) of this definition.   S&P:  Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor that is a nationally recognized statistical rating organization.   Specified Ineligible Receivable:  (i) On and after the Closing Date, each Receivable the Obligor of which is listed on Schedule II hereto and (ii) from time to time after the Closing Date, each Receivable, the Obligor of which is identified by the Servicer to the Class Agents in writing (it being understood that for purposes of this clause (ii), the Servicer shall not designate as Specified Ineligible Receivables, the Receivables of more than two Obligors per year).  Any designation by the Servicer of a Receivable as a Specified Ineligible Receivable shall be effective beginning with the Monthly Period immediately following the date of such designation.  Any Receivable that has been designated as an Specified Ineligible Receivable shall not become an Eligible Receivable without the prior written consent of the Agent.   SPV:  United Stationers Receivables, LLC, an Illinois limited liability company.   Stress Factor:  2.75.   Sub-Servicer:  As defined in Section 7.1(d).   Subsidiary:  With respect to any Person, any corporation or other Person (i) of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such Person or (ii) that is directly or indirectly controlled by such Person within the meaning of control under Section 15 of the Securities Act of 1933.   19   Taxes:  As defined in Section 9.3.   Termination Date:  The earliest of (i) the latest occurring Class Termination Date, (ii) the day upon which the Termination Date is declared or automatically occurs pursuant to Section 8.2, (iii) the Commitment Termination Date, (iv) the Sale Termination Date, (v) the Purchase Termination Date, and (vi) and the Maturity Date.   Termination Event:  As defined in Section 8.1.   Transaction Costs:  As defined in Section 9.4(a).   Transaction Documents:  Collectively, this Agreement, the First Tier Agreement, the Second Tier Agreement, the Fee Letter, the Blocked Account Agreements, and all of the other instruments, documents and other agreements executed and delivered by the Servicer, the Originator or the SPV in connection with any of the foregoing.   Trigger Delinquency Ratio:  For any Monthly Period, the ratio (expressed as a date of such Monthly Period by dividing (i) the aggregate Unpaid Balance of all Receivables (other than Specified Ineligible Receivables) which are Delinquent Receivables (other than Specified Ineligible Receivables which are Delinquent Receivables) plus Disputed Receivables (other than Specified Ineligible Receivables which are Disputed Receivables), by (ii) the aggregate Unpaid Balance of all Receivables (other than Specified Ineligible Receivables) at such time.   Trigger Default Ratio:  For any Monthly Period, the ratio (expressed as a date of such Monthly Period by dividing (i) the sum of (a) the aggregate Unpaid Balance of all Receivables (other than Specified Ineligible Receivables) which are 61-90 days past due as of such Month End Date and (b) the aggregate Unpaid Balance of all Receivables which became Charged-off Receivables during such Monthly Period (other than Specified Ineligible Receivables which are Defaulted Receivables), by (ii) the aggregate amount of sales by Originator giving rise to Receivables for the 3rd most preceding month.   Trigger Dilution Ratio: For any Monthly Period, the ratio (expressed as a date of such Monthly Period by dividing (i) the aggregate reduction in the original balance of all Receivables attributable to Dilutions during such month, by (ii) the aggregate amount of sales by the Originator in the most recent prior month.   UCC:  The Uniform Commercial Code as in effect in the applicable jurisdiction or jurisdictions.   Unpaid Balance:  Of any Receivable means at any time the unpaid principal amount thereof.   U.S.  or United States:  The United States of America.   Yield:  As defined in Section 2.4.   Yield Payment Date:  The last day of each Rate Period.   20   Yield Reserve: At any time, an amount equal to (a) the product of (i) 2.5 multiplied by the Days Sales Outstanding as of such day and (ii) the Default Rate in effect as of such day, divided by (b) 360, as applicable, multiplied by the Net Pool Balance.   SECTION 1.2                                   OTHER TERMS.   All terms defined directly or by incorporation herein shall have the defined meanings when used in any certificate or other document delivered pursuant hereto unless otherwise defined therein.  For purposes of this Agreement and all such certificates and other documents, unless the context otherwise requires:  (a) accounting terms not otherwise defined herein, and accounting terms partly defined herein to the extent not defined, shall have the respective meanings given to them under, and shall be construed in accordance with, GAAP; (b) terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9; (c) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (d) the words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of this Agreement (or such certificate or document); (e) references to any Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to this Agreement (or the certificate or other document in which the reference is made) and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (f) the term “including” means “including without limitation”; (g) references to any Law refer to that Law as amended from time to time and include any successor Law; (h) references to any agreement refer to that agreement as from time to time amended or supplemented or as the terms of such agreement are waived or modified in accordance with its terms; (i) references to any Person include that Person’s successors and permitted assigns; and (j) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof.   SECTION 1.3                                   COMPUTATION OF TIME PERIODS; CALCULATIONS.   (a)                                  Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each means “to but excluding”, and the word “within” means “from and excluding a specified date and to and including a later specified date”.   (B)                                 WITH RESPECT TO SET-ASIDE RECEIVABLES, ALL CALCULATIONS OF TRIGGERS, RESERVES AND RATIOS HEREIN SHALL BE MADE BASED ON THE DATES SUCH RECEIVABLE OR PORTION THEREOF BECAME A SET-ASIDE RECEIVABLE.   21   ARTICLE II   PURCHASES AND SETTLEMENTS   SECTION 2.1                                   TRANSFER OF AFFECTED ASSETS; INTENDED CHARACTERIZATION.   (A)                                  SALE OF ASSET INTEREST.  IN CONSIDERATION OF THE PAYMENT BY THE AGENT (ON BEHALF OF THE CONDUIT INVESTORS OR THE RELATED ALTERNATE INVESTORS AS DETERMINED PURSUANT TO SECTION 2.3) OF THE AMOUNT OF THE INITIAL NET INVESTMENT ON THE CLOSING DATE AND THE AGENT’S AGREEMENT (ON BEHALF OF THE CONDUIT INVESTORS OR THE RELATED ALTERNATE INVESTORS AS DETERMINED BELOW) TO MAKE PAYMENTS TO THE SPV FROM TIME TO TIME IN ACCORDANCE WITH SECTION 2.2, EFFECTIVE UPON THE SPV’S RECEIPT OF PAYMENT FOR SUCH INITIAL NET INVESTMENT ON THE CLOSING DATE, THE SPV HEREBY SELLS, CONVEYS, TRANSFERS AND ASSIGNS TO THE AGENT, ON BEHALF OF THE INVESTORS, AS THEIR INTERESTS MAY FROM TIME TO TIME APPEAR, (I) ALL RECEIVABLES EXISTING ON THE CLOSING DATE OR THEREAFTER ARISING OR ACQUIRED BY THE SPV FROM TIME TO TIME PRIOR TO THE FINAL PAYOUT DATE, AND (II) ALL OTHER AFFECTED ASSETS, WHETHER EXISTING ON THE CLOSING DATE OR THEREAFTER ARISING AT ANY TIME.   (B)                                 PURCHASE OF ASSET INTEREST.  SUBJECT TO THE TERMS AND CONDITIONS HEREOF, THE AGENT (ON BEHALF OF THE INVESTORS) HEREBY PURCHASES AND ACCEPTS FROM THE SPV THE RECEIVABLES AND ALL OTHER AFFECTED ASSETS SOLD, ASSIGNED AND TRANSFERRED PURSUANT TO SUBSECTION (A).  THE AGENT’S RIGHT, TITLE AND INTEREST IN AND TO THE RECEIVABLES AND ALL OTHER AFFECTED ASSETS HEREUNDER IS HEREIN CALLED THE “ASSET INTEREST”.  THE AGENT SHALL HOLD THE ASSET INTEREST ON BEHALF OF THE CONDUIT INVESTORS AND THE ALTERNATE INVESTORS, AS APPLICABLE PRO RATA IN ACCORDANCE WITH THEIR RESPECTIVE INVESTOR PERCENTAGES.   (C)                                  OBLIGATIONS NOT ASSUMED.  THE FOREGOING SALE, ASSIGNMENT AND TRANSFER DOES NOT CONSTITUTE AND IS NOT INTENDED TO RESULT IN THE CREATION, OR AN ASSUMPTION BY THE AGENT, THE CLASS AGENT OR ANY INVESTOR, OF ANY OBLIGATION OF THE SPV, THE SELLER, THE ORIGINATOR, OR ANY OTHER PERSON UNDER OR IN CONNECTION WITH THE RECEIVABLES OR ANY OTHER AFFECTED ASSET, ALL OF WHICH SHALL REMAIN THE OBLIGATIONS AND LIABILITIES OF THE SPV, THE SELLER AND THE ORIGINATOR, AS APPLICABLE.   (D)                                 INTENDED CHARACTERIZATION; GRANT OF SECURITY INTEREST.   (I)                                     THE SPV, THE AGENT, THE CLASS AGENTS AND THE INVESTORS INTEND THAT THE SALE, ASSIGNMENT AND TRANSFER OF THE AFFECTED ASSETS TO THE AGENT (ON BEHALF OF THE CONDUIT INVESTORS AND/OR THE ALTERNATE INVESTORS AS APPLICABLE) HEREUNDER SHALL BE TREATED AS A SALE FOR ALL PURPOSES, OTHER THAN FEDERAL AND STATE INCOME TAX AND ACCOUNTING PURPOSES.  IF NOTWITHSTANDING THE INTENT OF THE PARTIES, THE SALE, ASSIGNMENT AND TRANSFER OF THE AFFECTED ASSETS TO THE AGENT (ON BEHALF OF THE INVESTORS) IS NOT TREATED AS A SALE FOR ALL PURPOSES, OTHER THAN FEDERAL AND STATE INCOME TAX AND ACCOUNTING PURPOSES, THE SALE, ASSIGNMENT AND TRANSFER OF THE AFFECTED ASSETS SHALL BE TREATED AS THE GRANT OF, AND THE SPV HEREBY DOES GRANT, A SECURITY INTEREST IN THE AFFECTED ASSETS TO SECURE THE PAYMENT AND PERFORMANCE OF THE SPV’S OBLIGATIONS TO THE AGENT (ON BEHALF OF THE CONDUIT INVESTORS AND/OR THE ALTERNATE INVESTORS AS APPLICABLE) HEREUNDER AND UNDER THE OTHER TRANSACTION DOCUMENTS OR AS MAY BE DETERMINED IN CONNECTION THEREWITH BY APPLICABLE LAW.   22   (II)                                  EACH OF THE PARTIES HERETO FURTHER EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE COMMITMENTS OF THE ALTERNATE INVESTORS HEREUNDER, REGARDLESS OF THE INTENDED TRUE SALE NATURE OF THE OVERALL TRANSACTION, ARE FINANCIAL ACCOMMODATIONS (WITHIN THE MEANING OF SECTION 365(C)(2) OF THE BANKRUPTCY CODE) TO OR FOR THE BENEFIT OF SPV.   SECTION 2.2                                   PURCHASE PRICE.   Subject to the terms and conditions hereof, including Article V, in consideration for the sale, assignment and transfer of the Affected Assets by the SPV to the Agent (on behalf of the Conduit Investors and/or the Alternate Investors, as applicable) hereunder:   (A)                                  INVESTMENTS.  ON THE CLOSING DATE, AND THEREAFTER FROM TIME TO TIME DURING THE REINVESTMENT PERIOD, ON REQUEST OF THE SPV IN ACCORDANCE WITH SECTION 2.3, EACH CLASS AGENT (ON BEHALF OF THE RELATED CONDUIT INVESTORS OR THE RELATED ALTERNATE INVESTORS, AS DETERMINED PURSUANT TO SECTION 2.3) SHALL PAY TO THE SPV AN AMOUNT EQUAL, IN EACH INSTANCE, TO THE LESSER OF (I) THE RELATED CLASS PRO RATA SHARE OF THE AMOUNT REQUESTED BY THE SPV UNDER SECTION 2.3(A), AND (II) THE LARGEST AMOUNT THAT WILL NOT CAUSE (A) THE CLASS NET INVESTMENT TO EXCEED THE CLASS MAXIMUM NET INVESTMENT, (B) THE SUM OF THE CLASS NET INVESTMENT AND THE RELATED CLASS PRO RATA SHARE OF THE REQUIRED RESERVES TO EXCEED THE RELATED CLASS PRO RATA SHARE OF THE NET POOL BALANCE AND (C) IF SUCH INVESTMENT DATE OCCURS DURING THE PERIOD BEGINNING ON THE CLOSING DATE THROUGH AND INCLUDING THE REPORTING DATE IN JUNE 2009, THE NET INVESTMENT TO EXCEED $150,000,000.  EACH SUCH PAYMENT IS HEREIN CALLED AN “INVESTMENT”.   (B)                                 REINVESTMENTS.  ON EACH BUSINESS DAY DURING THE REINVESTMENT PERIOD THE SERVICER, ON BEHALF OF EACH CLASS AGENT (FOR THE BENEFIT OF THE RELATED CONDUIT INVESTORS AND/OR THE RELATED ALTERNATE INVESTORS, AS APPLICABLE), SHALL APPLY OUT OF COLLECTIONS OF RECEIVABLES, THE AMOUNT AVAILABLE FOR REINVESTMENT IN ACCORDANCE WITH SECTION 2.14.  EACH SUCH PAYMENT IS HEREINAFTER CALLED A “REINVESTMENT”.  ALL REINVESTMENTS SHALL BE MADE RATABLY ON BEHALF OF EACH INVESTOR THAT HAS FUNDED ANY PORTION OF THE NET INVESTMENT PRO RATA IN ACCORDANCE WITH ITS RESPECTIVE INVESTOR PERCENTAGE.   (C)                                  SPV PAYMENTS LIMITED TO COLLECTIONS.  NOTWITHSTANDING ANY PROVISION CONTAINED IN THIS AGREEMENT TO THE CONTRARY, THE AGENT AND THE CLASS AGENTS SHALL NOT, AND SHALL NOT BE OBLIGATED (WHETHER ON BEHALF OF THE CONDUIT INVESTORS OR THE ALTERNATE INVESTORS), TO PAY ANY AMOUNT TO THE SPV AS THE PURCHASE PRICE OF RECEIVABLES PURSUANT TO SUBSECTION (B) ABOVE EXCEPT TO THE EXTENT OF COLLECTIONS ON RECEIVABLES AVAILABLE FOR DISTRIBUTION TO THE SPV IN ACCORDANCE WITH THIS AGREEMENT.  ANY AMOUNT WHICH THE AGENT OR ANY CLASS AGENT (WHETHER ON BEHALF OF THE RELATED CONDUIT INVESTORS OR THE RELATED ALTERNATE INVESTORS) DOES NOT PAY PURSUANT TO THE PRECEDING SENTENCE SHALL NOT CONSTITUTE A CLAIM (AS DEFINED IN §101 OF THE BANKRUPTCY CODE) AGAINST, OR CORPORATE OBLIGATION OF, THE AGENT OR SUCH CLASS AGENT FOR ANY SUCH INSUFFICIENCY UNLESS AND UNTIL SUCH AMOUNT BECOMES AVAILABLE FOR DISTRIBUTION TO THE SPV UNDER SECTION 2.12.   SECTION 2.3                                   INVESTMENT PROCEDURES.   (A)                                  NOTICE.  THE SPV SHALL REQUEST AN INVESTMENT HEREUNDER, BY REQUEST TO THE AGENT AND EACH CLASS AGENT GIVEN BY FACSIMILE IN THE FORM OF AN INVESTMENT REQUEST AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE PROPOSED DATE OF ANY INVESTMENT (INCLUDING THE INITIAL INVESTMENT).    23   EACH SUCH INVESTMENT REQUEST SHALL SPECIFY (I) THE DESIRED AMOUNT OF SUCH INVESTMENT (WHICH SHALL BE AT LEAST $2,000,000 OR AN INTEGRAL MULTIPLE OF $100,000 IN EXCESS THEREOF OR, TO THE EXTENT THAT THE THEN AVAILABLE UNUSED PORTION OF THE MAXIMUM NET INVESTMENT IS LESS THAN SUCH AMOUNT, SUCH LESSER AMOUNT EQUAL TO SUCH AVAILABLE UNUSED PORTION OF THE MAXIMUM NET INVESTMENT) AND (II) THE DESIRED DATE OF SUCH INVESTMENT (THE “INVESTMENT DATE”) WHICH SHALL BE A PERMITTED INVESTMENT DATE.   (B)                                 CONDUIT INVESTOR ACCEPTANCE OR REJECTION; INVESTMENT REQUEST IRREVOCABLE.   (I)                                     EACH CLASS AGENT WILL PROMPTLY NOTIFY THE RELATED INVESTORS OF ITS RECEIPT OF ANY INVESTMENT REQUEST WITH RESPECT TO ITS CLASS.  IF THE INVESTMENT REQUEST IS RECEIVED PRIOR TO THE CONDUIT INVESTMENT TERMINATION DATE, EACH CONDUIT INVESTOR SHALL INSTRUCT THE RELATED CLASS AGENT TO ACCEPT OR REJECT SUCH INVESTMENT REQUEST BY NOTICE GIVEN TO THE RELATED CLASS AGENT BY TELEPHONE OR FACSIMILE BY NO LATER THAN THE CLOSE OF ITS BUSINESS ON THE BUSINESS DAY FOLLOWING ITS RECEIPT OF ANY SUCH INVESTMENT REQUEST.  FOLLOWING RECEIPT OF SUCH INSTRUCTIONS FROM THE RELATED CONDUIT INVESTORS, EACH CLASS AGENT SHALL PROMPTLY NOTIFY THE SPV AND THE RELATED ALTERNATE INVESTORS OF THE ACCEPTANCE OR REJECTION BY THE RELATED CONDUIT INVESTORS OF THE INVESTMENT REQUEST.   (II)                                  EACH INVESTMENT REQUEST SHALL BE IRREVOCABLE AND BINDING ON THE SPV, AND THE SPV SHALL INDEMNIFY EACH INVESTOR AGAINST ANY LOSS OR EXPENSE INCURRED BY SUCH INVESTOR, EITHER DIRECTLY OR INDIRECTLY (INCLUDING, IN THE CASE OF ANY CONDUIT INVESTOR, THROUGH A PROGRAM SUPPORT AGREEMENT) AS A RESULT OF ANY FAILURE BY THE SPV TO COMPLETE SUCH INVESTMENT, INCLUDING ANY LOSS (INCLUDING LOSS OF PROFIT) OR EXPENSE INCURRED BY ANY CLASS AGENT AND ANY RELATED INVESTOR, EITHER DIRECTLY OR INDIRECTLY (INCLUDING, IN THE CASE OF ANY CONDUIT INVESTOR, PURSUANT TO A PROGRAM SUPPORT AGREEMENT) BY REASON OF THE LIQUIDATION OR REEMPLOYMENT OF FUNDS ACQUIRED BY SUCH INVESTOR (OR THE APPLICABLE PROGRAM SUPPORT PROVIDER(S)) (INCLUDING FUNDS OBTAINED BY ISSUING COMMERCIAL PAPER OR PROMISSORY NOTES OR OBTAINING DEPOSITS OR LOANS FROM THIRD PARTIES) IN ORDER TO FUND SUCH INVESTMENT.   (C)                                  ALTERNATE INVESTORS’ COMMITMENT.  SUBJECT TO THE SATISFACTION OF THE CONDITIONS PRECEDENT SET FORTH IN SECTIONS 5.1 AND 5.2 AND THE OTHER TERMS AND CONDITIONS HEREOF, EACH ALTERNATE INVESTOR HEREBY AGREES TO MAKE AVAILABLE ITS ALTERNATE INVESTOR PERCENTAGE OF THE RELATED CLASS PRO RATA SHARE OF EACH INVESTMENT DURING THE PERIOD FROM AND INCLUDING THE CLOSING DATE TO BUT NOT INCLUDING THE COMMITMENT TERMINATION DATE IN AN AMOUNT UP TO ITS COMMITMENT.  SUBJECT TO SECTION 2.2(B) CONCERNING REINVESTMENTS, AT NO TIME WILL THE CONDUIT INVESTORS HAVE ANY OBLIGATION TO FUND AN INVESTMENT OR REINVESTMENT.  AT ALL TIMES ON AND AFTER THE CONDUIT INVESTMENT TERMINATION DATE, ALL INVESTMENTS AND REINVESTMENTS SHALL BE MADE BY THE RELATED CLASS AGENT ON BEHALF OF THE RELATED ALTERNATE INVESTORS.  IN ADDITION, AT ANY TIME WHEN A CONDUIT INVESTOR HAS REJECTED A REQUEST TO FUND ITS CLASS PRO RATA SHARE OF AN INVESTMENT, THE RELATED CLASS AGENT SHALL SO NOTIFY THE RELATED ALTERNATE INVESTORS AND SUCH ALTERNATE INVESTORS SHALL MAKE AVAILABLE THEIR RESPECTIVE ALTERNATE INVESTOR PERCENTAGES OF THE RELATED CLASS PRO RATA SHARE OF SUCH INVESTMENT.  NOTWITHSTANDING ANYTHING CONTAINED IN THIS SECTION 2.3(C) OR ELSEWHERE IN THIS AGREEMENT TO THE CONTRARY, NO ALTERNATE INVESTOR SHALL BE OBLIGATED TO PROVIDE THE RELATED CLASS AGENT OR THE SPV WITH FUNDS IN CONNECTION WITH AN INVESTMENT OR REINVESTMENT IN AN AMOUNT THAT WOULD RESULT IN THE PORTION OF THE RELATED CLASS NET INVESTMENT THEN FUNDED BY   24   IT (AFTER GIVING EFFECT TO ANY INVESTMENT TO BE FUNDED ON SUCH DAY) EXCEEDING ITS COMMITMENT THEN IN EFFECT (MINUS THE UNRECOVERED PRINCIPAL AMOUNT OF SUCH ALTERNATE INVESTOR’S INVESTMENTS IN THE ASSET INTEREST PURSUANT TO THE PROGRAM SUPPORT AGREEMENT TO WHICH IT IS A PARTY).  THE OBLIGATION OF EACH ALTERNATE INVESTOR TO REMIT ITS ALTERNATE INVESTOR PERCENTAGE OF ANY SUCH CLASS PRO RATA SHARE OF ANY INVESTMENT OR REINVESTMENT SHALL BE SEVERAL FROM THAT OF EACH OTHER ALTERNATE INVESTOR, AND THE FAILURE OF ANY ALTERNATE INVESTOR TO SO MAKE SUCH AMOUNT AVAILABLE TO THE RELATED CLASS AGENT SHALL NOT RELIEVE ANY OTHER ALTERNATE INVESTOR OF ITS OBLIGATION HEREUNDER.   (D)                                 PAYMENT OF INVESTMENT.  ON ANY INVESTMENT DATE, EACH CONDUIT INVESTOR OR THE RELATED ALTERNATE INVESTOR, AS THE CASE MAY BE, SHALL REMIT ITS PRO RATA SHARE OF THE AGGREGATE AMOUNT OF SUCH INVESTMENT (DETERMINED PURSUANT TO SECTION 2.2(A)) TO THE ACCOUNT OF THE SPV SPECIFIED THEREFOR FROM TIME TO TIME BY THE AGENT BY NOTICE TO SUCH PERSONS BY WIRE TRANSFER OF SAME DAY FUNDS.   (E)                                  AGENT MAY ADVANCE FUNDS.  UNLESS THE AGENT SHALL HAVE RECEIVED NOTICE FROM ANY INVESTOR THAT SUCH PERSON WILL NOT MAKE ITS SHARE OF ANY INVESTMENT AVAILABLE ON THE APPLICABLE INVESTMENT DATE THEREFOR, THE AGENT MAY (BUT SHALL HAVE NO OBLIGATION TO) MAKE ANY SUCH INVESTOR’S SHARE OF ANY SUCH INVESTMENT AVAILABLE TO THE SPV IN ANTICIPATION OF THE RECEIPT BY THE AGENT OF SUCH AMOUNT FROM THE APPLICABLE INVESTOR.  TO THE EXTENT ANY SUCH INVESTOR FAILS TO REMIT ANY SUCH AMOUNT TO THE AGENT AFTER ANY SUCH ADVANCE BY THE AGENT ON SUCH INVESTMENT DATE, SUCH INVESTOR, AND IF SUCH INVESTOR DOES NOT, UPON THE REQUEST OF THE AGENT, THE SPV, SHALL BE REQUIRED TO PAY SUCH AMOUNT TO THE AGENT FOR PAYMENT TO THE AGENT FOR ITS OWN ACCOUNT, TOGETHER WITH INTEREST THEREON AT A PER ANNUM RATE EQUAL TO THE FEDERAL FUNDS RATE, IN THE CASE OF SUCH INVESTOR, OR THE BASE RATE, IN THE CASE OF THE SPV, TO THE AGENT FOR PAYMENT TO SUCH AGENT (PROVIDED THAT NO CONDUIT INVESTOR SHALL HAVE ANY OBLIGATION TO PAY SUCH INTEREST AMOUNTS EXCEPT TO THE EXTENT THAT IT SHALL HAVE SUFFICIENT FUNDS TO PAY THE FACE AMOUNT OF ITS RESPECTIVE COMMERCIAL PAPER IN FULL).  UNTIL SUCH AMOUNT SHALL BE REPAID, SUCH AMOUNT SHALL BE DEEMED TO BE NET INVESTMENT PAID BY THE AGENT AND THE AGENT SHALL BE DEEMED TO BE THE OWNER OF AN INTEREST IN THE ASSET INTEREST HEREUNDER TO THE EXTENT OF SUCH INVESTMENT.  UPON THE PAYMENT OF SUCH AMOUNT TO THE AGENT (I) BY THE SPV, THE AMOUNT OF THE NET INVESTMENT SHALL BE REDUCED BY SUCH AMOUNT OR (II) BY SUCH INVESTOR, SUCH PAYMENT SHALL CONSTITUTE SUCH PERSON’S PAYMENT OF ITS SHARE OF THE APPLICABLE INVESTMENT.  NOTWITHSTANDING THE FOREGOING, EACH OF THE PARTIES HERETO AGREES THAT, PRIOR TO THE TERMINATION DATE, ANY AMOUNT TO BE PAID BY THE SPV UNDER THIS SECTION 2.3(E) WILL BE PAYABLE ON THE NEXT SUCCEEDING SETTLEMENT DATE PURSUANT TO AND IN ACCORDANCE WITH THE PRIORITIES FOR PAYMENT SET FORTH IN SECTION 2.12 HEREOF.   (F)                                    DEFAULTING ALTERNATE INVESTOR.  IF, BY 2:00 P.M. (NEW YORK CITY TIME), WHETHER OR NOT THE AGENT HAS ADVANCED THE AMOUNT OF THE APPLICABLE INVESTMENT, ONE OR MORE ALTERNATE INVESTORS WITH RESPECT TO A CLASS (EACH, A “DEFAULTING ALTERNATE INVESTOR”, AND EACH ALTERNATE INVESTOR WITH RESPECT TO SUCH CLASS OTHER THAN ANY DEFAULTING ALTERNATE INVESTOR BEING REFERRED TO AS A “NON-DEFAULTING ALTERNATE INVESTOR”) FAILS TO MAKE EITHER (1) ITS ALTERNATE INVESTOR PERCENTAGE OF THE RELATED CLASS PRO RATA SHARE OF ANY INVESTMENT AVAILABLE TO THE AGENT PURSUANT TO SECTION 2.3(D) OR (2) ANY ASSIGNMENT AMOUNT PAYABLE BY IT PURSUANT TO SECTION 3.1 (THE AGGREGATE AMOUNT NOT SO MADE AVAILABLE TO THE AGENT BEING HEREIN CALLED IN EITHER CASE THE “INVESTMENT DEFICIT”), THEN THE RELATED CLASS AGENT SHALL, BY NO LATER THAN 2:30 P.M. (NEW YORK CITY TIME) ON THE APPLICABLE INVESTMENT DATE OR THE APPLICABLE ASSIGNMENT DATE, AS THE CASE MAY BE, INSTRUCT EACH NON-DEFAULTING ALTERNATE INVESTOR TO PAY, BY NO LATER THAN 3:00 P.M. (NEW YORK   25   CITY TIME), IN IMMEDIATELY AVAILABLE FUNDS, TO THE ACCOUNT DESIGNATED BY THE RELATED CLASS AGENT, AN AMOUNT EQUAL TO THE LESSER OF (I) SUCH NON-DEFAULTING ALTERNATE INVESTOR’S PROPORTIONATE SHARE (BASED UPON THE RELATIVE COMMITMENTS OF THE NON-DEFAULTING ALTERNATE INVESTORS) OF THE INVESTMENT DEFICIT AND (II) ITS UNUSED COMMITMENT.  A DEFAULTING ALTERNATE INVESTOR SHALL FORTHWITH, UPON DEMAND, PAY TO THE RELATED CLASS AGENT FOR THE RATABLE BENEFIT OF THE NON-DEFAULTING ALTERNATE INVESTORS ALL AMOUNTS PAID BY EACH NON-DEFAULTING ALTERNATE INVESTOR ON BEHALF OF SUCH DEFAULTING ALTERNATE INVESTOR, TOGETHER WITH INTEREST THEREON, FOR EACH DAY FROM THE DATE A PAYMENT WAS MADE BY A NON-DEFAULTING ALTERNATE INVESTOR UNTIL THE DATE SUCH NON-DEFAULTING ALTERNATE INVESTOR HAS BEEN PAID SUCH AMOUNTS IN FULL, AT A RATE PER ANNUM EQUAL TO THE DEFAULT RATE.  IN ADDITION, IF, AFTER GIVING EFFECT TO THE PROVISIONS OF THE IMMEDIATELY PRECEDING SENTENCE, ANY INVESTMENT DEFICIT WITH RESPECT TO ANY ASSIGNMENT AMOUNT CONTINUES TO EXIST, EACH SUCH DEFAULTING ALTERNATE INVESTOR SHALL PAY INTEREST TO THE RELATED CLASS AGENT, FOR THE ACCOUNT OF THE RELATED CONDUIT INVESTOR, ON SUCH DEFAULTING ALTERNATE INVESTOR’S PORTION OF SUCH REMAINING INVESTMENT DEFICIT, AT A RATE PER ANNUM, EQUAL TO THE DEFAULT RATE, FOR EACH DAY FROM THE APPLICABLE ASSIGNMENT DATE UNTIL THE DATE SUCH DEFAULTING ALTERNATE INVESTOR SHALL PAY ITS PORTION OF SUCH REMAINING INVESTMENT DEFICIT IN FULL TO SUCH CONDUIT INVESTOR.   SECTION 2.4                                   IS SPECIFIED IN SCHEDULE I, WHICH IS INCORPORATED HEREIN BY REFERENCE.   SECTION 2.5                                   YIELD, FEES AND OTHER COSTS AND EXPENSES.   Notwithstanding any limitation on recourse herein, the SPV shall pay, as and when due in accordance with this Agreement, all fees hereunder and under the Fee Letters, Yield, all amounts payable pursuant to Article IX, if any, and the Servicing Fees.  On each Settlement Date, to the extent not paid pursuant to Section 2.12 for any reason, the SPV shall pay to each Class Agent, on behalf of the Conduit Investors or the Alternate Investors, as applicable, an amount equal to the accrued and unpaid Yield for the related Rate Period.  Nothing in this Agreement shall limit in any way the obligations of the SPV to pay the amounts set forth in this Section 2.5.   SECTION 2.6                                   DEEMED COLLECTIONS.   (A)                                  DILUTIONS.  IF ON ANY DAY THE UNPAID BALANCE OF A RECEIVABLE IS REDUCED OR SUCH RECEIVABLE IS CANCELED AS A RESULT OF ANY DILUTION, THE SPV SHALL BE DEEMED TO HAVE RECEIVED ON SUCH DAY A COLLECTION OF SUCH RECEIVABLE IN THE AMOUNT OF THE UNPAID BALANCE (AS DETERMINED IMMEDIATELY PRIOR TO SUCH DILUTION) OF SUCH RECEIVABLE (IF SUCH RECEIVABLE IS CANCELED) OR, OTHERWISE IN THE AMOUNT OF SUCH REDUCTION, AND THE SPV SHALL PAY TO THE SERVICER AN AMOUNT EQUAL TO SUCH DEEMED COLLECTION AND SUCH AMOUNT SHALL BE APPLIED BY THE SERVICER AS A COLLECTION IN ACCORDANCE WITH SECTION 2.12.   (B)                                 BREACH OF REPRESENTATION OR WARRANTY.  IF ON ANY DAY ANY OF THE REPRESENTATIONS OR WARRANTIES IN ARTICLE IV WAS OR BECOMES UNTRUE WITH RESPECT TO A RECEIVABLE (WHETHER ON OR AFTER THE DATE OF TRANSFER THEREOF TO THE AGENT, FOR THE BENEFIT OF THE INVESTORS, AS CONTEMPLATED HEREUNDER), THE SPV SHALL BE DEEMED TO HAVE RECEIVED ON SUCH DAY A COLLECTION OF SUCH RECEIVABLE IN FULL AND THE SPV SHALL ON SUCH DAY PAY TO THE SERVICER AN AMOUNT EQUAL TO THE UNPAID BALANCE OF SUCH RECEIVABLE AND SUCH AMOUNT SHALL BE ALLOCATED AND APPLIED BY THE SERVICER AS A COLLECTION IN ACCORDANCE WITH SECTION 2.12.   26   (C)                                  ANY PAYMENT BY THE SPV REQUIRED TO MADE UNDER THIS SECTION 2.6 SHALL BE PAID AS SOON AS POSSIBLE FROM THE SPV’S SHARE OF COLLECTIONS AND, IN ANY EVENT, SHALL BECOME DUE AND PAYABLE ON THE EARLIER TO OCCUR OF (I) THE NEXT SETTLEMENT DATE AFTER THE OBLIGATION TO MAKE SUCH PAYMENT ARISES AND (II) THE TERMINATION DATE.   SECTION 2.7                                   REDUCTIONS IN NET INVESTMENT; PAYMENTS AND COMPUTATIONS, ETC.   (A)                                  THE SPV MAY, ON ANY SETTLEMENT DATE OCCURRING AT LEAST THE REQUIRED NOTICE DAYS AFTER THE DATE OF THE SPV’S NOTICE TO THE AGENT AND EACH CLASS AGENT, REDUCE ALL OR ANY PORTION OF THE OUTSTANDING NET INVESTMENT AT SUCH TIME (TOGETHER WITH ANY ACCRUED AND UNPAID INTEREST THEREON AT SUCH TIME AND, IN CONNECTION WITH A REDUCTION OF ALL OF THE NET INVESTMENT, TOGETHER WITH ALL OTHER AGGREGATE UNPAIDS).  ANY SUCH REDUCTION SHALL BE ACCOMPLISHED BY PAYMENT BY THE SPV TO EACH CLASS AGENT, IN REDUCTION OF THE NET INVESTMENT, THE RELATED CLASS PRO RATA SHARE OF THE AMOUNT OF SUCH REDUCTION (TOGETHER WITH ANY ACCRUED AND UNPAID INTEREST THEREON AT SUCH TIME AND, IN CONNECTION WITH A REDUCTION OF ALL OF THE NET INVESTMENT, TOGETHER WITH ALL OTHER AGGREGATE UNPAIDS) (IT BEING UNDERSTOOD THAT NEITHER THE NET INVESTMENT NOR ANY CLASS NET INVESTMENT SHALL BE DEEMED REDUCED BY SUCH PAYMENT UNLESS AND UNTIL, AND THEN ONLY TO THE EXTENT THAT, SUCH AMOUNT IS FINALLY PAID TO THE RELATED CLASS AGENT); PROVIDED THAT THE AMOUNT OF SUCH REPAYMENT SHALL NOT BE LESS THAN $1,000,000.   (B)                                 ALL AMOUNTS TO BE PAID OR DEPOSITED BY THE SPV OR THE SERVICER HEREUNDER SHALL BE PAID OR DEPOSITED IN ACCORDANCE WITH THE TERMS HEREOF NO LATER THAN 12:00 P.M. (NOON) (NEW YORK CITY TIME) ON THE DAY WHEN DUE IN IMMEDIATELY AVAILABLE FUNDS; IF SUCH AMOUNTS ARE PAYABLE TO THE AGENT (WHETHER ON BEHALF OF ANY INVESTOR OR OTHERWISE) THEY SHALL BE PAID OR DEPOSITED IN THE ACCOUNT INDICATED UNDER THE HEADING “PAYMENT INFORMATION” IN SECTION 11.3, UNTIL OTHERWISE NOTIFIED BY THE AGENT.  THE SPV SHALL, TO THE EXTENT PERMITTED BY LAW, PAY TO THE AGENT, FOR THE BENEFIT OF THE INVESTORS, UPON DEMAND, INTEREST ON ALL AMOUNTS NOT PAID OR DEPOSITED WHEN DUE HEREUNDER AT A RATE EQUAL TO THE DEFAULT RATE.  ALL COMPUTATIONS OF YIELD AND ALL PER ANNUM FEES HEREUNDER SHALL BE MADE ON THE BASIS OF A YEAR OF 360 DAYS FOR THE ACTUAL NUMBER OF DAYS (INCLUDING THE FIRST BUT EXCLUDING THE LAST DAY) ELAPSED.  ANY COMPUTATIONS BY THE AGENT OF AMOUNTS PAYABLE BY THE SPV HEREUNDER SHALL BE BINDING UPON THE SPV ABSENT MANIFEST ERROR.   SECTION 2.8                                   REPORTS.   By no later than 4:00 p.m. (New York City time) on the 15th day of each calendar month, or if such day is not a Business Day then on the next succeeding Business Day (and, after the occurrence of a Termination Event, within two (2) Business Days after a request from the Agent or any Class Agent) (each, a “Reporting Date”), Servicer shall prepare and forward to the Agent and each Class Agent a Servicer Report, certified by the Originator, the Seller and the Servicer.  Prior to the Closing Date and once a calendar year, the Servicer, at its expense, will cause to be prepared a report by an accounting firm or other firm specializing in due diligence matters, which firm shall be satisfactory to the Agent, setting forth the results of such firm’s application of the agreed upon procedures set forth on Exhibit J.   The Agent may require the Servicer to prepare more frequent reports.  Upon receipt of such request for more frequent reporting, the Servicer shall provide to the Agent and each Class    27   Agent all reports regarding the Receivables and Collections that are available to the Servicer in accordance with its then current accounts receivable system without the Servicer manually preparing such reports.  The  Agent acknowledges that such additional reports may not include all of the information provided in the monthly Servicer Reports.   SECTION 2.9                                   COLLECTION ACCOUNT.   The Agent shall establish in its name on the day of the initial Investment hereunder and shall maintain a segregated account (the “Collection Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Agent, on behalf of the Investors.  The Agent shall have exclusive dominion and control over the Collection Account and all monies, instruments and other property from time to time in the Collection Account.  On and after the occurrence of a Termination Event or a Potential Termination Event, the Servicer shall remit within two Business Days of receipt to the Collection Account all Collections received.  Funds on deposit in the Collection Account (other than investment earnings) shall be invested by the Agent, in the name of the Agent, in Eligible Investments that will mature so that such funds will be available so as to permit amounts in the Collection Account to be paid and applied on the next Settlement Date and otherwise in accordance with the provisions of Section 2.12; provided that such funds shall not reduce the Net Investment or accrued Yield hereunder until so applied under Section 2.12.  On each Settlement Date, all interest and earnings (net of losses and investment expenses) on funds on deposit in the Collection Account shall be applied as Collections in accordance with Section 2.12.  On the Final Payout Date, any funds remaining on deposit in the Collection Account shall be paid to the SPV.   SECTION 2.10                            SHARING OF PAYMENTS, ETC.   If any Investor (for purposes of this Section only, being a “Recipient”) shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of the portion of the Asset Interest owned by it (other than pursuant to the Fee Letter, Section 3.3(b) or Article IX and other than as a result of the differences in the timing of the applications of Collections pursuant to Section 2.12 and other than a result of the different methods for calculating Yield) in excess of its ratable share of payments on account of the Asset Interest obtained by the Investors entitled thereto, such Recipient shall forthwith purchase from the Investors entitled to a share of such amount participations in the portions of the Asset Interest owned by such Persons as shall be necessary to cause such Recipient to share the excess payment ratably with each such other Person entitled thereto; provided, however, that if all or any portion of such excess payment is thereafter recovered from such Recipient, such purchase from each such other Person shall be rescinded and each such other Person shall repay to the Recipient the purchase price paid by such Recipient for such participation to the extent of such recovery, together with an amount equal to such other Person’s ratable share (according to the proportion of (a) the amount of such other Person’s required payment to (b) the total amount so recovered from the Recipient) of any interest or other amount paid or payable by the Recipient in respect of the total amount so recovered.   28   SECTION 2.11                            RIGHT OF SETOFF.   Without in any way limiting the provisions of Section 2.10, each Class Agent and each Investor is hereby authorized (in addition to any other rights it may have) at any time after the occurrence of the Termination Date due to the occurrence of a Termination Event or during the continuance of a Potential Termination Event to set-off, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by such Class Agent or such Investor to, or for the account of, the SPV against the amount of the Aggregate Unpaids owing by the SPV to such Person or to the Agent on behalf of such Person (even if contingent or unmatured).   THE REMAINDER OF ARTICLE II IS SPECIFIED IN SCHEDULE III (SETTLEMENT PROCEDURES), WHICH PROVISIONS ARE INCORPORATED HEREIN BY REFERENCE.   ARTICLE III   ADDITIONAL ALTERNATE INVESTOR PROVISIONS   SECTION 3.1                                   ASSIGNMENT TO ALTERNATE INVESTORS.   (A)                                  ASSIGNMENT AMOUNTS.  AT ANY TIME ON OR PRIOR TO THE COMMITMENT TERMINATION DATE, IF ANY CLASS AGENT ON BEHALF OF THE RELATED CONDUIT INVESTORS SO ELECTS, BY WRITTEN NOTICE TO THE AGENT, THE SPV HEREBY IRREVOCABLY REQUESTS AND DIRECTS THAT SUCH CONDUIT INVESTORS ASSIGN, AND EACH CONDUIT INVESTOR DOES HEREBY ASSIGN EFFECTIVE ON THE ASSIGNMENT DATE REFERRED TO BELOW, ALL OR SUCH PORTIONS AS MAY BE ELECTED BY SUCH CONDUIT INVESTOR OF, THE RELATED CLASS NET INVESTMENT AND THE ASSET INTEREST AT SUCH TIME TO THE RELATED ALTERNATE INVESTORS PURSUANT TO THIS SECTION 3.1 AND THE SPV HEREBY AGREES TO PAY THE AMOUNTS DESCRIBED IN SECTION 3.1(B); PROVIDED, HOWEVER, THAT UNLESS SUCH ASSIGNMENT IS AN ASSIGNMENT OF ALL OF SUCH CLASS NET INVESTMENT, INCLUDING THE PORTION OF THE ASSET INTEREST RELATED THERETO, IN WHOLE ON OR AFTER THE CONDUIT INVESTMENT TERMINATION DATE, NO SUCH ASSIGNMENT SHALL TAKE PLACE PURSUANT TO THIS SECTION 3.1 IF A TERMINATION EVENT DESCRIBED IN SECTION 8.1(G) SHALL THEN EXIST; AND PROVIDED, FURTHER, THAT NO SUCH ASSIGNMENT SHALL TAKE PLACE PURSUANT TO THIS SECTION 3.1 AT A TIME WHEN AN EVENT OF BANKRUPTCY WITH RESPECT TO SUCH CONDUIT INVESTOR EXISTS.  NO FURTHER DOCUMENTATION OR ACTION ON THE PART OF THE CONDUIT INVESTORS OR THE SPV SHALL BE REQUIRED TO EXERCISE THE RIGHTS SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE, OTHER THAN THE GIVING OF THE NOTICE BY A CLASS AGENT ON BEHALF OF THE RELATED CONDUIT INVESTOR TO THE AGENT AND THE DELIVERY BY THE RELATED CLASS AGENT OF A COPY OF SUCH NOTICE TO EACH RELATED ALTERNATE INVESTOR (THE DATE OF THE RECEIPT BY THE RELATED CLASS AGENT OF ANY SUCH NOTICE BEING THE “ASSIGNMENT DATE”).  EACH ALTERNATE INVESTOR HEREBY AGREES, UNCONDITIONALLY AND IRREVOCABLY AND UNDER ALL CIRCUMSTANCES, WITHOUT SETOFF, COUNTERCLAIM OR DEFENSE OF ANY KIND, TO PAY THE FULL AMOUNT OF ITS ASSIGNMENT AMOUNT ON SUCH ASSIGNMENT DATE TO THE RELATED CONDUIT INVESTOR IN IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT DESIGNATED BY THE RELATED CLASS AGENT.  UPON PAYMENT OF ITS ASSIGNMENT AMOUNT, SUCH ALTERNATE INVESTOR SHALL ACQUIRE AN INTEREST IN THE RELATED CLASS NET INVESTMENT (AND THE PORTION OF THE ASSET INTEREST RELATED THERETO) EQUAL TO ITS PRO RATA SHARE (BASED ON THE OUTSTANDING PORTIONS OF SUCH CLASS NET INVESTMENT FUNDED BY IT) OF THE RELATED CLASS NET INVESTMENT.  UPON ANY ASSIGNMENT IN WHOLE BY ANY CONDUIT INVESTOR TO THE RELATED ALTERNATE INVESTORS ON OR AFTER THE CONDUIT   29   INVESTMENT TERMINATION DATE AS CONTEMPLATED HEREUNDER, SUCH CONDUIT INVESTOR SHALL CEASE TO MAKE ANY ADDITIONAL INVESTMENTS OR REINVESTMENTS HEREUNDER.  AT ALL TIMES PRIOR TO THE CONDUIT INVESTMENT TERMINATION DATE, NOTHING HEREIN SHALL PREVENT ANY CONDUIT INVESTOR FROM MAKING A SUBSEQUENT INVESTMENT OR REINVESTMENT HEREUNDER, IN ITS SOLE DISCRETION, FOLLOWING ANY ASSIGNMENT PURSUANT TO THIS SECTION 3.1 OR FROM MAKING MORE THAN ONE ASSIGNMENT PURSUANT TO THIS SECTION 3.1.   (B)                                 SPV’S OBLIGATION TO PAY CERTAIN AMOUNTS; ADDITIONAL ASSIGNMENT AMOUNT.  THE SPV SHALL PAY TO THE RELATED CLASS AGENT, FOR THE ACCOUNT OF THE RELATED CONDUIT INVESTOR, IN CONNECTION WITH ANY ASSIGNMENT BY SUCH CONDUIT INVESTOR TO THE RELATED ALTERNATE INVESTORS PURSUANT TO THIS SECTION 3.1, AN AGGREGATE AMOUNT EQUAL TO ALL YIELD TO ACCRUE THROUGH THE END OF THE CURRENT RATE PERIOD TO THE EXTENT ATTRIBUTABLE TO THE PORTION OF THE CLASS NET INVESTMENT SO ASSIGNED TO THE RELATED ALTERNATE INVESTORS (WHICH YIELD SHALL BE DETERMINED FOR SUCH PURPOSE USING THE CP RATE MOST RECENTLY DETERMINED BY THE RELATED CLASS AGENT) (AS DETERMINED IMMEDIATELY PRIOR TO GIVING EFFECT TO SUCH ASSIGNMENT), PLUS ALL OTHER AGGREGATE UNPAIDS (OTHER THAN THE CLASS NET INVESTMENT AND OTHER THAN ANY YIELD NOT DESCRIBED ABOVE) RELATED TO SUCH CLASS.  IF THE SPV FAILS TO MAKE PAYMENT OF SUCH AMOUNTS AT OR PRIOR TO THE TIME OF ASSIGNMENT BY A CONDUIT INVESTOR TO THE RELATED ALTERNATE INVESTORS, SUCH AMOUNT SHALL BE PAID BY THE RELATED ALTERNATE INVESTORS (IN ACCORDANCE WITH THEIR RESPECTIVE ALTERNATE INVESTOR PERCENTAGES) TO SUCH CONDUIT INVESTOR AS ADDITIONAL CONSIDERATION FOR THE INTERESTS ASSIGNED TO SUCH ALTERNATE INVESTORS AND THE AMOUNT OF THE RELATED CLASS NET INVESTMENT SHALL BE INCREASED BY AN AMOUNT EQUAL TO THE ADDITIONAL AMOUNT SO PAID BY THE ALTERNATE INVESTORS (WHICH SUCH AMOUNTS, BASED UPON THE PROPORTION THAT THE AMOUNT FUNDED BY EACH SUCH ALTERNATE INVESTOR BEARS TO THE AGGREGATE OF SUCH AMOUNTS).  ANY PAYMENT BY THE SPV REQUIRED TO MADE UNDER THIS SECTION 3.1(B) SHALL BE PAID AS SOON AS POSSIBLE FROM THE SPV’S SHARE OF COLLECTIONS AND, IN ANY EVENT, SHALL BECOME DUE AND PAYABLE ON THE EARLIER TO OCCUR OF (I) THE NEXT SETTLEMENT DATE AFTER THE OBLIGATION TO MAKE SUCH PAYMENT ARISES AND (II) THE TERMINATION DATE.   (C)                                  ADMINISTRATION OF AGREEMENT AFTER ASSIGNMENT FROM CONDUIT INVESTOR TO ALTERNATE INVESTORS FOLLOWING THE CONDUIT INVESTMENT TERMINATION DATE.  AFTER ANY ASSIGNMENT IN WHOLE BY A CONDUIT INVESTOR TO THE RELATED ALTERNATE INVESTORS PURSUANT TO THIS SECTION 3.1 AT ANY TIME ON OR AFTER THE CONDUIT INVESTMENT TERMINATION DATE (AND THE PAYMENT OF ALL AMOUNTS OWING TO SUCH CONDUIT INVESTOR IN CONNECTION THEREWITH), ALL RIGHTS OF THE RELATED CLASS AGENTS OR THE RELATED COLLATERAL AGENT SET FORTH HEREIN SHALL BE GIVEN TO THE RELATED CLASS AGENT ON BEHALF OF THE ALTERNATE INVESTORS INSTEAD OF EITHER SUCH PARTY.   (D)                                 [RESERVED].   (E)                                  RECOVERY OF NET INVESTMENT.  IN THE EVENT THAT THE AGGREGATE OF THE ASSIGNMENT AMOUNTS RELATED TO ANY CLASS PAID BY THE RELATED ALTERNATE INVESTORS PURSUANT TO THIS SECTION 3.1 ON ANY ASSIGNMENT DATE OCCURRING ON OR AFTER THE CONDUIT INVESTMENT TERMINATION DATE IS LESS THAN THE PORTION OF THE CLASS NET INVESTMENT OWNED BY THE RELATED CONDUIT INVESTOR ON SUCH ASSIGNMENT DATE, THEN TO THE EXTENT COLLECTIONS THEREAFTER RECEIVED BY THE AGENT HEREUNDER IN RESPECT OF SUCH CLASS NET INVESTMENT EXCEED THE AGGREGATE OF THE UNRECOVERED ASSIGNMENT AMOUNTS FOR SUCH CLASS AND THE CLASS NET INVESTMENT FUNDED BY THE RELATED ALTERNATE INVESTORS (OTHER THAN ANY PORTION THEREOF ATTRIBUTABLE TO SUCH ASSIGNMENT AMOUNTS), SUCH EXCESS SHALL BE   30   REMITTED BY THE RELATED CLASS AGENT TO THE RELATED CONDUIT INVESTOR FOR THE ACCOUNT OF THE RELATED CONDUIT INVESTOR.   SECTION 3.2                                   DOWNGRADE OF ALTERNATE INVESTOR.   (A)                                  DOWNGRADES GENERALLY.  IF AT ANY TIME ON OR PRIOR TO THE COMMITMENT TERMINATION DATE, THE SHORT TERM DEBT RATING OF ANY ALTERNATE INVESTOR SHALL BE “A-2” OR “P-2” FROM S&P OR MOODY’S, RESPECTIVELY, WITH NEGATIVE CREDIT IMPLICATIONS, SUCH ALTERNATE INVESTOR, UPON REQUEST OF THE RELATED CLASS AGENT, SHALL, WITHIN THIRTY (30) DAYS OF SUCH REQUEST, ASSIGN ITS RIGHTS AND OBLIGATIONS HEREUNDER TO ANOTHER FINANCIAL INSTITUTION (WHICH INSTITUTION’S SHORT TERM DEBT SHALL BE RATED AT LEAST “A-2” OR “P-2” FROM S&P OR MOODY’S, RESPECTIVELY, AND WHICH SHALL NOT BE SO RATED WITH NEGATIVE CREDIT IMPLICATIONS AND WHICH IS ACCEPTABLE TO THE RELATED CONDUIT INVESTOR AND THE RELATED CLASS AGENT AND SUBJECT TO SECTION 3.4.  IF THE SHORT TERM DEBT RATING OF AN ALTERNATE INVESTOR SHALL BE “A-3” OR “P-3”, OR LOWER, FROM S&P OR MOODY’S, RESPECTIVELY (OR SUCH RATING SHALL HAVE BEEN WITHDRAWN BY S&P OR MOODY’S), SUCH ALTERNATE INVESTOR, UPON REQUEST OF THE RELATED CLASS AGENT, SHALL, WITHIN FIVE (5) BUSINESS DAYS OF SUCH REQUEST, ASSIGN ITS RIGHTS AND OBLIGATIONS HEREUNDER TO ANOTHER FINANCIAL INSTITUTION (WHICH INSTITUTION’S SHORT TERM DEBT SHALL BE RATED AT LEAST “A-2” OR “P-2”, FROM S&P OR MOODY’S, RESPECTIVELY, AND WHICH SHALL NOT BE SO RATED WITH NEGATIVE CREDIT IMPLICATIONS AND WHICH IS ACCEPTABLE TO THE RELATED CONDUIT INVESTOR AND THE RELATED CLASS AGENT AND SUBJECT TO SECTION 3.4).  IN EITHER SUCH CASE, IF ANY SUCH ALTERNATE INVESTOR SHALL NOT HAVE ASSIGNED ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT WITHIN THE APPLICABLE TIME PERIOD DESCRIBED ABOVE (IN EITHER SUCH CASE, THE “REQUIRED DOWNGRADE ASSIGNMENT PERIOD”), THE RELATED CLASS AGENT ON BEHALF OF THE RELATED CONDUIT INVESTOR SHALL HAVE THE RIGHT TO REQUIRE SUCH ALTERNATE INVESTOR TO PAY UPON ONE (1) BUSINESS DAY’S NOTICE AT ANY TIME AFTER THE REQUIRED DOWNGRADE ASSIGNMENT PERIOD (AND EACH SUCH ALTERNATE INVESTOR HEREBY AGREES IN SUCH EVENT TO PAY WITHIN SUCH TIME) TO SUCH CLASS AGENT AN AMOUNT EQUAL TO SUCH ALTERNATE INVESTOR’S UNUSED COMMITMENT (A “DOWNGRADE DRAW”) FOR DEPOSIT BY SUCH CLASS AGENT INTO AN ACCOUNT, IN THE NAME OF SUCH CLASS AGENT (A “DOWNGRADE COLLATERAL ACCOUNT”), WHICH SHALL BE IN SATISFACTION OF SUCH ALTERNATE INVESTOR’S OBLIGATIONS TO MAKE INVESTMENTS AND TO PAY ITS ASSIGNMENT AMOUNT UPON AN ASSIGNMENT FROM SUCH CONDUIT INVESTOR IN ACCORDANCE WITH SECTION 3.1; PROVIDED, HOWEVER, THAT IF, DURING THE REQUIRED DOWNGRADE ASSIGNMENT PERIOD, SUCH ALTERNATE INVESTOR DELIVERS A WRITTEN NOTICE TO SUCH CLASS AGENT OF ITS INTENT TO DELIVER A DIRECT PAY IRREVOCABLE LETTER OF CREDIT PURSUANT TO THIS PROVISO IN LIEU OF THE PAYMENT REQUIRED TO FUND THE DOWNGRADE DRAW, THEN SUCH ALTERNATE INVESTOR WILL NOT BE REQUIRED TO FUND SUCH DOWNGRADE DRAW.  IF ANY ALTERNATE INVESTOR GIVES THE RELATED CLASS AGENT SUCH NOTICE, THEN SUCH ALTERNATE INVESTOR SHALL, WITHIN ONE (1) BUSINESS DAY AFTER THE REQUIRED DOWNGRADE ASSIGNMENT PERIOD, DELIVER TO SUCH CLASS AGENT A DIRECT PAY IRREVOCABLE LETTER OF CREDIT IN FAVOR OF SUCH CLASS AGENT IN AN AMOUNT EQUAL TO THE UNUSED PORTION OF SUCH ALTERNATE INVESTOR’S COMMITMENT, WHICH LETTER OF CREDIT SHALL BE ISSUED THROUGH AN UNITED STATES OFFICE OF A BANK OR OTHER FINANCIAL INSTITUTION (I) WHOSE SHORT-TERM DEBT RATINGS BY S&P AND MOODY’S ARE AT LEAST EQUAL TO THE RATINGS ASSIGNED BY SUCH STATISTICAL RATING ORGANIZATION TO THE COMMERCIAL PAPER OF THE RELATED CONDUIT INVESTOR AND (II) THAT IS ACCEPTABLE TO SUCH CONDUIT INVESTOR AND SUCH CLASS AGENT.  SUCH LETTER OF CREDIT SHALL PROVIDE THAT THE AGENT MAY DRAW THEREON FOR PAYMENT OF ANY INVESTMENT OR ASSIGNMENT AMOUNT PAYABLE BY SUCH ALTERNATE INVESTOR WHICH IS NOT PAID HEREUNDER WHEN REQUIRED, SHALL EXPIRE NO EARLIER THAN THE COMMITMENT TERMINATION DATE AND SHALL OTHERWISE BE IN FORM AND SUBSTANCE ACCEPTABLE TO SUCH CLASS AGENT.   31   (B)                                 APPLICATION OF FUNDS IN DOWNGRADE COLLATERAL ACCOUNT.  IF ANY ALTERNATE INVESTOR SHALL BE REQUIRED PURSUANT TO SECTION 3.2(A) TO FUND A DOWNGRADE DRAW, THEN THE RELATED CLASS AGENT SHALL APPLY THE MONIES IN THE DOWNGRADE COLLATERAL ACCOUNT APPLICABLE TO THE RELATED ALTERNATE INVESTOR PERCENTAGE OF THE RELATED CLASS PRO RATA SHARE OF INVESTMENTS REQUIRED TO BE MADE BY THE ALTERNATE INVESTORS OF THE RELATED CLASS, TO ANY ASSIGNMENT AMOUNT PAYABLE BY SUCH ALTERNATE INVESTOR PURSUANT TO SECTION 3.1 AND TO ANY PURCHASE PRICE PAYABLE BY SUCH ALTERNATE INVESTOR PURSUANT TO SECTION 3.3(B) AT THE TIMES, IN THE MANNER AND SUBJECT TO THE CONDITIONS PRECEDENT SET FORTH IN THIS AGREEMENT.  THE DEPOSIT OF MONIES IN SUCH DOWNGRADE COLLATERAL ACCOUNT BY SUCH ALTERNATE INVESTOR SHALL NOT CONSTITUTE AN INVESTMENT OR THE PAYMENT OF ANY ASSIGNMENT AMOUNT (AND SUCH ALTERNATE INVESTOR SHALL NOT BE ENTITLED TO INTEREST ON SUCH MONIES EXCEPT AS PROVIDED BELOW IN THIS SECTION 3.2(B), UNLESS AND UNTIL (AND THEN ONLY TO THE EXTENT THAT) SUCH MONIES ARE USED TO FUND INVESTMENTS OR TO PAY ANY ASSIGNMENT AMOUNT OR PURCHASE PRICE PURSUANT TO SECTION 3.3(B) PURSUANT TO THE FIRST SENTENCE OF THIS SECTION 3.2(B).  THE AMOUNT ON DEPOSIT IN SUCH DOWNGRADE COLLATERAL ACCOUNT SHALL BE INVESTED BY THE RELATED CLASS AGENT IN ELIGIBLE INVESTMENTS AND SUCH ELIGIBLE INVESTMENTS SHALL BE SELECTED BY SUCH CLASS AGENT IN ITS SOLE DISCRETION.  SUCH CLASS AGENT SHALL REMIT TO SUCH ALTERNATE INVESTOR, ON THE LAST BUSINESS DAY OF EACH MONTH, THE INCOME ACTUALLY RECEIVED THEREON.  UNLESS REQUIRED TO BE RELEASED AS PROVIDED BELOW IN THIS SUBSECTION, COLLECTIONS RECEIVED BY SUCH CLASS AGENT IN RESPECT OF SUCH ALTERNATE INVESTOR’S PORTION OF THE RELATED CLASS NET INVESTMENT SHALL BE DEPOSITED IN THE DOWNGRADE COLLATERAL ACCOUNT FOR SUCH ALTERNATE INVESTOR.  AMOUNTS ON DEPOSIT IN SUCH DOWNGRADE COLLATERAL ACCOUNT SHALL BE RELEASED TO SUCH ALTERNATE INVESTOR (OR THE STATED AMOUNT OF THE LETTER OF CREDIT DELIVERED BY SUCH ALTERNATE INVESTOR PURSUANT TO SUBSECTION (A) ABOVE MAY BE REDUCED) WITHIN ONE BUSINESS DAY AFTER EACH SETTLEMENT DATE FOLLOWING THE TERMINATION DATE TO THE EXTENT THAT, AFTER GIVING EFFECT TO THE DISTRIBUTIONS MADE AND RECEIVED BY THE RELATED INVESTORS ON SUCH SETTLEMENT DATE, THE AMOUNT ON DEPOSIT IN SUCH DOWNGRADE COLLATERAL ACCOUNT WOULD EXCEED THE RELATED ALTERNATE INVESTOR PERCENTAGE OF THE RELATED CLASS PRO RATA SHARE (DETERMINED AS OF THE DAY PRIOR TO THE TERMINATION DATE) OF THE SUM OF THE RELATED CLASS NET INVESTMENT THEN FUNDED BY THE RELATED CONDUIT INVESTOR, PLUS THE RELATED INTEREST COMPONENT.  ALL AMOUNTS REMAINING IN SUCH DOWNGRADE COLLATERAL ACCOUNT SHALL BE RELEASED TO SUCH ALTERNATE INVESTOR NO LATER THAN THE BUSINESS DAY IMMEDIATELY FOLLOWING THE EARLIEST OF (I) THE EFFECTIVE DATE OF ANY REPLACEMENT OF SUCH ALTERNATE INVESTOR OR REMOVAL OF SUCH ALTERNATE INVESTOR AS A PARTY TO THIS AGREEMENT, (II) THE DATE ON WHICH SUCH ALTERNATE INVESTOR SHALL FURNISH THE RELATED CLASS AGENT WITH CONFIRMATION THAT SUCH ALTERNATE INVESTOR SHALL HAVE SHORT-TERM DEBT RATINGS OF AT LEAST “A-2” OR “P-2” FROM S&P AND MOODY’S, RESPECTIVELY, WITHOUT NEGATIVE CREDIT IMPLICATIONS, AND (III) THE COMMITMENT TERMINATION DATE (OR IF EARLIER, THE COMMITMENT TERMINATION DATE IN EFFECT PRIOR TO ANY RENEWAL PURSUANT TO SECTION 3.3 TO WHICH SUCH ALTERNATE INVESTOR DOES NOT CONSENT, BUT ONLY AFTER GIVING EFFECT TO ANY REQUIRED PURCHASE PURSUANT TO SECTION 3.3(B)).  NOTHING IN THIS SECTION 3.2 SHALL AFFECT OR DIMINISH IN ANY WAY ANY SUCH DOWNGRADED ALTERNATE INVESTOR’S COMMITMENT TO THE SPV OR THE RELATED CONDUIT INVESTOR OR SUCH DOWNGRADED ALTERNATE INVESTOR’S OTHER OBLIGATIONS AND LIABILITIES HEREUNDER AND UNDER THE OTHER TRANSACTION DOCUMENTS.   (C)                                  PROGRAM SUPPORT AGREEMENT DOWNGRADE PROVISIONS.  NOTWITHSTANDING THE OTHER PROVISIONS OF THIS SECTION 3.2, AN ALTERNATE INVESTOR SHALL NOT BE REQUIRED TO MAKE A DOWNGRADE DRAW (OR PROVIDE FOR THE ISSUANCE OF A LETTER OF CREDIT IN LIEU THEREOF) PURSUANT TO SECTION 3.2(A) AT A TIME WHEN SUCH ALTERNATE INVESTOR HAS A DOWNGRADE COLLATERAL ACCOUNT (OR LETTER OF CREDIT IN LIEU THEREOF) ESTABLISHED PURSUANT TO THE PROGRAM SUPPORT AGREEMENT RELATING TO THE TRANSACTIONS   32   CONTEMPLATED BY THIS AGREEMENT TO WHICH IT IS A PARTY IN AN AMOUNT AT LEAST EQUAL TO ITS UNUSED COMMITMENT, AND THE RELATED CLASS AGENT MAY APPLY MONIES IN SUCH DOWNGRADE COLLATERAL ACCOUNT IN THE MANNER DESCRIBED IN SECTION 3.3(B) AS IF SUCH DOWNGRADE COLLATERAL ACCOUNT WERE A DOWNGRADE COLLATERAL ACCOUNT.   SECTION 3.3                                   NON-RENEWING ALTERNATE INVESTORS.   (A)                                  THE SPV MAY REQUEST THAT THE ALTERNATE INVESTORS RENEW THEIR COMMITMENTS HEREUNDER BY PROVIDING WRITTEN REQUEST FOR RENEWAL TO EACH ALTERNATE INVESTORS NO MORE THAN 60 DAYS AND NOT LESS THAN 45 DAYS PRIOR TO THE THEN-CURRENT COMMITMENT TERMINATION DATE.   (B)                                 IF AT ANY TIME THE SPV SO REQUESTS THAT THE ALTERNATE INVESTORS RENEW THEIR COMMITMENTS HEREUNDER AND SOME BUT LESS THAN ALL THE ALTERNATE INVESTORS CONSENT TO SUCH RENEWAL WITHIN 15 DAYS PRIOR TO THE THEN-CURRENT COMMITMENT TERMINATION DATE, THE SPV MAY ARRANGE FOR AN ASSIGNMENT TO ONE OR MORE FINANCIAL INSTITUTIONS OF ALL THE RIGHTS AND OBLIGATIONS HEREUNDER OF EACH SUCH NON-CONSENTING ALTERNATE INVESTOR IN ACCORDANCE WITH SECTION 11.8.  ANY SUCH ASSIGNMENT SHALL BECOME EFFECTIVE ON THE THEN-CURRENT COMMITMENT TERMINATION DATE.  EACH ALTERNATE INVESTOR WHICH DOES NOT SO CONSENT TO ANY RENEWAL SHALL COOPERATE FULLY WITH THE SPV IN EFFECTUATING ANY SUCH ASSIGNMENT.   (C)                                  IF AT ANY TIME THE SPV REQUESTS THAT THE ALTERNATE INVESTORS EXTEND THE COMMITMENT TERMINATION DATE HEREUNDER AND SOME BUT LESS THAN ALL THE ALTERNATE INVESTORS CONSENT TO SUCH EXTENSION WITHIN 15 DAYS PRIOR TO THE THEN-CURRENT COMMITMENT TERMINATION DATE, AND IF NONE OR LESS THAN ALL THE COMMITMENTS OF THE NON-RENEWING ALTERNATE INVESTORS ARE ASSIGNED AS PROVIDED IN SECTION 3.3(B), THEN (WITHOUT LIMITING THE OBLIGATIONS OF ALL THE ALTERNATE INVESTORS TO MAKE INVESTMENTS AND PAY ANY ASSIGNMENT AMOUNT PRIOR TO THE COMMITMENT TERMINATION DATE IN ACCORDANCE WITH THE TERMS HEREOF) ANY RELATED CONDUIT INVESTOR MAY SELL AN INTEREST IN THE PORTION OF THE RELATED CLASS NET INVESTMENT FUNDED BY IT (INCLUDING THE RELATED INTEREST IN THE ASSET INTEREST) FOR AN AGGREGATE PURCHASE PRICE EQUAL TO THE LESSER OF (I) THE MAXIMUM AGGREGATE ASSIGNMENT AMOUNTS WHICH WOULD BE PAYABLE IF SUCH CONDUIT INVESTOR ASSIGNED ITS ENTIRE INTEREST IN THE ASSET INTEREST AT THAT TIME UNDER SECTION 3.1, AND (II) THE AGGREGATE UNUSED COMMITMENTS OF THE NON-RENEWING ALTERNATE INVESTORS IN SUCH CLASS, WHICH PURCHASE PRICE SHALL BE PAID SOLELY BY SUCH NON-RENEWING ALTERNATE INVESTORS, PRO RATA ACCORDING TO THEIR RESPECTIVE COMMITMENTS.  FOLLOWING THE PAYMENT OF SUCH PURCHASE PRICE, (I) THE EXTENDED COMMITMENT TERMINATION DATE SHALL BE EFFECTIVE WITH RESPECT TO THE RENEWING ALTERNATE INVESTORS, (II) THE RELATED CLASS FACILITY LIMIT SHALL AUTOMATICALLY BE REDUCED BY THE AGGREGATE OF THE COMMITMENTS OF ALL NON-RENEWING ALTERNATE INVESTORS (IT BEING UNDERSTOOD THAT AMOUNTS NECESSARY TO REDUCE THE RELATED CLASS FACILITY LIMIT SHALL BE PAYABLE SOLELY IN ACCORDANCE WITH SECTION 2.12 AND SHALL NOT BE AN IMMEDIATE PAYMENT OBLIGATION OF THE SPV) AND (III) THIS AGREEMENT AND THE COMMITMENTS OF THE RENEWING ALTERNATE INVESTORS SHALL REMAIN IN EFFECT IN ACCORDANCE WITH THEIR TERMS NOTWITHSTANDING THE EXPIRATION OF THE COMMITMENTS OF THE NON-RENEWING ALTERNATE INVESTORS.  PRIOR TO THE TERMINATION DATE, ALL AMOUNTS WHICH, UNDER SECTION 2.12 ARE TO BE APPLIED IN REDUCTION OF THE RELATED CLASS NET INVESTMENT, UP TO THE AGGREGATE CLASS NET INVESTMENT SOLD TO THE NON-RENEWING ALTERNATE INVESTORS AS DESCRIBED ABOVE IN THIS SUBSECTION, SHALL BE DISTRIBUTED TO THE NON-RENEWING ALTERNATE INVESTORS RATABLY ACCORDING TO THE AGGREGATE INVESTMENTS HELD BY THEM, IN REDUCTION OF SUCH INVESTMENTS.  ON AND AFTER THE TERMINATION DATE, EACH NON-RENEWING ALTERNATE INVESTOR SHALL BE ENTITLED TO RECEIVE DISTRIBUTIONS   33   AS OTHERWISE PROVIDED IN SECTION 2.12, SUCH THAT ALL DISTRIBUTIONS OF COLLECTIONS PURSUANT TO SECTION 2.12 THEREAFTER SHALL BE ALLOCATED AMONG THE NON-RENEWING ALTERNATE INVESTORS AND THE OTHER ALTERNATE INVESTORS IN ACCORDANCE WITH EACH SUCH ALTERNATE INVESTOR’S PRO RATA SHARE (BASED ON THE PORTION OF THE NET INVESTMENT FUNDED BY IT AS OF THE TERMINATION DATE) OF THE ALTERNATE INVESTOR PERCENTAGE OF THE RELATED CLASS NET INVESTMENT.  WHEN (AFTER THE EXPIRATION OF THE COMMITMENTS OF THE NON-RENEWING ALTERNATE INVESTORS) THE AGGREGATE OF THE INVESTMENTS DESCRIBED ABOVE IN THIS SUBSECTION SHALL HAVE BEEN REDUCED TO ZERO AND ALL ACCRUED YIELD ALLOCABLE THERETO AND ALL OTHER AGGREGATE UNPAIDS OWING TO SUCH NON-RENEWING ALTERNATE INVESTORS SHALL HAVE BEEN PAID TO SUCH ALTERNATE INVESTORS IN FULL, THEN SUCH NON-RENEWING ALTERNATE INVESTORS SHALL CEASE TO BE PARTIES TO THIS AGREEMENT FOR ANY PURPOSE.   SECTION 3.4                                   NEW ALTERNATE INVESTORS AND LIQUIDITY BANKS.   Notwithstanding anything to the contrary herein contained, (i) any Alternate Investor may assign any portion or all of its Commitment and its investment in the related Class Net Investment to any other Person, (ii) any Liquidity Bank may assign any portion or all of its commitment under its Liquidity Agreement and its investment in the related Class Net Investment to any other Person and (iii) each Conduit Investor may add new Liquidity Banks to its Liquidity Agreement relating to the Transactions contemplated hereby; provided, however, in the case of clauses (i), (ii) and (iii) if such assignment or addition occurs prior to the occurrence of any Termination Event, and the assignee or new Liquidity Bank is not at the time a party to this Agreement, the consent of the SPV to such assignment shall be required (such consent not to be unreasonably withheld or delayed); provided, however, such consent of the SPV shall not be required in the case of an assignment to Bank of America or an Affiliate of  Bank of America or to PNC Bank or an Affiliate of PNC Bank (or, for the avoidance of doubt, in the case of a sale of a participation interest that does not affect the rights or obligations of such Alternate Investor hereunder and does not permit such participant to vote on any matters hereunder).   ARTICLE IV   REPRESENTATIONS AND WARRANTIES   SECTION 4.1                                   REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR, THE SPV, THE SELLER AND THE SERVICER.   Each of the Originator, the SPV, the Seller and the Servicer represents and warrants to the Agent, the Class Agents and the Investors, as to itself, that, on the Closing Date and on each Investment Date and Reinvestment Date:   (A)                                  CORPORATE EXISTENCE AND POWER.  IT (I) IS DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF ILLINOIS, WHICH, IN EACH CASE IS ITS SOLE JURISDICTION OF FORMATION, (II) HAS ALL CORPORATE POWER AND ALL LICENSES, AUTHORIZATIONS, CONSENTS AND APPROVALS OF ALL OFFICIAL BODIES REQUIRED TO CARRY ON ITS BUSINESS IN EACH JURISDICTION IN WHICH ITS BUSINESS IS NOW AND PROPOSED TO BE CONDUCTED (EXCEPT WHERE THE FAILURE TO HAVE ANY SUCH LICENSES, AUTHORIZATIONS, CONSENTS AND APPROVALS WOULD NOT INDIVIDUALLY OR IN THE AGGREGATE HAVE A MATERIAL ADVERSE EFFECT) AND (III) IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING IN EVERY OTHER   34   JURISDICTION IN WHICH THE NATURE OF ITS BUSINESS REQUIRES IT TO BE SO QUALIFIED, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD STANDING WOULD NOT HAVE A MATERIAL ADVERSE EFFECT.   (B)                                 CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION.  THE EXECUTION, DELIVERY AND PERFORMANCE BY IT OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY ARE (I) WITHIN THE ITS ORGANIZATIONAL POWERS, (II) HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ORGANIZATIONAL ACTION, (III) REQUIRE NO ACTION BY OR IN RESPECT OF, OR FILING WITH, ANY OFFICIAL BODY OR OFFICIAL THEREOF (EXCEPT AS CONTEMPLATED BY SECTIONS 5.1(F), 5.1(G) AND 7.7, ALL OF WHICH HAVE BEEN (OR AS OF THE CLOSING DATE WILL HAVE BEEN) DULY MADE AND IN FULL FORCE AND EFFECT), (IV) DO NOT CONTRAVENE OR CONSTITUTE A DEFAULT UNDER (A) ITS ORGANIZATIONAL DOCUMENTS, (B) ANY LAW APPLICABLE TO IT, (C) ANY CONTRACTUAL RESTRICTION BINDING ON OR AFFECTING IT OR ITS PROPERTY OR (D) ANY ORDER, WRIT, JUDGMENT, AWARD, INJUNCTION, DECREE OR OTHER INSTRUMENT BINDING ON OR AFFECTING IT OR ITS PROPERTY, OR (V) RESULT IN THE CREATION OR IMPOSITION OF ANY ADVERSE CLAIM UPON OR WITH RESPECT TO ITS PROPERTY OR THE PROPERTY OF ANY OF ITS SUBSIDIARIES (EXCEPT AS CONTEMPLATED HEREBY), FOR PURPOSES OF CLAUSE (IV) HEREOF EXCEPT (OTHER THAN WITH RESPECT TO THE SPV) TO THE EXTENT SUCH FAILURE WOULD NOT BE REASONABLY EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.   (C)                                  BINDING EFFECT.  EACH OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY HAS BEEN DULY EXECUTED AND DELIVERED AND CONSTITUTES ITS LEGAL, VALID AND BINDING OBLIGATION, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS, SUBJECT TO APPLICABLE BANKRUPTCY, INSOLVENCY, MORATORIUM OR OTHER SIMILAR LAWS AFFECTING THE RIGHTS OF CREDITORS GENERALLY.   (D)                                 PERFECTION.  IN THE CASE OF THE SPV, IT IS THE OWNER OF ALL OF THE RECEIVABLES AND OTHER AFFECTED ASSETS, FREE AND CLEAR OF ALL ADVERSE CLAIMS (OTHER THAN ANY ADVERSE CLAIM ARISING HEREUNDER) AND UPON THE MAKING OF THE INITIAL INVESTMENT ON THE CLOSING DATE AND AT ALL TIMES THEREAFTER UNTIL THE FINAL PAYOUT DATE, ALL FINANCING STATEMENTS AND OTHER DOCUMENTS REQUIRED TO BE RECORDED OR FILED IN ORDER TO PERFECT AND PROTECT THE INTEREST OF THE AGENT ON BEHALF OF THE INVESTORS IN THE ASSET INTEREST AGAINST ALL CREDITORS OF AND PURCHASERS FROM THE SPV AND THE ORIGINATOR WILL HAVE BEEN DULY FILED IN EACH FILING OFFICE NECESSARY FOR SUCH PURPOSE AND ALL FILING FEES AND TAXES, IF ANY, PAYABLE IN CONNECTION WITH SUCH FILINGS SHALL HAVE BEEN PAID IN FULL.   (E)                                  ACCURACY OF INFORMATION.  ALL INFORMATION HERETOFORE FURNISHED BY IT (INCLUDING THE SERVICER REPORTS, ANY OTHER REPORTS DELIVERED PURSUANT TO SECTION 2.8 AND ITS FINANCIAL STATEMENTS) TO ANY INVESTOR, ANY CLASS AGENT OR THE AGENT FOR PURPOSES OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY, TAKEN AS A WHOLE, IS, AND ALL SUCH INFORMATION HEREAFTER FURNISHED BY IT TO ANY INVESTOR, ANY CLASS AGENT OR THE AGENT WILL BE, TRUE, COMPLETE AND ACCURATE IN EVERY MATERIAL RESPECT, ON THE DATE SUCH INFORMATION IS STATED OR CERTIFIED, AND NO SUCH ITEM CONTAINS OR WILL CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS OR WILL OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.   (F)                                    TAX STATUS.  IT HAS (I) TIMELY FILED ALL TAX RETURNS (FEDERAL, STATE AND LOCAL) REQUIRED TO BE FILED, (II) PAID OR MADE ADEQUATE PROVISION FOR THE PAYMENT OF ALL TAXES, ASSESSMENTS AND OTHER GOVERNMENTAL CHARGES EXCEPT WITH RESPECT TO THE ORIGINATOR, THE SELLER AND THE SERVICER, IN THE CASE OF CLAUSES (I) AND (II), FOR TAXES WHICH ARE BEING CONTESTED IN GOOD FAITH AND FOR WHICH APPROPRIATE RESERVES ARE MAINTAINED IN ACCORDANCE WITH GAAP AND (III) IN THE CASE OF THE SPV,   35   ACCOUNTED FOR THE SALE OF THE ASSET INTEREST HEREUNDER, IN ITS BOOKS AND FINANCIAL STATEMENTS AS SALES, CONSISTENT WITH GAAP (EXCEPT TO THE EXTENT THAT THE SPV IS CONSOLIDATED FOR FINANCIAL ACCOUNTING PURPOSES WITH THE SELLER OR ITS AFFILIATES).   OF ANY ORDER OF ANY OFFICIAL BODY OR ARBITRATOR.  THE ORIGINATOR, THE SELLER AND THE SERVICER ARE NOT IN VIOLATION OF ANY ORDER OF ANY OFFICIAL BODY OR ARBITRATOR, EXCEPT WHERE SUCH VIOLATION WOULD NOT BE REASONABLY EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.  EXCEPT AS SET FORTH IN SCHEDULE 4.1(G), THERE ARE NO ACTIONS, SUITS, LITIGATION OR PROCEEDINGS PENDING, OR TO ITS KNOWLEDGE, THREATENED, AGAINST OR AFFECTING IT OR ANY OF ITS AFFILIATES OR THEIR RESPECTIVE PROPERTIES, IN OR BEFORE ANY OFFICIAL BODY OR ARBITRATOR, WHICH MAY, INDIVIDUALLY OR IN THE AGGREGATE, HAVE A MATERIAL ADVERSE EFFECT.   (H)                                 USE OF PROCEEDS.  IN THE CASE OF THE SPV, THE SELLER AND THE ORIGINATOR, NO PROCEEDS OF ANY INVESTMENT OR REINVESTMENT WILL BE USED BY IT (I) TO ACQUIRE ANY SECURITY IN ANY TRANSACTION WHICH IS SUBJECT TO SECTION 13 OR 14 OF THE SECURITIES EXCHANGE ACT OF 1934, (II) TO ACQUIRE ANY EQUITY SECURITY OF A CLASS WHICH IS REGISTERED PURSUANT TO SECTION 12 OF SUCH ACT OR (III) FOR ANY OTHER PURPOSE THAT VIOLATES APPLICABLE LAW, INCLUDING REGULATIONS U OR X OF THE FEDERAL RESERVE BOARD.   (I)                                     PRINCIPAL PLACE OF BUSINESS; CHIEF EXECUTIVE OFFICE; LOCATION OF RECORDS.  ITS PRINCIPAL PLACE OF BUSINESS, CHIEF EXECUTIVE OFFICE AND THE OFFICES WHERE IT KEEPS ALL ITS RECORDS, ARE LOCATED AT THE ADDRESS(ES) DESCRIBED ON SCHEDULE 4.1(I) OR SUCH OTHER LOCATIONS NOTIFIED TO THE CONDUIT INVESTORS IN ACCORDANCE WITH SECTION 7.7 IN JURISDICTIONS WHERE ALL ACTION REQUIRED BY SECTION 7.7 HAS BEEN TAKEN AND COMPLETED.   (J)                                     SUBSIDIARIES; TRADENAMES, ETC.  IN THE CASE OF THE SPV, AS OF THE CLOSING DATE:  (I) IT HAS ONLY THE SUBSIDIARIES AND DIVISIONS LISTED ON SCHEDULE 4.1(J); AND (II) IT HAS, WITHIN THE LAST FIVE (5) YEARS, OPERATED ONLY UNDER THE TRADENAMES IDENTIFIED IN SCHEDULE 4.1(J), AND, WITHIN THE LAST FIVE (5) YEARS, HAS NOT CHANGED ITS NAME, MERGED WITH OR INTO OR CONSOLIDATED WITH ANY OTHER PERSON OR BEEN THE SUBJECT OF ANY PROCEEDING UNDER THE BANKRUPTCY CODE, EXCEPT AS DISCLOSED IN SCHEDULE 4.1(J).  SCHEDULE 4.1(J) ALSO LISTS THE CORRECT FEDERAL EMPLOYER IDENTIFICATION NUMBER OF THE SPV.   (K)                                  GOOD TITLE.  IN THE CASE OF THE SPV, UPON EACH INVESTMENT AND REINVESTMENT, THE AGENT SHALL ACQUIRE A VALID AND ENFORCEABLE PERFECTED FIRST PRIORITY OWNERSHIP INTEREST OR A FIRST PRIORITY PERFECTED SECURITY INTEREST IN EACH RECEIVABLE AND ALL OTHER AFFECTED ASSETS THAT EXIST ON THE DATE OF SUCH INVESTMENT OR REINVESTMENT, WITH RESPECT THERETO, FREE AND CLEAR OF ANY ADVERSE CLAIM.  IN THE CASE OF THE SELLER, UPON EACH TRANSFER TO THE SPV PURSUANT TO THE TERMS OF THE SECOND TIER AGREEMENT, THE SPV SHALL ACQUIRE A VALID AND ENFORCEABLE PERFECTED FIRST PRIORITY OWNERSHIP INTEREST IN EACH RECEIVABLE AND ALL OTHER AFFECTED ASSETS THAT EXIST ON THE DATE OF SUCH TRANSFER, WITH RESPECT THERETO, FREE AND CLEAR OF ANY ADVERSE CLAIM.  IN THE CASE OF THE ORIGINATOR, UPON EACH TRANSFER TO THE SELLER PURSUANT TO THE TERMS OF THE FIRST TIER AGREEMENT, THE SELLER SHALL ACQUIRE A VALID AND ENFORCEABLE PERFECTED FIRST PRIORITY OWNERSHIP INTEREST IN EACH RECEIVABLE AND ALL OTHER AFFECTED ASSETS THAT EXIST ON THE DATE OF SUCH TRANSFER, WITH RESPECT THERETO, FREE AND CLEAR OF ANY ADVERSE CLAIM.   36   (L)                                     NATURE OF RECEIVABLES.  EACH RECEIVABLE (I) REPRESENTED BY IT TO BE AN ELIGIBLE RECEIVABLE IN ANY SERVICER REPORT OR OTHER REPORT DELIVERED PURSUANT TO SECTION 2.8 OR (II)INCLUDED IN THE CALCULATION OF THE NET POOL BALANCE IN FACT SATISFIES AT SUCH TIME THE DEFINITION OF “ELIGIBLE RECEIVABLE” SET FORTH HEREIN.   (M)                               COVERAGE REQUIREMENT.  IN THE CASE OF THE SPV, THE SUM OF (I) THE NET INVESTMENT AND (II) THE REQUIRED RESERVES DOES NOT EXCEED THE NET POOL BALANCE.   (N)                                 CREDIT AND COLLECTION POLICY.  SINCE FEBRUARY 2, 2009, THERE HAVE BEEN NO MATERIAL CHANGES IN THE CREDIT AND COLLECTION POLICY OTHER THAN IN ACCORDANCE WITH THIS AGREEMENT.  IT HAS AT ALL TIMES COMPLIED WITH THE CREDIT AND COLLECTION POLICY IN ALL MATERIAL RESPECTS WITH REGARD TO EACH RECEIVABLE.   (O)                                 NO TERMINATION EVENT OR POTENTIAL TERMINATION EVENT.  IN THE CASE OF THE SPV, NO EVENT HAS OCCURRED AND IS CONTINUING AND NO CONDITION EXISTS, OR WOULD RESULT FROM ANY INVESTMENT OR REINVESTMENT OR FROM THE APPLICATION OF THE PROCEEDS THEREFROM, WHICH CONSTITUTES A TERMINATION EVENT OR A POTENTIAL TERMINATION EVENT.   (P)                                 NOT AN INVESTMENT COMPANY OR HOLDING COMPANY.  IT IS NOT, AND IS NOT CONTROLLED BY, AN “INVESTMENT COMPANY” WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, OR IS EXEMPT FROM ALL PROVISIONS OF SUCH ACT.   (Q)                                 ERISA.  EACH EMPLOYEE BENEFIT PLAN SPONSORED, MAINTAINED OR CONTRIBUTED TO BY THE SPV, THE ORIGINATOR OR ANY ERISA AFFILIATE WHICH PLAN IS TAX QUALIFIED UNDER SECTION 401(A) OF THE CODE IS IN COMPLIANCE IN ALL RESPECTS WITH THE APPLICABLE PROVISIONS OF ERISA, THE CODE AND ANY REGULATIONS AND PUBLISHED INTERPRETATIONS THEREUNDER OR, IF NOT, ANY SUCH NON-COMPLIANCE DOES NOT HAVE A MATERIAL ADVERSE EFFECT.  NEITHER THE SPV NOR ANY ERISA AFFILIATE HAS INCURRED, OR REASONABLY EXPECTS TO INCUR, ANY LIABILITY TO THE PENSION BENEFIT GUARANTY CORPORATION UNDER TITLE IV OF ERISA WITH RESPECT TO ANY PENSION PLAN (OTHER THAN PREMIUMS DUE AND NOT DELINQUENT UNDER SECTION 4007 OF ERISA) THAT WOULD HAVE A MATERIAL ADVERSE EFFECT. NEITHER THE SPV NOR ANY ERISA AFFILIATE SPONSORS, MAINTAINS,  MAKES CONTRIBUTIONS TO, IS OBLIGATED TO MAKE CONTRIBUTIONS TO, OR, DURING THE PRECEDING SIX (6) PLAN YEARS, HAS MADE OR BEEN OBLIGATED TO MAKE CONTRIBUTIONS TO, A MULTIEMPLOYER PLAN.   (R)                                    BLOCKED ACCOUNTS.  THE NAMES AND ADDRESSES OF ALL THE BLOCKED ACCOUNT BANKS, TOGETHER WITH THE ACCOUNT NUMBERS OF THE BLOCKED ACCOUNTS AT SUCH BLOCKED ACCOUNT BANKS, ARE SPECIFIED IN SCHEDULE 4.1(R) (OR AT SUCH OTHER BLOCKED ACCOUNT BANKS AND/OR WITH SUCH OTHER BLOCKED ACCOUNTS AS HAVE BEEN NOTIFIED TO THE CLASS AGENTS AND THE COLLATERAL AGENT AND FOR WHICH BLOCKED ACCOUNT AGREEMENTS HAVE BEEN EXECUTED IN ACCORDANCE WITH SECTION 7.3 AND DELIVERED TO THE AGENT).  ALL BLOCKED ACCOUNTS NOT MAINTAINED AT, AND IN THE NAME OF THE AGENT, ARE SUBJECT TO BLOCKED ACCOUNT AGREEMENTS.  ALL OBLIGORS HAVE BEEN INSTRUCTED TO MAKE PAYMENT TO A BLOCKED ACCOUNT AND ONLY COLLECTIONS ARE DEPOSITED INTO THE BLOCKED ACCOUNTS.   (S)                                  BULK SALES.  IN THE CASE OF THE SPV, NO TRANSACTION CONTEMPLATED HEREBY OR BY THE SECOND TIER AGREEMENT REQUIRES COMPLIANCE WITH ANY BULK SALES ACT OR SIMILAR LAW.   (T)                                    TRANSFERS UNDER FIRST TIER AGREEMENT.  IN THE CASE OF THE SELLER (EXCEPT FOR THE RECEIVABLES ACQUIRED BY THE SELLER IN RESPECT OF THE TERMINATION OF THE EXISTING RECEIVABLES   37   SECURITIZATION ON OR PRIOR TO THE DATE OF THE INITIAL FUNDING HEREUNDER), EACH RECEIVABLE HAS BEEN PURCHASED BY IT FROM THE ORIGINATOR PURSUANT TO, AND IN ACCORDANCE WITH, THE TERMS OF THE FIRST TIER AGREEMENT.   (U)                                 TRANSFERS UNDER SECOND TIER AGREEMENT.  IN THE CASE OF THE SPV, EACH RECEIVABLE HAS BEEN PURCHASED BY IT FROM THE SELLER PURSUANT TO, AND IN ACCORDANCE WITH, THE TERMS OF THE SECOND TIER AGREEMENT.   (V)                                 FAIR VALUE BY SPV.  IN THE CASE OF THE SPV, IT SHALL HAVE GIVEN REASONABLY EQUIVALENT VALUE TO THE SELLER IN CONSIDERATION FOR THE TRANSFER TO IT OF THE AFFECTED ASSETS FROM THE SELLER, AND EACH SUCH TRANSFER SHALL NOT HAVE BEEN MADE FOR OR ON ACCOUNT OF AN ANTECEDENT DEBT OWED BY THE SELLER TO IT AND NO SUCH TRANSFER IS OR MAY BE VOIDABLE UNDER ANY SECTION OF THE BANKRUPTCY CODE.   (W)                               FAIR VALUE BY SELLER.  IN THE CASE OF THE SELLER, IT SHALL HAVE GIVEN REASONABLY EQUIVALENT VALUE TO THE ORIGINATOR IN CONSIDERATION FOR THE TRANSFER TO IT OF THE AFFECTED ASSETS FROM THE ORIGINATOR, AND EACH SUCH TRANSFER SHALL NOT HAVE BEEN MADE FOR OR ON ACCOUNT OF AN ANTECEDENT DEBT OWED BY THE ORIGINATOR TO IT AND NO SUCH TRANSFER IS OR MAY BE VOIDABLE UNDER ANY SECTION OF THE BANKRUPTCY CODE.   (X)                                   NONCONSOLIDATION.  THE SPV IS OPERATED IN SUCH A MANNER THAT THE SEPARATE CORPORATE EXISTENCE OF THE SPV, ON THE ONE HAND, AND THE ORIGINATOR OR ANY AFFILIATE THEREOF, ON THE OTHER, WOULD NOT BE DISREGARDED IN THE EVENT OF THE BANKRUPTCY OR INSOLVENCY OF THE ORIGINATOR OR ANY AFFILIATE THEREOF AND, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING:   (I)                                     THE SPV IS A LIMITED PURPOSE ENTITY WHOSE ACTIVITIES ARE RESTRICTED IN ITS LIMITED LIABILITY COMPANY AGREEMENT TO ACTIVITIES RELATED TO PURCHASING OR OTHERWISE ACQUIRING RECEIVABLES (INCLUDING THE RECEIVABLES) AND RELATED ASSETS AND RIGHTS AND CONDUCTING ANY RELATED OR INCIDENTAL BUSINESS OR ACTIVITIES IT DEEMS NECESSARY OR APPROPRIATE TO CARRY OUT ITS PRIMARY PURPOSE, INCLUDING ENTERING INTO AGREEMENTS LIKE THE TRANSACTION DOCUMENTS;   (II)                                  THE SPV HAS NOT ENGAGED, AND DOES NOT PRESENTLY ENGAGE, IN ANY ACTIVITY OTHER THAN THOSE ACTIVITIES EXPRESSLY PERMITTED HEREUNDER AND UNDER THE OTHER TRANSACTION DOCUMENTS, NOR HAS THE SPV ENTERED INTO ANY AGREEMENT OTHER THAN THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY, AND WITH THE PRIOR WRITTEN CONSENT OF THE INVESTORS AND THE AGENT, ANY OTHER AGREEMENT NECESSARY TO CARRY OUT MORE EFFECTIVELY THE PROVISIONS AND PURPOSES HEREOF OR THEREOF;   (III)                               (A) THE SPV MAINTAINS ITS OWN DEPOSIT ACCOUNT OR ACCOUNTS, SEPARATE FROM THOSE OF ANY OF ITS AFFILIATES, WITH COMMERCIAL BANKING INSTITUTIONS, (B) THE FUNDS OF THE SPV ARE NOT AND HAVE NOT BEEN DIVERTED TO ANY OTHER PERSON OR FOR OTHER THAN THE CORPORATE USE OF THE SPV AND (C) EXCEPT AS MAY BE EXPRESSLY PERMITTED BY THIS AGREEMENT, THE FUNDS OF THE SPV ARE NOT AND HAVE NOT BEEN COMMINGLED WITH THOSE OF ANY OF ITS AFFILIATES;   (IV)                              TO THE EXTENT THAT THE SPV CONTRACTS OR DOES BUSINESS WITH VENDORS OR SERVICE PROVIDERS WHERE THE GOODS AND SERVICES PROVIDED ARE PARTIALLY FOR THE BENEFIT OF   38   ANY OTHER PERSON, THE COSTS INCURRED IN SO DOING ARE FAIRLY ALLOCATED TO OR AMONG THE SPV AND SUCH ENTITIES FOR WHOSE BENEFIT THE GOODS AND SERVICES ARE PROVIDED, AND EACH OF THE SPV AND EACH SUCH ENTITY BEARS ITS FAIR SHARE OF SUCH COSTS; AND  ALL MATERIAL TRANSACTIONS BETWEEN THE SPV AND ANY OF ITS AFFILIATES SHALL BE ONLY ON AN ARM’S-LENGTH BASIS;   (V)                                 THE SPV MAINTAINS A PRINCIPAL EXECUTIVE AND ADMINISTRATIVE OFFICE THROUGH WHICH ITS BUSINESS IS CONDUCTED AND A TELEPHONE NUMBER AND STATIONERY THROUGH WHICH ALL BUSINESS CORRESPONDENCE AND COMMUNICATION ARE CONDUCTED, IN EACH CASE SEPARATE FROM THOSE OF THE ORIGINATOR AND ITS AFFILIATES (PROVIDED IT MAY BE WITHIN THE SAME OFFICES AS THE ORIGINATOR AND ITS AFFILIATES);   (VI)                              THE SPV CONDUCTS ITS AFFAIRS STRICTLY IN ACCORDANCE WITH ITS ORGANIZATIONAL DOCUMENTS AND OBSERVES ALL NECESSARY, APPROPRIATE AND CUSTOMARY CORPORATE FORMALITIES, INCLUDING (A) HOLDING ALL REGULAR AND SPECIAL MEMBERS’ AND MANAGERS’ MEETINGS APPROPRIATE TO AUTHORIZE ALL CORPORATE ACTION, (B) KEEPING SEPARATE AND ACCURATE MINUTES OF SUCH MEETINGS, (C) PASSING ALL RESOLUTIONS OR CONSENTS NECESSARY TO AUTHORIZE ACTIONS TAKEN OR TO BE TAKEN, AND (D) MAINTAINING ACCURATE AND SEPARATE BOOKS, RECORDS AND ACCOUNTS, INCLUDING INTERCOMPANY TRANSACTION ACCOUNTS;   (VII)                           ALL DECISIONS WITH RESPECT TO ITS BUSINESS AND DAILY OPERATIONS ARE INDEPENDENTLY MADE BY THE SPV (ALTHOUGH THE OFFICER MAKING ANY PARTICULAR DECISION MAY ALSO BE AN EMPLOYEE, OFFICER OR DIRECTOR OF AN AFFILIATE OF THE SPV) AND ARE NOT DICTATED BY ANY AFFILIATE OF THE SPV (IT BEING UNDERSTOOD THAT THE SERVICER, WHICH IS AN AFFILIATE OF THE SPV, WILL UNDERTAKE AND PERFORM ALL OF THE OPERATIONS, FUNCTIONS AND OBLIGATIONS OF IT SET FORTH HEREIN AND IT MAY APPOINT SUB-SERVICERS, WHICH MAY BE AFFILIATES OF THE SPV, TO PERFORM CERTAIN OF SUCH OPERATIONS, FUNCTIONS AND OBLIGATIONS);   (VIII)                        THE SPV ACTS SOLELY IN ITS OWN CORPORATE NAME AND THROUGH ITS OWN AUTHORIZED OFFICERS AND AGENTS, AND NO AFFILIATE OF THE SPV SHALL BE APPOINTED TO ACT AS ITS AGENT, EXCEPT AS EXPRESSLY CONTEMPLATED BY THIS AGREEMENT;   (IX)                                NO AFFILIATE OF THE SPV ADVANCES FUNDS TO THE SPV, OTHER THAN AS IS OTHERWISE PROVIDED HEREIN OR IN THE OTHER TRANSACTION DOCUMENTS, AND NO AFFILIATE OF THE SPV OTHERWISE SUPPLIES FUNDS TO, OR GUARANTIES DEBTS OF, THE SPV; PROVIDED, HOWEVER, THAT AN AFFILIATE OF THE SPV MAY PROVIDE FUNDS TO THE SPV IN CONNECTION WITH THE CAPITALIZATION OF THE SPV;   (X)                                   OTHER THAN ORGANIZATIONAL EXPENSES AND AS EXPRESSLY PROVIDED HEREIN, THE SPV PAYS ALL EXPENSES, INDEBTEDNESS AND OTHER OBLIGATIONS INCURRED BY IT;   (XI)                                THE SPV DOES NOT GUARANTEE, AND IS NOT OTHERWISE LIABLE, WITH RESPECT TO ANY OBLIGATION OF ANY OF ITS AFFILIATES;   (XII)                             ANY FINANCIAL REPORTS REQUIRED OF THE SPV COMPLY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND ARE ISSUED SEPARATELY FROM, BUT MAY BE CONSOLIDATED WITH, ANY REPORTS PREPARED FOR ANY OF ITS AFFILIATES;   39   (XIII)                          AT ALL TIMES THE SPV IS ADEQUATELY CAPITALIZED TO ENGAGE IN THE TRANSACTIONS CONTEMPLATED IN ITS CERTIFICATE OF INCORPORATION;   (XIV)                         THE FINANCIAL STATEMENTS AND BOOKS AND RECORDS OF THE SPV AND THE ORIGINATOR REFLECT THE SEPARATE CORPORATE EXISTENCE OF THE SPV;   (XV)                            THE SPV DOES NOT ACT AS AGENT FOR THE ORIGINATOR OR ANY AFFILIATE THEREOF, BUT INSTEAD PRESENTS ITSELF TO THE PUBLIC AS A CORPORATION SEPARATE FROM EACH SUCH MEMBER AND INDEPENDENTLY ENGAGED IN THE BUSINESS OF PURCHASING AND FINANCING RECEIVABLES;   (XVI)                         THE SPV MAINTAINS A THREE-PERSON BOARD OF MANAGERS, INCLUDING AT LEAST ONE INDEPENDENT MANAGER, WHO HAS NEVER BEEN, AND SHALL AT NO TIME BE A STOCKHOLDER, MEMBER, MANAGER, OFFICER, EMPLOYEE OR ASSOCIATE, OR ANY RELATIVE OF THE FOREGOING, OF THE ORIGINATOR OR ANY AFFILIATE THEREOF (OTHER THAN THE SPV AND ANY OTHER BANKRUPTCY-REMOTE SPECIAL PURPOSE ENTITY FORMED FOR THE SOLE PURPOSE OF SECURITIZING, OR FACILITATING THE SECURITIZATION OF, FINANCIAL ASSETS OF THE ORIGINATOR OR ANY AFFILIATE THEREOF), ALL AS PROVIDED IN ITS CERTIFICATE OR ARTICLES OF INCORPORATION, AND IS OTHERWISE REASONABLY ACCEPTABLE TO THE INVESTORS AND THE AGENT; AND   (XVII)                      THE LIMITED LIABILITY COMPANY AGREEMENT OF THE SPV REQUIRES THE AFFIRMATIVE VOTE OF ITS INDEPENDENT MANAGER BEFORE A VOLUNTARY PETITION UNDER SECTION 301 OF THE BANKRUPTCY CODE MAY BE FILED BY THE SPV, AND REQUIRES THE SPV TO MAINTAIN CORRECT AND COMPLETE BOOKS AND RECORDS OF ACCOUNT AND MINUTES OF THE MEETINGS AND OTHER PROCEEDINGS OF ITS MEMBER AND BOARD OF MANAGERS.   (Y)                                 SOLVENCY. IN THE CASE OF THE SPV, ON THE DATE OF ANY INVESTMENT OR REINVESTMENT,  THE SPV IS SOLVENT BEFORE AND AFTER GIVING EFFECT TO SUCH INVESTMENT OR REINVESTMENT.   (Z)                                   RECEIVABLES PURCHASE FACILITY.  (I) THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS CONSTITUTE A “RECEIVABLES PURCHASE FACILITY” (AS DEFINED IN THE REVOLVING CREDIT AGREEMENT AND THE MASTER NOTE PURCHASE AGREEMENT, AS SUCH DOCUMENTS ARE IN EFFECT ON EACH DATE AS OF WHICH THIS REPRESENTATION IS MADE) AND IS PERMITTED UNDER THE REVOLVING CREDIT AGREEMENT AND THE MASTER NOTE PURCHASE AGREEMENT, AS SUCH DOCUMENTS ARE IN EFFECT ON THE DATE AS OF WHICH THIS REPRESENTATION IS MADE AND (II) IT HAS NOT ENTERED INTO ANY ADDITIONAL RECEIVABLES PURCHASE FACILITIES (AS DEFINED IN THE REVOLVING CREDIT AGREEMENT AND THE MASTER NOTE PURCHASE AGREEMENT, AS SUCH DOCUMENTS ARE IN EFFECT ON THE DATE AS OF WHICH THIS REPRESENTATION IS MADE).   (AA)                            NOTICE OF AMENDMENT TO EXISTING CREDIT DOCUMENTS.  IT SHALL PROVIDE COPIES OF  ANY PROPOSED  AMENDMENTS, MODIFICATIONS OR SUPPLEMENTS TO THE REVOLVING CREDIT AGREEMENT, MASTER NOTE PURCHASE AGREEMENT, INTERCREDITOR AGREEMENT AND PLEDGE AGREEMENT TO THE AGENT. UPON RECEIPT THEREOF, THE AGENT SHALL HAVE 15 DAYS TO NOTIFY THE SPV AND THE SERVICER IF IT REASONABLY BELIEVES THAT ANY SUCH AMENDMENT OR SUPPLEMENT WOULD ADVERSELY AFFECT RIGHTS OF IT, ANY PURCHASER AGENT, OR ANY INVESTOR OR CAUSE A BREACH OF ANY REPRESENTATION, WARRANTY OR OTHER TERM OR PROVISION HEREOF.   40   (BB)                          DISCLOSURE OF THE TRANSACTION.  THE PERFORMANCE GUARANTOR, THE ORIGINATOR, THE SELLER AND SPV EACH MAKE THE REPRESENTATIONS SET FORTH IN SCHEDULE 4.1 (BB) APPLICABLE TO IT WHICH ARE INCORPORATED HEREIN BY REFERENCE.   (CC)                            REPRESENTATIONS AND WARRANTIES IN OTHER RELATED DOCUMENTS.  IN THE CASE OF THE SPV, EACH OF THE REPRESENTATIONS AND WARRANTIES MADE BY IT CONTAINED IN THE TRANSACTION DOCUMENTS (OTHER THAN THIS AGREEMENT) IS TRUE, COMPLETE AND CORRECT IN ALL RESPECTS AND IT HEREBY MAKES EACH SUCH REPRESENTATION AND WARRANTY TO, AND FOR THE BENEFIT OF, THE AGENT, THE CLASS AGENTS AND THE INVESTORS AS IF THE SAME WERE SET FORTH IN FULL HEREIN.   (DD)                          NO SERVICER DEFAULT.  IN THE CASE OF THE SERVICER, NO EVENT HAS OCCURRED AND IS CONTINUING AND NO CONDITION EXISTS, OR WOULD RESULT FROM A PURCHASE IN RESPECT OF, OR REINVESTMENT IN RESPECT OF THE ASSET INTEREST, ANY INVESTMENT OR FROM THE APPLICATION OF THE PROCEEDS THEREFROM, WHICH CONSTITUTES A SERVICER DEFAULT.   SECTION 4.2                                   ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SERVICER.   The Servicer represents and warrants on the Closing Date and on each Investment Date and Reinvestment Date to the Agent, the Class Agents and the Investors, which representation and warranty shall survive the execution and delivery of this Agreement, that each of the representations and warranties of the Servicer (whether made by the Servicer in its capacity as the Seller or as the Servicer) contained in any Transaction Document is true, complete and correct on such date (unless such statement specifically applies to an earlier date) and, if made by the Servicer in its capacity as the Seller or other applicable capacity, applies with equal force to the Servicer in its capacity as the Servicer, and the benefit of, the Agent, the Class Agents and the Investors as if the same were set forth in full herein.   ARTICLE V   CONDITIONS PRECEDENT   SECTION 5.1                                   CONDITIONS PRECEDENT TO CLOSING.   The occurrence of the Closing Date and the effectiveness of the Commitments hereunder shall be subject to the conditions precedent that (i) the SPV or the Originator shall have paid in full (A) all amounts required to be paid by either of them on or prior to the Closing Date pursuant to the Fee Letter and (B) the fees and expenses described in clause (i) of Section 9.4 and invoiced prior to the Closing Date, and (ii) the Agent shall have received, for itself and each of the Investors and the Agent’s counsel, an original (unless otherwise indicated) of each of the following documents, each in form and substance satisfactory to the Agent.   (A)                                  A DULY EXECUTED COUNTERPART OF THIS AGREEMENT, THE FIRST TIER AGREEMENT, THE SECOND TIER AGREEMENT, THE FEE LETTER AND EACH OF THE OTHER TRANSACTION DOCUMENTS EXECUTED BY THE ORIGINATOR, THE SPV, THE SELLER AND THE SERVICER, AS APPLICABLE.   41   (B)                                 A CERTIFICATE, SUBSTANTIALLY IN THE FORM OF EXHIBIT G, OF THE SECRETARY OR ASSISTANT SECRETARY OF THE SPV, CERTIFYING AND (IN THE CASE OF CLAUSES (I) THROUGH (III)) ATTACHING AS EXHIBITS THERETO, AMONG OTHER THINGS:   (I)                                     THE ARTICLES OF INCORPORATION, CHARTER OR OTHER ORGANIZING DOCUMENT (INCLUDING A LIMITED LIABILITY COMPANY AGREEMENT, IF APPLICABLE) OF THE SPV, THE SERVICER, THE SELLER, THE ORIGINATOR AND THE PERFORMANCE GUARANTOR (CERTIFIED BY THE SECRETARY OF STATE OR OTHER SIMILAR OFFICIAL OF THE RESPECTIVE JURISDICTION OF INCORPORATION OR ORGANIZATION, AS APPLICABLE, AS OF A RECENT DATE);   (II)                                  RESOLUTIONS OF THE BOARD OF MANAGERS OR OTHER GOVERNING BODY OF THE SPV, THE SERVICER, THE SELLER, THE ORIGINATOR AND THE PERFORMANCE GUARANTOR AUTHORIZING THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO BE DELIVERED BY THE SPV, THE SERVICER, THE SELLER, THE ORIGINATOR AND THE PERFORMANCE GUARANTOR HEREUNDER OR THEREUNDER AND ALL OTHER DOCUMENTS EVIDENCING NECESSARY CORPORATE ACTION (INCLUDING SHAREHOLDER CONSENTS, IF APPLICABLE) AND GOVERNMENT APPROVALS, IF ANY; AND   (III)                               THE INCUMBENCY, AUTHORITY AND SIGNATURE OF EACH OFFICER OF THE SPV, THE SERVICER, THE SELLER, THE ORIGINATOR AND THE PERFORMANCE GUARANTOR EXECUTING THE TRANSACTION DOCUMENTS OR ANY CERTIFICATES OR OTHER DOCUMENTS DELIVERED HEREUNDER OR THEREUNDER ON BEHALF OF THE SPV, THE SERVICER, THE SELLER, THE ORIGINATOR AND THE PERFORMANCE GUARANTOR.   (C)                                  A CERTIFICATE, SUBSTANTIALLY IN THE FORM OF EXHIBIT H OF THE SECRETARY OR ASSISTANT SECRETARY OF THE ORIGINATOR, THE SERVICER, THE SELLER AND THE PERFORMANCE GUARANTOR CERTIFYING AND (IN THE CASE OF CLAUSES (I) THROUGH (III)) ATTACHING AS EXHIBITS THERETO, AMONG OTHER THINGS:   (I)                                     THE ARTICLES OF INCORPORATION, CERTIFICATE OF FORMATION, CHARTER OR OTHER ORGANIZING DOCUMENT (INCLUDING A LIMITED LIABILITY COMPANY AGREEMENT, IF APPLICABLE) OF THE ORIGINATOR, THE SERVICER, THE SELLER AND THE PERFORMANCE GUARANTOR (CERTIFIED BY THE SECRETARY OF STATE OR OTHER SIMILAR OFFICIAL OF ITS RESPECTIVE JURISDICTION OF INCORPORATION OR ORGANIZATION, AS APPLICABLE, AS OF A RECENT DATE);   (II)                                  THE BY-LAWS AND/OR OPERATING AGREEMENT OF THE ORIGINATOR, THE SERVICER, THE SELLER AND THE PERFORMANCE GUARANTOR;   (III)                               RESOLUTIONS OF THE BOARD OF DIRECTORS OR MANAGERS OR OTHER GOVERNING BODY OF THE ORIGINATOR, THE SERVICER, THE SELLER AND THE PERFORMANCE GUARANTOR AUTHORIZING THE EXECUTION, DELIVERY AND PERFORMANCE BY IT OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO BE DELIVERED BY IT HEREUNDER OR THEREUNDER AND ALL OTHER DOCUMENTS EVIDENCING NECESSARY CORPORATE ACTION (INCLUDING SHAREHOLDER CONSENTS) AND GOVERNMENT APPROVALS, IF ANY; AND   (IV)                              THE INCUMBENCY, AUTHORITY AND SIGNATURE OF EACH OFFICER OF THE ORIGINATOR, THE SERVICER, THE SELLER AND THE PERFORMANCE GUARANTOR EXECUTING THE TRANSACTION DOCUMENTS OR ANY CERTIFICATES OR OTHER DOCUMENTS DELIVERED HEREUNDER OR THEREUNDER ON ITS BEHALF.   42   (D)                                 A GOOD STANDING CERTIFICATE FOR THE SPV ISSUED BY THE SECRETARY OF STATE OR A SIMILAR OFFICIAL OF THE SPV’S JURISDICTION OF INCORPORATION OR ORGANIZATION, AS APPLICABLE, AND CERTIFICATES OF QUALIFICATION AS A FOREIGN CORPORATION ISSUED BY THE SECRETARIES OF STATE OR OTHER SIMILAR OFFICIALS OF EACH JURISDICTION WHERE SUCH QUALIFICATION IS MATERIAL TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, IN EACH CASE, DATED AS OF A RECENT DATE.   (E)                                  A GOOD STANDING CERTIFICATE FOR EACH OF THE ORIGINATOR, THE SERVICER AND THE SELLER  ISSUED BY THE SECRETARY OF STATE OR A SIMILAR OFFICIAL OF ITS JURISDICTION OF INCORPORATION OR ORGANIZATION, AS APPLICABLE, AND CERTIFICATES OF QUALIFICATION AS A FOREIGN CORPORATION ISSUED BY THE SECRETARIES OF STATE OR OTHER SIMILAR OFFICIALS OF EACH JURISDICTION WHERE SUCH QUALIFICATION IS MATERIAL TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, IN EACH CASE, DATED AS OF A RECENT DATE.   (F)                                    ACKNOWLEDGMENT COPIES OR OTHER EVIDENCE OF FILING ACCEPTABLE TO THE AGENT OF PROPER FINANCING STATEMENTS (FORM UCC-1), FILED ON OR BEFORE THE INITIAL INVESTMENT DATE NAMING THE SPV, AS DEBTOR, IN FAVOR OF THE AGENT, AS SECURED PARTY, FOR THE BENEFIT OF THE INVESTORS OR OTHER SIMILAR INSTRUMENTS OR DOCUMENTS AS MAY BE NECESSARY OR IN THE REASONABLE OPINION OF THE AGENT DESIRABLE UNDER THE UCC OF ALL APPROPRIATE JURISDICTIONS OR ANY COMPARABLE LAW TO PERFECT THE AGENT’S OWNERSHIP OR SECURITY INTEREST IN ALL RECEIVABLES AND THE OTHER AFFECTED ASSETS.   (G)                                 ACKNOWLEDGMENT COPIES OR OTHER EVIDENCE OF FILED ON OR BEFORE THE INITIAL INVESTMENT NAMING THE ORIGINATOR, AS THE DEBTOR, IN FAVOR OF THE SPV, AS SECURED PARTY, AND THE AGENT, FOR THE BENEFIT OF THE INVESTORS, AS ASSIGNEE, OR OTHER SIMILAR INSTRUMENTS OR DOCUMENTS AS MAY BE NECESSARY OR IN THE REASONABLE OPINION OF THE AGENT DESIRABLE UNDER THE UCC OF ALL APPROPRIATE JURISDICTIONS OR ANY COMPARABLE LAW TO PERFECT THE SPV’S OWNERSHIP INTEREST IN ALL RECEIVABLES AND THE OTHER AFFECTED ASSETS.   (H)                                 ACKNOWLEDGMENT COPIES OR OTHER EVIDENCE OF FILED ON OR BEFORE THE INITIAL INVESTMENT NAMING THE SELLER, AS THE DEBTOR, IN   (I)                                     COPIES OF PROPER FINANCING STATEMENTS (FORM UCC-3), IF ANY, FILED ON OR BEFORE THE INITIAL INVESTMENT DATE NECESSARY TO TERMINATE ALL SECURITY INTERESTS AND OTHER RIGHTS OF ANY PERSON IN RECEIVABLES OR THE OTHER AFFECTED ASSETS PREVIOUSLY GRANTED BY SPV.   (J)                                     COPIES OF PROPER FINANCING STATEMENTS RECEIVABLES OR THE OTHER AFFECTED ASSETS PREVIOUSLY GRANTED BY THE ORIGINATOR.   (K)                                  CERTIFIED COPIES OF REQUESTS FOR INFORMATION OR COPIES (FORM UCC-11) (OR A SIMILAR SEARCH REPORT CERTIFIED BY PARTIES ACCEPTABLE TO THE AGENT) DATED A DATE REASONABLY NEAR   43   THE DATE OF THE INITIAL INVESTMENT LISTING ALL EFFECTIVE FINANCING STATEMENTS WHICH NAME THE SPV, THE SELLER OR THE ORIGINATOR (UNDER THEIR RESPECTIVE PRESENT NAMES AND ANY PREVIOUS NAMES) AS DEBTOR AND WHICH ARE FILED IN JURISDICTIONS IN WHICH THE FILINGS WERE MADE PURSUANT TO CLAUSES (F) OR (G) ABOVE AND SUCH OTHER JURISDICTIONS WHERE THE AGENT MAY REASONABLY REQUEST TOGETHER WITH COPIES OF SUCH FINANCING STATEMENTS (NONE OF WHICH SHALL COVER ANY RECEIVABLES, OTHER AFFECTED ASSETS OR CONTRACTS UNLESS SUCH FILINGS HAVE BEEN TERMINATED OR RELEASED PURSUANT TO PARAGRAPHS (I) OR (J) ABOVE OR UNLESS SUCH RECEIVABLES, OTHER AFFECTED ASSETS OR CONTRACTS HAVE BEEN RELEASED UNDER THE TERMS OF THE RELATED AGREEMENT AS CONTEMPLATED IN SECTION 4.1(Z) ABOVE), AND SIMILAR SEARCH REPORTS WITH RESPECT TO FEDERAL TAX LIENS AND LIENS OF THE PENSION BENEFIT GUARANTY CORPORATION IN SUCH JURISDICTIONS, SHOWING NO SUCH LIENS ON ANY OF THE RECEIVABLES, OTHER AFFECTED ASSETS OR CONTRACTS.   (L)                                     EXECUTED COPIES OF THE BLOCKED ACCOUNT AGREEMENTS RELATING TO EACH OF THE BLOCKED ACCOUNTS.   (M)                               [RESERVED].   (N)                                 (I) A FAVORABLE OPINION OF MAYER BROWN LLP, SPECIAL COUNSEL TO THE SPV, THE SELLER, THE SERVICER, THE PERFORMANCE GUARANTOR AND THE ORIGINATOR, COVERING THE MATTERS SET FORTH IN EXHIBIT I, INCLUDING NON-CONTRAVENTION AS TO THE MATERIAL AGREEMENTS (INCLUDING THE REVOLVING CREDIT AGREEMENT AND THE MASTER NOTE PURCHASE AGREEMENT AND ALL RELATED DOCUMENTS), THE CREATION, ATTACHMENT, PERFECTION AND PRIORITY OF THE INTERESTS CREATED PURSUANT TO EACH OF THE FIRST TIER AGREEMENT, THE SECOND TIER AGREEMENT, AND THIS AGREEMENT, THE ENFORCEABILITY OF EACH OF THE TRANSACTION DOCUMENTS AGAINST EACH OF THE ORIGINATOR, THE SELLER, THE SPV AND THE PERFORMANCE GUARANTOR AND AS TO SUCH OTHER MATTERS AS THE AGENT MAY REASONABLY REQUEST AND (II) A FAVORABLE OPINION OF THE GENERAL COUNSEL TO THE ORIGINATOR COVERING CERTAIN CORPORATE MATTERS, EACH OF THE FOREGOING TO BE IN FORM AND SUBSTANCE ACCEPTABLE TO THE AGENT.   (O)                                 A FAVORABLE OPINION OF MAYER BROWN LLP, SPECIAL COUNSEL TO THE SPV, THE SELLER, THE PERFORMANCE GUARANTOR AND THE ORIGINATOR, COVERING CERTAIN BANKRUPTCY AND INSOLVENCY MATTERS I.E.  “TRUE SALE” AND NONCONSOLIDATION IN FORM AND SUBSTANCE SATISFACTORY TO THE AGENT AND AGENT’S COUNSEL.   (P)                                 [RESERVED].   (Q)                                 SATISFACTORY RESULTS OF A REVIEW AND AUDIT OF THE ORIGINATOR’S COLLECTION, OPERATING AND REPORTING SYSTEMS, CREDIT AND COLLECTION POLICY, HISTORICAL RECEIVABLES DATA AND ACCOUNTS, INCLUDING SATISFACTORY RESULTS OF A REVIEW OF THE ORIGINATOR’S OPERATING LOCATION(S) AND SATISFACTORY REVIEW AND APPROVAL OF THE ELIGIBLE RECEIVABLES IN EXISTENCE ON THE DATE OF THE INITIAL PURCHASE UNDER THE FIRST TIER AGREEMENT AND SECOND TIER AGREEMENT AND A WRITTEN OUTSIDE AUDIT REPORT OF A NATIONALLY-RECOGNIZED ACCOUNTING FIRM AS TO SUCH MATTERS.   (R)                                    A SERVICER REPORT AS OF JANUARY 31, 2009 SHOWING THE CALCULATION OF THE NET INVESTMENT, EACH CLASS NET INVESTMENT AND REQUIRED RESERVES AFTER GIVING EFFECT TO THE INITIAL INVESTMENT.   (S)                                  EVIDENCE OF THE APPOINTMENT OF CT CORPORATION SYSTEMS AS AGENT FOR PROCESS AS REQUIRED BY SECTION 11.4.   44   (T)                                    [RESERVED].   (U)                                 EVIDENCE OF THE TERMINATION OF THE EXISTING RECEIVABLES SECURITIZATION FACILITY AND THE RELEASE OF ALL LIENS RELATED THERETO.   (V)                                 SUCH OTHER APPROVALS, DOCUMENTS, INSTRUMENTS, CERTIFICATES AND OPINIONS AS THE AGENT, ANY CLASS AGENT OR ANY INVESTOR, MAY REASONABLY REQUEST.   SECTION 5.2                                   CONDITIONS PRECEDENT TO ALL INVESTMENTS AND REINVESTMENTS.   Each Investment and Reinvestment hereunder (including the initial Investment) shall be subject to the conditions precedent that (a) the Closing Date shall have occurred, (b) if the Agent shall have requested, in accordance with any provision of this Agreement, any additional information, report, document or filing, it has received such information, report or document or such filing as been made, and (c) on the date of such Investment and Reinvestment the following statements shall be true (and the SPV by accepting the amount of such Investment or Reinvestment shall be deemed to have certified that):   (I)                                     THE REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTIONS 4.1 AND 4.2 ARE TRUE, COMPLETE AND CORRECT ON AND AS OF SUCH DAY AS THOUGH MADE ON AND AS OF SUCH DAY AND SHALL BE DEEMED TO HAVE BEEN MADE ON SUCH DAY,   (II)                                  IN THE CASE OF A REINVESTMENT, THE AMOUNT OF THE REINVESTMENT WILL NOT EXCEED THE AMOUNT AVAILABLE THEREFOR UNDER SECTION 2.12, AND IN THE CASE OF AN INVESTMENT, THE AMOUNT OF SUCH INVESTMENT WILL NOT EXCEED THE AMOUNT AVAILABLE THEREFOR UNDER SECTION 2.2 AND AFTER GIVING EFFECT THERETO, THE SUM OF THE NET INVESTMENT AND REQUIRED RESERVES WILL NOT EXCEED THE NET POOL BALANCE,   (III)                               IN THE CASE OF AN INVESTMENT, THE AGENT SHALL HAVE RECEIVED AN INVESTMENT REQUEST, APPROPRIATELY COMPLETED, WITHIN THE TIME PERIOD REQUIRED BY SECTION 2.3,   (IV)                              IN THE CASE OF AN INVESTMENT, THE AGENT SHALL HAVE RECEIVED A SERVICER REPORT DATED NO MORE THAN 31 DAYS (OR SUCH OTHER DATE AT THE AGENT’S REQUEST) PRIOR TO THE PROPOSED INVESTMENT DATE AND THE INFORMATION SET FORTH THEREIN SHALL BE TRUE, COMPLETE AND CORRECT,   (V)                                 THE TERMINATION DATE HAS NOT OCCURRED,   (VI)                              NO TERMINATION EVENT OR POTENTIAL TERMINATION EVENT HAS OCCURRED OR HAS NOT BEEN WAIVED BY THE AGENT,   (VII)                           THE THREE-MONTH AVERAGE TRIGGER DELINQUENCY RATIO DOES NOT EXCEED 5.50%,   (VIII)                        THE THREE-MONTH AVERAGE TRIGGER DEFAULT RATIO DOES NOT EXCEED 1.75%,   (IX)                                THE THREE-MONTH AVERAGE TRIGGER DILUTION RATIO HAS NOT EXCEEDED 7.50%,   45   (X)                                   THE DAYS SALES OUTSTANDING DOES NOT EQUAL OR EXCEED 50 DAYS, AND   (XI)                                ANY CHALLENGE BY ANY OF THE PARTIES TO THE REVOLVING CREDIT AGREEMENT OR THE MASTER NOTE PURCHASE AGREEMENT THAT THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS ARE NOT A RECEIVABLE PURCHASE FACILITY (AS DEFINED IN THE REVOLVING CREDIT AGREEMENT OR THE MASTER NOTE PURCHASE AGREEMENT, AS SUCH DOCUMENT IS IN EFFECT ON THE DATE AS OF THE DATE OF THIS AGREEMENT) OR ARE NOT PERMITTED UNDER THE REVOLVING CREDIT AGREEMENT OR THE MASTER NOTE PURCHASE AGREEMENT, AS SUCH DOCUMENT IS IN EFFECT ON THE DATE AS OF WHICH THIS REPRESENTATION IS MADE.   No Investments or Reinvestments shall be made until all of the above conditions have been satisfied or waived by each Class Agent and, if the conditions to the continued Investment or Reinvestment that were not satisfied include those set forth in any of the clauses (vii), (viii), (ix) or (x) then a new Servicer Report has been received by the Class Agents, which Servicer Report indicates that such conditions have been satisfied.  Following the occurrence and continuance of a failure to satisfy one or more of the above conditions, the Collections received shall be applied on the next Settlement Date in accordance with the provisions of Section 2.12; provided, however, that solely during the failure to satisfy the conditions set forth in clauses (vii), (viii) and (ix) of this Section 5.2 (and for as long as such ratios have not exceeded the respective levels set forth in the Termination Events therefor), once a Servicer Report has been received by each of the Class Agents indicating that the Net Investment has been reduced to or below $50,000,000, Investments and Reinvestments shall resume (such period of time being an “Exception Funding Period”) to the extent that (1) the Net Investment does not exceed $50,000,000 and (2) all other conditions (other than clauses (vii), (viii) and (ix) of this Section 5.2) to such Investment or Reinvestment are satisfied; provided, further, that no Investments or Reinvestments shall be made during an Exception Funding Period unless (x) all representations and warranties are true and correct and (y) the Servicer has delivered a Servicer Report (as of the date reporting period covered by such report) showing that after giving effect to such requested Investment or Reinvestment, the sum of the Net Investment and the Required Reserves do not exceed the Net Pool Balance (as of the date reporting period covered by such report).   Any Exception Funding Period shall terminate upon delivery to each Class Agent by the Servicer of a Servicer Report evidencing that the conditions described in clauses (vii), (viii) and (ix) of this Section 5.2 have been satisfied.   ARTICLE VI   COVENANTS   SECTION 6.1                                   AFFIRMATIVE COVENANTS OF THE SPV AND SERVICER.   At all times from the date hereof to the Final Payout Date, unless the Class Agents shall otherwise consent in writing:   (A)                                  REPORTING REQUIREMENTS.  THE SPV AND THE PERFORMANCE GUARANTOR SHALL MAINTAIN, FOR ITSELF AND EACH OF ITS SUBSIDIARIES, A SYSTEM OF ACCOUNTING ESTABLISHED AND ADMINISTERED IN ACCORDANCE WITH GAAP, AND FURNISH TO THE AGENT AND EACH CLASS AGENT:   46   (I)                                     ANNUAL REPORTING.   (A) WITHIN NINETY (90) DAYS AFTER THE CLOSE OF THE SPV’S AND THE PERFORMANCE GUARANTOR’S FISCAL YEARS, AUDITED FINANCIAL STATEMENTS, PREPARED BY IN ACCORDANCE WITH GAAP ON A CONSOLIDATED BASIS FOR (A) THE SPV AND (B) FOR THE PERFORMANCE GUARANTOR AND ITS SUBSIDIARIES, IN EACH CASE, INCLUDING BALANCE SHEETS AS OF THE END OF SUCH PERIOD, RELATED STATEMENTS OF OPERATIONS, SHAREHOLDER’S EQUITY AND CASH FLOWS, ACCOMPANIED BY AN UNQUALIFIED AUDIT REPORT CERTIFIED BY INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS OF NATIONAL OR REGIONAL RECOGNITION, ACCEPTABLE TO THE AGENT, PREPARED IN ACCORDANCE WITH GAAP AND BY A CERTIFICATE OF SAID ACCOUNTANTS THAT, IN THE COURSE OF THE FOREGOING, THEY HAVE OBTAINED NO KNOWLEDGE OF ANY TERMINATION EVENT OR POTENTIAL TERMINATION EVENT, OR IF, IN THE OPINION OF SUCH ACCOUNTANTS, ANY TERMINATION EVENT OR POTENTIAL TERMINATION EVENT SHALL EXIST, STATING THE NATURE AND STATUS THEREOF, AND   (B)  WITHIN ONE HUNDRED TWENTY-FIVE (125) DAYS AFTER THE CLOSE OF THE SELLER AND THE SERVICER FISCAL YEARS, FINANCIAL STATEMENTS, PREPARED IN ACCORDANCE WITH GAAP ON A CONSOLIDATED BASIS FOR THE SELLER AND THE SERVICER, IN EACH CASE, INCLUDING BALANCE SHEETS AS OF THE END OF SUCH PERIOD, RELATED STATEMENTS OF OPERATIONS, SHAREHOLDER’S EQUITY AND CASH FLOWS, ALL CERTIFIED BY AN APPROPRIATE RESPONSIBLE OFFICER AND A CERTIFICATE OF A RESPONSIBLE OFFICER THAT, IN THE COURSE OF THE FOREGOING, THEY HAVE OBTAINED NO KNOWLEDGE OF ANY TERMINATION EVENT OR POTENTIAL TERMINATION EVENT, OR IF, IN THE OPINION OF SUCH RESPONSIBLE OFFICER, ANY TERMINATION EVENT OR POTENTIAL TERMINATION EVENT SHALL EXIST, STATING THE NATURE AND STATUS THEREOF;   (II)                                  QUARTERLY REPORTING.  WITHIN FORTY-FIVE (45) DAYS AFTER THE CLOSE OF THE FIRST THREE QUARTERLY PERIODS OF EACH OF THE SPV’S, THE SELLER’S, THE SERVICER’S AND THE PERFORMANCE GUARANTOR’S FISCAL YEARS, FOR (A) THE SPV, THE SELLER AND THE SERVICER AND (B) FOR PERFORMANCE GUARANTOR AND ITS SUBSIDIARIES, IN EACH CASE, CONSOLIDATED UNAUDITED BALANCE SHEETS AS AT THE CLOSE OF EACH SUCH PERIOD AND CONSOLIDATED RELATED STATEMENTS OF OPERATIONS, SHAREHOLDER’S EQUITY AND CASH FLOWS FOR THE PERIOD FROM THE BEGINNING OF SUCH FISCAL YEAR TO THE END OF SUCH QUARTER, ALL CERTIFIED BY ITS CHIEF FINANCIAL OFFICER. EACH SUCH REPORT BY THE PERFORMANCE GUARANTOR SHALL INCLUDE A CERTIFICATION THAT IT AND ITS AFFILIATES ARE IN COMPLIANCE WITH ALL FINANCIAL COVENANTS UNDER THE REVOLVING CREDIT AGREEMENT AND SHALL INCLUDE CALCULATIONS IN REASONABLE DETAIL EVIDENCING SUCH COMPLIANCE.   (III)                               COMPLIANCE CERTIFICATE.  TOGETHER WITH THE FINANCIAL STATEMENTS REQUIRED HEREUNDER, A COMPLIANCE CERTIFICATE IN SUBSTANTIALLY THE FORM SET FORTH ON EXHIBIT K SIGNED BY THE SPV’S OR THE PERFORMANCE GUARANTOR’S, AS APPLICABLE, CHIEF FINANCIAL OFFICER STATING THAT (A) THE ATTACHED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP AND ACCURATELY REFLECT THE FINANCIAL CONDITION OF THE SPV OR THE PERFORMANCE GUARANTOR AND ITS SUBSIDIARIES AS APPLICABLE (WHICH IN THE CASE OF QUARTERLY FINANCIAL STATEMENTS MAY BE SUBJECT TO NORMAL YEAR-END AUDIT ADJUSTMENTS) AND (B) TO THE BEST OF SUCH PERSON’S KNOWLEDGE, NO TERMINATION EVENT OR POTENTIAL TERMINATION EVENT EXISTS, OR IF ANY TERMINATION EVENT OR POTENTIAL TERMINATION EVENT EXISTS, STATING THE NATURE AND STATUS THEREOF.   47   (IV)                              SHAREHOLDERS STATEMENTS AND REPORTS.  PROMPTLY UPON THE FURNISHING THEREOF TO THE SHAREHOLDERS OF THE SPV, THE ORIGINATOR OR THE PERFORMANCE GUARANTOR, COPIES OF ALL FINANCIAL STATEMENTS, REPORTS AND PROXY STATEMENTS SO FURNISHED.   (V)                                 SEC FILINGS.  PROMPTLY UPON THE FILING THEREOF, COPIES OF ALL REGISTRATION STATEMENTS AND ANNUAL, QUARTERLY, MONTHLY OR OTHER REGULAR REPORTS WHICH THE ORIGINATOR OR ANY SUBSIDIARY OF THE ORIGINATOR OR THE PERFORMANCE GUARANTOR OR SUCH PERSON FILES WITH THE SECURITIES AND EXCHANGE COMMISSION.   (VI)                              NOTICE OF TERMINATION EVENTS OR POTENTIAL TERMINATION EVENTS; ETC.  (A) AS SOON AS POSSIBLE AND IN ANY EVENT WITHIN TWO (2) BUSINESS DAYS AFTER THE OCCURRENCE OF EACH TERMINATION EVENT OR POTENTIAL TERMINATION EVENT, A STATEMENT OF A RESPONSIBLE OFFICER OF THE SPV SETTING FORTH DETAILS OF SUCH TERMINATION EVENT OR POTENTIAL TERMINATION EVENT AND THE ACTION WHICH THE SPV PROPOSES TO TAKE WITH RESPECT THERETO, WHICH INFORMATION SHALL BE UPDATED PROMPTLY FROM TIME TO TIME; (B) PROMPTLY AFTER THE SPV OBTAINS KNOWLEDGE THEREOF, NOTICE OF ANY LITIGATION, INVESTIGATION OR PROCEEDING THAT MAY EXIST AT ANY TIME BETWEEN THE SPV AND ANY PERSON THAT COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT OR ANY LITIGATION OR PROCEEDING RELATING TO ANY TRANSACTION DOCUMENT; AND (C) PROMPTLY AFTER THE OCCURRENCE THEREOF, NOTICE OF A MATERIAL ADVERSE EFFECT.   (VII)                           CHANGE IN CREDIT AND COLLECTION POLICY AND DEBT RATINGS.  WITHIN TEN (10) BUSINESS DAYS AFTER THE DATE ANY MATERIAL CHANGE IN OR AMENDMENT TO THE CREDIT AND COLLECTION POLICY IS MADE, A COPY OF THE CREDIT AND COLLECTION POLICY THEN IN EFFECT INDICATING SUCH CHANGE OR AMENDMENT.  WITHIN FIVE (5) DAYS AFTER THE DATE OF ANY CHANGE IN THE SERVICER’S, THE SELLER’S, THE ORIGINATOR’S OR THE PERFORMANCE GUARANTOR’S PUBLIC OR PRIVATE DEBT RATINGS BY ANY RATING AGENCY, IF ANY, A WRITTEN CERTIFICATION OF THE SPV’S OR THE ORIGINATOR’S AND PRIVATE DEBT RATINGS AFTER GIVING EFFECT TO ANY SUCH CHANGE.   (VIII)                        CREDIT AND COLLECTION POLICY.  WITHIN NINETY (90) DAYS AFTER THE CLOSE OF EACH OF THE ORIGINATOR’S AND THE SPV’S FISCAL YEARS, A COMPLETE COPY OF THE CREDIT AND COLLECTION POLICY THEN IN EFFECT.   (IX)                                ERISA.  PROMPTLY AFTER THE FILING, GIVING OR RECEIVING THEREOF, COPIES OF ALL REPORTS AND NOTICES WITH RESPECT TO ANY REPORTABLE EVENT PERTAINING TO ANY PENSION PLAN AND COPIES OF ANY NOTICE BY ANY PERSON OF ITS INTENT TO TERMINATE ANY PENSION PLAN, AND PROMPTLY UPON THE OCCURRENCE THEREOF, WRITTEN NOTICE OF ANY CONTRIBUTION FAILURE WITH RESPECT TO ANY PENSION PLAN SUFFICIENT TO GIVE RISE TO A LIEN UNDER SECTION 302(F) OF ERISA.   (X)                                   CHANGE IN ACCOUNTANTS OR ACCOUNTING POLICY.  PROMPTLY, NOTICE OF ANY CHANGE IN THE ACCOUNTANTS OR ANY MATERIAL CHANGE (OTHER THAN AS A RESULT OF THE APPLICATION OF A CHANGE IN STANDARDS BY THE FINANCIAL ACCOUNTING STANDARDS BOARD OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS) IN ACCOUNTING POLICY OF EITHER THE SPV OR THE PERFORMANCE GUARANTOR.   48   (XI)                                AGREED UPON PROCEDURES.  NO LATER THAN 60 DAYS PRIOR TO NOVEMBER 23RD OF EACH CALENDAR YEAR, THE SERVICER, AT ITS EXPENSE, WILL CAUSE TO BE PREPARED A REPORT PREPARED BY A FIRM SATISFACTORY TO THE AGENT SETTING FORTH THE RESULTS OF SUCH FIRM’S APPLICATION OF THE AGREED UPON PROCEDURES SET FORTH ON EXHIBIT J.   (XII)                             OTHER INFORMATION.  SUCH OTHER INFORMATION (INCLUDING NON-FINANCIAL INFORMATION) AS THE AGENT OR ANY CLASS AGENT MAY FROM TIME TO TIME REASONABLY REQUEST WITH RESPECT TO THE ORIGINATOR, THE SPV, THE SELLER OR THE PERFORMANCE GUARANTOR.   (B)                                 CONDUCT OF BUSINESS; OWNERSHIP.  EACH OF THE SPV AND THE SERVICER SHALL CARRY ON AND CONDUCT ITS BUSINESS IN SUBSTANTIALLY THE SAME MANNER AND IN SUBSTANTIALLY THE SAME FIELDS OF ENTERPRISE AS IT IS PRESENTLY CONDUCTED AND DO ALL THINGS NECESSARY TO REMAIN DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING AS A DOMESTIC LIMITED LIABILITY COMPANY IN ITS JURISDICTION OF ORGANIZATION AND MAINTAIN ALL REQUISITE AUTHORITY TO CONDUCT ITS BUSINESS IN EACH JURISDICTION IN WHICH ITS BUSINESS IS CONDUCTED.  THE SPV SHALL AT ALL TIMES BE A WHOLLY-OWNED SUBSIDIARY OF THE SELLER.   (C)                                  COMPLIANCE WITH LAWS, ETC.  EACH OF THE SPV AND THE SERVICER SHALL COMPLY IN ALL MATERIAL RESPECTS WITH ALL LAWS TO WHICH IT OR ITS RESPECTIVE PROPERTIES MAY BE SUBJECT AND PRESERVE AND MAINTAIN ITS CORPORATE EXISTENCE, RIGHTS, FRANCHISES, QUALIFICATIONS AND PRIVILEGES.   (D)                                 FURNISHING OF INFORMATION AND INSPECTION OF RECORDS.  EACH OF THE SPV AND THE SERVICER SHALL FURNISH TO THE AGENT FROM TIME TO TIME SUCH INFORMATION WITH RESPECT TO THE AFFECTED ASSETS AS THE AGENT MAY REASONABLY REQUEST, INCLUDING LISTINGS IDENTIFYING THE OBLIGOR AND THE UNPAID BALANCE FOR EACH RECEIVABLE AVAILABLE TO THE SERVICER IN ACCORDANCE WITH ITS THEN CURRENT ACCOUNTS RECEIVABLE SYSTEM WITHOUT THE SERVICER MANUALLY PREPARING SUCH REPORTS.  EACH OF THE SPV AND THE SERVICER SHALL, AT ANY TIME AND FROM TIME TO TIME DURING REGULAR BUSINESS HOURS, AS REASONABLY REQUESTED  WITH REASONABLE PRIOR NOTICE BY THE AGENT OR ANY CLASS AGENT, PERMIT THE AGENT, OR ITS AGENTS OR REPRESENTATIVES, (I) TO EXAMINE AND MAKE COPIES OF AND TAKE ABSTRACTS FROM ALL BOOKS, RECORDS AND DOCUMENTS (INCLUDING APPLICABLE COMPUTER SYSTEMS FOLLOWING A POTENTIAL TERMINATION EVENT OR TERMINATION EVENT) RELATING TO THE RECEIVABLES OR OTHER AFFECTED ASSETS, INCLUDING THE RELATED CONTRACTS AND (II) TO VISIT THE OFFICES AND PROPERTIES OF THE SPV, THE ORIGINATOR OR THE SERVICER, AS APPLICABLE, FOR THE PURPOSE OF EXAMINING SUCH MATERIALS DESCRIBED IN CLAUSE (I), AND TO DISCUSS MATTERS RELATING TO THE AFFECTED ASSETS OR THE SPV’S, THE ORIGINATOR’S OR THE SERVICER’S PERFORMANCE HEREUNDER, UNDER THE CONTRACTS AND UNDER THE OTHER TRANSACTION DOCUMENTS TO WHICH SUCH PERSON IS A PARTY WITH ANY OF THE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES OR INDEPENDENT PUBLIC ACCOUNTANTS OF THE SPV, THE ORIGINATOR OR THE SERVICER, AS APPLICABLE, HAVING KNOWLEDGE OF SUCH MATTERS; PROVIDED, HOWEVER THAT THE SELLER AND SERVICER SHALL ONLY BE RESPONSIBLE FOR THE COSTS AND EXPENSES ASSOCIATED WITH ONE SUCH REVIEW PER YEAR UNLESS A TERMINATION EVENT OR POTENTIAL TERMINATION EVENT HAS OCCURRED.   (E)                                  KEEPING OF RECORDS AND BOOKS OF ACCOUNT.  EACH OF THE SPV AND THE SERVICER SHALL MAINTAIN AND IMPLEMENT ADMINISTRATIVE AND OPERATING PROCEDURES (INCLUDING AN ABILITY TO RECREATE RECORDS EVIDENCING RECEIVABLES AND RELATED CONTRACTS IN THE EVENT OF THE DESTRUCTION OF THE ORIGINALS THEREOF), AND KEEP AND MAINTAIN, ALL DOCUMENTS, BOOKS, COMPUTER TAPES, DISKS, RECORDS AND OTHER INFORMATION REASONABLY NECESSARY OR ADVISABLE FOR THE COLLECTION OF ALL RECEIVABLES (INCLUDING RECORDS ADEQUATE TO PERMIT THE DAILY IDENTIFICATION OF EACH NEW   49   RECEIVABLE AND ALL COLLECTIONS OF AND ADJUSTMENTS TO EACH EXISTING RECEIVABLE).  EACH OF THE SPV AND THE SERVICER SHALL GIVE THE AGENT PROMPT NOTICE OF ANY MATERIAL CHANGE IN ITS ADMINISTRATIVE AND OPERATING PROCEDURES REFERRED TO IN THE PREVIOUS SENTENCE.   (F)                                    PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS AND CREDIT AND COLLECTION POLICY.  EACH OF THE SPV AND THE SERVICER SHALL, (I) AT ITS OWN EXPENSE, TIMELY AND FULLY PERFORM AND COMPLY IN ALL MATERIAL RESPECTS WITH ALL PROVISIONS, COVENANTS AND OTHER PROMISES REQUIRED TO BE OBSERVED BY IT UNDER THE CONTRACTS RELATED TO THE RECEIVABLES; AND (II) TIMELY AND FULLY COMPLY IN ALL MATERIAL RESPECTS WITH THE CREDIT AND COLLECTION POLICY IN REGARD TO EACH RECEIVABLE AND THE RELATED CONTRACT.   (G)                                 NOTICE OF AGENT’S INTEREST.  IN THE EVENT THAT THE SPV OR THE ORIGINATOR SHALL SELL OR OTHERWISE TRANSFER ANY INTEREST IN ACCOUNTS RECEIVABLE OR ANY OTHER FINANCIAL ASSETS (OTHER THAN AS CONTEMPLATED BY THE TRANSACTION DOCUMENTS), ANY COMPUTER TAPES OR FILES OR OTHER DOCUMENTS OR INSTRUMENTS PROVIDED BY THE SERVICER IN CONNECTION WITH ANY SUCH SALE OR TRANSFER SHALL DISCLOSE THE SPV’S OWNERSHIP OF THE RECEIVABLES AND THE AGENT’S INTEREST THEREIN.   (H)                                 COLLECTIONS.  EACH OF THE SPV AND THE SERVICER SHALL INSTRUCT ALL OBLIGORS TO CAUSE ALL COLLECTIONS TO BE DEPOSITED DIRECTLY TO A BLOCKED ACCOUNT OR TO POST OFFICE BOXES TO WHICH ONLY BLOCKED ACCOUNT BANKS HAVE ACCESS AND SHALL CAUSE ALL ITEMS AND AMOUNTS RELATING TO SUCH COLLECTIONS RECEIVED IN SUCH POST OFFICE BOXES TO BE REMOVED AND DEPOSITED INTO A BLOCKED ACCOUNT ON A DAILY BASIS.   (I)                                     COLLECTIONS RECEIVED.  EACH OF THE SPV AND THE SERVICER SHALL HOLD IN TRUST, AND DEPOSIT, IMMEDIATELY, BUT IN ANY EVENT NOT LATER THAN TWO (2) BUSINESS DAYS OF ITS RECEIPT THEREOF, TO A BLOCKED ACCOUNT OR, IF REQUIRED BY SECTION 2.9, TO THE COLLECTION ACCOUNT, ALL COLLECTIONS RECEIVED BY IT FROM TIME TO TIME.   (J)                                     BLOCKED ACCOUNTS.  EACH BLOCKED ACCOUNT SHALL AT ALL TIMES BE SUBJECT TO A BLOCKED ACCOUNT AGREEMENT.   (K)                                  SALE TREATMENT.  THE SPV SHALL NOT (I) RECORD IN ITS BOOKS (OTHER THAN FOR ACCOUNTING AND TAX PURPOSES), OR OTHERWISE TREAT, THE TRANSACTIONS CONTEMPLATED BY THE SECOND TIER AGREEMENT IN ANY MANNER OTHER THAN AS A SALE OF RECEIVABLES BY THE SELLER TO THE SPV, OR (II) RECORD IN ITS BOOKS (OTHER THAN FOR TAX OR ACCOUNTING PURPOSES) OR OTHERWISE TREAT THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY MANNER OTHER THAN AS A SALE OF THE ASSET INTEREST BY THE SPV TO THE AGENT ON BEHALF OF THE INVESTORS.  IN ADDITION, THE SPV SHALL DISCLOSE (IN A FOOTNOTE OR OTHERWISE) IN ALL OF ITS FINANCIAL STATEMENTS (INCLUDING ANY SUCH FINANCIAL STATEMENTS CONSOLIDATED WITH ANY OTHER PERSONS’ FINANCIAL STATEMENTS) THE EXISTENCE AND NATURE OF THE TRANSACTION CONTEMPLATED HEREBY AND BY THE SECOND  TIER AGREEMENT AND THE INTEREST OF THE SPV (IN THE CASE OF THE ORIGINATOR’S FINANCIAL STATEMENTS) AND THE AGENT, ON BEHALF OF THE INVESTORS, IN THE AFFECTED ASSETS.  NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, EACH OF THE PARTIES HERETO HEREBY UNDERSTANDS AND AGREES THAT FOR ACCOUNTING PURPOSES, THE SPV MAY BE CONSOLIDATED WITH ANY AFFILIATES OF THE ORIGINATOR.   (L)                                     SEPARATE BUSINESS; NONCONSOLIDATION.  THE SPV SHALL NOT (I) ENGAGE IN ANY BUSINESS NOT PERMITTED BY ITS LIMITED LIABILITY COMPANY AGREEMENT AS IN EFFECT ON THE CLOSING   50   DATE OR (II) CONDUCT ITS BUSINESS OR ACT IN ANY OTHER MANNER WHICH IS INCONSISTENT WITH SECTION 4.1(X).  THE OFFICERS AND MANAGERS OF THE SPV (AS APPROPRIATE) SHALL MAKE DECISIONS WITH RESPECT TO THE BUSINESS AND DAILY OPERATIONS OF THE SPV INDEPENDENT OF AND NOT DICTATED BY ORIGINATOR OR ANY OTHER CONTROLLING PERSON.   (M)                               CORPORATE DOCUMENTS.  THE SPV SHALL ONLY AMEND, ALTER, CHANGE OR REPEAL ITS LIMITED LIABILITY COMPANY AGREEMENT WITH THE PRIOR WRITTEN CONSENT OF THE AGENT.   (N)                                 [RESERVED].   (O)                                 OWNERSHIP INTEREST, ETC.  THE SPV SHALL, AT ITS EXPENSE, TAKE ALL ACTION NECESSARY OR DESIRABLE TO ESTABLISH AND MAINTAIN A VALID AND ENFORCEABLE OWNERSHIP OR SECURITY INTEREST IN THE RECEIVABLES, THE RELATED SECURITY AND PROCEEDS WITH RESPECT THERETO, AND A FIRST PRIORITY PERFECTED SECURITY INTEREST IN THE AFFECTED ASSETS, IN EACH CASE FREE AND CLEAR OF ANY ADVERSE CLAIM, IN FAVOR OF THE AGENT FOR THE BENEFIT OF THE INVESTORS, INCLUDING TAKING SUCH ACTION TO PERFECT, PROTECT OR MORE FULLY EVIDENCE THE INTEREST OF THE AGENT, AS THE AGENT MAY REASONABLY REQUEST.   (P)                                 ENFORCEMENT OF FIRST TIER AGREEMENT.  THE SELLER, ON ITS OWN BEHALF AND ON BEHALF OF THE AGENT AND EACH INVESTOR, SHALL PROMPTLY ENFORCE ALL COVENANTS AND OBLIGATIONS OF THE ORIGINATOR CONTAINED IN THE FIRST TIER AGREEMENT.  THE SELLER SHALL DELIVER CONSENTS, APPROVALS, DIRECTIONS, NOTICES, WAIVERS AND TAKE OTHER ACTIONS UNDER THE FIRST TIER AGREEMENT AS MAY BE DIRECTED BY THE AGENT.   (Q)                                 ENFORCEMENT OF SECOND TIER AGREEMENT.  THE SPV, ON ITS OWN BEHALF AND ON BEHALF OF THE AGENT AND EACH INVESTOR, SHALL PROMPTLY ENFORCE ALL COVENANTS AND OBLIGATIONS OF THE SELLER CONTAINED IN THE SECOND TIER AGREEMENT.  THE SPV SHALL DELIVER CONSENTS, APPROVALS, DIRECTIONS, NOTICES, WAIVERS AND TAKE OTHER ACTIONS UNDER THE SECOND TIER AGREEMENT AS MAY BE DIRECTED BY THE AGENT.   (R)                                    NOTICE OF AMENDMENT.  THE SPV OR THE ORIGINATOR SHALL PROMPTLY NOTIFY THE AGENT OF ANY AMENDMENT, MODIFICATION OR SUPPLEMENT TO THE REVOLVING CREDIT AGREEMENT, MASTER NOTE PURCHASE AGREEMENT, INTERCREDITOR AGREEMENT OR THE PLEDGE AGREEMENT THAT COULD HAVE ANY EFFECT ON THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS.   (S)                                  DISCLOSURE OF THE TRANSACTION. THE PERFORMANCE GUARANTOR, THE ORIGINATOR, THE SELLER AND THE SPV EACH AGREE TO THE COVENANTS SET FORTH ON SCHEDULE 4.1 (BB) APPLICABLE TO IT WHICH ARE INCORPORATED HEREIN BY REFERENCE.   SECTION 6.2                                   NEGATIVE COVENANTS OF THE SPV AND SERVICER.   At all times from the date hereof to the Final Payout Date, unless the Agent and each Class Agent shall otherwise consent in writing:   (A)                                  NO SALES, LIENS, ETC.  (I) EXCEPT AS OTHERWISE PROVIDED HEREIN AND IN THE SECOND TIER AGREEMENT, NEITHER THE SPV NOR THE SERVICER SHALL, OR SHALL PERMIT THE SELLER OR THE ORIGINATOR TO, SELL, ASSIGN (BY OPERATION OF LAW OR OTHERWISE) OR OTHERWISE DISPOSE OF, OR CREATE OR   51   SUFFER TO EXIST ANY ADVERSE CLAIM UPON (OR THE FILING OF ANY FINANCING STATEMENT) OR WITH RESPECT TO (A) ANY OF THE AFFECTED ASSETS, OR (B) ANY INVENTORY OR GOODS, THE SALE OF WHICH MAY GIVE RISE TO A RECEIVABLE, OR ASSIGN ANY RIGHT TO RECEIVE INCOME IN RESPECT THEREOF (EXCEPT TO THE EXTENT THE RECEIVABLES HAVE BEEN EXCLUDED OR OTHERWISE EXCEPTED OR RELEASED FROM SUCH TRANSACTION ON OR BEFORE THE DATE SUCH RECEIVABLES ARE TRANSFERRED BY THE ORIGINATOR AND BY THE SELLER) AND (II) THE SPV SHALL NOT ISSUE ANY SECURITY TO, OR SELL, TRANSFER OR OTHERWISE DISPOSE OF ANY OF ITS PROPERTY OR OTHER ASSETS (INCLUDING THE PROPERTY SOLD, TRANSFERRED OR ASSIGNED TO IT BY THE SELLER) TO, ANY PERSON OTHER THAN AN AFFILIATE (WHICH AFFILIATE IS NOT A SPECIAL PURPOSE ENTITY ORGANIZED FOR THE SOLE PURPOSE OF ISSUING ASSET BACKED SECURITIES) OR AS OTHERWISE EXPRESSLY PROVIDED FOR IN THE TRANSACTION DOCUMENTS.   (B)                                 NO EXTENSION OR AMENDMENT OF RECEIVABLES.  EXCEPT AS OTHERWISE PERMITTED IN SECTION 7.2, NEITHER THE SPV NOR THE SERVICER SHALL EXTEND, AMEND OR OTHERWISE MODIFY THE TERMS OF ANY RECEIVABLE, OR AMEND, MODIFY OR WAIVE ANY TERM OR CONDITION OF ANY CONTRACT RELATED THERETO.   (C)                                  NO CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY.  NEITHER THE SPV NOR THE SERVICER SHALL MAKE ANY CHANGE IN THE CHARACTER OF ITS BUSINESS OR IN THE CREDIT AND COLLECTION POLICY, WHICH CHANGE WOULD, IN EITHER CASE, HAVE A MATERIAL ADVERSE EFFECT.   (D)                                 NO SUBSIDIARIES, MERGERS, ETC.  THE SPV SHALL NOT CONSOLIDATE OR MERGE WITH OR INTO, OR SELL, LEASE OR TRANSFER ALL OR SUBSTANTIALLY ALL OF ITS ASSETS TO, ANY OTHER PERSON. THE SERVICER SHALL NOT SUBSTANTIALLY ALL OF ITS ASSETS TO, ANY OTHER PERSON, UNLESS EITHER (I) THE SERVICER IS THE SURVIVING ENTITY OR (II) THE SURVIVING ENTITY IS A WHOLLY-OWNED SUBSIDIARY OF THE PERFORMANCE GUARANTOR.  THE SPV SHALL NOT FORM OR CREATE ANY SUBSIDIARY.   (E)                                  CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS.  NEITHER THE SPV NOR THE SERVICER SHALL ADD OR TERMINATE ANY BANK AS A BLOCKED ACCOUNT BANK OR ANY ACCOUNT AS A BLOCKED ACCOUNT TO OR FROM THOSE LISTED IN SCHEDULE 4.1(S) OR MAKE ANY CHANGE IN ITS INSTRUCTIONS TO OBLIGORS REGARDING PAYMENTS TO BE MADE TO ANY BLOCKED ACCOUNT, UNLESS (I) SUCH INSTRUCTIONS ARE TO DEPOSIT SUCH PAYMENTS TO ANOTHER EXISTING BLOCKED ACCOUNT OR TO THE COLLECTION ACCOUNT OR (II) THE AGENT SHALL HAVE RECEIVED WRITTEN NOTICE OF SUCH ADDITION, TERMINATION OR CHANGE AT LEAST THIRTY (30) DAYS PRIOR THERETO AND THE AGENT SHALL HAVE RECEIVED A BLOCKED ACCOUNT AGREEMENT EXECUTED BY EACH NEW BLOCKED ACCOUNT BANK OR AN EXISTING BLOCKED ACCOUNT BANK WITH RESPECT TO EACH NEW BLOCKED ACCOUNT, AS APPLICABLE.   (F)                                    DEPOSITS TO LOCK-BOX ACCOUNTS.  NEITHER THE SPV NOR THE SERVICER SHALL DEPOSIT OR OTHERWISE CREDIT, OR CAUSE OR PERMIT TO BE SO DEPOSITED OR CREDITED, TO ANY BLOCKED ACCOUNT OR THE COLLECTION ACCOUNT, CASH OR CASH PROCEEDS OTHER THAN COLLECTIONS.   (G)                                 CHANGE OF NAME, ETC.  THE SPV SHALL NOT CHANGE ITS NAME, IDENTITY OR STRUCTURE (INCLUDING BY MERGER), ITS JURISDICTION OF FORMATION OR THE LOCATION OF ITS CHIEF EXECUTIVE OFFICE OR ANY OTHER CHANGE WHICH COULD RENDER ANY UCC FINANCING STATEMENT FILED IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT TO BECOME “SERIOUSLY MISLEADING” UNDER THE UCC, UNLESS AT LEAST THIRTY (30) DAYS PRIOR TO THE EFFECTIVE DATE OF ANY SUCH CHANGE THE SPV DELIVERS TO THE AGENT (I) SUCH DOCUMENTS, INSTRUMENTS OR AGREEMENTS, EXECUTED BY THE SPV AS ARE   52   NECESSARY TO REFLECT SUCH CHANGE AND TO CONTINUE THE PERFECTION OF THE AGENT’S OWNERSHIP INTERESTS OR SECURITY INTERESTS IN THE AFFECTED ASSETS, INCLUDING AN OPINION OF COUNSEL THAT AFTER GIVING EFFECT TO SUCH CHANGE, THE AGENT’S INTEREST IN THE RECEIVABLES AND THE RELATED SECURITY SHALL CONTINUE UNAFFECTED BY SUCH CHANGE AND (II) NEW OR REVISED BLOCKED ACCOUNT AGREEMENTS EXECUTED BY THE BLOCKED ACCOUNT BANKS WHICH REFLECT SUCH CHANGE AND ENABLE THE AGENT TO CONTINUE TO EXERCISE ITS RIGHTS CONTAINED IN SECTION 7.3.   (H)                                 AMENDMENT TO FIRST OR SECOND TIER AGREEMENT.  THE SPV SHALL NOT AND SHALL NOT PERMIT THE SELLER OR THE ORIGINATOR TO AMEND, MODIFY, OR SUPPLEMENT THE FIRST TIER AGREEMENT OR THE SECOND TIER AGREEMENT OR WAIVE ANY PROVISION THEREOF, IN EACH CASE EXCEPT WITH THE PRIOR WRITTEN CONSENT OF THE AGENT.   (I)                                     OTHER DEBT.  EXCEPT AS PROVIDED HEREIN, THE SPV SHALL NOT CREATE, INCUR, ASSUME OR SUFFER TO EXIST ANY INDEBTEDNESS WHETHER CURRENT OR FUNDED, OR ANY OTHER LIABILITY OTHER THAN (I) INDEBTEDNESS OF THE SPV REPRESENTING FEES, EXPENSES AND INDEMNITIES ARISING HEREUNDER OR UNDER THE SECOND TIER AGREEMENT FOR THE PURCHASE PRICE OF THE RECEIVABLES AND OTHER AFFECTED ASSETS UNDER THE SECOND TIER AGREEMENT, AND (II) OTHER INDEBTEDNESS INCURRED IN ACCORDANCE WITH THE TRANSACTION DOCUMENTS.   (J)                                     PAYMENT TO THE SELLER.  THE SPV SHALL NOT ACQUIRE ANY RECEIVABLE OTHER THAN THROUGH, UNDER, AND PURSUANT TO THE TERMS OF, THE SECOND TIER AGREEMENT.   (K)                                  RESTRICTED PAYMENTS.  THE SPV SHALL NOT (I) PURCHASE OR REDEEM ANY OF ITS MEMBERSHIP INTEREST, (II) PREPAY, PURCHASE OR REDEEM ANY INDEBTEDNESS, (III) LEND OR ADVANCE ANY FUNDS OR (IV) REPAY ANY LOANS OR ADVANCES TO, FOR OR FROM ANY OF ITS AFFILIATES (THE AMOUNTS DESCRIBED IN CLAUSES (I) THROUGH (IV) BEING REFERRED TO AS “RESTRICTED PAYMENTS”), EXCEPT THAT THE SPV MAY (A) MAKE RESTRICTED PAYMENTS OUT OF FUNDS RECEIVED PURSUANT TO SECTION 2.2  AND/OR OTHERWISE PERMITTED PURSUANT TO THE TRANSACTION DOCUMENTS AND (B) MAY MAKE OTHER RESTRICTED PAYMENTS (INCLUDING THE PAYMENT OF DIVIDENDS) IF, AFTER GIVING EFFECT THERETO, NO TERMINATION EVENT OR POTENTIAL TERMINATION EVENT SHALL HAVE OCCURRED AND BE CONTINUING.   SECTION 6.3                                   IS SPECIFIED IN SCHEDULE 6.3, WHICH IS INCORPORATED HEREIN BY REFERENCE.   ARTICLE VII   ADMINISTRATION AND COLLECTIONS   SECTION 7.1                                   APPOINTMENT OF SERVICER.   (A)                                  THE SERVICING, ADMINISTERING AND COLLECTION OF THE RECEIVABLES SHALL BE CONDUCTED BY THE PERSON (THE “SERVICER”) SO DESIGNATED FROM TIME TO TIME AS SERVICER IN ACCORDANCE WITH THIS SECTION 7.1.  EACH OF THE SPV, THE CLASS AGENTS, THE AGENT AND THE INVESTORS HEREBY APPOINTS AS ITS AGENT THE SERVICER, FROM TIME TO TIME DESIGNATED PURSUANT TO THIS SECTION, TO ENFORCE ITS RESPECTIVE RIGHTS AND INTERESTS IN AND UNDER THE AFFECTED ASSETS.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE SPV, THE ORIGINATOR AND THE SELLER (TO THE EXTENT NOT THEN ACTING AS SERVICER HEREUNDER) HEREBY GRANTS TO ANY SERVICER APPOINTED HEREUNDER AN IRREVOCABLE POWER OF ATTORNEY TO TAKE ANY AND ALL STEPS IN THE SPV’S, THE ORIGINATOR’S AND/OR THE SELLER’S NAME AND ON   53   BEHALF OF THE SPV, THE ORIGINATOR OR THE SELLER AS NECESSARY OR DESIRABLE, IN THE REASONABLE DETERMINATION OF THE SERVICER, TO COLLECT ALL AMOUNTS DUE UNDER ANY AND ALL RECEIVABLES, INCLUDING ENDORSING THE SPV’S AND/OR THE ORIGINATOR’S NAME ON CHECKS AND OTHER INSTRUMENTS REPRESENTING COLLECTIONS AND ENFORCING SUCH RECEIVABLES AND THE RELATED CONTRACTS AND TO TAKE ALL SUCH OTHER ACTIONS SET FORTH IN THIS ARTICLE VII.  UNTIL THE AGENT GIVES NOTICE TO THE SERVICER (IN ACCORDANCE WITH THIS SECTION 7.1) OF THE DESIGNATION OF A NEW SERVICER, THE SELLER IS HEREBY DESIGNATED AS, AND HEREBY AGREES TO PERFORM THE DUTIES AND OBLIGATIONS OF, THE SERVICER PURSUANT TO THE TERMS HEREOF.  UPON THE OCCURRENCE OF A SERVICER DEFAULT, THE AGENT MAY, AND UPON THE DIRECTION OF THE CLASS AGENTS SHALL, DESIGNATE AS SERVICER ANY PERSON (INCLUDING ITSELF) TO SUCCEED THE SELLER OR ANY SUCCESSOR SERVICER, ON THE CONDITION IN EACH CASE THAT ANY SUCH PERSON SO DESIGNATED SHALL AGREE TO PERFORM THE DUTIES AND OBLIGATIONS OF THE SERVICER PURSUANT TO THE TERMS HEREOF; PROVIDED, HOWEVER, THAT IF A SERVICER DEFAULT OCCURS SOLELY AS A RESULT OF THE OCCURRENCE OF A TERMINATION EVENT AND, ON OR AFTER THE 60TH DAY AFTER SUCH OCCURRENCE THE NET INVESTMENT EXCEEDS ZERO, THEN A SUCCESSOR SERVICER MAY, OR UPON THE DIRECTION OF THE MAJORITY INVESTORS, SHALL, BE APPOINTED BY THE AGENT.   (B)                                 UPON THE DESIGNATION OF A SUCCESSOR SERVICER AS SET FORTH ABOVE, THE SELLER AGREES THAT IT WILL TERMINATE ITS ACTIVITIES AS SERVICER HEREUNDER IN A MANNER WHICH THE AGENT DETERMINES WILL FACILITATE THE TRANSITION OF THE PERFORMANCE OF SUCH ACTIVITIES TO THE NEW SERVICER, AND THE SELLER SHALL COOPERATE WITH AND ASSIST SUCH NEW SERVICER.  SUCH COOPERATION SHALL INCLUDE ACCESS TO AND TRANSFER OF RECORDS AND USE BY THE NEW SERVICER OF ALL RECORDS, LICENSES, HARDWARE OR SOFTWARE (EXCEPT TO THE EXTENT ANY SUCH LICENSES OR OTHER ITEMS ARE NOT ASSIGNABLE AND/OR MAY NOT BE SHARED OR ASSIGNED) NECESSARY OR DESIRABLE TO COLLECT THE RECEIVABLES AND THE RELATED SECURITY.   (C)                                  THE SELLER ACKNOWLEDGES THAT THE SPV, THE CLASS AGENTS, THE AGENT AND THE INVESTORS HAVE RELIED ON THE SELLER’S AGREEMENT TO ACT AS SERVICER HEREUNDER IN MAKING THEIR DECISION TO EXECUTE AND DELIVER THIS AGREEMENT.  ACCORDINGLY, THE SELLER AGREES THAT IT WILL NOT VOLUNTARILY RESIGN AS SERVICER.   (D)                                 THE SERVICER MAY NOT DELEGATE ANY OF ITS RIGHTS, DUTIES OR OBLIGATIONS HEREUNDER, OR DESIGNATE A SUBSTITUTE SERVICER, WITHOUT THE PRIOR WRITTEN CONSENT OF THE AGENT, AND PROVIDED THAT THE SERVICER SHALL CONTINUE TO REMAIN SOLELY LIABLE FOR THE PERFORMANCE OF THE DUTIES AS SERVICER HEREUNDER NOTWITHSTANDING ANY SUCH DELEGATION HEREUNDER.  THE SERVICER MAY DELEGATE ITS DUTIES AND OBLIGATIONS HEREUNDER TO ANY AFFILIATE SUBSERVICER (EACH, A “SUB-SERVICER”); PROVIDED THAT, IN EACH SUCH DELEGATION, (I) SUCH SUB-SERVICER SHALL AGREE IN WRITING TO PERFORM THE DUTIES AND OBLIGATIONS OF THE SERVICER PURSUANT TO THE TERMS HEREOF, (II) THE SERVICER SHALL REMAIN PRIMARILY LIABLE TO THE SPV, THE AGENT, THE CLASS AGENTS AND THE INVESTORS FOR THE PERFORMANCE OF THE DUTIES AND OBLIGATIONS SO DELEGATED, (III) THE SPV, THE AGENT, THE CLASS AGENTS AND THE INVESTORS SHALL HAVE THE RIGHT TO LOOK SOLELY TO THE SERVICER FOR PERFORMANCE AND (IV) THE TERMS OF ANY AGREEMENT WITH ANY SUB-SERVICER SHALL PROVIDE THAT THE AGENT MAY TERMINATE SUCH AGREEMENT UPON THE TERMINATION OF THE SERVICER HEREUNDER BY GIVING NOTICE OF ITS DESIRE TO TERMINATE SUCH AGREEMENT TO THE SERVICER (AND THE SERVICER SHALL PROVIDE APPROPRIATE NOTICE TO SUCH SUB-SERVICER).   (E)                                  THE SELLER HEREBY IRREVOCABLY AGREES THAT IF AT ANY TIME IT SHALL CEASE TO BE THE SERVICER HEREUNDER, IT SHALL ACT (IF THE THEN CURRENT SERVICER SO REQUESTS) AS THE DATA-PROCESSING AGENT OF THE SERVICER AND, IN SUCH CAPACITY, THE SELLER SHALL CONDUCT THE DATA-PROCESSING FUNCTIONS   54   OF THE ADMINISTRATION OF THE RECEIVABLES AND THE COLLECTIONS THEREON IN SUBSTANTIALLY THE SAME WAY THAT THE SELLER CONDUCTED SUCH DATA-PROCESSING FUNCTIONS WHILE IT ACTED AS THE SERVICER.   SECTION 7.2                                   DUTIES OF SERVICER.   (A)                                  THE SERVICER SHALL TAKE OR CAUSE TO BE TAKEN ALL SUCH ACTION AS MAY BE NECESSARY OR ADVISABLE TO COLLECT EACH RECEIVABLE FROM TIME TO TIME, ALL IN ACCORDANCE WITH THIS AGREEMENT AND ALL APPLICABLE LAW, WITH REASONABLE CARE AND DILIGENCE, AND IN ACCORDANCE WITH THE CREDIT AND COLLECTION POLICY.  THE SERVICER SHALL SET ASIDE (AND, IF APPLICABLE, SEGREGATE) AND HOLD IN TRUST FOR THE ACCOUNTS OF THE SPV, THE AGENT AND THE INVESTORS THE AMOUNT OF THE COLLECTIONS TO WHICH EACH IS ENTITLED IN ACCORDANCE WITH ARTICLE II.  SO LONG AS NO TERMINATION EVENT OR POTENTIAL TERMINATION EVENT SHALL HAVE OCCURRED AND IS CONTINUING, THE SERVICER MAY, IN ACCORDANCE WITH THE CREDIT AND COLLECTION POLICY, EXTEND THE MATURITY OR ADJUST THE UNPAID BALANCE OF ANY DEFAULTED RECEIVABLE, DELINQUENT RECEIVABLE OR ANY RECEIVABLE THAT IS OTHERWISE NOT AN ELIGIBLE RECEIVABLE AS THE SERVICER MAY DETERMINE TO BE APPROPRIATE TO MAXIMIZE COLLECTIONS THEREOF; PROVIDED, HOWEVER, THAT (I) SUCH ADJUSTMENT SHALL NOT ALTER, SUBJECT TO SECTION 1.3(B), THE STATUS OF SUCH RECEIVABLE AS A DEFAULTED RECEIVABLE OR A DELINQUENT RECEIVABLE OR LIMIT THE RIGHTS OF THE SPV, THE INVESTORS OR THE AGENT UNDER THIS AGREEMENT AND (II) IF A TERMINATION EVENT OR POTENTIAL TERMINATION EVENT HAS OCCURRED AND THE SELLER IS STILL ACTING AS SERVICER, THE SELLER MAY MAKE SUCH ADJUSTMENT ONLY UPON THE PRIOR WRITTEN APPROVAL OF THE AGENT.  THE SPV SHALL DELIVER TO THE SERVICER AND THE SERVICER SHALL HOLD IN TRUST FOR THE SPV AND THE AGENT, ON BEHALF OF THE INVESTORS, IN ACCORDANCE WITH THEIR RESPECTIVE INTERESTS, ALL RECORDS WHICH EVIDENCE OR RELATE TO ANY AFFECTED ASSET.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE AGENT SHALL HAVE THE ABSOLUTE AND UNLIMITED RIGHT TO DIRECT THE SERVICER (WHETHER THE SELLER OR ANY OTHER PERSON IS THE SERVICER) TO COMMENCE OR SETTLE ANY LEGAL ACTION TO ENFORCE COLLECTION OF ANY RECEIVABLE OR TO FORECLOSE UPON OR REPOSSESS ANY AFFECTED ASSET.  THE SERVICER SHALL NOT MAKE THE CLASS AGENTS, THE AGENT OR ANY OF THE INVESTORS A PARTY TO ANY LITIGATION WITHOUT THE PRIOR WRITTEN CONSENT OF SUCH PERSON.  AT ANY TIME WHEN A TERMINATION EVENT EXISTS, THE AGENT MAY NOTIFY ANY OBLIGOR OF ITS INTEREST IN THE RECEIVABLES AND THE OTHER AFFECTED ASSETS.   (B)                                 THE SERVICER SHALL, AS SOON AS PRACTICABLE FOLLOWING RECEIPT THEREOF, TURN OVER TO THE SELLER OR THE ORIGINATOR, AS DETERMINED BY THE SERVICER, ALL COLLECTIONS FROM ANY PERSON OF INDEBTEDNESS OF SUCH PERSON WHICH ARE NOT ON ACCOUNT OF A RECEIVABLE.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ARTICLE VII, THE SERVICER, IF NOT THE SELLER, THE ORIGINATOR OR ANY AFFILIATE OF THE SELLER OR THE ORIGINATOR, SHALL HAVE NO OBLIGATION TO COLLECT, ENFORCE OR TAKE ANY OTHER ACTION DESCRIBED IN THIS ARTICLE VII WITH RESPECT TO ANY INDEBTEDNESS THAT IS NOT INCLUDED IN THE ASSET INTEREST OTHER THAN TO DELIVER TO THE SELLER OR THE ORIGINATOR THE COLLECTIONS AND DOCUMENTS WITH RESPECT TO ANY SUCH INDEBTEDNESS AS DESCRIBED ABOVE IN THIS SECTION 7.2(B).   (C)                                  ANY PAYMENT BY AN OBLIGOR IN RESPECT OF ANY INDEBTEDNESS OWED BY IT TO THE ORIGINATOR SHALL, EXCEPT AS OTHERWISE SPECIFIED BY SUCH OBLIGOR, REQUIRED BY CONTRACT OR LAW OR CLEARLY INDICATED BY FACTS OR CIRCUMSTANCES (INCLUDING BY WAY OF EXAMPLE AN EQUIVALENCE OF A PAYMENT AND THE AMOUNT OF A PARTICULAR INVOICE), AND UNLESS OTHERWISE INSTRUCTED BY THE AGENT, BE APPLIED AS A COLLECTION OF ANY RECEIVABLE OF SUCH OBLIGOR (STARTING WITH THE OLDEST SUCH   55   RECEIVABLE) TO THE EXTENT OF ANY AMOUNTS THEN DUE AND PAYABLE THEREUNDER BEFORE BEING APPLIED TO ANY OTHER RECEIVABLE OR OTHER INDEBTEDNESS OF SUCH OBLIGOR.   SECTION 7.3                                   BLOCKED ACCOUNT ARRANGEMENTS.   Prior to the initial purchase hereunder the Servicer and SPV shall enter into Blocked Account Agreements with all of the Blocked Account Banks, and deliver original counterparts thereof to the Agent.  Upon the occurrence of a Termination Event or a Potential Termination Event, the Agent may at any time thereafter give notice to each Blocked Account Bank that the Agent is exercising its rights under the Blocked Account Agreements to do any or all of the following:  (a) to have the exclusive ownership and control of the Blocked Account Accounts transferred to the Agent and to exercise exclusive dominion and control over the funds deposited therein, (b) to have the proceeds that are sent to the respective Blocked Accounts be redirected pursuant to its instructions rather than deposited in the applicable Blocked Account, and (c) to take any or all other actions permitted under the applicable Blocked Account Agreement.  Each of the Servicer and SPV hereby agrees that if the Agent, at any time, takes any action set forth in the preceding sentence, the Agent shall have exclusive control of the proceeds (including Collections) of all Receivables and each of the Servicer and SPV hereby further agrees to take any other action that the Agent may reasonably request to transfer such control.  Any proceeds of Receivables received by the Seller, as Servicer or otherwise, or the SPV thereafter shall be sent immediately to the Agent.  The parties hereto hereby acknowledge that if at any time the Agent takes control of any Blocked Account, the Agent shall not have any rights to the funds therein in excess of the unpaid amounts due to SPV, the Agent and the Investors or any other Person hereunder and the Agent shall distribute or cause to be distributed such funds in accordance with Section 7.2(b) (including the proviso thereto) and Article II (in each case as if such funds were held by the Servicer thereunder); provided, however, that the Agent shall not be under any obligation to remit any such funds to the Seller or any other Person unless and until the Agent has received from the Seller or such Person evidence satisfactory to the Agent that the Seller or such Person is entitled to such funds hereunder and under applicable Law.   SECTION 7.4                                   ENFORCEMENT RIGHTS AFTER DESIGNATION OF NEW SERVICER.   (A)                                  AT ANY TIME FOLLOWING THE OCCURRENCE OF A TERMINATION EVENT AND THE DESIGNATION OF A SERVICER (OTHER THAN THE SELLER OR AN AFFILIATE OF THE SELLER) PURSUANT TO SECTION 7.1:   (I)                                     THE AGENT MAY DIRECT THE OBLIGORS THAT PAYMENT OF ALL AMOUNTS PAYABLE UNDER ANY RECEIVABLE BE MADE DIRECTLY TO THE AGENT OR ITS DESIGNEE;   (II)                                  THE SPV SHALL, AT THE AGENT’S REQUEST AND AT THE SPV’S EXPENSE, GIVE NOTICE OF THE AGENT’S, THE SPV’S, AND/OR THE INVESTORS’ OWNERSHIP OF THE RECEIVABLES AND (IN THE CASE OF THE AGENT) INTEREST IN THE ASSET INTEREST TO EACH OBLIGOR AND DIRECT THAT PAYMENTS BE MADE DIRECTLY TO THE AGENT OR ITS DESIGNEE, EXCEPT THAT IF THE SPV FAILS TO SO NOTIFY EACH OBLIGOR, THE AGENT MAY SO NOTIFY THE OBLIGORS; AND   (III)                               THE SPV SHALL, AT THE AGENT’S REQUEST, (A) ASSEMBLE ALL OF THE RECORDS AND SHALL MAKE THE SAME AVAILABLE TO THE AGENT OR ITS DESIGNEE AT A PLACE SELECTED BY THE AGENT OR ITS DESIGNEE, AND (B) SEGREGATE ALL CASH, CHECKS AND OTHER INSTRUMENTS RECEIVED   56   BY IT FROM TIME TO TIME CONSTITUTING COLLECTIONS OF RECEIVABLES IN A MANNER ACCEPTABLE TO SUCH AGENT AND SHALL, PROMPTLY UPON RECEIPT, REMIT ALL SUCH CASH, CHECKS AND INSTRUMENTS, DULY ENDORSED OR WITH DULY EXECUTED INSTRUMENTS OF TRANSFER, TO SUCH AGENT OR ITS DESIGNEE.   (B)                                 EACH OF THE SPV AND THE SELLER HEREBY AUTHORIZES THE AGENT, AND IRREVOCABLY APPOINTS THE AGENT AS ITS ATTORNEY-IN-FACT WITH FULL POWER OF SUBSTITUTION AND WITH FULL AUTHORITY IN THE PLACE AND STEAD OF THE SPV OR THE SELLER, AS APPLICABLE, WHICH APPOINTMENT IS COUPLED WITH AN INTEREST, TO TAKE ANY AND ALL STEPS FOLLOWING THE OCCURRENCE OF A TERMINATION EVENT OR THE OCCURRENCE AND CONTINUATION OF A POTENTIAL TERMINATION EVENT, IN THE NAME OF THE SPV OR THE SELLER, AS APPLICABLE, AND ON BEHALF OF THE SPV OR THE SELLER, AS APPLICABLE, NECESSARY OR DESIRABLE, IN THE DETERMINATION OF THE AGENT, TO COLLECT ANY AND ALL AMOUNTS OR PORTIONS THEREOF DUE UNDER ANY AND ALL RECEIVABLES OR RELATED SECURITY, INCLUDING ENDORSING THE NAME OF THE SELLER ON CHECKS AND OTHER INSTRUMENTS REPRESENTING COLLECTIONS AND ENFORCING SUCH RECEIVABLES, RELATED SECURITY AND THE RELATED CONTRACTS.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SUBSECTION (B), NONE OF THE POWERS CONFERRED UPON SUCH ATTORNEY-IN-FACT PURSUANT TO THE IMMEDIATELY PRECEDING SENTENCE SHALL SUBJECT SUCH ATTORNEY-IN-FACT TO ANY LIABILITY IF ANY ACTION TAKEN BY IT SHALL PROVE TO BE INADEQUATE OR INVALID, NOR SHALL THEY CONFER ANY OBLIGATIONS UPON SUCH ATTORNEY-IN-FACT IN ANY MANNER WHATSOEVER.   SECTION 7.5                                   SERVICER DEFAULT.   The occurrence of any one or more of the following events shall constitute a “Servicer Default”:   (A)                                  THE SERVICER (I) SHALL FAIL TO MAKE ANY PAYMENT OR DEPOSIT REQUIRED TO BE MADE BY IT HEREUNDER WHEN DUE AND SUCH FAILURE CONTINUES FOR ONE (1) BUSINESS DAY OR THE SERVICER SHALL FAIL TO OBSERVE OR PERFORM ANY TERM, COVENANT OR AGREEMENT ON THE SERVICER’S PART TO BE PERFORMED UNDER SECTIONS 6.1(B) (CONDUCT OF BUSINESS, OWNERSHIP), 6.1(F) (PERFORMANCE AND COMPLIANCE WITH RECEIVABLES, CONTRACTS AND CREDIT AND COLLECTION POLICY), 6.1(H) (OBLIGOR PAYMENTS), 6.1(I) (HANDLING COLLECTIONS), 6.2(A) (NO SALES OR LIENS), 6.2(C) (NO CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY), 6.2(D) (NO SUBSIDIARIES, MERGERS, ETC.), 6.2(E) (CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS), OR 6.2(F) (DEPOSITS TO LOCK-BOX ACCOUNTS) (ANY OF THE PRECEDING PARENTHETICAL PHRASES IN THIS CLAUSE (I) ARE FOR PURPOSES OF REFERENCE ONLY AND SHALL NOT OTHERWISE AFFECT THE MEANING OR INTERPRETATION OF ANY PROVISION HEREOF) AND SUCH FAILURE CONTINUES FOR TWO (2) BUSINESS DAYS, (II) SHALL FAIL TO OBSERVE OR PERFORM ANY OTHER TERM, COVENANT OR AGREEMENT TO BE OBSERVED OR PERFORMED BY IT UNDER SECTIONS 2.8, 2.9, 2.12 OR 2.15 AND SUCH FAILURE CONTINUES FOR TWO (2) BUSINESS DAYS, OR (III) SHALL FAIL TO OBSERVE OR PERFORM IN ANY MATERIAL RESPECT ANY OTHER TERM, COVENANT OR AGREEMENT HEREUNDER OR UNDER ANY OF THE OTHER TRANSACTION DOCUMENTS TO WHICH SUCH PERSON IS A PARTY OR BY WHICH SUCH PERSON IS BOUND AND SUCH FAILURE SHALL REMAIN UNREMEDIED FOR THIRTY (30) DAYS AFTER THE EARLIER TO OCCUR OF (1) RECEIPT OF NOTICE THEREOF FROM ANY CLASS AGENT, ANY INVESTOR OR THE AGENT OR (2) THE DATE A RESPONSIBLE OFFICER OF THE SERVICER FIRST BECOMES AWARE OF SUCH FAILURE; OR   (B)                                 ANY REPRESENTATION, WARRANTY, CERTIFICATION OR STATEMENT MADE BY THE SERVICER IN THIS AGREEMENT, THE FIRST TIER AGREEMENT, THE SECOND TIER AGREEMENT OR IN ANY OF THE OTHER TRANSACTION DOCUMENTS OR IN ANY CERTIFICATE OR REPORT DELIVERED BY IT PURSUANT TO ANY OF THE   57   FOREGOING SHALL PROVE TO HAVE BEEN INCORRECT IN ANY MATERIAL RESPECT WHEN MADE OR DEEMED MADE AND SHALL REMAIN UNREMEDIED FOR 30 DAYS AFTER THE EARLIER TO OCCUR OF (1) RECEIPT OF NOTICE THEREOF FROM ANY CLASS AGENT, ANY INVESTOR OR THE AGENT OR (2) THE DATE A RESPONSIBLE OFFICER OF THE SERVICER FIRST BECOMES AWARE OF SUCH FAILURE; OR   (C)                                  FAILURE OF THE SERVICER OR ANY OF ITS SUBSIDIARIES (OTHER THAN THE SPV) TO PAY WHEN DUE ANY AMOUNTS DUE UNDER ANY AGREEMENT UNDER WHICH ANY OUTSTANDING INDEBTEDNESS GREATER THAN $25,000,000 IS GOVERNED; OR THE DEFAULT (BEYOND THE APPLICABLE GRACE PERIOD WITH RESPECT THERETO, IF ANY) BY THE SERVICER OR ANY OF ITS SUBSIDIARIES (OTHER THAN THE SPV) IN THE PERFORMANCE  OF ANY TERM, PROVISION OR CONDITION CONTAINED IN ANY AGREEMENT UNDER WHICH ANY SUCH INDEBTEDNESS GREATER THAN $25,000,000 OUTSTANDING WAS CREATED OR IS GOVERNED, REGARDLESS OF WHETHER SUCH EVENT IS AN “EVENT OF DEFAULT” OR “DEFAULT” UNDER ANY SUCH AGREEMENT; OR ANY INDEBTEDNESS OF THE SERVICER OR ANY OF ITS SUBSIDIARIES GREATER THAN $25,000,000 OUTSTANDING SHALL BE DECLARED TO BE DUE AND PAYABLE OR REQUIRED TO BE PREPAID (OTHER THAN BY A REGULARLY SCHEDULED PAYMENT) PRIOR TO THE SCHEDULED DATE OF MATURITY THEREOF; OR   (D)                                 ANY EVENT OF BANKRUPTCY SHALL OCCUR WITH RESPECT TO THE SERVICER; OR   (E)                                  FAILURE OF THE SERVICER TO DELIVER ANY SERVICER REPORT WHEN DUE AND SUCH FAILURE REMAINS UNREMEDIED FOR 2 BUSINESS DAYS; OR   (F)                                    SUBJECT TO SECTION 7.1(A), A TERMINATION EVENT.   SECTION 7.6                                   SERVICING FEE.   The Servicer shall be paid a Servicing Fee in accordance with Schedule III and subject to the priorities therein.  If the Servicer is not the SPV or the Seller or an Affiliate of the SPV or the Seller, the Servicer, by giving three (3) Business Days’ prior written notice to the Class Agents, may revise the percentage used to calculate the Servicing Fee so long as the revised percentage will not result in a Servicing Fee that exceeds 110% of the reasonable and appropriate out-of-pocket costs and expenses of such Servicer incurred in connection with the performance of its obligations hereunder as documented to the reasonable satisfaction of the Class Agents; provided, however, that at any time after the sum of (1) the Net Investment and (2) the Required Reserves exceeds the Net Pool Balance, any compensation to the Servicer in excess of the Servicing Fee initially provided for herein shall be an obligation of the SPV and shall not be payable, in whole or in part, from Collections allocated to the Investors.   SECTION 7.7                                   PROTECTION OF OWNERSHIP INTEREST OF THE INVESTORS.   Each of the Originator, the Seller and the SPV agrees that it shall, from time to time, at its expense, promptly execute and deliver all instruments and documents and take all actions as may be necessary or as the Agent may reasonably request in order to perfect or protect the Asset Interest or to enable the Agent or the Investors to exercise or enforce any of their respective rights hereunder.  Without limiting the foregoing, each of the Originator and the SPV shall, upon the request of the Agent or any of the Investors, in order to accurately reflect this purchase and sale transaction, (a) execute and file such financing or continuation statements or amendments thereto or assignments thereof (as otherwise permitted to be executed and filed pursuant hereto) as may be requested by the Agent or any of the Investors and (b) mark its respective master data   58   processing records and other documents with a legend describing the conveyance to the to the Agent, for the benefit of the Investors, of the Asset Interest.  Each of the Originator, the Seller and the SPV (i) shall, upon request of the Agent or any of the Investors, obtain such additional search reports as the Agent or any of the Investors shall request and (ii) hereby authorize the Agent to file continuation statements and amendments thereto and assignments thereof without further consent or action by any of the Originator, the Seller or the SPV.  Carbon, photographic or other reproduction of this Agreement or any financing statement shall be sufficient as a financing statement.  Neither the Originator nor the SPV shall change its respective name, identity, corporate structure, jurisdiction of formation unless it shall have:  (i) given the Agent at least thirty (30) days prior notice thereof and (ii) prepared at the SPV’s expense and delivered to the Agent all financing statements, instruments and other documents necessary to preserve and protect the Asset Interest or requested by the Agent in connection with such change or relocation, including an opinion of counsel that after giving effect to such change, the Agent’s interest in the Receivables and the Related Security shall continue unaffected by such change.  All filings under the UCC or otherwise shall be made at the expense of the SPV.   ARTICLE VIII   TERMINATION EVENTS   SECTION 8.1                                   TERMINATION EVENTS.   “Termination Event”:   (A)                                  (I) THE SPV, THE SELLER, THE ORIGINATOR, THE PERFORMANCE GUARANTOR OR THE SERVICER SHALL FAIL TO MAKE ANY PAYMENT OR DEPOSIT REQUIRED TO BE MADE BY IT HEREUNDER WITH RESPECT TO A REDUCTION IN THE NET INVESTMENT; OR (II) THE SELLER, THE ORIGINATOR, THE PERFORMANCE GUARANTOR OR THE SERVICER SHALL FAIL TO MAKE ANY PAYMENT OR DEPOSIT REQUIRED TO BE MADE BY IT HEREUNDER OTHER THAN IN RESPECT OF A REDUCTION IN THE NET INVESTMENT WHEN DUE AND SUCH FAILURE CONTINUES FOR TWO (2) BUSINESS DAYS; OR   OR STATEMENT MADE OR DEEMED MADE BY THE SPV, THE SELLER, THE SERVICER, THE PERFORMANCE GUARANTOR OR THE ORIGINATOR IN THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT TO WHICH IT IS A PARTY OR IN ANY OTHER INFORMATION, REPORT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO SHALL PROVE TO HAVE BEEN INCORRECT WHEN MADE OR DEEMED MADE OR DELIVERED AND SHALL REMAIN UNREMEDIED FOR 30 DAYS AFTER INVESTOR OR THE AGENT OR (2) THE DATE A RESPONSIBLE OFFICER OF THE SERVICER, THE SPV, THE SELLER, THE PERFORMANCE GUARANTOR OR THE ORIGINATOR, AS APPLICABLE, FIRST BECOMES AWARE OF SUCH FAILURE; OR   (C)                                  THE SPV, THE SELLER, THE ORIGINATOR OR THE SERVICER SHALL DEFAULT IN THE PERFORMANCE OF ANY UNDERTAKING (OTHER THAN THOSE COVERED BY CLAUSE (A) ABOVE OR (P) BELOW) (I) TO BE PERFORMED OR OBSERVED UNDER 6.2(D) (NO SUBSIDIARIES, MERGERS, ETC.), 6.2(E) (NO CHANGE   59   IN PAYMENT INSTRUCTIONS TO OBLIGORS) OR 6.2(F) (DEPOSITS TO LOCK-BOX ACCOUNTS) (ANY OF THE PRECEDING PARENTHETICAL PHRASES IN THIS CLAUSE (I) ARE FOR PURPOSES OF REFERENCE ONLY AND SHALL NOT OTHERWISE AFFECT THE MEANING OR INTERPRETATION OF ANY PROVISION HEREOF) AND SUCH FAILURE CONTINUES FOR TWO (2) BUSINESS DAYS, OR (II) SHALL FAIL TO OBSERVE OR PERFORM UNDER ANY OTHER PROVISION OF THIS AGREEMENT (OTHER THAN THOSE COVERED BY CLAUSE (A) ABOVE OR SECTION 6.3) OR ANY PROVISION OF ANY OTHER TRANSACTION DOCUMENT TO WHICH IT IS A PARTY AND SUCH DEFAULT IN THE CASE OF THIS CLAUSE (II) SHALL CONTINUE FOR THIRTY (30) DAYS THE SERVICER, THE SPV, THE SELLER, THE PERFORMANCE GUARANTOR OR THE ORIGINATOR, AS APPLICABLE, FIRST BECOMES AWARE OF SUCH FAILURE; OR   RESPECT TO THE SPV, THE SELLER, THE ORIGINATOR, THE SERVICER, THE PERFORMANCE GUARANTOR OR ANY MATERIAL SUBSIDIARY; OR   (E)                                  THE AGENT, ON BEHALF OF THE INVESTORS, SHALL FOR ANY REASON FAIL OR CEASE TO HAVE A VALID AND ENFORCEABLE PERFECTED FIRST PRIORITY OWNERSHIP OR SECURITY INTEREST IN THE AFFECTED ASSETS, FREE AND CLEAR OF ANY ADVERSE CLAIM; OR   (F)                                    A SERVICER DEFAULT SHALL HAVE OCCURRED; OR   (G)                                 ON ANY SETTLEMENT DATE, THE SUM OF (I) THE NET INVESTMENT (AS DETERMINED AFTER GIVING EFFECT TO ALL DISTRIBUTIONS PURSUANT TO THIS AGREEMENT ON SUCH DATE) AND (II) THE REQUIRED RESERVES SHALL EXCEED THE NET POOL BALANCE (AS SUCH REQUIRED RESERVES AND NET POOL BALANCE ARE SHOWN IN THE MOST RECENT SERVICER REPORT DELIVERED ON OR PRIOR TO SUCH DATE); OR   (H)                                 FAILURE OF THE SPV, THE SELLER, THE ORIGINATOR, THE PERFORMANCE GUARANTOR OR ANY SUBSIDIARY OF THE SPV OR THE ORIGINATOR TO PAY WHEN DUE ANY AMOUNTS DUE UNDER ANY AGREEMENT TO WHICH ANY SUCH PERSON IS A PARTY AND UNDER WHICH ANY INDEBTEDNESS GREATER THAN $10,000 IN THE CASE OF THE SPV OR ANY SUBSIDIARY OF THE SPV, OR $25,000,000 OUTSTANDING, IN THE CASE OF THE SELLER, THE PERFORMANCE GUARANTOR, THE ORIGINATOR OR ANY SUBSIDIARY OF ANY OF THE FOREGOING PERSONS (OTHER THAN THE SPV) IS GOVERNED; OR THE DEFAULT (AFTER ANY APPLICABLE GRACE PERIOD, IF ANY) BY THE SPV, THE SELLER, THE PERFORMANCE GUARANTOR, THE ORIGINATOR OR ANY SUBSIDIARY OF ANY OF THE FOREGOING PERSONS IN THE PERFORMANCE OF ANY TERM, PROVISION OR CONDITION CONTAINED IN ANY AGREEMENT TO WHICH ANY SUCH PERSON IS A PARTY AND UNDER WHICH ANY INDEBTEDNESS OWING BY THE SPV, THE SELLER, THE PERFORMANCE GUARANTOR, THE ORIGINATOR OR ANY SUBSIDIARY OF ANY OF THE FOREGOING PERSONS GREATER THAN SUCH RESPECTIVE AMOUNTS DEFAULT” OR “DEFAULT” UNDER ANY SUCH AGREEMENT IF THE EFFECT OF SUCH DEFAULT IS TO CAUSE, OR TO PERMIT THE HOLDER OF SUCH INDEBTEDNESS TO CAUSE, SUCH INDEBTEDNESS TO BECOME DUE AND PAYABLE PRIOR TO ITS STATED MATURITY; OR ANY INDEBTEDNESS OWING BY THE SPV, THE SELLER, THE PERFORMANCE GUARANTOR, THE ORIGINATOR OR ANY SUBSIDIARY OF ANY OF THE FOREGOING PERSONS GREATER THAN SUCH RESPECTIVE AMOUNTS SHALL BE DECLARED TO BE DUE AND PAYABLE OR REQUIRED TO BE PREPAID (OTHER THAN BY A REGULARLY SCHEDULED PAYMENT) PRIOR TO THE DATE OF MATURITY THEREOF; OR   (I)                                     THERE SHALL BE A “CHANGE OF CONTROL” WITH RESPECT TO THE SERVICER, THE SPV, THE SELLER, THE PERFORMANCE GUARANTOR OR THE ORIGINATOR (FOR THE PURPOSES OF THIS CLAUSE ONLY “CHANGE IN CONTROL” MEANS:   60   (I)                                     THE FAILURE OF THE ORIGINATOR TO OWN, FREE AND CLEAR OF ANY ADVERSE CLAIM (OTHER THAN THE PLEDGE UNDER THE REVOLVING CREDIT AGREEMENT) AND ON A FULLY DILUTED BASIS, 100% OF THE EQUITY INTERESTS IN THE SPV,   (II)                                  THE LIEN ON THE EQUITY INTERESTS IN THE SPV SHALL BE FORECLOSED UPON,   (III)                               THE FAILURE OF THE PERFORMANCE GUARANTOR TO OWN, DIRECTLY OR INDIRECTLY, 100% OF THE EQUITY INTERESTS IN EACH OF THE ORIGINATOR, THE SELLER, THE SERVICER AND THE SPV, OR   (IV)                              THE ACQUISITION BY ANY PERSON, OR TWO OR MORE PERSONS ACTING IN CONCERT, OF BENEFICIAL OWNERSHIP (WITHIN THE MEANING OF RULE 13D-3 OF THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934) OF 20% OR MORE OF THE OUTSTANDING SHARES OF VOTING STOCK OF THE PERFORMANCE GUARANTOR; OR   (J)                                     [RESERVED];   (K)                                  ANY MATERIAL PROVISION OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT TO WHICH THE ORIGINATOR, THE SELLER, THE PERFORMANCE GUARANTOR OR THE SPV IS A PARTY SHALL CEASE TO BE IN FULL FORCE AND EFFECT OR THE ORIGINATOR, THE SELLER, THE PERFORMANCE GUARANTOR OR THE SPV SHALL SO STATE IN WRITING; OR   (L)                                     THE THREE-MONTH AVERAGE TRIGGER DELINQUENCY RATIO SHALL EXCEED 6.25%; OR   (M)                               THE THREE-MONTH AVERAGE TRIGGER DEFAULT RATIO SHALL EXCEED 2.25%; OR   (N)                                 THE THREE-MONTH AVERAGE TRIGGER DILUTION RATIO SHALL EXCEED 8.25%, OR   (O)                                 THE DAYS SALES OUTSTANDING EQUALS OR EXCEEDS 60 DAYS; OR   (P)                                 A BREACH OF SECTION 6.3; OR   (Q)                                 THE PERFORMANCE GUARANTOR SHALL DEFAULT ON ANY PAYMENT OBLIGATION UNDER THE PERFORMANCE GUARANTY WHEN DUE; OR   (R)                                    THE SPV SHALL BECOME REQUIRED TO REGISTER AS AN “INVESTMENT COMPANY” UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, OR THE ARRANGEMENTS CONTEMPLATED BY THE TRANSACTION DOCUMENT SHALL REQUIRE REGISTRATION AS AN “INVESTMENT COMPANY” WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940; OR   (S)                                  THE INTERNAL REVENUE SERVICE SHALL FILE NOTICE OF A LIEN PURSUANT TO SECTION 6323 OF THE CODE WITH REGARD TO ANY ASSETS OF THE SPV, THE SELLER OR THE ORIGINATOR AND SUCH LIEN SHALL NOT HAVE BEEN RELEASED WITHIN FIVE (5) BUSINESS DAYS, OR THE PENSION BENEFIT GUARANTY CORPORATION SHALL FILE NOTICE OF A LIEN PURSUANT TO SECTION 4068 OF ERISA WITH REGARD TO ANY OF THE ASSETS OF THE SPV, THE SELLER OR THE ORIGINATOR AND SUCH LIEN SHALL NOT HAVE BEEN RELEASED WITHIN FIVE (5) BUSINESS DAYS; OR   61   (T)                                    (I) ANY ACTION OR PROCEEDING IS COMMENCED BY ANY PARTY TO THE REVOLVING CREDIT AGREEMENT OR THE MASTER NOTE PURCHASE AGREEMENT CLAIMING OR ASSERTING THAT THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS ARE NOT A RECEIVABLE PURCHASE FACILITY (AS DEFINED IN THE REVOLVING CREDIT AGREEMENT OR THE MASTER NOTE PURCHASE AGREEMENT, AS SUCH DOCUMENT IS IN EFFECT ON THE DATE AS OF WHICH THIS REPRESENTATION IS MADE) OR ARE NOT PERMITTED UNDER THE REVOLVING CREDIT AGREEMENT OR THE MASTER NOTE PURCHASE AGREEMENT, AS SUCH DOCUMENT IS IN EFFECT ON THE DATE AS OF WHICH THIS REPRESENTATION IS MADE OR (II) THE ORIGINATOR OR THE PERFORMANCE GUARANTOR HAVE ENTERED INTO AN ADDITIONAL RECEIVABLE PURCHASE FACILITY (AS DEFINED IN THE   (U)                                 EITHER (I) A DEFAULT (AS DEFINED IN THE REVOLVING CREDIT AGREEMENT) SHALL OCCUR AND BE CONTINUING UNDER SECTION 7.6 OR 7.7 OF THE REVOLVING CREDIT AGREEMENT OR (B) THE REVOLVING CREDIT AGREEMENT AGENT SHALL DELIVER NOTICE UNDER THE REVOLVING CREDIT AGREEMENT PROHIBITING DISPOSITIONS OF ASSETS BY THE PERFORMANCE GUARANTOR OR ANY OF ITS AFFILIATES FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF ANY DEFAULT (AS DEFINED IN THE REVOLVING CREDIT AGREEMENT) UNDER CLAUSES (I), (II) OR (III) OF SECTION 7.2 OF THE REVOLVING CREDIT AGREEMENT.   If a Termination Event occurs, the Agent shall have all rights of a secured party under the UCC and, by notice to the SPV and the Servicer, may declare the Termination Date to occur, at which time all Collections shall be applied in accordance with the provisions of Section 2.12 and the Net Investment will accrue interest at the Default Rate.   SECTION 8.2                                   TERMINATION.   Upon the occurrence of any Termination Event, the Class Agents may, or at the direction of the Majority Investors shall, by notice to the SPV and the Servicer, declare the Termination Date to have occurred; provided, however, that in the case of any event described in Section 8.1(d), 8.1(e), 8.1(g), 8.1(o), 8.1(s) or 8.1(t), the Termination Date shall be deemed to have occurred automatically upon the occurrence of such event.  Upon any such declaration or automatic occurrence, the Agent shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction and other applicable laws, all of which rights shall be cumulative.  Upon the occurrence of the Termination Date, no Investments or Reinvestments shall be made by any Investors and all Collections shall be applied as set forth in Section 2.12.   ARTICLE IX   INDEMNIFICATION; EXPENSES; RELATED MATTERS   SECTION 9.1                                   INDEMNITIES BY THE SPV AND THE SERVICER.   Without limiting any other rights which the Indemnified Parties may have hereunder or under applicable Law, the SPV hereby agrees to indemnify the Investors, the Agent, each Class Agent, the Collateral Agent, the Program Support Providers and their respective officers, directors, employees, counsel and other agents (collectively, “Indemnified Parties”) from and against any and all damages, losses, claims, liabilities, costs and expenses, including reasonable   62   attorneys’ fees (which such attorneys may be employees of the Program Support Providers, the Agent, the Collateral Agent or the Class Agents, as applicable) and disbursements (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them in any action or proceeding between the SPV and any of the Indemnified Parties or between any of the Indemnified Parties and any third party or otherwise arising out of or as a result of this Agreement, the other Transaction Documents, the ownership or maintenance, either directly or indirectly, by the Agent or any Investor of the Asset Interest or any of the other transactions contemplated hereby or thereby, excluding, however, (x) Indemnified Amounts to the extent resulting from gross negligence or willful misconduct on the part of such Indemnified Party, as finally determined by a court of competent jurisdiction, or (y) recourse (except as otherwise specifically provided in this Agreement) for uncollectible Receivables.  Without limiting the generality of the foregoing, the SPV shall indemnify each Indemnified Party for Indemnified Amounts relating to or resulting from:   (A)                                  ANY REPRESENTATION OR WARRANTY MADE BY THE SPV, THE ORIGINATOR, THE PERFORMANCE GUARANTOR OR THE SELLER (INCLUDING, THE SELLER OR ANY OF ITS AFFILIATES IN THE CAPACITY AS THE SERVICER) OR ANY OFFICERS OF THE SPV, THE ORIGINATOR, THE PERFORMANCE GUARANTOR OR THE SELLER (INCLUDING, IN ITS CAPACITY AS THE SERVICER OR ANY AFFILIATE OF THE SELLER ACTING AS SERVICER) UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE FIRST TIER AGREEMENT, THE SECOND TIER AGREEMENT, ANY OF THE OTHER TRANSACTION DOCUMENTS, ANY SERVICER REPORT OR ANY OTHER INFORMATION OR REPORT DELIVERED BY THE SPV OR THE SERVICER PURSUANT HERETO, OR PURSUANT TO ANY OF THE OTHER TRANSACTION DOCUMENTS WHICH SHALL HAVE BEEN INCOMPLETE, FALSE OR INCORRECT IN ANY RESPECT WHEN MADE OR DEEMED MADE;   (B)                                 THE FAILURE BY THE SPV, THE ORIGINATOR, THE PERFORMANCE GUARANTOR OR THE SELLER (INCLUDING, IN ITS CAPACITY AS THE SERVICER OR ANY AFFILIATE OF THE SELLER ACTING AS SERVICER) TO COMPLY WITH ANY APPLICABLE LAW WITH RESPECT TO ANY RECEIVABLE OR THE RELATED CONTRACT, OR THE NONCONFORMITY OF ANY RECEIVABLE OR THE RELATED CONTRACT WITH ANY SUCH APPLICABLE LAW;   (C)                                  THE FAILURE (I) TO VEST AND MAINTAIN VESTED IN THE AGENT, ON BEHALF OF THE INVESTORS, A FIRST PRIORITY, PERFECTED OWNERSHIP INTEREST IN THE ASSET INTEREST FREE AND CLEAR OF ANY ADVERSE CLAIM OR (II) TO CREATE OR MAINTAIN A VALID AND PERFECTED FIRST PRIORITY SECURITY INTEREST IN FAVOR OF THE AGENT, FOR THE BENEFIT OF THE INVESTORS, IN THE AFFECTED ASSETS, FREE AND CLEAR OF ANY ADVERSE CLAIM;   (D)                                 THE FAILURE TO FILE, OR ANY DELAY IN FILING, FINANCING STATEMENTS, CONTINUATION STATEMENTS, OR OTHER SIMILAR INSTRUMENTS OR DOCUMENTS UNDER THE UCC OF ANY APPLICABLE JURISDICTION OR OTHER APPLICABLE LAWS WITH RESPECT TO ANY OF THE AFFECTED ASSETS;   (E)                                  ANY DISPUTE, CLAIM, OFFSET OR DEFENSE (OTHER THAN DISCHARGE IN BANKRUPTCY) OF THE OBLIGOR TO THE PAYMENT OF ANY RECEIVABLE (INCLUDING A DEFENSE BASED ON SUCH RECEIVABLE OR THE RELATED CONTRACT NOT BEING THE LEGAL, VALID AND BINDING OBLIGATION OF SUCH OBLIGOR ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS), OR ANY OTHER CLAIM RESULTING FROM THE SALE OF MERCHANDISE OR SERVICES RELATED TO SUCH RECEIVABLE OR THE FURNISHING OR FAILURE TO FURNISH SUCH MERCHANDISE OR SERVICES, OR FROM ANY BREACH OR ALLEGED BREACH OF ANY PROVISION OF THE RECEIVABLES OR THE RELATED CONTRACTS RESTRICTING ASSIGNMENT OF ANY RECEIVABLES;   63   (F)                                    ANY FAILURE OF THE SPV OR THE SERVICER TO PERFORM ITS DUTIES OR OBLIGATIONS IN ACCORDANCE WITH THE PROVISIONS HEREOF;   (G)                                 ANY PRODUCTS LIABILITY CLAIM OR PERSONAL INJURY OR PROPERTY DAMAGE SUIT OR OTHER SIMILAR OR RELATED CLAIM OR ACTION OF WHATEVER SORT ARISING OUT OF OR IN CONNECTION WITH MERCHANDISE OR SERVICES WHICH ARE THE SUBJECT OF ANY RECEIVABLE;   (H)                                 THE TRANSFER OF AN INTEREST IN ANY RECEIVABLE OTHER THAN AN ELIGIBLE RECEIVABLE;   (I)                                     THE FAILURE BY THE SPV, THE ORIGINATOR, THE PERFORMANCE GUARANTOR OR THE SELLER (INDIVIDUALLY OR AS SERVICER) TO COMPLY WITH ANY TERM, PROVISION OR COVENANT CONTAINED IN THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY OR TO PERFORM ANY OF ITS RESPECTIVE DUTIES OR OBLIGATIONS UNDER THE RECEIVABLES OR RELATED CONTRACTS;   (J)                                     THE SUM OF (I) THE NET INVESTMENT AND (II) THE REQUIRED RESERVES SHALL EXCEED THE NET POOL BALANCE AT ANY TIME;   (K)                                  THE FAILURE OF THE SPV, THE ORIGINATOR OR THE SELLER TO PAY WHEN DUE ANY SALES, EXCISE OR PERSONAL PROPERTY TAXES PAYABLE IN CONNECTION WITH ANY OF THE RECEIVABLES;   (L)                                     ANY REPAYMENT BY ANY INDEMNIFIED PARTY OF ANY AMOUNT PREVIOUSLY DISTRIBUTED IN REDUCTION OF NET INVESTMENT WHICH SUCH INDEMNIFIED PARTY BELIEVES IN GOOD FAITH IS REQUIRED TO BE MADE;   (M)                               THE COMMINGLING BY THE SPV, THE ORIGINATOR, THE SELLER OR THE SERVICER OR ANY OF THEIR AFFILIATES OF COLLECTIONS OF RECEIVABLES AT ANY TIME WITH ANY OTHER FUNDS;   (N)                                 ANY INVESTIGATION, LITIGATION OR PROCEEDING RELATED TO THIS AGREEMENT, ANY OF THE OTHER TRANSACTION DOCUMENTS, THE USE OF PROCEEDS OF INVESTMENTS BY THE SPV, THE SELLER OR THE ORIGINATOR, THE OWNERSHIP OF THE ASSET INTEREST, OR ANY AFFECTED ASSET;   (O)                                 FAILURE OF ANY BLOCKED ACCOUNT BANK TO REMIT ANY AMOUNTS HELD IN THE BLOCKED ACCOUNTS OR ANY RELATED LOCK-BOXES PURSUANT TO THE INSTRUCTIONS OF THE SERVICER, THE SPV, THE ORIGINATOR OR THE AGENT (TO THE EXTENT SUCH PERSON IS ENTITLED TO GIVE SUCH INSTRUCTIONS IN ACCORDANCE WITH THE TERMS HEREOF AND OF ANY APPLICABLE BLOCKED ACCOUNT AGREEMENT) WHETHER BY REASON OF THE EXERCISE OF SET-OFF RIGHTS OR OTHERWISE;   (P)                                 ANY INABILITY TO OBTAIN ANY JUDGMENT IN OR UTILIZE THE COURT OR OTHER ADJUDICATION SYSTEM OF, ANY STATE IN WHICH AN OBLIGOR MAY BE LOCATED AS A RESULT OF THE FAILURE OF THE SPV, THE ORIGINATOR OR THE SELLER TO QUALIFY TO DO BUSINESS OR FILE ANY NOTICE OF BUSINESS ACTIVITY REPORT OR ANY SIMILAR REPORT;   (Q)                                 ANY ATTEMPT BY ANY PERSON TO VOID, RESCIND OR SET-ASIDE ANY TRANSFER BY THE ORIGINATOR TO THE SELLER OR THE SELLER TO THE SPV OF ANY RECEIVABLE OR RELATED SECURITY UNDER STATUTORY PROVISIONS OR COMMON LAW OR EQUITABLE ACTION, INCLUDING ANY PROVISION OF THE BANKRUPTCY CODE OR OTHER INSOLVENCY LAW;   64   (R)                                    ANY ACTION TAKEN BY THE SPV, THE ORIGINATOR, OR THE SERVICER (IF THE ORIGINATOR OR ANY AFFILIATE OR DESIGNEE OF THE ORIGINATOR) OR ANY OF THEIR AFFILIATES IN THE ENFORCEMENT OR COLLECTION OF ANY RECEIVABLE;   (S)                                  THE USE OF THE PROCEEDS OF ANY INVESTMENT OR REINVESTMENT; OR   (T)                                    THE TRANSACTIONS CONTEMPLATED HEREBY BEING CHARACTERIZED AS OTHER THAN DEBT FOR THE PURPOSES OF THE CODE.   SECTION 9.2                                   INDEMNITY FOR TAXES, RESERVES AND EXPENSES.   (A)                                  IF AFTER THE CLOSING DATE, THE ADOPTION OF ANY LAW OR BANK REGULATORY GUIDELINE OR ANY AMENDMENT OR CHANGE IN THE ADMINISTRATION, INTERPRETATION OR APPLICATION OF ANY EXISTING OR FUTURE LAW OR BANK REGULATORY GUIDELINE BY ANY OFFICIAL BODY CHARGED WITH THE ADMINISTRATION, INTERPRETATION OR APPLICATION THEREOF, OR THE COMPLIANCE WITH ANY DIRECTIVE OF ANY OFFICIAL BODY (IN THE CASE OF ANY BANK REGULATORY GUIDELINE, WHETHER OR NOT HAVING THE FORCE OF LAW):   (I)                                     SHALL SUBJECT ANY INDEMNIFIED PARTY (OR ITS APPLICABLE LENDING OFFICE) TO ANY TAX, DUTY OR OTHER CHARGE (OTHER THAN EXCLUDED TAXES) WITH RESPECT TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE OWNERSHIP, MAINTENANCE OR FINANCING OF THE ASSET INTEREST, OR PAYMENTS OF AMOUNTS DUE HEREUNDER, OR SHALL CHANGE THE BASIS OF TAXATION OF PAYMENTS TO ANY INDEMNIFIED PARTY OF AMOUNTS PAYABLE IN RESPECT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE OWNERSHIP, MAINTENANCE OR FINANCING OF THE ASSET INTEREST, OR PAYMENTS OF AMOUNTS DUE HEREUNDER OR ITS OBLIGATION TO ADVANCE FUNDS HEREUNDER, UNDER A PROGRAM SUPPORT AGREEMENT OR THE CREDIT OR LIQUIDITY SUPPORT FURNISHED BY A PROGRAM SUPPORT PROVIDER OR OTHERWISE IN RESPECT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE OWNERSHIP, MAINTENANCE OR FINANCING OF THE ASSET INTEREST (EXCEPT EXCLUDED TAXES AND FOR CHANGES IN THE RATE OF GENERAL CORPORATE, FRANCHISE, NET INCOME OR OTHER INCOME TAX IMPOSED ON SUCH INDEMNIFIED PARTY BY THE JURISDICTION IN WHICH SUCH INDEMNIFIED PARTY’S PRINCIPAL EXECUTIVE OFFICE IS LOCATED);   (II)                                  SHALL IMPOSE, MODIFY OR DEEM APPLICABLE ANY RESERVE, SPECIAL DEPOSIT OR SIMILAR REQUIREMENT (INCLUDING ANY SUCH REQUIREMENT IMPOSED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM) AGAINST ASSETS OF, DEPOSITS WITH OR FOR THE ACCOUNT OF, OR CREDIT EXTENDED BY, ANY INDEMNIFIED PARTY OR SHALL IMPOSE ON ANY INDEMNIFIED PARTY OR ON THE UNITED STATES MARKET FOR CERTIFICATES OF DEPOSIT OR THE LONDON INTERBANK MARKET ANY OTHER CONDITION AFFECTING THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE AMOUNTS DUE HEREUNDER OR ITS OBLIGATION TO ADVANCE FUNDS HEREUNDER, UNDER A PROGRAM SUPPORT AGREEMENT OR THE CREDIT OR LIQUIDITY SUPPORT PROVIDED BY A PROGRAM SUPPORT PROVIDER OR OTHERWISE IN RESPECT OF THIS AGREEMENT, THE OTHER INTEREST; OR   (III)                               IMPOSES UPON ANY INDEMNIFIED PARTY ANY OTHER CONDITION OR EXPENSE (INCLUDING ANY LOSS OF MARGIN, REASONABLE ATTORNEYS’ FEES AND EXPENSES, AND EXPENSES OF LITIGATION OR PREPARATION THEREFOR IN CONTESTING ANY OF THE FOREGOING) WITH RESPECT TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE OWNERSHIP, MAINTENANCE OR FINANCING   65   OF THE ASSET INTEREST, OR PAYMENTS OF AMOUNTS DUE HEREUNDER OR ITS OBLIGATION TO ADVANCE FUNDS HEREUNDER UNDER A PROGRAM SUPPORT AGREEMENT OR THE CREDIT OR LIQUIDITY SUPPORT FURNISHED BY A PROGRAM SUPPORT PROVIDER OR OTHERWISE IN RESPECT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE OWNERSHIP, MAINTENANCE OR FINANCING OF THE ASSET INTERESTS,   and the result of any of the foregoing is to increase the cost to or to reduce the amount of any sum received or receivable by such Indemnified Party with respect to this Agreement, the other Transaction Documents, the ownership, maintenance or financing of the Asset Interest, the Receivables, the obligations hereunder, the funding of any purchases hereunder or a Program Support Agreement, by an amount deemed by such Indemnified Party to be material, then, within ten (10) days after demand in writing by such Indemnified Party through the Agent, the SPV shall pay to the Agent, for the benefit of such Indemnified Party, such additional amount or amounts as will compensate such Indemnified Party for such increased cost or reduction.   (B)                                 IF ANY INDEMNIFIED PARTY SHALL HAVE DETERMINED THAT THE ADOPTION AFTER THE DATE HEREOF OF ANY APPLICABLE LAW OR BANK REGULATORY GUIDELINE REGARDING CAPITAL ADEQUACY, OR ANY CHANGE THEREIN, OR ANY CHANGE AFTER THE HEREOF IN THE INTERPRETATION OR ADMINISTRATION THEREOF BY ANY OFFICIAL BODY, OR ANY REQUEST OR DIRECTIVE REGARDING CAPITAL ADEQUACY (IN THE CASE OF ANY BANK REGULATORY GUIDELINE, WHETHER OR NOT HAVING THE FORCE OF LAW) OF ANY SUCH OFFICIAL BODY, HAS OR WOULD HAVE THE EFFECT OF REDUCING THE RATE OF RETURN ON CAPITAL OF SUCH INDEMNIFIED PARTY (OR ITS PARENT) AS A CONSEQUENCE OF SUCH INDEMNIFIED PARTY’S OBLIGATIONS HEREUNDER OR WITH RESPECT HERETO TO A LEVEL BELOW THAT WHICH SUCH INDEMNIFIED PARTY (OR ITS PARENT) COULD HAVE ACHIEVED BUT FOR SUCH ADOPTION, CHANGE, REQUEST OR DIRECTIVE (TAKING INTO CONSIDERATION ITS POLICIES WITH RESPECT TO CAPITAL ADEQUACY) BY AN AMOUNT DEEMED BY SUCH INDEMNIFIED PARTY TO BE MATERIAL, THEN FROM TIME TO TIME, WITHIN TEN (10) DAYS AFTER DEMAND IN WRITING BY SUCH INDEMNIFIED PARTY THROUGH THE AGENT, THE SPV SHALL PAY TO THE AGENT, FOR THE BENEFIT OF SUCH INDEMNIFIED PARTY, SUCH ADDITIONAL AMOUNT OR AMOUNTS AS WILL COMPENSATE SUCH INDEMNIFIED PARTY (OR ITS PARENT) FOR SUCH REDUCTION.   (C)                                  THE AGENT SHALL PROMPTLY NOTIFY THE SPV OF ANY EVENT OF WHICH IT HAS KNOWLEDGE, OCCURRING AFTER THE DATE HEREOF, WHICH WILL ENTITLE AN INDEMNIFIED PARTY TO COMPENSATION PURSUANT TO THIS SECTION 9.2; PROVIDED THAT NO FAILURE TO GIVE OR ANY DELAY IN GIVING SUCH NOTICE SHALL AFFECT THE INDEMNIFIED PARTY’S RIGHT TO RECEIVE SUCH COMPENSATION.  A NOTICE BY THE AGENT OR THE APPLICABLE INDEMNIFIED PARTY CLAIMING COMPENSATION UNDER THIS SECTION AND SETTING FORTH THE ADDITIONAL AMOUNT OR AMOUNTS TO BE PAID TO IT HEREUNDER SHALL BE CONCLUSIVE IN THE ABSENCE OF MANIFEST ERROR.  IN DETERMINING SUCH AMOUNT, THE AGENT OR ANY APPLICABLE INDEMNIFIED PARTY MAY USE ANY REASONABLE AVERAGING AND ATTRIBUTING METHODS.   (D)                                 ANYTHING IN THIS SECTION 9.2 TO THE CONTRARY NOTWITHSTANDING, IF ANY CONDUIT INVESTOR ENTERS INTO AGREEMENTS FOR THE ACQUISITION OF INTERESTS IN RECEIVABLES FROM ONE OR MORE OTHER SPVS, SUCH CONDUIT INVESTOR SHALL ALLOCATE THE LIABILITY FOR ANY AMOUNTS UNDER THIS SECTION 9.2 WHICH ARE IN CONNECTION WITH A PROGRAM SUPPORT AGREEMENT OR THE CREDIT OR LIQUIDITY SUPPORT PROVIDED BY A PROGRAM SUPPORT PROVIDER (“ADDITIONAL COSTS”) TO THE SPV AND EACH OTHER SPV; PROVIDED, HOWEVER, THAT IF SUCH ADDITIONAL COSTS ARE ATTRIBUTABLE TO THE SPV, THE ORIGINATOR OR THE SERVICER AND NOT ATTRIBUTABLE TO ANY OTHER SPV, THE SPV SHALL BE SOLELY LIABLE FOR SUCH ADDITIONAL COSTS OR IF SUCH ADDITIONAL COSTS ARE ATTRIBUTABLE TO OTHER SPVS AND NOT ATTRIBUTABLE TO THE SPV, THE ORIGINATOR OR THE SERVICER, SUCH OTHER SPVS SHALL BE SOLELY LIABLE FOR SUCH ADDITIONAL COSTS.   66   SECTION 9.3                                   TAXES.   All payments and distributions made hereunder by the SPV or the Servicer (each, a “payor”) to any Investor or the Agent (each, a “recipient”) shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and any other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority on any recipient (or any assignee of such parties) (such non-excluded items being called “Taxes”), but excluding franchise taxes and taxes imposed on or measured by the recipient’s net income or gross receipts (“Excluded Taxes”).  In the event that any withholding or deduction from any payment made by the payor hereunder is required in respect of any Taxes, then such payor shall:   (A)                                  PAY DIRECTLY TO THE RELEVANT AUTHORITY THE FULL AMOUNT REQUIRED TO BE SO WITHHELD OR DEDUCTED;   (B)                                 PROMPTLY FORWARD TO THE AGENT AN OFFICIAL RECEIPT OR OTHER DOCUMENTATION SATISFACTORY TO THE AGENT EVIDENCING SUCH PAYMENT TO SUCH AUTHORITY; AND   (C)                                  PAY TO THE RECIPIENT SUCH ADDITIONAL AMOUNT OR AMOUNTS AS IS NECESSARY TO ENSURE THAT THE NET AMOUNT ACTUALLY RECEIVED BY THE RECIPIENT WILL EQUAL THE FULL AMOUNT SUCH RECIPIENT WOULD HAVE RECEIVED HAD NO SUCH WITHHOLDING OR DEDUCTION BEEN REQUIRED.   Moreover, if any Taxes are directly asserted against any recipient with respect to any payment received by such recipient hereunder, the recipient may pay such Taxes and the payor will promptly pay such additional amounts (including any penalties, interest or expenses) as shall be necessary in order that the net amount received by the recipient after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such recipient would have received had such Taxes not been asserted.   If the payor fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the recipient the required receipts or other required documentary evidence, the payor shall indemnify the recipient for any incremental Taxes, interest, or penalties that may become payable by any recipient as a result of any such failure.   SECTION 9.4                                   OTHER COSTS AND EXPENSES; BREAKAGE COSTS.   (A)                                  THE SPV AND THE SERVICER AGREE, UPON RECEIPT OF A WRITTEN INVOICE, TO PAY OR CAUSE TO BE PAID, AND TO SAVE THE INVESTORS AND THE AGENT HARMLESS AGAINST LIABILITY FOR THE PAYMENT OF, ALL REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS’, ACCOUNTANTS’ AND OTHER THIRD PARTIES’ FEES AND EXPENSES, ANY FILING FEES AND EXPENSES INCURRED BY OFFICERS OR EMPLOYEES OF ANY INVESTOR AND/OR THE AGENT) OR INTANGIBLE, DOCUMENTARY OR RECORDING TAXES INCURRED BY OR ON BEHALF OF THE ANY INVESTOR OR THE AGENT (I) IN CONNECTION WITH THE PREPARATION, NEGOTIATION, EXECUTION AND DELIVERY OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS AND ANY DOCUMENTS OR INSTRUMENTS DELIVERED PURSUANT HERETO AND THERETO AND THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (INCLUDING THE PERFECTION OR PROTECTION OF THE ASSET INTEREST) AND (II) FROM TIME TO TIME (A) RELATING TO ANY AMENDMENTS, WAIVERS OR CONSENTS UNDER THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, (B) ARISING IN CONNECTION WITH ANY INVESTOR’S, THE COLLATERAL AGENT’S OR THE AGENT’S ENFORCEMENT OR PRESERVATION OF RIGHTS (INCLUDING THE PERFECTION AND PROTECTION OF THE ASSET   67   INTEREST UNDER THIS AGREEMENT), OR (C) ARISING IN CONNECTION WITH ANY RATING AGENCY REVIEW, AUDIT (WHICH SHALL BE LIMITED TO THE ASSOCIATED COST OF ONE AUDIT PER CALENDAR YEAR UNLESS A TERMINATION EVENT OR POTENTIAL TERMINATION EVENT HAS OCCURRED), DISPUTE, DISAGREEMENT, LITIGATION OR PREPARATION FOR LITIGATION INVOLVING THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS (ALL OF SUCH AMOUNTS, COLLECTIVELY, “TRANSACTION COSTS”).   (B)                                 THE SPV SHALL PAY THE AGENT FOR THE ACCOUNT OF THE INVESTORS, AS APPLICABLE, ON DEMAND, SUCH AMOUNT OR AMOUNTS AS SHALL COMPENSATE THE INVESTORS FOR ANY LOSS (INCLUDING LOSS OF PROFIT), COST OR EXPENSE INCURRED BY THE INVESTORS  (AS REASONABLY DETERMINED BY THE AGENT) AS A RESULT OF ANY REDUCTION OF ANY PORTION OF INVESTMENT OTHER THAN ON THE MATURITY DATE OF THE COMMERCIAL PAPER (OR OTHER FINANCING SOURCE) FUNDING SUCH PORTION OF INVESTMENT, SUCH COMPENSATION TO BE (I) LIMITED TO AN AMOUNT EQUAL TO ANY LOSS OR EXPENSE SUFFERED BY THE INVESTORS DURING THE PERIOD FROM THE DATE OF RECEIPT OF SUCH REPAYMENT TO (BUT EXCLUDING) THE MATURITY DATE OF SUCH COMMERCIAL PAPER (OR OTHER FINANCING SOURCE) AND (II) NET OF THE INCOME, IF ANY, RECEIVED BY THE RECIPIENT OF SUCH REDUCTIONS FROM INVESTING THE PROCEEDS OF SUCH REDUCTIONS OF SUCH PORTION OF INVESTMENT.  THE DETERMINATION BY THE AGENT OF THE AMOUNT OF ANY SUCH LOSS OR EXPENSE SHALL BE SET FORTH IN A WRITTEN NOTICE TO THE SPV IN REASONABLE DETAIL AND SHALL BE CONCLUSIVE, ABSENT MANIFEST ERROR.   SECTION 9.5                                   [RESERVED].   SECTION 9.6                                   INDEMNITIES BY THE SERVICER.   Without limiting any other rights which the Agent or the Investors or the other Indemnified Parties may have hereunder or under applicable law, the Servicer hereby agrees to indemnify the Indemnified Parties from and against any and all Indemnified Amounts arising out of or resulting from (whether directly or indirectly) (a) the failure of any information contained in any Servicer Report as of the specified date of such information to be true and correct as of the date of such Servicer Report, or the failure of any other information provided to any Indemnified Party by, or on behalf of, the Servicer to be true and correct as of the specified date of such information, (b) the failure of any representation, warranty or statement made or deemed made by the Servicer (or any of its officers) under or in connection with this Agreement to have been true and correct as of the date made or deemed made, (c) the failure by the Servicer to comply with any applicable Law with respect to any Receivable or the related Contract, (d) any dispute, claim, offset or defense of the Obligor to the payment of any Receivable resulting from or related to the collection activities in respect of such Receivable, or (e) any failure of the Servicer to perform its duties or obligations in accordance with the provisions hereof.   SECTION 9.7                                   ACCOUNTING BASED CONSOLIDATION EVENT.   If an Accounting Based Consolidation Event shall at any time occur, then, within ten (10) days after demand in writing by the Indemnified Party affected thereby, through the related Class Agent, the SPV shall pay to the relevant Class Agent, for the benefit of such Indemnified Party, such amounts as such Indemnified Party reasonably determines will compensate or reimburse the Indemnified Party for any resulting (i) fee, expense or increased cost charged to, incurred or otherwise suffered by such Indemnified Party or (ii) regulatory capital charge, internal capital charge or other imputed cost determined by such Indemnified Party to be allocable to the   68   transactions contemplated under this Agreement or any Transaction Document in connection therewith.  Amounts under this Section 9.7 may be demanded at any time without regard to the timing of issuance of any financial statement by any Indemnified Party.   ARTICLE X   THE AGENT   SECTION 10.1                            APPOINTMENT AND AUTHORIZATION OF AGENT.   Each Investor hereby irrevocably appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Transaction Document and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement and any other Transaction Document, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Transaction Document, the Agent shall not have any duties or responsibilities, except those expressly set forth in this Agreement, nor shall the Agent have or be deemed to have any fiduciary relationship with any Investor, and no implied covenants, functions, Agreement or any other Transaction Document or otherwise exist against the Agent.  Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.   SECTION 10.2                            DELEGATION OF DUTIES.   The Agent may execute any of its duties under this Agreement or any other Transaction Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.   SECTION 10.3                            LIABILITY OF AGENT.   No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Transaction Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any Investor for any recital, statement, representation or warranty made by the SPV, the Originator or the Servicer, or any officer thereof, contained in this Agreement or in any other Transaction Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Transaction Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Transaction Document, or for any failure of the SPV, the Originator, the Servicer or any other party to any Transaction Document to perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any obligation to any Investor to ascertain or to inquire as   69   to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the SPV, the Originator or the Servicer or any of their respective Affiliates.   SECTION 10.4                            RELIANCE BY AGENT.   (A)                                  THE AGENT SHALL BE ENTITLED TO RELY, AND SHALL BE FULLY PROTECTED IN RELYING, UPON ANY WRITING, RESOLUTION, NOTICE, CONSENT, CERTIFICATE, AFFIDAVIT, LETTER, TELEGRAM, FACSIMILE, TELEX OR TELEPHONE MESSAGE, STATEMENT OR OTHER DOCUMENT OR CONVERSATION BELIEVED BY IT TO BE GENUINE AND CORRECT AND TO HAVE BEEN SIGNED, SENT OR MADE BY OR ON BEHALF OF THE PROPER PERSON OR PERSONS, AND UPON ADVICE AND STATEMENTS OF LEGAL COUNSEL (INCLUDING COUNSEL TO THE SPV, THE ORIGINATOR AND THE SERVICER), INDEPENDENT ACCOUNTANTS AND OTHER EXPERTS SELECTED BY THE AGENT.  THE AGENT SHALL BE FULLY JUSTIFIED IN FAILING OR REFUSING TO TAKE ANY ACTION UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT UNLESS IT SHALL FIRST RECEIVE SUCH ADVICE OR CONCURRENCE OF THE MAJORITY INVESTORS AS IT DEEMS APPROPRIATE AND, IF IT SO REQUESTS, IT SHALL FIRST BE INDEMNIFIED TO ITS SATISFACTION BY THE INVESTORS AGAINST ANY AND ALL LIABILITY AND EXPENSE WHICH MAY BE INCURRED BY IT BY REASON OF TAKING OR CONTINUING TO TAKE ANY SUCH ACTION.  THE AGENT SHALL IN ALL CASES BE FULLY PROTECTED IN ACTING, OR IN REFRAINING FROM ACTING, UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT IN ACCORDANCE WITH A REQUEST OR CONSENT OF THE CONDUIT INVESTORS OR MAJORITY INVESTORS OR, IF REQUIRED HEREUNDER, ALL INVESTORS AND SUCH REQUEST AND ANY ACTION TAKEN OR FAILURE TO ACT PURSUANT THERETO SHALL BE BINDING UPON ALL OF THE INVESTORS.   (B)                                 FOR PURPOSES OF DETERMINING COMPLIANCE WITH THE CONDITIONS SPECIFIED IN ARTICLE V ON THE CLOSING DATE OR THE DATE OF ANY INVESTMENT OR REINVESTMENT, EACH INVESTOR THAT HAS EXECUTED THIS AGREEMENT SHALL BE DEEMED TO HAVE CONSENTED TO, APPROVED OR ACCEPTED OR TO BE SATISFIED WITH, EACH DOCUMENT OR OTHER MATTER EITHER SENT BY THE AGENT TO SUCH INVESTOR FOR CONSENT, APPROVAL, ACCEPTANCE OR SATISFACTION, OR REQUIRED THEREUNDER TO BE CONSENTED TO OR APPROVED BY OR ACCEPTABLE OR SATISFACTORY TO SUCH INVESTOR.   SECTION 10.5                            NOTICE OF TERMINATION EVENT, POTENTIAL TERMINATION EVENT OR SERVICER DEFAULT.   The Agent shall not be deemed to have knowledge or notice of the occurrence of a Potential Termination Event, a Termination Event or a Servicer Default, unless the Agent has received written notice from any Class Agent, any Investor, the Servicer or the SPV referring to this Agreement, describing such Potential Termination Event, Termination Event or Servicer Default and stating that such notice is a “Notice of Termination Event or Potential Termination Event” or “Notice of Servicer Default,” as applicable.  The Agent will notify the Class Agents and the Investors of its receipt of any such notice.  The Agent shall (subject to Section 10.4) take such action with respect to such Potential Termination Event, Termination Event or Servicer Default as may be requested by the Majority Investors or the Class Agents, provided, however, that, unless and until the Agent shall have received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Termination Event, Termination Event or Servicer Default as it shall deem advisable or in the best interest of the Investors.   70   SECTION 10.6                            CREDIT DECISION; DISCLOSURE OF INFORMATION BY THE AGENT.   Each Investor acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of the SPV, the Servicer, the Originator or any of their respective Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Investor as to any matter, including whether the Agent-Related Persons have disclosed material information in their possession.  Each Investor, including any Investor by assignment, represents to the Agent that it has, independently and without reliance upon any Agent-Related Person its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the SPV, the Servicer, the Originator or their respective Affiliates, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the SPV hereunder.  Each Investor also represents that it shall, independently and without reliance upon any Agent-Related Person and based on such documents and credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Transaction Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the SPV, the Servicer or the Originator.  Except for notices, reports and other documents expressly herein required to be furnished to the Investors by the Agent herein, the Agent shall not have any duty or responsibility to provide any Investor with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the SPV, the Servicer, the Originator or their respective Affiliates which may come into the possession of any of the Agent-Related Persons.   SECTION 10.7                            INDEMNIFICATION OF THE AGENT.   Whether or not the transactions contemplated hereby are consummated, the Alternate Investors shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of the SPV and without limiting the obligation of the SPV to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified Amounts incurred by it; provided, however, that no Alternate Investor shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Amounts resulting from such Person’s gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction; provided, however, that no action taken in accordance with the directions of the Majority Investors shall be deemed to Without limitation of the foregoing, each Alternate Investor shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including attorney’s fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Transaction Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the SPV.  The undertaking in this Section shall survive payment on the Final Payout Date and the resignation or replacement of the Agent.   71   SECTION 10.8                            AGENT IN INDIVIDUAL CAPACITY.   Bank of America (and any successor acting as Agent) and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with any of the SPV, the Originator and the Servicer or any of their Subsidiaries or Affiliates as though Bank of America were not the Agent or an Alternate Investor hereunder and without notice to or consent of the Investors.  The Investors acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding the SPV, the Originator, the Servicer or their respective Affiliates (including information that may be subject to confidentiality obligations in favor of such Person) and acknowledge that the Agent shall be under no obligation to provide such information to them.  With respect to its Commitment, Bank of America (and any successor acting as Agent) in its capacity as an Alternate Investor hereunder shall have the same rights and powers under this Agreement as any other Alternate Investor and may exercise the same as though it were not the Agent or an Alternate Investor, and the term “Alternate Investor” or “Alternate Investors” shall, unless the context otherwise indicates, include the Agent in its individual capacity.   SECTION 10.9                            RESIGNATION OF AGENT.   The Agent may resign as Agent upon thirty (30) days’ notice to the Investors.  If the Agent resigns under this Agreement, the Majority Investors shall appoint from among the Alternate Investors a successor agent for the Investors.  If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Investors a successor agent from among the Alternate Investors.  Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term “Agent” shall mean such successor agent and the retiring Agent’s appointment, powers and duties as Agent shall be terminated.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this  Section 10.9 and Sections 10.3 and 10.7 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement.  If no successor agent has accepted appointment as Agent by the date which is thirty (30) days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Alternate Investors shall perform all of the duties of the Agent hereunder until such time, if any, as the Majority Investors appoint a successor agent as provided for above.   SECTION 10.10                     PAYMENTS BY THE AGENT.   Unless specifically allocated to an Alternate Investor pursuant to the terms of this Agreement, all amounts received by the Agent on behalf of the Alternate Investors shall be paid by the Agent to the related Class Agent (for distribution by such Class Agent to the related Alternate Investors), pro rata in accordance with their respective Class Pro Rata Shares on the Business Day received by the Agent, unless such amounts are received after 12:00 noon (New York City time) on such Business Day, in which case the Agent shall use its reasonable efforts to pay such amounts to the related Class Agents on such Business Day, but, in any event, shall pay such amounts to the related Class Agents not later than the following Business Day.   72   SECTION 10.11                     APPOINTMENT AND AUTHORIZATION OF CLASS AGENTS.   Each Investor hereby irrevocably appoints, designates and authorizes the related Class Agent to take such action on its behalf under the provisions of this Agreement and each other Transaction Document and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement and any other Transaction Document, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Transaction Document, the Class Agents shall not have any duties or responsibilities, except those expressly set forth in this Agreement, nor shall the Class Agents have or be deemed to have any fiduciary relationship with any Investor, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Transaction Document or otherwise exist against the Class Agents.  Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement with reference to the Class Agents is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.   SECTION 10.12                     DELEGATION OF DUTIES.   Each Class Agent may execute any of its duties under this Agreement or any other Transaction Document by or through agents, employees or attorneys in fact and duties.  No Class Agent shall be responsible for the negligence or misconduct of any agent or attorney in fact that it selects with reasonable care.   SECTION 10.13                     RELIANCE BY CLASS AGENTS.   (A)                                  EACH CLASS AGENT SHALL BE ENTITLED TO RELY, AND SHALL BE FULLY PROTECTED IN RELYING, UPON ANY WRITING, RESOLUTION, NOTICE, (INCLUDING COUNSEL TO THE SPV, THE ORIGINATORS AND THE SERVICER), INDEPENDENT ACCOUNTANTS AND OTHER EXPERTS SELECTED BY SUCH CLASS AGENT.  EACH CLASS AGENT SHALL BE FULLY JUSTIFIED IN FAILING OR REFUSING TO TAKE ANY ACTION UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT UNLESS IT SHALL FIRST RECEIVE SUCH ADVICE OR CONCURRENCE OF THE RELATED INVESTORS AS IT DEEMS APPROPRIATE AND, IF IT SO REQUESTS, IT SHALL FIRST BE INDEMNIFIED TO ITS SATISFACTION BY THE INVESTORS AGAINST ANY AND ALL LIABILITY AND EXPENSE WHICH MAY BE INCURRED BY IT BY REASON OF TAKING OR CONTINUING TO TAKE ANY SUCH ACTION.  EACH CLASS AGENT SHALL IN ALL CASES BE FULLY PROTECTED IN ACTING, OR IN REFRAINING FROM ACTING, UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT IN ACCORDANCE WITH A REQUEST OR CONSENT OF A MAJORITY OF THE RELATED INVESTORS OR, IF REQUIRED HEREUNDER, ALL RELATED INVESTORS AND SUCH REQUEST AND ANY ACTION TAKEN OR FAILURE TO ACT PURSUANT THERETO SHALL BE BINDING UPON ALL OF THE INVESTORS.   INVESTMENT OR REINVESTMENT, EACH INVESTOR THAT   73   HAS EXECUTED THIS AGREEMENT SHALL BE DEEMED TO HAVE CONSENTED TO, APPROVED OR ACCEPTED OR TO BE SATISFIED WITH, EACH DOCUMENT OR OTHER MATTER EITHER SENT BY THE RELEVANT CLASS AGENT TO SUCH INVESTOR FOR CONSENT, APPROVAL, ACCEPTANCE OR SATISFACTION, OR REQUIRED THEREUNDER TO BE CONSENTED TO OR APPROVED BY OR ACCEPTABLE OR SATISFACTORY TO SUCH INVESTOR.   SECTION 10.14                     NOTICE OF TERMINATION EVENT, POTENTIAL   No Class Agent shall be deemed to have knowledge or notice of the occurrence of a Potential Termination Event, a Termination Event or a Servicer Default, unless such Class Agent has received written notice from the Agent, any Investor, the “Notice of Servicer Default,” as applicable.  Each Class Agent will notify the related Investors of its receipt of any such notice.  Each Class Agent shall (subject to Section 10.5) take such action with respect to such Potential a majority of related Investors, provided, however, that, unless and until such Class Agent shall have received any such request, such Class Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Termination Event, Termination Event or Servicer Default as it shall deem advisable or in the best interest of the related Investors.   SECTION 10.15                     CREDIT DECISION; DISCLOSURE OF INFORMATION BY THE CLASS AGENTS.   Each Investor acknowledges that none of the Agent Related Persons has made any representation or warranty to it, and that no act by the related Class Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of the SPV, the Servicer, any Originator or any of their respective Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Investor as to any matter, including whether the Agent Related Persons have disclosed material information in their possession.  Each Investor, including any Investor by assignment, represents to the related Class Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the SPV, the Servicer, the Originators or their respective Affiliates, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the SPV hereunder.  Each Investor also represents that it shall, independently and without reliance upon any Agent-Related Person and time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Transaction Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the SPV, the Servicer or the Originators.  Except for notices, reports and other documents expressly herein required to be furnished to the Investors by the related Class Agent herein, such Class Agent shall not have any duty or responsibility to provide any Investor with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the SPV, the Servicer,   74   the Originators or their respective Affiliates which may come into the possession of any of the Agent Related Persons.   SECTION 10.16                     INDEMNIFICATION OF THE CLASS AGENT.   Alternate Investors shall indemnify upon demand each Agent Related Person (to any Agent Related Person of any portion of such Indemnified Amounts resulting related Class Agent upon demand for its ratable share of any costs or out of pocket expenses (including attorney’s fees) incurred by such Class Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Transaction Document, or any document contemplated by or referred to herein, to the extent that such Class Agent is not reimbursed for such expenses by or on behalf of the SPV.  The undertaking in this Section shall survive payment on the Final Payout Date and the resignation or replacement of the Class Agents.   SECTION 10.17                     CLASS AGENT IN INDIVIDUAL CAPACITY.   Bank of America (and any successor acting as Class Agent for the Enterprise Funding Class) and its Affiliates, PNC Bank (and any successor acting as a Class Agent for the Market Street Class) and its Affiliates and any other Class Agent who becomes a party to this Agreement (and any successor acting as a Class Agent for any such Class) and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with any of the SPV, the Originators and the Servicer or any of their Subsidiaries or Affiliates as though Bank of America or PNC Bank were not Class Agents or an Alternate Investor hereunder and pursuant to such activities, the Class Agents or their respective Affiliates may receive information regarding the SPV, the Originators, the Servicer or their respective Affiliates (including information that may be subject to Class Agents shall be under no obligation to provide such information to them.  With respect to its Commitment, the Class Agents, respectively, (and any successor acting as Class Agent) in its capacity as an Alternate Investor hereunder shall have the same rights and powers under this Agreement as any other Alternate Investor and may exercise the same as though it were not the Class Agent or an Alternate Investor, and the term “Alternate Investor” or “Alternate Investors” shall, unless the context otherwise indicates, include the Class Agents in each in its individual capacity.   75   SECTION 10.18                     RESIGNATION OF CLASS AGENT.   Each Class Agent may resign as Class Agent upon thirty (30) days’ notice to the related Investors.  If a Class Agent resigns under this Agreement, the majority of related Investors shall appoint from among the related Alternate Investors a successor agent for the related Investors.  If no successor agent is appointed prior to the effective date of the resignation of any Class Agent, such Class Agent may appoint, after consulting with the related Investors a successor agent from among the related Alternate Investors.  Upon the acceptance of its appointment as successor Class Agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Class Agent and the term “Class Agent” shall mean such successor Class Agent and the retiring Class Agent’s appointment, powers and duties as Class Agent shall be terminated.  After any retiring Class Agent’s resignation hereunder as a Class Agent, the provisions of   Section 10.10 and Sections 10.16 and 10.18 while it was the Class Agent under this Agreement.  If no successor agent has accepted appointment as Class Agent by the date which is thirty (30) days following a retiring Class Agent’s notice of resignation, the retiring Class Agent’s resignation shall nevertheless thereupon become effective and the Alternate Investors shall perform all of the duties of the Class Agent hereunder until such time, if any, as the majority of related Investors appoint a successor agent as provided for above.   SECTION 10.19                     LIABILITY OF AGENT AND THE CLASS AGENTS.   No Agent Related Person shall (a) be liable for any action taken or omitted to SPV, any Originator or the Servicer, or any officer thereof, contained in this Agent or any Class Agent under or in connection with, this Agreement or any other Transaction Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Transaction Document, or for any failure of the SPV, any Originator, the Servicer or any other party to any Transaction Document to perform its obligations hereunder or thereunder.  No Agent Related Person shall be under any obligation to any Investor to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the SPV, the Originators or the Servicer or any of their respective Affiliates.   ARTICLE XI   MISCELLANEOUS   SECTION 11.1                            TERM OF AGREEMENT.   This Agreement shall terminate on the Final Payout Date; provided, however, that (a) the rights and remedies of the Agent, the Investors and the Class Agents with respect to any representation and warranty made or deemed to be made by the SPV on or prior to the Final   76   Payout Date pursuant to this Agreement, (b) the indemnification and payment provisions of Article IX, (c) the provisions of Section 10.7 and Section 10.16 and (d) the agreements set forth in Sections 11.11 and 11.12, shall be continuing and shall survive any termination of this Agreement.   SECTION 11.2                            WAIVERS; AMENDMENTS.   (A)                                  NO FAILURE OR DELAY ON THE PART OF THE AGENT, THE INVESTORS, ANY CLASS AGENT OR ANY ALTERNATE INVESTOR IN EXERCISING ANY POWER, RIGHT OR REMEDY UNDER THIS AGREEMENT SHALL OPERATE AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY SUCH POWER, RIGHT OR REMEDY PRECLUDE ANY OTHER FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER POWER, RIGHT OR REMEDY.  THE RIGHTS AND REMEDIES HEREIN PROVIDED SHALL BE CUMULATIVE AND NONEXCLUSIVE OF ANY RIGHTS OR REMEDIES PROVIDED BY LAW.   (B)                                 ANY PROVISION OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE AMENDED OR WAIVED IF, BUT ONLY IF, SUCH AMENDMENT OR WAIVER IS IN WRITING AND IS SIGNED BY THE SPV, THE ORIGINATOR, THE SERVICER, THE AGENT AND THE MAJORITY INVESTORS; PROVIDED THAT NO SUCH AMENDMENT OR WAIVER SHALL, UNLESS SIGNED BY EACH INVESTOR DIRECTLY AFFECTED THEREBY, (I) INCREASE THE COMMITMENT OF ANY ALTERNATE INVESTOR, (II) REDUCE THE NET INVESTMENT, ANY CLASS NET INVESTMENT (OR PORTION THEREOF FUNDED BY ANY INVESTOR) OR RATE OF YIELD TO ACCRUE THEREON OR ANY FEES OR OTHER AMOUNTS PAYABLE HEREUNDER, (III) POSTPONE ANY DATE FIXED FOR THE PAYMENT OF ANY SCHEDULED DISTRIBUTION IN RESPECT OF THE NET INVESTMENT OR YIELD WITH RESPECT THERETO OR ANY FEES OR OTHER AMOUNTS PAYABLE HEREUNDER OR FOR TERMINATION OF ANY COMMITMENT, (IV) CHANGE THE PERCENTAGE OF THE COMMITMENTS OF ALTERNATE INVESTORS WHICH SHALL BE REQUIRED FOR THE ALTERNATE INVESTORS OR ANY OF THEM TO TAKE ANY ACTION UNDER THIS SECTION OR ANY OTHER PROVISION OF THIS AGREEMENT, (V) RELEASE ALL OR SUBSTANTIALLY ALL OF THE PROPERTY WITH RESPECT TO WHICH A SECURITY OR OWNERSHIP INTEREST THEREIN HAS BEEN GRANTED HEREUNDER TO THE AGENT OR THE ALTERNATE INVESTORS OR (VI) EXTEND OR PERMIT THE EXTENSION OF THE COMMITMENT TERMINATION DATE (IT BEING UNDERSTOOD THAT A WAIVER OF A TERMINATION EVENT  SHALL NOT CONSTITUTE AN EXTENSION OR INCREASE IN THE COMMITMENT OF ANY ALTERNATE INVESTOR); AND PROVIDED, FURTHER, THAT THE SIGNATURE OF THE SPV AND THE ORIGINATOR SHALL NOT BE REQUIRED FOR THE EFFECTIVENESS OF ANY AMENDMENT WHICH MODIFIES THE REPRESENTATIONS, WARRANTIES, COVENANTS OR RESPONSIBILITIES OF THE SERVICER AT ANY TIME WHEN THE SERVICER IS NOT THE ORIGINATOR OR ANY AFFILIATE OF THE ORIGINATOR OR A SUCCESSOR SERVICER IS DESIGNATED BY THE AGENT PURSUANT TO SECTION 7.1.  IN THE EVENT THE AGENT OR A CLASS AGENT REQUESTS AN INVESTOR’S CONSENT PURSUANT TO THE FOREGOING PROVISIONS AND SUCH AGENT OR A CLASS AGENT DOES NOT RECEIVE A CONSENT (EITHER POSITIVE OR NEGATIVE) FROM SUCH INVESTOR WITHIN TEN (10) BUSINESS DAYS OF SUCH INVESTOR’S RECEIPT OF SUCH REQUEST, THEN SUCH INVESTOR (AND ITS PERCENTAGE INTEREST HEREUNDER) SHALL BE DISREGARDED IN DETERMINING WHETHER SUCH AGENT OR A CLASS AGENT SHALL HAVE OBTAINED SUFFICIENT CONSENT HEREUNDER.   SECTION 11.3                            NOTICES; PAYMENT INFORMATION.   Except as provided below, all communications and notices provided for hereunder shall be in writing (including facsimile or electronic transmission or similar writing) and shall be given to the other party at its address or facsimile number set forth in Schedule 11.3 or at such other address or facsimile number as such party may hereafter specify for the purposes of notice to such party.  Each such notice or other communication shall be effective (a) if given by   77   facsimile, when such facsimile is transmitted to the facsimile number specified in this Section 11.3 and confirmation is received, (b) if given by mail, three (3) Business Days following such posting, if postage prepaid, and if sent via U.S.  certified or registered mail, (c) if given by overnight courier, one (1) Business Day after deposit thereof with a national overnight courier service, or (d) if given by any other means, when received at the address specified in this Section 11.3, provided that an Investment Request shall only be effective upon receipt by the applicable Class Agent.  The SPV agrees to deliver promptly to the Investors or the Class Agents, as applicable a written confirmation of each telephonic notice signed by an authorized officer of SPV.  However, the absence of such confirmation shall not affect the validity of such notice.  If the written confirmation differs in any material respect from the action taken by the Investors or the Class Agents, as applicable, the records of the Investors or the Class Agents, as applicable shall govern.   SECTION 11.4                            GOVERNING LAW; SUBMISSION TO JURISDICTION; APPOINTMENT OF SERVICE AGENT.   (A)                                  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICTS OF LAW PRINCIPLES THEREOF OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).  EACH OF THE PARTIES HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NOTHING IN THIS SECTION 11.4 SHALL AFFECT THE RIGHT OF THE INVESTORS, THE AGENT OR THE CLASS AGENTS TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OF THE SPV, THE ORIGINATOR, THE SELLER OR THE SERVICER OR ANY OF THEIR RESPECTIVE PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.   (B)                                 EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH, RELATING TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.   (C)                                  THE SPV, THE SERVICER, THE SELLER AND THE ORIGINATOR EACH HEREBY APPOINT CT CORPORATION SYSTEM LOCATED AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK 10011 AS THE   78   AUTHORIZED AGENT UPON WHOM PROCESS MAY BE SERVED IN ANY ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS TO WHICH SUCH PERSON IS A PARTY OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY THAT MAY BE INSTITUTED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK BY ANY INVESTOR, ANY CLASS AGENT, THE AGENT, THE COLLATERAL AGENT OR ANY SUCCESSOR OR ASSIGNEE OF ANY OF THEM.   SECTION 11.5                            INTEGRATION.   This Agreement contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire Agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.   SECTION 11.6                            SEVERABILITY OF PROVISIONS.   If any one or more of the provisions of this Agreement shall for any reason whatsoever be held invalid, then such provisions shall be deemed severable from the remaining provisions of this Agreement and shall in no way affect the validity or enforceability of such other provisions.   SECTION 11.7                            COUNTERPARTS; FACSIMILE DELIVERY.   deemed to be an original and all of which when taken together shall constitute one and the same Agreement.  Delivery by facsimile of an executed signature page of this Agreement shall be effective as delivery of an executed counterpart hereof.   SECTION 11.8                            SUCCESSORS AND ASSIGNS; BINDING EFFECT.   (A)                                  THIS AGREEMENT SHALL BE BINDING ON THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS; PROVIDED, HOWEVER, THAT NONE OF THE SPV, THE SERVICER OR THE ORIGINATOR MAY ASSIGN ANY OF ITS RIGHTS OR DELEGATE ANY OF ITS DUTIES HEREUNDER OR UNDER THE FIRST TIER AGREEMENT, THE SECOND TIER AGREEMENT OR UNDER ANY OF THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF THE AGENT AND EACH CLASS AGENT.  EXCEPT AS PROVIDED IN CLAUSE (B) BELOW, NO PROVISION OF THIS AGREEMENT SHALL IN ANY MANNER RESTRICT THE ABILITY OF ANY INVESTOR TO ASSIGN, PARTICIPATE, GRANT SECURITY INTERESTS IN, OR OTHERWISE TRANSFER ANY PORTION OF THE ASSET INTEREST.   (B)                                 ANY ALTERNATE INVESTOR MAY ASSIGN ALL OR ANY PORTION OF ITS COMMITMENT AND ITS INTEREST IN THE RELATED CLASS NET INVESTMENT AND THE ASSET INTEREST AND ITS OTHER RIGHTS AND OBLIGATIONS HEREUNDER TO ANY PERSON WITH THE WRITTEN APPROVAL OF THE RELATED CLASS AGENT, ON BEHALF OF THE RELATED CONDUIT INVESTOR, AND THE AGENT.  IN CONNECTION WITH ANY SUCH ASSIGNMENT, THE ASSIGNOR SHALL DELIVER TO THE ASSIGNEE(S) AN ASSIGNMENT AND ASSUMPTION AGREEMENT, DULY EXECUTED, ASSIGNING TO SUCH ASSIGNEE A PRO RATA INTEREST IN SUCH ASSIGNOR’S COMMITMENT AND OTHER OBLIGATIONS HEREUNDER AND IN THE RELATED CLASS NET INVESTMENT, THE ASSET INTEREST AND OTHER RIGHTS HEREUNDER, AND SUCH ASSIGNOR SHALL PROMPTLY EXECUTE AND DELIVER ALL FURTHER INSTRUMENTS AND DOCUMENTS, AND TAKE ALL FURTHER ACTION, THAT THE ASSIGNEE MAY REASONABLY REQUEST, IN ORDER TO   79   PROTECT, OR MORE FULLY EVIDENCE THE ASSIGNEE’S RIGHT, TITLE AND INTEREST IN AND TO SUCH INTEREST AND TO ENABLE THE AGENT, ON BEHALF OF SUCH ASSIGNEE, TO EXERCISE OR ENFORCE ANY RIGHTS HEREUNDER AND UNDER THE OTHER TRANSACTION DOCUMENTS TO WHICH SUCH ASSIGNOR IS OR, IMMEDIATELY PRIOR TO SUCH ASSIGNMENT, WAS A PARTY.  UPON ANY SUCH ASSIGNMENT, (I) THE ASSIGNEE SHALL HAVE ALL OF THE RIGHTS AND OBLIGATIONS OF THE ASSIGNOR HEREUNDER AND UNDER THE OTHER TRANSACTION WAS A PARTY WITH RESPECT TO SUCH ASSIGNOR’S COMMITMENT AND INTEREST IN THE RELATED CLASS NET INVESTMENT AND THE ASSET INTEREST FOR ALL PURPOSES OF THIS AGREEMENT AND UNDER THE OTHER TRANSACTION DOCUMENTS TO WHICH SUCH ASSIGNOR IS OR, IMMEDIATELY PRIOR TO SUCH ASSIGNMENT, WAS A PARTY AND (II) THE ASSIGNOR SHALL HAVE NO FURTHER OBLIGATIONS WITH RESPECT TO THE PORTION OF ITS COMMITMENT WHICH HAS BEEN ASSIGNED AND SHALL RELINQUISH ITS RIGHTS WITH RESPECT TO THE PORTION OF ITS INTEREST IN THE RELATED CLASS NET INVESTMENT AND THE ASSET INTEREST WHICH HAS BEEN ASSIGNED FOR ALL PURPOSES OF THIS AGREEMENT AND UNDER THE OTHER TRANSACTION DOCUMENTS TO WHICH SUCH ASSIGNOR IS OR, IMMEDIATELY PRIOR TO SUCH ASSIGNMENT, WAS A PARTY.  NO SUCH ASSIGNMENT SHALL BE EFFECTIVE UNLESS A FULLY EXECUTED COPY OF THE RELATED ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE DELIVERED TO THE RELATED CLASS AGENT, THE AGENT AND THE SPV.  ALL COSTS AND EXPENSES OF THE RELATED CLASS AGENT AND THE AGENT INCURRED IN CONNECTION WITH THE PREPARATION AND EXECUTION OF ANY DOCUMENTATION RELATED TO ANY ASSIGNMENT HEREUNDER SHALL BE BORNE BY THE ASSIGNEE.  NO ALTERNATE INVESTOR SHALL ASSIGN ANY PORTION OF ITS COMMITMENT HEREUNDER WITHOUT ALSO SIMULTANEOUSLY ASSIGNING AN EQUAL PORTION OF ITS INTEREST IN THE PROGRAM SUPPORT AGREEMENT TO WHICH IT IS A PARTY OR UNDER WHICH IT HAS ACQUIRED A PARTICIPATION.   (C)                                  BY EXECUTING AND DELIVERING AN ASSIGNMENT AND ASSUMPTION AGREEMENT, THE ASSIGNOR AND ASSIGNEE THEREUNDER CONFIRM TO AND AGREE WITH EACH OTHER AND THE OTHER PARTIES HERETO AS FOLLOWS:  (I) OTHER THAN AS PROVIDED IN SUCH ASSIGNMENT AND ASSUMPTION AGREEMENT, THE ASSIGNOR MAKES NO REPRESENTATION OR WARRANTY AND ASSUMES NO RESPONSIBILITY WITH RESPECT TO ANY STATEMENTS, WARRANTIES OR REPRESENTATIONS MADE IN OR IN CONNECTION WITH THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED PURSUANT HERETO OR THERETO OR THE EXECUTION, LEGALITY, VALIDITY, ENFORCEABILITY, GENUINENESS, SUFFICIENCY OR VALUE OR THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR ANY SUCH OTHER INSTRUMENT OR DOCUMENT; (II) THE ASSIGNOR MAKES NO REPRESENTATION OR WARRANTY AND ASSUMES NO RESPONSIBILITY WITH RESPECT TO THE FINANCIAL CONDITION OF THE SPV, THE ORIGINATOR OR THE SERVICER OR THE PERFORMANCE OR OBSERVANCE BY THE SPV, THE ORIGINATOR OR THE SERVICER OF ANY OF THEIR RESPECTIVE OBLIGATIONS UNDER THIS AGREEMENT, THE FIRST TIER AGREEMENT, THE SECOND TIER AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED PURSUANT HERETO; (III) SUCH ASSIGNEE CONFIRMS THAT IT HAS RECEIVED A COPY OF THIS AGREEMENT, THE FIRST TIER AGREEMENT, THE SECOND TIER AGREEMENT, EACH OTHER TRANSACTION DOCUMENT AND SUCH OTHER INSTRUMENTS, DOCUMENTS AND INFORMATION AS IT HAS DEEMED APPROPRIATE TO MAKE ITS OWN CREDIT ANALYSIS AND DECISION TO ENTER INTO SUCH ASSIGNMENT AND ASSUMPTION AGREEMENT AND TO PURCHASE SUCH INTEREST; (IV) SUCH ASSIGNEE WILL, INDEPENDENTLY AND WITHOUT RELIANCE UPON THE AGENT OR ANY CLASS AGENT, OR ANY OF THEIR RESPECTIVE AFFILIATES, OR THE ASSIGNOR AND BASED ON SUCH AGREEMENTS, DOCUMENTS AND INFORMATION AS IT SHALL DEEM APPROPRIATE AT THE TIME, CONTINUE TO MAKE ITS OWN CREDIT DECISIONS IN TAKING OR NOT TAKING ACTION UNDER THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS; (V) SUCH ASSIGNEE APPOINTS AND AUTHORIZES THE AGENT AND THE RELATED CLASS AGENT TO TAKE SUCH ACTION AS AGENT ON ITS BEHALF AND TO EXERCISE SUCH POWERS UNDER THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS AND ANY OTHER INSTRUMENT OR DOCUMENT FURNISHED PURSUANT HERETO OR THERETO AS ARE DELEGATED TO THE AGENT OR SUCH CLASS AGENT BY THE TERMS HEREOF OR THEREOF, TOGETHER   80   WITH SUCH POWERS AS ARE REASONABLY INCIDENTAL THERETO AND TO ENFORCE ITS RESPECTIVE RIGHTS AND INTERESTS IN AND UNDER THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS AND THE AFFECTED ASSETS; (VI) SUCH ASSIGNEE AGREES THAT IT WILL PERFORM IN ACCORDANCE WITH THEIR TERMS ALL OF THE OBLIGATIONS WHICH BY THE TERMS OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS ARE REQUIRED TO BE PERFORMED BY IT AS THE ASSIGNEE OF THE ASSIGNOR; AND (VII) SUCH ASSIGNEE AGREES THAT IT WILL NOT INSTITUTE AGAINST ANY CONDUIT INVESTOR ANY PROCEEDING OF THE TYPE REFERRED TO IN SECTION 11.11 PRIOR TO THE DATE WHICH IS ONE YEAR AND ONE DAY AFTER THE PAYMENT IN FULL OF ALL COMMERCIAL PAPER ISSUED BY SUCH CONDUIT INVESTOR.   (D)                                 WITHOUT LIMITING THE FOREGOING, EACH CONDUIT INVESTOR MAY, FROM TIME TO TIME, WITH PRIOR OR CONCURRENT NOTICE TO THE SPV, THE SERVICER AND THE AGENT, IN ONE TRANSACTION OR A SERIES OF TRANSACTIONS, ASSIGN ALL OR A PORTION OF THE RELATED CLASS NET INVESTMENT AND ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT AND ANY OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY TO A CONDUIT ASSIGNEE.  UPON AND TO THE EXTENT OF SUCH ASSIGNMENT BY SUCH CONDUIT INVESTOR TO A CONDUIT ASSIGNEE, (I) SUCH CONDUIT ASSIGNEE SHALL BE THE OWNER OF THE ASSIGNED PORTION OF THE RELATED CLASS NET INVESTMENT, (II) THE RELATED ADMINISTRATOR FOR SUCH CONDUIT ASSIGNEE WILL ACT AS THE CLASS AGENT FOR SUCH CONDUIT ASSIGNEE, WITH ALL CORRESPONDING RIGHTS AND POWERS, EXPRESS OR IMPLIED, GRANTED TO A CLASS AGENT HEREUNDER OR UNDER THE OTHER TRANSACTION DOCUMENTS, (III) SUCH CONDUIT ASSIGNEE (AND ANY RELATED COMMERCIAL PAPER ISSUER, IF SUCH CONDUIT ASSIGNEE DOES NOT ITSELF ISSUE COMMERCIAL PAPER) AND THEIR RESPECTIVE LIQUIDITY SUPPORT PROVIDER(S) AND CREDIT SUPPORT PROVIDER(S) AND OTHER RELATED PARTIES SHALL HAVE THE BENEFIT OF ALL THE RIGHTS AND PROTECTIONS PROVIDED TO THE RELATED CONDUIT INVESTOR AND ITS PROGRAM SUPPORT PROVIDER(S) HEREIN AND IN THE OTHER TRANSACTION DOCUMENTS (INCLUDING ANY LIMITATION ON RECOURSE AGAINST SUCH CONDUIT ASSIGNEE OR RELATED PARTIES, ANY AGREEMENT NOT TO FILE OR JOIN IN THE FILING OF A PETITION TO COMMENCE AN INSOLVENCY PROCEEDING AGAINST SUCH CONDUIT ASSIGNEE, AND THE RIGHT TO ASSIGN TO ANOTHER CONDUIT ASSIGNEE AS PROVIDED IN THIS PARAGRAPH), (IV) SUCH CONDUIT ASSIGNEE SHALL ASSUME ALL (OR THE ASSIGNED OR ASSUMED PORTION) OF THE RELATED CONDUIT INVESTOR’S OBLIGATIONS, IF ANY, HEREUNDER OR ANY OTHER TRANSACTION DOCUMENT, AND SUCH CONDUIT INVESTOR SHALL BE RELEASED FROM SUCH OBLIGATIONS, IN EACH CASE TO THE EXTENT OF SUCH ASSIGNMENT, AND THE OBLIGATIONS OF SUCH CONDUIT INVESTOR AND SUCH CONDUIT ASSIGNEE SHALL BE SEVERAL AND NOT JOINT, (V) ALL DISTRIBUTIONS IN RESPECT OF THE RELATED CLASS NET INVESTMENT SHALL BE MADE TO THE APPLICABLE AGENT OR AGENT, AS APPLICABLE, ON BEHALF OF THE RELATED CONDUIT INVESTOR AND SUCH CONDUIT ASSIGNEE ON A PRO RATA BASIS ACCORDING TO THEIR RESPECTIVE INTERESTS, (VI) THE DEFINITION OF THE TERM “CP RATE” WITH RESPECT TO THE PORTION OF THE RELATED CLASS NET INVESTMENT FUNDED WITH COMMERCIAL PAPER ISSUED BY THE RELATED CONDUIT INVESTOR FROM TIME TO TIME SHALL BE DETERMINED IN THE MANNER SET FORTH IN THE DEFINITION OF “CP RATE” APPLICABLE TO SUCH CONDUIT INVESTOR ON THE BASIS OF THE INTEREST RATE OR DISCOUNT APPLICABLE TO COMMERCIAL PAPER ISSUED BY SUCH CONDUIT ASSIGNEE (OR THE RELATED COMMERCIAL PAPER ISSUER, IF SUCH CONDUIT ASSIGNEE DOES NOT ITSELF ISSUE COMMERCIAL PAPER) RATHER THAN THE CONDUIT INVESTOR, (VII) THE DEFINED TERMS AND OTHER TERMS AND PROVISIONS OF THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS SHALL BE INTERPRETED IN ACCORDANCE WITH THE FOREGOING, AND (VIII) IF REQUESTED BY THE AGENT OR ADMINISTRATIVE AGENT WITH RESPECT TO A CONDUIT ASSIGNEE, THE PARTIES WILL EXECUTE AND DELIVER SUCH FURTHER AGREEMENTS AND DOCUMENTS AND TAKE SUCH OTHER ACTIONS AS THE AGENT OR SUCH ADMINISTRATIVE AGENT MAY REASONABLY REQUEST TO EVIDENCE AND GIVE EFFECT TO THE FOREGOING.  NO ASSIGNMENT BY A CONDUIT INVESTOR TO A CONDUIT ASSIGNEE OF ALL OR ANY PORTION OF THE RELATED CLASS NET INVESTMENT SHALL IN ANY WAY DIMINISH THE RELATED ALTERNATE INVESTORS’ OBLIGATION UNDER SECTION 2.3 TO FUND ANY INVESTMENT NOT FUNDED BY THE RELATED CONDUIT INVESTOR OR SUCH CONDUIT ASSIGNEE OR TO ACQUIRE FROM SUCH CONDUIT INVESTOR OR   81   SUCH CONDUIT ASSIGNEE ALL OR ANY PORTION OF THE RELATED CLASS NET INVESTMENT PURSUANT TO SECTION 3.1.   (E)                                  IN THE EVENT THAT A CONDUIT INVESTOR MAKES AN ASSIGNMENT TO A CONDUIT ASSIGNEE IN ACCORDANCE WITH CLAUSE (D) ABOVE, THE RELATED ALTERNATE INVESTORS:  (I) IF REQUESTED BY THE RELATED CLASS AGENT, SHALL TERMINATE THEIR PARTICIPATION IN THE APPLICABLE PROGRAM SUPPORT AGREEMENT TO THE EXTENT OF SUCH ASSIGNMENT, (II) IF REQUESTED BY THE RELATED CLASS AGENT, SHALL EXECUTE (EITHER DIRECTLY OR THROUGH A PARTICIPATION AGREEMENT, AS DETERMINED BY THE RELATED CLASS AGENT) THE PROGRAM SUPPORT AGREEMENT RELATED TO SUCH CONDUIT ASSIGNEE, TO THE EXTENT OF SUCH ASSIGNMENT, THE TERMS OF WHICH SHALL BE SUBSTANTIALLY SIMILAR TO THOSE OF THE PARTICIPATION OR OTHER AGREEMENT ENTERED INTO BY SUCH ALTERNATE INVESTOR WITH RESPECT TO THE APPLICABLE PROGRAM SUPPORT AGREEMENT (OR WHICH SHALL BE OTHERWISE REASONABLY SATISFACTORY TO THE RELATED CLASS AGENT AND THE RELATED ALTERNATE INVESTORS), (III) IF REQUESTED BY A RELATED CONDUIT INVESTOR, SHALL ENTER INTO SUCH AGREEMENTS AS REQUESTED BY SUCH CONDUIT INVESTOR PURSUANT TO WHICH THEY SHALL BE OBLIGATED TO PROVIDE FUNDING TO SUCH CONDUIT ASSIGNEE ON SUBSTANTIALLY THE SAME TERMS AND CONDITIONS AS IS PROVIDED FOR IN THIS AGREEMENT IN RESPECT OF SUCH CONDUIT INVESTOR (OR WHICH AGREEMENTS SHALL BE OTHERWISE REASONABLY SATISFACTORY TO SUCH CONDUIT INVESTOR AND THE RELATED ALTERNATE INVESTORS), AND (IV) SHALL TAKE SUCH ACTIONS AS THE AGENT SHALL REASONABLY REQUEST IN CONNECTION THEREWITH.   (F)                                    EACH OF THE SPV, THE SERVICER, THE SELLER AND THE ORIGINATOR HEREBY AGREES AND CONSENTS TO THE ASSIGNMENT BY THE CONDUIT INVESTOR FROM TIME TO TIME OF ALL OR ANY PART OF ITS RIGHTS UNDER, INTEREST IN AND TITLE TO THIS AGREEMENT AND THE ASSET INTEREST TO ANY PROGRAM SUPPORT PROVIDER.  IN ADDITION, EACH OF THE SPV, THE SERVICER, THE SELLER AND THE ORIGINATOR HEREBY AGREES AND CONSENTS TO THE ASSIGNMENT BY ANY CONDUIT INVESTOR FROM TIME TO TIME OF ALL OR ANY PART OF ITS RIGHTS UNDER, INTEREST IN AND TITLE TO THIS AGREEMENT AND THE ASSET INTEREST TO THE RELATED CLASS AGENT OR THE RELATED COLLATERAL AGENT.   SECTION 11.9                            WAIVER OF CONFIDENTIALITY.   Each of the SPV, the Servicer, the Seller and the Originator hereby consents to the disclosure of any non-public information with respect to it received by the Agent, any Investor or the Class Agents to any other Investor or potential Investor, the Agent, any nationally recognized statistical rating organization rating any Conduit Investor’s Commercial Paper, any dealer or placement agent of or depositary for such Conduit Investor’s Commercial Paper, any Class Agent, any Collateral Agent, any Program Support Provider or any of such Person’s counsel or accountants in relation to this Agreement or any other Transaction Document if such Persons are informed of the confidential nature of such information.   SECTION 11.10                     CONFIDENTIALITY AGREEMENT.   Each of the SPV, the Servicer, the Seller and the Originator hereby agrees that it will not disclose the contents of this Agreement or any other Transaction Document or any other proprietary or confidential information of or with respect to any Investor, the Agent, any Class Agent, any Collateral Agent or any Program Support Provider to any other Person except (a) its auditors and attorneys, employees or financial advisors (other than any commercial bank) and any nationally recognized statistical rating organization, provided such auditors, attorneys,   82   employees, financial advisors or rating agencies are informed of the highly confidential nature of such information or (b) as otherwise required by applicable law (including securities laws and SEC filings) or order of a court of competent jurisdiction.   SECTION 11.11                     NO BANKRUPTCY PETITION AGAINST THE CONDUIT INVESTORS.   Each of the SPV, the Servicer, the Seller and the Originator hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of all outstanding Commercial Paper or other rated indebtedness of any Conduit Investor (or its related commercial paper issuer), it will not institute against, or join any other Person in instituting against, any Conduit Investor any proceeding of a type referred to in the definition of Event of Bankruptcy.   SECTION 11.12                     NO RECOURSE AGAINST CONDUIT INVESTORS.   Notwithstanding anything to the contrary contained in this Agreement, the obligations of each Conduit Investor under this Agreement and all other Transaction Documents are solely the corporate obligations of such Conduit Investor and shall be payable solely to the extent of funds received from the SPV in accordance herewith or from any party to any Transaction Document in accordance with the terms thereof in excess of funds necessary to pay matured and maturing Commercial Paper.   [Signatures Follow]   83   In Witness Whereof, the parties hereto have executed and delivered this         as Originator       By: /s/ Robert J. Kelderhouse   Name: Robert J. Kelderhouse   Title: Vice-President and Treasurer       UNITED STATIONERS FINANCIAL SERVICES LLC, as Seller and Servicer       By:   Name: Robert J. Kelderhouse   Title:       as SPV       By:   Name: Robert J. Kelderhouse   Title:     [Signature page to Transfer and Administration Agreement]       ENTERPRISE FUNDING, as a Conduit Investor       By: /s/ Kevin P. Burns   Name: Kevin P. Burns   Title: Vice President     Commitment          $102,000,000   BANK OF AMERICA, NATIONAL ASSOCIATION, as Agent, as a Class Agent and as an Alternate Investor       By: /s/ Jeremy Grubb   Name: Jeremy Grubb   Title: Vice President           MARKET STREET, as a Conduit Investor       By: /s/ Doris J. Hearn   Name: Doris J. Hearn   Title: Vice President     Commitment          $51,000,000   PNC BANK, as a Class Agent and as an Alternate Investor       By: /s/ William P. Falcon   Name: William P. Falcon   Title: Vice President   [End of Signatures]       SCHEDULE I   Section 2.4 of this Agreement shall be read in its entirety as follows:   Section 2.4             Determination of Yield and Rate Periods.  (a) From time to time, for purposes of determining the Rate Periods applicable to the different portions of the related Class Net Investment and of calculating Yield with respect thereto, each Class Agent shall allocate its related Class Net Investment to one or more tranches (each a “Portion of Investment”).  At any time, each Portion of Investment shall have only one Rate Period and one Rate Type.  For the avoidance of doubt, at any time when the related Class Net Investment is not divided into more than one portion, “Portion of Investment” means 100% of the related Class Net Investment.   (b)           [Reserved].   (c)           As used in this Section 2.4, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):   Alternate Rate:  For any Rate Period for any Portion of Investment, an interest rate per annum equal to 1.75% per annum above the Offshore Rate for such Rate Period; provided, however, that in the case of:   (i)            any Rate Period which commences on a date other than a Settlement Date or which commences prior to the Agent receiving at least three (3) Business Days notice thereof, or   (ii)           any Rate Period relating to a Portion of Investment which is less than $2,000,000,   the “Alternate Rate” for each day in such Rate Period shall be an interest rate per annum equal to the Base Rate in effect on such day.  The “Alternate Rate” for any date on or after the declaration or automatic occurrence of Termination Date pursuant to Section 8.2 shall be an interest rate equal to the Default Rate in effect on such day.   Base Rate:  For any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate for such day, plus .50%, (b) the rate of interest in effect for such day as publicly announced from time to time by the Agent as its “prime rate” and (c) the Offshore Rate for such day, plus 1.75%.  The “prime rate” is a rate set by the Agent based upon various factors including the Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in the prime rate announced by the Agent shall take effect at the opening of business on the day specified in the public announcement of such change.   CP Rate:  For any Conduit Investor and any Rate Period for any Portion of Investment, the per annum rate equivalent to the weighted average cost (as determined by the related Class Agent and which shall include commissions of placement agents and dealers, incremental carrying costs incurred with respect to Commercial Paper related to the Conduit Investor that is a member   I - 1   of such Class maturing on dates other than those on which corresponding funds are received by such Conduit Investor (or its related commercial paper issuer if the Conduit Investor does not itself issue commercial paper), other borrowings by such Conduit Investor (other than under any Program Support Agreement) and any other costs associated with the issuance of Commercial Paper related to the Conduit Investor that is a member of such Class) of or related to the issuance of Commercial Paper related to the Conduit Investor that is a member of such Class that is allocated, in whole or in part, by such Conduit Investor or the related Class Agent to fund or maintain such Portion of Investment (and which may be also allocated in part to the funding of other assets of such Conduit Investor); provided, however, that if any component of such rate is a discount rate, in calculating the “CP Rate” for such Conduit Investor for such Portion of Investment for such Rate Period, such Conduit Investor (or such related commercial paper issuer) shall for such component use the rate resulting from converting such discount rate to an interest bearing equivalent rate per annum.   Federal Funds Rate:  For any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Agent on such day on such transactions as determined by it.   Offshore Rate:  For any Rate Period for any Portion of Investment, a rate per annum determined by the Agent pursuant to the following formula:   Offshore Rate =   Offshore Base Rate     1.00 - Eurodollar Reserve Percentage   Where,   Offshore Base Rate:  For such Rate Period:   (i)            the rate per annum (carried out to the fifth decimal place) equal to the rate determined by the Agent to be the offered rate that appears on the page of the Reuters Screen that displays an average British Bankers Association Interest Settlement Rate (such page currently being page number LIBOR01) for deposits in Dollars (for delivery on the first day of such Rate Period) with a term equivalent to such Rate Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Rate Period, or   (ii)           in the event the rate referenced in the preceding subsection (a) does not appear on such page or service or such page or service shall cease to be available, the rate per annum (carried to the fifth decimal place) equal to the rate determined by the Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the   I - 2   first day of such Rate Period) with a term equivalent to such Rate Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Rate Period, or   (iii)          in the event the rates referenced in the preceding subsections (a) and (b) are not available, the rate per annum determined by the Agent as the rate of interest at which Dollar deposits (for delivery on the first day of such Rate Period) in same day funds in the approximate amount of the applicable Portion of Investment to be funded by reference to the Offshore Rate and with a term equivalent to such Rate Period would be offered by its London Branch to major banks in the offshore dollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Rate Period; and   Eurodollar Reserve Percentage:  For any day during any Rate Period, the reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day, whether or not applicable to any Investor, under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “eurocurrency liabilities”).  The Offshore Rate shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.   Rate Period:  Unless otherwise mutually agreed by a Class Agent for any Portion of Investment funded by the related Class and the SPV, (a) with respect to any Portion of Investment funded by the issuance of Commercial Paper, (i) initially the period commencing on (and including) the date of the initial purchase or funding of such Portion of Investment and ending on (and including) the last day of the current calendar month, and (ii) thereafter, each period commencing on (and including) the first day after the last day of the immediately preceding Rate Period for such Portion of Investment and ending on (and including) the last day of the current calendar month; and (b) with respect to any Portion of Investment not funded by the issuance of Commercial Paper, (i) initially the period commencing on (and including) the date of the initial purchase or funding of such Portion of Investment and ending on (but excluding) the next following Settlement Date, and (ii) thereafter, each period commencing on (and including) a Settlement Date and ending on (but excluding) the next following Settlement Date; provided, that   (A)          any Rate Period with respect to any Portion of Investment (other than any Portion of Investment accruing Yield at the CP Rate) which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; provided, however, if Yield in respect of such Rate Period is computed by reference to the Offshore Rate, and such Rate Period would otherwise end on a day which is not a Business Day, and there is no subsequent Business Day in the same calendar month as such day, such Rate Period shall end on the next preceding Business Day;   (B)           in the case of any Rate Period for any Portion of Investment which commences before the Termination Date and would otherwise end on a date   I - 3   occurring after the Termination Date, such Rate Period shall end on such Termination Date and the duration of each Rate Period which commences on or after the Termination Date shall be of such duration as shall be selected by the related Class Agent; and   (C)           any Rate Period in respect of which Yield is computed by reference to the CP Rate may be terminated at the election of the Class Agent for the Class funding the related Portion of Investment at any time, in which case such Portion of Investment shall be allocated by the related Class Agent to a new Rate Period commencing on (and including) the date of such termination and ending on (but excluding) the next following Settlement Date, and shall accrue Yield at the Alternate Rate.   Rate Type:  The Offshore Rate, the Base Rate or the CP Rate.   Yield:  For any Portion of Investment:   (i)            during any Rate Period to the extent a Conduit Investor funds such Portion of Investment through the issuance of Commercial Paper (directly or indirectly through a related commercial paper issuer),     CPR x I x D     360     (ii)           funded by an Alternate Investor and for any Portion of Investment to the extent a Conduit Investor will not be funding such Portion of Investment through the issuance of Commercial Paper (directly or indirectly through a related commercial paper issuer),     AR x I x D     360     where:     AR   =   the Alternate Rate for such Portion of Investment for such Rate Period,               CPR   =   the CP Rate for such Portion of Investment for such Rate Period (as determined by the related Class Agent on or prior to the fifth Business Day of the calendar month next following such Rate Period),               D   =   the actual number of days during such Rate Period, and               I   =   the weighted average of such Portion of Investment during such Rate Period   I - 4   ; provided that no provision of the Agreement shall require the payment or permit the collection of Yield in excess of the maximum permitted by applicable law; and provided, further, that at all times after the declaration or automatic occurrence of the Termination Date pursuant to Section 8.2, Yield for all Portion of Investment shall be determined as provided in clause (ii) of this definition.   (d)           Offshore Rate Protection; Illegality.  (i) If the Agent is unable to obtain on a timely basis the information necessary to determine the Offshore Rate for any proposed Rate Period, then   (A)          the Agent shall forthwith notify the Investors and the SPV that the Offshore Rate cannot be determined for such Rate Period, and   (B)           while such circumstances exist, the Investors, the Class Agents and the Agent shall not allocate any Portion of Investment or reallocate any Portion of Investment to a Rate Period with respect to which Yield is calculated by reference to the Offshore Rate.   (ii)           If, with respect to any outstanding Rate Period, any Class Agent notifies the Agent that any of the Investors that comprise any of its Class is unable to obtain matching deposits in the London interbank market to fund its purchase or maintenance of such Portion of Investment or that the Offshore Rate applicable to such Portion of Investment will not adequately reflect the cost to the Person of funding or maintaining such Portion of Investment for such Rate Period, then (A) the Agent shall forthwith so notify the SPV and the Investors and (B) upon such notice and thereafter while such circumstances exist the Agent, the Class Agents and the Investors shall not allocate any Portion of Investment or reallocate any Portion of Investment, to a Rate Period with respect to which Yield is calculated by reference to the Offshore Rate and all Portions of Investment that have been allocated to a Rate Period to which the Offshore Rate applies shall be automatically allocated to a new Rate Period to which the Base Rate applies and the Rate Period to which such Offshore Rate applied terminated on such day.   (iii)          Notwithstanding any other provision of this Agreement, if any Conduit Investor or any Alternate Investor, as applicable, shall notify the Agent that such Person has determined (or has been notified by any Program Support Provider) that the introduction of or any change in or in the interpretation of any Law makes it unlawful (either for such Conduit Investor, such Alternate Investor, or such Program Support Provider, as applicable), or any central bank or other Official Body asserts that it is unlawful, for such Conduit Investor, such Alternate Investor or such Program Support Provider, as applicable, to fund the purchases or maintenance of any Portion of Investment accruing Yield calculated by reference to the Offshore Rate, then (A) as of the effective date of such notice from such Person to the Agent, the obligation or ability of such Conduit Investor or such Alternate Investor, as applicable, to fund the making or maintenance of any Portion of Investment accruing Yield calculated by reference to the Offshore Rate shall be suspended until such Person notifies the Agent that the circumstances causing such suspension no longer exist and (B) each Portion of Investment made or maintained by such Person accruing Yield calculated by reference to   I - 5   the Offshore Rate shall be deemed to accrue Yield at the Base Rate from the effective date of such notice until the end of such Rate Period.   I - 6   SCHEDULE II   Specified Ineligible Receivables   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   [**]   II - 1   SCHEDULE III   (Settlement Procedures)   Sections 2.12 through 2.15 of the Agreement shall be read in their entirety as follows:   Section  2.12          Settlement Procedures.  (a) Daily Procedure.  The Servicer, on behalf of the SPV and for the benefit of the Agent, the Class Agents and the Investors, shall on a daily basis manage the Collections of Receivables received or deemed received by the SPV or the Servicer on such day in accordance with the provisions of this Agreement and in such a manner that the SPV shall have sufficient funds available (to the extent of the Collections of Receivables received or deemed received) at all times, including on each Settlement Date, to pay its obligations due on such day, including, without limitation, managing Investments, Reinvestments and Deemed Collections and setting aside an amount equal to the excess, if any, of (i) the greatest of: (A) if the SPV shall have elected to reduce the Net Investment under Section 2.13, the amount of the proposed reduction, (B) the amount, if any, by which the sum of the Net Investment and Required Reserves shall exceed the Net Pool Balance (minus any portion of the Required Reserves attributable to such excess), together with the amount, if any, by which the Net Investment shall exceed the Maximum Net Investment, and (C) if such day is on or after the Termination Date, the Net Investment; over (ii) the aggregate of the amounts theretofore set aside for such purposes.  To the extent and for so long as such Collections may not be reinvested pursuant to Section 2.2(b), the Servicer shall hold such Collections in trust for the benefit of the Agent.   (b)           Settlement Procedures.   (i)  The Servicer shall deposit into each Class Agent’s account, on each Business Day selected by the SPV for a reduction of the Net Investment under Section 2.13 the related Class Pro Rata Share of the amount of Collections held for the Agent pursuant to Section 2.12(a)(ii).   (ii)  On any date on or prior to the Termination Date, if the sum of the Net Investment and Required Reserves exceeds the Net Pool Balance the Servicer shall immediately pay to each Class Agent’s account from amounts set aside pursuant to clause (ii) or clause (iii) of Section 2.12(a) an amount equal to the related Class Pro Rata Share of such excess (minus any portion of the Class Pro Rata Share of Required Reserves attributable to such excess).   (iii)  On each Settlement Date, the Servicer shall deposit to each Class Agent’s account:   (A)          out of the amounts set aside pursuant to clause (i) of Section 2.12(a) and not theretofore deposited in accordance with Section 2.12(b), an amount equal to the accrued and unpaid Yield, Servicing Fee, Program Fee and Facility Fee for the related Rate Period together with any other Aggregate Unpaids (other than Net Investment) then due to the related Class; and   III - 1   (B)           out of the amount, if any, set aside pursuant to clause (ii) and (to the extent not theretofore reinvested) clause (iii) of Section 2.12(a) and not theretofore deposited to such Class Agent’s account pursuant to this Section 2.12(b), an amount equal to related Class Pro Rata Share of the lesser of such amount and the Net Investment;   provided, however, that if the Agent gives its consent (which consent may be revoked at any time), the Servicer may retain amounts which would otherwise be deposited in respect of accrued and unpaid Servicing Fee, in which case no distribution shall be made in respect of such Servicing Fee under clause (c) below.  Any amounts set aside pursuant to Section 2.12(a) in excess of the amount required to be deposited in the Class Agents’ accounts pursuant to this subsection (b) shall continue to be set aside and held in trust by the Servicer for application on the next succeeding Settlement Date(s).   (c)           Order of Application.  Upon receipt by a Class Agent on any Yield Payment Date of funds deposited pursuant to subsection (b)(iii)(A), such Class Agent shall distribute them to the Investors in its Class, pro rata based on the amount of accrued and unpaid Yield owing to each of them, in payment of the accrued and unpaid Yield on the related Portions of Investment for the related Rate Period.  Upon receipt by a Class Agent of funds deposited pursuant to any other provision of subsection (b), such Class Agent shall distribute them to the Persons, for the purposes and in the order of priority set forth below:   (i)            to the related Investors, pro rata based on the amount of accrued and unpaid Yield, Program Fee and Facility Fee owing to each of them, in payment of the accrued and unpaid Yield, Program Fee and Facility Fee on the Portions of Investment for the related Rate Period for such Class;   (ii)           if the Seller or any Affiliate of the Originator is not then the Servicer, to the Servicer in payment of the related Class Pro Rata Share of the accrued and unpaid Servicing Fee payable on such Settlement Date;   (iii)          to the related Investors, pro rata based on their respective interests in the Asset Interest (based upon the respective portions of the Class Net Investment owned by each of them) except as otherwise provided in Section 3.3(b), in reduction of the related Class Net Investment;   (iv)          to the Agent, itself, the related Investors or such other Person as may be entitled to such payment, in payment of the related Class Pro Rata Share of any other Aggregate Unpaids owed by the SPV hereunder to such Person (other than Net Investment, Yield and Servicing Fee); and   (v)           if the Seller or any Affiliate of the Originator is the Servicer, to the Servicer in payment of the related Class Pro Rata Share of the accrued Servicing Fee payable on such Settlement Date, to the extent not paid pursuant to clause (ii) above or retained pursuant to subsection (b) above.   Section 2.13           Optional Reduction of Net Investment.  The SPV may at any time elect to cause the reduction of the Net Investment as follows:   III - 2   (a)           the SPV shall instruct the Servicer to (and the Servicer shall) set aside Collections and hold them in trust for the Agent under clause (ii) of Section 2.12(a) until the amount so set aside shall equal the desired amount of reduction; and   (b)           on each Settlement Date occurring at least the Required Notice Days after the date of the SPV’s notice, the Servicer shall pay to each Class Agent, in reduction of the Net Investment, the related Class Pro Rata Share of the amount of such Collections so held or, if less, the related Class Net Investment (it being understood that neither the Net Investment nor any Class Net Investment shall be deemed reduced by any amount set aside or held pursuant to this Section 2.13 unless and until, and then only to the extent that, such amount is finally paid to the related Class Agent as aforesaid); provided that, the amount of any such reduction shall be not less than $1,000,000.   Section 2.14  Application of Collections Distributable to SPV.  Unless otherwise instructed by the SPV, the Servicer shall allocate and apply, on behalf of the SPV, Collections distributable to the SPV hereunder first, to the payment to the Seller of the purchase price of new Receivables in accordance with the Second Tier Agreement and/or to Reinvestments as described in Section 2.2(b), second, to the payment or provision for payment of the SPV’s operating expenses, as instructed by the SPV, third, to the repayment to the Seller of Advances (as defined in the Second Tier Agreement) pursuant to Section 3.2(b)(i) of the Second Tier Agreement, subject to Section 6.2(k), fourth, to the payment of interest on Advances to the Seller pursuant to Section 3.2(b)(ii) of the Second Tier Agreement, subject to Section 6.2(k) and fifth, as directed from time to time by the SPV.   Section 2.15 Collections Held in Trust.  So long as the SPV or the Servicer shall hold any Collections or Deemed Collections then or thereafter required to be paid by the SPV to the Servicer or by the SPV or the Servicer to the Agent, it shall hold such Collections in trust, and, if requested by the Agent after the occurrence and during the continuance of a Termination Event or Potential Termination Event, shall deposit such Collections within one Business Day of receipt thereof into the Collection Account.  The Net Investment shall not be deemed reduced by any amount held in trust or in the Collection Account pursuant to Section 2.12 unless and until, and then only to the extent that, such amount is finally paid to the Agent in accordance with Section 2.12(b).   III - 3   SCHEDULE 4.1(g)     None.   1   SCHEDULE 4.1(i)     United Stationers Receivables, LLC Jurisdiction of formation:  Illinois Principal Place of Business:  One Parkway North Blvd., Deerfield, Illinois President:  Victoria J. Reich Location of Records:  One Parkway North Blvd., Deerfield, Illinois   United Stationers Supply Co. Chief Executive Officer:  Richard W. Gochnauer   United Stationers Financial Services LLC   1   SCHEDULE 4.1(j)     1)            United Stationers Receivables, LLC   Subsidiaries: None     Divisions: None     Tradenames: None     Federal Employer Identification Number: 26-4146967   2)            United Stationers Supply Co.   Subsidiaries: Azerty de Mexico, S.A. de C.V.   Lagasse, Inc   ORS Nasco, Inc.       United Stationers Technology Services LLC   United Stationers Hong Kong Limited   United Worldwide Limited     Divisions: United Supply US   Azerty US     Tradenames: None     36-2431718   3)            United Stationers Financial Services LLC   Subsidiaries: USS Receivables Company, Ltd.     Divisions: None     Tradenames: None     36-4428313   1   SCHEDULE 4.1(r)     (1) The following lockboxes and accounts maintained with PNC Bank, National Association:       P.O. Box 3100-0284 Pasadena, CA 91110   P.O. Box 7780-1724 Philadelphia, PA 19182-1724   1708 Solutions Center Chicago, IL 60677-1007   P.O. Box 67602 Dallas, TX 75267-6502   Demand Deposit Account #2149466     (2) The following lockbox and account maintained with U.S. Bank National Association:       Lockbox Number #952418   Deposit Account Number #199380226746     (3) The following account maintained with Fifth Third Bank:       Demand Deposit Account #7234544398     (4) The following account maintained with The Northern Trust Company:       Account Number #3510068   1   SCHEDULE 4.1(bb)   Disclosure Representations and Covenants   Originator—Disclosure Representations and Covenants   Disclosure of the Transactions   1.        The transactions referred to in the Opinion (the “Transactions”) have been or will be publicly disclosed as follows: (a) the Transactions will be addressed in notes relating to Performance Guarantor’s securitization activities in its financial statements (on which Originator is consolidated); and (b) UCC financing statements will be filed to perfect the transfer (the “Transfer”) of receivables (the “Receivables”) by Originator to United Stationers Financial Services LLC (“Seller”) pursuant to the receivables sale agreement referred to in the Opinion (the “Receivables Sale Agreement”).   2.        The footnotes that describe Performance Guarantor’s securitization activities (which include the Transactions) in Performance Guarantor’s consolidated financial statements (which will include Originator, Seller and the SPV) will describe Performance Guarantor’s securitization activities, will inform readers that securitized assets (such as the Receivables) are isolated in special purpose entities and support the securities issued by those entities.   3.        The computer records of Seller, as servicer (in such capacity, the “Servicer”) relating to the Receivables will be marked to reflect the Transfer.   4.        Originator will not conceal any transfers contemplated by the agreements referred to on Schedule II to the Opinion (the “Agreements”) from any interested party.  Although obligors on the Receivables will not be affirmatively informed of the transfers of their obligations, Originator will not conceal the transfers from any obligor that inquires.  Also, (other than certain rebates and allowances in respect of Receivables) the obligors are not expected to be material creditors of either Originator, Seller or the SPV.   Terms of the Transactions   5.        In connection with the Transactions: (a) certain investors in the Receivables rely on the Receivables and the other assets of the Issuer in making their investment decision; (b) certain investors in the Receivables will rely on the Transfer being characterized as a true sale, so as to isolate the Receivables from Originator’s creditors; and (c) the indirect sale of the Receivables to the SPV and its creditors and their financing through the Transactions is beneficial to Originator because it, among other things, increases the liquidity of their assets and, to a lesser extent, diversifies the funding sources for Originator’s business.   6.        The terms of the Receivables Sale Agreement and other transactions between Originator and Seller are (a) consistent with those of arm’s-length relationships and (b) fair and equitable to each of the parties.   1   7.        Originator intends the Transfer to be a true sale by Originator to Seller that is absolute and irrevocable and that provides Seller with the full benefits of ownership of the Receivables.  Originator will convey the Receivables as a result of the credit to Seller without recourse for uncollectibility of the Receivables as a result of the creditworthiness of the related Obligor and without any warranty of collectibility or any unconventional warranty.   8.        To finance its purchase, Originator will transfer the Receivables to the Seller, which in turn will transfer the Receivables to the SPV.   9.        The consideration received by Originator in the Transfer represents the fair market value of the Receivables.   10.      Immediately prior to the Transfer, Originator owned the Receivables free and clear of any lien or other adverse claim.   11.      Originator’s representations, warranties, covenants and indemnities in the Receivables Sale Agreement with respect to the Receivables:  (a) cover matters ascertainable by Originator in the ordinary course of business and (b) are intended to ensure that Seller will receive the type of assets that it has bargained to purchase.  Originator believes that such representations, warranties, covenants and indemnities do not cause Originator to retain or assume the risk of nonpayment or other material financial risks of the Receivables based in part on the belief that the matters covered are within Originator’s control, are unlikely to occur, or both.  The representations, warranties and covenants are not intended to cover material liabilities that are reasonably likely to occur.   12.      There are no agreements or understandings between the SPV, on one hand, and Originator or any of Originator’s other affiliates that are relevant to the Transactions other than the Agreements and any other agreements and understandings specifically referenced in the Agreements.  In particular, there are no other agreements or understandings pursuant to which Originator or another of its other affiliates (a) is responsible for maintaining Seller’s or the SPV’s solvency or (b) provides recourse, guarantees or otherwise retains or assumes financial risks with respect to the Receivables.   Relationship Between Originator and the SPV   13.      The SPV is a wholly-owned subsidiary of Seller which is a wholly owned subsidiary of Originator, and the SPV was formed for the special purpose of consummating the Transactions.   14.      Originator intends to act in a manner that is consistent with the SPV’s separate and distinct existence and will correct any known misunderstanding regarding its status as a separate entity.   15.      Originator prepares and maintains separate corporate and financial records from the SPV that accurately reflect its assets, liabilities and financial affairs.  Originator’s   2   believes its assets and liabilities can be readily and inexpensively segregated, ascertained and identified separate from those of the SPV.  All transactions between Originator and the SPV, including monetary transactions, are and will be properly reflected in Originator’s books and records and Originator believes that each transaction will be on terms and conditions consistent with those of an arm’s length transaction.   16.      Originator believes that the consolidation of Originator’s and the SPV’s business operations would not result in any significant cost savings or in a significantly greater efficiency or profitability of such combined business operation.   17.      Originator and the SPV do not intend to commingle their assets and liabilities, except that Seller, as Servicer of the Receivables: (a) may temporarily commingle collections pending identification and transfer to a collection account for the Transactions; and (b) will retain books and records pertaining to the Receivables.  Originator does not maintain joint bank accounts or other the SPV accounts to which the SPV has independent access.   18.      An integration of business functions between Originator and the SPV, if any, exists only to the extent summarized in this paragraph.  The SPV is operated for the exclusive purpose of purchasing Receivables from Seller.  The SPV will have no employees, and the SPV’s day-to-day business operations with respect to the Receivables will be conducted through Seller, in its capacity as Servicer, pursuant to the Transfer and Administration Agreement and that under that agreement, Seller has limited rights, in its capacity as Servicer, to enter into modifications of Receivables on behalf of the SPV, and Seller is generally not permitted to resign as Servicer.  Originator and the SPV may share some expenses, but these are not expected to be material and, in any event, will be allocated between the entities on a basis reasonably related to the cost of the services involved and each entity’s actual use of such services.  Obligors on the Receivables transferred to the SPV will not be notified that their Receivables have been transferred to the SPV.   19.      The SPV is held out to the public as a separate entity apart from Originator, including as described under Part I: Description of the Transactions in the Opinion.   20.      Originator maintains its own stationery and other business forms separate from the SPV’s and conducts business in its own name (including, without limitation, its contracts and written communications).   21.      Originator adheres in all material respects to corporate formalities in all transfers of assets and other transactions between Originator and the SPV.  In general, Originator observes appropriate corporate formalities under applicable law.   22.      Originator does not currently, and does not intend to, guaranty, and is not otherwise obligated to repay, the SPV’s liabilities.   23.      At closing, Originator will: (a) be solvent; (b) be adequately capitalized to conduct its business and affairs as a going concern, considering the size and nature of its business   3   and intended purposes and taking into account pending and threatened claims; and (c) intends to, and believes that it will be able to, pay its debts as they mature.  As a result, Originator is intended to (and is reasonably believed to) be able to survive as a stand-alone entity.   24.      Originator does not pay the SPV’s expenses, except as specifically provided in the Agreements.  Any allocations of direct, indirect or overhead expenses for items shared between Originator and the SPV are made among such entities to the extent practical on the basis of actual use or value of services rendered and otherwise on a basis reasonably related to actual use or the value of services rendered.   25.      Originator has not held itself out, nor does it intend to do so in the future, as responsible for the SPV’s debts.   4   Seller—Disclosure Representations and Covenants   Disclosure of the Transactions   in its financial statements (on which Seller is consolidated); and (b) UCC receivables by the Originator to Seller pursuant to the receivables sales agreement referred to in the Opinion (the “Receivables Sale Agreement”) and the transfer of the Receivables together with a portfolio of additional receivables previously acquired by Seller (the “Receivables”) from Seller to United Stationers Receivables, LLC (the “SPV”) pursuant to the receivables purchase agreement referred to in the Opinion (the “Receivables Purchase Agreement”).   2.        The computer records of Seller, as servicer (in such capacity, the   3.        Seller will not conceal any transfers contemplated by the agreements referred to on Schedule II to the Opinion (the “Agreements”) from any interested party.  Although obligors on the Receivables will not be affirmatively informed of the transfers of their obligations, Seller will not conceal the transfers from any obligor that inquires.  Also, (other than certain rebates and allowances in respect of Receivables) the obligors are not expected to be material creditors of either Seller or the SPV.   Terms of the Transactions   4.        In connection with the Transactions: (a) certain investors in the Receivables rely on the Receivables and the other assets of the SPV in making the Transfer being characterized as true sales, so as to isolate the Receivables from Seller’s creditors; and (c) the sale of the Receivables to the SPV and their financing through the Transactions is beneficial to Seller and its creditors because it, among other things, increases the liquidity of their assets.   5.        The terms of each of the Receivables Sale Agreement and other transactions between Originator and Seller and the Receivables Purchase Agreement and other transactions between Seller and the SPV are (a) consistent with those of arm’s-length relationships and (b) fair and equitable to each of the parties.   6.        Seller intends the Transfer to be a true sale by Originator to Seller that is absolute and irrevocable and that provides Seller with the full benefits of ownership of the Receivables.  Seller will receive the conveyance of the Receivables from Originator without recourse for uncollectibility of the Receivables as a result of the creditworthiness of the related Obligor and without any warranty of collectibility or any unconventional warranty.   5   7.        Seller intends the Transfer to be a true sale by Seller to the SPV that is absolute and irrevocable and that provides the SPV with the full benefits of ownership of the Receivables.  Seller will convey the Receivables to the SPV without recourse for uncollectibility of the Receivables as a result of the creditworthiness of the related Obligor and without any warranty of collectibility or any unconventional warranty.   8.        To finance its purchase, Seller will transfer the Receivables to the SPV, which will transfer the Receivables to Bank of America, National Association (for the benefit of certain investors).   9.        The consideration received from Originator in the Transfer represents   10.      Immediately prior to the Transfer, Seller owned the Receivables free and clear of any lien or other adverse claim.   11.      Seller purchases the Receivables in good faith without knowledge of any adverse claim against, interest in, lien on, or defense to payment of, such assets (other than any adverse claim arising solely as a result of any action taken by Seller under the Agreements).   12.      Originator’s representations, warranties, covenants and indemnities in the Receivables Sale Agreement with respect to the Receivables and Seller’s representations, warranties, covenants and indemnities in the Receivables Purchase Agreement with respect to the Receivables:  (a) cover matters ascertainable by Originator or Seller, as applicable, in the ordinary course of business and (b) are intended to ensure that Seller or the SPV, as applicable, will receive the type of assets that it has bargained to purchase.  Seller believes that such representations, warranties, covenants and indemnities do not cause Originator or Seller, as applicable, to retain or assume the risk of nonpayment or other material financial risks of the Receivables based in part on the belief that the matters covered are within Originator’s or Seller’s control, are unlikely to occur, or both.  The representations, warranties and covenants are not intended to cover material liabilities that are reasonably likely to occur.   13.      There are no agreements or understandings between the SPV or Seller or any of Seller’s other affiliates that are relevant to the Transactions other than the Agreements and any other agreements and understandings specifically referenced in the Agreements.  In particular, there are no other agreements or understandings pursuant to which Seller or another of its other affiliates (a) is responsible for maintaining Seller’s or the SPV’s solvency or (b) provides recourse, guarantees or otherwise retains or assumes financial risks with respect to the Receivables.   Relationship Between Seller and the SPV   14.      The SPV is a wholly-owned subsidiary of Seller and was formed for the special purpose of consummating the Transactions.   6   15.      Seller intends to act in a manner that is consistent with the SPV’s   16.      Seller prepares and maintains separate corporate and financial records from the SPV that accurately reflect its assets, liabilities and financial affairs.  Seller believes that its assets and liabilities can be readily and inexpensively segregated, ascertained and identified separate from those of the SPV.  All transactions between Seller and the SPV, including monetary transactions, are and will be properly reflected in Seller’s books and records and Seller believes that each transaction will be on terms and conditions consistent with those of an arm’s length transaction.   17.      Seller believes the consolidation of Seller’s and the SPV’s business operations would not result in any significant cost savings or in a significantly greater efficiency or profitability of such combined business operation.   18.      Seller and the SPV do not intend to commingle their assets and pertaining to the Receivables.  Seller does not maintain joint bank accounts or other the SPV accounts to which the SPV has independent access.   19.      An integration of business functions between Seller and the SPV, if not permitted to resign as Servicer.  Seller and the SPV may share some   20.      The SPV is held out to the public as a separate entity apart from Seller, including as described under Part I: Description of the Transactions in the Opinion.   21.      Seller maintains its own stationery and other business forms separate from the SPV’s and conducts business in its own name (including, without limitation, its contracts and written communications).   22.      Seller adheres in all material respects to corporate formalities in all transfers of assets and other transactions between Seller and the SPV.  In general, Seller observes appropriate corporate formalities under applicable law.   7   23.      Seller does not currently, and does not intend to, guaranty, and is not otherwise obligated to repay, the SPV’s liabilities.   24.      At closing, Seller will: (a) be solvent; (b) be adequately capitalized to conduct its business and affairs as a going concern, considering the size and nature of its business and intended purposes and taking into account pending and threatened claims; and (c) intends to, and believes that it will be able to, pay its debts as they mature.  As a result, Seller is intended to (and is reasonably believed to) be able to survive as a stand-alone entity.   25.      Seller does not pay the SPV’s expenses, except as specifically provided in the Agreements.  Any allocations of direct, indirect or overhead expenses for items shared between Seller and the SPV are made among such entities to the extent practical on the basis of actual use or value of services rendered and otherwise on a basis reasonably related to actual use or the value of services rendered.   26.      Seller has not held itself out, nor does it intend to do so in the   8   SPV—Disclosure Representations and Covenants   Disclosure of the Transactions   been or will be publicly disclosed by the SPV as follows: (a) the Transactions will be addressed in notes relating to Performance Guarantor’s securitization activities in its financial statements (on which the SPV is consolidated) and (b) UCC financing statements will be filed to perfect the transfer (the “Transfer”) of receivables (the “Receivables”) by the Originator to United Stationers Financial Services LLC (“Seller”) pursuant to the receivables sale subsequently the Receivables together with a portfolio of additional receivables previously acquired by Seller (the “Receivables”) by Seller to the SPV pursuant to the receivables purchase agreement referred to in the Opinion (the “Receivables Purchase Agreement”).   2.        The SPV will not conceal any transfers contemplated by the agreements of the transfers of their obligations, the SPV will not conceal those transfers material creditors of the SPV.   Terms of the Transactions   3.        In connection with the Transactions: (a) the Investors rely on the Receivables and the other assets of the SPV in making their investment decision and will rely on the Transfers being characterized as true sales, so as to isolate the Receivables from Performance Guarantor’s, Originator’s and Seller’s creditors.   4.        The terms of the transactions between the SPV and each of Performance Guarantor, Originator and Seller are (a) consistent with those of arm’s-length   5.        The SPV intends the Transfer to be a true sale by Seller to the SPV benefits of ownership of the Receivables.  The SPV will receive the conveyance of the Receivables from Seller without recourse for bad debt or uncollectibility of the Receivables and without any warranty of collectibility or any unconventional warranty.   6.        The consideration received by Seller in the Transfer is the fair market value of the Receivables.   7.        The SPV purchases the Receivables in good faith without knowledge of taken by the SPV under the Agreements).   9   8.        Seller’s representations, warranties, covenants and indemnities in the Receivables Purchase Agreement with respect to the Receivables (a) cover matters ascertainable by Seller in the ordinary course of business and (b) are intended to ensure that the SPV will receive the type of assets that it has bargained to purchase.  Such representations, warranties, covenants and indemnities do not cause Seller to retain or assume the risk of nonpayment or other material financial risks of the Receivables.   9.        There are no agreements or understandings between the SPV and Seller or any of Seller’s other affiliates that are relevant to the Transactions other understandings pursuant to which Originator or another of its other affiliates (a) is responsible for maintaining the SPV’s solvency or (b) provides recourse, guarantees or otherwise retains or assumes financial risks with respect to the Receivables.   Relationship Between the SPV and Performance Guarantor, Originator and Seller   10.      The SPV is a wholly-owned subsidiary of Seller and was formed for the special purpose of consummating the Transactions and other similar transactions with respect to Seller’s Receivables.  The SPV will comply with all separateness covenants contained in the applicable Agreements, or in the SPV’s limited liability company agreement.   11.      The SPV intends to act in a manner that is consistent with the SPV’s   12.      The SPV prepares and maintains separate corporate and financial records (which will be subject to audit by independent public accountants) from Originator and Seller that accurately reflect its assets, liabilities and financial affairs.  The SPV believes that its assets and liabilities can be readily and inexpensively segregated, ascertained and identified separate from those of Performance Guarantor, Originator and Seller.  All transactions between the SPV on the one hand and Performance Guarantor, Originator or Seller on the other hand, including monetary transactions, are and will be properly reflected in the SPV’s books and records and the SPV believes that each will be on terms and conditions consistent with those of an arm’s length transaction.   13.      The consolidation of each of Performance Guarantor’s, Originator’s or Seller’s and the SPV’s business operations would not result in any significant cost savings or in a significantly greater efficiency or profitability of such combined business operation.   14.      The SPV and each of Performance Guarantor, Originator and Seller will not commingle their assets and liabilities, except that Seller, as Servicer of the Receivables: (a) may temporarily commingle collections pending identification and transfer to a collection account for the Transactions; and (b) will retain books and records pertaining to the Receivables.  The SPV does not otherwise maintain joint bank accounts or other the SPV accounts to which either of Originator or Seller has independent access.   10   15.      An integration of business functions between any of Performance Guarantor, Originator or Seller and the SPV, if any, exists only to the extent summarized in this paragraph.  The SPV is operated for the exclusive purpose of purchasing Receivables from Seller.  The SPV will have no employees, and the SPV’s day-to-day business operations with respect to the Receivables will be conducted through Seller, in its capacity as Servicer, pursuant to the Transfer and Administration Agreement.  Under that agreement, Seller has limited rights, in its capacity as Servicer, to enter into modifications of Receivables on behalf of the SPV, and Seller is generally not permitted to resign as Servicer.  Each of Performance Guarantor, Originator, Seller and the SPV may share some expenses not reflected in Servicer’s fees, but these are not expected to be material and, in any event, will be allocated between the entities on a basis reasonably related to the cost of the services involved and each entity’s actual use of such services.  Obligors on the Receivables transferred to the SPV will not be notified that their Receivables have been transferred to the SPV.   16.      The SPV is held out to the public as a separate entity apart from each of Originator and Seller, including as described under Part I: Description of the Transactions in the Opinion.   17.      The SPV maintains its own stationery and other business forms separate from Originator’s and conducts business in its own name (including, without   18.      The SPV has its own office, which is located in premises that are primarily occupied by Originator but is separately demarcated and identified.   19.      The SPV will adhere in all material respects to corporate formalities in all transfers of assets and other transactions between the SPV and each of Originator and Seller.  In general, the SPV observes appropriate limited liability company formalities under applicable law.   20.      The SPV will not guaranty, or otherwise become obligated to repay, either Originator’s or Seller’s liabilities, except to the extent that the SPV’s indemnities in the Agreements may be considered guaranties.  To the extent that those indemnities cover either Originator’s or Seller’s actions or failures to act, the SPV considers the likelihood that the SPV will incur liabilities under those indemnities to be remote and immaterial.   21.      At closing, the SPV will: (a) be solvent; (b) be adequately capitalized its debts as they mature.  As a result, the SPV is intended to (and is reasonably believed to) be able to survive as a stand-alone entity.   22.      None of Performance Guarantor, Originator nor Seller pays the SPV’s expenses, except as specifically provided in the Agreements.  Any allocations of direct, indirect or overhead expenses for items shared between the SPV and Performance Guarantor,   11   Originator or Seller, which are not expected to be material, are made among such of services rendered.   23.      The SPV has not held itself out, nor does it intend to do so in the future, as responsible for either Performance Guarantor’s, Originator’s or Seller’s debts.   12   SCHEDULE 6.3   (Financial Covenants)   Section 6.3 of this Agreement shall be read in its entirety as follows:   Section 6.3             Financial Covenants.  (a)  During the term of this Agreement, unless the Agent shall otherwise consent in writing:   (i)  Leverage Ratio.  The Performance Guarantor and the Originator will not permit the ratio (the “Leverage Ratio”), determined as of the end of each of its fiscal quarters, of (i) Consolidated Funded Indebtedness to (ii) Consolidated EBITDA for the then most-recently ended four fiscal quarters to be greater than 3.25 to 1.00.  The Leverage Ratio shall be calculated as of the last day of each fiscal quarter of the Performance Guarantor based upon (a) for Consolidated Funded Indebtedness, Consolidated Funded Indebtedness as of the last day of each such fiscal quarter and (b) for Consolidated EBITDA, the actual amount as of the last day of each fiscal quarter for the most recently ended four consecutive fiscal quarters; provided that the Leverage Ratio shall be calculated, with respect to Permitted Acquisitions, on a pro forma basis reasonably satisfactory to the Agent, broken down by fiscal quarter in the Performance Guarantor’s reasonable judgment;   (ii)           Minimum Consolidated Net Worth.  The Performance Guarantor and the Originator will at all times maintain positive Consolidated Net Worth which shall not be less than (i) $550,000,000 minus (ii) amounts expended by Performance Guarantor on or after July 1, 2007 in connection with repurchases or redemptions of its capital stock under Section 6.10 in the Revolving Credit Agreement plus (iii) 50% of Consolidated Net Income (if positive) earned in each fiscal quarter beginning with the fiscal quarter ending June 30, 2007, plus (iv) 50% of the net cash proceeds resulting from issuances of the Performance Guarantor’s or any Subsidiary’s capital stock from and after the Restatement Effective Date; and   (iii)          Capital Expenditures.  The Performance Guarantor and the Originator will not, nor will they permit any Subsidiary to expend, for Consolidated Capital Expenditures in the acquisition of fixed assets in any fiscal year in the aggregate for the Performance Guarantor and its Subsidiaries, in excess of (i) $75,000,000 for the period from January 1, 2007 through December 31, 2007; and (ii) $75,000,000 for the period from January 1 through December 31 for each fiscal year thereafter, plus any amount permitted to be expended in the immediately preceding fiscal year (pursuant to the absolute dollar limitation for such preceding fiscal year and not pursuant to any carryover provision from a prior fiscal year) but not expended.   (b)           As used in this Section 6.3, the following terms shall have the   Acquisition:  Any transaction, or any series of related transactions, consummated on or after the Restatement Effective Date, by which the Performance Guarantor or any of its   1   Subsidiaries (i) acquires any going concern business or all or substantially all of the assets of any Person, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires from one or more Persons (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage of voting power) of the outstanding ownership interests of any Person.   Affiliate:  With respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person.   Aggregate Commitment:  The aggregate of the Commitments of all the Lenders, as increased or reduced from time to time pursuant to the terms hereof.  The initial Aggregate Commitment is Four Hundred Twenty-Five Million and 00/100 Dollars ($425,000,000).   Agreement Accounting Principles:  Generally accepted accounting principles as in effect in the United States from time to time.   Assignment Agreement:  As defined in Section 12.3.1 of the Revolving Credit Agreement.   Capital Expenditures:  Without duplication, any expenditures for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Performance Guarantor and its Subsidiaries prepared in accordance with Agreement Accounting Principles, excluding (i) expenditures of insurance proceeds to rebuild or replace any asset after a casualty loss, (ii) leasehold improvement expenditures for which the Performance Guarantor or a Subsidiary is reimbursed by the lessor, sublessor or sublessee, (iii) expenditures of net cash proceeds of any asset sale permitted under Section 6.12 in the Revolving Credit Agreement, and (iv) with respect to any Permitted Acquisition, (a) the Purchase Price thereof and (b) any Capital Expenditures expended by the seller or entity to be acquired in any Permitted Acquisition prior to the date of such Permitted Acquisition.   Capitalized Lease:  With respect to any Person, any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.   Capitalized Lease Obligations:  With respect to any Person, the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.   Commitment:  For each Lender, including, without limitation, each LC Issuer, such Lender’s obligation to make Loans to, and participate in Facility LCs issued upon the application of, and each LC Issuer’s obligation to issue Facility LCs for the account of, the Originator in an aggregate amount not exceeding the amount set forth for such Lender on the Commitment Schedule or in an Assignment Agreement delivered pursuant to Section 12.3 in the Revolving Credit Agreement, as such amount may be modified from time to time pursuant to the terms thereof.   2   Commitment Schedule:  The Schedule identifying each Lender’s Commitment as of the Restatement Effective Date attached hereto and identified as such.   Consolidated Capital Expenditures:  With reference to any period, the Capital Expenditures of the Performance Guarantor and its Subsidiaries calculated on a   Consolidated EBITDA:  With respect to any period, Consolidated Net Income for such period plus, to the extent deducted from revenues in determining Consolidated Net Income for such period, (i) Consolidated Interest Expense, (ii) expense for taxes paid or accrued, (iii) depreciation, (iv) amortization, (v) losses attributable to equity in Affiliates, (vi) non-cash charges related to employee compensation and (vii) any extraordinary non-cash or nonrecurring non-cash charges or losses, minus, to the extent included in Consolidated Net Income for such period, any extraordinary non-cash or nonrecurring non-cash gains, all calculated for the Performance Guarantor and its Subsidiaries on a consolidated basis.   Consolidated Funded Indebtedness: At any time, with respect to any Person, without duplication, the sum of (i) the aggregate dollar amount of Consolidated Indebtedness for borrowed money owing by such Person or for which such Person is liable which has actually been funded and is outstanding at such time, whether or not such amount is due or payable at such time (other than obligations in respect of Rate Management Transactions), plus (ii) the aggregate undrawn amount of all standby Letters of Credit at such time for which such Person or any of its Subsidiaries is the account party or is otherwise liable (other than standby Letters of Credit in an amount up to $10,000,000 issued to support worker’s compensation obligations of the Credit Parties and other than Letters of Credit supporting any other component of this definition), plus (iii) the aggregate principal component of Capitalized Lease Obligations owing by such Person and its Subsidiaries on a consolidated basis or for which such Person or any of its Subsidiaries is otherwise liable, plus (iv) all Off-Balance Sheet Liabilities of such Person and its Subsidiaries on a consolidated basis, plus (v) all Disqualified Stock of such Person and its Subsidiaries on a consolidated basis.   Consolidated Indebtedness:  At any time, with respect to any Person, the Indebtedness of such Person and its Subsidiaries calculated on a consolidated basis as of such time.   Consolidated Interest Expense:  With reference to any period, the interest expense of the Performance Guarantor and its Subsidiaries calculated on a consolidated basis for such period (net of interest income), including, without limitation, yield or any other financing costs resembling interest which are payable under any Receivables Purchase Facility.   Consolidated Net Income:  With reference to any period, the net income (or loss) of the Performance Guarantor and its Subsidiaries calculated on a consolidated basis for such period and on a FIFO basis of inventory valuation.   Consolidated Net Worth:  At any time, with respect to any Person, the consolidated stockholders’ equity of such Person and its Subsidiaries calculated on a consolidated basis and on a FIFO basis of inventory valuation as of such time.   3   Contingent Obligation:  With respect to any Person, any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take or pay contract or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership unless the underlying obligation is expressly made non-recourse to such general partner; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the lesser of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Contingent Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of the Contingent Obligation shall be such guaranteeing person’s reasonably anticipated liability in respect thereof as determined by such Person in good faith.   Credit Party:  Collectively, the Performance Guarantor, the Originator and each of the Guarantors.   Disqualified Stock:  Any preferred or other capital stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is ninety-one (91) days after the Facility Termination Date.   Domestic Subsidiary:  Any Subsidiary of any Person that is not a Foreign Subsidiary.   Facility LC:  As defined in Section 2.20.1 of the Revolving Credit Agreement.   Facility Termination Date:  The earlier of (a) July 5, 2012 and (b) the date of termination in whole of the Aggregate Commitment pursuant to Section 2.5 of the Revolving Credit Agreement or the Commitments pursuant to Section 8.1 of the Revolving Credit Agreement.   Foreign Subsidiary:  (i) Any Subsidiary of any Person that is not organized under the laws of a jurisdiction located in the United States of America and (ii) any Subsidiary of a Person described in clause (i) hereof that is organized under the laws of a jurisdiction located in the United States of America.   Guarantor:  Each of the Performance Guarantor’s Domestic Subsidiaries (other than the Originator and any SPV) and all other Subsidiaries of the Performance Guarantor which become Guarantors in satisfaction of the provisions of Section 6.23 in the Revolving Credit Agreement, in each case, together with their respective permitted successors and assigns.   4   Indebtedness:  With respect to any Person, at any time, without duplication, such Person’s (i) obligations for borrowed money which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person, (ii) obligations representing the deferred purchase price of Property or services (other than current accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the trade and accrued expenses in connection with the provision of services incurred in the ordinary course of such Person’s business), (iii) Indebtedness of others, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person (provided that the amount of any such Indebtedness at any time shall be deemed to be the lesser of (a) such Indebtedness at such time and (b) the fair market value of such Property, as determined by such Person in good faith at such time), (iv) financial obligations which are evidenced by notes, bonds, debentures, acceptances, or other instruments, (v) obligations to purchase securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or Property, (vi) Capitalized Lease Obligations, (vii) Contingent Obligations of such Person in respect of any Indebtedness, (viii) reimbursement obligations under Letters of Credit, bankers’ acceptances, surety bonds and similar instruments, (ix) Off-Balance Sheet Liabilities, (x) Net Mark-to-Market Exposure under Rate Management Transactions and (xi) Disqualified Stock.   JPMorgan Chase:  JPMorgan Chase Bank, National Association, in its individual capacity, and its successors.   LC Issuer:  JPMorgan Chase (or any Subsidiary or Affiliate of JPMorgan Chase designated by JPMorgan Chase) or any of the other Lenders, as applicable, in its respective capacity as issuer of Facility LCs hereunder.   Lenders:  The lending institutions listed on the signature pages of the Revolving Credit Agreement and their respective successors and assigns.  Unless otherwise specified, the term “Lenders” includes the Swing Line Lender and the LC Issuers.   Letter of Credit:  With respect to any Person, a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or, without duplication, for which such Person has a reimbursement obligation.   Lien: Any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).   Net Mark-to-Market Exposure:  With respect to any Person, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from Rate Management Transactions.  “Unrealized losses” means the fair market value of the cost to such Person of replacing such Rate Management Transaction as of the date of determination (assuming the Rate Management Transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Rate Management Transaction as of the date of determination (assuming such Rate Management Transaction were to be terminated as of that date).   5   Off-Balance Sheet Liability:  With respect to any Person, without duplication, the principal component of (i) any Receivables Purchase Facility or any other repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person (other than the sale or disposition in the ordinary course of business of accounts or notes receivable in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables)) or (ii) any liability under any so-called “synthetic lease” or “tax ownership operating lease” transaction entered into by such Person; provided that “Off-Balance Sheet Liabilities” shall not include the principal component of the foregoing if such principal component (a) is otherwise reflected as a liability on such Person’s consolidated balance sheet or (b) is deducted from revenues in determining such Person’s consolidated net income but is not thereafter added back in calculating such Person’s Consolidated EBITDA.   Permitted Acquisition:  As defined in Section 6.13.5 of the Revolving Credit Agreement.   Person:  Any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.   Property:  With respect to any Person, any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.   Purchase Price:  The total consideration and other amounts payable in connection with any Acquisition, including, without limitation, any portion of the consideration payable in cash, all Indebtedness incurred or assumed in connection with such Acquisition, but exclusive of the value of any capital stock or other equity interests of the Performance Guarantor, the Originator or any Subsidiary issued as consideration for such Acquisition.   Rate Management Transaction: Any transaction (including an agreement with respect thereto) now existing or hereafter entered into by the Performance Guarantor, the Originator or a Subsidiary which is a rate swap, basis swap, forward rate transaction, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap interest rates, foreign currencies, commodity prices or equity prices.   Receivables Purchase Documents:  Any series of receivables purchase or sale agreements, servicing agreements and other related agreements generally consistent with terms contained in comparable structured finance transactions pursuant to which the Performance Guarantor, the Originator or any of its Subsidiaries, in their respective capacities as sellers or transferors of any receivables, sell or transfer, directly or indirectly, to SPVs all of their respective right, title and interest in and to (but not their obligations under) certain receivables for further sale or transfer (or granting of Liens to other purchasers of or investors in such assets or interests therein (and the other documents, instruments and agreements executed in connection   6   therewith)), as any such agreements may be as amended, modified, supplemented, restated or replaced from time to time therefor.   Receivables Purchase Facility:  Any securitization facility made available to the Performance Guarantor, the Originator or any of its Subsidiaries, pursuant to which receivables of the Performance Guarantor, the Originator or any of its Subsidiaries are transferred, directly or indirectly, to one or more SPVs, and thereafter to certain investors, pursuant to the terms and conditions of the Receivables Purchase Documents.   Restatement Effective Date: July 5, 2007.   Revolving Credit Agreement: The Second Amended and Restated Five-Year Revolving Credit Agreement, dated July 5, 2007, by and among the Originator, the Performance Guarantor, the Lenders from time to time parties thereto, PNC Bank, National Association, U.S. Bank National Association, KeyBank National Association, LaSalle Bank, National Association and JPMorgan Chase Bank, National Association as such agreement exists as of the Closing Date without giving effect to any amendment, modification, waiver, replacement or supplement thereto that is not consented to in writing by each Class Agent.   SPV:  Any special purpose entity established for the purpose of purchasing receivables in connection with a receivables securitization transaction permitted under the terms of the Revolving Credit Agreement.   Subsidiary:  With respect to any Person, (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having shall mean a Subsidiary of the Performance Guarantor.   Swing Line Lender: JPMorgan Chase or such other Lender which may succeed to its rights and obligations as Swing Line Lender pursuant to the terms of the Revolving Credit Agreement.   7   SCHEDULE 11.3   Address and Payment Information   If to the Conduit Investors:   (a) If to ENTERPRISE FUNDING:     Enterprise Funding Company LLC   c/o Global Securitization Services, LLC   68 South Service Road, Suite 120   Melville, New York 11747   Telephone: (631) 587-4700   Facsimile: (212) 302-8767         (with a copy to the related Class Agent)       Payment Information:       Bank: Deutsche Bank (New York, NY)   Benf: DTBCA as Agent for Enterprise Funding   ABA: 021 001 033   A/C #: 01 476 289   Ref: Client Name / Wire Description   Attn: Orinthia Skeete   (b) If to MARKET STREET:     Market Street Funding LLC   c/o AMACAR Group, L.L.C.   6525 Morrison Boulevard, Suite 318   Charlotte, North Carolina 28211   Attention: Doris Hearn   Telephone: (704) 365-0569   Facsimile: (704) 365-1362             Payment Information:       Bank:   ABA: 043000096   Credit:  Market Street Funding LLC   1002422076   Ref: United Stationers Receivables LLC   1   If to the SPV:       One Parkway North Boulevard   Deerfield, Illinois 60015-2559   Telephone: (847) 627-7000   Facsimile: (847) 627-7001   Payment Information:     The Northern Trust Company   ABA 071-000-152   Account 3510068   Re: Credit United Stationers Receivables, LLC   If to the Originator:       One Parkway North Boulevard     Telephone:   Facsimile:   If to the Seller or Servicer:     United Stationers Financial Services, LLC   One Parkway North Boulevard     Telephone:   Facsimile:   If to the Agent:     Bank of America, National Association,   as Agent   Bank of America Hearst Tower, 19th Floor   Charlotte, North Carolina  28255   Attention: Banc of America Securities, LLC Global Asset Backed Securitization Group; Portfolio Management   Telephone: 704/386-7922   Facsimile: 704/388-9169   2   Payment Information:     Bank of America   ABA: 026009593   Account #: 109360 0656600   Ref: United Stationers — Closing Fees   Attn: Sean Walsh   3   Exhibit A     Reference is made to the Transfer and Administration Agreement dated as of March 3, 2009 as it may be amended, modified, supplemented, restated or replaced from time to time (as so amended or modified, the “Agreement”) by and among Investor, Market Street Funding, LLC, a Delaware limited liability company institutions from time to time parties hereto as Alternate Investors.  Terms defined in the Agreement are used herein with the same meaning.   [                                      ] (the “Assignor”) and [                                          ] (the “Assignee”) agree as follows:   1.             The Assignor hereby sells and assigns to the Assignee, without recourse and without representation and warranty, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to all of the Assignor’s rights and obligations under the Agreement and the other Transaction Documents.  Such interest expressed as a percentage of all rights and obligations of the Alternate Investors, shall be equal to the percentage equivalent of a fraction the numerator of which is $[                ] and the denominator of which is the Facility Limit.  After giving effect to such sale and assignment, the Assignee’s Commitment will be as set forth on the signature page hereto.   2.             [In consideration of the payment of $[                      ], being [      ]% of the existing Net Investment, and of $[                      ], being [      ]% of the aggregate unpaid accrued Discount, receipt of which payment is hereby acknowledged, the Assignor hereby assigns to the Agent for the account of the Assignee, and the Assignee hereby purchases from the Assignor, a [      ]% interest in and to all of the Assignor’s right, title and interest in and to the Net Investment purchased by the undersigned on [                                ], [20][    ] under the Agreement.]   3.             The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any Adverse Claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Agreement, any other Transaction Document or any other instrument or document furnished pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Agreement or the Receivables, any other Transaction Document or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty   A - 1   and assumes no responsibility with respect to the financial condition of any of the SPV or the Servicer or the Originator or the performance or observance by any of the SPV or the Servicer or the Originator of any of its obligations under the Agreement, any other Transaction Document, or any instrument or document furnished pursuant thereto.   4.             The Assignee (i) confirms that it has received a copy of the Agreement, the First Tier Agreement and the Second Tier Agreement together with copies of the financial statements referred to in Section [    ] of the Agreement, to the extent delivered through the date of this Assignment and Assumption Agreement (the “Assignment”), and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment; (ii) agrees that it will, independently and without reliance upon the Agent, any of its Affiliates, the Assignor or any other Alternate Investor and based on such documents and information as it shall taking or not taking action under the Agreement and any other Transaction Document; (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Agreement and the other Transaction Documents as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Agreement are required to be performed by it as an Alternate Investor; and (v) specifies as its address for notices and its account for payments the office and account set forth beneath its name on the signature pages hereof[; and (vi) attaches the forms prescribed by the Internal Revenue Service of the United States of America certifying as to the Assignee’s status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty].  [To be included if the Assignee is organized under the laws of a jurisdiction outside the United States]   5.             The effective date for this Assignment shall be the later of (i) the date on which the Agent receives this Assignment executed by the parties hereto and receives the consent of [the SPV] and the Class Agents, on behalf of the Conduit Investors, and (ii) the date of this Assignment (the “Effective Date”).  Following the execution of this Assignment and the consent of [the SPV and] the Class Agents, on behalf of the Conduit Investors, this Assignment will be delivered to the Agent for acceptance and recording.   6.             Upon such acceptance and recording, as of the Effective Date, (i) the Assignee shall be a party to the Agreement and, to the extent provided in this Assignment, have the rights and obligations of an Alternate Investor Assignment, relinquish its rights and be released from its obligations under the Agreement.   7.             Upon such acceptance and recording, from and after the Effective Date, the Agent shall make all payments under the Agreement in respect of the interest assigned hereby (including, without limitation, all payments in respect of such interest in Net Investment, Discount and fees) to the Assignee.  The Assignor and Assignee shall make all appropriate adjustments in payments under the Agreement for periods prior to the Effective Date directly between themselves.   A - 2   8.             The Assignee shall not be required to fund hereunder an aggregate amount at any time outstanding in excess of $[                      ] [This should match the commitment amount for this Alternate Investor], minus the aggregate outstanding amount of any interest funded by the Assignee in its capacity as a participant under the Liquidity Provider Agreement.   9.             The Assignor agrees to pay the Assignee its pro rata share of fees in an amount equal to the product of (a) [          ] per annum and (b) the [Commitment] [Should match fees in Section [    ] of the Participation Agreement] during the period after the Effective Date for which such fees are owing and paid by the SPV pursuant to the Agreement.  Amounts paid under this section shall be credited against amounts payable to the Assignee under Section [    ] of the Participation Agreement dated as of [date] by and between [Bank of America/PNC Bank] and [Alternate Investor] (and vice versa).   10.           THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICTS OF LAW PRINCIPLES THEREOF OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).   11.           This agreement contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire Agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.   12.           If any one or more of the covenants, agreements, provisions or terms of this agreement shall for any reason whatsoever be held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this agreement and shall in no way affect the validity or enforceability of the other provisions of this agreement.   13.           This agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so shall constitute one and the same agreement.  Delivery by facsimile of an executed signature page of this agreement shall be effective as delivery of an executed counterpart hereof.   14.           This agreement shall be binding on the parties hereto and their   A - 3   IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written       [ASSIGNOR]           By:       Name:       Title:         [ASSIGNEE]           By:       Name:       Title:         A - 4   Address for notices and Account for payments:   For Credit Matters: For Administrative Matters:     [NAME]   [NAME]   Attention:   Attention:   Telephone: [(     )       -        ] Telephone: Telefax: Telefax:   Account for Payments:   NAME   ABA Number: [      -      -      ] Account Number: [                      ] Attention: [                            ]   Re:          [                                ]   Consented to this [          ] day of         Accepted this[           ] day of [                                              ], [20][    ]     [                                  ], [20][    ]   [                            ], as [                            ], as Agent Class Agent     By:     By:   Name:     Name:   Title:     Title:               [SPV]           By:       Name:       Title:         A - 5   Exhibit B   [Reserved]   B - 1   Exhibit C     The Originator’s Credit and Collection Policy or Policies and practices, relating to Contracts and Receivables, existing on the date hereof are as set forth in manuals that were delivered by the SPV prior to the Closing Date to the Agent.   C - 1   Exhibit D   Form of Investment Request   United Stationers Receivables, LLC (the “SPV”), pursuant to Section 2.2(a) of the Transfer and Administration Agreement, dated as of March 3, 2009 (as amended, modified, supplemented, restated or replaced from time to time, the “Agreement”), among the SPV, United Stationers Supply Co., an Illinois corporation (the “Originator”), United Stationers Financial Services LLC, an Illinois limited liability company (the “Seller”) and as Servicer, Enterprise Funding Company LLC, a Delaware limited liability company (“Enterprise Funding”), as a Conduit Investor, Market Street Funding, LLC, a Delaware limited liability company (“Market Street”, each of Enterprise Funding and Market Street a “Conduit Investor” and, collectively, the “Conduit Investors”), Bank of America, National Association, a national banking association (“Bank of America”), as Agent, as a Class Agent and as an Alternate Investor, PNC Bank, National Association (“PNC Bank”), as a Class Agent and as an Alternate Investor, and the financial institutions from time to time parties hereto as Alternate Investors, hereby requests that the [Conduit Investors] [Alternate Investors] effect an Investment from it pursuant to the following instructions:   Investment Date:                                                                        ] Purchase Price:  [                                                                       ](1) Funding Period(s):                                                                  ] Account to be credited:   [bank name] ABA No.[                                                                           ] Account No.  [                                                                  ] Reference No.[                                                               ]   Please credit the above-mentioned account on the Investment Date.  Capitalized terms used herein and not otherwise defined herein have the meaning assigned to them in the Agreement.   The SPV hereby certifies as of the date hereof that the conditions precedent to such Investment set forth in Section 4.2 of the Agreement have been satisfied, and that all of the representations and warranties made in Section 3.1 of the Agreement are true and correct on and as of the Investment Date, both before and after giving effect to the Investment.       [SPV]       Dated:     By:       Name:       Title:     (1) At least [$5,000,000] and in integral multiples of [$1,000,000].   D - 1   Exhibit E     [Date]   [Name and Address of Blocked Account Bank]   Re:                               [Name of the SPV] Blocked Account No[s].  [                      ]   Ladies and Gentlemen:   [                                    ] (the “Owner”) hereby notifies you (the “Bank”) that in connection with certain transactions involving its accounts receivable, it has transferred exclusive ownership and dominion of its [blocked] [lock-box] account no[s].  [                    ] [and the related lock-boxes no[s].[              ] maintained with you (collectively the “Accounts”) to Bank of America, National Association, a national banking association, as agent (the “Agent”), and that the SPV will transfer exclusive control of the Accounts to the Agent effective upon delivery to you of the Notice of Effectiveness (as hereinafter defined).  Each of the parties hereto agrees that, from and after the date you receive the Notice of Effectiveness, you will comply with instructions originated by the Agent directing disposition of the funds in the Accounts without further consent by the SPV.   In furtherance of the foregoing, the Owner and the Agent hereby instruct you, beginning on the date of your receipt of the Notice of Effectiveness substantially in the form attached hereto as Annex I and you agree, without further consent by the SPV (which consent the SPV hereby irrevocably waives):  (i) to collect the monies, checks, instruments and other items of payment mailed to the Accounts; (ii) to deposit into the Accounts all such monies, checks, instruments and other items of payment or all funds collected with respect thereto (unless otherwise instructed by the Agent); and (iii) to transfer all funds deposited and collected in the Accounts pursuant to instructions given to you by the Agent from time to time.   You are hereby further instructed and you agree, without further consent by the SPV (which consent the SPV hereby irrevocably waives):  (i) unless and until the Agent notifies you to the contrary at any time after your receipt of the Notice of Effectiveness, to make such transfers from the Accounts at such times and in such manner as the Owner, in its capacity as collection agent for the Agent, shall from time to time instruct to the extent such instructions are not inconsistent with the instructions set forth herein, and (ii) to permit the Owner (in its capacity as collection agent for the Agent) and the Agent to obtain upon request any information relating to the Accounts, including, without limitation, any information regarding the balance or activity of the Accounts.   E - 1   The SPV also hereby notifies you that, beginning on the date of your receipt of the Notice of Effectiveness and notwithstanding anything herein or elsewhere to the contrary, the Agent shall be irrevocably entitled to exercise, without further consent by the SPV, any and all rights in respect of or in connection with the Accounts, including, without limitation, the right to specify when payments are to be made out of or in connection with the Accounts.  The Agent has a continuing interest in all of the checks and their proceeds and all monies and earnings, if any, thereon in the Accounts, and you shall be the Agent’s agent for the purpose of holding and collecting such property.  The monies, checks, instruments and other items of payment mailed to, and funds and wire transfers deposited to, the Accounts will not be subject to deduction, set-off, banker’s lien, or any other right in favor of any person other than the Agent (except that you may set off (i) all amounts due to you in respect of your customary fees and expenses for the routine maintenance and operation of the Accounts, and (ii) the face amount of any checks which have been credited to the Accounts but are subsequently returned unpaid because of uncollected or insufficient funds).   This Agreement may not be terminated at any time by the SPV or you without the prior written consent of the Agent.  Neither this Agreement nor any provision hereof may be changed, amended, modified or waived orally but only by an instrument in writing signed by the Agent and the SPV.   You shall not assign or transfer your rights or obligations hereunder (other than to the Agent) without the prior written consent of the Agent and the SPV.  Subject to the preceding sentence, this Agreement shall be binding upon each of the parties hereto and their respective successors and assigns, and shall inure to the benefit of, and be enforceable by, the Agent, each of the parties hereto and their respective successors and assigns.   You hereby represent that the person signing this Agreement on your behalf is duly authorized by you to so sign.   You agree to give the Agent and the SPV prompt notice if the Accounts become subject to any writ, garnishment, judgment, warrant of attachment, execution or similar process.   Any notice, demand or other communication required or permitted to be given hereunder shall be in writing and may be personally served or sent by facsimile or by courier service or by United States mail and shall be deemed to have been delivered when delivered in person or by courier service or by facsimile or three (3) Business Days after deposit in the United States mail (registered or certified, with postage prepaid and properly addressed).  For the purposes hereof, (i) the addresses of the parties hereto shall be as set forth below each party’s name below, or, as to each party, at such other address as may be designated by such party in a written notice to the other party and the Agent and (ii) the address of the Agent shall be:   Bank of America, National Association   [231 South LaSalle Street, 16th Floor   Chicago, Illinois 60697   Attention: Banc of America Securities, LLC   Asset Securitization Group; Portfolio Management Telephone: 312/828-6471 Facsimile: 312/923-0273]   E - 2   [Bank of America Corporate Center, 10th Floor Attention:   Global Asset Backed Securitization Group; Portfolio Management Telephone: Facsimile: 704/388-9169]   , or at such other address as may be designated by the Agent in a written notice to each of the parties hereto.   Please agree to the terms of, and acknowledge receipt of, this notice by signing in the space provided below.     Very truly yours,       [SPV]       By:     Name:     Title:         Address:   Attention:   Facsimile:           ASSOCIATION       By:     Name:     Title:         Address:   Attention:   Facsimile:   E - 3   ACKNOWLEDGED AND AGREED:       [NAME OF BLOCKED ACCOUNT BANK]       By:     Title:           Date:         [Address]   Attention:   Facsimile:     E - 4   ANNEX 1 TO BLOCKED ACCOUNT AGREEMENT   [FORM OF NOTICE OF EFFECTIVENESS]   DATED: [                                ], [20][    ]   TO:                            [Name of Blocked Account Bank]   [Address] ATTN: [                                            ]   Re:                               Blocked Account No[s].  [              ]   Ladies and Gentlemen:   We hereby give you notice that effective on the date you receive this letter, exclusive control of the above-referenced Blocked Account[s], as described in our letter agreement with you dated [                                ], [20][    ] shall be exercised by the Agent.  You are hereby instructed to comply immediately with the instructions set forth in [that letter agreement] [as set forth herein].   [Add instructions regarding disposition of proceeds in Accounts.]     Very truly yours,       ASSOCIATION, as Agent       By:     Name:     Title:         Address:   Attention:   Facsimile:     ACKNOWLEDGED AND AGREED:         By:     Title:     Date:         Address:   Attention:   Facsimile:     E - 5   Exhibit F   Form of Servicer Report     United Stationers Receivables Purchase Agreement dated March 28, 2003 Monthly Report for the Month Ended January 31, 2009       Fax to:   Lynn Baugh 312-7322245   Bill Falcon 412-762-9184   Charissa Toole 513-534-0319   Anna V. Tarasyuk 212.834.6657   A. Portfolio Information:   Previous Months Ending Gross Receivables Balance:           plus:   Sales (excluding advertising)           plus:   Advertising Sales           minus:   Collections           minus:   Advertising Credits           minus:   Damaged/Defective           minus:   Wrong Item/Quantity           minus:   Customer Cancellation           minus:   Net EFT Discounts (VCD’s)           minus:   Other Dilution           minus:   Other (Net of write-offs and recoveries) Unadjusted =           minus:   Write-offs           plus:   Recoveries               Adjust for rounding               Adjusted Gross Receivables Balance:       —     B. Summary Aging Schedule (excludes Advertising A/R,)                 Current               1-30 days past due               31-60 days past due               61-90 days past due               91+ days past due               Deferred A/R               Disputed A/R               Ending Gross Receivables Balance       —     C. Calculation of Eligible Receivables:             From A:   Ending Gross Receivables Balance (from Aging)       —   Less:   Receivables > 60 days past due       —   Less:   Notes           Less:   Disputed A/R           Less:   Deferred Receivables over 2% of receivable balance           Less:   Receivables that correspond to obligors that are excluded or credit controlled (“Slow Pays”)           Less:   Cross Aging 25%           Less:   Advertising A/R           Less:   Designated Obligors           Less:   Receivables of Bankrupt Obligors           Less:   Government Receivables           Less:   Foreign           Less:   Affiliated Receivables           Less:   Contras (net of contras for Excess Concentration accounts)           Less:   National Accounts Rebates Reserve           Less:   EFT Rebate Reserve           Less:   AR Balances Specifically Reserved           Less:   Discounts Reserves (VCDs) (+25% over actual)           Add:   EFT Rebate Included in VCD (above) (+25% over actual)           Less:   Load Rebates Check Reserve           Less:   Other Rebates Reserve (DBP, PIR)           Less:   Other miscellaneous               Eligible Receivables:       —               #N/A     D. Excess Concentration Computation:       Corporate Rating   Eligible Receivables   Accrued Rebate Bal   Contra   VCD   LOAD   Eligible Receivables   Applicable Percentage   Concentration Limit   Excess Concentration   [**]   [**]                               [**]   —   [**]   [**]                               [**]   —   [**]   [**]                               [**]   —   [**]   [**]                               [**]   —   [**]   [**]                               [**]   —                                           —                                           —                                           —                                           —                                           —           —   —   —   —   —   —           —     A1+   10.00 % A1   10.00 % A2   9.00 % A3   6.75 % <IG or Private   4.05 %     Dilution Percentage     Dynamic Loss Reserve     Minimum Reserve     Yield Reserve     Aggregate Reserves 0.00%   Servicing Fee Reserve     E. Calculation of Net Receivables Balance:   From C:   Eligible Receivables (“ER”):       —   minus:   Excess Concentrations       —       Aggregate Receivables Balance:       —     F. Calculation of Available Funding Amount   From E:   Net Receivables Balance (“NRB”):       $ —   less:   Required Reserves (net of Servicing Reserve)               Less Servicing Reserve               Maximum Invested Amount:       $ 100,000     G. Compliance:   Dilution Ratio             - Three month rolling average (Actual Dilution/Sales)                         Trigger     Three month rolling average Dilution Ratio       7.5%   7.50%   8.25%                   Exception Funding Period   NO             Termination Event > ?   NO                               Delinquency Ratio                 - Three month rolling average (60+ Disputed Receivables /Total Receivables)                                   Three month rolling average Delinquency Ratio       5.5%   5.50%   6.25%                   Exception Funding Period   NO             Termination Event > ?   NO                               Default Ratio                 - Three month rolling average (61-90 dpd + actual writeoffs, conversions to notes, and transfers to the bad debt ledger prior to the default proxy /Sales 3 mos prior) \                 Three month rolling Default Ratio       1.75%   1.75%   2.00%                   Excption Funding Period   NO             Termination Event > ?   NO                               DSO Trigger                 91 * (Unpaid Balance of Receivables / 3mths aggregate sales)                                   Three month rolling DSO Trigger       50   50   60                   Excption Funding Period   NO             Termination Event > ?   NO                               Purchaser Interest < 100%                 Aggregate Capital Outstanding (C)                 Aggregate Reserves (AR)                 Net Receivables Balance (NRB)                 C/(NRB-AR)                 Compliance?                   H. Calculation of Funding:   Available Funding for YC SUSI       Adjust for $200MM limit after June 2009   Current Outstanding for YC SUSI   0           Requested Increase/(Decrease) for YC SUSI   0           Total Outstanding for YC SUSI   0                           Available Funding for Market Street         Current Outstanding for Market Street   0           Requested Increase/(Decrease) for Market Street   0           Total Outstanding for Market Street   0                           TOTAL OUTSTANDING INVESTED AMOUNT   0             Signed by:     Title:     Date:   Robert J. Kelderhouse           F-1   Exhibit G     SECRETARY’S CERTIFICATE   [                                ], [20][    ]   I, [                                    ], the undersigned [                                ] of [SPV] (the “SPV”), a [                ] corporation, DO HEREBY CERTIFY that:   1.                                       Attached hereto as Annex A is a true and complete copy of the [              ] [Insert appropriate organizational document] of the SPV as in effect on the date hereof.   2.                                       Attached hereto as Annex B is a true and complete copy of the [By-laws] [Insert appropriate organizational document] of the SPV as in effect on the date hereof.   3.                                       Attached hereto as Annex C is a true and complete copy of the resolutions duly adopted by the Board of Managers of the SPV [adopted by consent] as of [                                ], [20][    ], authorizing the execution, delivery and performance of each of the documents mentioned therein, which resolutions have not been revoked, modified, amended or rescinded and are still in full force and effect.   4.                                       The below-named persons have been duly qualified as and at all times since [                                ], [20][    ], to and including the date hereof have been officers or representatives of the SPV holding the respective offices or positions below set opposite their names and are authorized to execute on behalf of the SPV the below-mentioned Transfer and Administration Agreement and all other Transaction Documents (as defined in such Transfer and Administration Agreement) to which the SPV is a party and the signatures below set opposite their names are their genuine signatures:   Name   Signature   Office                                                                 G - 1   WITNESS my hand and seal of the SPV as of the day first above written.         Secretary     I, [                                ] the undersigned, [Title] of the SPV, DO HEREBY CERTIFY that [                                          ] is the duly elected and qualified Secretary of the SPV and the signature above is his/her genuine signature.   WITNESS my hand as of the day first above written.         [Title]   G - 2   Exhibit H   Form of [Originator/Servicer/Seller] Secretary’s Certificate   SECRETARY’S CERTIFICATE     [                                ] of [Originator/Servicer/Seller] (the “[Originator/Servicer/Seller]”), a [                ] corporation, DO HEREBY CERTIFY that:   document] of the [Originator/Servicer/Seller] as in effect on the date hereof.     and complete copy of the resolutions duly adopted by the Board of Directors of the [Originator/Servicer/Seller] [adopted by consent] as of [                                ], [20][    ], authorizing the execution, delivery and performance of each of the documents mentioned therein, which resolutions have not been revoked, modified, amended or rescinded and are still   representatives of the [Originator/Servicer/Seller] holding the respective offices or positions below set opposite their names and are authorized to execute on behalf of the [Originator/Servicer/Seller] the below-mentioned [First Tier Agreement/Second Tier Agreement], the Transfer and Administration Agreement dated as of March 3, 2009 among the United Stationers Receivables, LLC, an Illinois limited liability company (the “SPV”), United Stationers Supply Co., an Illinois corporation (the “Originator”), United Stationers Financial Services LLC, an Illinois limited liability company (the “Seller”) and as Servicer, Enterprise Funding Company LLC, a Delaware limited liability company (“Enterprise Funding”), as a Conduit Investor, Market Street Funding, LLC, a Delaware limited liability company (“Market Street”, each of Enterprise Funding and Market Street a “Conduit Investor” and, collectively, the “Conduit Investors”), Bank of America, National Association, a national banking association (“Bank of America”), as Agent, as a Class Agent and as an Alternate Investor, PNC Bank, National Association (“PNC Bank”), as a Class Agent and as an Alternate Investor, and the financial institutions from time to time parties hereto as Alternate Investors and certain financial institutions named therein (the “Agreement”) and all other Transaction Documents to which the [Originator/Servicer/Seller] is a party and the signatures below set opposite their names are their genuine signatures:   H - 1   Name   Signature   Office                                                               WITNESS my hand and seal of the [Originator/Servicer/Seller] as of the date first above written.         Secretary     I, the undersigned, [Title] of the [Originator/Servicer/Seller], DO HEREBY CERTIFY that [                                          ] is the duly elected and qualified Secretary of the [Originator/Servicer/Seller] and the signature above is his/her genuine signature.   WITNESS my hand as of the date first above written.         [Title]   H - 2   Exhibit I       Enterprise Funding Company LLC   Market Street Funding LLC [address]   [231 South LaSalle Street Suite 1611 Chicago, Illinois  60697] Charlotte, North Carolina  28255]   [address]   Ladies and Gentlemen:   This opinion is furnished to you pursuant to Section [5.1(m)] of the Transfer and Administration Agreement dated as of March 3, 2009 (the “Agreement”) United Stationers Receivables, LLC, an Illinois limited liability company (the “SPV”), United Stationers Supply Co., an Illinois corporation (the “Originator”), United Stationers Financial Services LLC, an Illinois limited liability company (the “Seller”) and as Servicer, Enterprise Funding Company LLC, a Delaware limited liability company (“Enterprise Funding”), as a Conduit Investor, Market Street Funding LLC, a Delaware limited liability company (“Market Street”, each of Enterprise Funding and Market Street a “Conduit Investor” and, collectively, the “Conduit Investors”), Bank of America, National Association, a national banking hereto as Alternate Investors and certain financial institutions from time to time parties hereto as Alternate Investors.  Capitalized terms used herein and not otherwise defined herein shall have the meanings given such terms in the Agreement.   I - 1   We have acted as counsel to the Originator, the Seller and the SPV in connection with the preparation of the Agreement, the First Tier Agreement, the Second Tier Agreement, the other Transaction Documents and the transactions contemplated thereby.   We have examined, on the date hereof, the Agreement and all exhibits thereto, the First Tier Agreement, the Second Tier Agreement and all exhibits thereto, certificates of public officials and of officers of the SPV, the Seller and the Originator and certified copies of the Originator’s, the Seller’s and the SPV’s [Modify the following for appropriate type of entity] [certificate of incorporation, by-laws, the Board of Directors’ resolutions] authorizing the Originator’s, the Seller’s and the SPV’s participation in the transactions contemplated by the Agreement, the First Tier Agreement, the Second Tier Agreement, the other Transaction Documents, copies of each of the above having been delivered to you, copies of the financing statements on Form UCC-1 filed in the filing offices listed in Schedule I hereto executed by the Originator, as debtor, in favor of the SPV, as secured party and showing the Agent, on behalf of the Conduit Investors and the Alternate Investors, as the assignee of the secured party, substantially in the form attached hereto as Exhibit A (the “Originator Financing Statements”) and the Seller, as debtor, in favor of the SPV, as secured party and showing the Agent, on behalf of the Conduit Investors and the Alternate Investors, as the assignee of the secured party, substantially in the form attached hereto as Exhibit B (the “Seller Financing Statements”) and copies of the financing statements on Form UCC-1 filed in the filing offices listed in Schedule II hereto executed by SPV, as debtor, in favor of the Agent, on behalf of the Conduit Investor and the Alternate Investors, as secured party, substantially in the form attached hereto as Exhibit C [Should track the granting clause of the Agreement or if the SPV will only be used for a single transaction a blanket lien may be given by the SPV to the Agent covering:  all accounts, chattel paper, instruments, general intangibles, inventory, investment property and other property of the SPV, whether now or hereafter owned or existing, and all proceeds of the foregoing] (the “SPV Financing Statements”).  We have also examined the closing documents delivered pursuant to the Agreement, the First Tier Agreement, the Second Tier Agreement and copies of all such documents and records, and have made such investigations of law, as we have deemed necessary and relevant as a basis for our opinion.  With respect to the accuracy of material factual matters which were not independently established, we have relied on certificates and statements of officers of the Originator, the Seller and the SPV.   On the basis of the foregoing, we are of the opinion that:   1.             The SPV is a corporation duly [incorporated], validly existing and in good standing under the laws of [                  ], has the [corporate] power and authority to own its properties and to carry on its business as now being conducted, and had at all relevant times, and now has, all necessary power, authority, and legal right to acquire and own the Receivables and other Affected Assets, and is duly qualified and in good standing as a foreign [corporation] and is authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization.   2.             The Originator is a [corporation] duly incorporated, validly existing and in good standing under the laws of [                  ], has the [corporate] power and authority to own its properties and to carry on its business as now being conducted, and had at all relevant times, and now has, all necessary power, authority, and legal right to acquire and own the Receivables and   I - 2   other Affected Assets, and is duly qualified and in good standing as a foreign qualification or authorization.   3.             The Seller is a [corporation] duly incorporated, validly existing qualification or authorization.   4.             The SPV has the power, [corporate] and other, and has taken all necessary [corporate] action to execute, deliver and perform the Agreement and the other Transaction Documents to which it is a party, each in accordance with its respective terms, and to consummate the transactions contemplated thereby.  The Transaction Documents to which the SPV is a party have been duly executed and delivered by the SPV and constitute the legal, valid and binding obligations of the SPV enforceable against the SPV in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.   5.             The Originator has the power, [corporate] and other, and has taken all necessary corporate action to execute, deliver and perform the First Tier Agreement and the other Transaction Documents to which it is a party, each in accordance with its respective terms, and to consummate the transactions contemplated thereby.  The Transaction Documents to which the Originator is a party have been duly executed and delivered by the Originator and constitute the legal, valid and binding obligations of the Originator enforceable against the Originator in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.   6.             The Seller has the power, [corporate] and other, and has taken all necessary corporate action to execute, deliver and perform the Second Tier accordance with its respective terms, and to consummate the transactions contemplated thereby.  The Transaction Documents to which the Seller is a party have been duly executed and delivered by the Seller and constitute the legal, valid and binding obligations of the Seller enforceable against the Seller in accordance with their terms, except as enforcement thereof may be limited by creditors’ rights generally and by general equitable principles.   7.             The execution, delivery and performance in accordance with their terms by the SPV of the Agreement and the other Transaction Documents and the consummation of the transactions contemplated thereby, do not and will not (i) require (a) any governmental approval or (b) any consent or approval of any stockholder of the SPV that has not been obtained, (ii) violate or conflict with, result in a breach of, or constitute a default under (a) the [certificate of incorporation or the by-laws] of the SPV, (b) any other agreement to which the SPV is a party or by which the SPV or any of its properties may be bound, or (c) any Law applicable to the SPV of   I - 3   any court or of any Official Body having jurisdiction over the SPV or any of its properties, or (iii) result in or require the creation or imposition of any Adverse Claim upon any of the assets, property or revenue of the SPV other than as contemplated by the Agreement.   8.             The execution, delivery and performance in accordance with their terms by the Originator of the First Tier Agreement and the other Transaction Documents and the consummation of the transactions contemplated thereby, do not and will not (i) require (a) any governmental approval or (b) any consent or approval of any stockholder of the Originator that has not been obtained, (ii) violate or conflict with, result in a breach of, or constitute a default under (a) the certificate of incorporation or the by-laws of the Originator, (b) any other agreement to which the Originator is a party or by which the Originator or any of its properties may be bound, or (c) any Law applicable to the Originator of any Official Body having jurisdiction over the Originator or any of its Adverse Claim upon any of the assets, property or revenue of the Originator other than as contemplated by the First Tier Agreement.   9.             The execution, delivery and performance in accordance with their terms by the Seller of the Second Tier Agreement and the other Transaction (a) the certificate of incorporation or the by-laws of the Seller, (b) any other agreement to which the Seller is a party or by which the Seller or any of its properties may be bound, or (c) any Law applicable to the Seller of any Official Body having jurisdiction over the Seller or any of its properties, or (iii) result in or require the creation or imposition of any Adverse Claim upon any of the assets, property or revenue of the Seller other than as contemplated by the Second Tier Agreement.   10.           Except as set forth in the schedules attached hereto, there are not, in any court or before any arbitrator of any kind or before or by any governmental or non-governmental body, any actions, suits, proceedings, litigation or investigations, pending or to the best of our knowledge, after due inquiry, threatened, (i) against the SPV or the business or any property of the SPV except actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, have a Material Adverse Effect or (ii) relating to the Agreement or any other Transaction Document.   11.           Except as set forth in the schedules attached hereto, there are inquiry, threatened, (i) against the Originator or the business or any property of the Originator except actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, have a Material Adverse Effect or (ii) relating to the First Tier Agreement or any other Transaction Document.   12.           Except as set forth in the schedules attached hereto, there are litigation or investigations, pending or to the best of our   I - 4   knowledge, after due inquiry, threatened, (i) against the Seller or the business or any property of the Seller except actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, have a Material Adverse Effect or (ii) relating to the Second Tier Agreement or any other Transaction Document.   13.           The Receivables constitute [accounts] [general intangibles][chattel paper] [instruments] [certificated securities] [uncertificated securities] [investment property] as [that] [such] term[s] [is] [are] defined in the Uniform Commercial Code as in effect in [Insert the state whose law governs] [XYZ].   14.           The First Tier Agreement creates a valid and enforceable security interest (as that term is defined in Section 1-201(37) of the Uniform Commercial Code (including the conflict of laws rules thereof) (the “UCC”) as in effect in New York (the “New York UCC”) and [              ] (the “[XYZ] UCC”), under Article 9 of the New York UCC (“First Tier Security Interest”) in favor of the SPV in the Receivables and other Affected Assets and the proceeds thereof (except that the First Tier Security Interest will attach to any Receivable created after the date hereof only when the Originator possesses rights in such Receivable).  The internal laws of [XYZ] govern the perfection by the filing of financing statements of the First Tier Security Interest in the Receivables and the proceeds thereof.  The Originator Financing Statement(s) have been filed in the filing office(s) located in [XYZ] listed in Schedule I hereto, which [is] [are] the only office(s) in which filings are required under the [XYZ] UCC to perfect the First Tier Security Interest in the Receivables and the proceeds thereof, and accordingly the First Tier Security Interest in each Receivable and the proceeds thereof will, on the date of the initial transfer under the First Tier Agreement, be perfected under Article 9 of the [XYZ] UCC.  All filing fees and all taxes required to be paid as a condition to or upon the filing of the Originator Financing Statement(s) in [XYZ] have been paid in full.  As of the date hereof, there were no (i) UCC financing statements naming the Originator as debtor, Originator or assignor and covering any Receivables or other Affected Assets or any interest therein or (ii) notices of the filing of any federal tax lien (filed pursuant to Section 6323 of the Internal Revenue Code) or lien of the Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of the Employment Retirement Income Security Act) covering any Receivable or other Affected Asset or any interest therein.  The filing of the Originator Financing Statement(s) in the filing offices listed in Schedule I will create a first priority security interest in each Receivable.  Such perfection and priority will continue, provided that appropriate continuation statements are timely filed where and when required under the UCC.   15.           The Second Tier Agreement creates a valid and enforceable security Article 9 of the New York UCC (“Second Tier Security Interest”) in favor of the (except that the Second Tier Security Interest will attach to any Receivable created after the date hereof only when the Seller possesses rights in such financing statements of the Second Tier Security Interest in the Receivables and the proceeds thereof.  The Seller Financing Statement(s) have been filed in the filing office(s) located in [XYZ] listed in Schedule I hereto, which [is] [are] the Second Tier   I - 5   Security Interest in the Receivables and the proceeds thereof, and accordingly the Second Tier Security Interest in each Receivable and the proceeds thereof will, on the date of the initial transfer under the Second Tier Agreement, be perfected under Article 9 of the [XYZ] UCC.  All filing fees and all taxes required to be paid as a condition to or upon the filing of the Seller and/or Seller Financing Statement(s) in [XYZ] have been paid in full.  As of the date hereof, there were no (i) UCC financing statements naming the Seller as debtor, Seller or assignor and covering any Receivables or other Affected Assets or any interest therein or (ii) notices of the filing of any federal tax lien (filed pursuant to Section 6323 of the Internal Revenue Code) or lien of the Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of the Employment Retirement Income Security Act) covering any Receivable or other Affected Asset or any interest therein.  The filing of the Seller Financing Statement(s) in the filing offices listed in Schedule I will create a first priority security interest in each Receivable.  Such perfection and priority will continue, provided that appropriate continuation statements are timely filed where and when required under the UCC.   16.           The Agreement creates a valid and enforceable security interest (as that term is defined in Section 1-201(37) of the New York UCC and [              ] the [Note that the states in this paragraph 11 may be different that the stated in paragraph 10] ( the “[ABC] UCC”), under Article 9 of the New York UCC (“Third Tier Security Interest”) in favor of the Agent in each Receivable and other Affected Assets (except that the Third Tier Security Interest will attach only when the SPV possesses rights in such Receivable).  The internal laws of [ABC] govern the perfection by the filing of financing statements of the Third Tier Security Interest in the Receivables and the proceeds thereof.  The SPV Financing Statement(s) have been filed in the filing office(s) located in [ABC] listed in Schedule II hereto, which [is] [are] the only office(s) in which filings are required under the [ABC] UCC to perfect the Third Tier Security Interest in the Receivables and the proceeds thereof, and accordingly the Third Tier Security Interest in each Receivable and the proceeds thereof will, on the date of the initial transfer under the Agreement, be perfected under Article 9 of the [ABC] UCC.  All filing fees and all taxes required to be paid as a condition to or upon the filing of the SPV Financing Statement(s) in [ABC] have been paid in full.  As of the date hereof, there were no (i) UCC financing statements naming SPV as debtor, Originator or assignor and covering any Receivables or other Affected Assets or any interest therein or (ii) notices of the filing of any federal tax lien (filed pursuant to Section 6323 of the Internal Revenue Code) or lien of the Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of the Employment Retirement Income Security Act) covering any Receivable or other Affected Assets or any interest therein.  The filing of the SPV Financing Statement(s) in the filing offices listed in Schedule II will create a first priority security when required under the UCC.  [If the Receivables constitute instruments, certificated securities or uncertificated securities, this paragraph should be redrafted to reflect different perfection requirements]   17.           Neither the SPV, the Seller nor the Originator is, nor is controlled by, an “investment company” within the meaning of the Investment   In giving the opinions in paragraphs 14, 15 and 16, we have assumed that the Originator’s, the Seller’s and the SPV’s chief executive office will continue to be located in   I - 6   [XYZ][ABC][, as applicable].  The conclusions expressed in paragraphs 14, 15 and 16 are subject to the accuracy of the personnel in the filing offices referred to above with regard to the filing, indexing and recording of financing statements and notices of Adverse Claim, and to the correctness of reports to us by [Insert name of search company.] [                        ], who performed the searches of such records and who made the filings on behalf of the Originator, the Seller and the SPV in [XYZ][ABC][, as applicable].   In giving the opinions set forth in paragraphs 14, 15 and 16, we have assumed that all filings as appropriate in the event of a change in the name, identity or corporate structure of the debtor (or the Originator or assignor) named in any financing statements and all continuation statements necessary under the UCC to maintain the perfection of the First Tier Security Interest and the Second Tier Security Interest in the Receivables and the proceeds thereof will be duly and timely filed.  In giving such opinions, we also do not express any opinion as to (a) transactions excluded from Article 9 of the UCC by virtue of Section 9-104 of the UCC, (b) any security interest in proceeds except to the extent that the validity and perfection of any interest in proceeds (as such term is defined under the UCC) thereof that is covered by the Originator Financing Statements, the Seller Financing Statements or the SPV Financing Statements or any duly filed financing statement referred to above may be permitted by Section 9-306 of the UCC, and (c) any security interest that is terminated or released.   The foregoing opinions and conclusions were given only in respect of the laws of [XYZ] [, ABC], the State of New York and, to the extent specifically referred to herein, the Federal laws of the United States of America.   This opinion has been delivered at your request for the purposes contemplated by the Agreement.  Without our prior written consent, this opinion is not to be utilized or quoted for any other purpose and no one other than you is entitled to rely thereon; provided, that any Alternate Investor, any Program Support Provider [and any placement agent or dealer of any Conduit Investor’s commercial paper] may rely on this opinion as of it were addressed to them.   Very truly yours,   I - 7   Exhibit J     Scope of the Procedures to be Performed   [Date]   Time Periods to be tested:   [October] 2008 — tie in monthly reports [December] 2007 — tie in monthly reports & detailed testing   (Note: All samples are judgmentally selected)   Describe and document the following as it relates to the Company’s policies and procedures (through inquiry and observation, except where testing is noted):   The following are the procedures to be completed by the consultants:   1.              Monthly Servicer Report (Information Package)   Obtain the Monthly Servicer reports for the time periods to be tested. Test the accuracy of the Servicer reports submitted by performing the following procedures:   A.           Test the calculation of the accounts receivable rollforward, aging spreads, eligible collateral and concentrations reported on the existing Monthly Servicer Report for the periods subject to testing.  Calculate additional ineligibles for the selected time period, as applicable, as required in the Transfer and Administration Agreement dated [TBD] (testing of reserves, ratios and financial covenants is not included in the scope of the procedures to be performed.)   B.             Trace and agree line items to supporting documentation (including the general ledger and aged trial balance, if applicable). Recalculate line items. Explain the type of supporting documentation.   C.             Prepare a chart of the line items analyzed and a comparison of the Company prepared figures to recomputed amounts.   D.            Discuss other potential forms of non-cash offsets with appropriate management personnel.  Also, scan the general ledger for any general ledger accounts that disclose non-cash credits and/or potential offsets to receivables. Explain any such accounts that are noted that have not been previously identified and included in the rollforward.   E.              Obtain a reconciliation of receivables per the aged trial balance(s) to the general ledger for the most recent month subject to testing.  Report frequency of (monthly, weekly, daily) and procedures used in reconciling via discussions with Servicer personnel, and note any significant discrepancies (resolved or unresolved).  Compare to summary aging balances, noting whether the appropriate reconciled amount was included.  Prepare summary aging charts for each and attach the charts to your report.   2.              Obligor Concentration   A.            Obtain a listing of the ten largest obligors as of the most recent period subject to testing and test the accuracy of this information by tracing amounts to the receivable trial balance.   B.            Scan the trial balance noting any unidentified obligor concentrations.  Document if the Company is properly aggregating exposure among affiliated obligors and, if   Confidential   J - 1   C.            more than one entity is originating the receivables, exposure among the various related entities. Note the process by which this aggregation is accomplished.  Include a listing of the largest obligors with the report.   3.              Credit File Review   A.           Select a judgmental sample of 5 obligors and obtain the credit files.  For the sample selected, test that the credit limit was appropriately authorized (as per the Company’s authorization matrix), a current review was completed, and that relevant documentation is on file per the Company’s policy.   4.              Invoice Testing and Receivable Aging   A.           Document through inquiry the company’s aging methodology (i.e., invoice/contract date versus due date, etc.) Include a description of the aging methodology in the report.   B.             Judgmentally (from each division being tested) select 15 accounts/invoices from among the eligible aging categories on the selected aging report and perform the following procedures:   1)              Test whether the accounts are being properly aged in accordance with the terms and methodology. Note any accounts that may be aged in a non-conforming manner.   2)              Document any invoices noted which contain terms, such as terms of payment that would make the invoice ineligible to be included in the borrowing base. If so, document if the Company is properly excluding such invoices from the borrowing base.   3)              For the invoices selected above, obtain the related documentation pertaining to purchase order, proof of shipment of goods or performance of services and payment/resolution. Document whether the invoices were issued either coincident with or subsequent to the shipment of goods or performance of services.   4)              Prepare a listing of the accounts analyzed with an indication of the aging accuracy, the payment terms and reason for delinquency, if any.   5.              Invoice Resolution   A.           For the same 15 invoices selected in step 2 trace the amount owing through to final resolution (billing, aging, cash receipt and application against the invoice or write off/collection efforts).   6.              Delinquent Obligors   A.           Obtain form Management a listing of the top 15 invoices aged greater than 60 days from original due date and report the reason for non-payment and action taken, if such information is available in the credit file, or report that such information was not available.   Confidential   J - 2   7.              Write-Offs   A.            Obtain an understanding of the method used to write-off uncollectible accounts (i.e. direct method or allowance method).   B.            Obtain a list of the write-offs in the time periods subject to testing and present a reconciliation to the write-offs per the respective AR rollforwards and the general ledger.   C.            Obtain a list of the 10 largest write offs in the 12 months prior to September 2008.  The results of testing should be documented in a table which lists the following items:  Customer name, invoice number, invoice amount, invoice date, date of write-off, average age of the receivables at the time of write-off and reason for write-off, if available.  Also report compliance with the Servicer’s procedures, including proper authorization per the Company’s policy and procedures.   8.              Dilutions   A.            Judgmentally select a sample of 30 recent credit memos for the time periods subject to testing and prepare a table outlining the nature of the credit memos.   B.            For each credit memo selected in the sample, record the related invoice date, credit memo issuance date and rebill date (as applicable). Describe the method by which credits are aged in the AR.   C.            Calculate and report the simple and weighted average (weighted by dollar value) dilution horizons.  The dilution horizon is defined as the number of days between the original invoice date and credit memo issuance date.   D.            Document the Servicer’s procedures for identifying non-cash credits to AR for purposes of the monthly accounts receivable rollforward, and test the adequacy of such procedures using the Analysis Report tested in the procedures outlined above.   E.              Document how rebills are reflected in the AR rollforward and whether rebills result in the reaging of receivables.   9.              Rebates   A.           Discuss with management the existence of any rebate programs.  Obtain evidence of any current accruals for rebate programs and calculate the aggregate amount of such accruals.  Inquire how rebates are paid (e.g. by separate payments or by offsetting against accounts receivable).  Document any discussions.   10.       Contras   A.           Discuss with management any offset practices and document your findings.  Specifically discuss any obligors that are also vendors, and document the treatment of respective payable amounts for the purposes of the securitization program.   11.       Collection Methodology & Cash Application   A.            Document how partially paid, unapplied and unidentified cash is processed by and whether such procedures result in reaging accounts receivable.   B.            Obtain a current listing of the lockbox account(s) and concentration/depository account(s) into which collections on purchased receivables are deposited.  Attach this listing as an exhibit to the report.   Confidential   J - 3   C.            For the time periods subject to testing, obtain from Management a table summarizing collections by method of receipt, in a format similar to the one shown below:   METHOD OF RECEIPT   [MONTH] ($000’s)   %   Obligor mailed/sent payment directly to a lockbox   $       Electronic payments (ACH/wire) to a account           Other (describe)           Total Deposits related to Collections per Bank Statement(s)   $   100 % Total Collections per Monthly Report           Difference (ask Management for an explanation of significant causes of the difference, if any)             12.       Daily Balances   A.           Obtain and attach, if available, daily accounts receivable balances for the most recent month subject to testing.  Otherwise, obtain and attach daily sales and collection information for a recent month.  Prepare a chart summarizing the data.   13.       Internal Audit   A.            Provide a brief overview of the internal audit department including, number of personnel / planned changes and co-sourcing relationships.   B.            Inquire if the internal auditors have performed any reviews of credit, receivables, systems or other areas related to receivables in the 12 months ended September 2008.  Obtain a copy of the internal audit reports, as applicable and document internal audit findings and Management responses.   C.            If no internal audits were completed in the last 12 months relating to credit, receivables, systems or other areas related to receivables, inquire when such internal audits are scheduled.  If no internal audits are scheduled, inquire why.   Confidential   J-4   Exhibit K   Form of Compliance Certificate   To:  Bank of America, National Association, as Agent   This Compliance Certificate (the ‘Certificate”) is furnished pursuant to Section 6.1(a)(iii) of that certain Transfer and Administration Agreement dated as of March 3, 2009 as it may be amended or otherwise modified from time to time (as so amended or modified, the “Agreement”) by and among United Stationers Receivables, LLC, an Illinois limited liability company (the “SPV”), United hereto as Alternate Investors. Capitalized terms used and not otherwise defined herein are used with the meanings attributed thereto in the Agreement.   THE UNDERSIGNED HEREBY CERTIFIES THAT:   1.             I am the duly elected                                      [president] [treasurer] of the [SPV] [Performance Guarantor].   2.             I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the SPV and Performance Guarantor during the accounting period covered by the attached financial statements.   3.             The examinations described in Paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Termination Event or Potential Termination Event during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth in Paragraph 5 below.   4.             Schedule I attached hereto sets forth financial data and computations evidencing the compliance with certain covenants of the Agreement, including the financial covenants in Section 6.3 of the Agreement, all of which data and computations are true, complete and correct and have been prepared in accordance with GAAP.   5.             Described below are the exceptions, if any, to Paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the   K - 1   SPV or the Performance Guarantor has taken, is taking, or proposes to take with respect to each such condition or event:   6.             [add for SPV certification:  As of the date hereof, the jurisdiction of organization of the SPV is the State of Illinois, the place where the SPV is “located” for the purposes of Section 9-307 of the UCC is the State of Illinois, and the SPV has not changed its jurisdiction of organization or its “location” for the purposes of Section 9-307 of the UCC since the date of the original Agreement.]   The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this     day of                  ,      .       [SPV] [Performance Guarantor]       By:     Name:     Title:     K - 2   SCHEDULE I TO COMPLIANCE CERTIFICATE   A.            Schedule of Compliance as of                              ,                 with Section        of the Agreement.   This schedule relates to the fiscal year ended:   K - 3

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A Amendment No. 1 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): December 28, 2009 CHINA SHUANGJI CEMENT LTD. (Exact Name of Registrant as Specified in Charter) Delaware 000-52440 95-3542340 (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 221 Linglong Road, Zhaoyuan City, Shandong Province People’s Republic of China, 265400 (Address of Principal Executive Offices) Registrant's telephone number, including area code: (86) 535-8213217 Copies to: Gregory Sichenzia, Esq. Sichenzia Ross Friedman Ference LLP 61 Broadway, 32nd Floor New York, New York 10006 Phone: (212) 930-9700 Fax: (212) 930-9725 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) EXPLANATORY NOTE This Amendment No. 1 on Form 8-K/A is being filed solely to file as Exhibit 16.1 a letter from Robert G. Jeffrey, Certified Public Accountants, stating that it agrees with the statements made by China Shuangji Cement Ltd. in its Current Report on Form 8-K dated January 4, 2010. Item 9.01Financial Statements and Exhibits. (d) Exhibits Letter dated February 19, 2010, from Robert G. Jeffrey, Certified Public Accountants. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: August 16, 2010 CHINA SHUANGJI CEMENT LTD. By: /s/Michelle Zhu Michelle Zhu Chief Financial Officer

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 21, 2010 GlobalOptions Group, Inc. (Exact name of registrant as specified in its charter) Delaware 001-33700 30-0342273 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 75 Rockefeller Plaza, 27th Floor New York, New York (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (212) 445-6262 N/A (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. On June 21, 2010, Ronald M. Starr resigned from his position on the Board of Directors (the “Board”) of GlobalOptions Group, Inc. (the “Company”), effective immediately. Mr. Starr notified the Board of his resignation in a letter to Harvey W. Schiller, the Company's Chairman and Chief Executive Officer, dated June 21, 2010, which letter is attached hereto as Exhibit 99.1 and incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description Letter from Ronald M. Starr, dated June 21, 2010. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date:June 24, 2010 GLOBALOPTIONS GROUP, INC. By: /s/ Harvey W. Schiller Name: Harvey W. Schiller Title: Chairman and Chief Executive Officer EXHIBIT INDEX Exhibit No. Description Letter from Ronald M. Starr, dated June 21, 2010.

ADVISORY BOARD CONSULTING AGREEMENT   THIS CONSULTING AGREEMENT (“Agreement”) is made and entered into as of the 1st day of October, 2013 (“Effective Date”), by and between Barry Regenstein (“Consultant”) and Loton, Corp., a Nevada corporation (“Company”).   In consideration of the mutual promises and agreements contained herein, the parties hereto hereby agree as follows:   Section 1.            Advisory Board Consulting Services. During the term of this Agreement, Consultant shall be a member of and serve on the Company’s Advisory Board. The Company may, from time to time, request Consultant to advise management of the Company with respect to various aspects of the Company’s business. Consultant agrees to provide such advisory services to the Company; provided that, it does not conflict with any of Consultant’s other business commitments.   Section 2.            Term and Termination. This Agreement shall become effective on the date first written above and shall continue in full force and effect for one (1) year or until sooner terminated by either party, with or without cause, and with or without the giving of any reasons, by giving written notice thereof to the other party at least ten (10) calendar days before the termination is to be effective. Each party hereto acknowledges and agrees that neither party has made any representations or warranties (expressed or implied) to keep this Agreement in effect for any specified or minimum period of time.   Section 3.             Compensation and Expenses. The Company will provide Consultant with the following compensation and expense reimbursement during the term of this Agreement:   3.1         Stock Grant. Consultant shall receive a grant of 100,000 shares of the Company’s restricted common stock (“Stock Grant”), which shall vest on the date that is one year after the date of this Agreement and be subject to a lock-up of one (1) year from the date of vesting. The Stock Grant will be evidenced by and subject to the terms and conditions of a separate Notice of Grant and Restricted Stock Agreement.   3.2         Expenses. Any expenses incurred by Consultant at the request of the Company shall be reimbursed by the Company subject to receipt by the Company of appropriate documentation.         Section 4.            Status. Neither this Agreement, nor any transaction under or relating to this Agreement, shall be deemed to create an agency, partnership or joint venture relationship between the parties hereto. Consultant shall not be an employee of the Company. Consultant is and shall be an independent contractor. Consultant shall have neither the power nor the authority to negotiate and/or execute agreements on behalf of the Company, and Consultant shall not be authorized to bind the Company in any way whatsoever.   Section 5.            Proprietary Rights. Consultant acknowledges and agrees that Consultant has no right to or interest in the work, product, documents, reports or other materials created by Consultant specifically in connection with rendering strategic advisory services performed hereunder, nor any right to or interest in any copyright therein. Nothing contained herein shall prevent Consultant from performing similar services to other companies. The Company acknowledges that Consultant renders similar services to other similarly situated companies.   Section 6.            Confidentiality.   6.1         Confidential Information Defined. The Company may disclose to Consultant non-public information to further the performance of this Agreement. “Confidential Information” means all information (written or oral) disclosed by the Company, including but not limited to technical, financial and business information relating to the Company’s products, services, processes, profit or margin information, finances, customers, suppliers, marketing, and future business plans. All Confidential Information shall remain the sole property of the Company, and Consultant shall have no rights to the Confidential Information. The obligations of Consultant under this Section 6 shall survive the termination of this Agreement.   6.2         Return of Information. At any time during the term of this Agreement or after the expiration of this Agreement, upon written request by the Company, Consultant shall return within three (3) business days all originals and copies thereof of any and all Confidential Information; however Consultant may keep one copy for his files.   6.3         Exceptions.  Notwithstanding the other provisions of this Agreement, nothing received by Consultant shall be considered to be Confidential Information of the Company, if (a) it has been rightfully received by Consultant from a third party without confidentiality limitations; (b) it was known to Consultant prior to his first receipt thereof, as shown by files or other back-up documentation existing at the time of initial disclosure; or (c) it is required to be disclosed in the context of any administrative or judicial proceeding, provided that prior written notice of such required disclosure and an opportunity to oppose or limit disclosure is given to the Company.     7.1         Notices. Any notice or other document to be given hereunder by any party hereto to any other party hereto shall be in writing and delivered in person or by courier, electronically by facsimile or sent by any express mail service, postage or fees prepaid at the following addresses:   2     If to Consultant, to:   Barry Regenstein       Loton, Corp. 4751 Wilshire Blvd 3rd Floor Los Angeles, CA 90010   or at such other address or number for a party as shall be specified by like notice. Any notice which is delivered in the manner provided herein shall be deemed to have been duly given to the party to whom it is directed (a) on the day when personally served, including delivery by express mail and overnight courier, and (b) on the business day of confirmed transmission by telecommunications device.   7.2         Entire Agreement. This Agreement is intended by the parties hereto to be the final expression of their agreement with respect to the subject matter hereof and is the complete and exclusive statement of the terms thereof. This Agreement supersedes and terminates all prior agreements, arrangements and understandings between or among the Company and Consultant with respect to the subject matter hereof.   7.3         Amendment; Waiver. This Agreement may not be modified, amended or waived in any manner except by an instrument in writing signed by both parties hereto. The waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.   7.4         Governing Law. This Agreement shall be deemed to be made in, and in all respects shall be interpreted, construed, and governed by and in accordance with, the laws of the State of California.   7.5         Scope of Agreement.  This Agreement shall bind and inure to the benefit of the Company and its successors and assigns and of Consultant and its successors.   7.6         No Conflicts. Consultant represents and warrants to the Company that, at all times during the term of this Agreement, Consultant’s performance of the services contemplated by this Agreement shall not conflict with any agreement, commitment or obligation on the part of Consultant to any employer or other third party.   7.7         Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which   3     on the day and year first written above.     LOTON, CORP.         By: /s/ Robert Ellin     Name: Robert Ellin   Title: Chief Executive Officer               /s/ Barry Regenstein     Barry Regenstein                       4

EXHIBIT 10.3     BOND TRUST INDENTURE   Between   Brown County, South Dakota   And     as Bond Trustee     Dated as of October 1, 2007     $19,000,000   Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project) Series 2007A     TABLE OF CONTENTS       Page       GRANTING CLAUSES 3       ARTICLE I DEFINITIONS 5 Section 1.1 Definitions 5 Section 1.2 Interpretation 28       ARTICLE II THE SERIES 2007A BONDS 29 Section 2.1 Authorized Amount of Series 2007A Bonds 29 Section 2.2 Issuance of Series 2007A Bonds 29 Section 2.3 Execution; Limited Obligation 30 Section 2.4 Authentication 31 Section 2.5 [Intentionally Deleted] 32 Section 2.6 Form of Bonds and Temporary Bonds 32 Section 2.7 Delivery of Series 2007A Bonds 32 Section 2.8 Mutilated, Lost, Stolen or Destroyed Series 2007A Bonds 33 Section 2.9 Bond Register; Transfer and Exchange of Series 2007A Bonds; Persons Treated as Owners 33 Section 2.10 Cancellation 34 Section 2.11 Book-Entry Only System 34 Section 2.12 Successor Securities Depository; Transfers Outside Book-Entry Only System 36 Section 2.13 Payments and Notices to Cede & Co 36       ARTICLE III APPLICATION OF SERIES 2007A BOND PROCEEDS AND REQUIRED FUND DEPOSITS; EXPENSE FUND; PROJECT FUND; REBATE FUND 37 Section 3.1 Deposit of Funds 37 Section 3.2 Expense Fund 37 Section 3.3 Project Fund 37 Section 3.4 Rebate Fund 39       ARTICLE IV REVENUES AND FUNDS 40 Section 4.1 Source of Payment of Series 2007A Bonds 40 Section 4.2 Revenue Fund 40 Section 4.3 Interest Fund 40 Section 4.4 Bond Sinking Fund 40 Section 4.5 Debt Service Reserve Fund 41 Section 4.6 Redemption Fund 43 Section 4.7 Investment of Funds 43 Section 4.8 Trust Funds 44 Section 4.9 Excluded Funds; Transfers to Rebate Fund 44   i       Page       ARTICLE V REDEMPTION OF SERIES 2007A BONDS 45 Section 5.1 Redemption Dates and Prices 45 Section 5.2 Bond Sinking Fund Deposits - Mandatory Deposits 47 Section 5.3 Notice of Redemption 47       ARTICLE VI GENERAL COVENANTS 49 Section 6.1 Payment of Principal and Interest 49 Section 6.2 Performance of Covenants; Legal Authorization 49 Section 6.3 Ownership; Instruments of Further Assurance 49 Section 6.4 Recording and Filing 49 Section 6.5 Books and Records 50 Section 6.6 Bond Register 50 Section 6.7 Rights Under the Loan Agreement 50 Section 6.8 Designation of Additional Paying Agents 50 Section 6.9 Arbitrage; Compliance with Tax Exemption Agreement 50       ARTICLE VII 51 Section 7.1 Extension of Payment; Penalty 51 Section 7.2 Events of Default 51 Section 7.3 Acceleration 52 Section 7.4 Remedies; Rights of Bondholders 52 Section 7.5 Direction of Proceedings by Bondholders 53 Section 7.6 Appointment of Receivers 53 Section 7.7 Application of Moneys 53 Section 7.8 Remedies Vested in Bond Trustee 55 Section 7.9 Rights and Remedies of Bondholders 55 Section 7.10 Termination of Proceedings 56 Section 7.11 Waiver of Events of Default 56 Section 7.12 Borrower’s Rights of Possession and Use of Its Property 56 Section 7.13 Waiver of Redemption; Effect of Sale of Trust Estate 56 Section 7.14 Notice of Default 57       ARTICLE VIII THE BOND TRUSTEE 58 Section 8.1 Acceptance of the Trusts 58 Section 8.2 Fees, Charges and Expenses of Bond Trustee and any Additional Paying Agent 60 Section 8.3 Notice to Issuer and the Bondholders if Default Occurs 61 Section 8.4 Good Faith Reliance 61 Section 8.5 Dealings in Series 2007A Bonds 61 Section 8.6 Several Capacities 61 Section 8.7 Intervention by Bond Trustee 61 Section 8.8 Successor Bond Trustee by Merger or Consolidation 62 Section 8.9 Bond Trustee Required; Eligibility 62   ii       Page       Section 8.10 Resignation by the Bond Trustee 62 Section 8.11 Removal of the Bond Trustee 62 Section 8.12 Appointment of Successor Bond Trustee by the Bondholders; Temporary Bond Trustee 63 Section 8.13 Judicial Appointment of Successor Trustee 63 Section 8.14 Concerning Any Successor Bond Trustees 63 Section 8.15 Bond Trustee Protected in Relying Upon Resolution, Etc 64 Section 8.16 Successor Bond Trustee as Trustee of Funds, Paying Agent and Bond Registrar 64       ARTICLE IX SUPPLEMENTAL BOND INDENTURES 65 Section 9.1 Supplemental Bond Indentures Not Requiring Consent of Bondholders 65 Section 9.2 Supplemental Bond Indentures Requiring Consent of Bondholders 66       ARTICLE X AMENDMENTS TO THE LOAN AGREEMENT 68 Section 10.1 Amendments, Etc. to Loan Agreement Not Requiring Consent 68 Section 10.2 Amendments, Etc. to Loan Agreement Requiring Consent of the Bondholders 68       ARTICLE XI SATISFACTION OF THIS BOND INDENTURE 70 Section 11.1 Defeasance 70 Section 11.2 Liability of Issuer Not Discharged 71 Section 11.3 Provision for Payment of Portion of the Series 2007A Bonds 71 Section 11.4 When Advance Refunding is Not Permitted and Special Conditions for Refundings 72       ARTICLE XII MANNER OF EVIDENCING OWNERSHIP OF SERIES 2007A BONDS 73 Section 12.1 Proof of Ownership 73       ARTICLE XIII MISCELLANEOUS 74 Section 13.1 Limitation of Rights 74 Section 13.2 Unclaimed Moneys 74 Section 13.3 Severability 74 Section 13.4 Notices 75 Section 13.5 Bond Trustee as Paying Agent and Registrar 75 Section 13.6 Counterparts 75 Section 13.7 Applicable Law 75 Section 13.8 Immunity of Officers, Employees and Members of Issuer 75 Section 13.9 Parties Interested Hereunder 76 Section 13.10 Continuing Disclosure 76 Section 13.11 The Intercreditor Agreement 76   iii   EXHIBIT A (FORM OF SERIES 2007A BOND) A-1     EXHIBIT B PROJECT DESCRIPTION B-1     EXHIBIT C INTEREST PAYMENT SCHEDULE C-1   iv   THIS BOND TRUST INDENTURE (this “Bond Indenture”), dated as of October 1, 2007, between the BROWN COUNTY, SOUTH DAKOTA, a public body corporate and politic and a political subdivision, created and existing under the laws of the State of South Dakota (the “Issuer”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the “Bond Trustee”), duly established, existing and authorized to accept and execute trusts of the character herein set out under and by virtue of the laws of the United States of America. Capitalized terms used but not defined in the following recitals and granting clauses shall have the meanings given such terms in Article I hereof.     WHEREAS, the Issuer is a public body corporate and politic and a political subdivision duly and validly created and existing under the laws and constitution of the State of South Dakota and has all powers granted under the provisions of South Dakota Codified Laws Chapter 9-54, as supplemented and amended (the “Act”); and   WHEREAS, pursuant to the Act, the Issuer is authorized and empowered, among other things, to issue its revenue bonds for the purpose of financing “pollution control facilities” (within the meaning of the Act) within the territorial jurisdiction of the Issuer; and   WHEREAS, simultaneously with the execution and delivery of this Bond Indenture, the Issuer and Heartland Grain Fuels, L.P., a limited partnership organized and existing under the laws of the State of Delaware (the “Borrower”) which operates an ethanol production facility (the “Facility”) located in Brown County at 38469-133nd  Street, Aberdeen, South Dakota 57401, have entered into a Loan Agreement (the “Loan Agreement”), pursuant to which the Borrower covenants, among other things, to make loan repayments in amounts and at times which will be sufficient to pay when due the principal of, premium, if any, and interest on the revenue bonds herein authorized; and   WHEREAS, the Borrower has requested the Issuer to issue its revenue anticipation certificates and lend the proceeds thereof to the Borrower for the purpose of providing funds which will be used, together with certain funds of the Borrower, to provide the amounts necessary to (i) pay the cost of the acquisition, construction and equipping of improvements to and expansion of the Facility consisting of certain Solid Waste Disposal Facilities (as herein defined which constitute a project within the meaning of the Act (the “Project”), including reimbursement to the Borrower of certain moneys previously spent with respect to the Project, (ii) fund a debt service reserve, (iii) pay interest on the revenue bonds during construction of the Project and (iv) pay certain expenses incurred in connection with the issuance of said revenue bonds; and   WHEREAS, the Issuer is authorized under the Act to issue its revenue bonds for the aforesaid purposes and the Issuer has determined that the public interest will be best served by the issuance of its revenue bonds in order to lend funds to the Borrower for such purposes; and   WHEREAS, the Issuer has determined that it will issue its revenue anticipation certificates, to be known as Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project), Series 2007A (the “Series   1   2007A Bonds”), pursuant to the provisions of this Bond Indenture, for the purpose of providing the amounts necessary, together with certain funds of the Borrower, to (i) pay the costs of the Project, (ii) fund a debt service reserve, (iii) pay interest on the Series 2007A Bonds during construction of the Project and (iv) pay certain expenses incurred in connection with the issuance of the Series 2007A Bonds; and   WHEREAS, the execution and delivery of this Bond Indenture and the issuance of the Series 2007A Bonds have been in all respects duly and validly authorized by a resolution duly adopted by the Issuer; and   WHEREAS, the Series 2007A Bonds will be issued in substantially the form set forth in Exhibit A hereto, with necessary and appropriate variations, omissions and insertions as permitted or required by this Bond Indenture; and   WHEREAS all things necessary to make the Series 2007A Bonds, when authenticated by the Bond Trustee and issued as in this Bond Indenture provided, the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute this Bond Indenture a valid assignment and pledge of the payments and prepayments of the Borrower under the Loan Agreement to be applied to the payment of the principal of, premium, if any, and interest on the Series 2007A Bonds and a valid assignment of the rights of the Issuer under the Loan Agreement (excluding Unassigned Rights), have been done and performed, and the creation, execution and delivery of this Bond Indenture, and the creation, execution and issuance of the Series 2007A Bonds, subject to the terms hereof, have in all respects been duly authorized;   NOW, THEREFORE, THIS BOND INDENTURE WITNESSETH:   That the Issuer in consideration of the premises and of the purchase of the Series 2007A Bonds and of other good and lawful consideration, the receipt of which is hereby acknowledged, and to secure the payment of the principal of, premium, if any, and interest on the Series 2007A Bonds and the performance and observance of all of the covenants and conditions herein or therein contained, has executed and delivered this Bond Indenture and has conveyed, granted, assigned, transferred, pledged, set over and confirmed, and by these presents does hereby convey, grant, assign, transfer, pledge, set over and confirm, unto the Bond Trustee, its successor or successors and its or their assigns forever, a security interest in the property hereinafter described (said property being herein sometimes referred to as the “Trust Estate”) to wit:   2   GRANTING CLAUSES   DIVISION I   All right, title and interest of the Issuer in and to the Loan Agreement and the amounts payable to the Issuer thereunder (excluding Unassigned Rights);   DIVISION II   All right, title and interest of the Bond Trustee in and to the Bond Collateral Documents and all amounts realized from the enforcement thereof (excluding with respect to Unassigned Rights);   DIVISION III   Any and all other property of every kind and nature from time to time hereafter, by delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for additional security hereunder by the Issuer, the Borrower, or anyone on their behalf to the Bond Trustee, subject to the terms thereof, including without limitation funds of the Borrower held by the Bond Trustee in any of the funds and accounts established hereunder or otherwise as security for the Series 2007A Bonds and the Bond Proceeds Sub-Account established pursuant to the Accounts Agreement;   EXCEPTED PROPERTY   There is, however, expressly excepted and excluded from the lien and operation of this Bond Indenture amounts held by the Bond Trustee in the Rebate Fund established by this Bond Indenture;   TO HAVE AND TO HOLD, all and singular, the properties and the rights and privileges hereby conveyed, assigned and pledged by the Issuer or intended so to be, unto the Bond Trustee and its successors and assigns forever, in trust, nevertheless, for the equal and pro rata benefit and security of each and every holder of the Series 2007A Bonds issued and to be issued hereunder, without preference, priority or distinction as to participation in the benefit and protection hereof of one Series 2007A Bond over or from the others, by reason of priority in the issue or negotiation or maturity thereof, or for any other reason whatsoever, except as herein otherwise expressly provided, so that each and all of such Series 2007A Bonds shall have the same right, lien and privilege under this Bond Indenture and shall be equally secured hereby with the same effect as if the same had all been made, issued and negotiated simultaneously with the delivery hereof and were expressed to mature on one and the same date;   PROVIDED, NEVERTHELESS, and these presents are upon the express condition that if the Issuer or its successors or assigns shall well and truly pay or cause to be paid the principal of such Series 2007A Bonds with interest according to the provisions set forth in the Series 2007A Bonds and each of them or shall provide for the payment or redemption of such Series 2007A Bonds by depositing or causing to be deposited with the Bond Trustee the entire amount of funds or securities requisite for payment or redemption thereof when and as authorized by the provisions hereof, and shall also pay or cause to be paid all other sums payable hereunder by the   3   Issuer, then these presents and the estate and rights hereby granted shall cease, determine and become void, and thereupon the Bond Trustee, on payment of its lawful charges and disbursements then unpaid, on demand of the Issuer and upon the payment of the cost and expenses thereof, shall duly execute, acknowledge and deliver to the Issuer such instruments of satisfaction or release as may be necessary or proper to discharge this Bond Indenture, including if appropriate any required discharge of record, and if necessary shall grant, convey, reassign and deliver to the Issuer, its successors or assigns, all and singular the property, rights, privileges and interests by it hereby granted, conveyed, assigned and delivered, and all substitutes therefor, or any part thereof, not previously disposed of or released as herein provided; otherwise this Bond Indenture shall be and remain in full force.   AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by and between the parties hereto that all Series 2007A Bonds are to be issued, authenticated and delivered, and that all the trust estate is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and its successors, does hereby covenant and agree to and with the Bond Trustee and its respective successors in said trust, for the benefit of those who shall hold the Series 2007A Bonds, or any of them as follows:   4   ARTICLE I   DEFINITIONS   Section 1.1                         Definitions. The following words and terms as used herein shall have the following meanings herein and in the Loan Agreement, unless the context or use indicates another or different meaning or intent:   “ABE Pledge Agreement” means that certain Pledge and Security Agreement, dated as of October 1, 2007 among, Advanced BioEnergy, ABE Heartland, LLC, and the Bond Trustee, as amended or supplemented from time to time.   “Aberdeen Expansion” means the expansion of the Aberdeen Facility financed in part by the Senior Credit Facilities and the Series 2007A Bonds and includes the Project.   “Aberdeen Facility” means the existing ethanol production facility owned by the Borrower in the City of Aberdeen, Brown County, South Dakota.   “Aberdeen Grain Elevator Lease” means that certain Lease Agreement, dated as of October 1, 2007, between the Borrower and South Dakota Wheat Growers Association, relating to the grain elevator for the Aberdeen Facility.   “Aberdeen Senior Mortgage” means that certain Mortgage — Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the Borrower to the collateral agent specified therein for the benefit of the Senior Lenders relating to the Aberdeen Facility.   “Aberdeen Subordinate Mortgage” means that certain Subordinate Mortgage — Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the Borrower to the Bond Trustee relating to the Aberdeen Facility.   “Aberdeen Subordination, Non-Disturbance and Attornment Agreement” means that certain Subordination, Non-Disturbance and Attornment Agreement, dated as of October 1, 2007 among the Bond Trustee as mortgagee, the Borrower as lessee and South Dakota Wheat Growers Association as mortgagor, in relation to the Aberdeen Grain Elevator Lease, including all schedules, exhibits and attachments thereto.   “Accounts Agreement” means that certain Accounts Agreement by and among the Borrower, the Accounts Bank, the collateral agent as set forth therein, the administrative agent as set forth therein and the Bond Trustee.   “Accounts Bank” means Amarillo National Bank, not its individual capacity, but solely as depository bank and securities intermediary under the Accounts Agreement, and includes each other Person that may, from time to time, be appointed as successor Accounts Bank pursuant to and in accordance with the Accounts Agreement.   5   “Act” means South Dakota Codified Laws Chapter 9-54 as supplemented and amended.   “Additional Facility Document” means each contract, agreement, letter agreement or other instrument to which the Borrower becomes a party after the date hereof, other than any document under which the Borrower (a) could not reasonably be expected to have obligations or liabilities in the aggregate in excess of two million Dollars ($2,000,000), or be entitled to receive revenues in the aggregate in excess of two million Dollars ($2,000,000), in either case in value in any twelve (12) month period and (b) a termination of which could not reasonably be expected to result in a Material Adverse Effect; provided, that for the purposes of this definition, any series of related transactions (other than transactions, including hedging transactions, relating to the sale of Products or the purchase of corn and natural gas and Interest Rate Protection Agreements) shall be considered as one transaction, and all contracts, agreements, letter agreements or other instruments in respect of such transactions shall be considered as one contract, agreement, letter agreement or other instrument, as applicable.   “Administrative Agent”  means West LB, not in its individual capacity but solely as administrative agent for the Senior Lenders under the Senior Credit Agreement and the other Financing Documents, and includes each other Person that may, from time to time, be appointed as successors Administrative Agent pursuant to the Senior Credit Agreement.   “Advanced BioEnergy” means Advanced BioEnergy, LLC a Delaware limited liability company, which currently owns 100% of the Equity Interests in the Parent Company, and its successors and assigns and any surviving, resulting or transferee entity.   “Affiliate” of any Person means any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. A Person shall be deemed to be “controlled by” any other Person if such other Person (a) possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise or (b) owns at least ten percent (10%) of the Equity Interests in such Person.   “Ancillary Documents” means, with respect to each Additional Facilities Document, the following;   (i)                                    each security instrument and agreement necessary or desirable to grant to the Bond Trustee a perfected Lien (subject only to Permitted Liens) in such Additional Facilities Document and all property interests received by the Borrower in connection therewith;   (ii)                                 all recorded UCC financing statements and other filings required to perfect such Lien;   opinions of counsel for the Borrower addressing such matters relating to such document, each applicable Bond Collateral Document and Lien;   (iv)                             certified evidence of the authorization of such Additional Facility Document by the Borrower.   6   “Authorized Investments” means any of the following investments which at the time are legal investments under the laws of the State:   (v)                               Government Obligations;   (vi)                            Obligations of agencies of the United States government issued by the Federal Land Banks, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, and the Central Bank for Cooperatives;   (vii)                         Direct obligations of, and obligations fully guaranteed by, any of the fifty states of the United States of America rated a minimum of “A1” or “AA” by S&P or any equivalent rating by any equivalent rating service (such rating requirement can be met by an attached letter of credit from any bank meeting the requirements stated in clause (e) below or by municipal bond insurance);   (viii)                      Indebtedness of any county or other local government body within the United States of America rated at least “A1” or “AA” by S&P or any equivalent rating by any equivalent rating service (such rating requirement can be met by an attached letter of credit from any bank meeting the requirements stated in clause (e) below or by municipal bond insurance);   (ix)                              Indebtedness of any corporation rated “A1” or “AA” by S&P or any equivalent rating by any equivalent rating service;   (x)                                 Certificates of deposit, banker’s acceptances, trust deposits, demand deposits, including interest bearing money market accounts, or time deposits of any commercial bank, branch or Edge Act (12 USC 611 et seq.) branch which is a member of the Federal Reserve System, including the Trustee or any of its affiliates, has a net worth of at least $100 million and whose short term bank deposits have an “A” prefix by S&P or any equivalent rating by any equivalent rating service;   (xi)                              Repurchase agreements or reverse repurchase agreements with financial institutions whose commercial paper is “A1” or whose debt rating is “AA” by S&P or an equivalent rating by an equivalent rating service or any bank who meets the requirements as stated in clause (e) above, provided that in all cases the market value of the collateral used for such transactions must be adequate to insure safety, liquidity and preservation of capital: “AAA” 102%, “AA” 110%;   (xii)                          Securities and Exchange Commission Rule 2a 7 money market funds with a net asset value of one dollar and a parent company rating of “A1” or better by S&P or any equivalent rating by any equivalent rating service, including, without limitation, any mutual fund for which the Bond Trustee or an affiliate of the Bond Trustee serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (a) the Bond Trustee or an affiliate of the Bond Trustee receives fees from such funds for services rendered, (b) the Bond Trustee charges and collects fees for services rendered pursuant to the Bond Indenture, which fees are separate from the fees received from such   7   funds, and (c) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates; and   (xiii)                       any other obligations or securities permitted by the Senior Credit Facilities.   “Authorized Officer” means (i) with respect to any Person that is a corporation, the chief executive officer, the chief operating officer, the president, any vice president, the treasurer or the chief financial officer of such Person, (ii) with respect to any Person that is a partnership, an Authorized Officer of a general partner of such Person, (iii) with respect to any Person that is a limited liability company, any manager, the president, any vice president, the treasurer or the chief financial officer of such Person, or an Authorized Officer of the managing member of such Person, or (iv) with respect to any Person, such other representative of such Person who, in each such case, has been named as an Authorized Officer on a certificate of incumbency of such Person delivered to the Bond Trustee on or after the date hereof.   “Blocked Account Agreement” means the “Blocked Account Agreement” as defined in the Senior Credit Agreement.   “Bond Accounts” means the funds and accounts established and maintained under the Bond Indenture.   “Bond Collateral Documents” means the Bond Indenture, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordinate Equity Pledge, the ABE Pledge Agreement and any other documents granting, or relating to the grant, of security for the payment of amounts due under the Loan Agreement and the Series 2007A Bonds.   “Bond Documents” means the Series 2007A  Bonds, the Loan Agreement, the Bond Collateral Documents, the Bond Resolution and any other documents entered into in connection with, or relating to, the Series 2007A Bonds and the transactions contemplated by the issuance thereof.   “Bond Proceeds Withdrawal Certificate”  means a certificate substantially in the form of the “Bond Proceeds Withdrawal Certificate” attached as Exhibit K to the Accounts Agreement.   “Bond Resolution” means the resolution of the Issuer authorizing the issuance of the Series 2007A Bonds and the related transactions and documents.   “Bondholder”, “Holder”, “Owner” and “Registered Owner” mean with respect to the Series 2007A Bonds the registered owner of any Series 2007A Bond and does not mean any beneficial owner of the Series 2007A Bonds whether through the book-entry only system of DTC or otherwise.   “Bond Counsel” means Briggs and Morgan, Professional Association or any other nationally recognized municipal bond counsel selected by the Issuer or by the Borrower with the consent of the Issuer.   8   “Bond Indenture” means this Bond Trust Indenture between the Issuer and the Bond Trustee, as it may from time to time be amended or supplemented.   “Bond Proceeds Sub-Account” means the account so named established pursuant to the Accounts Agreement solely for the deposit of proceeds of the Series 2007A Bonds, and interest earnings thereon, from the Project Fund as permitted or directed by the Bond Indenture held under the Accounts Agreement solely for the payment of Costs of the Project as defined in the Bond Indenture and the Tax Exemption Agreement.   “Bond Register” means the registration books of the Issuer kept by the Bond Trustee (in its capacity as Registrar) to evidence the registration and transfer of the Series 2007A Bonds.   “Bond Sinking Fund” means the fund created in Section 4.4 hereof.   “Bond Trustee” means Wells Fargo Bank, National Association, as trustee, or any successor trustee under this Bond Indenture.   “Bond Year” means any twelve-month period beginning January 1 of a calendar year and ending on December 31 of the succeeding calendar year. For the purpose of calculating debt service on the Series 2007A Bonds payable in any Bond Year, principal and interest payable on the Series 2007A Bonds on January 1 of any Bond Year shall be deemed to be payable during the preceding Bond Year.   “Borrower” means Heartland Grain Fuels, L.P., a Delaware limited partnership and its successors and assigns and any surviving, resulting or transferee entity.   “Business Day” means a day which is not (a) a Saturday, Sunday or legal holiday on which banking institutions in the State, the State of New York or the state in which the principal corporate trust office of the Bond Trustee is located are authorized by law or executive order to close or (b) a day on which the New York Stock Exchange is authorized or obligated by law or executive order to close.   “Capitalized Lease Liabilities” of any Person means all monetary obligations of such Person under any leasing or similar arrangement that, in accordance with GAAP, would be classified as capitalized leases on a balance sheet of such Person or otherwise disclosed as such in a note to such balance sheet and, for purposes of the Financing Documents, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.   “Cash Equivalents” means:   (a)                                  readily marketable direct obligations of the government of the United States or any agency or instrumentality thereof, or obligations unconditionally guaranteed by the full faith and credit of the government of the United States, in each case maturing within one (1) year from the date of acquisition thereof;   (b)                                 securities issued by any state of the United instrumentality thereof having maturities of not more than one (1) year from the date of acquisition thereof and, at the time of acquisition,   9   having a rating of AA- or higher from S&P or Aa3 or higher from Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);   (c)                                  investments in commercial paper maturing within one hundred eighty (180) days from the date of acquisition thereof and having, at such date of acquisition, a rating of at least A-1 or P-1 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);   (d)                                 investments in certificates of deposit, banker’s acceptances and time deposits maturing within two hundred and seventy (270) days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Administrative Agent or any domestic office of any commercial bank organized under the laws of the United States of America, any State thereof, any country that is a member of the Organization for Economic Co-Operation and Development or any political subdivision thereof, that has a combined capital and surplus and undivided profits of not less than five hundred million Dollars $(500,000,000);   (e)                                  fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (d) of this definition; and   (f)                                    investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (e) of this definition.   “Cash Flow” means, for any period, the sum (without duplication) of the following:  (i) all cash paid to the Borrower during such period in connection with the Ethanol Marketing Agreement, Co-Product Marketing Agreement and any other sales of Products, (ii) all interest and investment earnings paid to the Borrower or the Project Accounts during such period on amounts on deposit in the Project Accounts, (iii) all cash paid to the Borrower during such period as business interruption insurance proceeds, and (iv) all other cash paid to the Borrower during such period; provided, however, that Cash Flow shall not include any proceeds of the Senior Credit Facilities or any other Indebtedness incurred by the Borrower; insurance proceeds; condemnation proceeds; the any equity contribution; proceeds from any disposition of assets of the Facilities or the Borrower (other than Products); tax refunds; amounts received, whether by way of a capital contribution or otherwise, from any holders of Equity Interests of the Borrower; and any other extraordinary or non-cash income or receipt of the Borrower under GAAP.   “Cash Flow Available for Debt Service” means, for any period, an amount equal to the amount of Cash Flow deposited in the “Revenue Account” established under the Accounts Agreement during such period minus all amounts paid during such period pursuant to priorities first and second of Section 6.01(c) of the Accounts Agreement so long as the Accounts Agreement is in effect and thereafter means, for any period, an amount equal to Cash Flow minus all amounts paid by the Borrower for Operation and Maintenance Expenses and Maintenance Capital Expenses.   10   “Change Order” means, with respect to an Expansion, each “Change Order” (if any) as described in the respective Design-Build Agreement.   “Closing Date” means the date on which all the conditions set forth in the Senior Credit Facilities as to closing and first funding have been satisfied or waived.   Each reference to the Code herein shall be deemed to include the United States Treasury Regulations, including temporary and proposed regulations relating to the Code or the sections thereof specifically referenced.   “Collateral” means all assets of and Equity Interests in the Borrower, whether now owned or hereafter acquired, upon which a Lien is purported to be created by any Bond Collateral Document then in effect or contemplated to be in effect.   “Collateral Agent” means WestLB, not in its individual capacity but solely in its capacity as collateral agent for the Senior Secured Parties under the Financing Documents, and includes each other Person that may, from time to time, be appointed as successor Collateral Agent pursuant to Section 9.06 (Resignation or Removal of Agent) of the Credit Agreement.   “Commodity Hedging Arrangements” means any arrangement to hedge the price of corn purchases, ethanol sales, Distillers Grains sales or natural gas purchases.   “Commodity Risk Management Plans” means risk management plans prepared by the Borrower setting forth terms and conditions relating to any Commodity Hedging Arrangements from time to time proposed to be entered into by the Borrower, including any updates made to such risk management.   “Construction Budget” means the budget attached the Senior Credit Facilities that sets forth all categories of costs and expenses required in connection with the development, construction, start-up, and testing of the Aberdeen Expansion, including all construction costs, all costs under the Design-Build Agreement, all interest, taxes and other carrying costs related to the construction loans, and costs related to the construction of the facilities described under the Aberdeen Expansion Documents, as updated from time to time in accordance the Senior Credit Facilities.   “Contest” means, with respect to any matter or claim involving any Person, that such Person is contesting such matter or claim in good faith and by appropriate proceedings timely instituted; provided that the following conditions are satisfied:  (a) such Person has posted a bond or cash collateral (or other security acceptable to the Senior Lenders so long as the Senior Credit Facilities are in effect or, thereafter, the Bond Trustee) for the full amount of such claim (or such lower amount as is acceptable to the Senior Lenders so long as the Senior Credit Facilities are in effect or, thereafter, the Bond Trustee); (b) during the period of such contest, the enforcement of any contested item is effectively stayed; (c) none of such Person or any of its officers, directors or employees, or any Senior Lender, the Bond Trustee, the Issuer or nay Bondholder or their respective officers, directors or employees, is or would reasonably be expected to become subject to any criminal liability or sanction in connection with such contested items; and (d) such contest and any resultant failure to pay or discharge the claimed or assessed amount during the   11   pendency of such contest does not, and could not reasonably be expected to (i) result in a Material Adverse Effect or (ii) involve a material risk of the sale, forfeiture or loss of, or the creation, existence or imposition of any Lien on, any of the Collateral.     “Conversion Date” means the Business Day upon which (i) all the conditions precedent set forth in the Senior Credit Facilities for the conversion from a construction loan to a term loan shall have been satisfied (or waived in accordance with the terms of the Senior Credit Facilities) and (ii) the construction loans are converted to term loans.   “Co-Product Marketing Agreement” means that certain Co-Product Marketing Agreement, dated as of May 9, 2007, between the Borrower and Dakotaland Feeds, LLC.   “Costs of the Project” means all costs of acquiring, constructing and equipping the Project which are permitted by the Act and consist of Solid Waste Disposal Facilities, and, without intending to limit or restrict any proper definition of such costs under any applicable law, shall include:   (a)                                  subject to the reimbursement restrictions contained in the Code, payment to the Borrower of such amounts, if any, as are necessary to reimburse the Borrower in full for all advances and payments made by it or for its account, with respect to the Project for expenditures in connection with the acquisition of any property required for the Project, the preparation of the plans and specifications (including any preliminary study or planning of the Project), or any aspect thereof and any reports or analyses concerning the Project, and all real or personal property deemed necessary in connection with the Project, or any one or more of said expenditures (including architectural, engineering and supervisory services);   (b)                                 payment for labor, services, materials and supplies used or furnished in the acquisition, construction and equipping of the Project, all as provided in the plans and specifications, payment for the cost of the acquisition, construction and installation of facilities, and all real and personal property deemed necessary in connection with the Project and payment for the miscellaneous expenses incidental to any of the foregoing items;   (c)                                  payment of any other costs and expenses relating to the acquisition, construction and equipping of the Project, including interest on the Series 2007A Bonds during construction of the Project, or the authorization, issuance and sale of the Series 2007A Bonds;   (d)                                 the cost of any indemnity and surety bonds to secure deposits in the Project Fund, taxes or other municipal or governmental charges lawfully levied or assessed during construction upon the Project or any property acquired therefor, and premiums on insurance, if any, in connection with the Project, during construction; and   12   (e)                                  any obligation or expense hereafter incurred by the Borrower for any of the foregoing purposes.   “Dakota Fuels” means Dakota Fuels, Inc., a Delaware corporation, which is the general partner of the Borrower.   “Date of Taxability” means the date on which a Determination of Taxability exists by expiration of any appeal period or unsuccessful conclusion of any appeal or contest.   “Debt Service” means, for any period, with respect to the Senior Credit Facilities or the Loan Agreement, as the case may be, the sum of (i) all fees and (iii) principal payments of the Loans (excluding the Required Cash Sweep and any other mandatory prepayments) scheduled to become due and payable during such period to the Senior Lenders or the Bond Trustee as the case may be and ,with respect to the Senior Credit Facilities only, all payments due by the Borrower pursuant to Section 4.03 (Increased Eurodollar Loan Costs) and Section 4.07(a) (Taxes) of the Senior Credit Facilities with respect to such scheduled principal, interest and fees.   “Debt Service Requirements” means, with respect to the period of time for which calculated, the aggregate of the payments required to be made during such period in respect of principal (whether at maturity, as a result of mandatory sinking fund redemption, a mandatory prepayment or otherwise) and interest on Outstanding Series 2007A Bonds.   “Debt Service Reserve Fund” means the fund created by Section 4.5 hereof.   “Debt Service Reserve Requirement” means an amount equal to the lesser of (i) the Maximum Annual Debt Service Requirement on the Series 2007A Bonds, (ii) 10% of the Proceeds of the Series 2007A Bonds or (iii) 125% of the average annual debt service on the Series 2007A Bonds.   “Defaulted Interest” means interest on the Series 2007A Bonds which is payable but not duly paid on the date due.   “Deferred Approvals” has the meaning provided in the Senior Credit Agreement.   “Design-Build Agreement” means each of the design build agreements for the Aberdeen Expansion specified in the Senior Credit Facilities.   “Distillers Grains” means any form of distillers grain products (including syrup) marketed by the Borrower from time to time.   “Determination of Taxability” means the issuance of a statutory notice of deficiency by the Internal Revenue Service, or ruling of the National Office or any District Office, or a final decision by any court of competent jurisdiction that interest on the Series 2007A Bonds is includible in the gross income of the recipient under Section 103 and related sections of the Code and regulations thereunder as in effect at the date of issuance of the Series 2007A Bonds, for any reason other than a change of law or that the Holder is a substantial user or a related person under Section 147(a), provided that the period for a contest or appeal, if any, of such action,   13   ruling or decision has expired without any such appeal or contest having been instituted, or, if instituted, such contest or appeal has been unsuccessfully concluded.   “DTC” means The Depository Trust Company, a New York corporation, and its successors and assigns.   “DTC Participant” or “DTC Participants” means securities brokers and dealers, banks, trust companies, clearing corporations and certain other corporations which have access to the DTC system.   “Environmental Affiliate” means any Person, only to the extent of, and only with respect to matters or actions of such Person for which, the Borrower could reasonably be expected to have liability as a result of the Borrower retaining, assuming, accepting or otherwise being subject to liability for Environmental Claims relating to such Person, whether the source of the Borrower’s obligation is by contract or operation of Law.   “Environmental Approvals” means any Governmental Approvals required under applicable Environmental Laws.   “Environmental Claim” means any written notice, claim, demand or similar written communication by any Person alleging potential liability or requiring or demanding regulatory compliance or remedial or responsive measures (including potential liability for investigatory costs, cleanup, remediation and mitigation costs, governmental response costs, natural resources damages, property damages, personal injuries, fines or penalties) in each such case (x) either (i) with respect to environmental contamination-related liabilities or obligations with respect to which the Borrower could reasonably be expected to be responsible that are, or could reasonably be expected to be, in excess of two hundred thousand Dollars ($200,000) in the aggregate, or (ii) that has or could reasonably be expected to result in a Material Adverse Effect and (y) arising out of, based on or resulting from (i) the presence, release or threatened release into the environment, of any Materials of Environmental Concern at any location, whether or not owned by such Person; (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Laws or Environmental Approvals; or (iii) personal injury or damage to property as a result of exposure to Materials of Environmental Concern.   “Environmental Laws” means all Laws applicable to the Facilities relating to pollution or protection of human health, safety or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including Laws relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise applicable to the Facilities relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, management, remediation or handling of Materials of Environmental Concern.   “Environmental Site Assessment Report” means, a Phase I environmental site assessment report prepared by an environmental consulting firm reasonably acceptable to the Administrative Agent, which report shall comply with ASTM standard 1527-05 (with such modifications thereto as may reasonably be requested by the Borrower and are reasonably acceptable to the Administrative Agent), and a Phase II environmental site assessment   14   reasonably acceptable to the Senior Lenders, addressing any recognized environmental conditions or other areas of concern identified in the relevant Phase I report if in the reasonable determination of the Senior Lenders, acting in consultation with the Independent Engineer, a Phase II assessment is warranted.   options, rights or other interests are outstanding on any date of determination, in each such case including all voting rights and economic rights related thereto.   and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.   “ERISA Affiliate” means any Person, trade or business that, together with the Borrower, is or was treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.   “Escrow Obligations” means (i)  Government Obligations, (ii) certificates evidencing a direct ownership interest in Government Obligations or in future interest or principal payments thereon held in a custody account by a custodian satisfactory to the Bond Trustee, and (iii) obligations of any state of the United States of America or any political subdivision, public instrumentality or public Issuer of any such state which are fully secured by and payable solely from Government Obligations held pursuant to an escrow agreement satisfactory to the Bond Trustee.   “Ethanol Marketing Agreement” means that certain Ethanol Marketing Agreement dated as of November 30, 2000, between the Borrower and Williams Ethanol Services, Inc. D/B/A  Williams Bio-Energy, N/K/A Aventine Renewable Energy, Inc., as amended March 31, 2003 and December 1, 2006.   “Event of Abandonment” means any of the following shall have occurred: (i) the abandonment by the Borrower of the development, construction, operation or maintenance of the Facilities for a period of more than sixty (60) consecutive days (other than as a result of force majeure, an any taking, exercise of rights of eminent domain, public improvement, inverse condemnation, condemnation or similar action of or proceeding by any Governmental Authority relating to any material part of the Project with, any Equity Interests of the Borrower, or any other assets thereof, or any event that causes the Facilities, or any materials portion thereof, to be damaged, destroyed, or rendered unfit for normal use for any reason), (ii) the suspension of all or substantially all of the Borrower’s activities with respect to the Facilities, other than as the result of such force majeure, taking or casualty, for a period of more than sixty (60) consecutive days,   15   or (iii) any written acknowledgement by the Borrower of a final decision to take any of the foregoing actions.   “Expansions” means the Aberdeen Expansion and the Huron Expansion.   “Expense Fund” means the fund created in Section 3.2 hereof.   “Facilities” means the Aberdeen Facility, the Aberdeen Expansion, the Huron Facility and the Huron Expansion, if undertaken.   “Facilities Documents” means the documents related to the Facilities defined as the “Project Documents” in the Senior Credit Facilities.   “Facilities Parties” means each Person (other than the Borrower or the Parent Company) who is a party to a Facilities Document.   “Final Completion Date” means with respect to the Aberdeen Expansion, the date (which shall occur on or before the Conversion Date Certain) on which the conditions in the Senior Credit Agreement have been satisfied, as certified by each of the Borrower and the Independent Engineer in a Final Completion Certificate.   “Final Completion Certificate” means (a) a certificate of the Independent Engineer, (b) a certificate of the Borrower, in each case in the form required by the Senior Credit Facilities and confirming that the Final Completion Date has occurred.   “Financial Model” means the pro forma financial statements and projections of revenue and expenses and cash flows with respect to the Borrower and the Facilities for the period from September 1, 2007 through the Fiscal Year ended December 31, 2022, attached to the Senior Credit Facilities, as the same may be updated by the Borrower.   “Financial Officer” means, with respect to any Person, the controller, treasurer or chief financial officer of such Person.   “Financing Documents” means the “Financing Documents” relating to the Senior credit Facilities as defined in the Senior Credit Agreement together with the Bond Documents.   “First Lien Agent” has the meaning provided in the Intercreditor Agreement.   “First Lien Claimholders” means, at any relevant time, the holders of First Lien Obligations at such time, including the First Lien Lenders, the First Lien Administrative Agent, the First Lien Agent, the Accounts Bank and Counterparties under the First Lien Hedge Agreements as defined in the Intercreditor Agreement.   “Fiscal Year” means any period of twelve (12) consecutive calendar months ending on September 30.   “Fiscal Quarter” means any quarter of a Fiscal Year.   16   “Funding Notice” means a request for funding of the Senior Credit Facilities for a construction or working capital or upon conversion to the term loan as further defined in the Senior Credit Agreement.   “GAAP” means generally accepted accounting principles in effect from time to time in the United States, applied on a consistent basis.   “Government Obligations” means direct obligations of the United States of America and obligations on which the timely payment of principal and interest is fully guaranteed by the United States of America.   “Governmental Approval” means any authorization, consent, approval, license, lease, ruling, permit, certification, exemption, filing for registration by or with any Governmental Authority.   “Governmental Authority” means any nation, state, sovereign, or government, any federal, regional, state, local or political subdivision and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.   “Guarantee” means, as to any Person, (a) any obligation, contingent or any holder of such Indebtedness to obtain any such Lien).   “Historical Debt Service Coverage Ratio” or “HDSCR” means, as of any Quarterly Payment Date, for the four (4) Fiscal Quarters immediately preceding (and not including the then-current Fiscal Quarter) such Quarterly Payment Date (or, if less than four (4) Fiscal Quarters have elapsed since the Conversion Date, for such number of full Fiscal Quarters that has elapsed since the Conversion Date), the ratio of (i) Cash Flow Available for Debt Service during such period to (ii) Debt Service on the Senior Credit Facilities or the Loan Agreement, as the case may be, during such period.   “Huron Expansion” means the expansion of the Huron Facility if undertaken and if financed in part by the Senior Lenders.   17   “Huron Facility” means the existing ethanol production facility owned by the Borrower in Huron, South Dakota.   “Huron Grain Elevator Lease” means that certain Lease Agreement, dated as of Association, relating to the grain elevator for the Huron Facility.   “Huron Ground Lease” means that certain Ground Lease, dated as of May 1, 1998, between the Borrower as Lessee and Farmland Industries, Inc. as Lessor, as assigned to Land O’Lakes Farmland Feed LLC (n/k/a Land O’Lakes Purina Feed LLC) pursuant to an Assignment and Assumption of Ground Lease dated July 16, 2004, and as amended by the First Amendment to Lease dated as of February 10, 2006, between Land O’Lakes Purina Feed, LLC and the Borrower.   “Huron Senior Mortgage” means that certain Mortgage – One Hundred Eighty Day Redemption, Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the Borrower to the Collateral Agent for the benefit of the Senior Lenders relating to the Huron Facility.   “Huron Subordinate Mortgage” means that certain, Subordinate Mortgage – One Hundred Eighty Day Redemption, Collateral Real Estate Mortgage, Security Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security Deposits made by the Borrower to the Bond Trustee relating to the Huron Facility.   “Huron Subordination, Non-Disturbance and Attornment Agreement” means that October 1, 2007, among the Bond Trustee as mortgagee, the Borrower as lessee and South Dakota Wheat Growers Association as mortgagor, in relation to the Huron     (g)                                 all obligations of such Person for or in respect of moneys borrowed or raised, whether or not for cash by whatever means (including acceptances, deposits, discounting, letters of credit, factoring, and any other form of financing which is recognized in accordance with GAAP in such Person’s financial statements as being in the nature of a borrowing or is treated as “off-balance sheet” financing);   (h)                                 all obligations of such Person evidenced by   (i)                                     all obligations of such Person for the deferred purchase price of property or services;   (j)                                     all obligations of such Person under conditional sale or other title retention agreements relating to property or assets acquired by such Person (even though the   18   rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property or are otherwise limited in recourse);   (k)                                  the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;   (l)                                     all Capitalized Lease Liabilities;   (m)                               net obligations of such Person under any Swap Contract;   (n)                                 all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests in such Person or any other Person or any warrants, rights or options to acquire such Equity Interests, valued, in the case of redeemable preferred interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and   (o)                                 all Guarantees of such Person in respect of   thereof as of such date.   “Independent Engineer” means the engineer or other expert selected by the Senior Lenders to review construction of the Aberdeen Expansion and draw requests for proceeds of the Senior Loan and draw request for the proceeds of the Series 2007A Bonds.   “Independent Engineer Certificate” means a certificate of the Independent Engineer substantially in the form of the “Independent Engineer’s Certificate attached as Exhibit L to the Accounts Agreement.   “Intercreditor Agreement” means that certain Intercreditor Agreement dated as of October 1, 2007 by and between the Borrower, the Parent Company, the Administrative Agent and the Bond Trustee.   “Interest Fund” means the fund created in Section 4.3 hereof.   “Interest Payment Date” means with respect to the Series 2007A Bonds each January 1 and July 1, commencing January 1, 2008; provided that, if such day shall not be a Business Day, payment shall be made on the next succeeding Business Day with the same force and effect as if made on the date such payment was due.   “Interest Rate Protection Agreement” means each interest rate swap, collar, put, or cap, or other interest rate protection arrangement, with a Qualified Counterparty, in each such   19   case that is reasonably satisfactory to the Administrative Agent and is entered into in accordance with the Senior Credit Facilities.   “Law” means, with respect to any Governmental Authority, any constitutional provision, law, statute, rule, regulation, ordinance, treaty, order, decree, judgment, decision, common law, holding, injunction, Governmental Approval or requirement of such Governmental Authority. Unless the context clearly requires otherwise, the term “Law” shall include each of the foregoing (and each provision thereof) as in effect at the time in question, including any amendments, supplements, replacements, or other modifications thereto or thereof, and whether or not in effect as of the date of this Agreement.   “Leased Premises” means those certain leased premises described in the Huron Ground Lease, the Huron Grain Elevator Lease and the Aberdeen Grain Elevator Lease.   “Letter of Representations” means the Blanket Issuer Letter of Representations from the Issuer to DTC.   “Lien” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, bailment, conditional sales or title retention agreement, lien (statutory or otherwise), charge against or interest in property, in each case of any kind, to secure payment of a debt or performance of an obligation.   “Loan Agreement” means the Loan Agreement relating to the Series 2007A Bonds, dated as of the date hereof, between the Borrower and the Issuer, as it may from time to time be amended or supplemented.   “Local Account” means any local bank account (other than the Project Accounts and the Bond Accounts) in the name of the Borrower.   “Maintenance Capital Expenses” means all expenditures by the Borrower for regularly scheduled (or reasonably anticipated) major maintenance of the Facilities, Prudent Ethanol Operating Practice and vendor and supplier requirements constituting major maintenance (including teardowns, overhauls, capital improvements, replacements and/or refurbishments of major components of the Facilities).   “Mandatory Sinking Fund Redemption” has the meaning given such term in Section 5.1 hereof.   “Material Adverse Effect” means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (i) the business, assets, property, condition (financial or otherwise), prospects, or operations of the Borrower or the Facilities taken as a whole, (ii) the ability of the Borrower, any Pledgor, any Project Party or any party (other than a Senior Secured Party) to the Intercreditor Agreement or Accounts Agreement to perform its material obligations under any Transaction Document to which it is a party, (iii) creation, perfection or priority of the Liens granted, or purported to be granted, in favor, or for the benefit, of the Collateral Agent pursuant to the Security Documents or (iv) the rights or remedies of any Senior Secured Party under any Financing Document.   20   “Materials of Environmental Concern” means chemicals, pollutants, contaminants, wastes, toxic substances and hazardous substances, any toxic mold, radon gas or other naturally occurring toxic or hazardous substance or organism and any material that is regulated in any way, or for which liability is imposed, pursuant to an Environmental Law.   “Maximum Annual Debt Service Requirement” means the largest total Debt Service Requirements for the current or any succeeding Bond Year.   “Mortgaged Property” means all real property right, title and interest of the Borrower that is subject to the Subordinate Mortgage.   “Multiemployer Plan” means a Plan that is a “multiemployer plan” as defined in   “Necessary Project Approvals” has the meaning set forth in the Senior Credit Facilities.   “Net Worth” of any Person means, as of any given date, the aggregate of capital, surplus and retained earnings (including any cumulative translation adjustment) of such Person as would be shown on a consolidated balance sheet of such Person prepared as of such date in accordance with generally accepted accounting principles which may be in part established with respect to asset value by an appraisal firm established in accordance with generally accepted accounting principles.   “Obligations” means and includes all loans, advances, debts, liabilities, Indebtedness and obligations, howsoever arising, owed to the Agents, the Lender or any Senior Secured Party of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower of any Insolvency or Liquidation Proceeding naming the Borrower as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such (including the Interest Rate Protection Agreement), proceeding, pursuant to the terms of this Agreement or any of the other Financing Documents including all principal, interest, fees, charges, expenses, attorneys’ fees, costs and expenses, accountants’ fees and Consultants’ fees payable by the Borrower hereunder or thereunder.   “Officer’s Certificate” means a certificate signed, in the case of a certificate delivered by a corporation, by the President, any Vice-President or any other officer authorized to sign by resolution of the governing body of such corporation or, in the case of a certificate delivered by any other Person, the chief executive or chief financial officer of such other Person, in either case whose authority to execute such Certificate shall be evidenced to the satisfaction of the Bond Trustee for the purpose of this Bond Indenture.   “Operating Budget” means the operating budget required to be prepared pursuant to the Senior Credit Facilities or the Loan Agreement, as the case may be.   “Operating Budget Category” means, at any time with respect to each Operating Budget, each line item set forth in such Operating Budget in effect at such time.   21   “Operating Statement” means an operating statement with respect to the Facilities, in substantially the form required by the Senior Credit Facilties.   “Operation and Maintenance Expenses” means, for any period, the sum without duplication of all (i) reasonable and necessary expenses of administering, managing and operating, and generating Products for sale from, the Facilities and maintaining it in good repair and operating condition, (ii)  costs associated with the supply and transportation of all corn, natural gas, electricity and other supplies and raw materials to the Facilities and distribution and sale of Products from the Facilities that the Borrower is obligated to pay, (iii) all reasonable and necessary insurance costs (other than insurance premiums that are paid as costs of the Aberdeen Expansion), (iv) property, sales and franchise taxes to the extent that the Borrower is liable to pay such taxes to the taxing authority (other than taxes imposed on or measured by income or receipts) to which the Facilities, may be subject (or payment in lieu of such taxes to which the Facilities may be subject), (v) reasonable and necessary costs and fees incurred in connection with obtaining and maintaining in effect the Necessary Project Approvals, (vi) reasonable and arm’s-length legal, accounting and other professional fees attendant to any of the foregoing items during such period, (vii) the reasonable costs of administration and enforcement of the Transaction Documents, (viii) costs incurred pursuant to the Permitted Commodity Hedging Arrangements, and (ix) all other costs and expenses included in the then-current Operating Budget. In no event shall cost of Aberdeen Expansion or Maintenance Capital Expenses be considered Operation and Maintenance Expenses.   “Outstanding” means, with respect to the Series 2007A Bonds, all Series 2007A Bonds which have been duly authenticated and delivered by the Bond Trustee under this Bond Indenture, except:   (a)                                  Series 2007A Bonds cancelled after purchase in the open market or because of payment at or redemption prior to maturity;   (b)                                 Series 2007A Bonds for the payment or redemption of which cash or Government Obligations shall have been theretofore deposited with the Bond Trustee (whether upon or prior to the maturity or redemption date of any such Series 2007A Bonds) in accordance with this Bond Indenture; provided that if such Series 2007A Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given or arrangements satisfactory to the Bond Trustee shall have been made therefor, or waiver of such notice satisfactory in form to the Bond Trustee shall have been filed with the Bond Trustee;   (c)                                  Series 2007A Bonds in lieu of which others have been authenticated under this Bond Indenture; and   (d)                                 Series 2007A Bonds owned by the Borrower, the Parent Company or affiliate thereof.   “Parent Company” means ABE Heartland, LLC, a Delaware limited liability company, which currently owns, directly or indirectly, 100% of the Equity Interests in the Borrower and its successors and assigns and any surviving, resulting or transferee entity.   22   “Paying Agent” means the Bond Trustee and the bank or banks, if any, designated pursuant to this Bond Indenture to receive and disburse the principal of and interest and premium, if any, on the Series 2007A Bonds.   “PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding   “Permitted Commodity Hedging Arrangements” means those Commodity Hedging Arrangements entered into by the Borrower in accordance with the provisions of   “Permitted Liens” means Liens identified in the Senior Credit Facilities as “Permitted Liens”.   “Permitted Tax Distribution” means, with respect to any distributee that is required to pay tax as a result of its direct or indirect ownership of the Borrower, an amount equal to forty percent (40%) of such distributee’s estimated share of the taxable income of the Borrower (after netting or otherwise taking account of a distributee’s shares of the income, loss, deduction and credit associated with the distributee’s interest in the Borrower) that the distributee is reasonably expected to have to report for income tax purposes for the Fiscal Quarter distributed to the extent necessary to fund a distributee’s timely payment to a Governmental Authority of tax liability (including estimated payments thereof) and subject to correction as described below.   “Person” means any natural person, firm, joint venture, association, partnership, business trust, corporation, public body, agency or political subdivision thereof or any other separately existing agency.   “Plan” means an employee pension benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV of ERISA or Section 412 of the Code that is sponsored or maintained by the Borrower or any ERISA Affiliate, or in respect of which the Borrower or any ERISA Affiliate has any obligation to contribution or liability.   “Proceeds” means (a) if the first offering price of the Series 2007A Bonds minus the compensation paid to the underwriter (the “Net Price”) is equal to or greater than 98% of the aggregate principal amount of the Series 2007A Bonds, an amount equal to the original aggregate principal amount of the Series 2007A Bonds or (b) if the net price is less than 98% of the original aggregate principal amount of the Series 2007A Bonds, an amount equal to the net price.   “Products” means ethanol, Distillers Grains, and any other co product or by-product produced in connection with the production of ethanol at the Project.   “Project” means the improvements, modifications, expansions and equipment purchases to be made for the Aberdeen Facility which constitute Solid Waste Facilities, the cost of which are to be financed, in whole or in part, with a portion of the proceeds of the Series 2007A Bonds, the plans and specifications for which are on file with the Borrower.   23   “Project Accounts” has the meaning provided in Section 1.01 of the Accounts Agreement.   “Project Fund” means the fund created in Section 3.3 hereof.   “Prospective Debt Service Coverage Ratio” or “PDSCR” means, for any Quarterly Payment Date, for the Fiscal Quarter including such Quarterly Payment Date and the three (3) Fiscal Quarters immediately following such Quarterly Payment Date, the ratio of (i) Cash Flow Available for Debt Service projected for such period to (ii) Debt Service on the Senior Credit Facilities or the Loan Agreement, as the case may be, projected for such period, in each case based on the then-current Operating Budget approved in accordance with the Senior Credit Facilities, as the same has been updated (if necessary) to reflect the then-current projections for commodity prices.   “Prudent Ethanol Operating Practice” means those reasonable practices, methods and acts that (i) are commonly used in the region where the Facilities is located to manage, operate and maintain ethanol production, distribution, equipment and associated facilities of the size and type that comprise the Facilities safely, reliably, and efficiently and in compliance with applicable Laws, manufacturers’ warranties and manufacturers’ and licensor’s recommendations and guidelines, and (ii) in the exercise of reasonable judgment, skill, diligence, foresight and care are expected of an ethanol plant operator, in order to efficiently accomplish the desired result consistent with safety standards, applicable Laws, manufacturers’ warranties, manufacturers’ recommendations and, in the case of the Facilities, the Project Documents. Prudent Ethanol Operating Practice does not necessarily mean one particular practice, method, equipment specifications or standard in all cases, but is instead intended to encompass a broad range of acceptable practices, methods, equipment specifications and standards.   “Quarterly Payment Date” means each March 31, June 30, September 30 and December 31.   “Purchase Contract” means the contract for the purchase of the Series 2007A Bonds among the Issuer, the Borrower and the purchasers named therein.   “Rebate Fund” means the Rebate Fund created by Section 3.4 of this Bond Indenture.   “Record Date” means the fifteenth day of the month (whether or not a Business Day) next preceding an Interest Payment Date.   “Redemption Fund” means the fund created in Section 4.6 hereof.   “Registrar” means the Bond Trustee as bond registrar for the Series 2007A Bonds.   “Required Cash Sweep” means each mandatory prepayment of the Loans made pursuant to Section 3.10 (Mandatory Prepayment) of the Senior Credit Facilities.   “Restricted Payments” means any (a) dividend or other distribution (whether in cash, securities or other property), or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption,   24   retirement, defeasance, acquisition, cancellation or termination of any Equity Interests of the Borrower, or on account of any return of capital to any holder of any such Equity Interest in, or any other Affiliate of, the Borrower, or any option, warrant or other right to acquire any such dividend or other distribution or payment, (b) any payment of fees (other than corporate overhead costs, expenses or any other payments pursuant to the Administrative Services Agreement) for any management, consultancy or administrative services, to any Person who owns, directly or indirectly, any Equity Interest in the Borrower, or any Affiliate of any such Person, or (c) any payment of indemnification obligations pursuant to the Borrower L.P. Agreement; provided that any Permitted Tax Distributions shall not constitute Restricted Payments.   “Revenue Fund” means the fund created by Section 4.2 of this Bond Indenture.   “Senior Credit Agreement” means that certain Credit Agreement, dated as of October 1, 2007, among the Borrower, each of the lenders from time to time party thereto, the Administrative Agent, WestLB AG, New York Branch, as collateral agent, issuing bank, lead arranger, sole book runners and syndicate agent.   “Senior Credit Facilities” means the construction loan, the term loan, and the working capital loan to be made by the Senior Lenders to the Borrower to finance a portion of the Expansions and to refinance certain existing debt of the Borrower relating to the Facilities, which are secured by the Senior Mortgage, the Senior Security Agreement and the Senior Equity Pledge Agreement.   “Senior Equity Pledge Agreement” means that certain Pledge and Security Agreement dated as of October 1, 2007 by and among the Parent Company, ABE Heartland, LLC and the collateral agent set forth therein, as amended or   “Senior Lenders” means WestLB and the other lenders from time to time party to the loan agreement in respect of the Senior Credit Agreement.   “Senior Mortgage” means the Aberdeen Senior Mortgage and the Huron Senior Mortgage.   “Senior Secured Parties” means the Lenders, the Agents and any Interest Rate Protection Provider as defined in the Credit Agreement.   “Senior Security Agreement” means that certain Assignment and Security Agreement dated September, 2007 from the Borrower to the Senior Lenders, as amended or   “Series 2007A Bonds” means the Brown County, South Dakota Subordinate Solid Waste Facilities Revenue Bonds (Heartland Grain Fuels, L.P. Ethanol Plant Project), Series 2007A, to be issued by the Issuer pursuant to the terms and conditions of this Bond Indenture.   “Site” means, with respect to each Facility those certain parcels described in the Senior Credit Facilities with respect to such Facility.   25   “SNDAs” means each of the Aberdeen Subordination, Non-Disturbance and Attornment Agreement and the Huron Subordination, Non-Disturbance and Attornment Agreement.   “Solid Waste Disposal Facilities” means “Solid Waste Disposal Facilities” as defined by the Code and regulations thereunder for the purposes of Section 142(a)(6) of the Code.   “S&P” means Standard &Poor’s Rating Group.   “Special Interest Payment Date” means the date, which need not be an Interest Payment Date, fixed by the Bond Trustee pursuant to the Bond Indenture for the payment of Defaulted Interest to Holders as of the Special Record Date.   “Special Record Date” means the fifteenth day (whether or not a Business Day) before a Special Interest Payment Date.   “State” means the State of South Dakota.   “Subordinate Equity Pledge Agreement” means that certain Subordinate Pledge and Security Agreement dated as of October 1, 2007 among the Parent Company, Dakota Fuels, the Borrower and the Bond Trustee as amended or supplemented from time to time.   “Subordinate Mortgage” means the Aberdeen Subordinate Mortgage and the Huron Subordinate Mortgage.   “Subordinate Security Agreement” means that certain Subordinate Assignment and Security Agreement dated as of October 1, 2007 from the Borrower to the Bond Trustee as amended or supplemented from time to time.   governed by or subject to any master agreement, (b) any and all transactions of Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement and (c) for the avoidance of doubt, includes the Permitted Commodity Hedging Arrangements and any Interest Rate Protection Agreements and excludes any contract for the physical sale or purchase of any commodity.   (including any Permitted Commodity Hedging Arrangements or any Interest Rate Protection Agreements), after taking into account the effect of any legally enforceable netting agreement   26   relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, in accordance with the terms of the applicable Swap Contract, or, if no provision is made therein, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).   “Tax” or “Taxes” means any present or future taxes (including income, gross receipts, license, payroll, employment, excise, severance, stamp, documentary, occupation, premium, windfall profits, environmental, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value-added, ad valorem, alternative or add-on minimum, estimated, or other tax of any kind whatsoever), levies, imposts, duties, fees or charges (including any interest, penalty, or addition thereof) imposed by any government or any governmental agency or instrumentality or any international or multinational agency or commission.   “Tax Exemption Agreement” means that certain Tax Exemption Agreement and Certificate, dated the date of delivery of the Series 2007A Bonds, among the Borrower, the Issuer, the Bond Trustee and the Accounts Bank.   “Taxable Rate” means that variable rate of interest which adjusts the first day of each calendar quarter in each year (January 1, April 1, July 1 and October 1) and is equal to the sum of (i) the rate of interest published as the London Interbank Offered Rate (LIBOR) with a term of three (3) months as of the first day of each calendar quarter or following Business Day if such first day is not a Business Day, and (ii) plus 350 basis points.   “Termination Event” means (i) a reportable event within the meaning of Section 4043(c) of ERISA with respect to any Plan, (ii) the initiation of any action by the Borrower, any ERISA Affiliate or any Plan fiduciary to terminate any Plan (other than a standard termination under Section 4041(b) of ERISA) or the treatment of an amendment to any Plan as a termination under Section 4041(e) of ERISA, (iii) the institution of proceedings by the PBGC under Section 4042 of ERISA to terminate any Plan or to appoint a trustee to administer any Plan, (iv) the withdrawal of the Borrower or any ERISA Affiliate from any Multiemployer Plan during a plan year in which the Borrower or such ERISA Affiliate was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of employment of twenty percent (20%) of any Multiemployer Plan participants who are employees of the Borrower or any ERISA Affiliate, (v) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from any Multiemployer Plan, or (vi) the Borrower or any ERISA Affiliate is in default (as defined in Section 4219(c)(5) of ERISA) with respect to payments to any Multiemployer Plan.   “Title Continuation” means a written notice issued by the title insurance company (including their local title insurance abstractors) confirming the status of title as set forth in the Title Insurance Policy, which indicates that, there has been no change in the title of title to the Mortgaged Property and no Liens or survey exceptions (in the case of any updated or “as-built” survey that has been issued) not theretofore approved by the Senior Lenders, which written   27   notice shall contain no recorded mechanic’s liens except as approved by the Required Lenders or as otherwise subject to a Contest.   “Transaction Documents” means, collectively, the Financing Documents and the Facilities Documents.   “Trust Estate” means the trust estate defined in the granting clauses hereof.   “Unassigned Rights” means the right of the Issuer to receive payment of its fees and expenses, the Issuer’s right to indemnification under the Loan Agreement, the Issuer’s right to execute and deliver supplements and amendments to the Loan Agreement.   “Unfunded Benefit Liabilities” means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all accrued benefits calculated on an accumulated benefit obligation basis and based upon the actuarial assumptions used for accounting purposes (i.e., those determined in accordance with FASB statement No.35 and used in preparing the Plan’s financial statements) exceeds (ii) the fair market value of all Plan assets allocable to such benefits, determined as of the then most recent actuarial valuation report for such Plan.   “Written Request” means, with respect to the Issuer, a request in writing by the Chairman, County Auditor or other authorized officer of the Issuer; with respect to the Bond Trustee, a request in writing signed by an authorized officer of the Bond Trustee; with respect to the Borrower or the Parent Company, a request in writing signed by the Chief Executive Officer, President, Chief Financial Officer or any Vice President of the Borrower or the Parent Company, and with respect to the issuer, the Bond Trustee, the Borrower and the Parent Company, as the case may be, any other officers designated to sign such requests by official action of the appropriate entity.   Section 1.2                         Interpretation. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural and vice versa. All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles. Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. All references in this Bond Indenture to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Bond Indenture as originally executed. The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Bond Indenture as a whole and not to any particular Article, Section or other subdivision unless the context indicates otherwise.   28   ARTICLE II   THE SERIES 2007A BONDS   Section 2.1                         Authorized Amount of Series 2007A Bonds. No bonds may be issued under the provisions of this Bond Indenture except in accordance with this Article. The total principal amount of Series 2007A Bonds that may be issued is hereby expressly limited to $19,000,000   Section 2.2                         Issuance of Series 2007A Bonds. The Series 2007A Bonds shall be designated “Brown County, South Dakota Subordinate Solid Project), Series 2007A”.   The Series 2007A Bonds shall be issuable only as registered bonds in the denominations of $5,000 and integral multiples thereof. Unless the Issuer shall otherwise direct, the Series 2007A Bonds shall be numbered from R-1 upward. The CUSIP number of 115433AA2 shall be set forth on the Bond.   The Series 2007A Bonds shall be dated as of the date of issuance and delivery thereof, shall bear interest at the rate of eight and one-quarter percent (8.25%) per annum (except to the extent to which the Bonds bear interest at the Taxable Rate pursuant to Section 5.1 hereof), calculated on the basis of a 360-day year of twelve 30-day months, payable on each Interest Payment Date, and shall mature on January 1, 2017 and be subject to Mandatory Sinking Fund Redemption as set forth in Section 5.2 hereof on January 1 in the years and in the amounts as follows:   Principal Amount   Due in the Year   $ 5,840,000.00   2016   6,320,000.00   2017   6,840,000.00   2018 *   * Final Maturity   Each Series 2007A Bond shall, except as provided in this Section 2.2, bear interest from the Interest Payment Date next preceding the date of authentication of such Series 2007A Bond to which interest on the Series 2007A Bonds has been paid, unless (i) such date of authentication is an Interest Payment Date to which interest has been paid, in which case from such Interest Payment Date, (ii) such date of authentication is after the Record Date with respect to an Interest Payment Date and prior to such Interest Payment Date, in which case from such Interest Payment Date or (iii) no interest has been paid on the Series 2007A Bonds, in which case from the date of issuance and delivery thereof.   The person in whose name any Series 2007A Bond is registered at the close of business on any Record Date with respect to any Interest Payment Date shall be entitled to receive the   29   interest payable on such Interest Payment Date notwithstanding any registration of transfer or exchange subsequent to such Record Date and prior to such Interest Payment Date.   The principal of and interest on the Series 2007A Bonds shall be payable in any currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts and such principal shall be payable upon presentation at the principal corporate trust office of the Bond Trustee. Payment of the interest on any Series 2007A Bond shall be made to the Person appearing on the Bond Register as the Registered Owner thereof as of the close of business of the Bond Trustee on the Record Date for such interest payment and shall be paid (i) by check or draft of the Bond Trustee mailed on the applicable Interest Payment Date to the registered owner at such owner’s address as it appears on the Bond Register or at such other address as is furnished to the Bond Trustee in writing by such Owner not less than 15 days prior to the Interest Payment Date or (ii) as to any Owner of $1,000,000 or more in aggregate principal amount of the Series 2007A Bonds who so elects, by wire transfer of funds to such wire transfer address within the continental United States as the Registered Owner shall have furnished in writing to the Bond Trustee no later than the Record Date, which wire instructions shall remain in effect until Bond Trustee is notified to the contrary.   Defaulted Interest with respect to any Series 2007A Bond shall cease to be payable to the Owner of such Series 2007A Bond on the relevant Record Date and, except as hereinafter provided, shall be payable to the Owner in whose name such Series 2007A Bond is registered at the close of business of the Bond Trustee on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed in the following manner. The Borrower shall notify the Bond Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Series 2007A Bond and the date of the proposed payment (which date shall be such, as will enable the  Bond Trustee to comply with the next sentence hereof) and, at the same time, the Borrower or the Obligated Group shall deposit with the Bond Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Bond Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the owners of the Series 2007A Bonds entitled to such Defaulted Interest as provided in this Section. Following receipt of such funds, the Bond Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which date will be fifteen (15) days prior to the date of the proposed payment. The Bond Trustee shall promptly notify the Borrower of such Special Record Date and, in the name and at the expense of the Borrower, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, not less than 10 days prior to such Special Record Date to each Owner of a Series 2007A Bond entitled to such notice at the address of such Owner as it appears on the Bond Register. Such Defaulted Interest shall be paid to the Owners of the Series 2007A Bonds in whose names the Series 2007A Bonds on which such Defaulted Interest is to be paid are registered on such Special Record Date.   Section 2.3                         Execution; Limited Obligation. The Series 2007A Bonds shall be executed on behalf of the Issuer by the manual or facsimile signature of the Chair of the County Commission and attested by the manual or facsimile signature of (or such other officer as may be designated by the Issuer), shall have impressed or printed by facsimile thereon the corporate seal of the Issuer, if required by law, and shall be countersigned by an attorney actually residing in   30   the State and duly licensed to practice in the State. The facsimile signatures of said officers shall have the same force and effect as if such officers had manually signed each of said Series 2007A Bonds. In case any officer whose signature or facsimile signature shall appear on the Series 2007A Bonds shall cease to be such officer before the delivery of such Series 2007A Bonds, such signature or facsimile signature shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery.   The Series 2007A Bonds shall be limited obligations of the Issuer payable solely from (a) amounts payable under the Loan Agreement (except for Unassigned Rights), (b) amounts derived from the enforcement of the Bond Collateral Documents (except for amounts with respect to Unassigned Rights) amounts on deposit in the funds to the extent herein provided and (c) income from the temporary investment of any of the foregoing. So long as the Senior Credit Facilities are outstanding, all funds available to the Borrower to make loan repayments (including Unassigned Rights) and all amounts derived from the enforcement of the Bond Collateral Documents are subject to prior liens in favor of the Senior Lenders and are subject to the provisions of the Accounts Agreements ant the Intercreditor Agreement. The Series 2007A Bonds shall be a valid claim of the respective Owners thereof only against the funds established under this Bond Indenture and other moneys held by the Bond Trustee for the benefit of the Series 2007A Bonds and the payments  due or to become due upon or under the Loan Agreement (except for Unassigned Rights), all of which are hereby assigned and pledged hereunder for the equal and ratable payment of the Series 2007A Bonds and shall be used for no other purpose than to pay the principal of, premium, if any, and interest on the Series 2007A Bonds, except as may be otherwise expressly authorized in this Bond Indenture. The Series 2007A Bonds do not constitute a debt or liability of the State or of any political subdivision thereof or a pledge of the faith and credit of the State or any political subdivision thereof. The issuance of the Series 2007A Bonds under the provisions of the Act does not, directly, indirectly or contingently, obligate the State or any political subdivision thereof to levy any form of taxation for the payment thereof or to make any appropriation for their payment, and such Series 2007A Bonds and interest payable thereon do not now and shall never constitute a debt of the State or any political subdivision thereof within the meaning of the Constitution or the statutes of the State and do not now and shall never constitute a charge against the credit or taxing power of the State or any political subdivision thereof. Neither the State nor any political subdivision thereof shall in any event be liable for the payment of the principal of or interest on the Series 2007A Bonds or for the performance of any pledge, obligation or agreement of any kind whatsoever which may be undertaken by the Issuer. No breach by the Issuer of any such pledge, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State or any political subdivision thereof. No covenant or agreement in the Series 2007A Bonds or in this Bond Indenture and no obligation herein imposed upon the Issuer and no breach thereof shall constitute or give rise to or impose upon the Issuer a general liability or a charge upon its general credit or property other than the trust estate, as provided herein.   Section 2.4                         Authentication. No Series 2007A Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Bond Indenture unless and until a certificate of authentication on such Series 2007A Bond shall have been duly executed by the Bond Trustee, and such executed certificate of the Bond Trustee upon any such Series 2007A Bond shall be conclusive evidence that such Series 2007A Bond has been authenticated and delivered under this Bond Indenture. The Bond Trustee’s certificate of authentication on any   31   Series 2007A Bond shall be deemed to have been executed by it if signed by an authorized officer or signatory of the Bond Trustee, but it shall not be necessary that the same officer or signatory sign the certificate of authentication on all of the Series 2007 Bonds issued hereunder.   Section 2.5                         [Intentionally Deleted]   Section 2.6                         Form of Bonds and Temporary Bonds. The Series 2007A Bonds shall be substantially in the form set forth in Exhibit A hereto with such appropriate variations, omissions and insertions as are permitted or required by this Bond Indenture or deemed necessary by the Bond Trustee and the Issuer.   Series 2007A Bonds may be initially issued in temporary form exchangeable for definitive Series 2007A Bonds when ready for delivery. The temporary Series 2007A Bonds shall be of such denomination or denominations as may be determined by the Issuer and may contain such reference to any of the provisions of this Bond Indenture as may be appropriate. Every temporary Series 2007A Bond shall be executed by the Issuer and be authenticated by the Bond Trustee upon the same conditions and in substantially the same manner as the definitive Series 2007A Bonds. If the Issuer issues temporary Series 2007A Bonds, it will execute and furnish definitive Series 2007A Bonds without delay and thereupon the temporary Series 2007A Bonds may be surrendered for cancellation in exchange therefor at the principal corporate trust office of the Bond Trustee, and the Bond Trustee shall authenticate and deliver in exchange for such temporary Series 2007A Bonds an equal aggregate principal amount of definitive Series 2007A Bonds of the same Series and maturity of authorized denominations. Until so exchanged, the temporary Series 2007A Bonds shall be entitled to the same benefits under this Bond Indenture as definitive Series 2007A Bonds authenticated and delivered hereunder.   Section 2.7                         Delivery of Series 2007A Bonds. Upon the execution and delivery of this Bond Indenture, the Issuer shall execute and deliver to the Bond Trustee and the Bond Trustee shall authenticate the Series 2007A Bonds and deliver them to the purchasers as may be directed by the Issuer as hereinafter in this Section 2.7 provided.   Prior to the delivery by the Bond Trustee of any of the Series 2007A Bonds there shall be filed with or delivered to the Bond Trustee and the Issuer:   (a)                                  a copy, duly certified by the Chair of the County Commission or the County Auditor of the Issuer, of the resolutions adopted and approved by the Issuer authorizing the execution and delivery of the Purchase Contract, the Loan Agreement, this Bond Indenture, and the Tax Exemption Agreement and the issuance and sale of the Series 2007A Bonds;   (b)                                 copies, duly certified by the Secretary or an Assistant Secretary of the Borrower of the resolutions adopted and approved by the Borrower authorizing the execution of or approving the, the Loan Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordinate Equity Pledge Agreement and the Tax Exemption Agreement and approving this Bond Indenture and the issuance and sale of the Series 2007A Bonds;   (c)                                  an original executed counterpart of this Bond Indenture, the Loan Agreement, the Subordinate Mortgage, the Subordinate Security Agreement, the Subordinate Equity Pledge Agreement and the Tax Exemption Agreement;   32   (d)                                 a request and authorization to the Bond Trustee on behalf of the Issuer and signed by its Chair (or such other officer as may be designated by the Issuer) to authenticate and deliver the Series 2007A Bonds to the purchasers therein identified upon payment to the Bond Trustee, but for the account of the Issuer, of the net proceeds from the sale of the Series 2007A Bonds;   (e)                                  the approving opinion of Bond Counsel;   (f)                                    an opinion of counsel to the Borrower as to the valid authorization, execution and delivery of the Loan Agreement and other related documents and as to such other matters as reasonably requested; and   (g)                                 such other closing documents and opinions of counsel as the Bond Trustee or the Issuer may reasonably specify.   Section 2.8                         Mutilated, Lost, Stolen or Destroyed Series 2007A Bonds. In the event any temporary or definitive Series 2007A Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and the Bond Trustee may authenticate a new Series 2007A Bond of like form, date, maturity and denomination as that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Series 2007A Bond, such mutilated Series 2007A Bond shall first be surrendered to the Bond Trustee, and in the case of any lost, stolen or destroyed Series 2007A Bond, there shall be first furnished to the Issuer and the Bond Trustee evidence of such loss, theft or destruction satisfactory to the Issuer and the Bond Trustee, together with indemnity satisfactory to them. In the event any such Series 2007A Bond shall have matured, instead of issuing a replacement Series 2007A Bond the Issuer may pay the same without surrender thereof. The Issuer and the Bond Trustee may charge the holder or owner of such Series 2007A Bond with their reasonable fees and expenses in this connection.   Section 2.9                         Bond Register; Transfer and Exchange of Series 2007A Bonds; Persons Treated as Owners. The Bond Register shall be kept by the Bond Trustee at its principal corporate trust office. At reasonable times and under reasonable regulations established by the Bond Trustee, the Bond Register may be inspected and copied by the Issuer.   Upon surrender for registration of transfer of any Series 2007A Bond at the principal corporate trust office of the Bond Trustee, the Issuer shall execute and the Bond Trustee shall authenticate and deliver in the name of the transferee or transferees a new fully registered Series 2007A Bond or Series 2007A Bonds of the same maturity and of authorized denomination for the aggregate principal amount which the Registered Owner is entitled to receive. Any Series 2007A Bond or Series 2007A Bonds may be exchanged at said office of the Bond Trustee for a like aggregate principal amount of Series 2007A Bond or Series 2007A Bonds of the same maturity of other authorized denominations. The execution by the Issuer of any Series 2007A Bond shall constitute full and due authorization of such Series 2007A Bond, and the Bond Trustee shall thereby be authorized to authenticate, date and deliver such Series 2007A Bond.   All Series 2007A Bonds presented for registration of transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in   33   form and with guaranty of signature satisfactory to the Bond Trustee, duly executed by the Registered Owner or by such Owner’s duly authorized attorney.   No service charge shall be imposed for any exchange or registration of transfer of Series 2007A Bonds. The Issuer and the Bond Trustee may, however, require payment by the person requesting an exchange or registration of transfer of Series 2007A Bonds of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto, except in the case of the issuance of a Series 2007A Bond or Series 2007A Bonds for the unredeemed portion of a Series 2007A Bond surrendered for redemption.   The Issuer and the Bond Trustee shall not be required to register the transfer of or exchange any Series 2007A Bond after notice calling such Series 2007A Bond or portion thereof for redemption has been given or during the 15-day period next preceding the first mailing of such notice of redemption of Series 2007A Bonds of the same maturity.   New Series 2007A Bonds delivered upon any registration of transfer or exchange shall be valid obligations of the Issuer, evidencing the same debt as the Series 2007A Bonds surrendered, shall be secured by this Bond Indenture and shall be entitled to all of the security and benefits hereof to the same extent as the Series 2007A Bond surrendered.   The Issuer and the Bond Trustee may treat the Registered Owner of any Series 2007A Bond as the absolute owner thereof for all purposes, whether or not such Series 2007A Bond shall be overdue, and shall not be bound by any notice, actual or constructive, to the contrary. All payments of or on account of the principal of and premium, if any, and interest on any such Series 2007A Bond as  herein provided shall be made only to or upon the written order of the registered owner thereof or his legal representative, but such registration may be changed as herein provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2007A Bond to the extent of the sum or sums so paid.   Section 2.10                  Cancellation. Any Series 2007A Bond surrendered for the purpose of payment or retirement or for exchange or registration of transfer or for replacement pursuant to Section 2.8 or Section 2.9 hereof, shall be cancelled upon surrender thereof to the Bond Trustee or any Paying Agent. If the Issuer or the Borrower shall acquire any of the Series 2007A Bonds, the Issuer or the Borrower shall deliver such Series 2007A Bonds to the Bond Trustee for cancellation and the Bond Trustee shall cancel the same. Any such Series 2007A Bonds cancelled by any Paying Agent other than the Bond Trustee shall be promptly transmitted by such Paying Agent to the Bond Trustee. A certificate identifying all Series 2007A Bonds so cancelled shall be delivered by the Bond Trustee to the Issuer and to the Borrower. Cancelled Series 2007A Bonds may be destroyed by the Bond Trustee unless instructions to the contrary are received from the Issuer or the Borrower.   Section 2.11                  Book-Entry Only System. The Series 2007A Bonds shall be initially issued in the form of a separate single fully registered Bond for each of the maturities thereof. Upon initial issuance, the ownership of each such Series 2007A Bond shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC, and except as provided in Section 2.12 hereof, all of the outstanding Series 2007A Bonds shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC.   34   With respect to Series 2007A Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, the Issuer, the Bond Trustee and the Borrower shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Series 2007A Bonds. Without limiting the immediately preceding sentence, the Issuer, the Bond Trustee and the Borrower shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Series 2007A Bonds, (ii) the delivery to any DTC Participant or any other Person, other than a Bondholder, as shown in the Bond Register, of any notice with respect to the Series 2007A Bonds, including any notice of redemption, (iii) the payment to any DTC Participant or any other Person, other than a Bondholder, as shown in the Bond Register, of any amount with  respect to principal of or interest on, the Series 2007A Bonds or (iv) any consent given by DTC as registered owner. So long as the certificates for the Series 2007A Bonds are not issued pursuant to Section 2.12 hereof, the Issuer and the Bond Trustee may treat DTC or any successor securities depository as, and deem DTC or any successor securities depository to be, the absolute owner of the Series 2007A Bonds for all purposes whatsoever, including without limitation (i) the payment of principal, premium, if any, and interest on the Series 2007A Bonds, (ii) giving notice of redemption and other matters with respect to the Series 2007A Bonds, (iii) registering transfers with respect to the Series 2007A Bonds and (iv) the selection of Series 2007A Bonds for redemption. Notwithstanding any other provision of this Bond Indenture to the contrary, the Issuer, the Bond Trustee and any Paying Agent shall be entitled to treat and consider the Person in whose name each Series 2007A Bond is registered in the Bond Register as the absolute owner of such Series 2007A Bond for the purpose of payment of principal, premium, if any, and interest with respect to such Series 2007A Bond, for the purpose of giving notices of redemption and other matters with respect to such Series 2007A Bond, for the purpose of registering transfers with respect to such Series 2007A Bond, and for all other purposes whatsoever. The Bond Trustee and any Paying Agent shall pay all principal of, premium, if any, and interest on the Series 2007A Bonds only to or upon the order of the respective Bondholders, as shown in the Bond Register as provided in this Bond Indenture, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to payment of principal of and interest on the Series 2007A Bonds to the extent of the sum or sums so paid. No Person other than a Bondholder, as shown in the Bond Register, shall receive a Series 2007A Bond certificate evidencing the obligation of the Issuer to make payments of principal, premium, if any, and interest pursuant to this Bond Indenture. Upon delivery by DTC to the Bond Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Bond Indenture with respect to interest checks or drafts being mailed to the registered owner at the close of business on the Record Date, the word “Cede & Co.” in this Bond Indenture shall refer to such new nominees of DTC; and upon receipt of such a notice the Bond Trustee shall promptly deliver a copy of the same to any Paying Agent. Except as provided in Section 2.12 hereof, the Series 2007A Bonds may be transferred, in whole but not in part, only to DTC or to Cede & Co., or to a successor securities depository selected or approved by the Issuer or to a nominee of such successor securities depository. If at any time DTC notifies the Issuer that it is unwilling or unable to continue as securities depository with respect to the Series 2007A Bonds, or if at any time DTC shall no longer be registered or in good standing under the Securities  Exchange Act of 1934, as amended, or other applicable statute or regulation and a   35   successor securities depository is not appointed by the Issuer within 90 days after the Issuer receives notice or becomes aware of such condition, as the case may be, then the Issuer shall execute and the Bond Trustee shall authenticate and deliver certificates representing the Series 2007A Bonds as provided in Section 2.12.   Section 2.12                  Successor Securities Depository; Transfers Outside Book-Entry Only System. The Bondholders have no right to a depository for the Series 2007A Bonds. The Issuer or the Bond Trustee may remove DTC or any successor thereto for cause at any time. In such event, the Issuer shall (i) appoint a successor securities depository, qualified to act as such under Section 17A of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Series 2007A Bond certificates to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Series 2007A Bond certificates and transfer one or more separate Series 2007A Bond certificates to DTC Participants having Series 2007A Bonds credited to their DTC accounts. In such event, the Series 2007A Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging Series 2007A Bonds shall designate, in accordance with the provisions of this Bond Indenture.   The Issuer has executed the Letter of Representations in connection with the issuance of its bonds. The Letter of Representations is for the purpose of effectuating the book-entry only system of DTC and shall not be deemed to amend, supersede or supplement the terms of this Bond Indenture which are intended to be complete without reference to the Letter of Representations. In the event of any conflict between the terms of the Letter of Representations and the terms of this Bond Indenture, the terms of this Bond Indenture shall control. DTC may exercise the rights of a Bondholder hereunder only in accordance with the terms hereof applicable to the exercise of such rights.   Section 2.13                  Payments and Notices to Cede & Co. Notwithstanding any other provision of this Bond Indenture to the contrary, so long as a Series 2007A Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Series 2007A Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Letter of Representations. The Bond Trustee shall request in each notice sent to Cede & Co. pursuant to the terms of this Bond Indenture that Cede & Co. forward or cause to be forwarded such notice to the DTC Participants.   36   ARTICLE III   APPLICATION OF SERIES 2007A BOND PROCEEDS AND REQUIRED FUND DEPOSITS; EXPENSE FUND; PROJECT FUND; REBATE FUND   Section 3.1                         Deposit of Funds. The Issuer, for and on behalf of, and as a loan to, the Borrower, shall deposit with the Bond Trustee all amounts required to be paid to the Bond Trustee by the Borrower from its available funds other than the Series 2007A Bond proceeds and all of the net proceeds from the sale of the Series 2007A Bonds, and the Bond Trustee shall, out of such proceeds, as may be further specified by a Written Request of the Borrower delivered to the Bond Trustee upon delivery of the Series 2007A Bonds:   (a)                                  Deposit $366,000.00 from monies paid to the Bond Trustee by the Borrower consisting of available funds of the Borrower other than proceeds of the Series 2007A Bonds and $380,000.00 from the proceeds of the Series 2007A Bonds to the credit of the Expense Fund; provided that, pursuant to a Written Request of the Borrower delivered to the Bond Trustee, all or any portion of said amount may be paid directly from bond proceeds for payment of any item which is authorized by Section 3.2 to be paid from the Expense Fund; provided, however, no more than two percent (2%) of the proceeds of the Series 2007A Bonds shall be used to pay cots of issuance of the Series 2007A Bonds.   (b)                                 Deposit to the credit of the Debt Service Reserve Fund the sum of $1,900,000.00 which will be sufficient to satisfy the Debt Service Reserve Requirement; and   (c)                                  Deposit the balance ($16,720,000.00) of the proceeds of the Series 2007A Bonds (including $1,136,437.50 representing capitalized interest on the Series 2007A Bonds) to the Project Fund.   Section 3.2                         Expense Fund. The Issuer hereby establishes with the Bond Trustee a separate account to be known as the “Series 2007A Expense Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project” (the “Expense Fund”). A deposit to the credit of the Expense Fund will be made pursuant to Section 3.1(a) hereof. Amounts on deposit in the Expense Fund shall be disbursed upon the Written Request of the Borrower for the payment of expenses for any recording, trustee’s fees and expenses, accounting and legal fees, financing costs (including costs of acquiring investments for the funds and escrows), and other fees and expenses incurred or to be incurred by or on behalf of the Issuer or the Borrower in connection with or incident to the issuance and sale of the Series 2007A Bonds. At such time as the Bond Trustee is furnished with a Written Request stating that all such fees and expenses have been paid, and in no event later than December 31, 2007, the Bond Trustee shall transfer any moneys remaining in the Expense Fund to the Project Fund.   Section 3.3                         Project Fund. The Issuer hereby establishes Project Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Project Fund”). Proceeds of the Series 2007A Bonds shall be deposited to the credit in the Project Fund pursuant to Section 3.1(c) hereof. Immediately upon deposit of such proceeds, the Bond Trustee shall transfer the amount of $15,583,562.50 to the   37   Accounts Bank for deposit to the Bond Proceeds Sub-Account held by the Accounts Bank pursuant to the terms of the Accounts Agreement. The Bond Trustee shall retain $1,136,437.50 in the Project Fund to be applied to the payment of interest on the Series 2007A Bonds as set forth in (a) below of this Section 3.3 The Bond Trustee shall direct the disbursement of funds by the Accounts Bank from the Bond Proceeds Sub-Account upon the procedures set forth in (a) below.   (a)                                  Disbursements from the Project Fund. In order to obtain disbursement of amounts in the Bond Proceeds Sub-Account, the Borrower shall submit a separate Bond Proceeds Withdrawal Certificate to the Bond Trustee and shall request the certificate of the Independent Engineer as required below. Upon review and execution, the Bond Trustee shall submit the Bond Proceeds Withdrawal Certificate to the Administrative Agent and the Independent Engineer to authorize and direct the withdrawal of the amount set forth in the Bond Proceeds Withdrawal Certificate by the Accounts Bank, from the Bond Proceeds Sub-Account. If there are insufficient funds in the Bond Proceeds Sub-Account, the Bond Trustee may, so long as all requirements for disbursement from the Bond Proceeds Sub-Account have been met, disburse moneys on deposit in the Project Fund in order to pay the Costs of the Project set forth in such Bond Proceeds Withdrawal Certificate. The Bond Trustee may not disburse amounts in the Project Fund required to pay interest for other Costs of the Project.   To the extent that the Borrower leases from third parties or otherwise provides equipment for the Project from sources other than funds on deposit in the Project Fund or the Bond Proceeds Sub-Account, the costs thereof shall not be included in the costs referred to above.   In addition, on December 25, 2007 and on June 25, 2008, the Bond Trustee shall transfer from the Project Fund to the Interest Fund the amount of capitalized interest set forth on Exhibit C hereto with respect to the applicable Interest Payment Date, which transferred amount shall be applied to pay interest on the Series 2007A Bonds on the applicable Interest Payment Date pursuant to Section 4.3 hereof. The amount of $1,136,437.50 shall be reserved for and used solely to pay interest on the Series 2007A Bonds. Investment earning on such amount may be used to pay other Costs of the Project under the disbursement procedures set forth above   (b)                                 Completion Certificate. Within 120 days after the substantial completion of the Facilities, the Borrower has agreed in the Loan Agreement to cause a completion certificate of an Independent Engineer to be delivered to the Bond Trustee, which certificate shall state that based upon periodic visits to the site, such Independent Engineer has generally become familiar with the progress and quality of the work on the Project and has determined that in general the work on the Project and the Facilities have been completed in compliance with the contract documents relating thereto, and to deliver to the Bond Trustee a completion certificate of the Borrower, which certificate shall state that substantial completion has occurred and that all Costs of the Project to be paid from the Project Fund have been included in Written Requests previously submitted to the Bond Trustee which have been paid by the Bond Trustee and directing the Bond Trustee to apply any amount remaining in the Project Fund to the mandatory redemption of Series 2007A Bonds upon completion as required by Section 5.1 hereof.   38   Substantial completion of the Project shall be deemed to have occurred when the Borrower is able to occupy and utilize all portions of the Facilities in the manner in which and for the purposes for which the same were intended, with no significant impairment of the utility thereof to the Borrower for such purposes.   (c)                                  Disposition of Project Fund Moneys After Completion. If after payment by the Bond Trustee of all orders theretofore tendered to the Bond Trustee under the provisions of subparagraph (a) of this Section 3.3 and after receipt by the Bond Trustee of the completion certificates described in subparagraph (b) of this Section 3.3 there shall remain any balance of moneys in the Project Fund, such moneys shall be transferred to the Bond Sinking Fund; provided, however, that the Borrower shall have obtained an opinion of Bond Counsel that such transfer will not impair the exclusion from federal income taxation of the interest on any of the Series 2007A Bonds.   Section 3.4                         Rebate Fund. There is hereby established with the Bond Trustee a “Series 2007A Rebate Fund- Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Rebate Fund”) which shall be held separate and apart from all other moneys of the Bond Trustee. Moneys in the Rebate Fund are neither pledged to nor available to be used to pay debt service on the Series 2007 Bonds. Deposits to be made to the Rebate Fund and other provisions relating thereto are set forth in the Tax Exemption Agreement.   39   ARTICLE IV REVENUES AND FUNDS   Section 4.1                         Source of Payment of Series 2007A Bonds. The Series 2007A Bonds herein authorized and all payments to be made by the Issuer thereon and into the various funds established under this Bond Indenture are not general obligations of the Issuer but are limited obligations payable solely from (i) amounts payable under the Loan Agreement pledged hereunder (other than Unassigned Rights), (ii) amounts on deposit in the Funds created hereunder to the extent herein provided and (iii) certain income from the temporary investment of any of the foregoing.   Section 4.2                         Revenue Fund. The Issuer hereby establishes with the Bond Trustee, and agrees to maintain so long as any of the Series 2007A Bonds are outstanding, a separate account to be known as the “Series 2007A Revenue Fund – Heartland Grain Fuels, L.P. Revenue Fund” (the “Revenue Fund”). The Bond Trustee shall deposit all amounts received for payment of the Series 2007A Bonds to the Revenue Fund for transfer to the Interest Fund, the Bond Sinking Fund, the Debt Service Reserve Fund and the Redemption Fund as set forth in this Article.   Section 4.3                         Interest Fund. The Issuer hereby establishes Interest Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Interest Fund”).   On or before December 31, 2007 the Bond Trustee shall deposit in the Interest Fund from amounts on deposit in the Revenue Fund, an amount which, (after taking into account the amount to be transferred from the Project Fund to the Interest Fund on the twenty-fifth day of the month preceding each Interest Payment Date representing that portion of the capitalized interest which is to be applied to the payment of interest on the Series 2007A Bonds on the next succeeding Interest Payment Date, as such amount is set forth on Exhibit C hereto) will be sufficient to pay the interest to become due on the series 2007A Bonds on January 1, 2008. On or before each Quarterly Payment date after December 31, 2007, commencing March 31, 2008, the Bond Trustee shall deposit in the Interest Fund from amounts on deposit in the Revenue Fund, an amount which (after taking into account said available amount of capitalized interest) will be equal to not less than one-half of the interest to become due on the Series 2007A Bonds on the next succeeding Interest Payment Date. No such deposit need be made, however, to the extent that there is a sufficient amount already on deposit and available for such purpose in the Interest Fund. If any such Quarterly Payment Day is not a Business Day, the deposit herein required to be made shall be made on the next preceding Business Day or so long as the Accounts Agreement is in effect, such Business Day as directed in the Accounts Agreement. Moneys on deposit in the Interest Fund, other than income earned thereon which is to be transferred to other funds created under this Bond Indenture, shall be applied by the Bond Trustee to pay interest on the Series 2007A Bonds as it becomes due.   Section 4.4                         Bond Sinking Fund. The Issuer hereby establishes with the Bond Trustee and agrees to maintain so long as any of the Series 2007A Bonds are outstanding, a separate   40   account to be known as the “Series 2007A Bond Sinking Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Bond Sinking Fund”).   On or before each Quarterly Payment Date, commencing March 31, 2015, after making the required deposits into the Interest Fund, the Bond Trustee shall deposit in the Bond Sinking Fund, from amounts on deposit in the Revenue Fund, an amount which is not less than one-fourth of the principal of the Series 2007A Bonds next to become due, whether at maturity or by Mandatory Sinking Fund Redemption. No such deposit need be made, however, to the extent that there is a sufficient amount already on deposit and available for such purpose in the Bond Sinking Fund. If any such Quarterly Payment Date day is not a Business Day, the deposit herein required to be made shall be made on the next preceding Business Day.   Moneys on deposit in the Bond Sinking Fund, other than income earned thereon which is to be transferred to other funds created under this Bond Indenture, shall be applied by the Bond Trustee to pay principal on the Series 2007A Bonds as it becomes due whether at maturity or by Mandatory Sinking Fund Redemption. In lieu of such payment, the Bond Trustee may, at the written request of the Borrower, purchase in the open market an equal principal amount of Series 2007A Bonds of the maturity to be paid or which is subject to Mandatory Sinking Fund Redemption at prices not exceeding the principal amount of the Series 2007A Bonds being purchased plus accrued interest, with such interest portion of the purchase price to be paid from the Interest Fund and the principal portion of such purchase price to be paid from the Bond Sinking Fund. In addition, the amount of Series 2007A Bonds to be paid or redeemed on any date shall be reduced by the principal amount of Series 2007A Bonds of the maturity required to be paid or redeemed which are acquired by the Borrower and delivered to the Bond Trustee for cancellation.   Section 4.5                         Debt Service Reserve Fund. The Issuer hereby Series 2007A Bonds are Outstanding, a separate account to be known as the “Series 2007A Debt Service Reserve Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Debt Service Reserve Fund”). An initial deposit to the credit of the Debt Service Reserve Fund is to be made under the provisions of   The Debt Service Reserve Fund shall be maintained in an amount equal to the Debt Service Reserve Requirement. Funds on deposit in the Debt Service Reserve Fund shall be used to make up any deficiencies in the Interest Fund and Bond Sinking Fund (in the order listed). The amount of any deficiency created pursuant to such use of said funds shall be restored to the Debt Service Reserve Fund from loan repayments to be made by the Borrower in not more than 4 consecutive substantially equal quarterly installments (the first such installment to be made on the Quarterly Payment Date following the month in which such deficiency is created) as provided in Article IV of the Loan Agreement.   On the first business day of January, 2008, and on the first business day of each January thereafter (each a “Valuation Date”), while any Series 2007A Bonds are Outstanding, the Trustee shall determine the aggregate value on such date of the Authorized Investments then held in the Debt Service Reserve Fund on the basis of the lower of cost or market value plus accrued interest. If such value, together with any cash then held in said Fund, is less than the Debt   41   Service Reserve Requirement, the Trustee shall immediately notify the Issuer and the Borrower of the amount of such deficiency, and subject to the express terms of the Accounts Agreement and the Intercreditor Agreement, the Borrower shall restore the amount of said deficiency to the Debt Service Reserve Fund from loan repayments to be made by the Borrower not later than one month after the date of such valuation in one monthly deposit pursuant to Article IV of the Loan Agreement. If the value of the securities on deposit in the Debt Service Reserve Fund on any Valuation Date, together with any cash then held therein, exceeds such requirement, such excess shall be transferred to the Bond Sinking Fund at the direction of the Borrower but, in any event, not less than annually. No deficiency shall be deemed to have occurred within the meaning of this paragraph if moneys have been transferred to the Bond Sinking Fund from the Debt Service Reserve Fund and the Borrower is repaying the same pursuant to the provisions of the second paragraph of this Section 4.5.   In lieu of the deposit of moneys in the Debt Service Reserve Fund, the Issuer, at the direction of the Borrower, may cause to be so credited a surety bond, an insurance policy or a letter of credit payable to the Issuer for the benefit of the owners of the Series 2007A Bonds in an amount equal to the Debt Service Reserve Requirement or the difference between the Debt Service Reserve Requirement and the amounts then on deposit in the Debt Service Reserve Fund with respect to the Series 2007A Bonds. The surety bond, insurance policy or letter of credit shall be payable (upon the giving of notice as required thereunder) on any date on which moneys will be required to be withdrawn from the Debt Service Reserve Fund and applied to the payment of the principal of or interest on the Series 2007A Bonds and such withdrawals cannot be made by amounts credited to the Debt Service Reserve Fund. The insurer providing such surety bond or insurance policy shall be an insurer whose municipal bond insurance policies insuring the payment, when due, of the principal of and interest on municipal bond issues results in such issues being rated in the highest rating category by either Standard & Poor’s Rating Services, a Division of The McGraw Hill Companies (“S&P”), or Moody’s Investors Service, Inc. (“Moody’s”), or their successors, or any insurer who holds the highest policyholder ratings accorded insurers by A. M. Best & Co. or any comparable service. The letter of credit issuer shall be a bank or trust company which is rated not lower than the highest rating category by S&P and Moody’s, or their successors, and the letter of credit itself shall be rated in the highest category of either such rating agency. If a disbursement is made pursuant to a surety bond, an insurance policy or a letter of credit provided pursuant to this paragraph, the Borrower shall be obligated either (i) to reinstate the maximum limits of such surety bond, insurance policy or letter of credit or (ii) to deposit funds into the Debt Service Reserve Fund in accordance with the first paragraph of this Section 4.5, or a combination of such alternatives, as shall result in the amount credited to the Debt Service Reserve Fund equaling the Debt Service Reserve Requirement for the Series 2007A Bonds.   If the issuer of a surety bond, insurance policy or letter of credit on deposit in the Debt Service Reserve Fund shall cease to have a rating described in the immediately preceding paragraph, the Borrower shall use reasonable efforts to replace such surety bond, insurance policy or letter of credit with one issued by an issuer having a rating so described, but shall not be obligated to pay, or commit to pay, increased fees, expenses or interest in connection with such replacement or to make deposits in the Debt Service Reserve Fund in lieu of replacing such surety bond, insurance   42   policy or letter of credit with another, and such surety bond, insurance policy or letter of credit shall fully satisfy the Debt Service Reserve Requirement notwithstanding such decrease in rating.   To the extent the Issuer or the Borrower deposits funds in the Debt Service Reserve Fund, other funds on deposit therein may be transferred to the Bond Sinking Fund, so long as the Debt Service Reserve Fund is maintained in an amount which is not less than the Debt Service Reserve Requirement.   Section 4.6                         Redemption Fund. The Issuer hereby Series 2007A Bonds are outstanding a separate account to be known as the “Series 2007A Redemption Fund – Heartland Grain Fuels, L.P. Ethanol Plant Project.” (the “Optional Redemption Fund”). In the event of (i) prepayment by or on behalf of the Borrower of amounts payable on the Loan Agreement or (ii) deposits with the Bond Trustee by the Borrower or the Issuer of moneys from any other source for redeeming Series 2007A Bonds (other than a Mandatory Sinking Fund Redemption), except as otherwise provided in this Bond Indenture, such moneys shall be deposited in the Redemption Fund. Moneys on deposit in the Redemption Fund shall be used first, to make up any deficiencies existing in the Interest Fund and the Bond Sinking Fund (in that order) and second, for the redemption or purchase of Series 2007A Bonds in accordance with the provisions of Article V hereof.   Section 4.7                         Investment of Funds. (a)  Upon receipt of a Written Request of the Borrower filed with the Bond Trustee, moneys consisting of proceeds of the Series 2007A Bonds, if any, and all investment earnings thereon in the Interest Fund, Bond Sinking Fund, Debt Service Reserve Fund, Project Fund, Expense Fund and Redemption Fund shall be invested in Authorized Investments, and all remaining moneys in said funds shall be invested in Qualified Investments specified by the Borrower. Such investments shall be made so as to mature on or prior to the date or dates that moneys therefrom are reasonably anticipated to be required. If the Borrower fails to give such direction and file such written request with the Bond Trustee, moneys in such funds shall be invested in Government Obligations, maturing not more than fourteen days after the day such investment is made. As and when any amounts invested pursuant to this Bond Indenture may be needed for disbursements from the Bond Sinking Fund, the Interest Fund, the Debt Service Reserve Fund, the Expense Fund, the Project Fund or the Redemption Fund, the Bond Trustee shall cause a sufficient amount of such investments to be sold or otherwise converted into cash to the credit of such fund. The Bond Trustee may rely upon an Officer’s Certificate of the Borrower in determining whether any investments constitute Authorized Investments and comply with the investment restrictions in this Bond Indenture and the Tax Exemption Agreement. The Bond Trustee, when authorized by the Borrower, may trade with itself in the purchase and sale of securities for such investment; provided, however, that in no case shall any investment be otherwise than in accordance with the investment limitations contained herein and in the Tax Exemption Agreement. The Bond Trustee shall not be liable or responsible for any loss resulting from any such investments. Gains from investments shall be credited to and held in, and losses shall be charged to, the fund or account from which the investment is made.   (b)                                 All investment earnings on amounts in the Project Fund shall be credited to the Project Fund. Other than the Project Fund, all income in excess of the   43   requirements of the funds specified in subsection (a) of this Section derived from the investment of moneys on deposit in any such funds shall be deposited in the following funds, in the order listed:   (i)                                The Debt Service Reserve Fund to the extent necessary to maintain the amount required therein.   (ii)                             The Bond Sinking Fund and the Interest Fund (in that order) to the extent, with respect to the Bond Sinking Fund, of the amount required to be deposited in the Bond Sinking Fund to make the next required principal payment on the Series 2007A Bonds if such payment is scheduled to occur within 13 months of the date of such deposit, and to the extent, with respect to the Interest Fund, of the amounts required to be deposited in the Interest Fund necessary to make any interest payments on the Series 2007A Bonds occurring within 13 months of the date of such deposit; and   (iii)                          The balance, if any, in the Redemption Fund.   Section 4.8                         Trust Funds. All moneys received by the Bond Trustee under the provisions of this Bond Indenture shall, except as provided in Section 4.9 hereof, be trust funds under the terms hereof for the benefit of all Series 2007A Bonds outstanding hereunder (except as otherwise provided) and shall not be subject to lien or attachment of any creditor of the Issuer or the Borrower. Such moneys shall be held in trust and applied in accordance with the provisions of this Bond Indenture.   Section 4.9                         Excluded Funds; Transfers to Rebate Fund. The foregoing provisions of this Article IV notwithstanding, (i) the Rebate Fund shall not be considered a part of the “trust estate” created by this Bond Indenture and (ii) the Bond Trustee shall be permitted to transfer moneys on deposit in any of the trust funds established under this Article IV to the Rebate Fund in accordance with the provisions of the Tax Exemption Agreement.   44   ARTICLE V     Section 5.1                         Redemption Dates and Prices. The Series 2007A Bonds are callable for redemption prior to maturity (herein  referred to as “Extraordinary Optional Redemption”) pursuant to this Section 5.1 in the event of damage to or destruction of the Facilities or any part thereof or condemnation or sale consummated under threat of condemnation of the Facilities or any part thereof, if the Net Proceeds of insurance, condemnation or sale received in connection therewith exceed $5,000,000, but only to the extent of funds provided for in Section 4.7 of the Loan Agreement; and pursuant to the Loan Agreement the Borrower elects to have all or a portion of such Net Proceeds applied to the prepayment of the Series 2007A Bonds. If so called for redemption, Series 2007A Bonds shall be subject to redemption by the Issuer at the direction of the Borrower, in whole or in part at any time, and if in part by maturities designated by the Borrower (less than all of a single maturity to be selected by lot in such manner as may be determined by the Bond Trustee) at the principal amount thereof plus accrued and unpaid interest thereon to the redemption date and without premium from the Net Proceeds from such insurance, or condemnation award or such sale, but not in excess of the amount of such Net Proceeds applied to such purpose.   Outstanding Series 2007A Bonds are also subject to redemption prior to maturity (herein referred to as “Optional Redemption”) on or after January 1, 2015 at the option of the Issuer upon direction of the Borrower out of amounts prepaid under the Loan Agreement and deposited in the Redemption Fund, in whole or in part at any time, and if in part by maturities designated by the Borrower (and if less than all of a single maturity is being redeemed, by lot within a maturity or in such manner as may be reasonably determined by the Bond Trustee), at a redemption price of 100% (expressed as percentages of the principal amount of the Series 2007A Bonds to be redeemed), plus accrued interest, if any,  thereon to the date of redemption.   January 1, 2015 through December 31, 2015   106 % January 1, 2016 through December 31, 2016   104   January 1, 2017 and thereafter   102     No Extraordinary Redemption or Optional Redemption of less than all of the Series 2007A Bonds Outstanding at the time of such redemption shall be made pursuant to the foregoing provisions of this Section 5.1 unless the aggregate principal amount of Series 2007A Bonds to be redeemed is equal to or greater than $100,000.   Series 2007A Bonds may be called for Extraordinary Redemption or Optional Redemption by the Bond Trustee pursuant to this Section 5.1 upon receipt by the Bond Trustee at least 60 days prior to the redemption date of a Written Request of the Borrower requesting such redemption. Such Written Request shall specify the principal amount of the Series 2007A Bonds to be called for redemption, the redemption date, the applicable redemption price or prices, the provision or provisions above specified pursuant to which such Series 2007A Bonds are to be called for redemption and if the Series 2007A Bonds are to be redeemed in part, the   45   maturities of such Series 2007A Bonds, and the amounts within each such maturity to be redeemed. If for any reason the Bond Trustee has not received a Written Request as to the maturities of the Series 2007A Bonds or the amounts within any maturity to be redeemed, it shall apply the funds available for redemption to redeem the Series 2007A Bonds in inverse order of maturity.   Following the occurrence of the Determination of Taxability, the Series 2007A Bonds are subject to mandatory redemption, in whole ,as soon as practicable but in any event no later than ninety (90) days after the occurrence of a Determination of Taxability. The Series 2007A Bonds are subject to mandatory redemption as prepayment upon a Determination of Taxability from a prepayment by the Company of all Loan Payments. The redemption price of the Series 2007A Bonds upon a Determination of Taxability will be equal to one hundred eight percent (108%) of the principal amount of the Bonds to be redeemed and prepaid plus interest accrued, if any, to the mandatory redemption date following the Determination of Taxability. In addition, upon occurrence of a Determination of Taxability, the interest rate on the Bonds shall be adjusted as of the Date of Taxability to the Taxable Rate. The Taxable Rate is equal to a fluctuating interest rate adjusted on the first day of each calendar quarter to a rate equal to the sum of the London Interbank Offered Rates (LIBOR) with a term of three months plus 350 basis points.   The Bonds are subject to mandatory redemption in part by lot (or such other random means selected by the Bond Trustee) at a redemption price equal to the principal amount thereof, together with accrued interest to the date of redemption, from proceeds of the Series 2007A Bonds available therefore after the Completion Date.   In addition to Extraordinary Optional Redemption, Optional Redemption, mandatory redemption upon Determination of Taxability and mandatory redemption upon completion, the Series 2007A Bonds are subject to mandatory sinking fund redemption pursuant to and in the manner specified in Section 5.2 (herein referred to as “Mandatory Sinking Fund Redemption”).   In lieu of redeeming Series 2007A Bonds pursuant to this Section 5.1 or Section 5.2, the Bond Trustee may, at the Written Request of the Borrower, use such funds otherwise available hereunder for redemption of Series 2007A Bonds to purchase for cancellation Series 2007A Bonds in the open market at a price not exceeding the redemption price then applicable hereunder. It is understood that in the case of any such redemption or purchase and cancellation of Series 2007A Bonds, the Issuer shall receive credit against its required Bond Sinking Fund deposits with respect to the Series 2007A Bonds of such maturity, which in the case of Series 2007A Bonds subject to Mandatory Sinking Fund Redemption shall be applied to the mandatory deposits with respect to Mandatory Sinking Fund Redemption which the Borrower elects or, if no election is made, in the inverse order thereof.   The portion of any Series 2007A Bonds of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and in selecting portions of such Series 2007A Bonds for redemption, the Bond Trustee shall treat each such Series 2007A Bond as representing that number of Series 2007A Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Series 2007A Bond by $5,000.   46   Section 5.2                         Bond Sinking Fund Deposits - Mandatory Deposits. With respect to the payment of Series 2007A Bonds, whether at maturity or by Mandatory Sinking Fund Redemption, the Issuer shall have on deposit in the Bond Sinking Fund moneys in the amounts and at the times, respectively, as follows:   January 1 of the Year   Principal Amount   2016    $ 5,840,000.00   2017    6,320,000.00   2018*   6,840,000.00   *Final Maturity   provided, that such amounts shall be reduced (a) by the amount of Series 2007A Bonds of the applicable maturity acquired and delivered in accordance with Section 4.4 hereof in satisfaction of such Bond Sinking Fund requirements and (b) in connection with a partial redemption of Series 2007A Bonds if the Borrower elects to reduce Mandatory Sinking Fund Redemptions for the Series 2007A Bonds of the applicable maturity in the manner provided in the penultimate paragraph of Section 5.1.   Moneys on deposit in the Bond Sinking Fund on January 1 of any year shall be applied to the Mandatory Sinking Fund Redemption of the Series 2007A Bonds next maturing in the amount set forth above. Payment of the Series 2007A Bonds through the Bond Sinking Fund shall be without premium. If less than all Series 2007A Bonds of a particular maturity are subject to Mandatory Sinking Fund Redemption on a particular date, the Series 2007A Bonds to be redeemed shall be selected by lot in such manner as may be designated by the Bond Trustee. The Series 2007A Bonds shall be paid by the Bond Trustee pursuant to the provisions of this paragraph without any notice from or direction by the Issuer or the Borrower.   Section 5.3                         Notice of Redemption. Notice of the call for any redemption of the Series 2007A Bonds shall state the following:  (i) the name of the Series 2007A Bonds, (ii) the CUSIP number and bond certificate number of the Series 2007A Bonds to be redeemed, (iii) the original dated date of the Series 2007A Bonds, (iv) the interest rate and maturity date of the Series 2007A Bonds to be redeemed, (v) the date of the redemption notice, (vi) the redemption date, (vii) the redemption price and (viii) the address and telephone number of the principal office of the Bond Trustee. Such notice shall further state that on the redemption date for such Series 2007A Bonds there shall become due and payable upon each Series 2007A Bond to be redeemed the redemption price thereof, or the redemption price of the specified portion of the principal amount thereof in the case of a Series 2007A Bond to be redeemed in part only, with interest accrued and unpaid to such date, and that from and after such date, interest thereon shall cease to accrue and be payable. The redemption notice shall be given by mailing a copy of such notice of redemption by first class mail, postage prepaid, to the Issuer, and the registered owners of the Series 2007A Bonds to be redeemed at the address shown on the Bond Register not less than 30 or more than 60 days prior to the redemption date; provided, however, that failure to give such notice by mailing or a defect in the notice or the mailing as to any Series 2007A Bond will not affect the validity of any proceedings for redemption as to any other Series 2007A Bond with   47   respect to which notice was properly given. Said notice shall also be given by the Bond Trustee by certified mail, return receipt requested, at least thirty days prior to the date fixed for redemption, to each securities depository registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and to the national information services which disseminate redemption notices. Except for a mandatory sinking fund redemption pursuant to Section 5.2 hereof, prior to the date that the redemption notice is first mailed as aforesaid, funds shall be placed with the Bond Trustee to pay the principal and redemption premium, if any, of such Series 2007A Bonds and the accrued interest thereon to the redemption date. In the case of an optional redemption, at the option of the Borrower, funds need not be deposited prior to the mailing of the notice of redemption, provided that the notice of redemption states that if funds are not on deposit with the Bond Trustee on or prior to the redemption date, the redemption shall be cancelled and the Series 2007A Bonds so called for redemption shall remain Outstanding and continue to bear interest. Upon the happening of the above conditions, the Series 2007A Bonds, or portions thereof, thus called for redemption shall not bear interest after the applicable redemption date, shall no longer be protected by this Bond Indenture and shall not be deemed to be outstanding under the provisions of this Bond Indenture. The Bond Trustee shall redeem or purchase, in the manner provided in this Article V, such an aggregate principal amount of Series 2007A Bonds at the principal amount thereof plus accrued interest to the redemption date as will exhaust as nearly as practicable such funds. At the Written Request of the Borrower, such funds may be invested in Government Obligations until needed for redemption.   48   ARTICLE VI   GENERAL COVENANTS   Section 6.1                         Payment of Principal and Interest. Subject to the limited source of payment hereinafter referred to, the Issuer covenants that it will promptly pay the principal of premium, if any, and interest on every Series 2007A Bond issued under this Bond Indenture at the place, on the dates and in the manner provided herein and in said Series 2007A Bonds according to the true intent and meaning thereof. The principal of premium, if any, and interest on the Series 2007A Bonds are payable solely from payments or prepayments by the Borrower under the  Loan Agreement, which Loan Agreement and payments thereon are hereby specifically assigned and pledged to the payment of the Series 2007A Bonds in the manner and to the extent herein specified, and nothing in the Series 2007A Bonds or in this Bond Indenture shall be considered as assigning or pledging any funds or assets of the Issuer except the moneys and the Loan Agreement (other than Unassigned Rights) pledged under this Bond Indenture.   Section 6.2                         Performance of Covenants; Legal Authorization. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Bond Indenture, in any and every Series 2007A Bond executed, authenticated and delivered hereunder and in all proceedings of its members pertaining thereto. The Issuer represents that it is duly  authorized under the Constitution and laws of the State to issue the Series 2007A Bonds authorized hereby and to execute this Bond Indenture and to assign the Loan Agreement and payments thereon in the manner and to the extent herein set forth, that all action on its part for the issuance of the Series 2007A Bonds and the execution and delivery of this Bond Indenture has been duly and effectively taken, and that the Series 2007A Bonds in the hands of the owners thereof are and will be valid and enforceable obligations of the Issuer according to the import thereof.   Section 6.3                         Ownership; Instruments of Further Assurance. The Issuer represents that the assignment of the Loan Agreement to the Bond Trustee hereby made are valid and lawful. The Issuer covenants that it will defend its interest in the Loan Agreement and the assignment thereof to the Bond Trustee, for the benefit of the holders and owners of the Series 2007A Bonds, against the claims and demands of all persons whomsoever. The Issuer covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such indentures supplemental hereto and such further acts, instruments and transfers as the Bond Trustee may reasonably require for the better assuring, transferring, mortgaging, conveying, pledging, assigning and confirming unto the Bond Trustee, the Loan Agreement and all payments thereon and thereunder (except for Unassigned Rights) pledged hereby to the Bonds.   Section 6.4                         Recording and Filing. The Issuer covenants that, solely from additional amounts payable as provided in Section 7.11 of the Loan Agreement, it will, if requested to do so in writing, cause this Bond Indenture and all supplements hereto and the Loan Agreement and all supplements thereto, and all related financing statements, to be kept, recorded and filed in such manner and in such places as may be so requested in order to preserve and protect fully the security of the holders of the Series 2007A Bonds and the rights of the Bond Trustee hereunder.   49   The Bond Trustee, at the expense of the Borrower, agrees to file all continuation statements with respect to such related financing statements as required from time to time by law.   Section 6.5                         Books and Records. The Issuer covenants that so long as any Series 2007A Bonds are outstanding and unpaid, to the extent of its financial dealings or transactions in relation to the Property of the Borrower and the amounts derived from the Loan Agreement, it will keep, or cause to be kept, proper books of record and account including such records as are required by the Tax Exemption Agreement. Such books shall at all times be open for any lawful purpose to the inspection of the Bond Trustee and such accountants or other agencies as the Bond Trustee may from time to time designate.   Section 6.6                         Bond Register. The Bond Trustee shall keep on file at its office the Bond Register. At reasonable times and under reasonable regulations established by the Bond Trustee, said Bond Register may be inspected and copied by the Borrower or the Issuer.   Section 6.7                         Rights Under the Loan Agreement. The Issuer agrees that the Bond Trustee in its own name or in the name of the Issuer may enforce all rights of the Issuer and all obligations of the Borrower under and pursuant to the Loan Agreement for and on behalf of the Bondholders (other than Unassigned Rights), whether or not the Issuer is in default hereunder.   Section 6.8                         Designation of Additional Paying Agents. The Issuer shall (upon the written direction of the Borrower) cause the necessary arrangements to be made through the Bond Trustee and to be thereafter continued for the designation of additional Paying Agents, if any, and for the making available of funds hereunder for the payment of such of the Series 2007A Bonds as shall be presented when due at the principal corporate trust office of the Bond Trustee, or its successor in trust hereunder, or at the principal office of said additional Paying Agents.   Section 6.9                         Arbitrage; Compliance with Tax Exemption Agreement. The Issuer covenants and agrees that it will not take any action, or fail to take any action which may be requested of it, with respect to the investment of the proceeds of the Series 2007A Bonds or with respect to the payments derived from the Loan Agreement or any other moneys regardless of source or where held which may result in constituting the Series 2007A Bonds “arbitrage bonds” within the meaning of such term as used in Section 148 of the Code. The Issuer further covenants and agrees that it will comply with and take all actions required by the Tax Exemption Agreement.   50   ARTICLE VII     Section 7.1                         Extension of Payment; Penalty. In case the time for the payment of principal of or the interest on any Series 2007A Bonds shall be extended, whether or not such extension be by or with the consent of the Issuer, such principal or such interest so extended shall not be entitled in case of default hereunder to the benefit or security of this Bond Indenture except subject to the prior payment in full of the principal of all Series 2007A Bonds then outstanding and of all interest thereon, the time for the payment of which shall not have been extended.   Section 7.2                         Events of Default. Each of the following events is hereby declared an “event of default,” that is to say, if:   (a)                                  payment of any installment of interest payable on any of the Series 2007A Bonds shall not be made when the same shall become due and payable; or   (b)                                 payment of the principal of, or the premium, if any, on the Series 2007A Bonds shall not be made when the same shall become due and payable, either at maturity, by proceedings for redemption, or upon acceleration; or   (c)                                  any event of default as defined in Section 6.1 of the Loan Agreement shall occur and such event of default shall be continuing for a period of 15 days from and after the date the Issuer is entitled under the Loan Agreement to request that the Bond Trustee declare the Series 2007A Obligation to be immediately due and payable or such event of default shall be continuing for a period of 15 days from and after the date on which the Bond Trustee is entitled under the Bond Indenture to declare the Series 2007A Bonds immediately due and payable, or the Bond Trustee shall declare the Series 2007A Bonds due and payable; or   (d)                                 the Issuer shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Series 2007A Bonds, in this Bond Indenture, or in any indenture supplemental hereto to be performed on the part of the Issuer, and such default shall continue for the period of 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the Issuer and the Borrower by the Bond Trustee; provided, that the Bond Trustee may give such notice in its discretion and shall give such notice at the written request of the owners of not less than ten percent (10%) in aggregate principal amount of the Series 2007A Bonds then outstanding hereunder; provided further that if such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Issuer to remedy such default within such 30-day period shall not constitute a default hereunder if the Issuer shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch; or   (e)                                  the Issuer or the Borrower shall default in the performance of any covenant, condition, agreement or provision of the Tax Exemption Agreement, and such default   51   shall continue for the period of 30 days after written notice specifying such default and requiring the same to be remedied shall have been given to the party in default and the Borrower by the other party; provided that if such default cannot with due diligence and dispatch be wholly cured within 30 days but can be wholly cured, the failure of the Issuer or the Borrower to remedy such default within such 30-day period shall not constitute a default hereunder if any of the foregoing shall immediately upon receipt of such notice commence with due diligence and dispatch the curing of such default and, having so commenced the curing of such default, shall thereafter prosecute and complete the same with due diligence and dispatch.   If on the date payment of principal of or interest on the Series 2007A Bonds is due sufficient moneys are not available to make such payment, the Bond Trustee shall give telephonic notice, confirmed in writing, of such insufficiency to the Issuer and the Borrower.   Section 7.3                         Acceleration. The Bond Trustee may, upon the happening of any event of default specified in paragraphs (c) through (e) of Section 7.2 and the continuance of the same for the period, if any, specified in said paragraphs, without any action on the part of the Bondholders, and the Bond Trustee shall, upon the happening of an event of default specified in paragraph (a) or (b) of Section 7.2 or upon the happening and continuance of any other event of default (other than those specified in paragraph (a) or (b) of Section 7.2) and the written request of the owners of not less than twenty-five percent in aggregate principal amount of the Series 2007A Bonds then outstanding hereunder (exclusive of Series 2007A Bonds then owned by the Issuer or the Borrower) and upon being indemnified to its satisfaction, by notice in writing delivered to the Issuer and the Borrower, declare the entire principal amount of the Series 2007A Bonds then outstanding hereunder and the interest accrued thereon, immediately due and payable, and the entire principal and interest shall thereupon become and be  immediately due and payable, subject, however, to the provisions of Section 7.11 hereof with respect to waivers of events of default.   Section 7.4                         Remedies; Rights of Bondholders. Upon the occurrence of any event of default, the Bond Trustee may pursue any available remedy including a suit at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Series 2007A Bonds outstanding hereunder.   If an event of default shall have occurred, and if it shall have been requested so to do by the holders of not less than twenty-five percent in aggregate principal amount of Series 2007A Bonds then outstanding and if it shall have been indemnified as provided in Section 8.1 hereof, the Bond Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VII as the Bond Trustee shall deem most expedient in the interests of the holders of Series 2007A Bonds; provided, however, that the Bond Trustee shall have the right to decline to comply with any such request if the Bond Trustee shall be advised by counsel (who may be its own counsel) that the action so requested may not lawfully be taken or the Bond Trustee in good faith shall determine that such action would be unjustly prejudicial to the holders of Series 2007A Bonds not parties to such request.   No remedy by the terms of this Bond Indenture conferred upon or reserved to the Bond Trustee (or to the holders of Series 2007A Bonds) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other   52   remedy given to the Bond Trustee or to the holders of Series 2007A Bonds hereunder now or hereafter existing at law or in equity or by statute.   No delay or omission to exercise any right or power accruing upon any default or event of default shall impair any such right or power or shall be construed to be a waiver of any such default or event of default, or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient.   No waiver of any default or event of default hereunder, whether by the Bond Trustee or by the holders of Series 2007A Bonds, shall extend to or shall affect any subsequent default or event of default or shall impair any rights or remedies consequent thereon.   In the event that the Bondholders direct the Bond Trustee to take any action under the Bond Indenture or act on behalf of the Bond Trustee or seek to enforce any right of the Bond Trustee, the Bondholders, and each Bondholder shall be subject to the express terms and conditions of the Intercreditor Agreement to the same extent and with the same effect as if the Bond Trustee took such action without direction from the Bondholders or took such action directly itself, as   Section 7.5                         Direction of Proceedings by Bondholders. The owners of a majority in aggregate principal amount of Series 2007A Bonds then outstanding shall have the right at any time, by an instrument or instruments in writing executed and delivered to the Bond Trustee, to direct the method  and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Bond Indenture, including the enforcement of the rights of the Issuer under the Loan Agreement or the appointment of a receiver or any other proceedings hereunder; provided, that such direction shall not be otherwise than in accordance with the provisions of law and of this Bond Indenture.   Section 7.6                         Appointment of Receivers. Upon the occurrence of an event of default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Bond Trustee and the holders of Series 2007A Bonds under this Bond Indenture, the Bond Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the rights and properties pledged hereunder and of the revenues, issues, payments and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer.   Section 7.7                         Application of Moneys. All moneys received by the Bond Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the cost and expenses (including the fees and expenses of counsel, which may be its in-house legal counsel) of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Bond Trustee, and all moneys in the funds maintained by the Bond Trustee under Articles III and IV, be applied as follows:   (a)                                  Unless the principal of all the Series 2007A Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied:   First:  To the payment to the Persons entitled thereto of all installments of interest then due on the Series 2007A Bonds, in the order of the maturity of the installments of   53   such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto without any discrimination or privilege;   Second:  To the payment to the Persons entitled thereto of the unpaid principal of any of the Series 2007A Bonds which shall have become due (other than Series 2007A Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Bond Indenture), in the order of their due dates, and, if the amount available shall not be sufficient to pay in full Series 2007A Bonds due on any particular date, then to the payment ratably, according to the amount of principal due on such date, to the Persons entitled thereto without any discrimination or privilege;   Third:  To the payment to the Persons entitled thereto of unpaid principal and interest due and owing on any Series 2007A Bonds, the payment of principal and interest of which has been extended in the manner described in Section 7.1; and   Fourth:  To the payment of amounts, if any, payable pursuant to the Tax Exemption Agreement.   (b)                                 If the principal of all the Series 2007A Bonds shall have become due or shall have been declared due and payable, all   First:  To the payment of the principal and interest then due and unpaid upon the Series 2007A Bonds, without preference or priority of principal or interest over the other, or of any installment of interest over any other installment of interest, or of any Series 2007A Bond over any other Series 2007A Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto without any discrimination or privilege;   Second:  To the payment of the principal and interest then due and unpaid upon Series 2007A Bonds with respect to which the payment of principal and interest has been extended as described in Section 7.1; and   Third: To the payment of amounts, if any, payable pursuant to the Tax Exemption Agreement.   (c)                                  If the principal of all the Series 2007A Bonds shall have been declared due and payable, and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of paragraph (b) of this Section in the event that the principal of all the Series 2007A Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section.   Whenever moneys are to be applied by the Bond Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as the Bond Trustee shall determine, having due regard for the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Bond Trustee shall apply such moneys, it shall fix the date (which shall   54   be an Interest Payment Date unless it shall  deem another date more suitable, or, with respect to payments of Defaulted Interest, shall be such date as is required by the last paragraph of Section 2.2 hereof) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Bond Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date and of the Special Record Date by mailing a copy of such notice by first class mail, postage prepaid, to the registered owners of the Series 2007A Bonds, at least 10 days prior to the Special Record Date. The Bond Trustee shall not be required to make payment to the holder of any Series 2007A Bond until such Series 2007A Bond shall be presented to the Bond Trustee for appropriate endorsement or for cancellation if fully paid.   Whenever all Series 2007A Bonds and interest thereon have been paid under the provisions of this Section 7.7 and all expenses and charges of the Bond Trustee have been paid, any balance remaining shall be paid to the Persons entitled to receive the same; if no other Person shall be entitled thereto, then the balance shall be paid to the Borrower.   Section 7.8                         Remedies Vested in Bond Trustee. All rights of action including the right to file proof of claims under this Bond Indenture or under any of the Series 2007A Bonds may be enforced by the Bond Trustee without the possession of any of the Series 2007A Bonds or the production thereof in any trial or other proceedings relating thereto and any such suit or proceeding instituted by the Bond Trustee shall be brought in its name as Bond Trustee without the necessity of joining as plaintiffs or defendants any holders of the Series 2007A Bonds, and any recovery of judgment shall be for the equal benefit of the holders of the outstanding Series 2007A Bonds.   Section 7.9                         Rights and Remedies of Bondholders. No holder of any Series 2007A Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Bond Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless (i) a default shall have become an event of default, (ii) the holders of twenty-five percent in aggregate principal amount of Series 2007A Bonds then outstanding shall have made written request to the Bond Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, and unless also they have offered to the Bond Trustee indemnity as provided in Section 8.1, and (iii) unless the Bond Trustee shall thereafter fail or refuse to exercise the power hereinbefore granted, or to institute such action, suit or proceeding in its own name; and such notification, request and offer of indemnity are hereby declared in every case at the option of the Bond Trustee to be conditions precedent to the  execution of the powers and trusts of this Bond Indenture and to any action or cause of action for the enforcement of this Bond Indenture, or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more holders of the Series 2007A Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Bond Indenture by any action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, had and maintained in the manner herein provided and for the equal benefit of the holders of all Series 2007A Bonds outstanding. Nothing in this Bond Indenture contained shall, however, affect or impair the right of any holder to enforce the payment of the principal of and interest on any Series 2007A Bond at and after the maturity thereof, or the obligation of the Issuer to pay the   55   principal of and interest on each of the Series 2007A Bonds issued hereunder to the respective holders thereof at the time and place, from the source and in the manner in said Series 2007A Bonds expressed.   Section 7.10                  Termination of Proceedings. In case the Bond Trustee shall have proceeded to enforce any right under this Bond Indenture by the appointment of a receiver, or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Bond Trustee, then and in every case the Issuer and the Bond Trustee shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder with respect to the property pledged and assigned hereunder, and all rights, remedies and powers of the Bond Trustee shall continue as if no such proceedings had been taken.   Section 7.11                  Waiver of Events of Default. The Bond Trustee may in its discretion waive any event of default hereunder and its consequences and rescind any declaration of maturity of principal upon written request of the holders of (1) at least 51% in aggregate principal amount of all the Series 2007A Bonds outstanding in respect of which default in the payment of principal and/or interest exists, or (2) at least 51% in aggregate principal amount of all the Series 2007A Bonds outstanding. The foregoing notwithstanding, in no event shall there be waived (a) any event of default in the payment when due (other than with respect to principal becoming due as a result of acceleration of the Series 2007A Bonds) of the principal of any outstanding Series 2007A Bonds whether by Mandatory Sinking Fund Redemption or at the dates of maturity specified therein or (b) any default in the payment when due of the interest on any such Series 2007A Bonds, unless prior to such waiver or rescission all arrears of interest, with interest thereon (to the extent permitted by law) at the rate borne by the Series 2007A Bonds in respect of which such default shall have occurred on overdue installments of interest or all  arrears of payments of principal when due, as the case may be, and all expenses of the Bond Trustee and any Paying Agent in connection with such default shall have been paid or provided for. In case of any such waiver or rescission or in case any proceeding taken by the Bond Trustee on account of any such default shall have been discontinued or abandoned or determined adversely, then and in every such case the Issuer, the Bond Trustee and the Bondholders shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereon.   Section 7.12                  Borrower’s Rights of Possession and Use of Its Property. So long as the Borrower is in full compliance with the terms and provisions of the Loan Agreement, the Borrower shall be suffered and permitted to possess, use and enjoy its Property and appurtenances thereto free of claims of the Issuer and the Bond Trustee.   Section 7.13                  Waiver of Redemption; Effect of Sale of Trust Estate. The Issuer, to the extent permitted by law, shall not claim any rights under any stay, valuation, exemption or extension law, and hereby waives any right of redemption which it may have in respect of any sale or other disposition of the Borrower’s Property pursuant to the rights and remedies granted under this Article VII. Upon the institution of any foreclosure proceedings or upon such sale or other disposition of the Borrower’s Property, or any acceleration of the principal of all Series   56   2007A Bonds then outstanding hereunder, if not previously due and payable shall without more become immediately due and payable.   Section 7.14                  Notice of Default. Upon the occurrence of an Event of Default hereunder, the Bond Trustee will promptly give written notice thereof to the Issuer and the Borrower setting forth the nature of such Event of Default.   57   ARTICLE VIII   THE BOND TRUSTEE   Section 8.1                         Acceptance of the Trusts. The Issuer initially appoints the Bond Trustee as Paying Agent and Registrar. The Bond Trustee accepts and agrees to execute the trusts imposed upon it by this Bond Indenture and to act as the Bond Trustee  under the Tax Exemption Agreement, but only upon the terms and conditions set forth herein, to all of which the Issuer agrees and the respective owners of the Series 2007A Bonds agree by their acceptance of delivery of any of the Series 2007A Bonds. The Bond Trustee, prior to the occurrence of an event of default hereunder and after the curing of all events of default hereunder which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Bond Indenture and to perform such trusts as an ordinarily prudent trustee under a corporate indenture and no other implied covenants or obligations should be read into this Bond Indenture against the Bond Trustee. If an event of default has occurred and is continuing, the Bond Trustee shall exercise such of the rights and powers vested in it by this Bond Indenture and shall use the same degree of care as a prudent person would exercise in the circumstances in the conduct of such person’s own affairs. The Bond Trustee agrees to perform such trusts only upon and subject to the following expressed terms and conditions:   (a)                                  The Bond Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents or receivers and shall not be responsible for the misconduct or negligence of any such attorneys, agents or receivers appointed in the exercise of care, and shall be entitled to advice of counsel concerning all matters of trusts hereof and duties hereunder, and may in all cases pay and be reimbursed for such reasonable compensation to any attorney, agent, receiver or employee retained or employed by it in connection herewith. The Bond Trustee may act upon the opinion or advice of an attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable care. The Bond Trustee shall not be responsible for any loss or damage resulting from any action or nonaction based on its good faith reliance upon such opinion or advice.   (b)                                 The Bond Trustee shall not be responsible for any recital herein, or in the Series 2007A Bonds (except with respect to the certificate of the Bond Trustee endorsed on the Series 2007A Bonds), or for the investment of moneys as herein permitted (except that no investment shall be made except in compliance with Section 4.7 hereof and the Tax Exemption Agreement), or for the recording or re-recording, filing or re-filing of this Bond Indenture, or any supplement or amendment thereto, or the filing of financing statements(other than continuation statements), or for the validity of the execution by the Issuer of this Bond Indenture, or of any supplemental indentures or instruments of further assurance, or for the sufficiency of the security for the Series 2007A Bonds issued hereunder or intended to be secured hereby, or for the value or title of the property herein conveyed or otherwise as to the maintenance of the security hereof. The Bond Trustee may (but shall be under no duty to) require of the Issuer and the Borrower full information and advice as to the performance of the covenants, conditions and agreements in the Loan Agreement. Except as otherwise provided in Section 7.4 hereof, the Bond Trustee shall have no obligation to perform any of the duties of the Issuer   58   (c)                                  The Bond Trustee shall not be accountable for the investment, use or application by the Issuer or the Borrower of any of the Series 2007A Bonds or the proceeds thereof or for the use or application of any money paid over by the Bond Trustee in accordance with the provisions of this Bond Indenture or for the use and application of money received by any Paying Agent. The Bond Trustee may become the owner of Series 2007A Bonds secured hereby with the same rights it would have if not Bond Trustee.   (d)                                 The Bond Trustee shall be protected in acting upon any notice, order, requisition, request, consent, certificate, order, opinion (including an opinion of Independent Counsel), affidavit, letter, telegram or other paper or document in good faith deemed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Bond Trustee pursuant to this Bond Indenture upon the request or Issuer or consent of any person who at the time of making such request or giving such Issuer or consent is the owner of any Series 2007A Bond, shall be conclusive and binding upon all future owners of the same Series 2007A Bond and upon Series 2007A Bonds issued in exchange therefor or in place thereof.   (e)                                  As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Bond Trustee shall be entitled to rely upon a certificate signed on behalf of the Issuer by its Chair or County Auditor as sufficient evidence of the facts therein contained and prior to the occurrence of a default of which the Bond Trustee has been notified as provided in subsection (g) of this Section, or of which by said subsection it is deemed to have notice, may accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. The Bond Trustee may accept a certificate of the Chair or County Auditor of the Issuer to the effect that a resolution in the form therein set forth has been adopted by the Issuer as conclusive evidence that such resolution has been duly adopted, and is in full force and effect.   (f)                                    The permissive right of the Bond Trustee to do things enumerated in this Bond Indenture shall not be construed as a duty and the Bond Trustee shall not be answerable for other than its gross negligence or willful default.   (g)                                 The Bond Trustee shall not be required to take notice or be deemed to have notice of any default hereunder, other than an event of default under clause (a) or (b) of Section 7.2 hereof unless the Bond Trustee shall be specifically notified in writing of such default by the Issuer or by the holders of at least twenty-five percent in aggregate principal amount of all Series 2007A Bonds then outstanding, and all notices or other instruments required by this Bond Indenture to be delivered to the Bond Trustee must, in order to be effective, be delivered at the principal corporate trust office of the Bond Trustee, and in the absence of such notice so delivered the Bond Trustee may conclusively assume there is no default except as aforesaid.   (h)                                 The Bond Trustee shall not be personally liable for any debts contracted or for damages to persons or to personal property injured or damaged, or for salaries or nonfulfillment of contracts during any period in which it may be in possession of or managing   59   the Property of the Borrower and shall have no obligation to expend its own funds for any purpose whatsoever.   (i)                                     At any and all reasonable times, the Bond Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all books, papers and records of the Issuer pertaining to the Series 2007A Bonds, and to take such memoranda from and in regard thereto as may be desired.   (j)                                     The Bond Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises.   (k)                                  Notwithstanding anything contained elsewhere in this Bond Indenture, the Bond Trustee shall have the right, but shall not be required, to demand, in respect of the authentication of any Series 2007A Bonds, the withdrawal of any cash, the release of any Property, or any action whatsoever within the purview of this Bond Indenture, any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Bond Trustee deemed reasonably necessary for the purpose of establishing the right of the Issuer to the authentication of any Series 2007A Bonds, the withdrawal of any cash, the release of any property or the taking of any other action by the Bond Trustee.   (l)                                     Before taking any action under Articles VII or VIII of this Bond Indenture other than an acceleration when required pursuant to Section 7.3 hereof, the Bond Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its gross negligence or willful default in connection with any action so taken.   (m)                               All moneys received by the Bond Trustee or any Paying Agent shall, until used or applied or invested as provided in this Bond Indenture or in the Tax Exemption Agreement, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law or by this Bond Indenture or by the Tax Exemption Agreement. Neither the Bond Trustee nor any Paying Agent shall be under any liability for interest on any moneys received hereunder except such as may be agreed upon.   Section 8.2                         Fees, Charges and Expenses of Bond Trustee and any Additional Paying Agent. The Bond Trustee shall be entitled to payment and/or reimbursement for reasonable fees and for its services rendered hereunder and all advances, counsel fees and other expenses reasonably and necessarily made or incurred by the Bond Trustee in connection with such services. The Bond Trustee shall be entitled to payment and/or reimbursement for the reasonable fees and charges of the Bond Trustee as Paying Agent and Registrar for the Series 2007A Bonds as hereinabove provided. Any additional Paying Agent shall be entitled to payment and/or reimbursement for its reasonable fees and charges as additional Paying Agent for the Series 2007A Bonds. Upon an event of default hereunder, but only upon an event of default hereunder, the Bond Trustee and any additional Paying Agent shall have a right of payment prior to payment on account of interest or principal of, or premium, if any, on any Series 2007A Bond for the foregoing advances, fees, costs and expenses incurred; provided, however, that in no   60   event shall the Bond Trustee or any such additional Paying Agent have any such prior right of payment or claim therefor against moneys or obligations deposited with or paid to the Bond Trustee for the  redemption or payment of Series 2007A Bonds which are deemed to have been paid in accordance with Article XI hereof.   Section 8.3                         Notice to Issuer and the Bondholders if Default Occurs. If a default occurs of which the Bond Trustee is by subsection (g) of Section 8.1 hereof required to take notice or if notice of default is given as in said subsection (g) provided, then the Bond Trustee shall give written notice thereof by first class mail, postage prepaid, to the Issuer and the registered owners of all Series 2007A Bonds then outstanding.   Section 8.4                         Good Faith Reliance. The Bond Trustee and any additional Paying Agent shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram, telex or facsimile transmission, request, consent, waiver, certificate, statement, affidavit, voucher, bond, requisition or other paper or document which it shall in good faith believe to be genuine and to have been passed or signed by the proper board, body or person or to have been prepared and furnished pursuant to any of the provisions of this Bond Indenture or the Loan Agreement, or upon the written opinion of any attorney, engineer, accountant or other expert believed by the Bond Trustee and any additional Paying Agent, as the case may be, to be qualified in relation to the subject matter, and the Bond Trustee and any additional Paying Agent shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. Neither the Bond Trustee nor any Paying Agent shall be bound to recognize any person as an owner of Series 2007A Bonds or to take any action at such person’s request unless satisfactory evidence that such person is the registered owner of such Series 2007A Bond shall be furnished to such entity.   Section 8.5                         Dealings in Series 2007A Bonds. The Bond Trustee and any additional Paying Agent, in its individual capacity, may in good faith buy, sell, own, hold and deal in any of the Series 2007A Bonds issued hereunder, and may join in any action which any owner may be entitled to take with like effect as if it did not act in any capacity hereunder. The Bond Trustee and any additional Paying Agent, in its individual capacity, either as principal or Agent, may also engage in or be interested in any financial or other transaction with the Borrower, and may act as depository, trustee or Agent for any committee or body of owners of Series 2007A Bonds secured hereby or other obligations of the Issuer or the Borrower as freely as if it did not act in any capacity hereunder.   Section 8.6                         Several Capacities. Anything in this Bond Indenture to the contrary notwithstanding, the same entity  may serve hereunder as the Bond Trustee, the Paying Agent and the Registrar, and in any other combination of such capacities, to the extent permitted by law.   Section 8.7                         Intervention by Bond Trustee. In any judicial proceeding to which the Issuer is a party and which in the opinion of the Bond Trustee and its counsel has a substantial bearing on the interests of owners of the Series 2007A Bonds, the Bond Trustee may intervene on behalf of Bondholders and, subject to the provisions of Section 8.1(1), shall do so if requested in writing by the owners of at least twenty-five percent in aggregate principal amount of all   61   Series 2007A Bonds then outstanding. The rights and obligations of the Bond Trustee under this Section are subject to the approval of a court of competent jurisdiction.   Section 8.8                         Successor Bond Trustee by Merger or Consolidation. Any corporation or association into which the Bond Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, provided such corporation or association is otherwise eligible under Section 8.9 hereof, shall be and become successor Bond Trustee hereunder and vested with all of the title to the whole property or trust estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.   Section 8.9                         Bond Trustee Required; Eligibility. There shall at all times be a Bond Trustee hereunder which shall be a bank or trust company in good standing under the law of the State and organized under the laws of the United States of America or any state, authorized to exercise corporate trust powers, subject to supervision or examination by federal or state authorities, and having a reported combined capital and surplus of not less than $75,000,000. If at any time the Bond Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner provided in Section 8.10 hereof. No resignation or removal of the Bond Trustee and no appointment of a successor Bond Trustee shall become effective until the successor Bond Trustee has accepted its appointment under Section 8.13 hereof.   Section 8.10                  Resignation by the Bond Trustee. Subject to Section 8.9, the Bond Trustee and any successor Bond Trustee may at any time resign from the trusts created by this  Bond Indenture and the Tax Exemption Agreement by executing any instrument in writing resigning such trusts and specifying the date when such resignation shall take effect, and filing the same with the Issuer and the Borrower, not less then 45 days before the date specified in such instrument when such resignation shall take effect, and by giving notice of such resignation by first class mail, postage prepaid, not less than 20 days prior to such resignation date, to each registered owner of Series 2007A Bonds then outstanding, as shown by the Bond Register.   Section 8.11                  Removal of the Bond Trustee. Subject to Section 8.9, the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding at the time, may remove the Bond Trustee for “cause” by notice to the Issuer, the Bond Trustee and the Borrower. The Bond Trustee shall continue to act as Bond Trustee hereunder and have the right to proceed to cure any gross negligence, willful misconduct or failure or unwillingness to perform its duties (any of which shall be deemed to constitute “cause”), for a period of two weeks. If such cure is not effected within such time, the Bond Trustee’s functions hereunder will be terminated immediately upon the appointment of a successor bond trustee by the Borrower pursuant to Section 8.12 hereof. Subject to Section 8.9, the Bond Trustee may be removed by filing with the Bond Trustee so removed, and with the Issuer and the Borrower, an instrument or instruments in writing by the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding hereunder at the time of execution of such instrument, appointing a successor, or an   62   outstanding hereunder at the time of execution of such instrument, consenting to the appointment by the Issuer of a successor and accompanied by an instrument of appointment by the Issuer of such successor.   Section 8.12                  Appointment of Successor Bond Trustee by the Bondholders; Temporary Bond Trustee. Subject to Section 8.9 in case the Bond Trustee hereunder shall resign or be removed, or be dissolved, or shall be in the process of dissolution or liquidation, or otherwise becomes incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed, by the owners of a majority in aggregate principal amount of Series 2007A Bonds then outstanding, by an instrument or concurrent instruments in writing signed by such owners, or by their attorneys in fact, duly authorized; provided, nevertheless, that in case of such vacancy the Borrower by an instrument executed and signed by a duly authorized officer, may appoint a temporary Bond Trustee to fill such vacancy until a successor Bond Trustee shall be appointed by the Bondholders in the manner above provided; provided further, that if no permanent successor Bond Trustee shall have been appointed by the Bondholders within the six calendar months next succeeding the month during which the Issuer appoints such a temporary Bond Trustee, such temporary Bond Trustee shall without any further action on the part of the Issuer or the Bondholders become the permanent successor Bond Trustee. The foregoing notwithstanding, any such temporary Bond Trustee so appointed by the Issuer shall immediately and without further act be superseded by any successor Bond Trustee so appointed by such Bondholders within the six calendar months next succeeding the month during which such temporary Bond Trustee is appointed.   Section 8.13                  Judicial Appointment of Successor Trustee. In case at any time the Bond Trustee shall resign and no appointment of a successor Bond Trustee shall be made pursuant to the foregoing provisions of this Article VIII prior to the date specified in the notice of resignation as the date when such resignation is to take effect, the resigning Bond Trustee may forthwith apply to a court of competent jurisdiction for the appointment of a successor Bond Trustee. If no appointment of a successor Bond Trustee shall be made pursuant to the foregoing provisions of this Article VIII within 30 days after a vacancy shall have occurred in the office of Bond Trustee, any owner of Series 2007A Bonds may apply to any court of competent jurisdiction to appoint a successor Bond Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Bond Trustee.   Section 8.14                  Concerning Any Successor Bond Trustees. Every successor Bond Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Issuer an instrument in writing accepting such appointment hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of the Issuer, or of its successor, execute and deliver an instrument transferring to such successor Bond Trustee all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Bond Trustee shall deliver all securities and moneys held by it as Bond Trustee hereunder to its successors. Should any instrument in writing from the Issuer be required by any successor Bond Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby   63   vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. The resignation of any Bond Trustee and the instrument or instruments removing any Bond Trustee and appointing a successor hereunder, together with all other instruments provided for in this Article shall be filed and/or recorded by the successor Bond Trustee in each recording office, if any, where this Bond Indenture shall have been filed and/or recorded.   Section 8.15                  Bond Trustee Protected in Relying Upon Resolution, Etc. The resolutions, opinions, certificates and other instruments provided for in this Bond Indenture may be accepted by the Bond Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and Issuer to the Bond Trustee for the release of property and the withdrawal of cash hereunder.   Section 8.16                  Successor Bond Trustee as Trustee of Funds, Paying Agent and Bond Registrar. In the event of a change in the office of Bond Trustee, the predecessor Bond Trustee which has resigned or been removed shall cease to be trustee of the Expense Fund, Interest Fund, Bond Sinking Fund, Project Fund, Redemption Fund and any other funds provided hereunder and Registrar and Paying Agent for principal of, premium, if any, and interest on the Series 2007A Bonds, and the successor Bond Trustee shall become such Bond Trustee, Registrar and Paying Agent unless a separate Paying Agent or Agents are appointed by the Issuer in connection with the appointment of any successor Bond Trustee.   64   ARTICLE IX   SUPPLEMENTAL BOND INDENTURES   Section 9.1                         Supplemental Bond Indentures Not Requiring Consent of Bondholders. Subject to the limitations set forth in Section 9.2 hereof with respect to this Section 9.1, the Issuer and the Bond Trustee may, but without the consent of, or notice to, any of the Bondholders, enter into an indenture or indentures supplemental to this Bond Indenture, as shall not be inconsistent with the terms and provisions hereof, for any one or more of the following purposes:   (a)                                  to cure any ambiguity or formal defect or omission in this Bond Indenture;   (b)                                 to grant to or confer upon the Bond Trustee for the benefit of the Bondholders any additional rights, remedies, powers or Issuer that may lawfully be granted to or conferred upon the Bondholders and the Bond Trustee, or either of them;   (c)                                  to assign and pledge under or subject to this Bond Indenture additional revenues, properties or collateral;   (d)                                 to evidence the appointment of a separate bond trustee or the succession of a new bond trustee hereunder;   (e)                                  to permit the qualification of this Bond Indenture under the Trust Indenture Act of 1939, as then amended, or any similar federal statute hereafter in effect or to permit the qualification of the Series 2007A Bonds for sale under the securities laws of any state of the United States;   (f)                                    to permit continued compliance with the Tax Exemption Agreement;   (g)                                 to provide for the refunding or advance refunding of any Series 2007A Bonds, including the right to establish and administer an escrow fund and to take related action in connection therewith; and   (h)                                 to make any other change that, in the judgment of the Bond Trustee, does not materially adversely affect the rights of any Bondholders.   If at any time the Issuer or the Bond Trustee proposes to enter into an indenture or indentures supplemental to this Bond Indenture pursuant to subparagraph (i) above, the Bond Trustee shall cause notice of the proposed execution of such supplemental indenture to be given to each rating agency, if any, then maintaining a rating on the Series 2007A Bonds in the manner provided in Section 13.4 hereof at least 30 days prior to the execution of such supplemental indenture, which notice shall include a copy of the proposed supplemental indenture and shall deliver to each such rating agency each such supplemental indenture promptly after it becomes effective.   65   Section 9.2                         Supplemental Bond Indentures Requiring Consent of Bondholders. In addition to supplemental indentures  covered by Section 9.1 hereof and subject to the terms and provisions contained in this Section, and not otherwise, the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding hereunder at the time of the execution of such supplemental indenture, shall have the right, from time to time, anything contained in this Bond Indenture to the contrary notwithstanding, to consent to and approve the execution by the Issuer and the Bond Trustee of such other indenture or indentures supplemental hereto as shall be deemed necessary and desirable by the Issuer for the purpose of modifying altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Bond Indenture or in any supplemental indenture; provided, however, that nothing in this Section or in Section 9.1 hereof contained shall permit, or be construed as permitting, a supplemental indenture effecting or providing for: (a) an extension of the stated maturity or reduction in the principal amount of, or reduction in the rate or extension of the time of paying interest on, or reduction of any premium payable on the redemption of any Series 2007A Bonds, without the consent of the owners of such Bonds; (b) a reduction in the amount or extension of the time of any payment required to be made to or from the Interest Fund or the Bond Sinking Fund; (c) the creation of any lien prior to or on a parity with the lien of this Bond Indenture, without the consent of the owners of all the Series 2007A Bonds at the time outstanding; (d) a reduction in the aforesaid aggregate principal amount of Series 2007A Bonds the owners of which are required to consent to any such supplemental indenture, without the consent of the owners of all the Series 2007A Bonds at the time outstanding which would be affected by the action to be taken; or (e) a modification of the rights, duties or immunities of the Bond Trustee, without the written consent of the Bond Trustee.   If at any time the Issuer shall request the Bond Trustee to enter into any such supplemental indenture for any of the purposes of this Section, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture to be mailed to each holder of Series 2007A Bonds as shown on the Bond Register and to each rating agency then maintaining a rating on the Series 2007A Bonds. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the principal corporate trust office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental indenture when consented to and approved as provided in this Section. If the holders of the requisite principal amount of Series 2007A Bonds which are outstanding hereunder at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no holder of any Series 2007A Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Bond Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this Section permitted and provided, this Bond Indenture shall be and be deemed to be modified and amended in accordance therewith and the Bond Trustee shall deliver a copy of such supplemental indenture to each rating agency then maintaining a rating on the Series 2007A Bonds.   66   Anything herein to the contrary notwithstanding, so long as the Borrower is not in default under the Loan Agreement, a supplemental indenture under this Article IX which adversely affects the rights of the Borrower under the Loan Agreement shall not become effective unless and until such corporation shall have consented in writing to the execution and delivery of such supplemental indenture. In this regard, the Bond Trustee shall cause notice of the proposed execution and delivery of any such supplemental indenture to which the Borrower has not already consented, together with a copy of the proposed supplemental indenture and a written consent form to be signed by the Borrower, to be mailed by certified or registered mail to the Borrower at least 30 days prior to the proposed date of execution and delivery of any such supplemental indenture.   67   ARTICLE X     Section 10.1                  Amendments, Etc. to Loan Agreement Not Requiring Consent. The Issuer, the Borrower and the Bond Trustee may, but without the consent of or notice to the owners of the Series 2007A Bonds, consent to any amendment, change or modification of the Loan Agreement (i) as may be required by the  provisions of this Bond Indenture or such Loan Agreement, (ii) for the purpose of curing any ambiguity or formal defect or omission, (iii) in connection with any other change therein which, in the judgment of the Bond Trustee, does not materially adversely affect the rights of the Bond Trustee, the owners of the Series 2007A Bonds or (iv) as may be required for the purpose of complying with the provisions of the Tax Exemption Agreement; provided, however, that nothing in this Section 10.1 shall permit, or be construed as permitting, any amendment, change or modification of the Loan Agreement that may result in anything described in clauses (a) through (e) of Section 9.2(a) hereof, without the consent of each Bondholder affected. If at any time the Borrower shall request the Issuer and the Bond Trustee to consent to any amendment, change or modification of the Loan Agreement pursuant to clause (iii) above, the Bond Trustee shall cause notice of the proposed execution of such amendment, change or modification to the Loan Agreement to be given to each rating agency, if any, then maintaining a rating on the Series 2007A Bonds at least 30 days prior to the execution of such amendment, change or modification to the Loan Agreement, which notice shall include a copy of the proposed amendment, change or modification to the Loan Agreement.   Section 10.2                  Amendments, Etc. to Loan Agreement Requiring Consent of the Bondholders. Except for the amendments, changes or modifications as provided in Section 10.1 hereof, neither the Issuer nor the Bond Trustee shall consent to any other amendment, change or modification of the Loan Agreement without the written approval or consent, given and procured as in this Section provided, of the owners of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds which are outstanding hereunder at the time of execution of any such amendment, change or modification. If at any time the Issuer and the Borrower shall request the consent of the Bond Trustee to any such proposed amendment, change or modification of the Loan Agreement, the Bond Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be given to each holder of the Series 2007A Bonds as shown on the Bond Register in the same manner as provided by Section 9.2 hereof with respect to supplemental indentures. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the principal office of the Bond Trustee for inspection by all Bondholders. The Bond Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to give such notice, and any such failure shall not affect the validity of such amendment, change or modification when consented to and approved as provided in this Section. If the holders of not less than fifty-one percent in aggregate principal amount of the Series 2007A Bonds outstanding hereunder at the time of the execution of any such amendment, change or modification shall have consented to and  approved the execution thereof, or to   68   enjoin or restrain the Bond Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof.   69   ARTICLE XI     Section 11.1                  Defeasance. If the Issuer shall pay or provide for the payment of the entire indebtedness on all Series 2007A Bonds (including, for the purposes of this Section 11.1, Series 2007A Bonds held by the Borrower outstanding in any one or more of the following ways:   (a)                                  by paying or causing to be paid the principal of and interest on all Series 2007A Bonds outstanding, as and when the same become due and payable;   (b)                                 by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Series 2007A Bonds outstanding (including the payment of interest payable on such Series 2007A Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Escrow Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2007A Bonds outstanding at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used for any other purpose under the Act;   (c)                                  by delivering to the Bond Trustee, for cancellation by it, all Series 2007A Bonds outstanding; or   (d)                                 by depositing with the Bond Trustee, in trust, moneys or Escrow Obligations in such amount as the Bond Trustee shall determine will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2007A Bonds outstanding at or before their respective maturity dates (which determination shall be made in reliance upon an accountant’s verification report reasonably accepted to the Bond Trustee);   and if the Issuer shall pay or cause to be paid or make arrangements satisfactory to the Bond Trustee for the payment of all other sums payable hereunder by the Issuer, and if any such Series 2007A Bonds are to be optionally redeemed prior to the maturity thereof, irrevocable notice of such redemption shall have been given in accordance with the requirements of this Bond Indenture or irrevocable instructions shall have been given to the Bond Trustee of such notice, this Bond Indenture and the estate and rights granted hereunder shall cease, determine, and be discharged, and thereupon the Bond Trustee shall, upon Written Request of the Issuer, and upon receipt by the Bond Trustee of an Officer’s Certificate of the Borrower and an opinion of Independent Counsel, each stating that in the opinion of the signers all conditions precedent to the satisfaction and discharge of this Bond Indenture have been complied with, forthwith execute proper instruments acknowledging satisfaction of and discharging this Bond Indenture and the lien hereof.   70   The satisfaction and discharge of this Bond Indenture shall be without prejudice to the rights of the Bond Trustee to charge and be reimbursed by the Issuer and the Borrower for any expenditures which it may thereafter incur in connection herewith.   Any moneys, funds, securities, or other property remaining on deposit in the Expense Fund, Interest Fund, Bond Sinking Fund, Project Fund, Redemption Fund or in any other fund or investment under this Bond Indenture (other than the Escrow Obligations or other moneys deposited in trust as above provided) shall, upon the full satisfaction of this Bond Indenture, forthwith be transferred, paid over and distributed to the Issuer and the Borrower, as their respective interests may appear.   The Issuer or the Borrower may at any time surrender to the Bond Trustee for cancellation by it any Series 2007A Bonds previously authenticated and delivered, which the Issuer or the Borrower may have acquired in any manner whatsoever, and such Series 2007A Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.   Section 11.2                  Liability of Issuer Not Discharged. Upon the deposit with the Bond Trustee, in trust, at or before maturity, of money or Escrow Obligations in the necessary amount to pay or redeem all outstanding Series 2007A Bonds (whether upon or prior to their maturity or the redemption date of such Series 2007A Bonds) and compliance with the other payment requirements of Section 11.1, provided that if such Series 2007A Bonds are to be redeemed prior to the maturity thereof, notice of  such redemption shall have been given as in Article V herein provided, or provisions satisfactory to the Bond Trustee shall have been made for the giving of such notice, and subject to the provisions of Section 11.4, this Bond Indenture may be discharged in accordance with the provisions hereof but the liability of the Issuer upon the Series 2007A Bonds shall continue, but the owners thereof shall thereafter be entitled to payment only out of the moneys or the Escrow Obligations deposited with the Bond Trustee as aforesaid.   Section 11.3                  Provision for Payment of Portion of the Series 2007A Bonds. If the Issuer shall pay or provide for the payment of a portion of the Series 2007A Bonds (including, for the purposes of this Section 11.3, any Series 2007A Bonds held by the Borrower) in one or more of the following ways:   principal of and interest on such portion of the Series 2007A Bonds, as and when the same shall become due and payable;   (when redeemable) a portion of the Series 2007A Bonds outstanding (including the payment of interest payable on such portion of the Series 2007A Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Escrow Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Series 2007A Bonds at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used for any other purpose under the Act;   71   cancellation by it, such portion of the Series 2007A Bonds; or   determine (which determination shall be made in reliance on an accountant’s verification report of an accountant reasonably acceptable to the Bond Trustee) (when redeemable) and discharge the indebtedness on such portion of the Series 2007A Bonds at or before their respective maturity dates;   and if the Issuer shall also pay or cause to be paid or made arrangements hereunder by the Issuer with respect to such Series 2007A Bonds, and, if such Series 2007A Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in Article V of this Bond Indenture provided or provisions satisfactory to the Bond Trustee shall have been made for the giving of such notice, such Series 2007A Bonds shall cease to be entitled to any lien, benefit or security under this Bond Indenture. The liability of the Issuer in respect of such Series 2007A Bonds shall continue, but the owners thereof shall thereafter be entitled to payment (to the exclusion of all other Bondholders) only out of the moneys or the Escrow Obligations deposited with the Bond Trustee as aforesaid.   Section 11.4                  When Advance Refunding is Not Permitted and Special Conditions for Refundings. The other provisions of this Bond Indenture notwithstanding, none of the Series 2007A Bonds outstanding hereunder may be refunded as aforesaid nor may this Bond Indenture be discharged if under any circumstances would result in the loss of any exclusion from federal income taxation to which the Series 2007A Bonds would otherwise be entitled. As a condition precedent to the advance refunding of any Series 2007A Bonds outstanding hereunder, the Bond Trustee shall receive an opinion of Bond Counsel (which counsel and opinion, including without limitation the scope, form, substance and other aspects thereof are acceptable to the Bond Trustee and which opinion may be based upon a ruling or rulings of the Internal Revenue Service and the verification report referred to in Sections 11.1 and 11.3 hereof) to the effect that such advance refunding will not result in the loss of any exclusion for purposes of federal income taxation to which the interest on the Series 2007A Bonds would otherwise be entitled.   72   ARTICLE XII     Section 12.1                  Proof of Ownership. Any request, direction, consent or other instrument provided by this Bond Indenture to be signed and executed by the Bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the execution of any such request, direction or other instrument or of the writing appointing any such agent and of the ownership of Series 2007A Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Bond Indenture and shall be conclusive in favor of the Bond Trustee and the Issuer, with regard to any action taken by them, or either of them, under such request or other instrument, namely:   (a)                                  the fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments in such jurisdiction, that the person signing such writing acknowledged before him the execution thereof, or by the affidavit of a witness of such execution; and   (b)                                 the ownership of Series 2007A Bonds and the amounts and registration numbers of such Bonds and the date of holding the same shall be proved by the Bond Register.   Any action taken or suffered by the Bond Trustee pursuant to any provision of this Bond Indenture, upon the request or with the assent of any Person who at the time is the owner of any Series 2007A Bond or Series 2007A Bonds, shall be conclusive and binding upon all future owners of the same Series 2007A Bond or Series 2007A Bonds.   73   ARTICLE XIII MISCELLANEOUS   Section 13.1      Limitation of Rights.  With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Bond Indenture or the Series 2007A Bonds is intended or shall be construed to give to any person other than the parties hereto and the owners of the Series 2007A Bonds any legal or equitable right, remedy or claim under or in respect to this Bond Indenture or any covenants, conditions and provisions herein contained; this Bond Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and the owners of the Series 2007A Bonds as herein provided.   Section 13.2      Unclaimed Moneys.  Any moneys deposited with the Bond Trustee in accordance with the terms and covenants of this Bond Indenture, in order to redeem or pay any Series 2007A Bond in accordance with the provisions of this Bond Indenture which remain unclaimed by the owners of the Series 2007A Bond for four years after the redemption or maturity date, as the case may be, shall, if the Borrower is not at the time, to the knowledge of the Bond Trustee, in default with respect to any of the terms and conditions of this Bond Indenture or the Series 2007A Bonds, be repaid by the Bond Trustee to the Borrower upon its written request therefor; and thereafter the owners of the Series 2007A Bond shall be entitled to look only to the Borrower for payment thereof.  Such moneys may be invested in accordance with Section 4.7 hereof if the Borrower makes arrangements satisfactory to the Bond Trustee to indemnify the Bond Trustee  for any costs which it may incur due to the unavailability of moneys due to such investment.  Investment income on any such unclaimed moneys received by the Bond Trustee shall be deposited as provided in Section 4.7 hereof until the final maturity or redemption date of the Series 2007A Bonds.  Any such income generated after such date shall be deemed to be unclaimed moneys of the type referred to in the first sentence of this Section and shall be disposed of in accordance with such sentence. The Issuer hereby covenants and agrees to indemnify and save the Bond Trustee harmless from any and all loss, costs, liability and expense suffered or incurred by the Bond Trustee by reason of having returned any such moneys to the Issuer as herein provided.   Section 13.3      Severability.  If any provision of this Bond Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever.   The invalidity of any one or more phrases, sentences, clauses or Sections in this Bond Indenture contained shall not affect the remaining portions of this Bond Indenture, or any part thereof.   74   Section 13.4      Notices.  It shall be sufficient service of any notice, request, complaint, demand or other paper if the same shall be duly mailed by registered or certified mail, sent by reputable registered overnight mail or delivery service, or send by personal delivery or confirmed facsimile delivery, and addressed as follows:   To the Issuer:   25 Market Street, Suite 2 Aberdeen, South Dakota 57401 Attention: County Auditor   To the Borrower:   Heartland Grain Fuels, L.P. 10201 Wayzata Boulevard, Suite 250 Minneapolis, Minnesota 55305 Attention: General Partner   To the Bond Trustee:   Well Fargo, National Association MAC N9311-115 625 Marquette Avenue, 11th Floor Minneapolis, Minnesota 55479 Attention:  Corporate Trust   Section 13.5      Bond Trustee as Paying Agent and Registrar.  The Bond Trustee is hereby designated and agrees to act as principal Paying Agent and Registrar for and in respect to the Series 2007A Bonds.   Section 13.6      Counterparts.  This Bond Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.   Section 13.7      Applicable Law.  This Bond Indenture shall be governed exclusively by the applicable laws of the State of South Dakota.   Section 13.8      Immunity of Officers, Employees and Members of Issuer.  No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Series 2007A Bonds or for any claim based thereon or upon any obligation, covenant or agreement in this Bond Indenture contained against any past, present or future elected official, officer, director, member, employee or agent of the Issuer, or of any successor political subdivision, as such, either directly or through the Issuer or any successor political subdivision, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such elected official, officers, directors, members, employees or agents as such is hereby expressly waived and released as a condition of   75   and consideration for the execution of this Bond Indenture and the issuance of such Series 2007A Bonds.   Section 13.9      Parties Interested Hereunder.  Nothing in this Bond Indenture expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the Issuer, the Bond Trustee and the registered owners of the Series 2007A Bonds, any right, remedy or claim under or by reason of this or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Bond Indenture, contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer, the Bond Trustee and the registered owners of the Series 2007A Bonds.   Section 13.10    Continuing Disclosure.  Pursuant to Section 5.16 of the Loan Agreement, the Borrower has agreed to undertake all responsibility for compliance with continuing disclosure requirements pursuant to a Continuing Disclosure Agreement, dated as of September 1, 2007 (the “Continuing Disclosure Agreement”) between the Borrower and the Bond Trustee to be executed the date of issuance and delivery of the Series 2007A Bonds, and the Issuer shall have no liability to the Bondholders or any other person with respect to such disclosure matters.  Notwithstanding any other provision of this Bond Indenture, failure of the Borrower to comply with the Continuing Disclosure Agreement shall not be considered an event of default, hereunder; however, any Bondholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Borrower to comply with its obligations under Section 5.16 of the Loan Agreement.   Section 13.11    The Intercreditor Agreement.  In connection with the execution and delivery of the Bond Indenture, the Bond Trustee has entered into the Intercreditor Agreement which sets forth the relative rights and priorities of the Bondholders and the Senior Lenders. The performance of the Bond Trustee of its duties hereunder and all actions taken by the Bond Trustee, as trustee hereunder, are subject to the express terms of the Intercreditor Agreement. Notwithstanding anything in this Bond Indenture to the contrary, any right of payment from or on behalf of the Borrower, liens or security interests granted to the Bond Trustee (other than the liens and security interests granted pursuant to the Granting Clauses of the Bond Indenture), the exercise of certain rights on remedies hereunder and the ability of the Bond Trustee to perform or enforce certain provisions of this Bond Indenture are subject to the provisions of (but only to the extent provided in) the Intercreditor Agreement. In the event that the express terms of the Intercreditor Agreement shall prohibit or restrict the Bond Trustee from taking any action or enforcing any right hereunder, the express terms of the Intercreditor Agreement shall govern and in the event of any conflict between the express terms of the Intercreditor Agreement and the Bond Indenture, the express terms of the Intercreditor Agreement shall govern and control; provided, however, the terms of the Intercreditor Agreement shall not constitute and amendment to, or waiver or deletion of, performance of any provisions, or waive or delete or amend any default or an Event of Default under the Bond Indenture.   76   IN WITNESS WHEREOF, the Brown County, South Dakota, has caused these presents to be signed in its name and on its behalf by its Chair, and the same to be attested by its County Auditor, and to evidence its acceptance of the trusts hereby created, Wells Fargo Bank, National Association has caused these presents to be signed in its name and on its behalf by one of its authorized officers, [its official seal to be hereunto affixed], and the same to be attested by one of its authorized officers, all as of the day and year first above written.     BROWN COUNTY, SOUTH DAKOTA         By /s/ Mike Wiese     Its: Chair               Attest: /s/ Maxine Taylor     Its: County Auditor     [Execution by Bond Trustee on following page.]       WELLS FARGO BANK, NATIONAL ASSOCIATION   AS BOND TRUSTEE           By /s/ Steven R. Gubrud             Its: Vice President                 By               Its:         EXHIBIT A (FORM OF SERIES 2007A BOND)   UNITED STATES OF AMERICA   STATE OF SOUTH DAKOTA     SUBORDINATE SOLID WASTE FACILITIES REVENUE BOND   (HEARTLAND GRAIN FUELS, L.P. ETHANOL PLANT PROJECT), SERIES 2007A   R-_______   INTEREST RATE:   MATURITY DATE:   DATED DATE:   CUSIP:   REGISTERED OWNER:   PRINCIPAL SUM:   AS PROVIDED IN THE BOND INDENTURE REFERRED TO HEREIN, UNTIL THE TERMINATION OF THE SYSTEM OF BOOK-ENTRY-ONLY TRANSFERS THROUGH THE DEPOSITORY TRUST COMPANY, NEW YORK, NEW YORK (TOGETHER WITH ANY SUCCESSOR SECURITIES DEPOSITORY APPOINTED PURSUANT TO THE BOND INDENTURE, “DTC”), AND NOTWITHSTANDING ANY OTHER PROVISIONS OF THE BOND INDENTURE TO THE CONTRARY, (A) THIS BOND MAY BE TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO A NOMINEE OF DTC, OR BY A NOMINEE OF DTC TO DTC OR A NOMINEE OF DTC, OR BY DTC OR A NOMINEE OF DTC TO ANY SUCCESSOR SECURITIES DEPOSITORY OR ANY NOMINEE THEREOF AND (B) A PORTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE PAID OR REDEEMED WITHOUT SURRENDER HEREOF TO THE PAYING AGENT.  DTC OR A NOMINEE, TRANSFEREE OR ASSIGNEE OF DTC OF THIS BOND MAY NOT RELY UPON THE PRINCIPAL AMOUNT INDICATED HEREON AS THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID.  THE PRINCIPAL AMOUNT HEREOF OUTSTANDING AND UNPAID SHALL FOR ALL PURPOSES BE THE AMOUNT DETERMINED IN THE MANNER PROVIDED IN THE BOND INDENTURE.   A-1   UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (A) TO THE BOND REGISTRAR FOR REGISTRATION OF TRANSFER OR EXCHANGE OR (B) TO THE BOND TRUSTEE FOR PAYMENT OF PRINCIPAL OR REDEMPTION PRICE, AND ANY BOND ISSUED IN REPLACEMENT HEREOF OR SUBSTITUTION HEREFOR IS REGISTERED IN THE NAME OF DTC OR ITS NOMINEE OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO DTC OR ITS NOMINEE, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE ONLY THE REGISTERED OWNER HEREOF, CEDE & CO., AS NOMINEE OF DTC, HAS AN INTEREST HEREIN.   BROWN COUNTY, SOUTH DAKOTA (the “Issuer”), a public body corporate and politic and a political subdivision duly and validly created and existing under the laws and constitution of the state of South Dakota and has all powers granted under the provisions, restrictions and limitations of South Dakota Codified Laws Chapter 9-54, as supplemented and amended (the “Act”), for value received, hereby promises to pay in lawful money of the United States of America to the registered owner shown above, or registered assigns, on the maturity date specified above, unless this Bond shall be redeemable and shall have previously been called for redemption and payment of the redemption price made or provided for, but solely from amounts available under the Bond Indenture (hereinafter referred to), and certain amounts payable under the Loan Agreement (hereinafter referred to), which payments are pledged and assigned for the benefit and payment hereof pursuant to the Bond Indenture and not otherwise, upon surrender hereof, the principal sum set forth above, and to pay interest on such principal amount (based on a 360-day year composed of twelve 30-day months) in like manner, but solely from said amounts available under the Bond Indenture, and certain amounts payable under the Loan Agreement, from the dated date hereof at the rate  per annum specified above, payable on each January 1 and July l, beginning January 1, 2008, until payment of such principal amount, or provision therefor, shall have been made upon redemption or at maturity.    The principal of this Bond is payable upon surrender of this Bond at the principal corporate trust office in Minneapolis, Minnesota of Wells Fargo Bank, National Association, as bond trustee (the “Bond Trustee”).  Except as otherwise provided in the Bond Indenture with respect to Defaulted Interest (as defined therein), interest payments hereon shall be made to the registered owner (the “Holder”) hereof appearing on the registration books of the Issuer (the “Bond Register”) maintained by the Bond Trustee, as bond registrar, as of the close of business of the Bond Trustee on the 15th day of the month (whether or not a business day) next preceding the interest payment date (the “Record Date”) and shall be paid (i) by check or draft of the Bond Trustee mailed on the applicable interest payment date to the Holder at the Holder’s address as it appears on the Bond Register or at such other address furnished in writing by such registered owner to the Bond Trustee no later than the Record Date or (ii) as to any Holder of $1,000,000 or more in aggregate principal amount of the Series 2007A Bonds who so elects, by wire transfer of funds to such wire transfer address within the continental United States as the Holder shall have furnished in writing to the Bond Trustee no later than the Record Date, which wire instructions shall remain in effect until the Bond Trustee is notified to the contrary.   except as hereinafter   A-2   provided, shall be payable to the Owner in whose name such Series 2007A Bond is registered at the close of business of the Bond Trustee on the Special Record Date for the payment of such Defaulted Interest, which Special Record Date shall be fixed in the following manner.  The Borrower shall notify the Bond Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Series 2007A Bond and the date of the proposed payment (which date shall be such, as will enable the  Bond Trustee to comply with the next sentence hereof) and, at the same time, the Borrower or the Obligated Group shall deposit with the Bond Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Bond Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the owners of the Series 2007A Bonds entitled to such Defaulted Interest as provided in this Section.  Following receipt of such funds, the Bond Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which date will be fifteen (15) days prior to the date of the proposed payment.  The Bond Trustee shall promptly notify the Borrower of such Special Record Date and, in the name and at the expense of the Borrower, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, not less than 10 days prior to such Special Record Date to each Owner of a Series 2007A Bond entitled to such notice at the address of such Owner as it appears on the Bond Register. Such Defaulted Interest shall be paid to the Owners of the Series 2007A Bonds in whose names the Series 2007A Bonds on which such Defaulted Interest is to be paid are registered on such Special Record Date.   Upon a Determination of Taxability, the interest rate on the Bonds will be converted to the Taxable Rate as of the date of the Determination of Taxability, regardless of the date as of which the Bonds were taxable. The Taxable Rate is a fluctuating per annum interest rate adjusted on the first day of each calendar quarter in a year (January 1, April 1, July, and October 1) and equal to the sum of (i) the rate of interest published as the London Interbank Offered Rates with a term of three months as of each adjustment date, plus (ii) 350 basis points. If the adjustment date is not a Business Day, the rate will be adjusted on the next Business Day. The Bond Trustee may be precluded by the terms of the Intercreditor Agreement and the Accounts Agreement from paying interest in the Bonds at the Taxable Rate.   This Bond is one of an authorized series of Bonds issued under the Bond Indenture in the aggregate principal amount of $______________ (the “Series 2007A Bonds”) for the purpose of lending funds to Heartland Grain Fuels, L.P., a limited partnership, organized and existing under the laws of the State of Delaware (the “Borrower”) which funds will be used, together with certain moneys of the Borrower, to (i) pay the cost of the acquisition, construction and equipping of improvements and expansion of the Facility consisting of certain Solid Waste Disposal Facilities (as herein defined which constitute a project within the meaning of the Act) (the “Project”), which is owned by the Issuer and operated by the Borrower, (ii) fund a debt service reserve, (iii) pay interest on the Series 2007A Bonds during construction of the Project and (iv) pay certain expenses incurred in connection with the issuance of the Series 2007A Bonds.   The loan by the Issuer to the Borrower of the proceeds of the Series 2007A Bonds will be made under and secured pursuant to a Loan Agreement, dated as of October 1, 2007 (the “Loan Agreement”) between the Borrower and the Issuer.   A-3   The Series 2007A Bonds are all issued under and equally and ratably secured by and entitled to the security of a Bond Trust Indenture dated as of October 1, 2007 (the “Bond Indenture”) duly executed and delivered by the Issuer to the Bond Trustee, pursuant to which Bond Indenture all of the right, title and interest of the Issuer in and to the Loan Agreement (excluding Unassigned Rights, as defined in the Bond Indenture) are assigned by the Issuer to the Bond Trustee as security for the Series 2007A Bonds. The payment of principal and interest, and redemption premium, if any, on Series 2007A Bonds will be secured by the Bond Collateral Documents as defined in the Bond Indenture. The ability of the Borrower to make payments under the Loan Agreement and the enforcement thereof and of the Bond Collateral Documents, and the use of the proceeds of any such enforcement, are subject and subordinate to the Senior Credit Facilities between the Borrower and the Senior Lenders pursuant to the Accounts Agreement and the Intercreditor Agreement, all as defined in the Bond Indenture. Reference is made to the Bond Indenture, the Loan Agreement, the Bond Collateral Documents, the Senior Credit Facilities, the Accounts Agreement, the Intercreditor Agreement and to all amendments to any such agreements for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the Issuer, the Bond Trustee and the rights of the owners of the Series 2007A Bonds and the Senior Lenders, and to all the provisions of which the owner, by the acceptance of this Bond, assents.   This Bond and such other Bonds of the series of which it forms a part do not constitute a debt or liability of the State of South Dakota (the “State”) or of any political subdivision thereof or a pledge of the faith and credit of the State or any political subdivision thereof.  The issuance of the Series 2007A Bonds under the provisions of the Act does not, directly, indirectly or  contingently, obligate the State or any political subdivision thereof to levy any form of taxation for the payment thereof or to make any appropriation for their payment, and such Bonds and the interest payable thereon do not now and shall never constitute a debt of the State or any political subdivision thereof within the meaning of the Constitution or the statutes of the State and do not now and shall never constitute a charge against the credit or taxing power of the State or any political subdivision thereof.  Neither the State nor any political subdivision thereof shall in any event be liable for the payment of the principal of or interest on the Series 2007A Bonds or for the performance of any pledge, obligation or agreement of any kind whatsoever which may be undertaken by the Issuer.  No breach by the Issuer of any such pledge, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State or any political subdivision thereof.  No covenant or agreement in the Series 2007A Bonds or in the Bond Indenture and no obligation imposed by the Bond Indenture upon the Issuer and no breach thereof shall constitute or give rise to or impose upon the Issuer a general liability or a charge upon its general credit or property other than the trust estate (as described in the Bond Indenture).    This Bond and such other Bonds of the series of which it forms a part, and the interest payable hereon and thereon, are limited obligations of the Issuer and are payable solely from amount available under the Bond Indenture and from payments or prepayments to be made under the Loan Agreement, which are pledged and assigned for the payment of the Series 2007A Bonds in accordance with the Bond Indenture, and from moneys and investments on deposit in various funds under the Bond Indenture.   This Bond is registered on the Bond Register and may be transferred by the registered owner hereof at the written request of such registered owner in person or by his duly authorized   A-4   attorney, but only in the manner, subject to the limitations and upon the payment of the charges provided in the Bond Indenture and upon surrender and cancellation of this Bond.  Upon such transfer, a new fully registered bond or bonds of the same maturity and of authorized denominations for the same aggregate principal amount shall be issued to the transferee in exchange therefor.  The Issuer and the Bond Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the principal and interest due hereon and for all other purposes, and neither the Issuer nor the Bond Trustee shall be affected by any notice to the contrary.  The Issuer and the Bond Trustee shall not be required to register the transfer or exchange of any Series 2007A Bond after notice calling such Bond or portion thereof for redemption has been given as provided in the Bond Indenture, or during the period of 15 days next preceding the giving of such notice of redemption with respect to any Series 2007A Bonds of the same maturity.   The Series 2007A Bonds are issuable only as registered bonds, in denominations of $5,000 and integral multiples thereof.   With respect to the payment of Series 2007A Bonds, whether at maturity or by Mandatory Sinking Fund Redemption (as defined in the Bond Indenture), the Issuer shall have on deposit in the Bond Sinking Fund (as defined in the Bond Indenture), moneys in the amounts and at the times, respectively, as follows:   January 1 of the Year   Principal Amount   January 1 of the Year   Principal Amount                                             Moneys on deposit in the Bond Sinking Fund on January 1 of each year shall be applied to the Mandatory Sinking Fund Redemption of the Series 2007A Bonds in the amount set forth above.  Payment of the Series 2007A Bonds through the Bond Sinking Fund shall be without premium.  If less than all Series 2007A Bonds of a particular maturity are subject to Mandatory Sinking Fund Redemption on a particular date, the Series 2007A Bonds to be redeemed shall be selected by lot in such manner as may be designated by the Bond Trustee.   Subject to the express terms of the Accounts Agreement and the Intercreditor Agreement, the Series 2007A Bonds are redeemable out of proceeds received from insurance and condemnation and from sale under threat of condemnation under certain conditions described in the Bond Indenture (“Extraordinary Redemption”), in whole or in part, and if in part, by maturities (less than all of a single maturity to be selected by lot in such manner as may be determined by the Bond Trustee) designated by the Borrower, at a redemption price equal to the principal amount thereof plus accrued and unpaid interest thereon to the date fixed for redemption and without premium, as provided in the Bond Indenture.   Agreement, outstanding Series 2007A Bonds are also subject to redemption prior to maturity on or after   A-5   January 1, _____ at the option of the Issuer upon direction of the Borrower (“Optional Redemption”) out of amounts prepaid under the Loan Agreement and deposited in the Redemption Fund (as defined in the Bond Indenture), in whole or in part at any time, and if in part by maturities (less than all of a single maturity is being redeemed by, lot within a maturity or in such manner as may be reasonably determined by the Bond Trustee) at the redemption prices (expressed as percentages of the principal amount of the Series 2007A Bonds to be redeemed) as set forth below plus accrued interest thereon to the date fixed for redemption:   Redemption Dates (Dates inclusive)   Redemption Price           January 1, 20__ through December 31, 20__   ____ %   ____ % January 1, 20__ and thereafter   ____ %   Series 2007A Bonds at the time outstanding shall be made unless the aggregate than $100,000.  In the case of any Extraordinary Redemption or Optional Redemption or any purchase and cancellation of Series 2007A Bonds, the Issuer shall receive credit against its required Bond Sinking Fund deposits with respect to such Series 2007A Bonds.   Agreement, outstanding Series 2007A Bonds are also subject to mandatory redemption prior to maturity (herein referred to as a “Determination of Taxability Redemption”) upon a Determination of Taxability, in whole but not in part, on the earliest redemption date for which notice can be given as required in Section 5.3 hereof as the redemption price equal to the principal amount of the Series 2007A Bonds to be redeemed plus accrued interest thereon to the date of redemption, without penalty.   Agreement, the Bonds are subject to mandatory redemption in part by lot (or such other random means selected by the Bond Trustee) at a redemption price equal to the principal amount thereof, together with accrued interest to the date of redemption, from proceeds of the Series 2007A Bonds available therefor after the Completion Date.   In the event any of the Series 2007A Bonds are called for redemption as aforesaid, notice thereof identifying the Series 2007A Bonds to be redeemed will be given by mailing a copy of the redemption notice by mail not less than 30 or more than 60 days prior to the date fixed for redemption to the registered  owner of each Series 2007A Bond to be redeemed at the address shown on the Bond Register; provided, however, that failure to give such notice by mailing, or any defect in such notice or mailing, as to any Series 2007A Bond, shall not affect the validity of any proceedings for redemption of any other Series 2007A Bond with respect to which notice was properly given.  All Series 2007A Bonds so called for redemption will cease to bear interest   A-6   on the specified redemption date, provided funds for their redemption are on deposit at the place of payment at that time, and shall no longer be protected by the Bond Indenture and shall not be deemed to be outstanding under the provisions of the Bond Indenture.   The Series 2007A Bonds are subject to advance defeasance of the Bond Indenture by depositing with the Bond Trustee, in trust, moneys or Escrow Obligations (as defined in the Bond Indenture) in such amount as the Bond Trustee shall determine (such determination may be based upon an accountant’s verification report) will, together with the income or increment to accrue thereon, without outstanding under the Bond Indenture at or before their respective maturity dates.  The Series 2007A Bonds are also subject to advance defeasance of the Bond Indenture by depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) all Series 2007A Bonds outstanding (including the payment of interest payable on such Series 2007A Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Escrow Obligations (as defined in the Bond Indenture) in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on all Series 2007A Bonds outstanding under the Bond Indenture at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used for any other purpose under the Act.  Upon such payment or provision therefor, together with all other payments required under the Bond Indenture, the Bond Indenture may be discharged in accordance with the provisions thereof, but the Issuer shall remain the obligor on all Series 2007A Bonds, although the owners thereof and the owner hereof shall be entitled to payment solely out of such moneys or Escrow Obligations deposited with the Bond Trustee.   The Issuer may also pay or provide for the payment of any portion of the Series 2007A Bonds by: (a) depositing with the Bond Trustee, in trust, moneys or Escrow Obligations in such amount as the Bond Trustee shall determine (such determination may be based upon an accountant’s verification report) will, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, be fully sufficient to pay or redeem (when Bonds at or before their respective maturity dates; or (b) depositing with the Bond Trustee, in trust, at or before maturity, moneys in an amount sufficient to pay or redeem (when redeemable) a portion of the Series 2007A Bonds outstanding (including the payment of interest payable on such portion of the Series 2007A Bonds to the maturity or redemption date thereof), provided that such moneys, if invested, shall be invested in Escrow Obligations in an amount, without consideration of any income or increment to accrue thereon, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such portion of the Series 2007A Bonds at or before their respective maturity dates; it being understood that the investment income on such Escrow Obligations may be used for any other purpose under the Act. Upon such deposit, such portion of the Series 2007A Bonds shall cease to be entitled to any lien, benefit or security under the Bond Indenture.  The Issuer shall remain the obligor on such portion of the Series 2007A Bonds but the owners thereof shall be entitled to payment (to the exclusion of all other Bondholders) solely out of such moneys or Escrow Obligations deposited with the Bond Trustee.   A-7   The foregoing notwithstanding, none of the Series 2007A Bonds may be so refunded nor may the Bond Indenture be discharged if under any circumstances such refunding would result in the loss of any exclusion for purposes of federal income taxation to which the interest on the Series 2007A Bonds would otherwise be entitled.  As a condition precedent to the advance refunding of any Series 2007A Bonds, the Bond Indenture requires that the Bond Trustee receive an opinion of nationally recognized municipal bond counsel (which counsel and opinion, including without limitation the scope, form, substance and other aspects thereof are acceptable to the Bond Trustee and which opinion may be based upon a ruling or rulings of the Internal Revenue Service and an accountant’s verification report) to the effect that such refunding will not result in the loss of any exclusion for purposes of federal income taxation to which the interest on the Series 2007A Bonds would otherwise be entitled.   The owner of this Bond shall have no right to enforce the provisions of the Bond Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Bond Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Bond Indenture.  In certain events, on the conditions, in the manner and with the effect set forth in the Bond Indenture, the principal of the Series 2007A Bonds issued under the Bond Indenture and then outstanding may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon.  Modifications or alterations of the Bond Indenture or of any supplements thereto, may be made only to the extent and in the circumstances permitted by the Bond Indenture.   It is hereby certified that all conditions, acts and things required to exist, happen and be performed under the Act and under the Bond Indenture precedent to and in the issuance of this Bond, exist, have happened and have been performed, and that the issuance, authentication and delivery of this Bond have been duly authorized by resolution of the Issuer duly adopted.   No recourse shall be had for the payment of the principal of, premium, if any, or interest on any of the Series 2007A Bonds or for any claim based thereon or upon any obligation, covenant or agreement in the Bond Indenture contained, against any past, present or future officer, director, member, employee or agent of the Issuer, or any incorporator, officer, director, member, trustee, employee or agent of any successor to the Issuer or body politic, as such, either directly or through the Issuer or any successor to the Issuer or body politic, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such incorporators, officers, directors, trustees, members, employees or agents, as such, is hereby expressly waived and released as a condition of and consideration for the execution of the Bond Indenture and the issuance of any of the Series 2007A Bonds.   This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Indenture until the certificate of authentication hereon shall have been duly executed by the Bond Trustee.   A-8   IN WITNESS WHEREOF, as provided by the Act, Brown County, South Dakota has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of its Chair [and its seal to be hereunto affixed or reproduced] and attested with the manual or facsimile signature of its County Auditor, all as of the dated date specified above.             By     Its: Chair               Attest:     Its: County Auditor (Seal)     Countersignature of Resident Attorney         Countersigned:         By         A Resident Attorney       A-9   CERTIFICATE OF AUTHENTICATION   This Bond is one of the Series 2007A Bonds described in the within-mentioned Bond Indenture.   Authentication Date:     ASSOCIATION,   Bond Trustee           By         Authorized Signatory   A-10   ASSIGNMENT   FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto                 (Name and Address of Assignee)     the within Bond and does hereby irrevocably constitute and appoint _______________________, Attorney, to transfer the said Bond on the Bond Register thereof with full power of substitution in the premises.   Dated:                               NOTICE: The assignor’s signature to this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatsoever.     Signature guaranteed:       NOTICE:  Signature must be guaranteed by an institution who is a participant in the Securities Transfer Agent Medallion Program (“STAMP”) or similar program     NOTICE:   The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever.   A-11   EXHIBIT B PROJECT DESCRIPTION   The Project consists of Solid Waste Disposal Facilities at the Aberdeen Facility, including the following:   Centrifuge.  The centrifuge portion of the Project consists of (i) the stillage pump, (ii) the whole stillage tank, (iii) centrifuges, (iv) a centrifuge conveyor, used solely to transport stillage cake from the centrifuges to the dryer, (v) then stillage storage tanks, used to temporarily hold then stillage removed from the centrifuges prior to being pumped to the evaporator, and (vi) related pipes, valves, switches, agitators, and controls.   Evaporator.  The evaporator portion of the Project consists of (i) a portion of the cost of the gas-fired boiler, representing that portion of the boiler used to produce steam for the processing of by-products, (ii) heat exchangers, which allow heat to be transferred from the steam to the thin stillage and from the evaporated vapor to the cooling water, (iii) evaporator recirculation pumps, used to recirculate the syrup until proper specifications are reached, (iv) a surge tank, used to temporarily hold the syrup before it is pumped to the dryer, (v) a syrup feed pump, used solely to pump the syrup from the evaporator to the dryer, and (vi) related pipes, valves, switches, agitators, small pumps and controls.   Dryer.  The dryer portion of the Project consists of (i) a dryer feed conveyor, used to convey the stillage cake to the dryer, (ii) a mixer in which the cake and syrup are mixed, (iii) the dryer drum and its drive system, (iv) a gas-fired burner and combustion furnace used exclusively to supply heat to the dryer, (v) a dryer discharge conveyor system, used to convey the DDGS out of the dryer, (vi) a recycle screw conveyor, which is used to convey a portion of the DDGS back into the dryer to enhance drying efficiencies, (vii) a 4-cyclone air/production separation system, (viii) a large induced draft fan, which pulls a draft on the dryer drum and discharges water vapor up the discharge stack in the form of steam, (ix) a stainless steel dryer discharge stack, which routes all steam away from the dryer, and (x) related pipes, valves, switches and controls.   Methanator.  The methanator portion of the Project consists of:  (i) the digester; (ii) the biogas scrubber and the biogas flare that burns off the cleaned gas; (iii) the decarbonator; (iv) the recycle tank; (v) tanks which store the “food” sources for the bacteria in the digester; and (vi) related pipes, valves, switches, and controls.   Storage.  The Project includes related storage to be used exclusively for the storage of DDGS.  In addition, the storage portion of the Project includes (i) a conveyor system used to move the DDGS from the dryer exit conveyor to the storage building, (ii) conveyors, elevator leg, weigh system, and related equipment used to handle weigh, and load bulk DDGS onto trucks or rail cars, and (iii) related pipes, valves, switches, and controls.   B-1   EXHIBIT C INTEREST PAYMENT SCHEDULE   The following amounts shall be withdrawn from the Project Fund on or before the Interest Payment date set forth below in the amount set forth below and transferred to the Interest Fund to pay interest on such Interest Payment Date:   Interest Payment Date   Amount   January 1, 2008   $ 357,041.67             July 1, 2008   779,395.83           Total   $ 1,136,437.50     C-1

November 12, 2015 Via EDGAR Correspondence Mr. William H. Thompson Accounting Branch Chief United States Securities and Exchange Commission treet, NE Washington, D.C. 20549 Re:Tile Shop Holdings, Inc. Form 10-K for the Fiscal Year Ended December 31, 2015 Filed February 27, 2015 File No. 1-35629 Dear Mr. Thompson, Thank you for your letter dated November 3, 2015 regarding Tile Shop Holdings, Inc. (“we” or the “Company”). Following this introductory section are your comments (in italics) and our responses. We place a high priority on providing clear and useful disclosures to the readers of our SEC filings, and we welcome the opportunity to review our practices in an effort to make our disclosures even better. We believe our responses address your comments. Should the staff have further questions or comments, we would welcome direct dialogue to discuss suggestions for future filings. Form 10-K for the Fiscal Year Ended December 31, 2014 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA, page 18 1. Please tell us how you determined shareholder litigation expenses, investigation costs and equity related transaction costs met the criteria to be identified as non-recurring. Please refer to Item 10(e) of Regulation S-K and Question 102.03 of our Non-GAAP Financial Measures Compliance & Disclosures Interpretations. Item 10(e) of Regulation S-K prohibits the use of a “non-recurring” description in the event the nature of the charge or gain has occurred within the prior two years or is reasonably likely to occur again within the next two years. Historically, we held the view that the shareholder litigation expense, investigation costs and equity related transaction costs related to unique one-time events that may or may not recur with similar materiality or impact to our results of operations. The charges related to the audit committee investigation were primarily incurred during the first quarter of 2014 and the equity transaction costs related to the exercise and repurchase of warrants, a repurchase of common stock and our secondary offering and were primarily incurred during the second quarter of fiscal 2013. In both cases, we had not experienced charges of a similar nature during the prior two years and we did not believe that it was reasonably likely that we would incur charges of a similar nature again within the next two years. The Tile Shop |14000 Carlson Parkway | Plymouth, MN 55441 | p763.541.1444 The shareholder litigation charges relate to a class action lawsuit filed during the fourth quarter of 2013. We believed as of the end of fiscal 2014 that these charges related to a unique underlying event and we did not anticipate that it was reasonably likely that we would incur charges of a similar nature again within the next two years. Thus, at the time of filing our Form 10-K for the fiscal year ended December 31, 2014 we believed it appropriate to characterize these charges as “non-recurring”. However, on March 4, 2015, our motion to dismiss the shareholder litigation was granted in part and denied in part by an order of the court. Additionally, two derivative suits related to the shareholder litigation were filed on March 17, 2015 and April 7, 2015. As a result, it became apparent during the first quarter of 2015 that we would continue to incur shareholder litigation costs and such charges would no longer meet the definition of “non-recurring”. Accordingly, beginning in the first quarter of 2015, we removed the reference to the word “non-recurring” from the description of Adjusted EBITDA set forth in our Quarterly Reports on Form 10-Q. We will exclude reference to the word “non-recurring” with respect to “special charges”, which includes shareholder litigation and investigation costs, from our future filings and earnings releases for at least the next two years and for so long as we have incurred charges of that nature within the prior two years or the nature of the charge is reasonably likely to recur within two years. Form 8-K Filed on October 20, 2015 2. We note your disclosure of the range of adjusted earnings per share and adjusted EBITDA in your financial guidance for fiscal year 2015. Please tell us what consideration you gave to disclosing forward looking GAAP earnings per share and EBITDA and presenting a schedule or other presentation detailing the differences between the forward looking non-GAAP financial measures and the other forward-looking GAAP financial measures. If the GAAP financial measures are not accessible on a forward-looking basis, you should disclose that fact, identify the information that is unavailable and its probable significance and provide reconciling information that is available without unreasonable effort. Please refer to Regulation G. We note the staff’s comment seeking a quantitative reconciliation of our non-GAAP forward-looking financial measures, adjusted earnings per share and adjusted EBITDA, to the appropriate forward-looking GAAP financial measures, earnings per share and net income. The Tile Shop |14000 Carlson Parkway | Plymouth, MN 55441 | p763.541.1444 To the extent we continue to provide forward looking non-GAAP financial measures in future filings, we will either provide a reconciliation of each forward-looking non-GAAP financial measure to the appropriate forward-looking GAAP financial measure or, if the forward-looking GAAP measure is not accessible, we will disclose that fact, provide reconciling information that is available without an unreasonable effort, identify the information that is unavailable and disclose its probable significance. **** Pursuant to your request, the Company acknowledges that: ● The Company is responsible for the adequacy and accuracy of the disclosure in the filing; ● Staff comments or changes to disclosures in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and ● The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. On behalf of Tile Shop Holdings, Inc. I thank you for your consideration of our response. If you have any questions regarding these matters, please contact me at (763) 852-2962. Sincerely, /s/ Kirk L. Geadelmann Kirk L. Geadelmann Chief Financial Officer cc: Ta Tanisha Meadows, Securities Exchange Commission Chris Homeister, Tile Shop Holdings, Inc. John Houston, Fredrikson & Byron, P.A. Anne Mootz, Ernst & Young, LLP The Tile Shop |14000 Carlson Parkway | Plymouth, MN 55441 | p763.541.1444

Title: [Texas] Payroll question. A whole month later, our old owner told the new owner not to pay holidays, so he deducted from our most recent paycheck since he paid Memorial Day. Question:Backstory: Previous boss sold the company at the beginning of May. The new owner decided to pay us holidays, so we were paid for Memorial Day. Fast forward to last week’s paycheck. We were a day short and I brought it up this morning. The new owner said that the old owner came in and he let her do payroll. She saw that we were paid for the holiday and took it upon herself to deduct that from our checks, a whole month later. No one even altered us. Is this legal? It feels unethical and dirty. She isn’t the owner so I’m confused as to why she is given power over the company. We were given 3 hours notice about the new owner and we were not able to negotiate our contracts, despite being employed under an entirely new LLC. Topic: Employment Law Answer #1: &gt; employed under an entirely new LLC. Are you an independent contractor? Hourly? Full time? Salary?Answer #2: Hi there. I'd like to respond, but first I have questions. 1. Am I correct in my understanding that the company was: a. owned by party A and sold to party B in May and b. Party A came in and was randomly handling payroll for the company they no longer own? If my understanding is correct: 1. What is the function of party A in relation to the new organization? Partner? Management Employee? Consultant? 2. Is this the only instance in which payroll was handled by this person. 3. Did the old organization have a written policy on holiday pay? 4.Does the new organization have a written policy on holiday pay? 5. When were you given notice? A more detailed timeline may help focus answers. Answer #3: I think the missing piece here is that you worked hours that you didn't get paid in this paycheck.

EXHIBIT 10.2   April 30, 2004   David Carey 2524 Aspen Springs Rd Park City, Utah 84060   Dear David,   We are pleased to confirm in writing the terms of your employment in the position of President & Chief Operating Officer with Entrust, Inc. (the “Company”), reporting to Bill Conner. Your salary on an annualized basis will be $280,000.00 US, which will be paid biweekly. Your salary and performance will be subject to review on an annual basis. The responsibilities of this position have been reviewed with you. However, should you have any questions, please contact Bill Conner at 972-713-5810.   You will be eligible to receive a one time $25,000.00 US signing bonus within your first 30 days of employment with the Company which was April 30, 2004 (“Commencement Date”); provided, however should you resign your employment with the Company at any time during the first twelve (12) months of employment for any reason, you will be required to pay on a pro-rated basis.   Additionally, you will be granted two awards of incentive stock options as follows: (i) an award of incentive stock options to purchase 250,000 shares of common stock of the Company (“First Grant”); and (ii) an award of incentive stock options to purchase 25,000 shares of common stock of the Company (the “Second Grant”). The strike price for both of these awards will be equal to the fair market value of the common stock at close of business on the Commencement Date, which was $4.50.   In respect of the First Grant, the vesting conditions that will be outlined in your Entrust Stock Option Agreement (that will be provided to you in due course) will include the following:     • this option will become exercisable as to 25% of the original number of shares on the Commencement Date; and     • this option will become exercisable as to an additional 1/24th of the remaining number of shares on that day of the month for each of the next 24 months thereafter.   In respect of the Second Grant, the vesting conditions that will be outlined in your Entrust Stock Option Agreement will include the following:   • this option will become exercisable as to 50% of the original number of shares on the earlier of the following dates:   (i) the second anniversary of the grant date; and (ii) the first day on which the closing price of the Company’s Common Stock on the Nasdaq National Market (“Nasdaq”), as reported by Nasdaq, is at least $15.00 per share for at least 50 out of 60 consecutive trading days, including the day of vesting (“Early Vest Date”).     • this option will become exercisable as to an additional 50% of the original number of shares the earlier of the following dates:   (i) the fourth anniversary of the grant date; and   (ii) the Early Vest Date.   As an officer of the Company, both of the aforementioned grants will be subject to acceleration upon certain acquisition events as set forth in your Entrust Stock Option Agreement(s). These grants will also be subject to the terms of the Amended and Restated 1996 Stock Incentive plan that will also be provided to you in due course.   You are also eligible to participate in the company’s current Incentive Plan. Your annual incentive potential is up to 60% of base salary or $168,000.00 US at 100% achievement of individual management objectives and Company revenue targets, subject to review by the Compensation Committee of the Board of Directors. This potential is not a target. This incentive program is in the discretion of the Company and may be amended, reduced or discontinued at any time.   Your vacation is set at 20 business days per annum, which will accrue on a per pay period basis. All vacation benefits are subject to the Company’s Paid Time-Off Policy for North America, as amended from time to time by the Company, a copy of which is enclosed.   A summary of the benefit plan is enclosed. These benefits may be modified, reduced, or discontinued by the Company at any time.   We believe that your abilities and our needs are compatible and that your acceptance of this offer will prove mutually beneficial. However, it is understood and agreed that your employment is terminable at the will of either party and is not an employment agreement for a year or any other specified term. This means that your terms and conditions of employment, including but not limited to termination, demotion, promotion, transfer, compensation, benefits, duties and location of work may be changed with or without cause, for any or no reason, and with or without notice. Your status as an at-will employee cannot be changed by any statement, promise, policy, course of conduct, in writing or manual except through a written agreement signed by the CEO of the Company.   You will be eligible to the severance benefits set forth in the enclosed Executive Severance Agreement.   Entrust will cover your relocation expenses from Salt Lake City, Utah, to Addison, Texas, to a maximum re-imbursement of $10,000.00 US.   You are also required to sign and return the enclosed Confidentiality, Non-Solicitation, Non-Competition, and Code Of Conduct Agreement, a copy of which is enclosed with this letter.   Also, please assist the Company by completing the employment application (included in offer package) and providing documentation to establish your identity and eligibility for employment as required under the Immigration Reform and Control Act of 1986, which is required of all employees. Please review the enclosed “List of Acceptable Documents”, and provide the appropriate ones to Human Resources as soon as possible.   Please assist the Company by completing the pre-employment background investigation, which is required of all employees. The authorization form should be completed and faxed, as soon as possible, to OccuScreen at 877-464-5656. Upon your request, we will identify any consumer reporting agency involved in this process so that you may, if you wish, seek access to its records as provided under the relevant statute.   Finally, please also provide or confirm your social security number and date of birth. This will facilitate your enrollment on our payroll and employee benefit programs. The laws of the State of the State of Texas shall govern the terms of this letter.   To confirm these terms governing your employment with the Company, please sign and return the original of this letter along with the following enclosed agreements:     • Confidentiality, Non-Solicitation, Non-Competition, and Code Of Conduct Agreement; and     • Executive Severance Agreement.   Otherwise, if you have any questions or concerns, please contact Jay Kendry at 972-713-5819 to discuss.   Sincerely,   /s/ Bill Conner   Bill Conner Chairman of the Board and Chief Executive Officer of Entrust, Inc.   I have read, understood, and therefore, accept this offer of employment, as set forth above.   Signature:     /s/  David Carey                       Date:                                           SS#: :                                      Date of Birth:                              Telephone:                                                     Attachments:   Executive Severance Agreement. Agreement Background Information Authorization Benefit Plan Summary Code of Business Conduct Policy on Information Security and Use of Corporate Systems Entrust Information Classification and Use Policy Harassment Policy Entrust, Inc. Insider Trading & Securities Policy I-9 Form (Employment Identification & Verification) W-4 Form (U.S. Federal Tax Withholding) Direct Deposit Application Form Paid Time-Off Policy for North America

Exhibit 10.2   AMENDMENT NO. 2 OF SENIOR UNSECURED PROMISSORY NOTE   THIS AMENDMENT NO. 2 (this “Amendment”) to the Senior Unsecured Promissory Note dated October 17, 2014, as amended (the "Note") is dated effective as of July 1, 2015, by and between Namecheap, Inc. (“Namecheap”), and Rightside Group, Ltd. (“Rightside”).  Unless otherwise expressly defined herein, all capitalized terms used herein shall have the meanings set forth in the Note.    WHEREAS, Namecheap issued the Note to Rightside in the original principal amount of $2,500,000 on October 17, 2014, as amended December 31, 2014, in connection with that certain Registrar Agreement between Namecheap and eNom, Incorporated dated December 20, 2013; and   WHEREAS, Namecheap and Rightside wish to extend the Maturity Date.    of which are hereby acknowledged, Namecheap and Rightside hereby agree as set forth below.   1. The Maturity Date of the Note is hereby extended from June 30, 2015 to July 31, 2015.    2. Except as modified hereby, the Note shall remain in full force and effect.   3. Each of Namecheap and Rightside represents and warrants to the other that it has the right, power and authority to enter into this Amendment.    4. This Amendment may be executed in counterparts, each of which shall be an original, and deemed to constitute one and the same instrument.  Signatures delivered by facsimile or PDF shall have the same force and effect as manual signatures delivered in person.          IN WITNESS WHEREOF, the parties hereto have caused the foregoing Amendment to be signed by a duly authorized agent of each party, executed as of the day and year first above written.           NAMECHEAP, INC. RIGHTSIDE GROUP, LTD.              By: /s/ Richard Kirkendall By: /s/ Tracy Knox   Name: Richard Kirkendall   Name: Tracy Knox   Title:    CEO   Title:   CFO  

EXHIBIT 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in Registration Statement No. 333-175165 on Form S-8 and Registration Statement No. 333-178820 on Form S-3 of Primo Water Corporation of our report dated March 17, 2014, relating to our audits of the consolidated financial statements, which appear in this Annual Report on Form 10-K of Primo Water Corporation for the year ended December 31, 2013. /s/ McGladrey LLP Raleigh, North Carolina March 17, 2014

Exhibit 4.1 THIS DEBENTURE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS DEBENTURE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO VANITY EVENTS HOLDING INC. THAT SUCH REGISTRATION IS NOT REQUIRED. CONVERTIBLE DEBENTURE FOR VALUE RECEIVED, VANITY EVENTS HOLDING, Inc., a Delaware corporation (the “Borrower”), promises to pay to Greystone Capital Partners LLC (the “Holder”) or its registered assigns or successors in interest, the sum of Fifty Thousand Dollars ($50,000), together with any accrued and unpaid interest hereon, on May 10, 2012 (the “Maturity Date”) if not sooner paid. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that certain Securities Purchase Agreement dated as of May 10, 2011, between Borrower and the Holder (as amended, modified or supplemented from time to time, the “Purchase Agreement”). The following terms shall apply to this Debenture: ARTICLE I INTEREST & AMORTIZATION 1.1.Contract Rate.Subject to Sections 3.10 and 5.7 hereof, interest payable on this Debenture shall accrue at a rate per annum equal to ten percent (10%). 1.2.Payments.Payment of the aggregate principal amount outstanding under this Debenture (the “Principal Amount”), together with all accrued interest thereon shall be made on the Maturity Date. ARTICLE II CONVERSION REPAYMENT 2.1.Optional Conversion.Subject to the terms of this Article II, the Holder shall have the right, but not the obligation, at any time until the Maturity Date, or thereafter during an Event of Default and to convert all or any portion of the outstanding Principal Amount and/or accrued interest and fees due and payable into fully paid and nonassessable shares of the Common Stock at the Conversion Price. The shares of Common Stock to be issued upon such conversion are herein referred to as the “Conversion Shares.”The “Conversion Price” shall mean the lesser of (i) ten percent(10%) of the lowest closing price of the Common Stock during the 10 trading days immediately preceding the Conversion Date as quoted by Bloomberg, LP or such other quotation service as mutually agreed to by the parties or (ii) ten percent(10%) of the closing price of the Common Stock on the date of issuance of this Debenture.The Conversion Price may be adjusted pursuant to the other terms of this Debenture. 2.2.Conversion Limitation.Notwithstanding anything contained herein to the contrary, the Holder shall not be entitled to convert pursuant to the terms of this Debenture an amount that would be convertible into that number of Conversion Shares which would exceed the difference between the number of shares of Common Stock beneficially owned by such Holder and 4.99% of the outstanding shares of Common Stock of Borrower.For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder. 2.3.Mechanics of Holder’s Conversion.Subject to Section 2.2, this Debenture will be converted by the Holder in part from time to time after the Issue Date, by submitting to the Borrower a Notice of Conversion (by facsimile or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time).On each Conversion Date (as hereinafter defined) and in accordance with its Notice of Conversion, the Holder shall make the appropriate reduction to the Principal Amount, accrued interest and fees as entered in its records and shall provide written notice thereof to the Borrower on the Conversion Date.Each date on which a Notice of Conversion is delivered or telecopied to Borrower in accordance with the provisions hereof shall be deemed a Conversion Date (the “Conversion Date”).A form of Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit A.Pursuant to the terms of the Notice of Conversion, Borrower will issue instructions to the transfer agent accompanied by an opinion of counsel to Borrower of the Notice of Conversion and shall cause the transfer agent to transmit the certificates representing the Conversion Shares to the Holder by physical delivery or crediting the account of the Holder’s designated broker with the Depository Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within five (5) business days after receipt by Borrower of the Notice of Conversion (the “Delivery Date”). In the case of the exercise of the conversion rights set forth herein the conversion privilege shall be deemed to have been exercised and the Conversion Shares issuable upon such conversion shall be deemed to have been issued upon the date of receipt by Borrower of the Notice of Conversion. The Holder shall be treated for all purposes as the record holder of such Common Stock, unless the Holder provides Borrower written instructions to the contrary. 1 2.4.Late Payments.The Borrower understands that a delay in the delivery of the shares of Common Stock in the form required pursuant to this Article beyond the Delivery Date could result in economic loss to the Holder.As compensation to the Holder for such loss, the Borrower agrees to pay late payments to the Holder for late issuance of such shares in the form required pursuant to this Article II upon conversion of the Debenture, in the amount equal to $500 per business day after the Delivery Date.The Borrower shall pay any payments incurred under this Section in immediately available funds upon demand. 2.5.Conversion Mechanics. (a)The number of shares of Common Stock to be issued upon each conversion of this Debenture shall be determined by dividing that portion of the Principal Amount and interest and fees to be converted, if any, by the then applicable Conversion Price. (b)The Conversion Price and number and kind of shares or other securities to be issued upon conversion shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains outstanding, as follows: A.Reclassification, etc.If Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes, this Debenture, as to the unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock (i) immediately prior to or (ii) immediately after such reclassification or other change at the sole election of the Holder. 2.6.Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Debenture.The Borrower is required at all times to have authorized and reserved such number of shares that is actually issuable upon full conversion of the Debenture (based on the Conversion Price in effect from time to time) (the “Reserved Amount”).The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Debenture shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Debenture.The Borrower agrees that its issuance of this Debenture shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Debenture. If, at any time Holder submits a Notice of Conversion, and the Borrower does not have sufficient authorized but unissued shares of Common Stock available to effect such conversion in accordance with the provisions of this Article II (a “Conversion Default”), subject to Section 2.2, the Borrower shall issue to the Holder all of the shares of Common Stock which are then available to effect such conversion.The portion of this Debenture which the Holder included in its Conversion Notice and which exceeds the amount which is then convertible into available shares of Common Stock shall, notwithstanding anything to the contrary contained herein, not be convertible into Common Stock in accordance with the terms hereof until (and at the Holder’s option at any time after) the date additional shares of Common Stock are authorized by the Borrower to permit such conversion.In addition, the Borrower shall pay to the Holder $1,000 per day (a “Conversion Default Payment”) to the date (the “Authorization Date”) that the Borrower authorizes a sufficient number of shares of Common Stock to effect conversion of the full outstanding Principal Amount of this Debenture.The Borrower shall use its best efforts to authorize a sufficient number of shares of Common Stock as soon as practicable following the earlier of (i) such time that the Holder notifies the Borrower or that the Borrower otherwise becomes aware that there are or likely will be insufficient authorized and unissued shares to allow full conversion thereof and (ii) a Conversion Default.The Borrower shall send notice to the Holder of the authorization of additional shares of Common Stock and the Authorization Date along with the Holder’s Conversion Default Payments in immediately available funds. Nothing herein shall limit the Holder’s right to pursue actual damages (to the extent in excess of the Conversion Default Payments) for the Borrower’s failure to maintain a sufficient number of authorized shares of Common Stock, and Holder shall have the right to pursue all remedies available at law or in equity (including degree of specific performance and/or injunctive relief). 2.7.Favored Nations Provision.With the exception of the shares the Company is obligated to issue to previous investors prior to this offering, for as long as the Debenture is outstanding, the Conversion Price of the Debenture shall be subject to adjustment for issuances of Common Stock or securities convertible into common stock or exercisable for shares of common stock at a purchase price of less than the then-effective Conversion Price, on any unconverted amounts, such that the then applicable Conversion Price shall be adjusted using full-ratchet anti-dilution on such new issuances subject, to customary carve outs, including restricted shares granted to officers, directors and consultants pursuant to a shareholder approved stock incentive/option plan. 2.8.Issuance of New Debenture.Upon any partial conversion of this Debenture, a new Debenture containing the same date and provisions of this Debenture shall, at the request of the Holder, be issued by the Borrower to the Holder for the principal balance of this Debenture and interest which shall not have been converted or paid. Subject to the provisions of Article III, the Borrower will pay no costs, fees or any other consideration to the Holder for the production and issuance of a new Debenture. 2 ARTICLE III EVENTS OF DEFAULT The occurrence of any of the following events set forth in Sections 3.1 through 3.9, inclusive, shall be an “Event of Default”: 3.1.Failure to Pay Principal, Interest or Other Fees.Borrower fails to pay principal, interest or other fees hereon and such failure shall continue for a period of five (5) days following the date upon which any such payment was due. 3.2.Breach of Covenant.Borrower breaches any covenant or other term or condition of this Debenture in any material respect and such breach, if subject to cure, continues for a period of five (5) days after the occurrence thereof. 3.3.Breach of Representations and Warranties.Any representation or warranty of Borrower made herein or the Purchase Agreement shall be false or misleading in any material respect. 3.4.Stop Trade.An SEC stop trade order or Principal Market trading suspension of the Common Stock shall be in effect for five (5) consecutive days or five (5) days during a period of 10 consecutive days, excluding in all cases a suspension of all trading on a Principal Market, provided that Borrower shall not have been able to cure such trading suspension within 30 days of the notice thereof or list the Common Stock on another Principal Market within 60 days of such notice.The “Principal Market” for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System, American Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock), or any securities exchange or other securities market on which the Common Stock is then being listed or traded. 3.5.Receiver or Trustee.The Borrower or any of its Subsidiaries shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed. 3.6.Judgments.Any money judgment, writ or similar final process shall be entered or filed against the Borrower or any of its Subsidiaries or any of their respective property or other assets for more than $100,000 in the aggregate for Borrower, and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days. 3.7.Bankruptcy.Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any of its Subsidiaries. 3.8.Default Under Other Agreements.The occurrence of an Event of Default under and as defined in the Purchase Agreement or any event of default (or similar term) under any other agreement evidencing indebtedness of at least $100,000. 3.9.Failure to Deliver Common Stock or Replacement Debenture.Borrower’s failure to timely deliver Common Stock to the Holder pursuant to and in the form required by this Debenture and the Purchase Agreement, if such failure to timely deliver Common Stock shall not be cured within five (5) days.If Borrower is required to issue a replacement Debenture to Holder and Borrower shall fail to deliver such replacement Debenture within seven (7) Business Days. DEFAULT RELATED PROVISIONS 3.10.Default Interest Rate.Following the occurrence and during the continuance of an Event of Default, interest on this Debenture shall automatically be instated at a rate of 18% per annum, effective as of the date of Issuance of this Debenture, which interest shall be payable in cash or Common Stock, at the option of the Borrower. 3.11.Conversion Privileges.The conversion privileges set forth in Article II shall remain in full force and effect immediately from the date hereof and until this Debenture is paid in full. 3.12.Cumulative Remedies.The remedies under this Debenture shall be cumulative. 3 ARTICLE IV DEFAULT PAYMENTS 4.1.Default Payment.If an Event of Default occurs and is continuing beyond any applicable grace period, the Holder, at its option, may elect, in addition to all rights and remedies of Holder under the Purchase Agreement and all obligations of the Borrower under the Purchase Agreement to require the Borrower to make a Default Payment (“Default Payment”).The Default Payment shall be 105% of the outstanding principal amount of the Debenture, plus accrued but unpaid interest, all other fees then remaining unpaid, and all other amounts payable hereunder. The Default Payment shall be applied first to any fees due and payable to Holder pursuant to the Debentures or the Ancillary Agreements, then to accrued and unpaid interest due on the Debentures and then to outstanding principal balance of the Debentures. 4.2.Default Payment Date.The Default Payment shall be due and payable immediately on the date that the Holder has exercised its rights pursuant to Section 4.1 (“Default Payment Date”). ARTICLE V MISCELLANEOUS 5.1.Failure or Indulgence Not Waiver.No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available. 5.2.Notices.Any notice herein required or permitted to be given shall be in writing and provided in accordance with the terms of the Purchase Agreement. 5.3.Amendment Provision.The term “Debenture” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument as it may be amended or supplemented. 5.4.Assignability.This Debenture shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may not be assigned by the Holder without the prior written consent of the Borrower, which consent may not be unreasonably withheld. 5.5.Cost of Collection.If default is made in the payment of this Debenture, each Borrower shall jointly and severally pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees. 5.6.Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.This Debenture shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to principles of conflicts of law.HOLDER AND BORROWER WAIVE ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS DEBENTURE OR ANY TRANSACTION CONTEMPLATED HEREIN, INCLUDING CLAIMS BASED ON CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER COMMON LAW OR STATUTORY BASES. Each party hereby submits to the exclusive jurisdiction of the state and federal courts located in the County of New York, State of New York.If the jury waiver set forth in this Section is not enforceable, then any dispute, controversy or claim arising out of or relating to this Debenture or any of the transactions contemplated herein will be finally settled by binding arbitration in New York, New York in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules.The arbitrator shall apply New York law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration.Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph.The expenses of the arbitration, including the arbitrator’s fees and expert witness fees, incurred by the parties to the arbitration, may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator.Unless and until the arbitrator decides that one party is to pay for all (or a share) of such expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator. 5.7.Maximum Payments.Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by Borrowers to the Holder and thus refunded to the Borrowers 5.8.Construction.Each party acknowledges that its legal counsel participated in the preparation of this Debenture and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Debenture to favor any party against the other. [signature page follows] 4 IN WITNESS WHEREOF, Borrower has caused this Convertible Debenture to be signed in its name effective as of this 10th day of May, 2011. VANITY EVENTS HOLDING INC. Date By: /s/Lloyd Lapidus Name: Lloyd Lapidus Title:Interim Chief Executive Officer 5 EXHIBIT A NOTICE OF CONVERSION (To be executed by the Holder in order to convert all or part of the Debenture into Common Stock) GREYSTONE CAPTIAL PARTNERS LLC [ADDRESS] The undersigned hereby converts $ of the principal due on May , 2012 under the Convertible Debenture issued by VANITY EVENTS HOLDING, Inc. (“Borrower”) dated as of May , 2011 by delivery of shares of Common Stock of Borrower on and subject to the conditions set forth in Article II of such Debenture. 1. Date of Conversion 2. Shares To Be Delivered: GREYSTONE CAPITAL PARTNERS LLC By: Name: Title:

Exhibit 10.23 PERSONAL AND CONFIDENTIAL Richard Heyse Term Sheet       Title   Vice President, Chief Financial Officer — Reports to Senior Vice President, Finance and Administration       Location   Pittsburgh, PA, relocation package per WESCO policy.       Base Salary   $325,000 annual rate paid twice monthly.       Annual Cash Bonus   Zero to 100% of base salary, based on the achievement of a combination of corporate and personal performance objectives as established annually by the Board. Your target bonus will be 50% of base salary. For 2009 the bonus award will be guaranteed at a minimum of $75,000, assuming a start date of June 15, 2009.       One Time Bonus Award   After 15 days of employment, a one time bonus of $50,000. Bonus is subject to a pro-rata pay back to the Company if employee leaves without good reason or is terminated for cause within one year.       Equity Awards   Stock appreciation rights (SARs) equal to the number of shares of WESCO stock purchased for long-term investment within the first twelve months of employment (up to the equivalent of three times your annual base salary) will be granted with the approval of the Compensation Committee and the Board of Directors. Strike price will be set at the closing price on the date of purchase on the open market in one or more transactions, not to exceed three trading days. Purchase of the shares must comply with the Company’s policy regarding insider trading. These options will vest ratably over three years. In the event you are unable to sell your New Jersey home in the first twelve months of employment with WESCO, the time period for the SARs match will be extended to the sooner of 30 days after the closing on the sale of the New Jersey home or twelve months from your one-year anniversary with the Company.           Future awards are based on performance and award guidelines established periodically by the Compensation Committee of the Board of Directors.       It is expected that you achieve and maintain an ownership position in WESCO stock equal to 2x your base salary by 2012.       Severance   In the event of the termination of your employment by WESCO without cause or by you for good reason, you will be entitled to receive a severance payment equal to one year’s base salary plus continued coverage in all applicable WESCO welfare benefits plans for one year, plus a pro rata payment of your estimated bonus, as approved by WESCO’s Compensation Committee, for the then current year based on results to the date of termination, plus full vesting for stock appreciation rights with time based vesting periods granted in accordance with your purchase of WESCO stock. Healthcare contributions will be at the active employee rate. In the event of the termination of your employment as a result of death or disability you will be entitled to receive your base salary and all welfare benefits through the date of death or disability. No severance will be paid other than payment of your base salary through the date of termination for termination for cause.           Termination For Cause shall mean termination within 30 days after we give you notice that we have cause to terminate you for:               a)   Engaging in a felony or willful misconduct which is in the good faith judgment of the Board materially injurious to the company, its customers, employees, suppliers or shareholders;       b)   Willful failure to materially perform your duties that continues after written notice;       c)   Your material breach of any manual or written policy, code or procedure of the company; or       d)   Failure to establish permanent residence in the Pittsburgh area.       Severance (cont.)   An act or failure to act by you will be deemed “willful” only if done or omitted to be done by you without a good faith reasonable belief that such act or failure to act was lawful and in the best interests of the Company.               Good reason shall mean any of the following to which you do not consent in writing and for which you give us 30 days notice and opportunity to cure during such period:               a)   Reduction in your Base Salary, excluding any reduction that occurs in connection with an across the board reduction of the salaries of the senior management team, or any other material breach of this letter and Term Sheet;       b)   A relocation of your primary place of employment to a location more than 50 miles from Pittsburgh, Pennsylvania; or       c)   A change in the authority, duties or responsibilities that materially and adversely affect your role in the organization.       Auto Allowance   Comparable to other Senior Executives, currently $1,000 per month       Value Acceleration Plan (VAP) Awards Program   The Compensation Committee annually determines whether supplemental cash bonus programs for key management personnel will be established. You will be eligible to participate at the Vice President level for all such programs. No VAP program is planned for 2009.       Health, Welfare, and Other Benefit Programs   Eligible to participate in all corporate benefit programs in accordance with standard policies and procedures. Eligible for 4 weeks of vacation annually, prorated for 2009.       Employment Policy   In accordance with Company practices, neither this letter, nor any benefit program or employment policy is to be considered an employment contract. Your employment and compensation are at the will of WESCO Distribution, Inc. and can be terminated, with or without cause and with or without notice, at any time, by either you or the Company.                 Accepted on May 21, 2009  /s/ Richard P. Heyse       Signature             

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of March, 2015. Commission File Number: 001-35197 LAKE SHORE GOLD CORP. (Translation of registrant’s name into English) 181 University Avenue, Suite 2000, Toronto, Ontario Canada M5H 3M7 (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-FForm 40-F x Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders. Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LAKE SHORE GOLD CORP. Date: March 30, 2015 By: /s/ Alasdair Federico Name: Alasdair Federico Title:VP, General Counsel & Secretary EXHIBITS Exhibit No. Exhibit Description Press Release, dated March 30, 2015, announcing that Lake Shore Gold Corp. has filed its Annual Information Form and related Technical Report for the Bell Creek Mine with Canadian securities regulators on SEDAR, and filed its Annual Report on Form 40-F with the SEC on EDGAR.

Exhibit 23.1 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSENT We consent to the use in this Form 8-K of Raptor Technology Group, Inc. of our report dated April 27, 2011 for Raptor Fabrication & Equipment, Inc. MaloneBailey, LLP www.malone-bailey.com Houston, Texas July 5, 2011

EXHIBIT 10.1 2 1.Purpose of the Plan. This 2011 Equity Incentive Plan (the “Plan”) is intended as an incentive, to retain in the employ of and as directors, officers, consultants, advisors and employees to FTOH Corp., a Delaware corporation (the “Company”), and any Subsidiary of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”), persons of training, experience and ability, to attract new directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries. It is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422 of the Code (the “Incentive Options”) while certain other options granted pursuant to the Plan shall be nonqualified stock options (the “Nonqualified Options”).Incentive Options and Nonqualified Options are hereinafter referred to collectively as “Options.” The Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act.Further, the Plan is intended to satisfy the performance-based compensation exception to the limitation on the Company’s tax deductions imposed by Section 162(m) of the Code with respect to those Options for which qualification for such exception is intended.In all cases, the terms, provisions, conditions and limitations of the Plan shall be construed and interpreted consistent with the Company’s intent as stated in this Section 1. 2.Administration of the Plan. The Board of Directors of the Company (the “Board”) shall appoint and maintain as administrator of the Plan a Committee (the “Committee”) consisting of two or more directors who are (i) “Independent Directors” (as such term is defined under the rules of the NASDAQ Stock Market), (ii) “Non-Employee Directors” (as such term is defined in Rule 16b-3) and (iii) “Outside Directors” (as such term is defined in Section 162(m) of the Code), which shall serve at the pleasure of the Board.The Committee, subject to Sections 3, 5 and 6 hereof, shall have full power and authority to designate recipients of Options and restricted stock (“Restricted Stock”) and to determine the terms and conditions of the respective Option and Restricted Stock agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan.The Committee shall have the authority, without limitation, to designate which Options granted under the Plan shall be Incentive Options and which shall be Nonqualified Options.To the extent any Option does not qualify as an Incentive Option, it shall constitute a separate Nonqualified Option. Subject to the provisions of the Plan, the Committee shall interpret the Plan and all Options and Restricted Stock granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Options or Restricted Stock granted under the Plan in the manner and to the extent that the Committee deems desirable to carry into effect the Plan or any Options or Restricted Stock.The act or determination of a majority of the Committee shall be the act or determination of the Committee and any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority of the Committee at a meeting duly held for such purpose.Subject to the provisions of the Plan, any action taken or determination made by the Committee pursuant to this and the other Sections of the Plan shall be conclusive on all parties. In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other acquisition under the Plan does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, or if the Board otherwise determines to administer the Plan, then the Plan shall be 1 administered by the Board, and references herein to the Committee (except in the proviso to this sentence) shall be deemed to be references to the Board, and any such grant, award or other acquisition may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3; provided, however, that grants to the Company’s Chief Executive Officer or to any of the Company’s other four most highly compensated officers that are intended to qualify as performance-based compensation under Section 162(m) of the Code may only be granted by the Committee. 3.Designation of Optionees and Grantees. The persons eligible for participation in the Plan as recipients of Options (the “Optionees”) or Restricted Stock (the “Grantees” and together with Optionees, the “Participants”) shall include directors, officers and employees of, and consultants and advisors to, the Company or any Subsidiary; provided that Incentive Options may only be granted to employees of the Company and any Subsidiary. In selecting Participants, and in determining the number of shares to be covered by each Option or award of Restricted Stock granted to Participants, the Committee may consider any factors it deems relevant, including, without limitation, the office or position held by the Participant or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Participant’s length of service, promotions and potential. A Participant who has been granted an Option or Restricted Stock hereunder may be granted an additional Option or Options, or Restricted Stock if the Committee shall so determine. 4.Stock Reserved for the Plan. Subject to adjustment as provided in Section 8 hereof, a total of 1,568,498 shares of the Company’s common stock, par value $0.0001 per share (the “Stock”), shall be subject to the Plan.The shares of Stock subject to the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of Stock shall be and is hereby reserved for such purpose.Any of such shares of Stock that may remain unissued and that are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan.Should any Option or award of Restricted Stock expire or be canceled prior to its exercise or vesting in full or should the number of shares of Stock to be delivered upon the exercise or vesting in full of an Option or award of Restricted Stock be reduced for any reason, the shares of Stock theretofore subject to such Option or Restricted Stock may be subject to future Options or Restricted Stock under the Plan, except where such reissuance is inconsistent with the provisions of Section 162(m) of the Code where qualification as performance-based compensation under Section 162(m) of the Code is intended. 5.Terms and Conditions of Options. Options granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable: (a)Option Price.The purchase price of each share of Stock purchasable under an Incentive Option shall be determined by the Committee at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share of Stock on the date the Option is granted; provided, however, that with respect to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Stock shall be at least 110% of the Fair Market Value per share of Stock on the date of grant.The purchase price of each share of Stock purchasable under a Nonqualified Option shall not be less than 100% of the Fair Market Value of such share of Stock on the date the Option is granted.The exercise price for each Option shall be subject to adjustment as provided in Section 8 below.“Fair Market Value” means the closing price on the final trading day immediately prior to the grant date of the Stock on the principal securities exchange on which shares of Stock are listed (if the shares of Stock are so listed), or on the NASDAQ Stock Market or OTC Bulletin Board (if the shares of Stock are regularly quoted on the NASDAQ Stock Market or OTC Bulletin Board, as the case may be), or, if not so listed, the mean between the closing bid and asked prices of publicly traded shares of Stock in the over the counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the 2 Committee in a manner consistent with the provisions of the Code.Anything in this Section 5(a) to the contrary notwithstanding, in no event shall the purchase price of a share of Stock be less than the minimum price permitted under the rules and policies of any national securities exchange on which the shares of Stock are listed. (b)Option Term.The term of each Option shall be fixed by the Committee, but no Option shall be exercisable more than ten years after the date such Option is granted and in the case of an Incentive Option granted to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, no such Incentive Option shall be exercisable more than five years after the date such Incentive Option is granted. (c)Exercisability.Subject to Section 5(j) hereof, Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant; provided, however, that in the absence of any Option vesting periods designated by the Committee at the time of grant, Options shall vest and become exercisable as to one-tenth of the total number of shares subject to the Option on each of the three month anniversary of the date of grant; and provided further that no Options shall be exercisable until such time as any vesting limitation required by Section 16 of the Exchange Act, and related rules, shall be satisfied if such limitation shall be required for continued validity of the exemption provided under Rule 16b-3(d)(3). Upon the occurrence of a “Change in Control” (as hereinafter defined), the Committee may accelerate the vesting and exercisability of outstanding Options, in whole or in part, as determined by the Committee in its sole discretion.In its sole discretion, the Committee may also determine that, upon the occurrence of a Change in Control, each outstanding Option shall terminate within a specified number of days after notice to the Optionee thereunder, and each such Optionee shall receive, with respect to each share of Company Stock subject to such Option, an amount equal to the excess of the Fair Market Value of such shares immediately prior to such Change in Control over the exercise price per share of such Option; such amount shall be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof, as the Committee shall determine in its sole discretion. For purposes of the Plan, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, a Change in Control shall be deemed to have occurred if: (i)a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their affiliates; (ii)the Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and their affiliates; (iii)the Company shall sell substantially all of its assets to another corporation that is not wholly owned by the Company, unless as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries and their affiliates; or (iv)a Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of 3 the time immediately prior to the first acquisition of such securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and their affiliates. Notwithstanding the foregoing, if Change of Control is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Change of Control shall have the meaning ascribed to it in such employment agreement. For purposes of this Section 5(c), ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act.In addition, for such purposes, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided, however, that a Person shall not include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company. (d)Method of Exercise.Options to the extent then exercisable may be exercised in whole or in part at any time during the option period, by giving written notice to the Company specifying the number of shares of Stock to be purchased, accompanied by payment in full of the purchase price, in cash, or by check or such other instrument as may be acceptable to the Committee.As determined by the Committee, in its sole discretion, at or after grant, payment in full or in part may be made at the election of the Optionee (i) in the form of Stock owned by the Optionee (based on the Fair Market Value of the Stock which is not the subject of any pledge or security interest, (ii) in the form of shares of Stock withheld by the Company from the shares of Stock otherwise to be received with such withheld shares of Stock having a Fair Market Value equal to the exercise price of the Option, or (iii) by a combination of the foregoing, such Fair Market Value determined by applying the principles set forth in Section 5(a), provided that the combined value of all cash and cash equivalents and the Fair Market Value of any shares surrendered to the Company is at least equal to such exercise price and except with respect to (ii) above, such method of payment will not cause a disqualifying disposition of all or a portion of the Stock received upon exercise of an Incentive Option.An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Stock purchased upon exercise of an Option at such time as the Optionee (i) has given written notice of exercise and has paid in full for such shares, and (ii) has satisfied such conditions that may be imposed by the Company with respect to the withholding of taxes. (e)Non-transferability of Options.Options are not transferable and may be exercised solely by the Optionee during his lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution.The Committee, in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the Optionee, (ii) a member of the Optionee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations order.Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee. (f)Termination by Death.Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised, to the extent then exercisable (or on such accelerated basis as the Committee shall determine at or after grant), by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or until the expiration of the stated term of such Option as provided under the Plan, whichever period is shorter. (g)Termination by Reason of Disability.Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Disability (as defined below), then any Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after one (1) year after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever period is shorter; provided, however, that, if the Optionee dies within such ninety (90) 4 day period, any unexercised Option held by such Optionee shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter.“Disability” shall mean an Optionee’s total and permanent disability; provided, that if Disability is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Disability shall have the meaning ascribed to it in such employment agreement (h)Termination by Reason of Retirement.Unless otherwise determined by the Committee, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such accelerated basis as the Committee shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever date is earlier; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable, to the extent to which it was exercisable at the time of death, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter. For purposes of this paragraph (h), “Normal Retirement” shall mean retirement from active employment with the Company or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such pension plan, age 65, and “Early Retirement” shall mean retirement from active employment with the Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan, age 55. (i)Other Terminations.Unless otherwise determined by the Committee upon grant, if any Optionee’s employment with or service to the Company or any Subsidiary is terminated by such Optionee for any reason other than death, Disability, Normal or Early Retirement or Good Reason (as defined below), the Option shall thereupon terminate, except that the portion of any Option that was exercisable on the date of such termination of employment or service may be exercised for the lesser of ninety (90) days after the date of termination (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the balance of such Option’s term, whichever period is shorter.The transfer of an Optionee from the employ of or service to the Company to the employ of or service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment or service for purposes of the Plan. (i)In the event that the Optionee’s employment or service with the Company or any Subsidiary is terminated by the Company or such Subsidiary for “cause” any unexercised portion of any Option shall immediately terminate in its entirety.For purposes hereof, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, “Cause” shall exist upon a good-faith determination by the Board, following a hearing before the Board at which an Optionee was represented by counsel and given an opportunity to be heard, that such Optionee has been accused of fraud, dishonesty or act detrimental to the interests of the Company or any Subsidiary of Company or that such Optionee has been accused of or convicted of an act of willful and material embezzlement or fraud against the Company or of a felony under any state or federal statute; provided, however, that it is specifically understood that “Cause” shall not include any act of commission or omission in the good-faith exercise of such Optionee’s business judgment as a director, officer or employee of the Company, as the case may be, or upon the advice of counsel to the Company.Notwithstanding the foregoing, if Cause is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Cause shall have the meaning ascribed to it in such employment agreement. (ii)In the event that an Optionee is removed as a director, officer or employee by the Company at any time other than for “Cause” or resigns as a director, officer or employee for “Good Reason” the Option granted to such Optionee may be exercised by the Optionee, to the extent the Option was exercisable on the date such Optionee ceases to be a director, officer or employee.Such Option may be exercised at any time within one (1) year after the date the 5 Optionee ceases to be a director, officer or employee (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof), or the date on which the Option otherwise expires by its terms; which ever period is shorter, at which time the Option shall terminate; provided, however, if the Optionee dies before the Options terminate and are no longer exercisable, the terms and provisions of Section 5(f) shall control.For purposes of this Section 5(i), and unless otherwise defined in an employment agreement between the Company and the relevant Optionee, Good Reason shall exist upon the occurrence of the following: (A) the assignment to Optionee of any duties inconsistent with the position in the Company that Optionee held immediately prior to the assignment; (B) a Change of Control resulting in a significant adverse alteration in the status or conditions of Optionee’s participation with the Company or other nature of Optionee’s responsibilities from those in effect prior to such Change of Control, including any significant alteration in Optionee’s responsibilities immediately prior to such Change in Control; and (C) the failure by the Company to continue to provide Optionee with benefits substantially similar to those enjoyed by Optionee prior to such failure. Notwithstanding the foregoing, if Good Reason is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Good Reason shall have the meaning ascribed to it in such employment agreement. (j)Limit on Value of Incentive Option.The aggregate Fair Market Value, determined as of the date the Incentive Option is granted, of Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000. 6.Terms and Conditions of Restricted Stock. Restricted Stock may be granted under this Plan aside from, or in association with, any other award and shall be subject to the following conditions and shall contain such additional terms and conditions (including provisions relating to the acceleration of vesting of Restricted Stock upon a Change of Control), not inconsistent with the terms of the Plan, as the Committee shall deem desirable: (a)Grantee rights.A Grantee shall have no rights to an award of Restricted Stock unless and until Grantee accepts the award within the period prescribed by the Committee and, if the Committee shall deem desirable, makes payment to the Company in cash, or by check or such other instrument as may be acceptable to the Committee.After acceptance and issuance of a certificate or certificates, as provided for below, the Grantee shall have the rights of a stockholder with respect to Restricted Stock subject to the non-transferability and forfeiture restrictions described in Section 6(d) below. (b)Issuance of Certificates.The Company shall issue in the Grantee’s name a certificate or certificates for the shares of Common Stock associated with the award promptly after the Grantee accepts such award. (c)Delivery of Certificates.Unless otherwise provided, any certificate or certificates issued evidencing shares of Restricted Stock shall not be delivered to the Grantee until such shares are free of any restrictions specified by the Committee at the time of grant. (d)Forfeitability, Non-transferability of Restricted Stock.Shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied.Shares of Restricted Stock are not transferable until the date on which the Committee has specified such restrictions have lapsed.Unless otherwise provided by the Committee at or after grant, distributions in the form of dividends or otherwise of additional shares 6 or property in respect of shares of Restricted Stock shall be subject to the same restrictions as such shares of Restricted Stock. (e)Change of Control.Upon the occurrence of a Change in Control as defined in Section 5(c), the Committee may accelerate the vesting of outstanding Restricted Stock, in whole or in part, as determined by the Committee, in its sole discretion. (f)Termination of Employment.Unless otherwise determined by the Committee at or after grant, in the event the Grantee ceases to be an employee or otherwise associated with the Company for any other reason, all shares of Restricted Stock theretofore awarded to him which are still subject to restrictions shall be forfeited and the Company shall have the right to complete the blank stock power.The Committee may provide (on or after grant) that restrictions or forfeiture conditions relating to shares of Restricted Stock will be waived in whole or in part in the event of termination resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock. 7.Term of Plan. No Option or award of Restricted Stock shall be granted pursuant to the Plan on or after the date which is ten years from the effective date of the Plan, but Options and awards of Restricted Stock theretofore granted may extend beyond that date. 8.Capital Change of the Company. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the Stock, the Committee shall make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the Plan and in the number and option price of shares subject to outstanding Options granted under the Plan, to the end that after such event each Optionee’s proportionate interest shall be maintained (to the extent possible) as immediately before the occurrence of such event.The Committee shall, to the extent feasible, make such other adjustments as may be required under the tax laws so that any Incentive Options previously granted shall not be deemed modified within the meaning of Section 424(h) of the Code.Appropriate adjustments shall also be made in the case of outstanding Restricted Stock granted under the Plan. The adjustments described above will be made only to the extent consistent with continued qualification of the Option under Section 422 of the Code (in the case of an Incentive Option) and Section 409A of the Code. 9.Purchase for Investment/Conditions. Unless the Options and shares covered by the Plan have been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the Company has determined that such registration is unnecessary, each person exercising or receiving Options or Restricted Stock under the Plan may be required by the Company to give a representation in writing that he is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.The Committee may impose any additional or further restrictions on awards of Options or Restricted Stock as shall be determined by the Committee at the time of award. 10.Taxes. (a)The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Options or Restricted Stock granted under the Plan with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters. (b)If any Grantee, in connection with the acquisition of Restricted Stock, makes the election permitted under Section 83(b) of the Code (that is, an election to include in gross income in the year of transfer the 7 amounts specified in Section 83(b)), such Grantee shall notify the Company of the election with the Internal Revenue Service pursuant to regulations issued under the authority of Code Section 83(b). (c)If any Grantee shall make any disposition of shares of Stock issued pursuant to the exercise of an Incentive Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Grantee shall notify the Company of such disposition within ten (10) days hereof. 11.Effective Date of Plan. The Plan shall be effective on November 3, 2010; provided, however, that if, and only if, certain options are intended to qualify as Incentive Stock Options, the Plan must subsequently be approved by majority vote of the Company’s stockholders no later than November 3, 2011, and further, that in the event certain Option grants hereunder are intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code, the requirements as to stockholder approval set forth in Section 162(m) of the Code are satisfied. 12.Amendment and Termination. The Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Participant under any Option or Restricted Stock theretofore granted without the Participant’s consent, and except that no amendment shall be made which, without the approval of the stockholders of the Company would: (a)materially increase the number of shares that may be issued under the Plan, except as is provided in Section8; (b)materially increase the benefits accruing to the Participants under the Plan; (c)materially modify the requirements as to eligibility for participation in the Plan; (d)decrease the exercise price of an Incentive Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof or the exercise price of a Nonqualified Option to less than 100% of the Fair Market Value per share of Stock on the date of grant thereof; or (e)extend the term of any Option beyond that provided for in Section 5(b). (f)except as otherwise provided in Sections 5(d) and 8 hereof, reduce the exercise price of outstanding Options or effect repricing through cancellations and re-grants of new Options. Subject to the forgoing, the Committee may amend the terms of any Option theretofore granted, prospectively or retrospectively, but no such amendment shall impair the rights of any Optionee without the Optionee’s consent. It is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder (the “Section 409A Rules”) and the Committee shall exercise its discretion in granting awards hereunder (and the terms of such awards), accordingly.The Plan and any grant of an award hereunder may be amended from time to time (without, in the case of an award, the consent of the Participant) as may be necessary or appropriate to comply with the Section 409A Rules. 13.Government Regulations. The Plan, and the grant and exercise of Options or Restricted Stock hereunder, and the obligation of the Company to sell and deliver shares under such Options and Restricted Stock shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies, national securities exchanges and interdealer quotation systems as may be required. 8 14.General Provisions. (a)Certificates.All certificates for shares of Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal or state securities law, any stock exchange or interdealer quotation system upon which the Stock is then listed or traded and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. (b)Employment Matters.Neither the adoption of the Plan nor any grant or award under the Plan shall confer upon any Participant who is an employee of the Company or any Subsidiary any right to continued employment or, in the case of a Participant who is a director, continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of its directors or the retention of any of its consultants or advisors at any time. (c)Limitation of Liability.No member of the Committee, or any officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. (d)Registration of Stock.Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration in the United States.The Company shall not be under any obligation to register under applicable federal or state securities laws any Stock to be issued upon the exercise of an Option granted hereunder in order to permit the exercise of an Option and the issuance and sale of the Stock subject to such Option, although the Company may in its sole discretion register such Stock at such time as the Company shall determine.If the Company chooses to comply with such an exemption from registration, the Stock issued under the Plan may, at the direction of the Committee, bear an appropriate restrictive legend restricting the transfer or pledge of the Stock represented thereby, and the Committee may also give appropriate stop transfer instructions with respect to such Stock to the Company’s transfer agent. 15.Non-Uniform Determinations. The Committee’s determinations under the Plan, including, without limitation, (i) the determination of the Participants to receive awards, (ii) the form, amount and timing of such awards, (iii) the terms and provisions of such awards and (ii) the agreements evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, awards under the Plan, whether or not such Participants are similarly situated. 16.Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the internal laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law. 9

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 September 20, 2011 Date of report (Date of earliest event reported) BRITTON & KOONTZ CAPITAL CORPORATION (Exact Name of Registrant as Specified in its Charter) Mississippi 0-22606 64-0665423 (State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification N.) 500 Main Street, Natchez, Mississippi39120 (Address of Principal Executive Offices) (Zip Code) (601) 445-5576 Registrant’s telephone number, including area code Check the appropriate box below if the 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02Results of Operations and Financial Condition. The information required by this item is contained in Item 4.02 of this Current Report on Form 8-K and is incorporated herein by reference. Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. On September 20, 2011, the Board of Directors of Britton & Koontz Capital Corporation (the “Company”) concluded, based upon the recommendation of management and the findings of a recent bank regulatory examination, that the Company’s previously issued financial statements for the three and six months ended June 30, 2011, as reported in the Company’s Quarterly Report on Form 10-Q, can no longer be relied upon.This determination was made in connection with an examination by the Office of the Comptroller of the Currency (the “OCC”) of Britton & Koontz Bank, N.A., the Company’s wholly-owned subsidiary (the “Bank”).The Company’s prior earnings and press release and similar communications should no longer be relied upon to the extent they are related to these financial statements. As a result of this determination, the Company intends to amend its Form 10-Q for the three and six months ended June 30, 2011, no later than October 15, 2011.Similarly, the Bank will amend its call report for the quarter ended June 30, 2011. The Bank’s normal and periodic regulatory exam began on July 18, 2011, prior to the original filing on August 12, 2011, of the Company’s Form 10-Q for the quarter ended June 30, 2011.Following the conclusion of the OCC’s on-site work, the examiners officially advised the Company on September 17, 2011 that, on account of poor problem loan identification by the Company’s loan officers and an inadequate methodology for calculating the allowance for loan and lease losses (“ALLL”), the ALLL was insufficient at June 30, 2011 and an additional provision of $262 thousand as of such date was required.The OCC directed the Bank to amend its call report for the quarter ended June 30, 2011 to reflect this additional provision.After discussing the adjustments with its outside independent accountants and the Company’s Board of Directors, management determined that the Company will reflect the additional loan provision as of June 30, 2011. As of the date of this filing and based on the Company’s initial estimates, the Company anticipates the following changes to its previously reported financial results: · The Company’s net income after tax for the three months ended June 30, 2011, will decrease from $393 thousand, or $0.18 per diluted share, to $229 thousand, or $0.11 per diluted share.The Company’s net income for the six months ended June 30, 2011, will decrease from $969 thousand, or $0.45 per diluted share, to $805 thousand, or $0.38 per diluted share. · The loan loss provision for the second quarter of 2011 will increase from $300 thousand to $562 thousand while the loan loss provision for the six months ended June 30, 2011, will increase from $1.1 million to $1.3 million. · The ALLL at June 30, 2011 will increase from $3.3 million to $3.6 million. · Shareholders’ equity at June 30, 2011 will decrease from $39.9 million to $39.8 million. The Company notes that the financial information set forth above reflects management’s preliminary estimates as of the date of this filing, and analyses of whether any other potential adjustments may be necessary or appropriate are ongoing. The Company has discussed the matters disclosed in this Item 4.02 with Hannis T. Bourgeois, LLP, the Company’s independent accountants. Item 8.01Other Events. In addition to the matters discussed in Item 4.02 above, the Company will make an additional provision to its ALLL in the 3rd quarter of 2011, which is currently estimated to be in the range of $1 million to $1.25 million in the aggregate.The additional 3rd quarter provision is in response to further OCC’s findings which prompted the Company to transfer a commercial real estate loan in the amount of $4.2 million to non-accrual, impaired status and further adjustments in the historical and qualitative factors that are used in the ALLL methodology calculation. Management is reevaluating the effectiveness of the Company’s disclosure controls and procedures in light of the examiner’s findings to determine whether there are any material weaknesses in the Company’s internal control over financing reporting which may have existed as of June 30, 2011.Management intends to complete its evaluation as soon as possible, and any findings will be submitted to the Audit Committee for its consideration and reflected in its amended Form 10-Q. Finally, in order to fortify the Company’s capital position, the Board of Directors has suspended the Company’s quarterly cash dividend for the foreseeable future.Upon strengthening of the Company’s loan portfolio and a corresponding improvement of re-investment opportunities of cash flows from both the loan portfolio and its securities investment portfolio, the Board of Directors will promptly consider the resumption of dividends. Forward Looking Statements This Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such forward-looking statements are based on numerous assumptions (some of which may prove to be incorrect) and are subject to risks and uncertainties, which could cause the actual results to differ materially from the Company’s expectations.Forward-looking statements have been and will be made in written documents and oral presentations of the Company.Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management.When used in the Company’s documents (including this Report) or oral presentations, the words “anticipate,” “estimate,” “expect,” “objective,” “projection,” “forecast,” “goal” and similar expressions are intended to identify forward-looking statements.In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause the Company’s actual results to differ materially from those contemplated in any forward-looking statements include, among others, increased competition, regulatory factors, economic conditions, changing market conditions, availability or cost of capital, employee workforce factors, costs and other effects of legal and administrative proceedings, and changes in federal, state or local legislative requirements.The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of changes in actual results, changes in assumptions or other factors affecting such statements. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. BRITTON & KOONTZ CAPITAL CORPORATION By:/s/ W. Page Ogden W. Page Ogden, President and Chief Executive Officer

Exhibit 10.24 Saks Incorporated 2000 Change of Control and Material Transaction Severance Plan Amended and Restated as of August 31, 2006   1. General A. Purpose. The Saks Incorporated Change of Control and Material Transaction Severance Plan (this “Plan”) protects a designated group of associates against some of the financial consequences of several adverse events affecting employment so as to attract and retain the associates and motivate them to enhance the value of the underlying businesses of Saks Incorporated (the “Company”) and its subsidiaries. This Plan is intended to qualify as an unfunded welfare plan under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended. B. Effective Date of this Plan. The effective date of this Plan is August 31, 2006 (the “Effective Date”).   2. Eligibility and Participation A. Eligibility. Subject to the next sentence and the exclusions contained on Schedules 1(a) and 1(b), each associate of the Company or a subsidiary of the Company (each an “Employer”) who is either (i) in a position of employment listed on Schedule 1(a) or 1(b) to this Plan on or after the Effective Date or (ii) designated by the Company’s Employee Benefits Committee (each person referred to in either (i) or (ii), a “Designated Associate”), shall become a participant in this Plan. If the Designated Associate has rights to severance compensation from the Designated Associate’s Employer pursuant to a written agreement, the Designated Associate shall not be a participant in this Plan unless and until the Designated Associate waives all of the Designated Associate’s rights to severance compensation pursuant to the written agreement in form and substance satisfactory to the Employee Benefits Committee in its sole discretion. Each Designated Associate who becomes a participant in this Plan in accordance with this subsection A. is a “Participant” except as otherwise provided in this Plan. All store managers, all associates reporting directly or indirectly to store managers, and all store-based division associates are excluded from participating in the Plan and none of them is a Participant. The Company’s Employee Benefits Committee and its successors with comparable functions are referred to in this Plan as the “Committee”. B. Notice of Participation. The Company shall notify Participants in writing of their participation in this Plan, give each Participant a copy of this Plan upon Participant’s request, and otherwise comply with the requirements of ERISA. C. Termination of Participation. A Participant’s participation in this Plan shall automatically terminate, without notice to or consent of Participant, and after the termination of Saks Incorporated Amended and Restated 2000 Executive Severance Plan    Page 2   participation the Designated Associate shall not be treated as a Participant, upon the earliest to occur of the following events: (i) the Designated Associate’s death; (ii) the Designated Associate suffers, on or before termination of employment with all Employers, a mental or physical condition that (a) prevents the Designated Associate from reasonably discharging the duties of the Designated Associate’s position, and (b) is attested to in writing by a physician selected by the Employer and reasonably acceptable to the Designated Associate; (iii) the Employer’s termination of the Designated Associate’s employment for any reason except as the result of, and within two years after, a Change of Control (defined in Section 7.B.) or a Reduction in Force (defined in Section 7.I.); and (iv) the Designated Associate terminates the Designated Associate’s own employment, except for Good Reason (defined in Section 7.G.) within two years after a Change of Control. When the participation of a Designated Associate in this Plan terminates in accordance with this Section 2.C., the Designated Associate shall not be entitled to severance pay or other benefits under this Plan following termination of participation. D. Determination of Eligibility. To the fullest extent permitted by law, a Participant’s eligibility for severance pay and other benefits under this Plan shall be determined by the Committee in its sole discretion.   3. Severance Benefits A. Termination. Subject to a Participant’s termination of participation pursuant to Section 2.C. and the conditions set forth below, if: (i) Participant’s employment with the Employer is terminated by the Employer as the result of a Reduction in Force as to Participant; (ii) subject to the last sentence of this subsection A. and to subsection B. of this section, Participant’s employment with the Employer is terminated by the Employer as the result of, and within two years after, a Change of Control; or (iii) Participant terminates Participant’s own employment with the Employer for Good Reason within two years after a Change of Control; then Participant shall be entitled to severance pay and other benefits under this Plan in the Saks Incorporated    Page 3   amounts provided in Sections 3.C. and 3.D. of this Plan. For the avoidance of doubt, Participant shall be entitled to severance pay in accordance with clause (ii) of this subsection A only if the Employer’s termination of Participant’s employment is without Cause and is the direct result of, and within two years after, a Change of Control, and termination after a Change of Control for reasons of Participant’s inadequate job performance shall not entitle the Participant to severance pay. B. Limitations. (1) A transfer of a Participant’s position of employment or an offer to transfer from one Employer (the “Original Position”) to a position of employment with another Employer or to an affiliate of either shall not constitute a termination of employment for purposes of subsection A.(ii) of this Section if the new position of employment (i) includes at least the same annual base salary amount and at least the same annual base rate of bonus potential (determined as a percentage of annual base salary) as the Original Position’s annual base salary amount and annual base rate of bonus potential (determined as a percentage of annual base salary), (ii) includes duties and responsibilities that are comparable to the Original Position’s duties and responsibilities, and (iii) is located not more than fifty miles from the location of the Original Position. (2) Neither a change in job title nor a change in volume of business managed shall constitute a termination of employment for purposes of subsection A. (ii) of this Section if the duties and responsibilities of the job (other than the volume of business managed) after the change are comparable in all material respects to the duties and responsibilities of the job prior to the change. C. Amount of Severance Pay. (i) The amount of severance pay to which a Participant is entitled in accordance with Section 3.A. shall be equal to the amount listed on Schedule 1(a) or 1(b), subject to the next sentences of this Section 3.C.(i). The increased severance benefit (“Enhanced Severance”) provided in Schedule 1(b) is limited to Participant’s who are employed as Saks Incorporated “Corporate” associates, and the opportunity to receive Enhanced Severance is subject to the terms, conditions and limitations specified in Schedule 1(b). Enhanced Severance is not available for Associates employed in the Saks Fifth Avenue Enterprises, Club Libby Lu or Parisian businesses or any individuals who are specifically and exclusively assigned to work in those businesses. “Base Salary” on Schedule 1(a) or 1(b) means Participant’s weekly base salary in effect immediately prior to the termination of employment (but subject to the next sentence). Any reduction in weekly base salary that either (i) results in, occurs in connection with, or otherwise precedes a termination resulting from a Reduction in Force or a termination without Cause or (ii) constitutes Good Reason, shall be ignored for purposes of determining Base Salary. Saks Incorporated    Page 4   (ii) If a Participant is employed in a position of employment by more than one Employer, Participant shall be entitled to only one severance payment in accordance with this Plan upon termination regardless of the number of employment positions terminated. Participants shall not be entitled to any other duplicative severance payment. (iii) If a Participant’s employment with the Employer is terminated by the Employer as a result of a Reduction in Force as to Participant and the termination occurs within two years after a Change of Control, Participant shall be entitled to only one severance payment in accordance with this Plan upon termination. (iv) Participants are not required to mitigate their damages, and severance pay is not subject to mitigation. (v) Except as required by Section 6.J and unless the Company or the Employer shall have acted in bad faith or engaged in intentional misconduct, no Employer shall be liable to a Participant for any damages with respect to this Plan exceeding the amount of severance pay to which Participant is entitled in accordance with this Plan. (vi) The Employer may deduct and withhold from severance pay all amounts required to be deducted or withheld by law. D. Other Benefits. If the Employer maintains a pension plan in which Participant is a participant, Participant shall be entitled to credited service, if available under and as limited by, the pension plan, as amended from time to time, for a period of time represented by the number of weeks of base salary payable to Participant in accordance with this Plan. E. Time of Payment. All severance payments shall be paid, at the Employer’s election, either in a lump sum or in substantially equal installments (without interest). Lump sum payments shall be made, and installments shall begin, not later than 15 days following Participant’s termination of employment.   4. Claims A. Claims Procedure. If any Participant has a claim for benefits under this Plan that are not being paid, Participant may file with the Secretary of the Committee a written claim setting forth the amount and nature of the claim, supporting facts, and Participant’s address. The Chairman of the Committee shall designate an individual to review the claim (the “Authorized Representative”). The Authorized Representative shall notify Participant of the Authorized Representative’s decision in writing by registered or certified mail within 60 days after the Authorized Representative’s receipt of the claim or, under special circumstances, within 120 days after its receipt of the claim. If the claim is denied, the written notice of denial shall list the reasons for denial, refer to pertinent Plan provisions on which the denial is based, describe any additional material or information necessary for Participant to realize the claim, and explain the claim review procedure under this Plan. Saks Incorporated    Page 5   B. Claims Review Procedure. If the Authorized Representative denies a Participant’s claim, Participant may file a written request for review of the denial by the Committee. The Committee shall review the claim and notify Participant in writing of its decision within 30 days after receipt of the request. In special circumstances, the Committee may extend for up to 30 additional days the deadline for its decision. The notice of the final decision of the Committee shall include the reasons for its decision and specific references to the provisions of this Plan on which the decision is based. The decision of the Committee shall be final and binding on all parties. C. ERISA Rights. (i) Participants may obtain copies of all Plan information upon written request to the Plan Administrator. The Plan Administrator and others who operate this Plan must do so prudently and in the interest of Participants. No Employer or other person may fire or otherwise unlawfully discriminate against a Participant in any way to prevent Participant from obtaining a severance benefit or exercising his or her rights under ERISA. If discrimination occurs, Participant may seek assistance from the U.S. Department of Labor or may file suit in a federal court. (ii) A Participant is entitled to receive a written explanation of the reasons for the denial of Participant’s claim, and to have the Committee review and reconsider the claim. Participant may file suit in a state or federal court to challenge any claim denial. (iii) Under ERISA, there are steps a Participant can take to enforce the above rights. For instance, if materials are requested from this Plan and are not received within 30 days, Participant may file suit in a federal court. In that event, the court may require the Plan Administrator to provide the materials and pay Participant up to $100 a day until the materials are received, unless due to reasons beyond the control of the Plan Administrator. The court will decide who should pay court costs and legal fees. The court may order either Participant or the person sued by Participant to pay legal costs and fees. Contact the Plan Administrator for answers to questions. If a Participant has any questions about this Section 4.C. or about rights under ERISA, contact the nearest Area Office of the U.S. Labor-Management Services Administration, Department of Labor. D. Agent for Service of Legal Process. Service of legal process upon this Plan shall be made upon the Plan Administrator at the address indicated in Section 5.B. of this Plan.   5. Administration A. Plan Sponsor. The Company is Plan Sponsor for this Plan and an Employer participating in this Plan. The Company’s address is 750 Lakeshore Parkway, Birmingham, Alabama 35211. Saks Incorporated    Page 6   B. Plan Administrator. The Company shall administer this Plan through the Committee. The address of the Plan Administrator is: Employee Benefits Committee 750 Lakeshore Parkway Birmingham, Alabama 35211 Attn: Secretary C. Quorum. A majority of the members of the Committee shall constitute a quorum for any meeting held concerning this Plan. The act of a majority of the members of Committee, whether at a meeting or approved in writing without a meeting, shall be the valid act of the Committee. D. Duties. The Committee shall have the power and duty to do all things necessary or convenient to effect the intent and purposes of this Plan, whether or not the powers and duties are specifically described in this Plan including without limitation the power to: (i) provide rules for the management, operation, and administration of this Plan and, from time to time, amend or supplement the rules; (ii) construe this Plan in the Committee’s sole discretion to the fullest extent permitted by law, which shall be final and conclusive upon all persons; and (iii) correct any defect, supply any omission, or reconcile any inconsistency in this Plan in a manner and to the extent as the Committee shall deem appropriate in its sole discretion to carry this Plan into effect. E. Binding Authority. The decisions of the Committee and its duly authorized delegate within the powers conferred by this Plan shall be final and conclusive for all purposes of this Plan, and shall not be subject to any appeal or review other than pursuant to Section 4. F. Exculpation. No member of the Committee shall be directly or indirectly responsible or otherwise liable by reason of any action or default as a member of the Committee or of the exercise of or failure to exercise any power or discretion as the member, except for any action, default, exercise or failure to exercise resulting from the member’s gross negligence or willful misconduct. No member of the Committee shall be liable in any way for the acts or defaults of any other member of the Committee or any of its advisors, agents, or representatives. G. Indemnification. The Company shall indemnify and hold harmless each member of the Committee against any and all expenses and liabilities arising out of the member’s membership on the Committee, except for expenses and liabilities arising out of the member’s gross negligence or willful misconduct. Saks Incorporated    Page 7   H. Compensation. Members of the Committee who are employees of the Company shall not receive any compensation for their services rendered as members. I. Information. The Company may furnish to the Committee in writing all information the Committee requires to exercise its powers and duties in the administration of this Plan. The information may include, without limitation, the names of all Participants, their earnings and their dates of birth, employment, retirement or death. The information shall be conclusive for all purposes of this Plan, and the Committee shall be entitled to rely on the information without investigation. J. Self Interest. No member of the Committee may act, vote, or otherwise influence a decision of the Committee specifically relating to the member’s benefits, if any, under this Plan. Saks Incorporated    Page 8   6. General Provisions A. Non-Property Interest. This Plan is unfunded. Any liability of an Employer to any person with respect to benefits payable under this Plan shall give rise only to a claim as an unsecured creditor against the general assets of the Employer. Any Participant who may have or claim any interest in or right to any compensation, payment, or benefit payable under this Plan shall rely solely upon the unsecured promise of Participant’s Employer for payment. Nothing in this Plan shall give to or vest in Participant or any other person, now or at any time in the future, any right, title, interest, or claim in or to any specific asset, fund, reserve, account, insurance, annuity policy, or contract, or other property of any kind whatsoever owned by the Employer, or in which the Employer may have any right, title, or interest now or at any time in the future. B. Other Rights. Subject to the next sentences of this subsection B., this Plan supersedes (1) the Carson Pirie Scott & Co. 1994 Executive Severance Plan as amended and restated, effective as of April 3, 1998, the Younkers, Inc. Change In Control Severance Plan, and the Saks Holdings, Inc. Executive Severance Policy (each a “Superseded Plan”), which plans and policy are terminated and of no force or effect from and after the effective date of this Plan, and (2) all other plans, policies, and programs providing severance pay benefits for the Designated Associates (together, the “Existing Programs”), under which Existing Programs the Designated Associates shall have no rights to receive severance pay benefits from and after the effective date of this Plan (the terms of the Existing Programs to the contrary notwithstanding). If a Participant has vested rights under a Superseded Plan or one of more of the Existing Programs on the effective date of this Plan, (i) those vested rights shall continue until they terminate in accordance with the terms of the Superseded Plan or Existing Program and (ii) unless and until such vested rights terminate in accordance with the terms of the applicable Superseded Plan or Existing Program, Participant shall have no rights, and neither the Company nor any Employer shall have any obligation to Participant, of any kind under this Plan, including without limitation pursuant to Section 2 of this Plan. This Plan shall not affect or impair the rights or obligations of an Employer or a Participant (other than with respect to severance pay benefits) under any other contract, arrangement, or pension, profit sharing, or other compensation plan. C. Amendment or Termination. (i) This Plan (including Schedules 1(a) and 1(b), may be amended, suspended, or terminated by the Committee in its sole discretion, subject to the approval of the Chief Executive Officer of the Company and subject to subsections (ii) and (iii). (ii) If this Plan is amended, suspended, or terminated after a Participant’s employment is terminated by the Employer as a result of a Reduction in Force, Participant’s rights under this Plan to receive the severance pay and other benefits under this Plan shall continue in full force and effect as if the amendment, suspension, or termination had not occurred. Saks Incorporated    Page 9   (iii) If this Plan is amended, suspended, or terminated within two years after a Change of Control, Participant’s rights under this Plan to receive the severance pay and other benefits under this Plan if (a) Participant’s employment is terminated without Cause within two years after the Change of Control or (b) Participant terminates Participant’s own employment for Good Reason within two years after the Change of Control, in each case shall continue in full force and effect as if the amendment, suspension, or termination had not occurred. (iv) If the Company ceases to own, directly or through subsidiaries, at least 50.1% of outstanding voting stock or at least 50.1% of the outstanding equity interests of an Employer, then, subject to the next sentences, (a) the Employer shall cease to be an Employer for purposes of this Plan (an “Employer Termination”), and (b) the participation in this Plan of all Participants that are employed by such Employer shall automatically terminate, without notice to or consent of the Participants. If an Employer Termination occurs after a Participant’s employment is terminated by the Employer as a result of a Reduction in Force, Participant’s rights under this Plan to receive the severance pay and other benefits under this Plan shall continue in full force and effect as if the Employer Termination had not occurred. If an Employer Termination occurs within two years after a Change of Control, Participant’s rights under this Plan to receive the severance pay and other benefits under this Plan if (a) Participant’s employment is terminated without Cause within two years after the Change of Control or (b) Participant terminates Participant’s own employment for Good Reason within two years after the Change of Control, in each case shall continue in full force and effect as if the Employer Termination had not occurred. D. Severability. If any term or condition of this Plan shall be invalid or unenforceable to any extent or in any application, then the remainder of this Plan, with the exception of the invalid or unenforceable provision, shall not be affected and shall continue in effect and application to its fullest extent. If, however, the Committee determines in its sole discretion that any term or condition of this Plan which is invalid or unenforceable is material to the interests of the Company, the Committee may, subject to subsection C. of this section, declare this Plan null and void in its entirety. E. No Employment Rights. Neither the establishment of this Plan, any provisions of this Plan, nor any action of the Committee shall be held or construed to confer upon any employee the right to a continuation of employment by Participant’s Employer. Subject to any applicable employment agreement, each Employer reserves the right to dismiss any employee, or otherwise deal with any employee, to the same extent as though this Plan had not been adopted. F. Incapacity. If the Committee determines that a Participant receiving payment of benefits under the Plan is unable to care for Participant’s affairs because of illness or accident, any benefit due Participant may be paid to Participant’s spouse or to any other person deemed by the Committee to have incurred expense for Participant (including a duly appointed guardian, committee, or other legal representative), and any payment shall be a complete discharge of the Employer’s obligation under this Plan. Saks Incorporated    Page 10   G. Successors and Assigns; Transferability of Rights. This Plan is binding upon the Company and each Employer and the successors (including without limitation by merger or otherwise by operation of law) and permitted assigns of each. Each Employer shall have the unrestricted right to transfer its obligations under this Plan with respect to one or more Participants to any person, including without limitation to any purchaser of all or any part of the Employer’s business. The payment to a Participant of severance pay in the amount provided herein by the purchaser of all or any part of an Employer's business, or by any other person to whom an Employer has transferred its obligations hereunder, shall be in complete satisfaction of the Employer's obligation to pay severance pay hereunder to such Participant. No Participant or spouse of a Participant shall have any right to commute, encumber, transfer, or otherwise dispose of or alienate any present or future right or expectancy that Participant or the spouse may have at any time to receive payments of benefits under this Plan, which benefits and the right are expressly declared to be nonassignable and nontransferable, except to the extent required by law. Any attempt to transfer or assign a benefit, or any right granted under this Plan, by a Participant or the spouse of a Participant shall, in the sole discretion of the Committee (after consideration of the facts they deem pertinent), be grounds for terminating any rights of Participant or the spouse to any portion of this Plan benefits not previously paid. H. Entire Document. This Plan, as amended from time to time, supersedes any and all prior understandings, agreements, descriptions, and arrangements regarding the subject matter of this Plan, except for written employment or severance agreements executed and delivered by an Employer. I. Governing Law. This Plan shall be construed, administered, and enforced according to the laws of the State of Alabama, except to the extent those laws are preempted by the federal laws of the United States of America. J. Enforcement. If a Participant brings any litigation to enforce Participant’s rights under this Plan, the Company shall reimburse Participant for reasonable attorney’s fees and disbursements incurred in the litigation if (i) Participant obtains a final court order awarding Participant damages in an amount equal to 50% or more of the damages Participant demanded in the litigation, or (ii) Participant and the Company or Participant’s Employer agree in writing to a settlement in which the Company or the Employer agrees to pay Participant an amount equal to 50% or more of the damages Participant demanded in the litigation.   7. Definitions A. “Cause” means any act or any failure to act on the part of Participant which constitutes: (i) Participant’s conviction, after all applicable rights of appeal have been exhausted or waived, for any crime that materially discredits the Company or the Participant’s Saks Incorporated    Page 11   Employer or is materially detrimental to the reputation or goodwill of the Company or the Participant’s Employer; Saks Incorporated    Page 12   (ii) commission of any material act of fraud or dishonesty by Participant against the Company or Participant’s Employer or commission of an immoral or unethical act that materially reflects negatively on the Company or Participant’s Employer, but only if Participant shall first be provided by the Company or Participant’s Employer with written notice of the alleged immoral or unethical act and then shall have the opportunity to contest the alleged immoral or unethical act before the chief executive officer of the Company; (iii) Participant’s willful and continual material breach of the material terms and conditions of Participant’s employment with Participant’s Employer; or (iv) Participant’s willful violation of any policy of Participant’s Employer that in accordance with the Employer’s customary practices results in discharge after the first occurrence. No act or failure to act by a Participant will be deemed “willful” unless it is done, or omitted to be done, by Participant in bad faith or without reasonable belief that the action or omission was in the best interests of the Company or Participant’s Employer. B. “Change of Control” means the happening of any one or more of the following: the Securities Exchange Act of 1934, as amended, other than Company, a subsidiary of the Company, or any employee benefit plan of the Company or its subsidiaries, becomes the beneficial owner of the Company’s securities having 25 percent or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election for directors of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business); or (2) As the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, less than a majority of the combined voting power of the then-outstanding securities of the Company or any successor corporation or entity (excluding any subsidiary or former subsidiary of the Company) entitled to vote generally in the election of directors of the Company or such other corporation or entity after such transaction, are held in the aggregate by holders of the Company’s securities entitled to vote generally in the election of directors of the Company immediately prior to such transactions; or (3) During any period of two consecutive years, individuals who at the beginning of any such period constitute the Board of Directors of the Company cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company’s stockholders, of each director of the Company first elected during such period Saks Incorporated    Page 13   was approved by a vote of at least two-thirds of the directors of the Company then still in office who were directors of the Company at the beginning of any such period. C. “Committee” is defined in Section 2.A. D. “Company” is defined in Section 1.A. E. “Designated Associate” is defined in Section 2.A. F. “Employer” is defined in Section 2.A. G. “Good Reason” means Participant’s (a) annual base salary amount or annual base rate of bonus potential (determined as a percentage of annual base salary) is reduced or (b) location of employment with the Employer is changed by the Employer to a location that is more than fifty miles from the location of Participant’s employment with the Employer on the day first preceding a Change of Control. H. “Participant” is defined in Section 2.A. I. “Reduction in Force” means (1) the termination of Participant’s employment with the Participant’s Employer due to the elimination of Participant’s position or job function (each an “Eliminated Position”) that occurs as a result of or in connection with the sale or other transfer for consideration to an acquiror that is not an affiliate of the Company of any material asset or assets (considered alone or together if a series of related transactions) of the Company or any also constitutes a Change of Control, and (2) Participant is not offered another position of employment (to begin immediately following the elimination of the Eliminated Position) by the Employer, the acquiror, or any affiliate of either, that includes each of the following: (i) at least the same amount of annual base salary and at least the same annual as the Eliminated Position’s amount of annual base salary and annual base rate of bonus potential (determined as a percentage of annual base salary); and (ii) is located not more than fifty miles from the Eliminated Position’s location. Saks Incorporated    Page  14   Saks Incorporated, By:     /s/ Paul D. Shore Paul D. Shore Senior Vice President of Human Resources Saks Incorporated    Page 15   Schedule 1(a) SEVERANCE BENEFITS   Position of Employment (Group of Designated Executives)    Severance Payment in Accordance with Section 3.C (Weeks of Base Salary) Division Presidents and Corporate Executive Vice Presidents and Corporate Senior Vice Presidents    104 weeks Division Executive Vice Presidents and Division Senior Vice Presidents    78 weeks Corporate Vice Presidents and Division DMMs    52 weeks Director-level associates and Buyers    26 weeks, unless qualified for Enhanced Severance in Schedule 1(b) below. All other exempt and non-exempt associates not employed in Stores    Severance based on length of service with the Company as follows (unless qualified for Enhanced Severance in Schedule 1(b) below):   0-6 months of service: 2 weeks   7-12 months of service: 4 weeks   >12 months of service: a minimum of 12 weeks, or one week for each year of service, whichever is greater, but not more than 52 weeks (for greater than 12 months service, a partial year of service is credited as a whole year) Severance benefits pursuant to Section 3.C.(i) of this Plan and described above in this Schedule 1(a) are subject to the following terms, conditions and limitations:     1) Associates must remain in their position until released from employment by the Company,     2) Associates must not have been transferred to or received an offer of comparable employment (as defined in Section 3.B. of this Plan) within Saks Incorporated or any acquiring company, and     3) Associates must continue to perform their duties in a satisfactory manner and comply with the Company’s policies and procedures in effect from time to time.     4) The Company’s determinations as to who is eligible for the enhanced benefits in Schedule 1(a) described above, how much Enhanced Severance is payable in any situation, and all related matters are final and binding. Saks Incorporated    Page 16     5) An associate is entitled to benefits under either Schedule 1(a) or 1(b), but not both. Saks Incorporated    Page 17   Schedule 1(b) ENHANCED SEVERANCE BENEFITS (Replaces Schedule 1(a) for Saks Incorporated “Corporate” associates in certain positions designated in this Schedule 1(b) and eligibility for Enhance Severance is subject to the terms, conditions and limitations noted below)   Position of Employment (Group of Designated Executives)    Vice Presidents    Not eligible Division Executive Vice Presidents and Division Senior Vice Presidents    Not eligible Corporate Vice Presidents and Division DMMs    Not eligible Director-level associates and Buyers    52 weeks (see conditions and limitations below) All other exempt and non-exempt associates not employed in Stores    Severance based on length of service with the Company as follows (see conditions and limitations below):   •        0-6 months of service: 4 weeks   •        7-12 months of service: 8 weeks   •        Greater than 12 months service – minimum 24 weeks, or 2 weeks per year of service, up to a maximum of 52 weeks (for greater than 12 months service, a partial year of service is credited as a whole year) Enhanced Severance pursuant to Section 3.C.(i) and described above in this Schedule 1(b) are subject to the following terms, conditions and limitations:   the Company,     time.     4) Associates who participate in any Company retention pay program are not eligible for benefits under Schedule 1(b). Saks Incorporated    Page 18     5) Enhanced Benefits in accordance with Schedule 1(b) are provided to those associates employed in positions for Saks Incorporated Corporate, Saks Support Group, and Saks Distribution Center in Steele, Alabama except the following:     •   associates who are part of the Northern Department Store Group sale,     •   corporate-based Alterations associates,     •   associates in Department Store Group Corporate Central,     •   Corporate Loss Prevention associates based in the Steele, Alabama facility,     •   Accounting associates based in the Aberdeen, Maryland facility,     •   Distribution, Fulfillment and International Services associates in the Aberdeen, Maryland facility,     •   Asset Protection associates in the Aberdeen, Maryland facility, and     •   all associates employed in Saks Fifth Avenue Enterprises, Club Libby Lu or Parisian businesses or any individuals who are specifically and exclusively assigned to work at Saks Fifth Avenue Enterprises, Club Libby Lu or Parisian.     6) The Company’s determinations as to who is eligible for the enhanced benefits in Schedule 1(b) described above, how much enhanced severance is payable in any situation and all related matters are final and binding.   but not both.

Name: Commission Regulation (EEC) No 2296 of 26 July 1990 on the application of Decision No 2/90 of the EEC - Switzerland Joint Committee supplementing and amending Annex III to protocol No 3 concerning the definition of the concept of "originating products" and methods of administrative cooperation Type: Regulation Subject Matter: international affairs; executive power and public service; tariff policy; Europe; international trade Date Published: nan 8 . 8 . 90 Official Journal of the European Communities No L 210/ 21 COMMISSION REGULATION (EEC) No 2296 /90 of 26 July 1990 on the application of Decision No 2/90 of the EEC-Switzerland Joint Committee supplementing and amending Annex III to Protocol No 3 concerning the definition of the concept of 'originating products' and methods of administrative cooperation Whereas , by virtue of Article 28 of Protocol No 3 , the Joint Committee has adopted Decision No 2 /90 supplementing and amending Protocol No 3 ; Whereas it is necessary to apply this Decision in the Community; Whereas the provisions of this Regulation are in accordance with the opinion of the Committee on Origin , HAS ADOPTED THIS REGULATION: THE COMMISSION OF THE EUROPEAN COMMUNITIES , Having regard to the Treaty establishing the European Economic Community , and in particular Article 113 thereof, Having regard to the Council Regulation (EEC) No 2843 / 89 of 18 September 1989 on the implementation of Decision No 1 / 89 of the EEC-Switzerland Joint Committee amending Protocol No 3 concerning the definition of the concept of originating products and methods of administrative cooperation and establishing provisions for the implementation of the Joint Declaration annexed to Decision No 1 / 88 of the EEC-Switzerland Joint Committee 0), and in particular Article 2 thereof, Whereas the Agreement between the European Economic Community and the Swiss Confederation was signed on 22 July 1972 and entered into force on 1 January 1973 (*); Whereas Protocol No 3 concerning the definition of the concept of 'originating products' and methods of administrative cooperation ( 3 ) (hereafter referred to as Protocol No 3 ) forms an integral part of the said Agreement ; Article 1 Decision No 2/90 of the EEC-Switzerland Joint Committee shall apply in the Community . The text of the Decision is attached to this Regulation . Article 2 This Regulation shall enter into force on the day of its publication in the Official Journal of the European Communities. It shall apply with effect from 1 January 1988 . This Regulation shall be binding in its entirety and directly -applicable in all Member States . Done at Brussels, 26 July 1990 . * For the Commission Christiane SCRIVENER Member of the Commission ( ») OJ No L 278 , 27 . 9 . 1989 , p. 21 . ( 2 ) OJ No L 300 , 31 . 12 . 1972 , p . 189 . ( 3 ) OJ No L 216, 8 . 8 . 1988 , p. 75 .

Exhibit 10.19 EMPLOYMENT AGREEMENT                 This Employment Agreement ("Agreement") is made and entered into as of the 16th day of October, 2001, by and between NuVox, Inc. and Gabriel Communications Properties, Inc., Delaware corporations (the "Company"), and Paul A. Pitts ("Executive").                 WHEREAS, Executive desires to continue to be employed by the Company, and the Company desires to continue to employ Executive, upon the terms and conditions hereinafter set forth.                 NOW, THEREFORE, in consideration of the compensation and other benefits of Executive's employment by the Company and the recitals, mutual covenants and agreements hereinafter set forth, Executive and the Company agree as follows:                 1.          Employment Services.                              (a)        During the Employment Period (as defined below), the Company agrees to employ Executive, and Executive agrees to serve the Company, in Executive’s present capacity as Senior Vice President - Operations, Planning and Engineering of the Company or in another executive capacity with responsibilities substantially equivalent to Executive’s present responsibilities. Executive will devote substantially his entire business time and best efforts during the Employment Period to the performance of his duties, as now or hereafter prescribed by the Company’s By-Laws or assigned by the Board of Directors of the Company (the “Board”) or the Chief Executive Officer of the Company, including service in his present offices or other offices with the Company and its subsidiary and associated companies to which he is or hereafter may be elected or appointed; provided, however, that without the consent of Executive, Executive may not be required to regularly perform his duties at any location that is more than twenty-five (25) miles from the present principal executive offices of the Company.                              (b)        Executive shall not, during the Employment Period, become or serve as a director, officer, employee or member of any entity conducting, nor become an owner of any substantial interest in any entity conducting, a business in substantial competition with the Company’s business.                 2.          Term of Employment.      The term of this Employment Agreement (the "Employment Period") shall be the two (2) year period from the date hereof to and including October 31, 2003 (the "Initial Period"), and shall thereafter continue from year to year (each an "Annual Extension"), unless sooner terminated as provided in the second sentence of this Section 2 or in Section 4 hereof. Unless sooner terminated as provided in Section 4 hereof, the Employment Period may be terminated by either the Company or Executive, at the end of the Initial Period or an Annual Extension, if a written notice of nonrenewal is delivered to the other party at least six (6) months prior to the end of such Initial Period or Annual Extension, as the case may be.                              (a)        Annual Base Salary.      During the Employment Period, the Company shall pay Executive as compensation for his services an annual base salary in an amount determined by the Compensation Committee of the Board. Such annual base salary shall be at the annual rate of not less than One Hundred Sixty-Five Thousand Dollars ($165,000) through December 31, 2001. Executive’s annual base salary rate shall be reviewed at least annually for increase in the discretion of the Compensation Committee; Executive’s annual base salary rate shall not be subject to decrease at any time during the Employment Period other than as a result of an across the board adjustment affecting all of the Company’s most senior executives proportionately. Executive’s base salary shall be payable in accordance with the Company’s usual practices.                              (b)        Annual Bonus.      During the Employment Period, Executive shall be eligible for an annual bonus under a bonus program to be established by the Compensation Committee of the Board and approved by the Board. Under the bonus program, Executive’s annual bonus will be tied to performance criteria and Executive is expected to be eligible for a bonus of thirty to forty percent (30-40%) of his annual base salary.                              (c)        Benefits.      During the Employment Period, Executive shall also (i) be eligible to participate in all benefit programs from time to time maintained by the Company for the benefit of its executives including without limitation, its group medical, dental and term life insurance coverages, 401 (k) Plan, the NuVox, Inc. 2001 Stock Incentive Plan (“Stock Plan”) and the NuVox, Inc. 2001 Performance Plan (the “Performance Plan”), in each case on and subject to the terms and conditions of each of such programs as such programs apply to the Company’s executives, and (ii) be entitled to four (4) weeks of paid vacation per year. Executive’s benefits shall include the following which have been awarded as of the date of, and in connection with Executive’s execution of, this Agreement:                           2001 Performance Plan: Participation Grant - 3.00%                           2001 Stock Incentive Plan: Series F-1 Options - 425,000 shares @ $0.59 per share.                 4.          Termination of Employment.      Prior to the expiration of the Employment Period, this Agreement and Executive's employment may be terminated as follows:                              (a)        Automatically upon Executive's death.                              (b)        By the Company, upon thirty (30) day's prior written notice to Executive, in the event the Board believes that Executive, by reason of physical or mental illness, is unable to perform a material portion of the services required of Executive hereunder for a continuous one-hundred thirty-five (135) day period; in the event of a disagreement concerning the existence of any such disability (in which event any such termination shall not become effective until such disagreement shall have been resolved), the matter shall be resolved by a disinterested licensed physician chosen by the Company (such physician to be located within 50 miles of Executive’s principal residence) and otherwise reasonably satisfactory to the Executive or his legal representative. 2                              (c)        By the Company, for "Good Cause." "Good Cause" shall mean:                              (1)           The willful and continued failure of Executive to substantially perform material duties assigned to Executive in accordance with Section 1(a) hereof (other than any such failure resulting from incapacity due to physical or mental illness);                              (2)           A material breach of Section 1(b) of this Agreement by Executive; or                              (3)           Executive's commission of fraud or willful conduct which significantly harms the Company or its subsidiaries or which significantly impairs Executive's ability to perform his duties.   For purposes of this definition, no act, or failure to act, shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.                              (d)        By the Company, without Good Cause, upon seven (7) days prior written notice to Executive. A termination without Good Cause shall be deemed to exist upon any termination of Executive by the Company other than as set forth in Sections 4(a), (b), (c) or (f) or upon delivery by the Company of a notice of non-extension pursuant to Section 2.                              (e)        By Executive, following his determination that "Good Reason" for termination exists. "Good Reason" shall be deemed to exist if:                              (1)           Executive's titles, duties, authorities or responsibilities are materially reduced or modified without Executive's consent, in his sole discretion, from those specified herein; or                              (2)           A change in the location of the Company's executive offices to a location that is greater than 25 miles from its present location.                              (f)        By the Company, following a Change of Control (as defined in the Stock Plan).                              (g)        By Executive, upon ninety (90) days prior written notice to the Company, for serious personal reasons that Executive believes makes it inadvisable for him to continue to perform his services hereunder. 3                 5.          Effect of Termination of Employment.      Upon termination of Executive's employment and this Agreement, the rights and obligations of the parties pursuant to Sections 7 through 14 and Section 16 shall be unaffected, but all other rights and obligations of the parties hereunder shall cease, except:                              (a)        If this Agreement is terminated pursuant to Section 4(a) or (b), Executive (or his estate) shall receive his base salary and benefits (as applicable) accrued through the end of the calendar month in which such termination occurs (including his then vested Options and Participation Grants under the Stock Plan and the Performance Plan) and his annual base salary and benefits (as applicable) for a period of twelve (12) calendar months thereafter (according to the same payroll practices that are in effect at the time of termination). In addition, Executive (or his estate) shall receive a lump sum payment, within ten days of any such termination, equal to the maximum bonus for which Executive was eligible in the year in which such termination occurs, plus payment for his accrued but untaken vacation for the portion of the year in which such termination occurs. Any unvested Options and Participation Grants awarded granted to Executive under terms of the terms of the Stock Plan and the Performance Plan shall be forfeited.                              (b)        If this Agreement is terminated pursuant to Section 4(c) or 4(g), Executive shall receive his base salary and benefits accrued through the date of such termination of employment (including his then vested Options and Participation Grants under the Stock Plan and the Performance Plan). Any unvested Options and Participation Grants under the terms of the Stock Plan and the Performance Plan shall be forfeited.                              (c)        If this Agreement is terminated pursuant to Section 4 (d), Executive shall receive (i) his base salary and benefits (as applicable) accrued through the end of the calendar month in which such termination occurs, (ii) his base salary for a period of twelve (12) calendar months thereafter (according to the same payroll practices that are in effect at the time of termination), and (iii) his benefits (as applicable) for the remainder of the Initial Period or for a period of twelve (12) months, whichever is shorter, or for the remainder of the applicable Annual Extension, as the case may be. In addition, Executive shall receive a lump sum payment for his accrued but untaken vacation for the portion of the year in which such termination occurs. Notwithstanding the terms of the Stock Plan and the Performance Plan and any Options and Participation Grants awarded to Executive thereunder and outstanding immediately prior to such termination, 1/36 of such Options and Participation Grants shall become exercisable and fully vested for each full month of continuous service with the Company subsequent to the date of the grant thereof and for an additional twelve (12) full months thereafter (so that, for example, if such termination occurs after eighteen months of continuous service, 30/36 of such Options and Participation Grants would become exercisable and fully vested), and the balance, if any, shall be forfeited.                              (d)        If this Agreement is terminated pursuant to Section 4(e), Executive shall receive his base salary and benefits (as applicable) for a period of twelve (12) calendar months after the date of such termination (according to the same payroll practices that are in effect at the time of termination). Any unvested Options and Participation Grants under the terms of the Stock Plan and the Performance Plan shall be forfeited. 4                              (e)        If this Agreement is terminated pursuant to Section 4(f), Executive shall receive his base salary for the remainder of the calendar year in which such termination occurs and benefits (as applicable) for the remainder of the Initial Period or the applicable Annual Extension, as the case may be. In addition, Executive shall receive a lump sum payment equal to two times his then current annual base salary, plus two times the maximum bonus for which Executive was eligible in the year in which such termination any Options and Participation Grants awarded to Executive thereunder, all such Options and Participation Grants outstanding thereunder immediately prior to such termination shall immediately become exercisable and fully vested.                              (f)        All shares of stock, options and warrants held by Executive at the time of termination shall remain subject to the terms of the Stock Plan and the agreements pursuant to which they were issued.                              (g)        If Executive accepts alternative employment at any time during which payments are being made and/or benefits are being provided to Executive under Section 5(c) or 5(d), the Company may (i) offset the amount of base salary paid to Executive by his new employer against the amounts of base salary otherwise payable thereunder from and after the effective date of such alternative employment and (ii) if Executive’s new employer provides group medical, dental and/or life insurance coverages, the Company’s obligation to provide such coverages hereunder shall cease upon the effectiveness of his new coverages.                 6.          Provisions Relating to Taxation of Payments.                              (a)        Gross-up Payment.      Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon such payment or distribution.                              (b)        Determination of Gross-Up.      Subject to the provisions of paragraph (c) of this Section 6, all determinations required to be made under this Section 6, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by an accounting firm satisfactory to the Company and Executive (“Accounting Firm”). The Accounting Firm shall make such determination and provide detailed supporting calculations to both the Company and Executive within fifteen (15) business days after it is requested to do so. The initial Gross-Up Payment, if any, as determined pursuant to this paragraph (b) of this Section 6, shall be paid to Executive within five (5) business days after the Company’s receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that he has legal authority satisfying the criteria set forth in Treasury Regulation Section 1.6661-3 or similar successor provisions not to report any Excise Tax on his federal income tax return. Any determination by the Accounting Firm shall be binding upon the Company and Executive. 5                              (c)        Dispute of Tax Claim.      Executive shall notify the Company in writing of any proposed assessment or proposed adjustment by the Internal Revenue Service (“IRS”) pursuant to an audit of Executive’s federal income tax return or otherwise, that, if successful, would require the payment by the Company of a Gross-Up Payment (hereinafter referred to as a “Claim”). Such notice shall be given as soon as practicable but no later than ten (10) business days after the earlier of (i) the receipt by Executive of a written notice of proposed adjustment from the IRS or (ii) the receipt by Executive of a statutory notice of deficiency. Such notice by Executive to the Company shall include (i) notice of the amount of the proposed assessment or proposed adjustment which relates to the Claim and the taxable year or years in which the Claim arises, (ii) the general nature of the Claim and (iii) all relevant written reports of the examining agent relating to the Claim. Within thirty (30) days of (i) the receipt by Executive of a final assessment or (ii) the execution by Executive and the IRS of a closing agreement, with respect to any tax year of Executive in which a Claim has been raised, pursuant to which Executive is required to pay any amount with respect to the Claim, Executive shall provide the Company and the Accounting Firm with a copy of such assessment or agreement, together with supporting documents sufficient to determine the amount of such tax liability that was attributable to the Claim. The Accounting Firm shall determine the amount Gross-Up Payment under this Agreement due to such tax liability and the Company will make such Gross-Up Payment to Executive within five (5) business days after its receipt of such determination.                 7.          Withholding.      All compensation paid to Executive shall be subject to customary withholding taxes and other employment taxes as required with respect thereto.                 8.          Non-Waiver of Rights.      The failure of either party to enforce at any time any of the provisions of this Agreement or to require at any time performance by the other party of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement, or any part hereof, or the right of either party thereafter to enforce each and every provision in accordance                 9.          Severability and Interpretation.      In the event of a conflict between the terms of this Agreement and any of the definitions or provisions in the Stock Plan and the Performance Plan, the terms of this Agreement shall prevail. Whenever possible, each provision of this Agreement and any portion hereof shall be interpreted in such a manner as to be effective and valid under applicable law, rules and regulations. If any covenant or other provision of this Agreement (or portion thereof) shall be held to be invalid, illegal, or incapable of being enforced, by reason of any rule of law, rule, regulation, administrative order, judicial decision or public policy, all other conditions and provisions of this Agreement shall, nevertheless, remain in full force and effect, and no covenant or provision shall be deemed dependent upon any other covenant or provision (or portion) unless so expressed herein. The parties hereto desire and consent that the court or other body making such determination shall, to the extent necessary to avoid any unenforceability, so reform such covenant or other provision or portions of this Agreement to the minimum extent necessary so as to render the same enforceable in accordance with the intent herein expressed. 6                 10.          Entire Agreement.      This Agreement represents the entire and integrated Employment Agreement between Executive and the Company and supersedes all prior negotiations, representations and agreements, either                 11.          Notice.      All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party, by registered or certified mail, return receipt requested, postage prepaid, or by overnight courier, addressed as set forth in this Section 11 or to such other address as may hereafter be notified by such party to the other party. Notices and communications shall be effective at the time they are given in the foregoing manner (provided that notice by mail shall be deemed given three business days after posting).   If to Executive: Paul A. Pitts 345 Wilkshire Loop Moore, SC 29369 NuVox, Inc. 16090 Swingley Ridge Road, Suite 500 Chesterfield, MO 63017 Attn: Secretary                 12.          Amendments and Waivers.      No modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing specifically referring hereto, and signed by the parties hereto.                 13.          Assignments.      This Agreement shall inure to the benefit of, and be binding upon, the Company, its successors and assigns and/or any other entity which shall succeed to the business presently being conducted by the Company. Being a contract for personal services, neither this Agreement nor any rights hereunder shall be assigned by Executive.                 14.          Choice of Forum and Governing Law.      The parties agree that: (i) any litigation involving any noncompliance with or breach of this Agreement, or regarding the interpretation, validity and/or enforceability of this Agreement, shall be filed and conducted in the state or federal courts in St. Louis County, Missouri; and (ii) this Agreement shall be interpreted in accordance with and governed by the laws of the State of Missouri, without regard for any conflict of law principles. 7                 15.          Headings.      Section headings are provided in this Agreement for convenience only and shall not be deemed to substantively alter the content of such sections.                 16.          Indemnification.      To the fullest extent permitted by the indemnification provisions of the Certificate of Incorporation and By-laws of the Company in effect as of the date of this Agreement and the indemnification provisions of the corporation statute of the jurisdiction of the Company's incorporation in effect from time to time (collectively, the "Indemnification Provisions"), and in each case subject to the conditions thereof, the Company shall (i) indemnify the Executive, as a director and officer of the Company or a subsidiary of the Company or a trustee or fiduciary of an employee benefit plan of the Company or a subsidiary of the Company, or, if the Executive shall be serving in such capacity at the Company's written request, as a director or officer of any other corporation (other than a subsidiary of the Company) or as a trustee or fiduciary of an employee benefit plan not sponsored by the Company or a subsidiary of the Company, against all liabilities and reasonable expenses that may be incurred by the Executive in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, because the Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan, and against which the Executive may be indemnified by the Company, and (ii) pay for or reimburse the reasonable expenses incurred by the Executive in the defense of any proceeding to which the Executive is a party because the Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan. The rights of the Executive under the Indemnification Provisions shall survive the termination of the employment of the Executive by the Company. this Agreement to be executed as of the day and year first above written.     Paul A. Pitts   NuVox, Inc. and Gabriel Communications Properties, Inc.   By:   Name:   David L. Solomon 8

Exhibit 10.1 THERMO FISHER SCIENTIFIC INC. 2013 STOCK INCENTIVE PLAN   1. Purpose. The purpose of this 2013 Stock Incentive Plan (the “Plan”) of Thermo Fisher Scientific Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in which the Company has a controlling interest.   2. Eligibility. All of the Company’s employees, officers, directors, as well as consultants and advisors to the Company (as the terms consultants and advisors are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933 (the “Securities Act”), or any successor form) are eligible to be granted options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) and other stock-based awards (each, an “Award”) under the Plan. Each person who receives an award under the Plan is deemed a “Participant.”   3. Administration and Delegation. Board of Directors of the Company (the “Board”). The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any good faith. may delegate to one or more officers of the Company the power to grant Options and other Awards that constitute rights under Section 157(c) of the Delaware General Corporation Law (subject to any limitations under the Plan) to employees or officers of the Company and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of the Awards to be granted by such officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the officers may grant; provided further, however, that no officer shall be authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act). The Board may not delegate authority under this Section 3(c) to issue shares of Common Stock as Restricted Stock unless Delaware law then permits such delegation.   4. Stock Available for Awards. may be made under the Plan for up to 22,000,000 shares of common stock, $1.00 the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. the grant of Awards under the Plan and under the sublimits contained in Sections 4(b)(2) and 4(b)(3), (A) all shares of Common Stock covered by independent SARs not be so counted; (B) in the case of a SAR granted in tandem with an Option, as described in Section 6(b)(1) below (a “Tandem SAR”), only the shares covered by the Option, and not the shares covered by the Tandem SAR, shall be so counted, and the expiration of one in connection with the other’s exercise will not restore shares to the Plan; (C) if any Award (i) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or (ii) results in any Common Stock not being issued (including as a result of an independent SAR that was settleable either in cash or in stock actually being settled in cash), the unused Common Stock covered by such Award shall again be available for the grant of Awards; provided, however, in the case of Incentive Stock Options (as hereinafter defined), the foregoing shall be subject to any limitations under the Code; and provided further, (I) in the case of independent SARs, that the full number of shares subject to any stock-settled SAR shall be counted against the shares available under the Plan and against the sublimit set forth in Sections 4(b)(2) and 4(b)(3) regardless of the number of shares actually used to settle such SAR upon exercise, and (II) that the shares covered by a Tandem SAR shall not again become available for grant upon the expiration or termination of such Tandem SAR; (D) shares of Common Stock delivered (either by actual delivery, attestation, or net exercise) to the Company by a Participant to (i) purchase shares of Common Stock upon the exercise of an Award or (ii) satisfy tax withholding obligations (including shares retained from the Award creating the tax obligation) shall not be added back to the number of shares available for the future grant of Awards; and (E) shares of Common Stock repurchased by the Company on the open market using the proceeds from the exercise of an Award shall not increase the number of shares available for future grant of Awards. Plan shall be 2,000,000 per calendar year. For purposes of the foregoing limit, a Tandem SAR (as hereinafter defined) shall be treated as a single Award. The per-Participant limit described in this Section 4(b)(1) shall be construed and applied consistently with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder (“Section 162(m)”). 11,000,000. (3) Limit on Awards to Directors. The maximum number of shares with respect to which Awards may be granted to directors who are not employees of the Company at the time of grant shall be 1,200,000. forth in Section 4(a)(1) or any sublimits contained in the Plan, except as may   5. Stock Options. necessary or advisable. An Option that is not intended to be an Incentive Stock Option.” Stock Option”) shall only be granted to employees of Thermo Fisher Scientific Inc., any of Thermo Fisher Scientific Inc.’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. If the Fair Market Value (as defined below) of shares on the date of grant with respect to which Incentive Stock Options are exercisable for the first time by a Participant in any calendar year exceeds $100,000, the Options for the first $100,000 worth of shares to become exercisable in that calendar year will be Incentive Stock Options, and the Options for the shares with a Fair Market Value (as defined below) in excess of $100,000 that become exercisable in that calendar year will be Nonstatutory Stock Options. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or for any action taken by the Board, including without limitation the conversion of an Incentive Stock Option to a Nonstatutory Stock Option. or the formula by which such exercise price shall be determined. The exercise price shall be specified in the applicable option agreement. The exercise price date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date. option agreement; provided, however, that no Option will be granted with a term (e) Exercise of Option. Options may be exercised by delivery to the Company or its designee of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Company, together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. Shares of Common Stock subject to the Option will be delivered by the Company as soon as practicable following exercise. (2) except as may otherwise be provided in the applicable option agreement, by (3) to the extent provided for in the applicable option agreement or approved by the Board, in its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board (“Fair Market Value”), provided (A) such method of payment is then permitted under applicable law, (B) such Common Stock, if acquired directly from the Company, was owned by the Participant for such minimum period of time, if any, as may be established by the Board in its discretion and (C) such Common Stock is not subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements; (4) to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would receive (A) the number of shares underlying the portion of the Option being exercised, less (B) such number of shares as is equal to (i) the aggregate exercise price for the portion of the Option being exercised divided by (ii) the Fair Market Value on the date of exercise; (5) to the extent permitted by applicable law and provided for in the applicable option agreement or approved by the Board, in its sole discretion, by payment of such other lawful consideration as the Board may determine; or (6) by any combination of the above permitted forms of payment. Section 9), (2) the Board may not cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefore new Awards under the per share of the cancelled option, (3) the Board may not cancel in exchange for a cash payment any outstanding Option with an exercise price per share above the then-current Fair Market Value, and (4) the Board may not take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of the New York Stock Exchange (“NYSE”). (h) No Reload Rights. No option granted under the Plan shall contain any provision entitling the grantee to the automatic grant of additional Options in (i) No Dividend Equivalents. No option shall provide for the payment or accrual of dividend equivalents.   (a) General. The Board may grant Awards consisting of SARs entitling the holder, upon exercise, to receive an amount of Common Stock or cash or a combination thereof (such form to be determined by the Board) determined in whole or in part by reference to appreciation, from and after the date of grant, in the Fair Market Value of a share of Common Stock over the exercise price established pursuant to Section 6(c). The date as of which such appreciation is determined shall be the exercise date. (A) the SAR will be exercisable only at such time or times, and to the extent, Board in connection with a Reorganization Event or a Change in Control Event) and will be exercisable in accordance with the procedure required for exercise of the related Option; (B) the SAR will terminate and no longer be exercisable upon the termination or exercise of the related Option, except to the extent designated by the Board in connection with a Reorganization Event or a Change in Control Event and except that a SAR granted with respect to less than the full number of shares covered by an Option will not be reduced until the number of shares as to which the related Option has been exercised or has terminated exceeds the number of shares not covered by the SAR; (C) the Option will terminate and no longer be exercisable upon the exercise of the related SAR; and (D) the SAR will be transferable only with the related Option. of 10 years. (e) Exercise of SARs. SARs may be exercised by delivery to the Company or its together with any other documents required by the Company. price per share of such outstanding SAR (other than adjustments pursuant to Section 9), (2) the Board may not cancel any outstanding SAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under the per share of the cancelled SAR, (3) the Board may not cancel in exchange for a cash payment any outstanding SAR with a grant price per share above the the NYSE. (g) No Reload Rights. No SAR granted under the Plan shall contain any provision entitling the grantee to the automatic grant of additional SARs in connection with any exercise of the original SAR. (h) No Dividend Equivalents. No SAR shall provide for the payment or accrual of dividend equivalents.   time such Award vests or such later time on or after such Award vests as may be specified in such Award (“Restricted Stock Units”) (Restricted Stock and Award”). (b) Terms and Conditions for All Restricted Stock Awards. The Board shall determine the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any. stock. (2) Stock Certificates. The Company may require that any stock certificates issued in respect of shares of Restricted Stock shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Company, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death (the “Designated Beneficiary”). In the absence of an effective designation by a Participant, “Designated Beneficiary” shall mean the Participant’s estate. (d) Additional Provisions Relating to Restricted Stock Units. (1) Settlement. Upon the vesting of and/or lapsing of any other restrictions mandatory basis or at the election of the Participant in a manner that complies with Code Section 409A. (2) Voting Rights. A Participant shall have no voting rights with respect to any Restricted Stock Units. (3) Dividend Equivalents. To the extent provided by the Board, in its sole (e) Deferred Delivery of Shares. The Board may, at the time any Restricted Stock Award is granted, provide that, at the time Common Stock would otherwise be delivered pursuant to the Award, the Participant shall instead receive an instrument evidencing the right to future delivery of Common Stock at such time or times, and on such conditions, as the Board shall specify in a manner that complies with Code Section 409A.   (a) General. Other Awards of shares of Common Stock, and other Awards that are Common Stock or other property, may be granted hereunder to Participants (“Other Stock-Based-Awards”), including without limitation Awards entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board shall determine. (b) Terms and Conditions. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Stock-Based Award, including any purchase price applicable thereto.   dividend, (1) the number and class of securities available under this Plan, (2) the sub-limits and share counting rules set forth in Sections 4(a), 4(b), 7(b) and 8(b), (3) the number and class of securities and exercise price per share of each outstanding Option, (4) the share and per-share provisions and the exercise price of each SAR, (5) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award and (6) the share and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. (b) Reorganization and Change in Control Events. (1) Definitions. (A) A “Reorganization Event” shall mean: (i) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled; (ii) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction; or (iii) any complete liquidation or dissolution of the Company. (B) A “Change in Control Event” shall mean: (i) the acquisition by an individual, entity or group (within the meaning of ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control Event: (I) any acquisition directly by the Company, (II) any acquisition by any employee corporation controlled by the Company, or (III) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (iii) of this definition; or (ii) such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a consents, by or on behalf of a person other than the Board; or (iii) the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company in one or a series of transactions (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors. (C) “Cause” shall have the meaning set forth in the Participant’s employment or other agreement with the Company, provided that if the Participant is not a party to any such employment or other agreement or such employment or other agreement does not contain a definition of Cause, then Cause shall mean: (i) the willful and continued failure of the Participant to perform substantially the Participant’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Participant by the Company that specifically identifies the alleged manner in which the Participant has not substantially performed the Participant’s duties; or (ii) the willful engaging by the Participant in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. For purposes of this definition, no act or failure to act on the part of the Participant shall be considered “willful” unless it is done, or omitted to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was in the best interests of the Company. (D) “Good Reason” shall have the meaning set forth in the Participant’s employment, change in control, or other agreement with the Company (“Individual Agreement”), provided that if the Participant is not a party to any such employment or other agreement or such employment or other agreement does not contain a definition of Good Reason, then Good Reason shall mean the occurrence, on or after a Change in Control Event and without the affected Participant’s written consent, of any of the events or circumstances set forth in clauses (i) through (vii) below. Notwithstanding the occurrence of any such event or circumstance, such occurrence shall not be deemed to constitute Good Reason unless, prior to the effective date of an employment termination (“Date of Termination”) the Participant has provided written notice to the Company of not less than 15 days identifying the reason for the Participant’s planned departure (“Notice of Termination”); provided, however, that if the event or circumstance identified by the Participant has been fully corrected and the Participant has been reasonably compensated for any losses or damages resulting therefrom (provided that such right of correction by the Company shall only apply to the first Notice of Termination for Good Reason given by the Participant), the Participant shall not be deemed to have Good Reason for termination under the Plan. (i) the assignment to the Participant of duties inconsistent in any material respect with the Participant’s position (including status, offices, titles and reporting requirements), authority or responsibilities in effect immediately prior to the earliest to occur of (I) the Change in Control Event, (II) the date of the execution by the Company of the initial written agreement or instrument providing for the Change in Control Event or (III) the date of the adoption by the Board of Directors of a resolution providing for the Change in Control Event (with the earliest to occur of such dates referred to herein as the “Measurement Date”) or a material diminution in such position, authority or responsibilities; (ii) a reduction in the Participant’s annual base salary as in effect on the Measurement Date or as the same was or may be increased thereafter from time to time; (iii) the failure by the Company to (I) continue in effect any material compensation or benefit plan or program, including without limitation any life insurance, medical, health and accident or disability plan and any vacation or automobile program or policy, in which the Participant participates or which is applicable to the Participant immediately prior to the Measurement Date (a “Benefit Plan”), unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan or program, (II) continue the Participant’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable than the basis existing immediately prior to the Measurement Date (III) award cash bonuses to the Participant in amounts and in a manner substantially consistent with past practice in light of the Company’s financial performance or (IV) continue to provide any material fringe benefit enjoyed by Participant immediately prior to the Measurement Date; (iv) a change by the Company in the location at which the Participant performs the Participant’s principal duties for the Company to a new location that is both (I) outside a radius of 50 miles from the Participant’s principal residence immediately prior to the Measurement Date and (II) more than 30 miles from the location at which the Participant performed the Participant’s principal duties for the Company immediately prior to the Measurement Date; or a requirement by the Company that the Participant travel on Company business to a substantially greater extent than required immediately prior to the Measurement Date; (v) the failure of the Company to obtain the agreement from any successor to the Company to assume and agree to perform his or her Individual Agreement; (vi) a purported termination of the Participant’s employment which is not effected in accordance with his or her Individual Agreement; or (vii) any failure of the Company to pay or provide to the Participant any portion of the Participant’s compensation or benefits due under any Benefit Plan within seven days of the date such compensation or benefits are due, or any material breach by the Company of any Individual Agreement. The Participant’s right to terminate the Participant’s employment for Good Reason shall not be affected by the Participant’s incapacity due to physical or mental illness. (2) Effect of Reorganization Event on Options. Upon the occurrence of a Reorganization Event (regardless of whether such event also constitutes a Change in Control Event), or the execution by the Company of any agreement with respect to a Reorganization Event (regardless of whether such event will result in a Change in Control Event), the Board shall provide that all outstanding Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof). For purposes hereof, an Option shall be considered to be assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in value (as determined by the Board) to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event. Notwithstanding the foregoing, if the acquiring or succeeding corporation (or an affiliate thereof) does not agree to assume, or substitute for, such Options, or in the event of a liquidation or dissolution of the Company, the Board may take any one or more of the following actions as to all or any (or any portion of) outstanding Options on such terms as the Board determines: (A) upon written notice to a Participant, provide that the Participant’s unexercised Options will terminate immediately prior to the within a specified period following the date of such notice, (B) provide that outstanding Options shall become exercisable, realizable, or deliverable, or restrictions applicable to an Option shall lapse, in whole or in part prior to or upon such Reorganization Event, (C) in the event of a Reorganization Event equal to the excess, if any, of (i) the Acquisition Price times the number of shares of Common Stock subject to the Participant’s Options (if the exercise price does not exceed the Acquisition Price) over (ii) the aggregate exercise price of all such outstanding Options and any applicable tax withholdings, in exchange for the termination of such Options, (D) provide that, in connection with a liquidation or dissolution of the Company, Options shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise price thereof and any applicable tax withholdings) and (E) any combination of the foregoing. In taking any of the actions permitted under this Section 9(b), the Board shall not be obligated by the Plan to treat all Options, all Options held by a Participant, or all Options of the same type, identically. In the event of a Reorganization Event that does not also constitute a Change in Control Event, then to the extent all or any portion of an Option becomes exercisable solely as a result of the first sentence of this paragraph, upon exercise of such Option the Participant shall receive shares subject to a right of repurchase by the Company or its successor at the Option exercise price. Such repurchase right (i) shall lapse at the same rate as the Option would have become exercisable under its terms and (ii) shall not apply to any shares subject to the Option that were exercisable under its terms without regard to the first sentence of this paragraph. (3) Effect of Reorganization Event on Restricted Stock Awards. Upon the occurrence of a Reorganization Event that is not a Change in Control Event, the repurchase and other rights of the Company under each outstanding Restricted Stock Award shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. (4) Effect of Reorganization Event on Stock Appreciation Rights and Other Stock Unit Awards. The Board may specify in an Award at the time of the grant the effect of a Reorganization Event on any SAR and Other Stock Unit Award. (5) Effect of Change in Control Event on Awards. (A) Unless otherwise determined by the Board at the time of the grant or evidenced in an applicable instrument evidencing an Award or employment or other agreement, in the event that a Participant’s employment or service is terminated by the Company without Cause or by the Participant for Good Reason, in each case within eighteen (18) months following a Change in Control Event: (i) any Award carrying a right to exercise that was not previously vested and exercisable shall become fully vested and exercisable and all outstanding Awards shall remain exercisable for one (1) year following such date of termination of employment or service but in no event beyond the original term of the Award and shall thereafter terminate; and (ii) the restrictions, deferral limitations, payment conditions, and forfeiture conditions applicable to any Award other than an Award described in (i) shall lapse and such Awards shall be deemed fully vested, and any performance conditions imposed with respect to Awards shall be deemed to be achieved at the higher of (x) the target level for the applicable performance period or (y) the level of achievement of such performance conditions for the most recently concluded performance period. (B) Notwithstanding subparagraph (A) of this Section 9(b)(5), upon a Change in Control Event, the Board shall have the discretion to: (i) accelerate the vesting or payment of any Award effective immediately upon the occurrence of a Change in Control Event; or (ii) convert the vesting of performance-based Awards to a time-based vesting schedule as deemed appropriate by the Board; in each case only to the extent that such action would not cause any Award to result in deferred compensation that is subject to the additional twenty percent (20%) tax under Section 409A of the Code.   10. General Provisions Applicable to Awards. Securities Act, provided that Incentive Stock Options and Awards that are subject to Section 409A of the Code may be transferable only to the extent permitted by the Code; provided, further, that the Company shall not be required to recognize any such transfer until such time as the Participant and such permitted transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. For the avoidance of doubt, nothing contained in this Section 10(a) shall be deemed to restrict a transfer to the Company. (b) Documentation. Each Award shall be evidenced on such form, and containing such terms and conditions, as the Board shall determine and shall be delivered in such manner as the Company shall determine, including in writing, electronically or otherwise. The Award may be in the form of an agreement signed by the Company and the Participant or a written or electronic confirming memorandum to the Participant from the Company. Each Award may contain terms and conditions in addition to those set forth in the Plan. uniformly. determines otherwise. If provided for in an Award or approved by the Company in provided, however, except as otherwise provided by the Company, that the total tax withholding where stock is being used to satisfy such tax obligations cannot (f) Amendment of Award. Except as otherwise provided in Section 5(g) and Section 6(f) with respect to repricings, Section 10(i) with respect to Performance Awards or Section 11(e) with respect to actions requiring shareholder approval, the Board may amend, modify or terminate any outstanding converting an Incentive Stock Option to a Nonstatutory Stock Option. The Participant’s consent to such action shall be required unless (1) the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant’s rights under the Plan or (2) the change is permitted under Section 9 hereof. restrictions from shares previously delivered under the Plan until (1) all Company, (2) in the opinion of the Company’s counsel, all other legal matters in stock market rules and regulations, and (3) the Participant has executed and or regulations. Section 10(i) (“Performance Awards”), subject to the limit in Section 4(b)(1) on Performance-Based Compensation, the Committee shall specify that the extent of vesting and/or delivery shall be subject to the achievement of one or more objective performance measures established by the Committee, which shall be combination of the following which may be determined pursuant to generally accepted accounting principles (“GAAP”) or on a non-GAAP basis, as determined by the Committee: (A) earnings per share, (B) earnings, (C) earnings growth, (D) earnings before interest, taxes and amortization (EBITA), (E) operating income, (F) operating margins, (G) revenues, (H) expenses, (I) stock price, (J) market share, (K) chargeoffs, (L) reductions in non-performing assets, (M) return on sales, assets, equity or investment, (N) regulatory compliance, (O) satisfactory internal or external audits, (P) improvement of financial ratings, (Q) achievement of balance sheet or income statement objectives, (R) net cash provided from continuing operations, (S) stock price appreciation, (T) total shareholder return, (U) cost control, (V) strategic initiatives, (W) net operating profit after tax, (X) pre-tax or after-tax income, or (Y) cash flow, and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The Committee may specify that such performance measures shall be adjusted to exclude any one or more of (i) extraordinary items and any other unusual or non-recurring items, (ii) discontinued operations, (iii) gains or losses on the dispositions of discontinued operations, (iv) the cumulative effects of changes in accounting principles, (v) the writedown of any asset, (vi) charges for restructuring and rationalization programs, (vii) other non-cash charges or items, (viii) gains or losses related to financing activities, (ix) the effect of acquisitions, or (x) gains or losses as a result of foreign currency conversions or fluctuations in foreign currency exchange rates. Such performance measures: (I) may vary by Participant and may be different for different Awards; (II) may be particular to a Participant or the department, branch, line of business, subsidiary or other unit in which the Participant works and may cover such period as may be specified by the Committee; and (III) shall be set by the Committee within the Section 162(m). Awards that are not intended to qualify as Performance-Based Compensation may be based on these or such other performance measures as the Board may determine. such Awards satisfy all requirements for Performance-Based Compensation. Prior to the payment of any Award subject to this Section 10(i), the Committee shall certify in writing (which may be substantiated by the inclusion of such a determination in the minutes of a meeting of the Committee) that the performance goals and other material terms applicable to such Award was satisfied.   11. Miscellaneous. applicable Award. (b) Recoupment of Awards. The Board may provide in the terms of an applicable Award that the Award (including any proceeds, gains or other economic benefit actually or constructively received by the Participant upon any receipt or exercise of any Award or upon the receipt or resale of any share of Common Stock underlying the Award) may be subject to recoupment as required by any clawback policy implemented by the Company or by the applicable provisions of any law (including without limitation Section 10D of the Exchange Act), government regulation or stock exchange listing requirement. (c) No Rights As Stockholder. Subject to the provisions of the applicable Award, (d) Effective Date and Term of Plan. The Plan shall become effective on the date (e) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that (1) to the extent required by Section 162(m) (including the vote required under Section 162(m)); (2) no amendment that would require stockholder approval under the rules of the NYSE may be made effective unless and until such amendment shall have been approved by the Company’s stockholders; and (3) if the NYSE amends its corporate governance rules so that such rules no longer require stockholder approval of material revisions to equity compensation plans, then, from and after the effective date of such amendment to the NYSE rules, no amendment to the Plan (A) materially increasing the number of shares authorized under the Plan (other than pursuant to Section 4(c) or 9), (B) expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the class of participants eligible to participate in the Plan shall be effective unless stockholder approval is obtained. In addition, if at any time the approval of the Company’s stockholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 11(e) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment does not materially and adversely affect the rights of Participants under the Plan. (f) Provisions for Foreign Participants. The Board may modify Awards granted to to tax, securities, currency, employee benefit or other matters. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement. (g) Compliance with Code Section 409A. No Award shall provide for deferral of intended to comply with Section 409A of the Code. Accordingly, the terms of this Plan shall be interpreted as necessary to provide payments that comply with (or are exempt from) the requirements of Section 409A. As an example, and without limiting the scope of the foregoing, to the extent that an Award provides for the deferral of compensation and is subject to (and not exempt from) Section 409A and the Award provides payment upon a Change in Control Event or provides for a different time and form of payment in connection with terminations following a Change in Control Event, a Change in Control Event shall in the context of such payment provisions mean an event that both (1) is described as a Change in Control Event and (2) is described in Code Section 409A(a)(2)(A)(v). Except as otherwise provided in individual Award agreements initially or by amendment, if and to the extent any portion of any payment, compensation or other benefit provided to a Participant in connection with his or her employment termination is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with its procedures, by which determination the Participant (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day after the date of “separation from service” (as determined under Code Section 409A) (the “New Payment Date”), except as Code Section 409A may then permit. The aggregate of any payments that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or for any action taken by the Board. (h) Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee, or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor will such individual be personally liable with respect to the Plan because of any contract or other instrument he or she executes in his or her capacity as a director, officer, other employee, or agent of the Company. The Company will indemnify and hold harmless each director, officer, other employee, or agent of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out of any act or omission to act concerning this Plan unless arising out of such person’s own fraud or bad faith. (i) Governing Law. The provisions of the Plan and all Awards made hereunder Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.

EXHIBIT 10.4(b)   DETERMINATION OF DIRECTOR’S FEES   DIRECTOR RETIREMENT PLAN AGREEMENT AND PAYMENT OF BENEFITS FOR DAVID W. THOMAS THIS AGREEMENT is made this 2nd day of March, 2010, by and between THE OHIO VALLEY BANK COMPANY located in Gallipolis, Ohio (the “Company”), and DAVID W. THOMAS (the “Director”).   The Company and the Director entered into an AMENDED AND RESTATED DIRECTOR RETIREMENT PLAN AGREEMENT on December 28, 2007 (the “Agreement”).   The Director agrees that Director’s total annual or monthly fees in sections 2.1 Normal Retirement Benefit, 2.2 Disability Benefit, and 3.1 Death During Active Service will include the Independent or Non-Independent Directors’ Fees paid monthly plus the Annual Retainer (formerly called Annual Bonus) and will not include additional fees paid to said Director as Lead Director. The parties, by executing this Agreement hereby agree to the terms stated herein.       DIRECTOR:                                                                                     OHIO VALLEY BANK COMPANY                                                                                                             By:                                                                 David W. Thomas                                                                           Title:  President and Chief Executive Officer  

Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing Exhibit 5.2 [Letterhead of Clifford Chance US LLP] December 28, 2007 RAM Holdings Ltd. 46 Reid Street Hamilton, Bermuda HM 12 Re: Registration Statement on Form S-3 Ladies and Gentlemen: We have represented RAM Holdings Ltd., a Bermuda exempted company (“ RAM ”), in connection with the preparation and filing with the Securities and Exchange Commission (the “ Commission ”) pursuant to the Securities Act of 1933, as amended (the “ Securities Act ”), of a Registration Statement on Form S-3 (the “ Registration Statement ”) relating to possible offerings from time to time by RAM of up to $350,000,000 in the aggregate amount of securities of RAM, including: (i) debt securities of RAM (the “ Debt Securities ”); (ii) warrants of RAM (the “ Warrants ”) to be issued pursuant to the terms of one or more warrant agreements (the “ Warrant Agreements ”) to be entered into prior to the issuance of the Warrants; (iii) depositary shares of RAM (the “ Depositary Shares ”) to be issued pursuant to the terms of one or more deposit agreements (the “ Deposit Agreements ”) to be entered into prior to the issuance of the Depositary Shares; (iv) share purchase contracts of RAM (the “ Share Purchase Contracts ”); and (v) share purchase units of RAM (the “ Share Purchase Units ”). All such securities are collectively referred to herein as the “ Securities .” Certain terms of the Securities will be established by or pursuant to resolutions of RAM’s Board of Directors (the “ Corporate Proceedings ”). In rendering the opinions expressed below, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the Registration Statement and certain resolutions of the Board of Directors of RAM, in the name of RAM, certified by an officer of RAM on the date hereof as being complete, accurate and in effect, authorizing the filing of the Registration Statement and other related matters. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such other documents (including the form of debt securities indenture filed as an exhibit to the Registration Statement), company records, certificates and letters of public officials and other instruments as we have deemed necessary or appropriate for the purposes of rendering the opinions set forth below. In examining all such documents, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us, and the conformity with the respective originals of all documents submitted to us as certified, telecopied, photostatic or reproduced copies. As to facts upon which this opinion is based, we have relied, as to all matters of fact, upon certificates and statements of officers, directors and employees of, and accountants for, RAM, and others. Based on, and subject to, the foregoing, the qualifications and assumptions set forth herein and such examination of law as we have deemed necessary, we are of the opinion that: (i) The Debt Securities, assuming the due authorization thereof, the completion of the Corporate Proceedings with respect thereto, the consistency of the terms thereof with the description of the Debt Securities contained in the Registration Statement and any applicable prospectus supplement and that the interest on those Debt Securities is not at a rate which violates applicable law, when duly executed and delivered and authenticated in accordance with the indenture under which they are to be issued and when payment therefor is received, will constitute valid and legally binding obligations of RAM, enforceable against RAM in accordance with their terms (subject, as to enforceability, to any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting the enforceability of creditors' rights generally and to court decisions with respect thereto and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)); (ii) The depositary receipts evidencing the Depositary Shares, assuming the due authorization thereof, the completion of the Corporate Proceedings with respect thereto, the consistency of the terms thereof with the description of the Depositary Shares contained in the Registration Statement and any applicable prospectus supplement and the due authorization and issuance of the preference shares of RAM underlying the Depositary Shares, when duly issued by the depositary pursuant to the Depositary Agreements against deposit of the preference shares in accordance with the Depositary Agreements, will be duly and validly issued and will be entitled to the benefits provided by the Depositary Shares and the Depositary Agreements; (iii) The Warrants, assuming the due authorization thereof, the completion of the Corporate Proceedings with respect thereto, the consistency of the terms thereof with the description of the Warrants contained in the Registration Statement and any applicable prospectus supplement, the due authorization of any common shares, preference shares or debt securities of RAM underlying the Warrants and that the Warrants provide for the issuance of such common shares, preference shares or debt securities upon payment of consideration equal at least to the par value of the common shares, preference shares or debt securities being issued, if applicable, and do not contain provisions which violate applicable law, when duly executed, delivered and countersigned in accordance with the Warrant Agreements and when payment therefor is received, will constitute valid and legally binding obligations of RAM, will be entitled to the benefits provided by the Warrant Agreements and will be enforceable against RAM in accordance with their terms (subject, as to enforceability, to any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting the enforceability of creditors' rights generally and to court decisions with respect thereto and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)); (iv) The Share Purchase Contracts, assuming the due authorization thereof, the completion of the Corporate Proceedings with respect thereto, the consistency of the terms thereof with the description of the Share Purchase Contracts contained in the Registration Statement and any applicable prospectus supplement and the due authorization of any securities of RAM underlying the Share Purchase Contracts, when duly executed and delivered, will constitute valid and legally binding obligations of RAM, enforceable against RAM in accordance with their terms (subject, as to enforceability, to any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting the enforceability of creditors’ rights generally and to court decisions with respect thereto and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)), and the interests therein, when duly sold and delivered and when payment therefor is received, will be entitled to the benefits provided by the Share Purchase Contracts; and (v) The Share Purchase Units, assuming the due authorization thereof and of the related Share Purchase Contracts and applicable pledge agreements, the completion of the Corporate Proceedings with respect thereto, the consistency of the terms thereof with the description of the Share Purchase Units contained in the Registration Statement and any applicable prospectus supplement and the due authorization of any securities of RAM underlying the Share Purchase Units, when the related Share Purchase Contracts and applicable pledge agreements are duly executed and delivered, will constitute valid and legally binding obligations of RAM, enforceable against RAM in accordance with their terms (subject, as to enforceability, to any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting the enforceability of creditors’ rights generally and to court decisions with respect thereto and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)), and the interests therein, when duly sold and delivered and when payment therefor is received, will be entitled to the benefits provided by the Share Purchase Units. The opinions set forth in this letter relate only to the federal securities laws of the United States, and the laws of the State of New York. We express no opinion (a) as to the enforceability of forum selection clauses in the federal courts or (b) with respect to the requirements of, or compliance with, any state securities or blue sky laws. This letter has been prepared for your use in connection with the Registration Statement and is based upon the law as in effect and the facts known to us on the date hereof. We have not undertaken to advise you of any subsequent changes in the law or of any facts that hereafter may come to our attention. We consent to the filing of this letter as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Matters" in the prospectus which is a part of the Registration Statement. In giving this consent, we do not concede that we are within the category of persons whose consent is required under the Securities Act or the rules and regulations of the Commission promulgated thereunder. Very truly yours, /s/ Clifford Chance US LLP

Name: COMMISSION REGULATION (EEC) No 2582/93 of 21 September 1993 on the sale by the procedure laid down in Regulation (EEC) No 2539/84 of boneless beef held by certain intervention agencies and intended for export to certain destinations Type: Regulation Subject Matter: trade policy; animal product; trade; marketing Date Published: nan 22. 9 . 93 Official Journal of the European Communities No L 237/9 COMMISSION REGULATION (EEC) No 2582/93 of 21 September 1993 on the sale by the procedure laid down in Regulation (EEC) No 2539/84 of boneless beef held by certain intervention agencies and intended for export to certain destinations THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Economic Community, Having regard to Council Regulation (EEC) No 805/68 of 27 June 1968 on the common organization of the market in the beef and veal sector ('), as last amended by Regula ­ tion (EEC) No 1 25/93 (2), and in particular Article 7 (3) thereof, import and export licences in the beef and veal sector Q, as last amended by Regulation (EEC) No 2292/93 (8) ; Whereas in order to ensure that beef sold is exported to the intended destination, the lodging of a security, as specified in Article 5 (2) (a) of Regulation (EEC) No 2539/84, should be required ; Whereas, in order to ensure a smoother functioning of the export operations, provision should be made for dero ­ gations from certain provisions relating to the release of the security ; Whereas it is appropriate to specify that, in view of the prices which have been fixed in the context of these said, exports should not be eligible for the refunds periodically fixed in the beef and veal sector ; Whereas products held by intervention agencies and intended for export are subject to the provision of Commission Regulation (EEC) No 3002/92 (9), as last amended by Regulation (EEC) No 1938/93 ( ,0) ; Whereas the measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Beef and Veal, HAS ADOPTED THIS REGULATION : Whereas Commission Regulation (EEC) No 2539/84 of 5 September 1984 laying down detailed rules for certain sales of frozen beef held by the intervention agencies (3), as last amended by Regulation (EEC) No 1759/93 (4), has provided for the possibility of applying a two-stage pro ­ cedure when selling beef from intervention stocks ; whereas Commission Regulation (EEC) No 2824/85 of 9 October 1985 laying down detailed rules for the sale of frozen boned beef from intervention stocks for export either in the same state or after cutting and/or repack ­ ing ^) amended by Regulation (EEC) No 251 /93 (6) provided for repackaging under certain conditions ; Whereas certain intervention agencies hold large stocks of intervention meat ; whereas an extension of the period of storage for the meat bought in should be avoided on account of the ensuing high costs ; whereas part of that meat should be put up for sale in accordance with Regu ­ lations (EEC) No 2539/84 and (EEC) No 2824/85 for import into the Commonwealth of Independent States (CIS); Whereas, in view of the urgency and the specific nature of the operation and of the need for controls, special detailed rules must be laid down in particular as regards the minimum quantity which may be purchased during the operation ; Whereas it is necessary to lay down a time limit for the export of the said meat ; whereas this time limit should be fixed by taking into account Article 5 (b) of Commission Regulation (EEC) No 2377/80 of 4 September 1980 on special detailed rules for the application of the system of Article 1 1 . A sale shall be organized of approximately : ” 10 000 tonnes of boneless beef held by the Irish inter ­ vention agency bought in before 1 January 1992, ” 10 000 tonnes of boneless beef held by the interven ­ tion agency of the United Kingdom and bought in between 1 January 1991 and 1 January 1992. 2. This meat must be imported into one or more Republics of the CIS (see Annex IV). 3 . Subject to the provisions of this Regulation , the sale shall take place in accordance with the provisions of Regulations (EEC) No 2539/84 and (EEC) No 2824/85. (') OJ No L 148 , 28 . 6. 1968 , p. 24 . (2) OJ No L 18 , 27. 1 . 1993, p. 1 . (3) OJ No L 238, 6. 9 . 1984, p. 13 . 0 OJ No L 241 , 13 . 9 . 1980, p. 5 . (4) OJ No L 161 , 2. 7. 1993, p . 59 . à ’5) OJ No L 268, 10 . 10. 1985, p . 14. (6) OJ No L 28 , 5. 2. 1993, p . 47. (*) OJ No L 206, 18 . 8 . 1993, p . 3 . 0 OJ No L 301 , 17. 10 . 1992, p. 17. H OJ No L 176, 20. 7 . 1993, p . 12. No L 237/10 Official Journal of the European Communities 22. 9 . 93 Removal orders as referred to in Article 3 ( 1 ) (b) of Regu ­ lation (EEC) No 3002/92, export declarations and, where appropriate T 5 control copies shall bear the following : Productos de intervencià ³n sin restitucià ³n [Reglamento (CEE) n ° 2582/93]; Interventionsvarer uden restitution [Forordning (EÃF) nr. 000/93] ; 2582/93] ; Interventionserzeugnis ohne Erstattung [Verordnung (EWG) Nr. 2582/93] ; Î Ï ÃŽ ¿Ã ŠÃ ŒÃŽ ½Ã „ÃŽ ± ÏÎ ±Ã ÃŽ µÃŽ ¼ÃŽ ²ÃŽ ¬Ã ƒÃŽ µÃ ‰Ã ‚ Ï ‡Ã ‰Ã ÃŽ ¯Ã ‚ Î µÃÃŽ ¹Ã ƒÃ „Ï ÃŽ ¿Ã †ÃŽ ® [Î šÃŽ ±ÃŽ ½ÃŽ ¿ÃŽ ½ÃŽ ¹ ­ Ï ƒÃŽ ¼Ã ŒÃ ‚ (Î •ÃŽ ŸÃŽ š) Î ±Ã ÃŽ ¹ÃŽ ¸. 2582/93]. Intervention products without refund [Regulation (EEC) No 2582/93]; Produits d intervention sans restitution [Rà ¨glement (CEE) n0 2582/93] ; Prodotti d intervento senza restituzione ” [Regolamento (CEE) n ° 2582/93]; Produkten uit interventievoorraden zonder restitutie ” [Verordening (EEG) nr. 2582/93] ; 4. The qualities and the minimum prices referred to in Article 3 ( 1 ) of Regulation (EEC) No 2539/84 are given in Annex I hereto. 5. An offer or purchase application shall be valid only if it relates to : ” a total minimum quantity of 1 0 000 tonnes expressed in product weight, ” a lot comprising all the cuts referred to in Annex II in the percentages stated therein and shall contain a single price per tonne expressed in ecus of the lot made up in this fashion . 6. Only those tenders shall be taken into consideration which reach the intervention agencies concerned not later than 12 noon on 29 September 1993 . 7. Particulars of the qualities and the places where the products are stored shall be available to interested parties at the addresses given in Annex III . Article 2 The products referred to in Article 1 must be exported within five months from the date of conclusion of the contract of sale with the intervention agency. Article 3 1 . The security provided for in Article 5 ( 1 ) of Regula ­ tion (EEC) No 2539/84 shall be ECU 30 per 100 kilo ­ grams. 2. The security provided for in Article 5 (2) (a) of Regu ­ lation (EEC) No 2539/84 shall be ECU 265 per 100 kilo ­ grams of boneless beef. Article 4 1 . No export refund shall be granted on meat sold under this Regulation . Produtos de intervenà §Ãƒ £o sem restituià §Ãƒ £o [Regulamento (CEE) n? 2582/93]. 2. With regard to the security provided for in Article 3 (2) compliance with paragraph 1 shall constitute a primary requirement within the meaning of Article 20 of Commission Regulation (EEC) No 2220/85 ('). However, by derogation from Article 15 of Regulation (EEC) No 3002/92 part of the security shall be released when it is established that the products have reached one of the destinations referred to in Article 1 1 ( 1 ) (a), (b) or (c) of that Regulation . That part shall be equivalent to the amount of the security initially lodged less ECU 165 per 100 kg product weight. Article 5 This Regulation shall enter into force on 29 September 1993 . This Regulation shall be binding in its entirety and directly applicable in all Member States . Done at Brussels, 21 September 1993 . For the Commission Rene STEICHEN Member of the Commission (') OJ No L 205, 3 . 8 . 1985, p. 5. 22. 9 . 93 Official Journal of the European Communities No L 237/ 11 ANEXO I ” BILAG I ”ANHANG I ” Î Î ‘ÃŽ ¡ÃŽ ‘ÃŽ ¡ÃŽ ¤ÃŽ —ÃŽ œÃŽ ‘ / ” ANNEX I ” ANNEXE I ” ALLEGATOL ” BIJLAGE I ”ANEXO I Estado miembro Productos Cantidades (toneladas) Precio de venta expresado en ecus por tonelada Medlemsstat Produkter Mà ¦ngde (tons) Salgspriser i ECU/ton Mitgliedstaat Erzeugnisse Mengen (Tonnen) Verkaufspreise, ausgedrà ¼ckt in ECU/Tonne Î šÃ ÃŽ ¬Ã „ÃŽ ¿Ã ‚ Î ¼ÃŽ ­ÃŽ »ÃŽ ¿Ã ‚ Î Ï ÃŽ ¿Ã ŠÃ ŒÃŽ ½Ã „ÃŽ ± Î Î ¿Ã ƒÃ ŒÃ „ÃŽ ·Ã „ÃŽ µÃ ‚ ( Ï „Ï ŒÃŽ ½ÃŽ ¿ÃŽ ¹ ) Î ¤ÃŽ ¹ÃŽ ¼ÃŽ ­Ã ‚ ÏÏ ‰ÃŽ »ÃŽ ®Ã ƒÃŽ µÃ ‰Ã ‚ Î µÃŽ ºÃ †Ã ÃŽ ±ÃŽ ¶Ã ŒÃŽ ¼ÃŽ µÃŽ ½ÃŽ µÃ ‚ Ï ƒÃŽ µ Ecu Î ±ÃŽ ½ÃŽ ¬ Ï „Ï ŒÃŽ ½ÃŽ ¿ Member State Products Quantities (tonnes) Selling prices expressed in ecus per tonne à ‰tat membre Produits Quantità ©s (tonnes) Prix de vente exprimà ©s en à ©cus par tonne Stato membro Prodotti Quantità (tonnellate) Prezzi di vendita espressi in ecu per tonnellata Lid-Staat Produkten Hoeveelheid (ton) Verkoopprijzen uitgedrukt in ecu per ton Estado-membro Produtos Quantidade (toneladas) Preà §o de venda expresso em ecus por tonelada Ireland ” Boneless cuts from : Category C, classes U, R and O 10 000 600 (') United Kingdom ” Boneless cuts from : Category C, classes U, R and O 10 000 550 (') ') Precio mà ­nimo por cada tonelada de producto de acuerdo con la distribucià ³n contemplada en el Anexo II . ') Minimumpris pr. ton produkt efter fordelingen i bilag II . ') Mindestpreis je Tonne des Erzeugnisses gemà ¤Ãƒ Ÿ der in Anhang II angegebenen Zusammensetzung. ') Î •ÃŽ »ÃŽ ¬Ã ‡ÃŽ ¹Ã ƒÃ „ÃŽ · Ï „ÃŽ ¹ÃŽ ¼ÃŽ ® Î ±ÃŽ ½ÃŽ ¬ Ï „Ï ŒÃŽ ½ÃŽ ¿ ÏÏ ÃŽ ¿Ã ŠÃ ŒÃŽ ½Ã „ÃŽ ¿Ã ‚ Ï ƒÃ ÃŽ ¼Ã †Ã ‰ÃŽ ½ÃŽ ± Î ¼ÃŽ µ Ï „ÃŽ ·ÃŽ ½ Î ºÃŽ ±Ã „ÃŽ ±ÃŽ ½ÃŽ ¿ÃŽ ¼ÃŽ ® ÏÎ ¿Ã Î ±ÃŽ ½ÃŽ ±Ã †ÃŽ ­Ã ÃŽ µÃ „ÃŽ ±ÃŽ ¹ Ï ƒÃ „ÃŽ ¿ ÏÎ ±Ã ÃŽ ¬Ã Ã „ÃŽ ·ÃŽ ¼ÃŽ ± II . ') Minimum price per tonne of products made up according to the percentages referred to in Annex II . ') Prix minimum par tonne de produit selon la rà ©partition visà ©e à l'annexe II . ') Prezzo minimo per tonnellata di prodotto secondo la ripartizione indicata nell'allegato II . ') Minimumprijs per ton produkt volgens de in bijlage II aangegeven verdeling. ') Preà §o mà ­nimo por tonelada de produto segundo a repartià §Ãƒ £o indicada no anexo II. No L 237/ 12 Official Journal of the European Communities 22. 9 . 93 ANEXO II ” BILAG II ” ANHANG II ” Î Î ‘ÃŽ ¡ÃŽ ‘ÃŽ ¡ÃŽ ¤ÃŽ —ÃŽ œÃŽ ‘ II ” ANNEX II ” ANNEXE II ” ALLEGATO II ” BIJLAGE II ” ANEXO II Distribucià ³n del lote contemplado en el segundo guià ³n del apartado 5 del articulo 1 Fordeling af det i artikel 1 , stk. 5 , andet led, omhandlede parti Zusammensetzung der in Artikel 1 Absatz 5 zweiter Gedankenstrich genannten Partie Î šÃŽ ±Ã „ÃŽ ±ÃŽ ½ÃŽ ¿ÃŽ ¼ÃŽ ® Ï „ÃŽ ·Ã ‚ ÏÎ ±Ã Ã „ÃŽ ¯ÃŽ ´ÃŽ ±Ã ‚ ÏÎ ¿Ã Î ±ÃŽ ½ÃŽ ±Ã †ÃŽ ­Ã ÃŽ µÃ „ÃŽ ±ÃŽ ¹ Ï ƒÃ „ÃŽ ¿ Î ¬Ã ÃŽ ¸Ã ÃŽ ¿ 1 ÏÎ ±Ã ÃŽ ¬ÃŽ ³Ã ÃŽ ±Ã †ÃŽ ¿Ã ‚ 5 Î ´ÃŽ µÃ Ã „ÃŽ µÃ ÃŽ · ÏÎ µÃ ÃŽ ¯ÃÃ „Ï ‰Ã ƒÃŽ · Repartition of the lot meant in the second subparagraph of Article 1 (5) Repartition du lot visà © à l'article 1 er paragraphe 5 second tiret Composizione della partita di cui all'articolo 1 , paragrafo 5 , secondo trattino Verdeling van de in artikel 1 , lid 5 , tweede streepje, bedoelde partij Repartià §Ãƒ £o do lote referido no n? 5 , segundo travessà £o, do artigo 1? Estado miembro Cortes Porcentaje en peso Medlemsstat Udskaeringer Vaegtprocent Mitgliedstaat Teilstà ¼cke Gewichtsanteile KÏ ÃŽ ¬Ã „ÃŽ ¿Ã ‚ Î ¼ÃŽ ­ÃŽ ¿Ã ‚ TÎ µÃŽ ¼ÃŽ ¬Ã ‡ÃŽ ¹ÃŽ ± Î Î ¿Ã ƒÃŽ ¿Ã ƒÃ „Ï Œ too 6&amp;poug Member State Cuts Weight percentage à ‰tat membre Dà ©coupes Pourcentage du poids Stato membro Tagli Percentuale del peso Lid-Staat Deelstukken % van het totaalgewicht Estado-membro Cortes Percentagem do peso Ireland Forequarters 85 Plates / Flanks 15 100 % United Kingdom Clod and sticking / Forerib / Pony 85 Forequarter flanks / Thin flanks 15 100 % 22. 9. 93 Official Journal of the European Communities No L 237/13 ANEXO III ” BILAG III ” ANHANG III ” Î Î ‘ÃŽ ¡ÃŽ ‘ÃŽ ¡ÃŽ ¤ÃŽ —ÃŽ œÃŽ ‘ III ” ANNEX III ” ANNEXE III ” ALLEGATO III ” BIJLAGE III ” ANEXO III Direcciones de los organismos de intervencià ³n ” Interventionsorganernes adresser ” Anschriften der Interventionsstellen ” Î ”ÃŽ ¹ÃŽ µÃ Î ¸Ã ÃŽ ½Ã ƒÃŽ µÃŽ ¹Ã ‚ Ï „Ï ‰ÃŽ ½ Î ¿Ã ÃŽ ³ÃŽ ±ÃŽ ½ÃŽ ¹Ã ƒÃŽ ¼Ã ŽÃŽ ½ ÏÎ ±Ã ÃŽ µÃŽ ¼ÃŽ ²ÃŽ ¬Ã ƒÃŽ µÃ ‰Ã ‚ ” Addresses of the intervention agencies ” Adresses des organismes d'intervention ” Indirizzi degli organismi d'intervento ” Adressen van de interventiebureaus ” Endereà §os dos organismos de intervenà §Ãƒ £o UNITED KINGDOM : Intervention Board for Agricultural Produce Fountain House 2 Queens Walk Reading RG1 7QW Berkshire tel . (0734) 58 36 26 telex 848 302, telefax (0734) 56 67 50 IRELAND : Department of Agriculture, Food and Forestry Agriculture House Kildare Street Dublin 2 tel . (01 ) 678 90 11 , ext. 2278 and 3806 telex 93292 and 93607, telefax (01)6616263, (01)6785214 and (01 ) 6620198 ANNEX IV Republics of the Commonwealth of Independent States Armenia Belarus Kazakhstan Kyrgyzstan Moldova Russia Tajikistan Turkmenistan Ukraine Uzbekistan

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13G Under the Securities Exchange Act of 1934 (AMENDMENT NO. ) BioRestorative Therapies, Inc. (Name of Issuer) Common Stock, $0.001 par value (Title of Class of Securities) (CUSIP Number) May 14, 2015 (Date of Event Which Requires Filing of this Statement) Check appropriate box to designate the rule pursuant to which this Schedule is filed: [] Rule 13d-1(b) [X] Rule 13d-1(c) [] Rule 13d-1(d) CUSIP NO. 090655101 Page 2of 7 Pages 1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Glenn Cotton 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [] (b) [] 3 SEC USE ONLY 4 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 5. SOLE VOTING POWER 6. SHARED VOTING POWER 0 7. SOLE DISPOSITIVE POWER 8. SHARED DISPOSITIVE POWER 0 9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 10 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* [] 11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 6.2% 12 TYPE OF REPORTING PERSON* IN *SEE INSTRUCTION BEFORE FILLING OUT! Item 1(a). Name of Issuer: BioRestorative Therapies, Inc. Item 1(b). Address of Issuer's Principal Executive Offices: 40 Marcus Drive Melville, New York 11747 Item 2(a). Name of Person Filing: This statement is filed by Glenn Cotton. Item 2(b). Address of Principal Business Office or, if none, Residence: 2th Place Ft. Lauderdale, FL33306 Item 2(c). Citizenship: United States Item 2(d). Title of Class of Securities: Common stock, par value $0.001 per share Item 2(e). CUSIP Number: Item 3. Type of Reporting Person: Not applicable Item 4. Ownership. The percentages used herein are calculated based upon 39,151,442 shares of common stock of the Company outstanding as of May 14, 2015. 1.(a) Amount beneficially owned: 2,440,705 (1) (b) Percent of class: 6.2% (c)(i) Sole power to vote or direct the vote: 2,440,705 (ii) Shared power to vote or direct the vote: 0 (iii) Sole power to dispose or direct the disposition: 2,440,705 (iv) Shared power to dispose or direct the disposition: 0 (1) Includes 530,141 shares of common stock issuable upon the exercise of currently exercisable warrants. Items 5-9. Not applicable Item 10. Certifications: By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: May 26, 2015 /s/Glenn Cotton Glenn Cotton Title

EXHIBIT 10.1 AMENDED AND RESTATED PARENT UNDERTAKING This Amended and Restated Parent Undertaking (“Guaranty”) is executed as of this 18th day of November, 2016 by Ashland LLC, a Kentucky limited liability company (“Ashland”), and Ashland Global Holdings Inc. (“Ashland Global”, and together with Ashland, each with its successors and permitted assigns is a “Guarantor” and collectively the “Guarantors”), in favor of The Bank of Nova Scotia (the “Agent”) and the Secured Parties (as defined in the Transfer and Administration Agreement described below), from time to time party to the Transaction Documents (collectively, the “Beneficiaries”). PRELIMINARY STATEMENTS This Guaranty hereby amends and restated in its entirety, as of the date hereof, that certain Parent Undertaking, dated as of August 31, 2012, made by Ashland in favor of the Beneficiaries. Ashland, Ashland Specialty Ingredients, G.P., a Delaware general partnership, and each other direct or indirect subsidiary of Ashland party thereto from time to time pursuant to a joinder agreement in form and substance satisfactory to the Agent (each an “Originator” and collectively, the “Originators”), CVG Capital III LLC (the “Seller”), the Agent and the various Investor Groups, Managing Agents and Administrators from time to time parties thereto have entered into a Transfer and Administration Agreement, dated as of August 31, 2012 (as amended, supplemented and modified from time to time, the “Transfer and Administration Agreement”) pursuant to which the Seller will sell and assign to the Investors all of the Seller’s right, title and interest in and to certain assets more specifically described therein. In the Transfer and Administration Agreement, Ashland has agreed to act as servicer under the Transfer and Administration Agreement and in that capacity has agreed, among other things, to service certain assets as more specifically described therein. Ashland is an indirect wholly-owned subsidiary of Ashland Global. The other Originators are direct or indirect wholly-owned subsidiaries of Ashland. The Seller is wholly-owned by the Originators. The Originators and the Seller have entered into a sale agreement dated as of August 31, 2012 (as amended, supplemented and modified from time to time, the “Sale Agreement”). The Seller will purchase Receivables from the Originators under the Sale Agreement. In consideration of the execution of the Transfer and Administration Agreement and the Sale Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor agrees as follows: SECTION 1.Definitions. Unless otherwise defined in this Guaranty, all defined terms used in this Guaranty, including the Preliminary Statements hereof, shall have the meanings ascribed to such terms in the Transfer and Administration Agreement. 1     SECTION 2.    Guaranty of Obligations. Each Guarantor, jointly and severally, hereby irrevocably, absolutely, and unconditionally guarantees to the Beneficiaries the full and timely performance by the Originators (in their respective capacities as Originators) of all of their respective obligations under the Transaction Documents including, without limitation, any agreement or obligation of any such Originator to pay any indemnity or any agreement or obligation of any such Originator to make any payment in respect of any applicable dilution adjustment or repurchase obligation under any such Transaction Document (all such terms, covenants, conditions, agreements, undertakings and obligations on the part of each Originator to be paid, performed or observed being collectively called the “Obligations”). Without limiting the generality of the foregoing, each Guarantor, jointly and severally, agrees that if any Originator shall fail in any manner whatsoever to perform or observe any of the Obligations when the same shall be required to be performed or observed under any applicable Transaction Document, then such Guarantor will itself duly and punctually perform or observe or cause to be performed or observed the Obligations. Notwithstanding anything contained in this Guaranty to the contrary, this Guaranty does not provide any guaranty with respect to (i) the bad debt or uncollectability of any Receivable, (ii) Obligations resulting from gross negligence or willful misconduct on the part of an indemnified Person, or (iii) with respect to Foreign Receivables, losses incurred due to the Seller’s inability to receive Collections with respect to such Foreign Receivables arising directly as a result of any Originator’s failure to perfect the Seller’s security interest in jurisdictions outside the United States. SECTION 3.    Validity of Obligations; Irrevocability; Conditional Termination. Each Guarantor agrees that its obligations under this Guaranty shall be absolute and unconditional, irrespective of (i) the validity, enforceability, discharge or disaffirmance (by any Person, including a trustee in bankruptcy) of any of the Obligations, (ii) the absence of any attempt to enforce the Obligations against the Seller, the other Guarantor or the Originators, (iii) the waiver or consent by any Person with respect to any provision of any of the Transaction Documents, (iv) any change made in any term of any Transaction Documents (including, without limitation, any change in the time, manner or place of any payments provided for therein), (v) any law, regulation or order of any jurisdiction affecting any term of any Transaction Document, (vi) the validity, regularity or enforceability of any Transaction Document or (vii) any other circumstances which might otherwise constitute a legal or equitable discharge or defense of such Guarantor. Each Guarantor agrees that the Beneficiaries shall be under no obligation to marshal any assets in favor of or against or in payment of any or all of the Obligations. Each Guarantor further agrees that, to the extent that the Originators (in their respective capacities as Originators) or the Seller makes a payment or payments to any Beneficiary, or the Originators pay any Deemed Collections into a Blocked Account, to the Seller or to the Agent, which payment or payments or any part thereof are subsequently required to be repaid to any Person, its estate, trustee, receiver or any other party, including, without limitation, either Guarantor, under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such payment or repayment, (i) the Obligations constituting payments or any part thereof which have been paid, reduced or satisfied by such amount and (ii) this Guaranty, shall be reinstated and continued in full force and effect as of the date such initial payment, reduction or satisfaction occurred. Each Guarantor waives all set-offs and counterclaims and all presentments, demands for performance, notices of dishonor and notices of acceptance of this Guaranty, except as expressly 2     provided for herein. Each Guarantor agrees that its obligations under this Guaranty shall be irrevocable. SECTION 4.    Waiver of Subrogation. Neither Guarantor shall exercise any rights (direct or indirect) of subrogation, contribution, reimbursement, indemnification, or other rights of payment or recovery from any Originator for any payments made by such Guarantor hereunder until such time as all of the Obligations have been performed in full or waived (the “Full Performance Date”), and each Guarantor hereby waives and releases, absolutely and unconditionally, its right to exercise against any Originator prior to the Full Performance Date any such rights of subrogation, contribution, reimbursement, indemnification and other rights of payment or recovery which such Guarantor may now have or hereafter acquire. SECTION 5.    Representations and Warranties. Each Guarantor hereby represents and warrants to each Beneficiary, as of the date hereof, as follows: (a)    Corporate Existence and Power. Such Guarantor, (a) (i) in the case of Ashland, is a limited liability company validly existing and in good standing under the laws of the Commonwealth of Kentucky or, (ii) in the case of Ashland Global, is a corporation validly existing and in good standing under the laws of the State of Delaware; (b) has all corporate power and all licenses, authorizations, consents and approvals of all Official Bodies required to carry on its business in each jurisdiction in which its business is now and proposed to be conducted (except where the failure to have any such licenses, authorizations, consents and approvals would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect); and (c) is duly qualified to do business and is in good standing in every other jurisdiction in which the nature of its business requires it to be so qualified, except where the failure to be so qualified or in good standing would not (b)    Authorization; No Contravention. The execution, delivery and performance by such Guarantor of this Guaranty and the other Transaction Documents to which it is a party (i) are within its corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) require no action by or in respect of, or filing with, any Official Body or official thereof (except as contemplated by the Transfer and Administration Agreement, all of which have been (or as of the Closing Date will have been) duly made and in full force and effect), other than any such action or approval as may be required pursuant to the laws of any Official Body outside of the United States in connection with any Foreign Receivable, (iv) do not contravene or constitute a default under (A) its organizational documents, (B) any Law applicable to it, (C) any provision of any indenture, agreement or other instrument evidencing material Indebtedness to which it is a party or by which any of its property may be bound or (D) any order, writ, judgment, award, injunction, decree or other instrument binding on or affecting it or its property except, with respect to clauses (B), (C) and (D) above, to the extent the contravention or default under such Law, contractual restriction, order, writ, judgment, award, injunction, decree or other instrument would not reasonably be expected to have a Material Adverse Effect, or (v) result in the creation or imposition of any Adverse Claim upon or with respect to its property (except as contemplated by the Transaction Documents). 3     (c)    Binding Effect. Each of this Guaranty and the other Transaction Documents to which such Guarantor is a party has been duly executed and delivered and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally (whether at law or equity). (d)    Action, Suits. It is not in violation of any order of any Official Body that would, individually or in the aggregate with all such other violations, reasonably be expected to have a Material Adverse Effect. Except as set forth in Schedule 4.1(g) to the Transfer and Administration Agreement, there are no actions, suits, litigation or proceedings pending or, to its knowledge, threatened in writing against or affecting it or any of its Affiliates or their respective properties, in or before any Official Body, as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, would, individually or in the aggregate, reasonably be expected to (e)    Compliance with Applicable Laws; Licenses, etc. (i) Such Guarantor is in compliance with the requirements of all applicable laws, rules, regulations, and orders of all Official Bodies (including the Federal Consumer Credit Protection Act, as amended, Regulation Z of the Board of Governors of the Federal Reserve System, as amended, laws, rules and regulations relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy and all other consumer laws, rules and regulations applicable to the Receivables), except to the extent any non-compliance, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect; provided that no representation or warranty is made with respect to the laws, rules, regulations, and orders of Official Bodies outside of the United States with respect to Foreign Receivables. (ii)    Such Guarantor has not failed to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business (including, without limitation, any registration requirements or other actions as may be necessary in any applicable jurisdiction in connection with the ownership of the Contracts or the Receivables and other related assets), except to the extent any violation or failure to obtain would not be reasonably likely to have a Material Adverse Effect. SECTION 6.    Successors. The agreements herein set forth shall be mutually binding upon and inure to the mutual benefit of each Guarantor and the Beneficiaries and their respective successors, provided, however, that neither Guarantor shall assign its rights or appoint a successor under this Guaranty without the prior written consent of each of the Managing Agents. SECTION 7.    Waiver. Each Guarantor waives promptness, diligence, notice of acceptance, notice of default by the Originators (in their respective capacities as Originators), notice of the incurrence of any Obligation and any other notice with respect to any of the Obligations and this Guaranty, the Transfer and Administration Agreement and any other Transaction Document and any requirement that the Beneficiaries exhaust any right or take action against the Seller or the Originators, any other Person or any property. 4     SECTION 8.    Costs, Expenses.    The Guarantors shall pay all reasonable costs and expenses (including reasonable attorneys’ fees and expenses for Mayer Brown LLP or any other single law firm) paid or incurred by any of the Beneficiaries in connection with the enforcement of this Guaranty and the prosecution or defense of any action by or against any of the Beneficiaries in connection with this Guaranty, whether involving either Guarantor or any other Person, including a trustee in bankruptcy; provided, however, that neither Guarantor shall have any such obligation in connection with any action brought by any Beneficiary or any other Person against such Guarantor to the extent that such Guarantor is the prevailing party in the judgment rendered in any such action. To the extent that performance of the Obligations by a Guarantor would include an obligation to pay or deposit any money, the applicable Guarantor shall pay interest on all amounts owing by it under this Guaranty from the date of demand therefor until such obligations are paid in full, at the per annum rate equal to the Default Rate. SECTION 9.    Governing Law and Jurisdiction. This Guaranty shall be governed by and construed in accordance with the laws of the State of New York as applied to contracts made and performed in that state. Each Guarantor hereby submits to the nonexclusive jurisdiction of the competent United States and state courts in New York City in relation to any legal action or proceedings arising out of this Guaranty. SECTION 10.    Waiver of Jury Trial.    TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH GUARANTOR IRREVOCABLY WAIVES, AND, IN ACCEPTING THE BENEFITS OF THIS GUARANTY, EACH OF THE BENEFICIARIES IRREVOCABLY WAIVES, ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY MATTER ARISING HEREUNDER. SECTION 11.    Effect of Guaranty. This Guaranty amends and restates in its entirety, as of the date hereof, that certain Parent Undertaking, dated as of August 31, 2012 (as amended, supplemented or otherwise modified prior to the date hereof, the “Prior Guaranty”), between Ashland and the Agent. Upon the effectiveness of this Guaranty, the terms and provisions of the Prior Guaranty shall, subject to this paragraph, be superseded hereby in their entirety. Notwithstanding the amendment and restatement of the Prior Guaranty by this Guaranty, Ashland shall continue to be liable to the Agent for the Obligations (as defined in the Prior Guaranty), reasonable and documented fees and expenses which are accrued and unpaid under the Prior Guaranty as of the date hereof (collectively, the “Prior Guaranty Outstanding Amounts”). To the extent that any rights, benefits or provisions in favor of the Agent existed in the Prior Guaranty and continue to exist in this Guaranty, then such rights, benefits or provisions are acknowledged to be and to continue to be effective from and after the date of the Prior Guaranty or any applicable portion thereof. Ashland agrees and acknowledges that any and all rights, remedies and payment provisions under the Prior Guaranty shall continue and survive the execution and delivery of this Guaranty. Upon the effectiveness of this Guaranty, each reference to the Prior Guaranty in any other document, instrument or agreement shall mean and be a reference to this Guaranty. Nothing contained herein, unless expressly herein stated to the contrary, is intended to amend, modify or otherwise affect any other instrument, document or agreement executed and/or delivered in connection with the Prior Guaranty. 5     SECTION 12.    Taxes. All payments made by either Guarantor under this Guaranty shall be made free and clear of, and without deduction or withholding for, or on account of, any Taxes. If any such Taxes are required to be withheld from any amounts payable to any Beneficiary hereunder, the amounts so payable to such Beneficiary shall be increased to the extent necessary to yield to such Beneficiary (after payment of all Taxes) a net amount equal to the amount that would have been payable hereunder had no such Taxes been applicable, provided that neither Guarantor shall be required to pay any additional amount in respect of Taxes pursuant to this Section 11 to any Beneficiary if the obligation to pay such additional amount would not have arisen but for a failure by such Beneficiary to comply with its obligations under Section 9.4 of the Transfer and Administration Agreement (other than by reason of a change in Law occurring after the date of the Transfer and Administration Agreement or the date upon which such Beneficiary became a party thereto, if later). 6     IN WITNESS WHEREOF, this Guaranty has been duly executed by each Guarantor as of the day first above written. ASHLAND LLC, as a Guarantor By:     /s/ Eric N. Boni         Name:    Eric N. Boni ASHLAND GLOBAL HOLDINGS INC., as a Guarantor [SIGNATURES CONTINUE ON FOLLOWING PAGE] S-1    Amended and Restated Parent Undertaking Acknowledged and accepted as of the day first above written. as Agent By:     /s/ Diane Emanuel         Name:     Diane Emanuel     Title:     Managing Director S-2    Amended and Restated Parent Undertaking

Title: (MO) Being accused of Hit &amp; Run for parallel parking outside of my apartment. Supposedly bumpers were touching. Not sure what to do. Question:Hi r/legaladvice, Yesterday, somebody posted a photocopied receipt from the KCMO police department indicating a case number and a date on the door exterior door of my apartment building. Then written in red pen on the margins of the paper it said "KCPD SAYS HIT AND RUN. EYE WITNESS. PICTURE WITH CELL PHONE. BACK OFF. OWNER OF BLACK G6." and then on the other side of the paper it has my license plate number written on it. I live on a one-way street with parking on both sides of it. Everybody in my apartment building parks on the street outside. Often the street is pretty full, so parallel parking happens frequently. I live walking distance to work, so I usually keep my minivan in the same place all week, typically unused. I wouldn't have paid any attention to this note if I didn't see my license plate number written on it. It scared me. So I called the police and referenced the case number and they put me on the phone with a detective. The detective says that the incident occurred on September 20 (so almost a month ago) and a person reported a hit and run to my vehicle, for my license plate touching the front bumper of their black pontiac G6. He was nice enough to give me that person's name and phone number, to contact them If I wish. So to clarify, no law enforcement or legal entities have approached me, there's just this weird letter which must have been made by the person who is accusing me of a hit and run. Also, because the address it occurred at was my apartment and I park outside, if anything did in fact happen, it should be a hit and stay (if that were a thing). My minivan shows no signs of damage. It is 19 years old, rusty, and light blue colored, and has been in street parking environments for the past 3 years I've had it, so it's been bumped or tapped a few times in the past, but nothing recent that i'd know of. I did look outside and there is a black pontiac G6 that regularly parks on my block, oftentimes near my minivan. I looked at it yesterday and didn't notice and outstanding damage, or anything obvious like blue paint from my van. The note said "EYE WITNESS. PICTURE WITH CELL PHONE." but I don't even know what that means, if he is the eye witness or if somebody else is or if the picture is of me or of him? To make things even more interesting, since the detective gave me the "victim"'s name, ive discovered that the guy lives in my building. What I'd like to know, r/legaladvice is this: Should I try to talk to the guy? Could this be some kind of scam? Does he even have a case? Should I leave this to my insurance people? Am I liable for any consequences If I don't don't do anything? If we talk and he's a reasonable person, what's a recommended way to proceed through this? Thank you for your help. I'm leaving the country in a couple days on an important work thing, and the last thing I want is all of this trouble before and after I come back. Answer #1: Honestly at this point, my suggestion would be to do nothing. The ball is in their court. They don't really have much for a hit and run case so criminal charges are extremely unlikely. But if they are coming, there isn't much to do until they come. As for the civil side of things, let them report it to insurance and they can have their insurance company deal with yours. If you like you can contact him and exchange info. If you can find the car parked somewhere, go take a look at it's bumper and see if there was any damage. And take a picture.

Exhibit 10.48   LEASE AGREEMENT   SECTION 1. Parties   This Agreement made by and between LFT Realty Group, a Pennsylvania corporation Owner, having offices situate at 600 Old Elm Street, Conshohocken, PA 19428 (hereinafter referred to as Landlord), of the one part, and Ceco Filters, Inc. (“Tenant”), having offices at 3120 Forrer Street, Cincinnati, Ohio 45209-1016 Federal ID #23-2399315, of the other part.   SECTION 2. Premises   WITNESSETH THAT: Landlord does hereby demise and let unto Tenant 16,000 +/- square feet of that certain building situate at 1029 Conshohocken Road, Plymouth Township (“Building”) as shown at Exhibit A (“demised premises”), in the County of Montgomery, State of Pennsylvania, to be used and occupied as industrial filter assembly, storage, sales, and related office, and any other lawful industrial or office use and uses incidental thereto.   SECTION 3. Term   The term of this Lease shall be three (3) years, beginning May 1, 2003, and ending April 30, 2006, plus the renewal term, if any, described in Section 7. As used herein the words “term”, “term of this Lease”, “Lease term” or words of similar import shall mean the initial three (3) year term and the three (3) year renewal period, if any.   SECTION 4. Base Minimum Rental   The minimum monthly rental shall be payable in lawful money of The United States of America, payable in monthly installments in advance during the said term of the this Lease, or any renewal hereof, on the first day of each month provided, however, that such payment shall not be deemed late or cause any event of default so long as the rent check is postmarked before the third of the month. The first rental payment to be made during the occupancy of the premises shall be adjusted to prorate a partial month of occupancy, if any, at the inception of this Lease Agreement.   It is agreed and understood that the minimum base rent, for the primary term of this lease, shall be payable on the first day of each month and shall be as follows:        Amount    Start Date    End Date Initial Term    $ 7,333.33    05/01/03    04/30/06 Renewal Term, if any    $ 7,883.33    05/01/06    04/30/09 SECTION 5. Place of Payment   All rent shall be payable without prior notice or demand at the office of the Landlord:   LFT Realty Group, Inc. 600 Old Elm Street Conshohocken, PA 19428,   or at such other place as Landlord may from time to time designate by notice in writing.   SECTION 6. Agency   Intentionally Omitted.   SECTION 7. Termination of Lease   It is hereby mutually agreed that Tenant may renew this Lease for an additional three (3) year period at the end of said term by giving to the Landlord written notice thereof at least one hundred twenty (120) days prior thereto. If Tenant fails to give such notice, this Lease shall expire without further action by either party. In the event Tenant remains in the Premises beyond the expiration of the initial three (3) year term, or the three (3) year renewal period, if exercised, specified in the immediately preceding sentence, then in such event Tenant shall be deemed a holdover Tenant and shall be liable for holdover rent in the amount of Nine Thousand One Hundred Sixty-Six and 66/100 Dollars ($9,166.66) per month. The holdover tenancy described herein shall be a month-to-month tenancy terminable upon thirty (30) days notice by either party hereto.   SECTION 8. Security Deposit   Tenant does herewith deposit with Landlord the sum of Seven Thousand, Three Hundred and Thirty Three Dollars and Thirty Three cents ($7,333.33) to be held as security for the full and faithful performance by Tenant of Tenant’s obligations under this Lease and for the payment of damages to the demised premises. Said security deposit is to be held by Landlord in an account designated for security deposits and not commingled with any other monies. Except for such sum as shall be lawfully applied by Landlord to satisfy valid claims against Tenant arising from defaults under this Lease or by reason of damages to the demised premises, the Security Deposit shall be returned to Tenant at the expiration of the term of this Lease or any renewal or extension thereof. It is understood that no part of any security deposit is to be considered as the last rental due under the terms of the Lease.   SECTION 9. Inability to Give Possession   If Landlord is unable to give Tenant possession of the Demised Premises, as herein provided, by reason of Tenant’s act or omission, Landlord shall not be liable in damages to Tenant therefor. Notwithstanding, Landlord agrees that it will not undertake any act or omission to prevent Tenant from obtaining possession of the Premises as herein provided.   SECTION 10. Additional Rent     (a) Damages for Default. Tenant agrees to pay as rent in addition to the minimum rental herein reserved any and all sums which may become due by reason of the failure of Tenant to comply with all of the covenants of this Lease and any and all damages, costs and expenses which the Landlord may suffer or incur by reason of any default of the   2   Tenant or failure on his/her part to comply with the covenants of this Lease, and each of them, and also any and all damages to the demised premises caused by any act or neglect of the Tenant.     (b) Taxes. Intentionally Omitted.     (c) Insurance Premiums. Intentionally Omitted.     (d) Water Rent. Intentionally Omitted.     (e) Sewer Rent. Intentionally Omitted.   SECTION 11. Affirmative Covenants of Tenant   Tenant covenants and agrees that he/she will without demand:     (a) Payment of Rent. Pay the rent and all other charges herein reserved as rent at the times and at the place that the same are payable, except as expressly permitted herein; and if Landlord shall at any time or times accept said rent or rent charges after the same shall have become delinquent, such acceptance shall not excuse delay upon subsequent occasions, or constitute or be construed as a waiver of any of Landlord’s rights except with respect to the payment so accepted. Tenant agrees that any charge or payment herein reserved, included, or agreed to be treated or collected as rent and/or any other charges, expenses, or costs herein agreed to be paid by Tenant may be proceeded for and recovered by Landlord by legal process in the same manner as rent due and in arrears, but that Landlord shall not have any right of termination or dispossession with respect to such changes other than rent.     (b) Cleaning and Repairs. Tenant covenants and agrees that it will without demand keep the interior of demised premises reasonably clean and free from all ashes, dirt and other refuse matter as typical for a like facility; replace all glass windows, doors, etc., broken; keep all waste and drain pipes located within and exclusively serving the Premises open; repair all damage to plumbing located within and exclusively serving the Premises and to the interior of premises in general; keep the same in good order and repair as they are now, reasonable wear and tear, damage by accidental fire or other casualty not occurring through negligence of Tenant or those employed by or acting for Tenant alone and repairs which are Landlord’s responsibility herewith excepted. The Tenant agrees to surrender the demised premises in the same condition in which Tenant has herein agreed to keep the same during the continuance of this Lease.     (c) Requirements of Public Authorities. Tenant covenants and agrees that it will without demand comply with any requirements any of the constituted public authorities, and with the terms of any State or Federal statute or local ordinance or regulation (collectively “Laws”) applicable to Tenant or his use of the demised premises, and save Landlord harmless from penalties, fines, costs, or damages resulting from failure so to do except in the event the cost to comply with said ordinance or regulation is prohibitive in Tenants sole opinion, said determination to be made within thirty (30) days of notice of such   3   violation. Notwithstanding the forgoing, in no event shall Tenant be required or responsible to make any alteration, addition or repair to the Premises or Building or any other improvement of the land upon which the Building sits necessary to comply with the Laws unless such alteration, addition or repair is required specifically as a result of Tenant’s use of the demised premises as an industrial filter facility, and would not be required of manufacturing facilities generally. All such alterations, additions or improvements which are not due to Tenant’s use of the demised premises as an industrial filter facility shall be Landlord’s responsibility to make at Landlord’s sole cost and expense as soon as practically possible in the circumstances. In the event Tenant is unable to use the demised premises due to any violation of the Laws which is not Tenant’s obligation to cure hereunder, then in any such event all rent and all other charges due hereunder shall abate. If such condition prevents Tenant from using the demised premises for a period in excess of thirty (30) days, then Tenant may at any time thereafter terminate this Lease by written notice to Landlord, such termination effective as of the date of Tenant’s notice, after which neither Landlord nor Tenant shall have any further obligation or responsibility to the other.     (d) Fire. Tenant covenants and agrees that he/she will without demand use reasonable precaution, against fire.     (e) Rules and Regulations. Tenant covenants and agrees that he/she will without demand, comply with rules and regulations of Landlord promulgated as hereinafter provided, so long as such rules and regulations do not increase Tenant’s obligations, diminish Tenant’s rights or materially change the provisions of this Lease and further provided that in the event of any conflict or ambiguity between the terms of any rules and regulations and the terms and conditions of this Lease, the terms and conditions of this Lease shall prevail.     (f) Surrender of Possession. Tenant covenants and agrees that he/she will without demand peaceably deliver up and surrender possession of the demised premises to the Landlord at the expiration or sooner termination of this Lease, promptly delivering to Landlord at his office all keys for the demised premises.     (g) Notice of Fire, etc. Tenant covenants and agrees that he/she will give to Landlord prompt, written, notice of any fire, or damage occurring on or to the demised premises.     (h) Condition of Pavement. Intentionally Omitted.     (i) Agency on Removal. Tenant agrees that if, with the permission in writing of Landlord, Tenant shall vacate or decide at any time during the term of this Lease, or any renewal thereof, to vacate the herein demised premises prior to the expiration of this Lease, or any renewal hereof, Tenant will not cause or allow any other agent to represent Tenant in any sub-letting or re-letting of the demised premises other than an agent approved by the Landlord and that should Tenant do so, or attempt to do so, the Landlord may remove any signs that may be placed on or about the demised premises by such other agent without any liability to Landlord or to said agent, the Tenant assuming all responsibility for such action.   4   (j) Indemnification. Tenant covenants and agrees that it will indemnify and save Landlord harmless from any and all loss occasioned by Tenant’s breach of any of the covenants, terms and conditions of the Lease, or caused by its agents, employees, licensees, invitees or contractors, or their respective agents, employees, licensees, invitees or contractors. Landlord covenants and agrees that it will indemnify, defend and save Tenant harmless from any and all loss occasioned by Landlord’s breach of any of the covenants, terms or conditions of this Lease, or due to any act or omission of Landlord, its agents, employees, licensees, invitees or contractors, or their respective agents, employees, licensees, invitees or contractors.   SECTION 12. Negative Covenants of Tenant   Tenant covenants and agrees that it will do none of the following things without first obtaining the consent, in writing of Landlord, which consent Landlord shall not unreasonably withhold, condition or delay:     (a) Use of Premises. Occupy the demised premises in any other manner or for any other purpose than as above set forth.     (b) Assignment and Subletting. Assign, mortgage or pledge this Lease or under-let or sub-lease the demised premises, or any part thereof, or permit any other person, firm or corporation to occupy the demised premises, or any part thereof; nor shall any assignee or sub-Tenant assign, mortgage or pledge this Lease or such sub-lease, without as additional written consent by the Landlord, and without such consent no such assignment, mortgage or pledge shall be valid. If the Tenant becomes insolvent, or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against the Tenant or a bill in equity or other proceeding for the appointment of a receiver for the Tenant is filed, or if the real or personal property of the tenant shall be sold or levied upon by any Sheriff, Marshall or Constable, and any such condition is not cured within ninety (90) days after Tenant learns of such condition, the same shall be a violation of this covenant. Notwithstanding the forgoing, Tenant may assign this Lease or sublet the Premises, without the need for Landlord’s consent, to any affiliate of Tenant. For purposes of this paragraph, an affiliate means any entity controlled by, under common control with or under the control of, Tenant. As used herein, the term “control” means the ability to direct the affairs of such entity, whether by control of the Board of Directors, ownership of stock or membership interests or otherwise. In the event of any subletting or assignment, Tenant shall remain primarily liable to Landlord for rent and other charges due hereunder through the expiration or termination of the term of this Lease.     (c) Signs. Intentionally Omitted.     (d) Alterations and Improvements. Make any structural alterations, improvements, or additions to the demised premises without the written consent of Landlord, not to be unreasonably withheld, delayed or conditioned. All alterations, improvements, additions, whether installed before or after the execution of this Lease, shall remain the property of Tenant, unless Tenant abandons such alterations at the conclusion of the Lease.   5   (e) Machinery. Use or operate any machinery that is not in use as of the date of this Lease if such machinery and is harmful to the building or disturbing to other tenants occupying other parts thereof. Landlord acknowledges and agrees that Tenant’s use of the demised premises as of the date of this Lease is acceptable under this paragraph and does not cause a violation of this paragraph.     (f) Weights. Place any weights in any portion of the demised premises beyond the safe carrying capacity of the structure. Landlord acknowledges and agrees paragraph.     (g) Fire Insurance. Do or suffer to be done, any act, matter or thing objectionable to the fire insurance companies whereby the fire insurance or any other insurance now in force or hereafter to be placed on the demised premises, or any part thereof, or on the building of which the demised premises may be a part, shall become void or suspended, or whereby the same shall be rated as a more hazardous risk than at the date of execution of this lease, or employ any person or persons objectionable to the fire insurance companies or carry or have any benzene or explosive matter of any kind in and about the demised premises. In case of a breach of this covenant (in addition to all other remedies given to Landlord in case of the breach of any of the conditions or covenants of this Lease) Tenant agrees to pay Landlord as additional rent any and all increase or increases of premiums on insurance carried by Landlord on the demised premises, part, caused in any way by the occupancy of Tenant. Landlord acknowledges and agrees that Tenant’s use of the demised premises as of the date of this Lease is paragraph.     (h) Removal of Goods. Intentionally Omitted.     (i) Vacate Premises. Intentionally Omitted.   SECTION 13. Landlord’s Rights.   Tenant covenants and agrees that Landlord shall have the right to do the following things and matters in and about the demised premises:     (a) Inspection of Premises. At all reasonable times during normal business hours and upon at least twenty-four (24) hours notice by himself or his duly authorized agents to go upon and inspect the demised premises and every part thereof.     (b) Rules and Regulations. At any time or times and from time to time make such reasonable rules and regulations as may be necessary or desirable for the safety, care, and cleanliness of the demised premises and/or of the building of which the demised premises is a part and of real and personal property contains therein and for the preservation of good order. Such rules and regulations shall, when communicated in writing to Tenant, form a part of this Lease, subject to the limitations of Section 11(e).   6   (c) Sale or Rent Signs. To display a “For Sale” sign at any time with 24 hours notice, and also, after notice from either party of intention to terminate this Lease, or at anytime within three (3) months prior to the expiration of this Lease, a “for Rent” sign, or both “For Rent” and “For Sale” signs; and all of said signs shall be placed upon such part of the premises as Landlord may elect and may contain such matter as Landlord shall require. Persons authorized by Landlord may inspect the premises at reasonable hours during the said periods.     (d) Discontinue facilities and Service. Intentionally Omitted.     (e) Relocation. Landlord may relocate Tenant to reasonably comparable space within two (2) miles of the premises with thirty- (30) days written notice to Tenant. Landlord shall pay all costs associated with moving Tenant including without limitation reprinting business cards, letterhead, re-wiring computers and equipment. Landlord may exercise the rights herein only with Tenants approval, which shall not be unreasonably with held or delayed.   SECTION 14. Responsibility of Tenant     (a) Tenant agrees to relieve and hereby relieves the Landlord from all liability by reason of any injury or damage any person or property in the demised premises, whether belonging to the Tenant or any other person caused by any fire, breakage, or leakage in any part or portion of the building of which the demised premises is a part or water, rain or snow that may leak into, issue or flow from any part of the said premises, or of the building of which the demised premises is a part, from the drains, pipes, or plumbing work of the same, or from any place or quarter, unless such breakage, leakage, injury or damage be caused by or result from the negligence or reckless or willful conduct of Landlord or its servants or agents.     (b) Tenant also agrees to relieve and hereby relieves Landlord from all liability by reason of any damage or injury to any property or to Tenant or Tenant’s guests, servants or employees which may arise from or be due to the use, misuse or abuse of all or any of the elevators, hatches, openings, stairways, hallways of any kind whatsoever which may exist or hereafter be erected or constructed on the said premises or the sidewalks surrounding the building of which may arise from defective construction, failure of water supply, light, power, electric wiring, plumbing or machinery, wind, lighting, storm or any other cause whatsoever on the said premises or the building of which the demised premises is a part, unless such damage, injury, use, misuse, or abuse be caused by or result from the negligence or recklessness or willful conduct of Landlord, its servants or agents.   SECTION 15. Responsibilities of Landlord     (a) Total Destruction of Premises. In the event the demised premises are totally destroyed or so damaged by fire or other casualty that, in the opinion of a licensed architect retained by Landlord, the same cannot be repaired and restored within forty-five (45) days from   7   the happening of such injury, or the demised premises are not, in fact, resolved within forty-five (45) days, this lease shall absolutely cease and terminate, and the rent shall abate from the date of casualty for the balance of the term.     (b) Partial Destruction of Premises. If the damage be only partial and such that the premises can be restored, in the opinion of a licensed architect retained by Landlord, to their former condition within forty-five (45) days from the date of the casualty loss Landlord shall restore the same within forty-five (45) days, reserving the right to enter upon the demised premises for that purpose. Landlord also reserves the right to enter upon the demised premises whenever necessary to repair damage caused by fire or other casualty to the building of which the demised premises is a part, even though the effect of such entry be to render the demised premises or a part thereof untenantable. In either event the rent shall be apportioned and suspended during the time the demised premises are rendered untenantable and the duration of Landlord’s possession.     (c) Repairs by Landlord. Landlord shall give notice to Tenant within ten (10) days from the day Landlord received notice that the demised premises had been destroyed or damaged by fire or other casualty as to whether the demised premises can be restored as provided above.     (d) Damage for Interruption of Use. Except to the extent herein before provided, Landlord shall not be liable for any damages, compensation, or claim by reason of the necessity of repairing any portion of the building, the interruption in the use of the premises, any inconvenience or annoyance arising as a result such repairs, or interruption, or the termination of this lease by reason of damage to or destruction of the premises.     (e) Representation of Condition of Premises. Tenant has inspected the demised premises and Landlord has let the demised premises in their present “AS IS” condition and without any representations, other than those specifically endorsed hereon by Landlord, through its officers, employees, servants and/or agents. It is understood and agreed that the Landlord is under no duty to make repairs, alterations, or improvements at the inception of this lease or at any time thereafter unless such duty of Landlord shall be set forth in writing endorsed hereon.     (f) Zoning. It is understood and agreed that the Landlord hereof does not warrant or undertake that the Tenant shall be able to obtain a permit under any Zoning Ordinance or Regulation for such use as Tenant intends to make of the said premises, and nothing in this lease contained shall obligate the Landlord to assist Tenant in obtaining said permit; the Tenant further agrees that in the event a permit cannot be obtained by Tenant under any Zoning Ordinance or Regulation, this lease shall not terminate without Landlord’s consent, and the Tenant shall use the premises only in a manner permitted under such Zoning Ordinance or Regulation.   8 SECTION 16. Miscellaneous Agreements and Conditions   No contract entered into or that may be subsequently entered into by Landlord with Tenant, relative to any alterations, additions, improvements or repairs, nor the failure of Landlord to make such alterations, additions, improvements or repairs as required by any such contract, nor the making by Landlord or his agents or contractors of such alterations, additions, improvements or repairs shall in any way affect the payment of the rent or said other charges at the time specified in this Lease, except to the extent and in the manner herein before provided.     (a) Effect of Repairs on Rental. It is hereby covenanted and agreed, any law, usage or custom to the contrary notwithstanding, that Landlord shall have the right to all times to enforce the covenants and provisions of this Lease in strict accordance with the terms hereof, notwithstanding any conduct or custom on the part of the Landlord in refraining from so doing at any time or times, and, further, that failure of Landlord at any time or times to enforce his rights under said covenants and provisions strictly in accordance with the same shall not be construed as having created a custom in any way or manner contrary to the specific terms, provisions and covenants of this Lease or as having in any way or manner modified the same. Notwithstanding any provision herein to the contrary, so long as Tenant pays rent due hereunder and complies with the terms of this Lease, Tenant shall quietly enjoy exclusive use of the demised premises free from hindrance, interference or molestation from anyone.     (b) Waiver of Custom. Intentionally Omitted.     (c) Failure of Tenant to Repair. In the event of the failure of Tenant promptly to perform the covenants of SECTION 13 (b) hereof, Landlord may go upon the demised premised and perform such covenants, the cost thereof, at the sole option of Landlord, to be charged to the Tenant as additional and delinquent rent.     (d) Waiver of Subrogation. Intentionally Omitted.   SECTION 17. Remedies of Landlord. If the Tenant     (a) Does not pay in full within ten (10) days after written notice from Tenant to Landlord that such payment is due (subject to the three (3) day grace period described in Section 4 of this Lease) and further provided that Landlord shall only be obligated to provide such notice on one occasion in any twelve (12) month period, any and all installments of rent and/or any other charge or payment herein reserved, included, or agreed to be treated or collected as rent and/or any other charge, expense, or cost herein agreed to be paid by the Tenant, or     (b) Violates or fails to perform or otherwise breaks any covenant or agreement herein contained and such violation or failures continues for thirty (30) days after Landlord’s written notice to Tenant of such violation or failure, or such longer time as may be reasonable under the circumstances so long as Tenant commences such cure within such thirty (30) days period and thereafter diligently pursues such cure; or     (c) Intentionally Omitted;   9   (d) Becomes embarrassed or insolvent or makes an assignment for the benefit of creditors, or if a petition in bankruptcy is filed by or against Tenant or a complaint in equity, or other proceedings for the appointment of a receiver for Tenant is filed, or if proceedings for reorganization or for composition with creditors under any State or Federal law be instituted by or against Tenant, or if the real or personal property of Tenant shall be levied upon, or be sold, and such condition is not cured within ninety (90) days.   Thereupon;     (1) The whole balance of rent and other charges, payments, costs, and expenses herein agreed to be paid by Tenant, or any part thereof, shall be taken to be due and payable and in arrears as if by terms and provisions of this lease said balance of rent and other charges, payment, taxes, costs and expenses were on that date, payable in advance. Further, if this lease or any part thereof is assigned, or if the premises, or any part thereof is sub-let, Tenant hereby irrevocably constitutes and appoints Landlord as Tenant’s agent to collect the rents due from such assignee or sub-Tenant and apply the same to the rent due hereunder without in any way affecting Tenant’s obligation to pay any unpaid balance of rent due hereunder; or     (2) At the option of Landlord, this lease and the terms hereby created shall determine and become absolutely void without any right on the part of the Tenant to reinstate this lease by payment of any sum due or by other performance of any condition, term, or covenant broken, whereupon, Landlord shall be entitled to recover damages for such breach in an amount equal to the amount of rent reserved for the balance of the term of this lease, less the fair rental value of the said demised premises for the remainder of the Lease term,   In all instances of Tenant default, Landlord agrees to use reasonable efforts to mitigate its damages.   SECTION 18. Further Remedies of Landlord   In the event of any default as above set forth in SECTION 17, Landlord, or anyone acting on Landlord’s behalf, at Landlord’s option:     (a) May let said premises or any part or parts thereof to such person or persons as may, in Landlord’s discretion, be best; and Tenant shall be liable for any loss of rent for the balance of the then current term.     (b) Intentionally Omitted;     (c) May have and exercise any and all other rights and/or remedies granted or allowed landlords by an existing or future Statute, Act of Assembly, or other law of this state in cases where a landlord seeks to enforce rights arising under a lease agreement against a tenant who has defaulted or otherwise breached the terms of such lease agreement; subject to, however, to all of the rights granted or created by any such Statute, Act of Assembly, or other law of this state existing for the protection and benefit of tenants; and     (d) Intentionally Omitted.   10 SECTION 19. Landlord Default   In the event that Landlord breaches any covenant, condition or provision of this Lease, or fails to perform any obligation of Landlord required under this Lease, or becomes insolvent, files or has filed against it any action in bankruptcy, as a receiver appointed for its assets or otherwise becomes embarrassed or assigns its assets to creditors, and any such breach, failure or condition is not cured within thirty (30) days after written notice thereof from Tenant to Landlord (except in the case of emergency in which event no notice shall be necessary), or such longer period as may be reasonable under the circumstances so long as Landlord commences such cure within such thirty (30) day period and is thereafter diligently pursuing such cure, but in no event more than ninety (90) days, then in any such event Landlord shall be deemed in default of this Lease. Upon Landlord’s default, Tenant may either (i) terminate this Lease upon the condition described hereinafter or (ii) cure such breach, failure or condition, for the account of Landlord, and thereafter Landlord shall reimburse Tenant the cost of such cure within ten (10) days after presentment of an invoice therefor. If Landlord fails to reimburse Tenant as provided herein, then in such event Tenant may offset rent and other charges due hereunder to Landlord until Tenant is reimbursed for its expenditure in full. In the event of an emergency, such as by way of example, a hole in the roof which interferes with Tenant’s business operations, Tenant may immediately cure such condition and thereafter seek reimbursement from Landlord and, failing reimbursement from Landlord, thereafter offset the cost of such cure against rent and other charges due hereunder. Not withstanding the foregoing, Tenant may only terminate this Lease in the event that the cost of curing Landlord’s default exceeds the rent due (excluding additional rent) over the remainder of the then current term.   SECTION 20. Confession of Judgment for Possession of Real Property   Tenant covenants and agrees that if this lease shall be terminated (either because of condition broken during the term of this lease, or any renewal or extension thereof and/or when the term hereby created or any extension thereof shall have expired) then, and in that event, Landlord may cause a judgment in ejectment to be entered against Tenant for possession of the demised premises, and for that purpose Tenant hereby authorizes and empowers any Prothonotary, Clerk of Court or Attorney of any Court of Record to appear for Tenant and to confess judgment against tenant in Ejectment for possession of the herein demised premises, and agrees that Landlord may commence an action pursuant to Pennsylvania Rules Of Procedure No. 2970 et seq. For the entry of an order in Ejectment for the possession of real property and Tenant further agrees that a Writ of Possession pursuant thereto may issue forthwith, for which authorization to confess judgment and for the issuance of a writ or writs of possession pursuant thereto, this lease, or a true and correct copy there of, shall be sufficient warrant. Tenant further covenants and agrees, that if for any reason whatsoever, after said action shall have commenced the action shall be terminated and the possession of the premises, demised hereunder shall remain in or be restored to Tenant, Landlord shall have the right upon any subsequent default or defaults, or upon the termination of this lease as above set forth to commence successive actions for possession of real property and to cause the entry of successive judgments by confession in Ejectment for possession of the premises demised hereunder. Notwithstanding the forgoing, before exercising any rights under this Section 20, or Sections 21, 22 or 23, Landlord shall give Tenant fifteen (15) days notice of its intention to seek the remedies set forth therein and, at the   11 expiration of such fifteen (15) day period, Tenant shall have an additional five (5) days to cure any default upon which Landlord bases its determination to pursue the remedies contained in this Section 20, or Sections 21, 22 or 23 of this Lease.   SECTION 21. Affidavit of Default   In any procedure or action to enter Judgment by Confession in Ejectment for possession of real property pursuant to Section 20 hereof, if Landlord shall first cause to be filed in such action an affidavit or averment of the facts constituting the default or occurrence of the condition precedent, or event, the happening of which default, occurrence, or event authorizes and empowers Landlord to cause the entry of judgment by confession, such affidavit or averment shall be conclusive evidence of such facts, defaults, occurrences, conditions precedent, or events; and if a true copy of this lease (and of the truth of which such affidavit or averment shall be sufficient evidence) be filed in such procedure or action, it shall not be necessary to file the original as a Warrant of Attorney, or any rule of court, custom, or practice to the contrary notwithstanding.   SECTION 22. Waivers by Tenant of Errors, Right of Appeal, Stay, Exemption, Inquisition   Tenant hereby releases to Landlord and to any and all attorneys who may appear for Tenant all errors in any procedure or action to enter Judgment by Confession by virtue of the warrants of attorney contained in this Lease, and all liability therefore, Tenant further authorized the Prothonotary or any Clerk of any Court of Record to issue a Writ or Execution or other process, and further agrees that real estate may be sold on a Writ of Execution or other process. If proceedings shall be commenced to recover possession of the demised premises either at the end of the term or sooner termination of this lease, or for non-payment of rent or for any reason, Tenant specifically waives the right to the three (3) months notice to quit and/or the fifteen (15) or thirty (30) days’ notice to quit required by the Act of April 6, 1951. P.I., 69, as amended, and agrees that the notice and opportunity to cure provided in Section 20 of this Lease shall be sufficient.   SECTION 23. Right of Assignee of Landlord   The right to enter judgment against Tenant by confession and to enforce all of the other provisions of this lease herein provided for may at the option of any assignee of this lease, be exercised by any assignee of the Landlord’s right, title and interest in this lease in his, her, or their own name, any statute, rule of court, custom, or practice to the contrary notwithstanding.   SECTION 24. Remedies Cumulative   All of the remedies herein before given to Landlord and all rights and remedies given to it by law and equity shall be cumulative and concurrent. No determination of this lease or the taking or recovering possession shall deprive Landlord of any of its remedies or actions against the Tenant for rent due at any time or which, under the terms hereof would in the future become due as if there had been no determination, nor shall the bringing of any action for rent or breach of covenant, or the resort to any other remedy herein provided for the recovery of rent be construed as a waiver of the right to obtain possession of the premises.   SECTION 25. Condemnation   In the event that the premises demised herein, or any part thereof, is taken or condemned for a public or quasi-public use, this lease shall as to the part so taken, terminate as of the date title shall vest in   12 the condemnor, and rent shall abate in proportion to the square feet of leased space taken or condemned or shall cease if the entire premises be so taken provided that Tenant may terminate this Lease by written notice to Landlord should such a portion of the demised premises be taken so as to render the demised premises unsuitable for Tenant’s use. In either event the Tenant waives all claims against the Landlord by reason of the complete or partial taking of the demised premises, but reserves the right to pursue its own award from the condemning authority.   SECTION 26. Subordination   This Agreement of Lease and all its terms, covenants and provisions are and each of them is subject and subordinate to any lease or other arrangement or right to possession, under which the Landlord is in control of the demised premises, to the rights of the owners or owners of the demised premises and of the land or buildings of which the demised premises are a part, to all rights of the Landlord’s landlord and to any and all mortgages and other encumbrances now or hereafter placed upon the demised premises or upon the land and/or the buildings containing the same; Tenant’s agreement to subordinate contained in this Section 26 is expressly conditioned upon Landlord’s agreement to obtain from any existing lender or superior title holder an agreement specifically recognizing this Lease, Tenant’s rights under this Lease, and providing that so long as Tenant pays rent due hereunder and otherwise complies with the terms and conditions of this Lease, then Tenant’s possession of the demised premises shall not be disturbed, and in the event of any foreclosure or other action to dispossess Landlord, Tenant shall not be named as a party defendant in any such action (“Non-Disturbance Agreement”). In addition, Landlord agrees to obtain a Non-Disturbance Agreement from any future lender or future superior title holder or Tenant’s subordination granted herein shall be of no force or effect. Tenant agrees to attorn to any foreclosing lender or future title holder should Landlord be dispossessed of the demised premises.   SECTION 27. Notice   All notices, must be given by certified mail, return receipt requested.   SECTION 28. Lease Contains all Agreements   It is expressly understood and agreed by and between the parties hereto that this lease and the riders attached hereto and forming a part hereof set forth all the promises, agreements, conditions, and understandings between Landlord and his Agent and Tenant relative to the demised premises, and that there are no promises, agreements, conditions, or understandings, either oral or written, between them other than herein set forth. It is further understood and agreed that, except as herein otherwise provided, no subsequent alteration, amendment, change or addition to this lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by them.   SECTION 29. Heirs and Assignees   All rights and liabilities herein given to, or imposed upon, the respective parties hereto shall extend to and bind the several and respective heirs, executors, administrators, successors, and assigns of said parties; and if there shall be more than one Tenant, they shall all be bound jointly and severally by the terms, covenants, and arrangements herein, and the word “Tenant” shall be deemed and taken to mean each and every person or party mentioned as a Tenant herein, be the same one or more; and if there shall be more than one Tenant, any notice required or permitted by the terms of this lease may be given by or to any one thereof, and shall have the same force and effect as if given by or to all   13 thereof. The words “his” and “him” wherever stated herein, shall be deemed to refer to the Landlord or Tenant whether such Landlord or Tenant is singular or plural and irrespective of gender. No rights, however, shall inure to the benefit of any assignee of Tenant unless Landlord has approved the assignment to such assignee in writing as aforesaid.   SECTION 30. Headings no part of lease   Any headings preceding the text of the several paragraphs and sub-paragraphs hereof are inserted solely for convenience of reference and shall not constitute a part of this lease nor shall they affect its meaning, construction or effect.   SECTION 31. Option to Renew. Deleted   SECTION 32. Agency   Landlord shall indemnify, defend and hold Tenant harmless from any claim for a commission or fee from any person or entity.   SECTION 33. Late Charge   Tenant agrees to pay to Landlord a late charge of five (5%) percent of the gross monthly rental for rents not received by Landlord within ten (10) days of due date. A charge of $50.00 is applicable for any checks returned from the bank, for whatever reason.   Further, no payment by Tenant or receipt by Landlord, or Landlord’s Agent, of a lesser amount than any installation or payment of rent or additional rent due shall be deemed to be other than on account of the amount due. If either party owes money to the other due to a default under this Lease, then such sum shall accrue interest at the rate of 10% per annum from the date such sum is due until the date such sum is paid.   SECTION 34. Liability Insurance   During the term of this lease and any extensions thereof, Tenant shall keep in full force and effect a policy of Commercial General Liability insurance in which the limits of Bodily Injury shall not be less than $2,000,000.00 per occurrence, and on which the Property Damage limit shall not be less than $2,000,000.00 per occurrence. A copy of the policy or a Certificate of Insurance shall be delivered to the Landlord’s Agent. The insurance carrier shall be a responsible insurance carrier authorized to do business in the State of Pennsylvania and such policy may be by blanket coverage. Said policy shall name Landlord and Tenant, as insured, and shall contain a clause that the insurer will not cancel or change the insurance without first giving the Landlord thirty (30) days prior written notice.   SECTION 35. Utilities and Maintenance   Until such time as Landlord leases additional space in the Building of which the demised premises are a part, Tenant shall pay for all utility services consumed at the demised premises. Upon such date as Landlord leases space to another tenant for any other portion of the Building of which the demised premises are a part, Landlord shall cause, at its sole cost and expense, that all utility service to the demised premises be separately metered by a new meter from the appropriate utility or by tab meter. Thereafter, Tenant shall only pay for utilities used by the Tenant at the demised premises. In   14 the event any utility service is interrupted due to the act or omission of Landlord, and such interruption shall continue for a period of three (3) days, then on the fourth day and thereafter until such interruption is cured, all rent and other charges due hereunder shall completely abate. If such interruption continues for a period of thirty (30) days, then Tenant shall have the option of terminating this Lease by written notice to Landlord, such termination effective as of the date of Tenant’s notice, after which neither Landlord nor Tenant shall have any further obligation or responsibility to the other.   Tenant further covenants and agrees throughout the term of this Lease Agreement, any extensions or renewals thereof, that it will be responsible to maintain the demised premises in good repair, order and condition, at its sole cost and expense, excluding any maintenance as may be required to the structural members, exterior walls, or roof of the demised premises, but including all floors, interior walls, ceilings, doors of all types, locks, closures, and hinges, all lighting (including the replacement of light bulbs), all glass including windows, all electrical, heat, ventilating, and air conditioning systems located within and exclusively serving the demised premises, as well as all utilities and plumbing systems located within and exclusively servicing the demised premises, making all repairs and / or replacements thereto as may be required or necessary, with materials of like quality.   In addition, Tenant herein shall be responsible to have the heating system serviced a minimum of once a year, along with having the air conditioning systems / units serviced at least four (4) times per year. Said servicing shall be at the sole cost and expense of Tenant, shall be performed by a reputable heating and / or air conditioning contractor, and copies of said contract shall be submitted to Landlord by Tenant annually. Should the Tenant fail to service said systems, then this work may be done by the Landlord, and immediate payment as well as a service charge of ten (10%) percent shall be due from the Tenant for such work and / or repairs.   Further, the Tenant shall be responsible for the cleanliness of the demised premises and shall be responsible, at Tenant’s sole cost and expense, for the separation, recycling, and removal of Tenant’s waste materials to conform with any and all governmental rules and regulations thereto.   SECTION 36. Licenses and Permits   Tenant, at Tenant’s expense and subject to the limitations set forth in Section 11(c) of this Lease, shall obtain whatever permits and/or licenses which may be required by Tenant to operate from the premises, any permits and/or licenses which may be required for the installation of signs, and compliance with the Americans of Disabilities Act relating to Tenant’s use and occupancy of the demised premises. Subject to the limitations of Section 11(c) of this Lease, Tenant’s responsibility and compliance with this paragraph shall also include any present and future governmental or quasi-governmental directives (including without limitation those requirements of the Occupational Safety and Health Administration) that relate to the use and occupancy of the premises including but not limited to the indoor air quality of the demised premises and the maintenance of any heating, ventilating, and air conditioning equipment or system for which the Tenant is responsible pursuant to this Lease.   SECTION 37. Signs   In compliance with Paragraph 13(c) of this Lease Agreement, and any other applicable provisions contained herein, it is understood and agreed that the Tenant will not install any signs other than   15 what is set forth herein without first receiving written permission from the Landlord, and will be solely responsible for any cost and effort as may be required for the installation or signs on the building or within the demised premises. This responsibility includes the purchase, installation, maintenance, upkeep and removal, if requested by Landlord (and repair after removal of any damage caused by signs), of any such sign(s). Further, Tenant is responsible to obtain and pay for any governmental licenses and / or permits, as may be required for any such sign(s). All signs of the Tenant shall be maintained by the Tenant, and kept in proper order including lighting, repairs, and / or repainting. Landlord makes no representation as to whether or not signage, or the type or size of signage is permitted by governmental authorities at the demised premises or the building. Upon termination of this Lease and/or Tenant’s vacating of the premises, Tenant shall, at the option of the Landlord, remove all interior and exterior signage and other advertising material, making all repairs as reasonably necessary as a result of said removal. Notwithstanding the forgoing, Landlord hereby approves of all of Tenant’s existing signage and agrees that all of Tenant’s existing signage may be removed by, or left by, Tenant at the expiration or earlier termination of this Lease at Tenant’s option. Notwithstanding the forgoing, Tenant acknowledges and understands that the total square footage of its signage may be reduced in the event that Landlord obtains another Tenant for space in the Building. In such event, Tenant acknowledges that its signage will be proportionately reduced to a fraction of existing signage, such fraction equaling the square footage of the demised premises divided by the entire square footage of the Building.   Tenant herein is given permission to install an identification sign of size and at a location to be approved by Landlord. Tenant shall present to the Landlord plans and specifications for such signage, for Landlord’s approval, prior to said installation.   SECTION 38. Landlord’s Liability   Landlord’s responsibility under this Lease shall be limited to its interest in the demised premises and in the building of which the demised premises forms a part, and the income derived therefrom including financing proceeds, and no members of Landlord’s partnership shall be personally liable hereunder. Tenant agrees to look solely to Landlord’s interest in the demised premises and in the building and the income derived therefrom including financing proceeds, for the collection of any judgment, and, in entering any such judgment, the person entering same shall request the Prothonotary to mark the judgment index accordingly. If the demised premises or the building is transferred or conveyed, Landlord shall be relieved of all covenants and obligations under this lease thereafter, provided that notice of said transfer or conveyance is given to Tenant by Landlord and any transferee agrees in writing, for the benefit of Tenant, to assume all of Landlord’s obligations hereunder.   SECTION 39. Non-Foreign Entity Attestation   Tenant hereby certifies that Tenant is not a non-resident alien, or foreign corporation, a foreign partnership, a foreign trust, or a foreign estate (as these terms are defined in the Internal Revenue Code and Income Tax Regulations); that Tenant’s Social Security number or Federal Income Tax number and Tenant’s home or office address are as shown in Part I of this Lease Agreement. Tenant acknowledges that this certification may be disclosed to the Internal Revenue Service pursuant to federal law.   16 SECTION 40. Captions   The captions of the paragraphs in this Lease Agreement are inserted and included solely for convenience and shall never be considered or given any effect in construing the provisions hereof if any questions of intent should arise.   SECTION 41. Notices   Notwithstanding any other provision in this Lease contained herein to the contrary, any notices required to be given to either party under the terms of this Lease shall be in writing and shall be sent by Overnight, Registered, or Certified Mail as follows:   to the Tenant:   Ceco Filters, Inc.     3120 Forrer Street     Cincinnati, Ohio 45209-1016     Attn: Marshall J. Morris   or such other address as Tenant shall designate in writing,   to the Landlord:       ATTN: Stephen A. Tornetta     600 Old Elm Street     Conshohocken, PA 19428   or such other address as the Landlord shall designate in writing.   Notwithstanding any provision in this Lease to the contrary, Tenant shall not be deemed to be in default for failure to pay rent or other charges unless such failure to pay continues for ten (10) days after written notice thereof from Landlord.   SECTION 42. Fire Insurance.   Lessor agrees to carry policies insuring the Premises and Building against fire and such other perils, including liability coverage, as are normally covered by Lessor in an amount of at least ninety (90%) percent of the replacement value of such improvements or with such higher limits so that Landlord is not deemed a co-insurer, together with insurance against such other risks (including loss of rent) and in such amounts as Lessor deems appropriate. Lessee agrees to pay to Lessor their proportionate share of said insurance upon the premises of which the demised premises is a part, based upon the percentage by which Landlord’s square footage bears to the entire square footage of the Building during the term of this Lease, renewals or extensions thereof. The Lessee, as stated above, shall pay such cost of said insurance, to Lessor as additional rent, in addition to the minimum rental hereon reserved, within thirty (30) days of proof of payment of such insurance. Such insurance shall not include Lessee’s furniture, fixtures, equipment or improvements. The amount due hereunder on account of said insurance shall be apportioned for that part of the first and last calendar years covered by the term hereof.   17 SECTION 43. Structural Repairs.   During the term of this Lease Agreement, and any extensions or renewals thereof, Landlord is responsible for any structural repairs to roof and exterior walls of the demised premises. Landlord’s obligation to pay for such repairs, or replacements if necessary, shall not extend to any damage caused by the Tenant, it’s agents, employees and/or invitees. In this event, the cost of any such repairs or replacements, if necessary, shall be borne exclusively by Tenant. Tenant moreover has no rights whatsoever to said roof area and shall not, in any way, cause to have any appurtenances attached thereto except as may be existing as of the date of this Lease.   SECTION 44. Estoppels Certificate.   Either party shall, at any time and from time to time, within twenty (20) days following the written request from the other, execute, acknowledge, and deliver to the requesting party a written statement certifying that this lease is in full force and effect and unmodified (or, if modified, stating that nature or such modification), certifying the date to which the rent reserved hereunder has been paid, and certifying that there are not, to the certifying party’s knowledge, any uncured defaults or unpaid charges on the part of the other party, or specifying such defaults or unpaid charges if any are claimed, and certifying such other information as the requesting party shall reasonable request. Any prospective purchaser or mortgagee on all or any part of the building or land on which the building is situated may rely upon any such statement by any lending institution or. The failure to deliver such statement within said twenty (20) day period shall be conclusive that this lease is in full force and effect and unmodified, and that there are no uncured defaults in requesting party’s performance hereunder.   SECTION 45. Net Charges   It is agreed and understood that Tenant shall be responsible for the payment of Tenant’s proportionate share of real estate taxes and fire insurance premiums. It being understood that such insurance shall not include Tenant’s furniture fixtures, equipment, or inventory, or Tenant’s improvements to the demised premises.   Tenant agrees that it will not keep, use, or offer for sale in or upon the demised premises any article, which may be prohibited by the standard form insurance policy. Landlord acknowledges and agrees that Tenant’s existing use as of the date of this Lease does not violate the forgoing paragraph.   SECTION 46. Taxes.   Tenant agrees to pay as additional rent, in addition to the base rent, their proportionate share of all taxes (including assessments) assessed or imposed upon the demised premises during the term of this lease, renewals or extensions thereof. Tenant shall pay Landlord such taxes based on the fiscal year or years of the taxing authorities, or portions thereof during the term hereof (appropriately apportioned for any partial year at the beginning or end of the term hereof) Landlord shall submit to Tenant a copy of any tax bills authorized and prepared by the tax authorities, as well as a bill prepared by Landlord as to Tenant’s share of taxes due. Tenant shall at all times be responsible for and shall pay before delinquency Tenant’s proportionate share of all county, township, and school real estate taxes assessed against the property, as well as all municipal, county, state or federal taxes assessed against any leasehold interest or any personal property of any kind owned, installed or used by Tenant, as well as all rent, occupancy, transportation, utility, use, amusement or vending machine taxes, now or hereafter imposed. Said taxes shall be paid by Tenant to Landlord on a quarterly basis, in advance, based upon the most recent tax bill.   18 Landlord has historically, and shall continue to endeavor to take advantage of any early payment discount.   SECTION 47. Common Area Maintenance.   Landlord shall provide, as needed to keep the demised premises and Building operating as it is as of the date of this Lease, certain services to the common areas of the property of which the demised premises is a part as well as the common areas of the entire campus. Said services shall include, but may not be limited to, the cutting of grass, maintenance of landscaping, snow and ice removal, maintenance of sanitary sewer systems, maintenance of retention basins, general periodic clean-up, replacement of exterior lights and bulbs and / or fixtures, common area lighting, repairs to the parking area and access roads, including the main access roads.   SECTION 48. Odors and Emissions.   As the demised premises is located in a (strip shopping center / multi-tenant facility), it is imperative that odors, noise, or any other emissions and / or nuisance, which would originate from the Tenant’s operation shall not permeate beyond the walls of the demised premises. Tenant shall be responsible for controlling said odors, noise, emissions and / or nuisance, including the installation of necessary sound and odor controlling devices, as is necessary in not unreasonably disturbing the adjoining tenants. Landlord acknowledges and agrees that Tenant’s existing use as of the date of this Lease does not violate the forgoing paragraph.   SECTION 49. Common Parking Area.   Tenant shall have the non-exclusive use in common with the Landlord, other tenants, their guests and invitees, of the automobile parking areas, driveways, and footways. Landlord shall have the right to designate parking areas for the use of the building tenants and their employees, and the Tenant and their employees shall not park in parking areas not so designated specifically including driveways, fire lanes, loading / unloading areas, walkways and building entrances. Notwithstanding the foregoing, Landlord agrees that it will not designate parking for Tenant nor any other tenant at the Building in such a way as to render parking for Tenant inconvenient to the demised premises, or in any event further than 200 feet from the lease line of the demised premises. Landlord agrees that it will not materially alter any portion of the common areas so as to interfere with Tenant’s vehicular, pedestrian and truck access to the demised premises from the condition existing as of the date of this Lease. Tenant is permitted to store materials outside the demised premises in the common areas.   SECTION 50. Outside Storage.   Outside storage is not permitted without advance approval in writing from the Landlord, such approval not to be unreasonably withheld, delayed or conditioned. Long-term trailer storage on any portion of the property is not permitted. Landlord hereby pre-approves of 5,700 square feet of outdoor storage.   19 SECTION 51. Pest Control.   Tenant agrees that should it be required in the Tenant’s facility, or in adjacent facilities, that the Tenant shall contract with a pest exterminating contractor to exterminate as may be necessary and as may be directed by the Landlord. The sole cost and expense of this service shall be the responsibility and obligation of the Tenant, and a copy of said contract shall be delivered to Landlord annually without demand.   SECTION 52. Construction & Remodeling.   The Leased premises shall be delivered “AS IS.”   SECTION 53. “As Is” Condition   It is agreed and understood that the demised premises is being leased in “AS IS” condition, and the Tenant accepts the responsibility for any renovations, alterations, improvements and decorating that Tenant may require in the performance of Tenant’s business except to the extent specifically allocated to Landlord hereunder. Tenant agrees not to damage the demised premises or the building of which the demised premises forms a part, in the process of installing or constructing any such improvements. Further, Tenant is responsible for repairs, replacements and maintenance, as may be necessitated during the term of this Lease, with the exception of the roof and structural members of the demised premises of which Landlord is solely responsible, provided Tenant, its employees, invitees, etc. are not negligent. In this event, any such repairs, replacements or maintenance, if necessary, shall be borne exclusively by Tenant. way, cause to have any appurtenances attached thereto except as may exist as of the date of this Lease.   Any primary or underground plumbing, primary electrical work, or work beyond the demised premises area, as well as roof, exterior walls and floor penetrations, not the responsibility of Landlord hereunder must be approved in writing by the Landlord, at the sole cost and expenses of the Tenant. Should the Landlord elect to provide this service work, Landlord will be competitive and reasonable in price, materials, and quality of workmanship. All other work on the interior of the demised premises, including but not limited to any special plumbing, electrical, partitions, floor coverings and decorating, shall be the responsibility of the Tenant.   If so required by Section 12(d), the Tenant shall submit plans for all improvements to be done by the Tenant for Landlord’s approval before any work is begun, and all such work is to be done by approved contractors in a workmanship manner in both work and materials as approved by the Landlord. Landlord’s approval of any plans, specifications and / or working drawings for Tenant’s alterations or improvements shall create no responsibility or liability on the part of Landlord for their completeness, design sufficiency, or compliance with all laws, rules and regulations now in force, or which may hereafter be in force of governmental agencies or authorities.   It is agreed and understood that the Tenant agrees to release and forever discharge, indemnify and hold harmless Landlord, or its agents, from any liability arising from or resulting from the acts of the Tenant or any of Tenant’s agents, servants, workmen, sub-contractors, and / or employees at the demised premises, performing any work and/or services for or on behalf of Tenant.   20 SECTION 54. Additional Terms   Tenant shall have use of all office space and warehouse space (except as delineated at Exhibit A) in the Building upon commencement of the term. Tenant shall pay all utilities used on the entire premises until such time as Landlord obtains another tenant(s). If and when Landlord obtains another tenant during the term of this lease, then Landlord shall provide sixty (60) days prior written notice to Tenant for tenant to vacate all portions of the Building outside of the 16,000 +/- foot area designated as the Premises which will be demised by Landlord for Tenant’s use. Tenant shall only pay its proportionate share of taxes, insurance, and common area maintenance for the demised premises, even if Tenant is utilizing more than the demised premises as set forth herein.   If and when Landlord obtains another tenant(s), then Landlord shall pay all costs associated with separating Tenant from all other tenants in the building, said costs including the construction of demising walls and separation (or separately metering) utilities. Tenant shall pay its own moving costs for moving into the demised premises, as well as all costs associated with its telephone and computer systems and wiring. Any and all work done by Landlord in connection with demising the demised premises for Tenant as contemplated herein shall be done, causing as little interference to Tenant’s operations and business as possible. Further, all such work to be completed by Landlord shall be done in a good and workmanlike manner and in compliance with all laws   TENANT HAS CAREFULLY READ AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS LEASE, INCLUDING THE PROVISIONS CONCERNING ENTRY OF AND EXECUTION ON CONFESSED JUDGMENT. IN NEGOTIATING THIS ARMS-LENGTH COMMERCIAL LEASE, TENANT HAS EITHER BEEN REPRESENTED BY COUNSEL OR HAS DELIBERATELY CHOSEN, FOR BUSINESS REASONS, NOT TO BE REPRESENTED BY COUNSEL.   IN WITNESS WHEREOF, the parties hereto have executed these presents on /April 10, 2003/ and intend to be legally bound thereby.   Witness:   LFT Realty Group (Landlord) /s/   BY:   /s/ Stephen A. Tornetta         Stephen A. Tornetta, Treasurer Attest:   Ceco Filters, Inc. (Tenant) /s/   BY:   /s/ Michael J. Meyer   21 Exhibit “A”   Description of the Premises   22 Exhibit B   Landlord’s Work   Intentionally Omitted   23

Exhibit 10.1   DENISE KASSEKERT EMPLOYMENT AGREEMENT THIS AGREEMENT (the “Agreement”), made this 15th day of May, 2008, (the “Effective Date”) by and between BENEFICIAL MUTUAL BANCORP, INC., a federally-chartered corporation (the “Company”), BENEFICIAL MUTUAL SAVINGS BANK, a Pennsylvania chartered savings bank (the “Bank”), and DENISE KASSEKERT (the WHEREAS, Executive serves in a position of substantial responsibility; and WHEREAS, the Company and the Bank wish to assure the services of Executive for the period provided in this Agreement; and WHEREAS, Executive is willing to continue to  serve in the employ of the Bank on a full-time basis for said period. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows: 1.           Employment.  Executive is employed as Executive Vice President of the Company and the Bank.  Executive shall perform all duties and shall have all powers which are commonly incident to the office of Executive Vice President or which, consistent with the office, are delegated to her by the Chief Executive Officer of the Bank.  (All subsequent references herein to the Board shall be the Board of the Bank, unless otherwise indicated). 2.           Location and Facilities.  Executive will be furnished with the working facilities and staff as are necessary for her to perform her duties.  The location of such facilities and staff shall be at the principal administrative offices of the Bank, or at such other site or sites customary for such offices. 3.           Term.  The term of this Agreement shall commence on the date first written above and continue until January 7, 2010 (or until such earlier date as determined pursuant to Section 11 of this Agreement).  The term of this Agreement may be extended only if agreed to in writing by all parties to the Agreement. 4.           Base Compensation.   a. Effective May 15, 2008,  the Bank agrees to pay Executive a base salary at the rate of $200,000 per year, payable in accordance with customary payroll practices.   b. The Board shall review the rate of Executive’s base salary based upon factors it deems relevant, and may maintain or increase her salary, provided that no such action shall reduce the rate of salary below the rate set forth in paragraph a. of this Section 4.  The Executive’s first base salary review will be conducted on or before January 1, 2009 (“initial review”).  All subsequent salary reviews will take place on or before the anniversary date of the initial review.       c. In the absence of action by the Board, Executive shall continue to receive salary at the annual rate specified in paragraph a. of this Section 4. or, if another rate has been established under the provisions of this Section 4, the rate last properly established by action of the Board under the provisions of this Section 4. 5.           Bonuses.  Executive shall be entitled to participate in discretionary bonuses or other incentive compensation programs that the Company and the Bank may award from time to time to senior management employees pursuant to bonus plans or otherwise. 6.           Benefit Plans.  Executive shall also be eligible to participate in such medical, dental, pension, profit sharing, retirement and stock-based compensation plans and other programs and arrangements as may be approved from time to time by the Company and the Bank for the benefit of their employees. 7.           Vacation and Leave.   a. Executive shall be entitled to vacation and other leave in accordance with the Bank’s policy for senior executives, or otherwise as approved by the Board.   b. In addition to paid vacations and other leave, Executive shall be entitled, without loss of pay, to absent herself voluntarily from the performance of her employment for such additional periods of time and for such valid and legitimate reasons as the Board may, in its discretion, determine.  Further, the Board may grant to Executive a leave or leaves of absence, with or without pay, at such time or times and upon such terms and conditions as the Board in its discretion may determine. 8.           Expense Payments and Reimbursements.  Executive shall be reimbursed for all reasonable out-of-pocket business expenses that she shall incur in connection with her services under this Agreement upon substantiation of such expenses in accordance with applicable policies of the Bank.                   9.           Automobile Allowance.  During the term of this Agreement, Executive shall be entitled to use of a Bank-owned automobile.  Executive shall comply with reasonable reporting and expense limitations on the use of such automobile as may be established by the Bank from time to time, and the Bank shall include on Executive's Form W-2 any amount of income attributable to Executive’s personal use of such automobile. 2   10.           Loyalty and Confidentiality.   a. During the term of this Agreement Executive:  (i) shall devote all her time, attention, skill, and efforts to the faithful performance of her duties hereunder; provided, however, that from time to time, Executive may serve on the boards of directors of, and hold any other offices or positions in, companies or organizations which will not present any conflict of interest with the Company and the Bank or any of their subsidiaries or affiliates, unfavorably affect the performance of Executive’s duties pursuant to this Agreement, or violate any applicable statute or regulation and (ii) shall not engage in any business or activity contrary to the business affairs or interests of the Company and the Bank.   b. Nothing contained in this Agreement shall prevent or limit Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the Company and the Bank, or, solely as a passive, minority investor, in any business.   c. Executive agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Company and the Bank; the names or addresses of any of its borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning the Company and the Bank to which she may be exposed during the course of her employment.  Executive further agrees that, unless required by law or specifically permitted by the Board in writing, she will not disclose to any person or entity, either during or subsequent to her employment, any of the above-mentioned information which is not generally known to the public, nor shall she employ such information in any way other than for the benefit of the Company and the Bank. 11.           Termination and Termination Pay.  Subject to Section 12 of this Agreement, Executive’s employment under this Agreement may be terminated in the following circumstances:   a. Death.  Executive’s employment under this Agreement shall terminate upon her death during the term of this Agreement, in which event Executive’s estate shall be entitled to receive the compensation due to Executive through the last day of the calendar month in which her death occurred.   b. Retirement.  This Agreement will terminate on Executive’s Retirement Date.  For purposes of this Agreement, Retirement Date is defined as the date the Executive retires from the Bank under the retirement benefit plan or plans in which she participates pursuant to Section 6 of this Agreement.   3   c.           Disability.   i. The Board or Executive may terminate Executive’s employment after having determined Executive has a Disability.  For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform her duties under this Agreement and that results in Executive becoming eligible for long-term disability benefits under any long-term disability plans of the Company and the Bank (or, if there are no such plans in effect, that impairs Executive’s ability to substantially perform her duties under this Agreement for a period of one hundred eighty (180) consecutive days).  The Board shall determine whether or not Executive is and continues to be permanently disabled for purposes of this Agreement in good faith, based upon competent medical advice and other factors that they reasonably believe to be relevant.  As a condition to any benefits, the Board may require Executive to submit to such physical or mental evaluations and tests as it deems reasonably appropriate.   ii. In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate.  The Bank will pay Executive, as Disability pay, an amount equal to sixty-six and two thirds percent (66 2/3%) of Executive’s bi-weekly rate of base salary in effect as of the date of her termination of employment due to Disability.  Disability payments will be made on a monthly basis and will commence on the first day of the month following the effective date of Executive’s termination of employment for Disability and end on the earlier of:  (A) the date Executive returns to full-time employment at the Bank in the same capacity as she was employed prior to her termination for Disability; (B) Executive’s death; (C) Executive’s attainment of age 65; or (D) the date the Agreement would have expired had Executive’s employment not terminated by reason of Disability.  Such payments shall be reduced by the amount of any short- or long-term disability benefits payable to Executive under any other disability programs sponsored by the Company and the Bank.  In addition, during any period of Executive’s Disability, Executive and her dependents shall, to the greatest extent possible, continue to be covered under all benefit plans (including, without limitation, retirement plans and medical, dental and life insurance plans) of the Company and the Bank, in which Executive participated prior to her Disability on the same terms as if Executive were actively employed by the Company and the Bank. d.           Termination for Cause.   i. The Board may, by written notice to Executive in the form and manner specified in this paragraph, immediately terminate her employment at any time, for “Cause.”  Executive shall have no right to receive compensation or other benefits for any period after termination for Cause except for vested benefits.  Termination for Cause shall mean termination because of, in the good faith determination of the Board, Executive’s:   4     (1) Personal dishonesty;   (2) Incompetence;   (3) Willful misconduct;   (4) Breach of fiduciary duty involving personal profit;   (5) Intentional failure to perform stated duties under this Agreement;   (6) Willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that reflects adversely on the reputation of the Company and the Bank, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; or   (7) Material breach by Executive of any provision of this Agreement.   ii. terminated for Cause by the Company and the Bank unless there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board at a meeting of such Board called and held for the purpose (after reasonable notice to Executive and an opportunity for Executive to be heard before the Board with counsel), of finding that, in the good faith opinion of the Board, Executive was guilty of the conduct described above and specifying the particulars thereof.   e. Voluntary Termination by Executive.  In addition to her other rights to terminate under this Agreement, Executive may voluntarily terminate employment during the term of this Agreement upon at least sixty (60) days prior written notice to the Board, in which case Executive shall receive only her compensation, vested rights and employee benefits up to the date of her termination.     f. Without Cause or With Good Reason.   i. In addition to termination pursuant to Sections 11a. through 11e., the Board may, by written notice to Executive, immediately terminate her employment at any time for a reason other than Cause (a termination “Without Cause”) and Executive may, by written notice to the Board, immediately terminate this Agreement at any time within ninety (90) days following an event constituting “Good Reason,” as defined below (a termination “With Good Reason”).   5     ii. Subject to Section 12 of this Agreement, in the event of termination under this Section 11f., Executive shall be entitled to receive a severance benefit equal to two (2) times the sum of Executive’s (i) current base salary and (ii) the most recent bonus paid to Executive by the Company and/or the Bank.  Executive’s severance benefit shall be payable ratably over a two (2) year period through the Bank’s regular payroll.  In addition, Executive shall receive continued medical, dental and life insurance coverage, upon terms no less favorable than the most favorable terms provided to senior executives of the Company and the Bank during the twenty-four (24) month period following her termination date.  In the event that the Company and the Bank are unable to provide such coverage by reason of Executive no longer being an employee, the Company and the Bank shall provide Executive with comparable coverage on an individual policy basis.  The severance payments and benefits provided under this subparagraph (ii) are subject to Section 11f.(v) of this Agreement.   iii. “Good Reason” shall exist if, without Executive’s express written consent, the Company and the Bank materially breach any of their respective obligations under this Agreement.  Without limitation, such a material breach shall be deemed to occur upon any of the following:   (1) A material reduction in Executive’s responsibilities or authority in connection with her employment with the Company or the Bank;   (2) Assignment to Executive of duties of a non-executive nature or duties for which she is not reasonably equipped by her skills and experience;   (3) A reduction in salary or benefits contrary to the terms of this Agreement, or, following a Change in Control as defined in Section 12 of this Agreement, any reduction in salary or material reduction in benefits below the amounts to which Executive was entitled prior to the Change in Control;   (4) Termination of incentive and benefit plans (other than the Bank’s tax-qualified plans), programs or arrangements, or reduction of Executive’s participation to such an extent as to materially reduce their aggregate value below their aggregate value as of the Effective Date;   6     (5) A relocation of Executive’s principal business office by more than thirty (30) miles from its current location; or     (6) Liquidation or dissolution of the Company or the Bank.   iv. Notwithstanding the foregoing, a reduction or elimination of Executive’s benefits under one or more benefit plans maintained by the Company or the Bank as part of a good faith, overall reduction or elimination of such plans or benefits thereunder applicable to all participants in a manner that does not discriminate against Executive (except as such discrimination may be necessary to comply with law) shall not constitute an event of Good Reason or a material breach of this Agreement, provided that benefits of the same type or to the same general extent as those offered under such plans are not available to other officers of the Company and the Bank, or any company that controls either of them, under a plan or plans in or under which Executive is not entitled to participate subsequent to such reduction or elimination of benefits.   v. The parties to this Agreement intend for the payments to satisfy the short-term deferral exception under Section 409A of the Code or, in the case of health and welfare benefits, not constitute deferred compensation (since such amounts are not taxable to Executive).  However, notwithstanding anything to the contrary in this Agreement, to the extent payments do not meet the short-term deferral exception of Section 409A of the Code and, in the event Executive is a “Specified Employee” (as defined herein) no payment shall be made to Executive under this Agreement prior to the first day of the seventh month following the Event of Termination in excess of the “permitted amount” under Section 409A of the Code.  For these purposes the “permitted amount” shall be an amount that does not exceed two times the lesser of: (A) the sum of Executive’s annualized compensation based upon the annual rate of pay for services provided to the Company for the calendar year preceding the year in which Executive has an Event of Termination, or (B) the maximum amount that may be taken into account under a tax-qualified plan pursuant to Section 401(a)(17) of the Code for the calendar year in which occurs the Event of Termination.  The payment of the “permitted amount” shall be made within sixty (60) days of the occurrence of the Event of Termination.  Any payment in excess of the permitted amount shall be made to Executive on the first day of the seventh month following the Event of Termination.  “Specified Employee” shall be interpreted to comply with Section 409A of the Code and shall mean a key employee within the meaning of Section 416(i) of the Code (without regard to paragraph 5 thereof), but an individual shall be a “Specified Employee” only if the Company is a publicly-traded institution or the subsidiary of a publicly-traded holding company.   7     g. Continuing Covenant Not to Compete or Interfere with Relationships.  Regardless of anything herein to the contrary, following a termination by the Company and the Bank or Executive pursuant to Section 11f.:   i. Executive’s obligations under Section 10c. of this Agreement will continue in effect; and   ii. During the period ending one year after such termination of employment, Executive shall not serve as an officer, director or employee of any bank holding company, bank, savings bank, savings and loan holding company, or mortgage company (any of which, a “Financial Institution”) which Financial Institution offers products or services competing with those offered by the Bank from any office within thirty (30) miles from the main office or any branch of the Bank and shall not interfere with the relationship of the Company and the Bank and any of its employees, agents, or representatives. 12.           Termination in Connection with a Change in Control.   a. For purposes of this Agreement, a “Change in Control” means any of the following events:   i. Merger:  The Company or the Bank merges into or consolidates with another corporation, or merges another corporation into the Company or the Bank, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation.   ii. Acquisition of Significant Share Ownership:  There is filed, or required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities, but this clause (b) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.   iii. Change in Board Composition:  During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or   8     iv. Sale of Assets:  The Company or the Bank sells to a third party all or substantially all of its assets. Notwithstanding anything in this Agreement to the contrary, in no event shall the reorganization of the Bank from the mutual holding company form of organization to the full stock holding company form of organization (including the elimination of the mutual holding company) constitute a “Change in Control”   b. Termination.  If within the period ending  twelve (12) months after a Change in Control, (i) the Company and the Bank shall terminate Executive’s employment Without  Cause, or (ii) Executive voluntarily terminates her employment With Good Reason, the Company and the Bank shall, within ten (10) calendar days of the termination of Executive’s employment, make a lump-sum cash payment to her equal to three (3) times the sum of Executive’s (i) base salary and (ii) the most recent bonus paid by the Company and/or Bank.  Also, in such event, Executive shall, for a thirty-six (36) month period following her termination of employment, receive continued medical, dental and life insurance coverage upon terms no less favorable than the most favorable terms provided to senior executives of the Bank during such period.  In the event that the Company or the Bank is unable to provide such coverage by reason of Executive no longer being an employee, the Company and the Bank shall provide Executive with comparable coverage under an individual policy.  The parties to this Agreement intend for the payments to satisfy the short-term deferral exception under Section 409A of the Code or, in the case of health and welfare benefits, not constitute deferred compensation (since such amounts are not taxable to Executive).  However, notwithstanding anything to the contrary in this Agreement, to the extent payments do not meet the short-term deferral exception of Section 409A of the Code and, in the event Executive is a “Specified Employee” (as defined herein) no payment shall be made to Executive under this Agreement prior to the first day of the seventh month following the Event of Termination in excess of the “permitted amount” under Section 409A of the Code.  For these purposes the “permitted amount” shall be an amount that does not exceed two times the lesser of: (A) the sum of Executive’s annualized compensation based upon the annual rate of pay for services provided to the Company for the calendar year preceding the year in which Executive has an Event of Termination, or (B) the maximum amount that may be taken into account under a tax-qualified plan pursuant to Section 401(a)(17) of the Code for the calendar year in which occurs the Event of Termination.  The payment of the “permitted amount” shall be made within sixty (60) days of the occurrence of the Event of Termination.  Any payment in excess of the permitted amount shall be made to Executive on the first day of the seventh month following the Event of Termination.  “Specified Employee” shall be interpreted to comply with Section 409A of the Code and shall mean a key employee within the meaning of Section 416(i) of the Code (without regard to paragraph 5 thereof), but an individual shall be a “Specified Employee” only if the Company is a publicly-traded institution or the subsidiary of a publicly-traded holding company.   9     c. The provisions of Section 12 and Sections 14 through 27, including the defined terms used in such sections, shall continue in effect until the later of the expiration of this Agreement or one (1) year following a Change in Control.   13. Indemnification and Liability Insurance.   a. Indemnification.  The Company and the Bank agree to indemnify Executive (and her heirs, executors, and administrators), and to advance expenses related thereto, to the fullest extent permitted under applicable law and regulations against any and all expenses and liabilities reasonably incurred by her in connection with or arising out of any action, suit, or proceeding in which she may be involved by reason of her having been a director or Executive of the Company, the Bank or any of their subsidiaries (whether or not she continues to be a director or Executive at the time of incurring any such expenses or liabilities) such expenses and liabilities to include, but not be limited to, judgments, court costs, and attorneys’ fees and the costs of reasonable settlements, such settlements to be approved by the Board, if such action is brought against Executive in her capacity as an Executive or director of the Company and the Bank or any of their subsidiaries.  Indemnification for expenses shall not extend to matters for which Executive has been terminated for Cause.  Nothing contained herein shall be deemed to provide indemnification prohibited by applicable law or regulation.  Notwithstanding anything herein to the contrary, the obligations of this Section 13 shall survive the term of this Agreement by a period of six (6) years.   b. Insurance.  During the period in which indemnification of Executive is required under this Section, the Company and the Bank shall provide Executive (and her heirs, executors, and administrators) with coverage under a directors’ and officers’ liability policy at the expense of the Company and the Bank, at least equivalent to such coverage provided to directors and senior executives of the Company and the Bank. 14.           Reimbursement of Executive’s Expenses to Enforce this Agreement.  The Company and the Bank shall reimburse Executive for all out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees, incurred by Executive in connection with successful enforcement by Executive of the obligations of the Company and the Bank to Executive under this Agreement.  Successful enforcement shall mean the grant of an award of money or the requirement that the Company and the Bank take some action specified by this Agreement:  (i) as a result of court order; or (ii) otherwise by the Company and the Bank following an initial failure of the Company and the Bank to pay such money or take such action promptly after written demand therefor from Executive stating the reason that such money or action was due under this Agreement at or prior to the time of such demand.   10   15.           Limitation of Benefits under Certain Circumstances.  If the payments and benefits pursuant to Section 12 of this Agreement, either alone or together with other payments and benefits which Executive has the right to receive from the Company and the Bank, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits pursuant to Section 12 shall be reduced or revised, in the manner determined by Executive, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under Section 12 being non-deductible to the Company and the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code.  The determination of any reduction in the payments and benefits to be made pursuant to Section 12 shall be based upon the opinion of the Company and the Bank’s independent public accountants and paid for by the Company and the Bank.  In the event that the Company, the Bank and/or Executive do not agree with the opinion of such counsel, (i) the Company and the Bank shall pay to Executive the maximum amount of payments and benefits pursuant to Section 12, as selected by Executive, which such opinion indicates there is a high probability do not result in any of such payments and benefits being non-deductible to the Company and the Bank and subject to the imposition of the excise tax imposed under Section 4999 of the Code and (ii) the Company and the Bank may request, and Executive shall have the right to demand that they request, a ruling from the IRS as to whether the disputed payments and benefits pursuant to Section 12 have such consequences.  Any such request for a ruling from the IRS shall be promptly prepared and filed by the Company and the Bank, but in no event later than thirty (30) days from the date of the opinion of counsel referred to above, and shall be subject to Executive’s approval prior to filing, which shall not be unreasonably withheld.  The Company, the Bank and Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any such rulings, together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.  Nothing contained herein shall result in a reduction of any payments or benefits to which Executive may be entitled upon termination of employment other than pursuant to Section 12 hereof, or a reduction in the payments and benefits specified in Section 12 below zero. 16.           Injunctive Relief.  If there is a breach or threatened breach of Section 11g. of this Agreement or the prohibitions upon disclosure contained in Section 10c. of this Agreement, the parties agree that there is no adequate remedy at law for such breach, and that the Company and the Bank shall be entitled to injunctive relief restraining Executive from such breach or threatened breach, but such relief shall not be the exclusive remedy hereunder for such breach.  The parties hereto likewise agree that Executive, without limitation, shall be entitled to injunctive relief to enforce the obligations of the Company and the Bank under this Agreement. 17.           Successors and Assigns.   a. This Agreement shall inure to the benefit of and be binding upon any corporate or other successor to the Company and the Bank which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company and the Bank.   11     b. Since the Company and the Bank are contracting for the unique and personal skills of Executive, Executive shall be precluded from assigning or delegating her rights or duties hereunder without first obtaining the written consent of the Company and the Bank. 18.           No Mitigation.  Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to Executive in any subsequent employment. 19.           Notices.  All notices, requests, demands and other communications in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed to the Company and/or the Bank at their principal business offices and to Executive at her home address as maintained in the records of the Company and the Bank. 20.           No Plan Created by this Agreement.  Executive, the Company and the Bank expressly declare and agree that this Agreement was negotiated among them and that no provision or provisions of this Agreement are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and each party expressly waives any right to assert the contrary.  Any assertion in any judicial or administrative filing, hearing, or process that such a plan was so created by this Agreement shall be deemed a material breach of this Agreement by the party making such an assertion. 21.           Amendments.  No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties, except as herein otherwise specifically provided. 22.           Applicable Law.  Except to the extent preempted by federal law, the laws of the Commonwealth of Pennsylvania shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise. 23.           Severability.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 24.           Headings.  Headings contained herein are for convenience of reference only. 25.           Entire Agreement.  This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, other than written agreements with respect to specific plans, programs or arrangements described in Sections 5 and 6.   12   26.           Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in Philadelphia, Pennsylvania, in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of her right to be paid until the date of termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 27.           Required Provisions.  In the event any of the foregoing provisions of this Section 26 are in conflict with the terms of this Agreement, this Section 27 shall prevail.   a. The Bank’s board of directors may terminate Executive’s employment at any time, but any termination by the Bank, other than termination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement.  Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause.   b. If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Bank may in its discretion:  (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.   c. If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.   d. If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.   13     e. All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank:  (i) by the Director of the OTS (or his or her designee), at the time the Federal Deposit Insurance Corporation (FDIC) enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Director of the OTS (or his or her designee) at the time the Director (or his designee) approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition.  Any rights of the parties that have already vested, however, shall not be affected by such action.     f. subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments. 14 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on July 16, 2008. ATTEST:         BENEFICIAL MUTUAL BANCORP, INC.                           /s/ Thomas M. Topley   By:   /s/ Gerard P. Cuddy   Corporate Secretary       For the Entire Board of Directors                                        ATTEST:         BENEFICIAL MUTUAL SAVINGS BANK                             By:     Corporate Secretary       For the Entire Board of Directors                                       WITNESS:       EXECUTIVE                             By:   /s/ Denise Kassekert           Denise Kassekert                                                                      15

PROXY STATEMENT SCHEDULE 14A INFORMATION (RULE 14a-101) PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [ ] Filed by a Party other than the Registrant [X] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, for Use of theCommission Only (as permittedby Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Under Rule 14a-12 ARTES MEDICAL, INC. (Name of Registrant as Specified in Charter) H.

Listing Report:Supplement No. 23 dated Apr 24, 2012 to Prospectus dated Apr 11, 2012 File pursuant to Rule 424(b)(3) Registration Statement No. 333-147019 Prosper Marketplace, Inc. Borrower Payment Dependent Notes This Listing Report supplements the prospectus dated Apr 11, 2012 and provides information about each loan request (referred to as a "listing") and series of Borrower Payment Dependent Notes (the "Notes") we are currently offering. Prospective investors should read this Listing Report supplement together with the prospectus dated Apr 11, 2012 to understand the terms and conditions of the Notes and how they are offered, as well as the risks of investing in Notes. The following series of Notes are currently being offered: Borrower Payment Dependent Notes Series 557445 The following information pertains to the borrower loan being requested, that corresponds to the series of Notes to be issued upon the funding of the borrower loan, in the event the listing receives commitments to purchase Notes in an amount that equals or exceeds the minimum amount required for the loan to fund. Amount: Prosper Rating: C

UNIVAR INC. RELEASE AGREEMENT This Release Agreement (“Release”) is entered into this ___ day of December, 2016 by Christopher Oversby (“Executive”) with respect to the termination of the employment relationship between Executive and Univar Inc. (the “Company”). 1.    Executive’s last day of employment will be on December 31, 2016 (the “Termination Date”). 2.    Executive will be paid: (a) an amount equal to his current annual salary of $515,000, (b) an amount equal to his target incentive under the Company’s Management Incentive Plan (MIP) of $412,000, (c) any amount earned under the 2016 MIP in accordance with the terms of such plan (and the assumed target level of 65% of base salary) and at the time of payment in accordance with the terms of the plan and (d) and Energy Incentive under his employment agreement of $200,000 (collectively the “Separation Payment”). Executive will also retain his rights to COBRA benefits under the Company’s health and welfare programs. Other than: (a) the Separation Payment, (b) reimbursement of rental and utilities on the UK home that Company rented for Executive through the earlier of a May 31, 2017 or a sublease of that facility, whichever is the earlier to occur, (c) any unused, accrued vacation for 2016, (d) relocation of personal possessions by sea freight from the UK to the US (e) tax equalization support as indicated in the assignment letter of April 24, 2016 as limited to the income tax associated with the assignment related amounts paid to Executive for his relocation to UK and then his return relocation to the US, the Executive and Employer have settled all compensation and benefits earned Executive by virtue of employment with Employer and agreements with Employer. The payment of the Separation Payment is conditioned upon Executive signing this Release Agreement and not revoking it within the applicable release period described below, and will be paid immediately after such Release Period has expired (without revocation) or 15 days after the effective date of this Release (whichever is earlier). 3.    Executive hereby releases the Company, and its affiliates, including without limitation Univar USA Inc. and their respective officers, directors, and employees, from any and all claims, causes of action, and liability for damages of whatever kind, known or unknown, arising from or relating to Executive’s employment and separation from employment (“Released Claims”). Released Claims include claims (including claims to attorneys’ fees), damages, causes of action, and disputes of any kind whatsoever, including without limitation all claims for wages, any claims for unused vacation benefits (for any year), employee benefits, and damages arising out of any: contracts, express or implied; tort; discrimination; wrongful termination; any federal, state, local, or other governmental statute or ordinance, including, without limitation Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended (“ADEA”), the Fair Labor Standards Act, the Washington Law Against Discrimination, the Washington Minimum Wage Act and the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); and any other legal limitation on the employment relationship. Notwithstanding the foregoing, “Released Claims” do not include claims for breach or enforcement of this Agreement, claims that arise after the execution of this Agreement, claims to vested benefits under ERISA, workers’ compensation claims, claims challenging the validity of this Agreement under or any other claims that may not be released under this Agreement in accordance with applicable law. This waiver and release shall not apply to claims arising after Executive’s execution of this Release. 4.    Executive represents and warrants that Executive has not filed any litigation based on any Released Claims. Executive covenants and promises never to file, press, or join in any lawsuit based on any Released Claim and agrees that any such claim, if filed by Executive, shall be dismissed, except that this covenant and promise does not apply to any claim of Executive challenging the validity of this Agreement in connection with claims arising under the ADEA. Moreover, while nothing in this Agreement restricts Executive from bringing before any fair employment practices agencies matters for which such agencies have jurisdiction, or cooperating in any investigation by any such agency, Executive covenants and promises that he waives, releases, and shall not accept any benefits of any administrative or agency action. Executive represents and warrants that Executive is the sole owner of any and all Released Claims that Executive may have; and that Executive has not assigned or otherwise transferred Executive’s right or interest in any Released Claim. 5.    On or before December 31, 2016, Executive shall turn over to Employer all property of Employer, including without limitation all files, memoranda, keys, manuals, equipment, data, records, and other documents, including electronically recorded documents and data that Executive received from Employer or its employees or that Executive generated in the course of employment with Employer. 6.    Executive specifically agrees as follows: a.    Executive is knowingly and voluntarily entering into this Release; b.    Executive acknowledges that the Company is providing benefits in the form of payments and compensation, to which Executive would not otherwise be entitled in the absence of Executive’s entry into this Release, as consideration for Executive’s entering into this Release; c.    Executive is hereby advised by this Release to consult with an attorney prior to executing this Release; d.    Executive understands he has a period of at least twenty-one (21) days from the date a copy of this Release is provided to Executive in which to consider and sign the Release (during which the offer will remain open), and that Executive has an additional seven (7) days after signing this Release within which to revoke acceptance of the Release; e.    If during the twenty-one (21) day waiting period Executive should elect not to sign this Release, or during the seven (7) day revocation period Executive should revoke acceptance of the Release, then this Release shall be void and the effective date of this Release shall be the eighth day after Executive signs and delivers this Release, provided he has not revoked acceptance; and f.    Executive may accept this Agreement before the expiration of the twenty-one (21) days, in which case Executive shall waive the remainder of the 21-day waiting period. 7. Covenants. a. Confidentiality Executive recognizes that the success of the Company and its current or future Affiliates depends upon the protection of information or materials that are designated as confidential and/or proprietary at the time of disclosure or should, based on their nature or the circumstances surrounding such disclosure, reasonably be deemed confidential including, without limitation, information to which Executive has access while employed by the Company whether recorded in any medium or merely memorized (all such information being “Confidential Information”). “Confidential Information” includes without limitation, and whether or not such information is specifically designated as confidential or proprietary: all business plans and marketing strategies; information concerning existing and prospective markets, suppliers and customers; financial information; information concerning the development of new products and services; and technical and non-technical data related to software programs, design, specifications, compilations, inventions, improvements, patent applications, studies, research, methods, devices, prototypes, processes, procedures and techniques. Confidential Information expressly includes information provided to the Company or its Affiliates by third parties under circumstances that require them to maintain the confidentiality of such information. Notwithstanding the foregoing, Executive shall have no confidentiality obligation with respect to disclosure of any Confidential Information that (a) was, or at any time becomes, available in the public domain other than through a violation of this Agreement or (b) Executive can demonstrate by written evidence was furnished to Executive by a third party in lawful possession thereof and who was not under an obligation of confidentiality to the Company or any of its Affiliates. Executive agrees that during Executive’s employment and after termination of employment irrespective of cause, Executive will use Confidential Information only for the benefit of the Company and its Affiliates. Notwithstanding the foregoing, the Employee may disclose Confidential Information as required pursuant to an order or requirement of a court, administrative agency or other government body, provided Executive has notified the Company or the applicable Affiliate immediately after receipt of such order or requirement and allowed the Company and/or the Affiliate a meaningful opportunity to apply for protective measures. Executive’s obligations under this section are in addition to any obligations that Executive has under state or federal law. Executive’s obligations under this section 7(a) are indefinite in term and shall survive the termination of this Agreement. b. Nonsolicitation and Noncompete For a period expiring eighteen (18) months after the termination of the Executive employment (the “Restrictive Period”), regardless of the reason, if any, for such termination, the Executive shall not, in the United States or Canada, directly or indirectly: i.    solicit or entice away or in any other manner persuade or attempt to persuade any officer, employee, consultant or agent of the Company or any of its Affiliates to alter or discontinue his or her relationship with the Company or its Affiliates; ii.    solicit from any person or entity that was a customer of the Company or any of its Affiliates during the Executive’s employment with the Company, any business of a type or nature similar to the business of the Company or any of its Affiliates with such customer; iii.    solicit, divert, or in any other manner persuade or attempt to persuade any supplier of the Company or any of its Affiliates to discontinue its relationship with the Company or its Affiliates; iv.    solicit, divert, take away or attempt to solicit, divert or take away any customers of the Company or its Affiliates; or v.    engage in or participate in the chemical distribution or logistics business. The Company and the Executive agree that the provisions of this Section 7 do not impose an undue hardship on the Executive and are not injurious to the public; that this provision is necessary to protect the business of the Company and its Affiliates; that this Section 7 is reasonable in terms of length of time and scope; and that adequate consideration supports this Section 7. In the event that a court determines that any provision of this Section 7 is unreasonably broad or extensive, the Employee agrees that such court should narrow such provision to the extent necessary to make it reasonable and enforce the provisions as narrowed. 8.    Executive hereby acknowledges his obligation to comply with the obligations that survive termination of the Employment Agreement, including without limitation those obligations with respect to confidentiality, inventions and nonsolicitation. Executive: /s/ Christopher Oversby (Signature) Dated: 1/7/17 Christopher Oversby Univar Inc. By: /s/ Stephen N. Landsman Title: General Counsel Dated: 1-16-17

Exhibit 99 FOR IMMEDIATE RELEASE November 3rd, 2016 THE EASTERN COMPANY REPORTS THIRD QUARTER EARNINGS OF $0.38 PER SHARE Naugatuck, CT–The Eastern Company (NASDAQ-EML) today announced the results of its operations for the third quarter of 2016.Sales for the quarter were $33.5 million, compared to $36.2 million for the same period in 2015. Net income for the third quarter was $2.4 million, or $0.38 per diluted share, compared to $2.5 million, or $0.41 per diluted share in the third quarter of 2015, a decrease of 5%. Net sales for the first nine months of 2016 were $103.5 million, compared to $110.2 million for the same period in 2015. Net income for the first nine months of 2016 was $5.1 million, or $0.82 per diluted share, compared to $4.0 million, or $0.64 per diluted share during the same period in 2015, an increase of 29%. Mr, Vlak added that “our businesses have executed well in the face of a significant and sustained downturn in the class 8 truck market and a secular decline in the mining industry by expanding into new markets and building a sustainable pipeline of new business opportunities for 2017 and beyond.The elimination of one-time costs of $1.4 million net of tax, associated with the proxy contest in the first half of 2015, also contributed to an improvement for the first nine months of 2016 over the same period in 2015. The Industrial Hardware segment sales were down 7% in the third quarter compared to the same period in 2015, primarily as a result of slow sales in our composite panels business. In the face of a decline in its core markets, our composite panels business has continued to build our sales and engineering capabilities in North Carolina to pursue additional opportunities in other transportation as well as architectural applications.” Mr. Vlak continued that “In our Security Products segment, third quarter and first nine months of 2016 sales were 2% below and 1% above the same period last year, respectively. Income before taxes was up 30% and 70% compared to the third quarter and first nine months of 2015, respectively, as a result of strong performance in our supply chain and our ability to take advantage of favorable currency trends.Mr. Vlak expanded that “In the second quarter, we invested in an upgrade of our capabilities at Argo Transdata, which is part of our Security Products segment. Argo delivered solid sales and income growth in the third quarter over the same period in 2015.” Mr. Vlak also said that “Net sales in the Metal Products segment were 23% below the same period last year, consistent with performance in prior quarters, due to persistent pressure in the US coal industry. The segment generated $76 thousand in earnings in the third quarter.This is the first quarter of positive earnings for the Metal Products segment this year.” Mr. Vlak continued, “the Company generated $9.0 million of cash from its operations, in the first nine months of 2016, as a result of disciplined capital management. The improvement in cash flow in 2016 is primarily the result of increased earnings during the period and the impact from inventory reduction initiatives.In addition, our decision to freeze our pension plan effective May 31, 2016 not only strengthens our balance sheet but also contributed $0.11 and $0.17 per diluted share in the third quarter and the nine-month period ending October 1, 2016.” “The Company continues to make steady progress on three parts of its strategy, including optimizing its portfolio, strengthening execution in each of its businesses, and building its balance sheet,” said August Vlak, President and CEO. He stated that “our team has built a solid pipeline of M&A opportunities and we have been evaluating potential transactions that can improve returns and accelerate growth of our business”, Mr. Vlak concluded, “Our businesses are preparing plans for 2017 and beyond.As part of our efforts to strengthen execution, we have asked our each of our businesses to identify multi-year growth opportunities – leveraging their presence with customers, finding new end-markets for our products, or identifying ways to re-invent our core offerings.We are encouraged by the work that is being completed by our businesses and look forward to sharing our plans.” The Eastern Company is a 158-year-old manufacturer of industrial hardware, security products and metal castings.It operates from 13 locations in the U.S., Canada, Mexico, Taiwan and China.The diversity of the Company’s products helps it to respond to the changing requirements of a broad array of markets. Safe Harbor for Forward-Looking Statements Statements in this document about the Company’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including those set forth in the Company’s reports and filings with the U.S. Securities and Exchange Commission. The Company is not obligated to update or revise any forward-looking statements as a result of developments occurring after the date of this document. The Eastern Company August Vlak or John L. Sullivan III, 203-729-2255 Statement of Consolidated Income (unaudited) THE EASTERN COMPANY (NASDAQ - EML) THREE Months Ended NINE Months Ended 13 wks 13 wks 39 wks 39 wks Oct 1, 2016 Oct 3, 2015 Oct 1, 2016 Oct 3, 2015 Net Sales $ 36,239,500 Net Income After Tax Net Income Per Share: Basic Diluted Weighted average shares outstandings: Basic Diluted

FORM 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2013 OR oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-54895 Dutchess Holdings Corp. (Exact name of registrant as specified in its charter) Delaware 61-1693030 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) c/o Samir Masri CPA Firm P.C., 175 Great Neck Road, Suite 403, Great Neck, NY 11021 (Address of principal executive offices) (516) 466-6257 (Registrant’s telephone number, including area code) No change (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No o. Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated file.See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yesx No o. APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yesx No o. APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,000,000 shares of common stock, par value $.0001 per share, outstanding as of August 14, 2013. DUTCHESS HOLDINGS CORP. - INDEX - Page PART I – FINANCIAL INFORMATION: Item 1. Financial Statements: 1 Balance Sheet as of June 30, 2013 (Unaudited) and March 31, 2013 2 Statement of Operations (Unaudited) for the Three Months Ended June 30, 2013 and for the Period from August 29, 2012 (Inception) to June 30, 2013 3 Statement of Stockholder's Deficiency for the Period fromAugust 29, 2012 (Inception) to June 30, 2013 (Unaudited) 4 Statement of Cash Flows (Unaudited) for the Three Months EndedJune 30, 2013 and for the Period from August 29, 2012 (Inception) to June 30, 2013 5 Notes to Financial Statements 6 Item 2. Management’s Discussion and Analysis of Financial Condition and 10 Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Item 4. Controls and Procedures 14 PART II – OTHER INFORMATION: Item 1. Legal Proceedings 14 Item 1A. Risk Factors 14 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Mine Safety Disclosures 14 Item 5. Other Information 14 Item 6. Exhibits 14 Signatures

Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements (Nos. 333-164510, 333-152138, 333-92414, 333-101517, 333-106201, 333-122893, 333-134674, 333-143145 and 333-146607) on Form S-8 and Registration Statement (No. 333-175938) on Form S-3 of our report dated March 28, 2014, relating to our audit of the consolidated financial statements of Echo Therapeutics, Inc. (the “Registrant”), appearing in the Annual Report on Form 10-K of the Registrant for the year ended December 31, 2013. /s/ Wolf & Company, P.C. Boston, Massachusetts March 28, 2014

EXHIBIT 10.3 Fair Isaac Corporation 2012 Long-Term Incentive Plan Performance Share Unit Agreement This Performance Share Unit Award Agreement (this “Agreement”), dated                     (the “Grant Date”), is by and between *[Name] (the “Participant”), and Fair Isaac Corporation, a Delaware corporation (the “Company”). Any term capitalized but not defined in this Agreement will have the meaning set forth in the Company’s 2012 Long-Term Incentive Plan (the “Plan”). In the exercise of its discretion to grant Awards under the Plan, the Committee has determined that the Participant should receive an Award of performance share units under the Plan. This Award is subject to the following terms and conditions:   1. Grant of Performance Share Units. The Company hereby grants to the Participant an Award consisting of *[Insert maximum number of units the participant could earn] performance share units (the “Units”). Each Unit that has been earned pursuant to Section 3 of this Agreement and vests pursuant to Section 4 of this Agreement represents the right to receive one share of the Company’s common stock as provided in Section 7 of this Agreement. The Award will be subject to the terms and conditions of the Plan and this Agreement.   2. Restrictions on Units. Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered other than a transfer upon death in accordance with the Participant’s will, by the laws of descent and distribution or pursuant to a beneficiary designation submitted by the Participant in accordance with Section 6(d) of the Plan. Any attempted transfer in violation of this Section 2 shall be of no effect and may result in the forfeiture of all Units. The Units and the Participant’s right to receive Shares in settlement of the Units under this Agreement shall be subject to forfeiture as provided in this Agreement until satisfaction of the conditions for earning and vesting the Units as set forth in Section 3 and Section 4, respectively, of this Agreement.   3. Earned Units. Whether and to what degree the Units will have been earned (the “Earned Units”) during the period starting on October 1,             and ending on September 30,             (the “Performance Period”) will be determined by whether and to what degree the Company has satisfied the applicable performance goal(s) for the Performance Period as set forth in Appendix A to this Agreement, and whether and to what degree the Committee has chosen to exercise its discretion to decrease the number of Units otherwise deemed to have been earned. The Participant acknowledges that the number of Units deemed to have been earned based on whether and to what degree the Company has satisfied the applicable performance goal(s) for the Performance Period may be adjusted downward, including to zero, by the Committee in its sole and absolute discretion based on such factors as the Committee determines to be appropriate and/or advisable. Any Units that are not designated as Earned Units at the conclusion of the Performance Period in accordance with this Section 3 will be forfeited. 4. Vesting of Earned Units. Subject to Section 6 of this Agreement, if the Participant remains an Employee of the Company or any of its Affiliates continuously from the Grant Date, then 25% of the Earned Units will vest on each *[specify next four anniversary dates of the grant date]. The period from October 1,              through *[specify end date of vesting period] is referred to as the “Vesting Period.”   5. Service Requirement. Except as otherwise provided in accordance with Section 6 of this Agreement, if you cease to be an Employee of the Company or any of its Affiliates prior to the vesting dates specified in Section 4 of this Agreement, you will forfeit all unvested Units. Your Service as an Employee will be deemed continuing while you are on a leave of absence approved by the Company in writing or guaranteed by applicable law or other written agreement you have entered into with the Company (an “Approved Leave”). If you do not resume providing Service as an Employee of the Company or any Affiliate following your Approved Leave, your Service will be deemed to have terminated upon the expiration of the Approved Leave.   6. Effect of Termination of Service or Change in Control. (a) Except as may be provided by the Committee pursuant to Section 6(b), upon termination of Service during the Performance Period for any reason other than death or Disability, all Units will be immediately forfeited without consideration. (b) Upon (i) termination of Service during the Performance Period due to death or Disability or (ii) a Change in Control during the Performance Period as a result of which the Company does not survive as an operating company or survives only as a subsidiary of another entity, 50% of the number of Units subject to this Award will be deemed Earned Units and will immediately vest in full. Any remaining Units that do not vest as provided in this Section 6(b) will be immediately forfeited without consideration. In connection with a Change in Control during the Performance Period that does not fit the circumstances described in clause (ii) of this Section 6(b), the Committee may provide in its discretion that 50% of the number of Units subject to this Award will be deemed Earned Units and will vest in full upon the occurrence of the Change in Control or upon the termination of the Participant’s Service as an employee within 12 months following the Change in Control. (c) Except as may be provided by the Committee pursuant to Section 6(d), upon termination of Service during the Vesting Period for any reason other than death or Disability, all Earned Units that have not vested will be immediately forfeited without consideration. (d) Upon (i) termination of Service during the Vesting Period due to death or Disability or (ii) a Change in Control during the Vesting Period as a result of which the Company does not survive as an operating company or survives only as a subsidiary of another entity, all Earned Units will immediately vest in full. In connection with a Change in Control during the Vesting Period that does not fit the circumstances described in clause (ii) of this Section 6(d), the Committee may provide in its discretion that all Earned Units will vest in full upon the occurrence of the Change in Control or upon the termination of the Participant’s Service as an employee within 12 months following the Change in Control. 7. Settlement of Units. After any Units vest pursuant to Section 4 or Section 6 of this Agreement, the Company shall, as soon as practicable (but in any event within the period specified in Treas. Reg. § 1.409A-1(b)(4) to qualify for a short-term deferral exception to Section 409A of the Code), cause to be issued and delivered to the Participant, or to the Participant’s designated beneficiary or estate in the event of the Participant’s death, one Share in payment and settlement of each vested Unit (the date of each such issuance being a “Settlement Date”). Delivery of the Shares shall be effected by the electronic delivery of the Shares to a brokerage account maintained for the Participant at E*Trade (or another broker designated by the Company or the Participant), or by another method provided by the Company, and shall be subject to the tax withholding provisions of Section 8 of this Agreement and compliance with all applicable legal requirements, including compliance with the requirements of applicable federal and state securities laws, and shall be in complete satisfaction and settlement of such vested Units.   8. Tax Consequences and Withholding. As a condition precedent to the delivery of Shares in settlement of the Units, the Participant is required to make arrangements acceptable to the Company for payment of any federal, state or local withholding taxes that may be due as a result of the issuance of Shares pursuant to the settlement of the Units (“Withholding Taxes”), in accordance with Section 15 of the Plan. Until such time as the Company provides notice to the contrary, it will collect the Withholding Taxes through an automatic Share withholding procedure (the “Share Withholding Method”), unless other arrangements acceptable to the Company have been made. Under such procedure, the Company or its agent will withhold, at the Settlement Date, a portion of the Shares with a Fair Market Value (measured as of the Settlement Date) sufficient to cover the amount of such taxes; provided, however, that the number of any Shares so withheld shall not exceed the number necessary to satisfy the Company’s required tax withholding obligations using the minimum statutory withholding rates for federal, state and local tax purposes that are applicable to supplemental taxable income. The Company will notify the Participant in writing in the event the Share Withholding Method is not available, in which case the Withholding Taxes will be collected from the Participant through one of the following alternatives: (a) delivery of the Participant’s authorization to E*Trade (or another broker designated by the Company or the Participant) to transfer to the Company from the Participant’s account at such broker the amount of such Withholding Taxes; (b) the use of the proceeds from a next-day sale of the Shares issued to the Participant, provided that (i) such sale is permissible under the Company’s trading policies governing its securities, (ii) the Participant makes an irrevocable commitment, on or before the Settlement Date, to effect such sale of the Shares, and (iii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002; or (c) any other method approved by the Company.   9. No Shareholder Rights. The Units subject to this Award do not entitle the Participant to any rights of a shareholder of the Company’s common stock. The Participant will not have any of the rights of a shareholder of the Company in connection with the grant of Units subject to this Agreement unless and until Shares are issued to the Participant upon settlement of the Units as provided in Section 7 of this Agreement. 10. Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.   11. Choice of Law. This Agreement will be interpreted and enforced under the laws of the state of Minnesota (without regard to its conflicts or choice of law principles).   12. Binding Effect. This Agreement will be binding in all respects on the Participant’s heirs, representatives, successors and assigns, and on the   13. Discontinuance of Service. This Agreement does not give the Participant a right to continued Service with the Company or any Affiliate, and the Company or any such Affiliate may terminate the Participant’s Service at any time and otherwise deal with the Participant without regard to the effect it may have upon the Participant under this Agreement.   14. Section 409A of the Code. The award of Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to be exempt from Section 409A of the Code under the short-term deferral exception specified in Treas. Reg. § 1.409A-l(b)(4).   15. Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or any committee thereof in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the Securities and Exchange Commission or any national securities exchange on which the Company’s common stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy. By executing this Agreement, the Participant accepts this Award and agrees to all the terms and conditions described in this Agreement and in the Plan document.   PARTICIPANT     FAIR ISAAC CORPORATION         By:           Title:      

Exhibit 10.13(a)   International Business Machines Corporation New Orchard Road Armonk, New York 10504   October 27, 2004   Ms. Gloria McCarthy Executive Vice President and Chief Operating Officer WellChoice, Inc. 11 West 42nd Street   Subject:  Agreement regarding claims engine matters   Dear Gloria:   This letter agreement (“Letter”) is between International Business Machines Corporation (“IBM”) and WellChoice, Inc. (“WellChoice”).   WellChoice and IBM agree to the following, effective as of October 27, 2004 (the “Letter Effective Date”):   1. The Master Services Agreement between the parties, originally dated June 1, 2002, as amended (the “MSA”) is amended as provided below:     a. Schedule A-5 of the MSA is deleted in its entirety.     b. The table entitled “Savings to WellChoice Prior to Additional Spend by WellChoice” that is Exhibit 1 to Schedule C of the MSA is deleted and replaced by the table titled “Savings to WellChoice,” attached hereto as Exhibit 1.     c. All references to rights or obligations of the Parties regarding the claims engine in all attachments to the MSA, including without limitation, in the second sentence of paragraph 2 of Section 1 in Schedule A-1, shall be deleted.     d. In Section 1.1(a) of the MSA, delete the phrase “which savings will be used in part in connection with the Claims Engine, as defined below, and”.     e. Delete Section l.1(b) of the MSA and replace it with “[Intentionally Left Blank]”.     f. In Section 1.1(e) of the MSA, delete the phrase “(i) the Claims Engine License Agreement, (ii) the Licensing and Joint Development Agreement, and (iii) this Master Services Agreement” and replace such       Page 1 of 3   phrase with “(i) the Licensing and Joint Development Agreement and (ii) this Master Services Agreement”     g. In Section 2.1 (m) of the MSA, add to the end of this section, before the period [“.”]: “which was terminated by the Parties effective as of October 27, 2004”.     h. Delete the last sentence of Section 7.4(b)(ii) of the MSA.     i. In Section 2.0 of Contract Amendment AM-0009 of the MSA, delete the definition of “Additional Services”.     j. Delete Article 4 (including Sections 4.1, 4.2 and 4.3) of Schedule C in its entirety and replace it with “[Intentionally Left Blank]”. For clarity, IBM (on behalf of itself and its Affiliates) hereby relieves WellChoice (and its Affiliates) of the spending commitments arising under Article 4 of Schedule C of the MSA, including (i) the remainder of the fifty-five million Dollar ($55,000,000) additional spending commitment in Section 4.2, and (ii) WellChoice’s obligation to spend up to thirty million Dollars ($30,000,000) on systems integration services in Section 4.1.   2. Except as expressly set forth herein, the Software License and Support Agreement, originally dated June 1, 2002, as amended, including all schedules, attachments, and exhibits thereto (“SLSA”), shall be terminated and of no further force or effect. The provisions of the SLSA that survive termination of the SLSA pursuant to Section 14.12 thereof shall survive termination of the SLSA under this Letter, other than the License and Sections 3.8(c), 3.12(c), 5.2, 7.9, 7.10, 11, 12 (except for sections 12.2, 12.3, 12.5, 12.6 and 12.7, which shall survive only to the extent of claims subject to indemnification accruing before the Letter Effective Date), 16.7, 16.11, and 16.12, which shall not survive termination of the SLSA under this Letter.   3. The parties hereby agree IBM and WellChoice shall promptly following the Letter Effective Date cooperate and take all actions necessary to terminate the Preferred Escrow Agreement entered into by IBM, deNovis, WellChoice and DSI Technology Escrow Services, Inc. dated effective as of June 2002.   4. WellChoice (on behalf of itself and its Affiliates (as defined in the MSA)) and IBM (on behalf of itself and its Affiliates (as defined in the MSA)), except with respect to any surviving obligations under sections 12.2, 12.3, 12.5, 12.6, or 12.7 of the SLSA with respect to claims subject to indemnification arising before the Letter Effective Date, each hereby unconditionally fully and finally discharge and release the other Party (as defined in the MSA), its Affiliates, and their respective officers, directors, agents, employees, contractors, successors and assigns, from any and all claims, losses, damages, causes of action of whatever type or nature, whether based in law or equity, in contract or in tort, and whether known or unknown, arising out of, or related to the claims engine development project, including, without limitation, the SLSA, Schedule A-5 of the MSA, and Article 4 of Schedule C of the MSA, that accrued on or before the Letter Effective Date.       Page 2 of 3 Except as expressly amended herein, the MSA shall remain in fall force and effect. This Letter (i) may only be amended by a writing signed by the parties, (ii) is the sole agreement of the parties relating to the subject matter hereto, replacing any prior or contemporaneous agreements between the parties relating to the subject matter hereto, and (iii) shall be governed by the substantive   Please sign and return a copy of this Letter acknowledging your agreement with its contents.   Agreed to and accepted by:   /s/    LOIS ROMEO           10/27/04       /s/    GLORIA MCCARTHY           10/27/04 Lois Romeo   Date       Gloria McCarthy   Date Vice President, Payor Services Offering International Business Machines Corp.           Executive Vice President & COO WellChoice, Inc.           Page 3 of 3

  INDEPENDENT DIRECTOR AGREEMENT   This INDEPENDENT DIRECTOR AGREEMENT (the “Agreement”) is made and entered into as of this 28th day of April, 2011 (the “Effective Date”), by and between China Integrated Energy, Inc., a Delaware corporation whose shares are publicly traded (the “Company”), and Steven Markscheid, a citizen of the United States, with a permanent residence at _________________________________. (the “Independent Director”).   WHEREAS, the Company desires to engage the Independent Director, and the Independent Director desires to serve, as a non-employee director of the Company, subject to the terms and conditions contained in this Agreement.   herein, the receipt of which is hereby acknowledged, the Company and the Independent Director, intending to be legally bound, hereby agree as follows:   1.           DEFINITIONS.   (a)           “Corporate Status” describes the capacity of the Independent Director with respect to the Company and the services performed by the Independent Director in that capacity.   (b)           “Entity” shall mean any corporation, partnership, limited liability company, joint venture, trust, foundation, association, organization or other legal entity.   (c)           “Proceeding” shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative or investigative, whether formal or informal, including a proceeding initiated by the Independent Director pursuant to Section 12 of this Agreement to enforce the Independent Director’s rights hereunder.   (d)           “Expenses” shall mean all reasonable fees, costs and expenses, incurred in connection with any Proceeding, including, without limitation, attorneys’ fees, disbursements and retainers, fees and disbursements of expert witnesses, private investigators, professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services, and other disbursements and expenses.   (e)           “Liabilities” shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement, and any interest, assessments or other charges imposed thereon, and any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement.   (f)           “Parent” shall mean any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities ending with the Company, if each of the corporations or entities, other than the Company, owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.   (g)           “Subsidiary” shall mean any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities beginning with the Company, if each of the corporations or entities, other than the last corporation or entity in the unbroken chain, owns stock or other interests possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain.           2.           SERVICES OF INDEPENDENT DIRECTOR. While this Agreement is in effect, the Independent Director shall perform duties as an independent director and Chairman of the Audit Committee of the Board, be compensated for such and be reimbursed expenses in accordance with the Schedule A attached to this Agreement, subject to the following.   (a)           The Independent Director will perform services as is consistent with Independent Director’s position with the Company, as required and authorized by the By-Laws and Certificate of Incorporation of the Company, and in accordance with high professional and ethical standards and all applicable laws and rules and regulations pertaining to the Independent Director’s performance hereunder, including without limitation, laws, rules and regulations relating to a public company.   (b)           The Independent Director is solely responsible for taxes arising out of any compensation paid by the Company to the Independent Director under this Agreement, and the Independent Director understands that he/she will be issued a U.S. Treasury form 1099 for any compensation paid to him/her by the Company, and understands and agrees that the Company shall comply with any tax or withholding obligations as required by applicable law from time to time in connection with this Agreement.   (c)           The Company may offset any and all monies payable to the Independent Director to the extent of any monies owing to the Company from the Independent Director.   (d)           The rules and regulations of the Company notified to the Independent Director, from time to time, apply to the Independent Director. Such rules and regulations are subject to change by the Board in its sole discretion. Notwithstanding the foregoing, in the event of any conflict or inconsistency between the terms and conditions of this Agreement and rules and regulations of the Company, the terms of this Agreement control.   3.           REQUIREMENTS OF INDEPENDENT DIRECTOR. During the term of the Independent Director’s services to the Company hereunder, Independent Director shall observe all applicable laws and regulations relating to independent directors of a public company as promulgated from to time, and shall not: (1) be an employee of the Company or any Parent or Subsidiary; (2) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company other than as a director and/or a member of a committee of the Board; (3) be an affiliated person of the Company or any Parent or Subsidiary, as the term “affiliate” is defined in 17 CFR 240.10A-3(e)(1), other than in his capacity as a director and/or a member of a committee of the Board; (4) possess an interest in any transaction with the Company or any Parent or Subsidiary, for which disclosure would be required pursuant to 17 CFR 229.404(a), other than in his capacity as a director and/or a member of a committee of the Board; (5) be engaged in a business relationship with the Company or any Parent or Subsidiary, for which disclosure would be required pursuant to 17 CFR 229.404(b), except that the required beneficial interest therein shall be modified to be 5% hereby.     2     4.           REPORT OBLIGATION. While this Agreement is in effect, the Independent Director shall immediately report to the Company in the event: (1) the Independent Director knows or has reason to know or should have known that any of the requirements specified in Section 3 hereof is not satisfied or is not going to be satisfied; and (2) the Independent Director simultaneously serves on an audit committee of any other public company.   5.           TERM AND TERMINATION. The term of this Agreement and the Independent Director’s services hereunder shall be for one (1) year from the Effective Date, unless terminated as provided for in this Section 5. This Agreement and the Independent Director’s services hereunder shall terminate upon the earlier of the following:   (a)           Expiration of the Independent Director’s term as a director of the Company;   (b)           Removal of the Independent Director as a director of the Company, upon proper Board action in accordance with the By-Laws and Certificate of Incorporation of the Company and applicable law;   (c)           Resignation of the Independent Director as a director of the Company upon written notice to the Board of Directors of the Company; or   (d)           Termination of this Agreement by the Board, in the event any of the requirements specified in Section 3 hereof is not satisfied, as determined by the Board in its sole discretion.   6.           LIMITATION OF LIABILITY. In no event shall the Independent Director be individually liable to the Company or its shareholders for any damages for breach of fiduciary duty as an independent director of the Company, unless the Independent Director’s act or failure to act involves willful misconduct, fraud or a knowing violation of law.  No act or failure to act on the part of the Independent Director shall be considered “willful” unless it is done, or omitted to be done, by the Independent Director in bad faith or without reasonable belief that his action or omission was in the best interest of the Company.   7.           AGREEMENT OF INDEMNITY. The Company agrees to indemnify the Independent Director as follows:   (a)           Subject to the exceptions contained in Section 8(a) below, if the Independent Director was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the Independent Director’s Corporate Status, the Independent Director shall be indemnified by the Company against all Expenses and Liabilities incurred or paid by the Independent Director in connection with such Proceeding (referred to herein as “INDEMNIFIABLE EXPENSES” and “INDEMNIFIABLE LIABILITIES,” respectively, and collectively as “INDEMNIFIABLE AMOUNTS”).     3     (b)           Subject to the exceptions contained in Section 8(b) below, if the any Proceeding by or in the right of the Company, to procure a judgment in its favor by reason of the Independent Director’s Corporate Status, the Independent Director shall be indemnified by the Company against all Indemnifiable Amounts.   (c)           For purposes of this Agreement, the Independent Director shall be deemed to have acted in good faith in conducting the Company’s affairs as an independent director of the Company and/or a member of a committee of the Board of the Company, if the Independent Director: (i) exercised or used the same degree of diligence, care, and skill as an ordinarily prudent man would have exercised or used under the circumstances in the conduct of his own affairs; or (ii) took, or omitted to take, an action in reliance upon advise of counsels or other professional advisors for the Company, or upon statements made or information furnished by other directors, officers or employees of the Company, or upon a financial statement of the Company provided by a person in charge of its accounts or certified by a public accountant or a firm of public accountants, which the Independent Director had reasonable grounds to believe to be true. (d)           The parties hereto acknowledge and intend that this Agreement shall provide for indemnification in excess of that expressly provided by statute and currently provided in the Company’s formation and governing documents, including, without limitation, any indemnification provided by the Company’s By-Laws, Certificate of Incorporation, vote of its shareholders or disinterested directors, or applicable law. (e)           In the event the Independent Director intends to engage separate legal counsel, the Independent Director shall provide at least two days’ prior written notice to the Company before such engagement and identify therein the Proceeding.   8.           EXCEPTIONS TO INDEMNIFICATION.  The Independent Director shall be entitled to indemnification under Sections 7(a) and 7(b) above in all circumstances other than the following:   (a)           If indemnification is requested under Section 7(a) and it has been adjudicated finally by a court or arbitral body of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, (i) the Independent Director failed to act in good faith and in a manner the Independent Director reasonably believed to be in or not opposed to the best interests of the Company, (ii) the Independent Director had reasonable cause to believe that the Independent Director’s conduct was unlawful, or (iii) the Independent Director’s conduct constituted willful misconduct, fraud or knowing violation of law, then the Independent Director shall not be entitled to payment of Indemnifiable Amounts hereunder.  No act or failure to act on the part of the Independent Director shall be considered “willful” unless it is done, or omitted to be done, by the Independent Director in bad faith or without reasonable belief that his action or omission was in the     4     (b)           If indemnification is requested under Section 7(b) and   (i)           it has been adjudicated finally by a court or arbitral body of competent jurisdiction that, in connection with the subject of the Proceeding failed to act in good faith and in a manner the Independent Director reasonably believed to be in or not opposed to the best interests of the Company, including without limitation, the breach of Section 4 hereof by the Independent Director, the Independent Director shall not be entitled to payment of Indemnifiable Expenses hereunder; or   (ii)           it has been adjudicated finally by a court or arbitral body of competent jurisdiction that the Independent Director is liable to the Company with respect to any claim, issue or matter involved in the Proceeding out of which the claim for indemnification has arisen, including, without limitation, a claim that the Independent Director received an improper benefit or improperly took advantage of a corporate opportunity, the Independent Director shall not be entitled to payment of Indemnifiable Expenses hereunder with respect to such claim, issue or matter.   9.           WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that the Independent Director is, by reason of the Independent Director’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, the Independent Director shall be indemnified in connection therewith. If the Independent Director is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Independent Director against those Expenses and Liabilities reasonably incurred by the Independent Director or on the Independent Director’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.   10.           ADVANCES AND INTERIM EXPENSES. The Company shall pay to the Independent Director on request (and, in any event, within not more than ten business days of such request), all Indemnifiable Expenses incurred by the Independent Director in connection with any Proceeding, including a Proceeding by or in the right of the Company, in advance of the final disposition of such Proceeding, if the Independent Director furnishes the Company with a written undertaking, to the satisfaction of the Company, to repay the amount of such Indemnifiable Expenses advanced to the Independent Director in the event it is finally determined by a court or arbitral body of competent jurisdiction that the Independent Director is not entitled under this Agreement to indemnification with respect to such Indemnifiable Expenses.  The Independent Director’s obligation to reimburse the Company for such advances shall be unsecured and no interest shall be charged thereon.   11.           PROCEDURE FOR PAYMENT OF INDEMNIFIABLE AMOUNTS. The Independent Director shall submit to the Company a written request specifying the Indemnifiable Amounts, for which the Independent Director seeks payment under Section 7 hereof and the Proceeding of which has been previously notified to the Company and approved by the Company for indemnification hereunder. At the request of the Company, the Independent Director shall furnish such documentation and information as are reasonably available to the Independent Director and necessary to establish that the Independent Director is entitled to indemnification hereunder. The Company shall pay such Indemnifiable Amounts within ten (10) days of receipt of all required documents.     5     12.           REMEDIES OF INDEPENDENT DIRECTOR.   (a)           RIGHT TO PETITION COURT. In the event that the Independent Director makes a request for payment of Indemnifiable Amounts under Sections 7, 9-11 above, or seeks payment of insurance under Section 14, below, and such payment or advancement is not made in a timely manner (i) by the Company, pursuant to the terms of this Agreement, or (ii) by any insurance carrier(s), pursuant to the terms of their respective insurance policies, then the Independent Director may petition the appropriate judicial authority to enforce the Company’s or the carrier(s) respective obligations.   (b)           BURDEN OF PROOF. In any judicial proceeding brought under Section 12 (a) above, the Company shall have the burden of proving that the Independent Director is not entitled to payment of Indemnifiable Amounts hereunder.   (c)           EXPENSES. The Company agrees to reimburse the Independent Director in full for any Expenses incurred by the Independent Director in connection with investigating, preparing for, litigating, defending or settling any action brought by the Independent Director under Section 12 (a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith.   (d)           VALIDITY OF AGREEMENT. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 12 (a) above, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the   (e)           FAILURE TO ACT NOT A DEFENSE. The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 12 (a) above.   13.           PROCEEDINGS AGAINST COMPANY. Except as otherwise provided in this Agreement, the Independent Director shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by the Independent Director against the Company, any Entity which it controls, any director or officer thereof, or any third party, unless the Board has consented to the initiation of such Proceeding. This section shall not apply to counterclaims or affirmative defenses asserted by the Independent Director in an action brought against the Independent Director.   14.           INSURANCE. The Company shall obtain and maintain a policy or policies of director and officer liability insurance, in an amount not less than $10,000,000, providing the Independent Director with coverage for Indemnifiable Amounts and/or Indemnifiable Expenses in accordance with said insurance policy or policies (“D&O INSURANCE”), provided that the Company shall not be liable under this Agreement to make any payment in connection with any claim made against the Independent Director to the extent the Independent Director has otherwise received payment (under any insurance policy) of the amounts otherwise indemnifiable hereunder.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Independent Director, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.     6     15.           NON-EXCLUSIVITY .  The rights of the Independent Director hereunder shall be in addition to and not in lieu of any other rights the Independent Director may have under the Company’s Certificate of Incorporation, Bylaws, applicable law, contract or otherwise.  It is the intention of this Agreement to effect the greatest protection possible to the Independent Director.  To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, applicable law, contract or this Agreement, it is the intent of the parties that the Independent Director enjoy by this Agreement and any other agreements the greater benefits so afforded by such change.   16.           SUBROGATION. In the event of any payment of Indemnifiable Amounts under this Agreement or the D&O Insurance, the Company or its Insurance Carrier, as the case may be, shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of the Independent Director against other persons, and the Independent Director shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.   17.           AUTHORITY. Each party has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by each party hereto:   18.           SUCCESSORS AND ASSIGNMENT. This Agreement shall (a) be binding upon and inure to the benefit of all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law), and (b) be binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of the Independent Director. The Independent Director has no power to assign this Agreement or any rights and obligations hereunder.   19.           CHANGE IN LAW. To the extent that a change in applicable law (whether by statute or judicial decision) shall mandate broader or narrower indemnification than is provided hereunder, the Independent Director shall be subject to such broader or narrower indemnification and this Agreement shall be deemed to be amended to such extent.   20.           SEVERABILITY. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.     7     21.           MODIFICATIONS AND WAIVER. Except as provided in Section 19 hereof with respect to changes in applicable law which broaden or narrow the right of the Independent Director to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No delay in exercise or non-exercise by the Company of any right under this Agreement shall operate as a current or future waiver by it as to its same or different rights under this Agreement or otherwise.   22.           NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date en which it is so mailed:   If to Independent Director, to: Stephen Markscheid   If to the Company, to: Gao Xincheng, Chairman and Chief Executive Officer, China Integrated Energy, Inc., Dongxin Century Square, 7th Floor, Hi-Tech Development District, Xi’an, Shaanxi Province, PRC 710043, or to such other address as may have been furnished in the same manner by any party to the others.   23.           GOVERNING LAW. This Agreement shall be governed by and construed and enforced under the laws of the State of Delaware.   24.           CONSENT TO JURISDICTION. The parties hereby consent to the jurisdiction of the courts having jurisdiction over matters arising in Delaware for any proceeding arising out of or relating to this Agreement. The parties agree that in any such proceeding, each party shall waive, if applicable, inconvenience of forum and right to a jury.   25.           AGREEMENT GOVERNS. This Agreement is to be deemed consistent wherever possible with relevant provisions of the By-Laws and Certificate of Incorporation of the Company; however, in the event of a conflict between this Agreement and such provisions, the provisions of this Agreement shall control.   26.           INDEPENDENT CONTRACTOR. The parties understand, acknowledge and agree that the Independent Director’s relationship with the Company is that of an independent contractor and nothing in this Agreement is intended to or should be construed to create a relationship other than that of independent contractor. Nothing in this Agreement shall be construed as a contract of employment/engagement between the Independent Director and the Company or as a commitment on the part of the Company to retain the Independent Director in any capacity, for any period of time or under any specific terms or conditions, or to continue the Independent Director’s service to the Company beyond any period.   27.           ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the Company and the Independent Director with respect to the subject matter hereof, and supersedes all prior understandings and agreements with respect to such subject matter.     8     IN WITNESS WHEREOF, the parties hereto have executed this Independent Director Indemnification Agreement as of the day and year first above written.     AGREED   AGREED           China Integrated Energy, Inc.   Independent Director                           /s/ Gao Xincheng   /s/ Steven Markscheid   Name:  Gao Xincheng   Name:  Steven Markscheid   Title:   Chairman and CEO           9     SCHEDULE A   I POSITION:   INDEPENDENT DIRECTOR AND CHAIRMAN OF THE AUDIT COMMITTEE   II. COMPENSATION:   FEES. For all services rendered by the Independent Director pursuant to this Agreement, both during and outside of normal working hours, including but not limited to, attending all required meetings of the Board or applicable committees thereof, executive sessions of the independent directors, reviewing filing reports and other corporate documents as requested by the Company, providing comments and opinions as to business matters as requested by the Company, the Company agrees to pay to the Independent Director a fee in cash of One Hundred Thousand Dollars ($100,000) per annum (“the Fee”).  The Fee shall be payable in cash to the Independent Director in one lump sum on or before May 6, 2011.  If this Agreement is terminated in accordance with Section 5 hereof prior to the end of the Term, the Independent Director agrees to return to the Company the pro rata portion of the Fee for the remainder of the Term.   STOCK. During the term of the Independent Director’s service as a director or member of any committee of the Board, the Independent Director shall be granted an option to purchase One Hundred Thousand (100,000) shares of common stock of the Company with an exercise price equal to the fair market value of a share of the Company’s common stock on the date of the grant of the option and vesting annually, in equal installments for a three year period.  Any such stock grant shall be in accordance with the equity incentive plans as may be adopted by the Company, from time to time. The Independent Director’s rights in respect to any grant shall be determined solely by the Board of Independent Directors of the Company and are subject to execution by Independent Director of any applicable agreements as established and requested by the Company pursuant to the equity incentive plans.   EXPENSES. During the term of the Independent Director’s service as a director of the Company, the Company shall promptly reimburse the Independent Director for all expenses incurred by him/her in connection with attending (a) all meetings of the Board or applicable committees thereof, (b) executive sessions of the independent directors, and (c) stockholder meetings, as a director or a member of any committee of the Board , which are approved by the Company in advance.     10     NO OTHER BENEFITS OR COMPENSATION. The Independent Director acknowledges and agrees that he/she is not granted and is not entitled to any other benefits or compensation from the Company for the services provided under this Agreement except expressly provided for in this Schedule A.   AGREED   AGREED             Independent Director Name:  Gao Xincheng   Name:  Steven Markscheid             11    

Exhibit 10.20 AMENDMENT OF LEASE This agreement (“Agreement”), made as of this 11th day of January, 2007 (but expressly deemed effective as of the 1st day of May, 2006), between 60 HUDSON OWNER LLC (successor to Westport Communications LLC and Hudson Telegraph Associates, L.P., formerly known as Hudson Telegraph Associates), a Delaware limited liability company, having an address c/o Williams Real Estate Co. Inc., 380 Madison Avenue, New York, New York 10017-2513 (“Landlord”) and FIBERNET EQUAL ACCESS, LLC, a New York limited liability company, having an address at 570 Lexington Avenue, New York, New York 10022 (“Tenant”). WHEREAS, Landlord and Tenant are the present parties to an agreement of lease dated as of April 1, 2001 (“Original Lease”), as thereafter amended on numerous occasions (collectively, “Existing Lease”), pursuant to which Landlord now leases to Tenant and Tenant now leases from Landlord portions of the ground floor and basement (collectively, “Demised Premises”), as more particularly described in the Existing Lease, in Landlord’s building known as 60 Hudson Street, New York, New York; and WHEREAS, Landlord and Tenant wish to amend the Existing Lease as set forth herein. hereinafter contained, Landlord and Tenant agree that the Existing Lease is hereby further amended as follows: 1. All terms contained in this Agreement shall, for the purposes hereof, have the same meanings ascribed to them in the Existing Lease unless otherwise defined herein. As used herein, the term “Lease” shall mean the Existing Lease, as amended by this Agreement and as the same may be hereafter amended. 2. (A) Pursuant to an amendment of the Original Lease, dated November 7, 2002 (“Condenser Water Amendment”), Tenant has installed water cooled supplementary air conditioning equipment in the Demised Premises having an air conditioning capacity of ninety (90) tons (“Supplemental System”) and Landlord is furnishing the condenser water necessary to operate the Supplemental System. Tenant is presently paying Landlord an annual Condenser Water Charge for the Supplemental System of $99,342.90 per annum, which Condenser Water Charge is subject to adjustment as provided in the Condenser Water Amendment. (B) As of May 1, 2006, Tenant installed additional water cooled supplementary air conditioning equipment having a further air conditioning capacity of an additional ninety (90) tons (“Additional Supplemental System”), for which Landlord also is furnishing the necessary condenser water. Effective as of May 1, 2006, Tenant shall pay Landlord an additional Condenser Water Charge for the Additional Supplemental System initially at the rate of $99,342.90 per annum. Such initial Condenser Water Charge shall be subject to adjustment and payment in accordance with Paragraph 2(B) of the Condenser Water Amendment. (C) The provisions of Paragraph 2(C) of the Condenser Water Amendment also shall be applicable to the Additional Supplemental System. 3. Tenant covenants, represents and warrants that Tenant has had no dealings or communications with any broker or agent in connection with the consummation of this Agreement other than Williams Real Estate Co. Inc. (the “Broker”) and Tenant covenants and agrees to indemnify Landlord from and against all costs, expenses (including reasonable attorneys’ fees and disbursements) and liability for any commission or other compensation claimed by any broker or agent (other than the Broker) with respect to this Agreement. Landlord shall pay any commission owing to the Broker in connection with this Agreement. The provisions of this Paragraph shall survive any termination of this Agreement. 4. This Agreement may not be changed orally, but only by a writing signed by the party against whom enforcement thereof is sought. 5. The submission of this Agreement to Tenant shall not constitute an offer by Landlord to execute and exchange this Agreement with Tenant and is made subject to Landlord’s acceptance, execution and delivery thereof.       60 HUDSON OWNER LLC     By:   HUDSON TELEGRAPH ASSOCIATES, L.P., its managing member       By:   Sixty Hudson Management LLC, general partner         By:             Name:           Manager       FIBERNET EQUAL ACCESS, LLC     By:         Name:       Title:   By its execution below, the undersigned acknowledges its agreement to be bound by this Agreement and the Existing Lease jointly and severally with Tenant.     FIBERNET TELECOM GROUP, INC.     By:         Name:       Title:     -2-

CARMAX, INC. NOTICE OF STOCK OPTION GRANT %%FIRST_NAME%-% %%LAST_NAME%-%     %%ADDRESS_LINE_1%-% %%ADDRESS_LINE_2%-% %%CITY%-% , %%STATE%-% %%ZIPCODE%-%   Dear %%FIRST_NAME%-% %%LAST_NAME%-% The Board of Directors of CarMax, Inc. (the “Company”) wants to provide you with an opportunity to share in the success of our Company. Accordingly, I am pleased to inform you that, as of %%OPTION_DATE%_% the Compensation and Personnel Committee of the Board of Directors of the Company (the “Committee”) exercised its authority pursuant to the CarMax, Inc. 2002 Stock Incentive Plan, as amended and restated (the “Plan”) and granted you non-statutory options to purchase shares of the common stock of CarMax, Inc. (the “Options”) as set forth herein. The Options are not qualified for Incentive Stock Option tax treatment. Limited stock appreciation rights (“SARs”), described below, were also granted in connection with these Options. The Options and SARs are subject to the provisions of the Plan. The Committee administers the Plan. The terms of the Plan are incorporated into this notice of Stock Option Grant (the “Notice of Grant”) and in the case of any conflict between the Plan and this Notice of Grant, the terms of the Plan shall control. All capitalized terms not defined herein shall have the meaning given to them in the Plan. Please refer to the Plan for certain conditions not set forth in this Notice of Grant. Additionally, a copy of a Prospectus for the Plan, which describes material terms of the Plan, can be found on The CarMax Way. Copies of the Prospectus, the Plan and the Company’s annual report to shareholders on Form 10-K for fiscal year 20__ are available from the Company’s corporate secretary at (804) 747-0042. Number of Shares Subject to Option: %%TOTAL_SHARES_GRANTED%% Option Price Per Share:  %%OPTION_PRICE%% Vesting of Options Except as otherwise provided in this Notice of Grant, the Options will vest and become exercisable according to the following schedule: one-fourth on %%VEST_DATE_PERIOD1%-% , one-fourth on %%VEST_DATE_PERIOD2%-% , one-fourth on %%VEST_DATE_PERIOD3%-% , and one-fourth on %%VEST_DATE_PERIOD4%-% provided you continue to be employed by the Company on such dates. Termination of Options The unexercised Options shall terminate upon the earliest to occur of the following conditions: 1.   Expiration. The Options will expire on %%EXPIRE_DATE_PERIOD1%-% (the “Expiration Date”). 2.   Termination Without Cause; Immediate Vesting. If the Company terminates your employment with the Company for any reason other than Cause (as defined in your employment agreement with the Company), including for “Involuntary Termination Without Cause” or “Termination Without Cause”, as applicable, as defined in your employment agreement with the Company, all of your Options will become immediately vested and exercisable, effective as of the date of the termination of your employment. You, your personal representative, distributees, or legatees, must exercise your Options within three (3) months of the effective 3.   Termination For Cause. Upon termination of your employment with the Company for “Cause” as defined in your employment agreement with the Company, your unexercised vested and unvested Options will terminate immediately. 4.   Change in Full-Time Employment Status. In the event that your employment with the Company changes from full-time to part-time for any reason, your unvested Options will expire on the date of the change. Your vested Options will be unaffected and remain subject to the terms of this Notice of Grant. 5.   Resignation; Leave. In the event that you resign your employment with the Company, you must exercise your vested Options within three (3) months of your resignation date or they will expire. Options that have not vested by your resignation date will expire on your resignation date. Employees on authorized leave (as determined under the Company’s authorized leave policy) will not be considered as having terminated merely by reason of the leave and will continue to be eligible to exercise and sell their Options during the period of the leave. Exercise of Options When the Options are exercisable, you may purchase shares of Company common stock under your Option by: 1.   Giving written notice to the Company, signed by you, stating the number of shares you have elected to purchase; and 2.   Remitting payment of the purchase price in full (You may deliver Mature Shares of Company common stock that you own in satisfaction of all or any part of the purchase price or make other arrangements satisfactory to the Company and permitted by the Plan regarding payment of the purchase price); and 3.   Remitting payment to satisfy the income tax withholding requirements for non-statutory options or making other arrangements to satisfy such withholding that are satisfactory to the Company and permitted by the Plan. Death, Disability or Retirement If your employment by the Company terminates because you die, become disabled or retire (in accordance with retirement eligibility provisions of the Company’s retirement plan) all of your Options covered by this Notice of Grant will become of your employment, and you, your personal representative, distributees, or legatees, as applicable, may exercise your vested Options at any time before the Expiration Date. Transferability of Options Except as provided below, the Options are not transferable by you other than by will or by the laws of descent and distribution and is exercisable during your lifetime only by you. You may transfer your rights under the Option during your lifetime subject to the following limitations: 1.   Transfers are allowed only to the following transferees: a)   Your spouse, children, step-children, grandchildren, step-grandchildren or other lineal descendants (including relationships arising from legal adoptions). Such individuals are hereinafter referred to as “Immediate Family Members”. b)   Trust(s) for the exclusive benefit of any one or more of your Immediate Family Members. c)   Partnership(s), limited liability company(ies) or other entity(ies), the only partners, members or interest holder of which are among your Immediate Family Members. d)   Pursuant to a court issued divorce decree or Domestic Relations Order (as (or rules thereunder)). 2.   You may not receive any consideration in connection with the transfer. 3.   Transferees may not subsequently transfer their rights under the Option except by will or by the laws of descent or distribution. 4.   Following the transfer, the Option will continue to be subject to the same terms and conditions as were applicable immediately prior to transfer (except that the transferee may deliver the Option exercise notice and payment of the exercise price). 5.   You must give written notice of the transfer to the Company and the Company may require that any transfer is conditioned upon the transferee executing any document or agreement requested by the Company. Any Option transferred in accordance with the terms hereof shall be accompanied by the associated SAR. Change of Control; SARs Notwithstanding anything to the contrary herein, in the event of a Change of Control, all unvested Options granted hereunder shall immediately vest and you shall have the right during the period beginning on the date of the Change of Control and ending on the Expiration Date to exercise any and all vested Options in accordance with the provisions of this Notice of Grant. Pursuant to this Notice of Grant, you have been granted one (1) SAR for every Option granted to you hereunder. Following a Change of Control, you may choose to exercise the SARs granted hereunder in lieu of exercising your vested Options. Doing so will relieve you of the obligation to pay for the exercise of your Options as described above and, instead, will allow you to receive a cash payment of the net value of your SARs as calculated below without having to remit any payment to the Company. The SARs granted in connection with the Options are limited SARs and may be exercised in accordance with the Plan and the terms hereof as follows: 1.   The SARs shall only be exercisable if a Change of Control occurs. In such event, the Options will be exercisable at any time during a period of 90 days beginning on the date the Change of Control occurs. To the extent that the SARs or their underlying Options are not exercised during an exercise period, the SARs will become unexercisable again until such time as another Change of Control occurs or %%EXPIRE_DATE_PERIOD1%-% , when they expire. 2.   When the SARs become exercisable, you may exercise the SARs by giving written notice to the Company, signed by you, stating the number of SARs that you are exercising. 3.   Upon exercise of the SARs, you shall receive in exchange from the Company an amount equal to the excess of (x) the value of the Company’s common stock on the date of exercise, over (y) the exercise price of the underlying Option. For purposes of this paragraph, the value of the Company’s common stock shall be the Fair Market Value of the Company’s common stock on the date of exercise; provided, however, if the net after tax benefit to you, after considering all applicable taxes, interest and penalties, including taxes, interest and penalties imposed under Code section 409A, would be greater if the value was determined based on the highest closing price of the Company’s common stock, on the exchange on which it is then traded, during the 90 days immediately preceding the Change of Control, the value of the Company’s common stock shall be such higher amount. The determination of the net after tax benefit to you shall be made by the Company in its reasonable discretion.   4. The Company’s obligation arising upon exercise of the SARs shall be paid in cash and shall be subject to required income tax withholdings.   5. To the extent a SAR is exercised, the underlying Option must be surrendered. The underlying Option, to the extent surrendered, shall no longer be exercisable. Change in Capital Structure If the number of outstanding shares of the Company’s common stock is increased or decreased as a result of a stock dividend, stock split, subdivision or consolidation of shares, or other similar change in capitalization, the number of Company shares for which you have unexercised Options and the exercise price will automatically be adjusted, as provided in the Plan, (i) so as to preserve the ratio that existed immediately before the change between the number of such shares and the total number of shares of Company stock previously outstanding, and (ii) so that your aggregate Option price remains the same; provided, however, that the Company will not be required to issue any fractional shares upon exercise of your Options as a result of such adjustment. Legal Fees The grant of these Options does not obligate the Company to continue your employment. If there is any litigation involving Options, each party will bear its own expenses, including all legal fees, except that in the event of an action brought by you under this Notice of Grant following a Change in Control, then insofar as such action is not deemed to be frivolous by the arbitrator, the Company shall bear all expenses related to the arbitration, including all legal fees incurred by you. The Committee shall have the authority to interpret and administer this Notice of Grant. By accepting this grant on-line, this Notice of Grant, together with the Plan, will become a Stock Option Agreement between you and the Company which is Commonwealth of Virginia. Further, by accepting this grant online, you agree that you are in compliance with, and will abide by, the Company’s “Policy Against Insider Trading - Management” which can be found on The CarMax Way. Further, by accepting this Notice of Grant, you agree that if you have not yet achieved the Company stock ownership levels required for your position, as applicable, as set forth in the Company’s Stock Ownership Guidelines for Certain Executive Officers, then upon exercise of any Options you will retain at least 50% of the underlying shares remaining after satisfaction of the option exercise cost and applicable tax liability. Sincerely, [Name, Title] ACCEPTED: Signature %%EMPLOYEE_IDENTIFIER%-% Printed Name Employee ID Number

Consent of Independent Registered Public Accounting Firm We consent to the references to our firm under the captions “Financial Highlights” and “Independent Registered Public Accounting Firm” in the Prospectus and “Independent Registered Public Accounting Firm” in the Statement of Additional Information and to the incorporation by reference of our report dated December 30, 2015, in the Registration Statement (Form N-2) of Stone Ridge Trust III for the period ended October 31, 2015, filed with the Securities and Exchange Commission in this Post-Effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933 (Registration No. 333-201265). /s/ Ernst & Young LLP New York, New York February 26, 2016

EXHIBIT 99.1 CINEDIGM RESTRUCTURES CORPORATE ORGANIZATION:COO ADAM MIZEL TRANSITIONS TO CONSULTING ROLE LOS ANGELES (October 16, 2015) – In a continuing process of streamlining corporate structure to better fit its evolving business profile and reduce costs, Cinedigm Corp. (NASDAQ: CIDM)announced today that it is restructuring corporate responsibilities and will eliminate the current chief operating officer position.Effective October 16, 2015, COO Adam Mizel will transition to a consulting role with the Company, including a focus on business development opportunities. The move comes as part of a long-term and rigorous management reorganization that began more than a year ago.The COO position will not be replaced, with responsibilities shared by Chief Executive Officer Chris McGurk, Chief Financial Officer Jeffrey Edell, Cinedigm Entertainment President Bill Sondheim, and President of Digital Cinema/General Counsel Gary Loffredo moving forward. “Cinedigm has gone through an enormous re-invention over the last three years as we have transformed the Company from a service provider that converted movie theaters into digital entertainment centers to our current position as a leading independent content distributor and OTT pioneer,” said McGurk.“We have been looking at every aspect of our company to improve efficiency and to develop an organization that best fits our new business profile.As a shareholder, Board member and part of our management team, Adam agreed that this consolidation in the corporate structure was a strategically smart move for Cinedigm.We thank him for many years of service to the management team and look forward to his new role as a consultant.” “I am proud to have worked with Chris and the Cinedigm team to have repositioned the company as an industry innovator and to have successfully launched three OTT channels,” commented Mizel. “I look forward to continuing to support Cinedigm’s success as a consultant as I explore a variety of other projects in the entertainment, technology and finance spaces.” About Cinedigm Cinedigm is a leading independent content distributor in the United States, with direct relationships with thousands of physical retail storefronts and digital platforms, including Wal- Mart, Target, iTunes, Netflix, and Amazon, as well as the national Video on Demand platform on cable television. The company’s library of films and TV episodes encompasses award-winning documentaries from Docurama Films®, next-gen Indies from Flatiron Film Company®, acclaimed independent films and festival picks through partnerships with the Sundance Institute and Tribeca Films and a wide range of content from brand name suppliers, including National Geographic, Discovery, Scholastic, NFL, Shout Factory, Hallmark, Jim Henson and more. Additionally, given Cinedigm’s infrastructure, technology, content and distribution expertise, the Company has rapidly become a leader in the quickly evolving over-the-top digital network business. Cinedigm’s first channel, DOCURAMA, launched in May 2014, and is currently available on iOS, Roku, Xbox and Samsung, with additional platforms currently being rolled out. Cinedigm launched CONtv, a Comic Con branded channel in partnership with WIZARD WORLD, on March 3, 2015. The Company’s third OTT channel, DOVE CHANNEL, launched on September 15, 2015 and is a digital streaming subscription service targeted to families and kids seeking high quality and family friendly content approved by Dove Foundation. Cinedigm™ and Cinedigm Digital Cinema Corp™ are trademarks of Cinedigm Corp.[CIDM-G] Press Contact: Maggie Begley/MBC 310.390.0101M: 310.749.3055 [email protected]

Exhibit 10.11 ADVANTAGE SOLUTIONS INC. INDEMNIFICATION AND ADVANCEMENT AGREEMENT This Indemnification and Advancement Agreement (“Agreement”) is made as of ________ __, ________ by and between Advantage Solutions Inc., a Delaware corporation (the “Company”) (f/k/a Conyers Park II Acquisition Corp., a Delaware corporation), and ______________, [a member of the Board of Directors / an officer] of the Company (“Indemnitee”). RECITALS highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers, or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification and advancement of expenses against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of such corporations; WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The Certificate of Incorporation of the Company (as may be amended from time to time, the “Certificate of Incorporation”) and the Bylaws of the Company (as may be amended from time to time, the “Bylaws”) require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “DGCL”). The Certificate of Incorporation, the Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification and advancement of expenses; WHEREAS, the uncertainties relating to such insurance, to indemnification, and to advancement of expenses may increase the difficulty of attracting and retaining such persons; WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future; WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to hold harmless and indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by Applicable Law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and any resolutions adopted pursuant thereto, and is not a substitute therefor, nor diminishes or abrogates any rights of Indemnitee thereunder; WHEREAS, Indemnitee does not regard the protection available under the Certificate of Incorporation, the Bylaws, the DGCL and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as an officer or director without adequate additional protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified and be advanced expenses; and WHEREAS, Indemnitee may have certain rights to indemnification and/or insurance provided by an investment or private equity firm with which Indemnitee is or may become affiliated (the “Associated Firm”) which Indemnitee and the Associated Firm intend to be secondary to the primary obligation of the Company to hold harmless and indemnify Indemnitee as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve on the Board. NOW, THEREFORE, in consideration of the promises and the covenants contained Section 1. Services to the Company. Indemnitee agrees or has agreed to serve as a [director/officer] of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). This Agreement does not create any obligation on the Company to continue Indemnitee in such position and is not an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee. Section 2. Definitions. As used in this Agreement: (a) “Affiliate” shall have the meaning set forth in Rule 405 under the Securities Act of 1933, as amended (as in effect on the date hereof). (b) “Agent” means any person who is or was a director, officer or employee of the Company or an Enterprise or other person authorized by the Company or an Enterprise to act for or represent the interests of the Company or an Enterprise, respectively. (c) A “Change in Control” occurs upon the earliest to occur after the later of (i) the Closing and (ii) date of this Agreement of any of the following events: i. Acquisition of Stock by Third Party. Any Person (as defined below), other than a Designated Person, is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities unless the change in relative   -2- beneficial ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors; ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(c)(i), 2(c)(iii) or 2(c)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (the “Initial Board”), cease for any reason to constitute at least a majority of the members of the Board (a “Board Change”); provided, however, that no change to the composition of the Initial Board shall be considered for the purposes of determining whether a Board Change has occurred to the extent such change resulted from a designation made, or a loss of ability to designate, in pursuant to the Stockholders’ Agreement, dated September 7, 2020, by and among the Company, Karman Topco L.P., a Delaware limited partnership (“Seller”), CVC ASM Holdco, L.P., a Delaware limited partnership, the entities identified on the signature pages thereto under the heading “LGP Stockholders”, BC Eagle Holdings, L.P., a Cayman Islands exempted partnership, and Conyers Park II Sponsor LLC, a Delaware limited liability company (“CP Sponsor”), as may be amended from time to time; iii. Corporate Transactions. The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination, (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction: (1) which results in the Company’s voting securities outstanding immediately prior to such transaction continuing to represent the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and (2) after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (2) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; iv. Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and v. Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a   -3- response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement. vi. For purposes of this Section 2(c), the following terms have the following meanings:     1 to time.     2 “Person” has the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person excludes (i) the Company, (ii) any the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.     3 “Beneficial Owner” has the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner excludes any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity. (d) “Applicable Law” means all applicable law, including but not limited to, the DGCL and any amendments to or replacements of the DGCL adopted after the date of this Agreement that expand the Company’s ability to hold harmless and indemnify its officers and directors. (e) “Closing” means the closing of the transactions contemplated by the Agreement and Plan of Merger, dated September 7, 2020, by and among the Company, CP II Merger Sub, Inc., a Delaware corporation, Advantage Solutions Inc., a Delaware corporation and successor to the Company, and the Seller. (f) “Corporate Status” describes the status of a person who is or was acting as a director, officer, employee, fiduciary, or Agent of the Company or an Enterprise. (g) “Designated Person” means Seller and its Affiliates and Related Parties and CP Sponsor and its Affiliates and Related Parties. (h) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee. (i) “Enterprise” means any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity for which Indemnitee is or was serving at the request of the Company as a director, officer, employee, fiduciary or Agent.   -4- (j) “Expenses” shall be broadly construed and shall include, without limitation, all direct and indirect costs of any nature whatsoever, disbursements or expenses reasonably incurred in connection with prosecuting, defending, preparing to prosecute or defend, appeal, investigating, being or preparing to be a deponent or witness in, or otherwise participating in, a Proceeding (including all reasonable attorneys’ fees, retainers, court costs, mediation fees, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties and other out-of-pocket costs of whatever nature) and amounts paid in settlement by or on behalf of Indemnitee. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent, (ii) reasonable compensation for time spent by Indemnitee for which he is not compensated by the Company or any Subsidiary or third party (a) for any period during which Indemnitee is not an Agent, in the employment of, or providing services for compensation to, the Company or any Subsidiary; or (b) if the rate of compensation and estimated time involved is approved by the Disinterested Directors of the Company, and (iii) Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, the DGCL or otherwise, by litigation or otherwise. (k) “finally adjudged” or “final adjudication” means determined by a final (not interlocutory) judgment or other adjudication of a court or arbitration or administrative body of competent jurisdiction as to which there is no further right or option of appeal or the time within which an appeal must be filed has expired without such filing (and from which there is no further right of appeal). (l) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel, regardless of the manner in which such Independent Counsel was selected, and to fully hold harmless and indemnify such counsel against all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. (m) “Potential Change in Control” means the occurrence of any of the following events: (i) the Company enters into any written or oral agreement, undertaking or arrangement, the consummation of which would result in the occurrence of a Change in Control; (ii) any Person or the Company publicly announces an intention to take or consider taking actions which if consummated would constitute a Change in Control; (iii) any Person, other than a Designated Person, who becomes the Beneficial Owner, directly or indirectly, of securities of the Company   -5- representing five percent (5% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors increases his beneficial ownership of such securities by five percent (5% or more over the percentage so owned by such Person on the date hereof; or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (n) “Proceeding” shall be broadly construed and mean any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of Indemnitee’s Corporate Status or by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement. A Proceeding also includes a situation the Indemnitee believes in good faith may lead to or culminate in the institution of a Proceeding. (o) “Related Party” means, with respect to any Person, (a) any controlling stockholder, controlling member, general partner, subsidiary, spouse or immediate family member (in the case of an individual) of such Person, (b) any estate, trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners or owners of which consist solely of one or more Designated Person (other than the Company and its subsidiaries) and/or such other Persons referred to in the immediately preceding clause (a), or (c) any executor, administrator, trustee, manager, director or other similar fiduciary of any Person referred to in the immediately preceding clause (b), acting solely in such capacity. Section 3. Indemnity in Third-Party Proceedings. The Company will hold harmless and indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, the Company will hold harmless and indemnify Indemnitee to the fullest extent permitted by Applicable Law against all loss and liability suffered, Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein if (a) such Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (b) in the case of a criminal Proceeding, such Indemnitee had no reasonable cause to believe that Indemnitee’s conduct was unlawful. Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company will hold harmless and indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the   -6- Company will hold harmless and indemnify Indemnitee to the fullest extent permitted by Applicable Law against all Expenses actually and reasonably Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, if Applicable Law so expressly provides at the time of determination, the Company will not hold harmless and indemnify Indemnitee for Expenses under this Section 4 related to any claim, issue or matter in a Proceeding for which Indemnitee has been finally adjudged by a court to be liable to the Company, unless, and only to the extent that, the Court of Chancery of the State of Delaware or any court in which the Proceeding was brought determines that such indemnification may be made. Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by Applicable Law, the Company will hold harmless and indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any Proceeding in which Indemnitee is successful, on the merits or otherwise. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company will hold harmless and indemnify Indemnitee against all behalf in connection with or related to each successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, will be deemed to be a Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement and to the fullest extent permitted by Applicable Law, the Company will hold harmless and indemnify Indemnitee against all behalf in connection with any Proceeding to which Indemnitee is not a party but to which Indemnitee, by reason of Indemnitee’s Corporate Status (whether or not serving in such capacity at the time any Expense is incurred), is a witness, deponent, interviewee, or otherwise asked to participate. Section 7. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company will hold harmless and indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Section 8. Additional Indemnification. Notwithstanding any limitation in Sections 3, 4, or 5, the Company will hold harmless and indemnify Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf to the fullest extent permitted by Applicable Law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally adjudged (subject to the presumptions, set forth in Section 13) to be unlawful.   -7- Section 9. Exclusions. Notwithstanding any provision in this Agreement, the Company is not obligated under this Agreement to make any indemnification payment to Indemnitee in connection with any Proceeding: (a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except to the extent provided in Section 16(b), and except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or (b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act) or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, if any, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or (c) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to indemnification or advancement, of Expenses under this Agreement or under any other agreement, provision in the Bylaws or Certificate of Incorporation (or equivalent governing documents) of the Company or its subsidiaries or Applicable Law, including a Proceeding (or any part of any Proceeding) initiated pursuant to Section 14 of this Agreement, (ii) the Board or a committee of Disinterested Directors authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under Applicable Law. Section 10. Advances of Expenses. (a) The Company will advance, to the fullest extent permitted by Applicable Law, but subject to the terms of this Agreement, all Expenses incurred by Indemnitee or on behalf of Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee or any Proceeding (or any part of any Proceeding) initiated by Indemnitee if (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to obtain indemnification or advancement of Expenses from the Company or an Enterprise, including a proceeding initiated pursuant to Section 14 or (ii) the Board or a committee of Disinterested Directors authorized the Proceeding (or any part of any Proceeding) prior to its initiation. The Company will advance the Expenses within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any   -8- Proceeding. The right to advances under this Section shall continue until final disposition of any Proceeding, including any appeal therein. (b) Advances will be unsecured and interest free. Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, thus Indemnitee qualifies for advances upon the execution of this Agreement and delivery to the Company. No other form of undertaking is required other than the execution of this Agreement. The Company will make advances without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Section 11. Procedure for Notification of Claim for Indemnification or Advancement. (a) Indemnitee will notify the Company in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. Indemnitee will include in the written notification to the Company a description of the nature of the Proceeding and the allegations underlying the Proceeding and provide such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Indemnitee’s failure to so notify the Company will not relieve the Company from any obligation it may have to Indemnitee under this Agreement, and any delay or defect in so notifying the Company will not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company will, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification or advancement. (b) The Company will be entitled to participate in the Proceeding at its own expense, provided, that the Company will not be entitled to assume the defense of such Proceedings on Indemnitee’s behalf without Indemnitee’s prior written consent. (c) The Company will not settle any Proceeding (in whole or in part) if such settlement would attribute to Indemnitee any admission of liability or impose any Expense, judgment, liability, fine, penalty or obligation or limitation on Indemnitee without Indemnitee’s prior written consent, which shall not be unreasonably withheld. Section 12. Procedure Upon Application for Indemnification. (a) Unless a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made: i. by a majority vote of the Disinterested Directors, even though less than a quorum of the Board; ii. by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board;   -9- iii. if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by written opinion provided by Independent Counsel selected by the Board; or iv. if so directed by the Board, by the stockholders of the Company. (b) If a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made by written opinion provided by Independent Counsel selected by Indemnitee (unless Indemnitee requests such selection be made by the Board). (c) The party selecting Independent Counsel pursuant to subsection (a)(iii) or (b) of this Section 12 will provide written notice of the selection to the other party. The notified party may, within ten (10) days after receiving written notice of the selection of Independent Counsel, deliver to the selecting party a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Court of Chancery of the State of Delaware Court has determined that such objection is without merit. If, within thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, Independent Counsel has not been selected or, if selected, any objection to has not been resolved, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware for the appointment as Independent Counsel of a person selected by such court or by such other person as such court designates. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel will be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). The Company agrees to pay the fees and expenses of the Independent Counsel and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. (d) The Company and Indemnitee will cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. The Company will advance and pay any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making the indemnification determination irrespective of the determination as to Indemnitee’s entitlement to indemnification and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing of the determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied and providing a copy of any written opinion provided to the Board by Independent Counsel.   -10- (e) If it is determined that Indemnitee is entitled to indemnification, the Company will make payment to Indemnitee within ten (10) days after such determination. Section 13. Presumptions and Effect of Certain Proceedings. (a) It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under Applicable Law and public policy of the State of Delaware. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination will, to the fullest extent not prohibited by Applicable Law, presume Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company will, to the fullest extent not prohibited by Applicable Law, have the burden of proof to overcome that presumption by clear and convincing evidence. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. (b) If the determination of the Indemnitee’s entitlement to indemnification has not made pursuant to Section 12 within sixty (60) days after the later of (i) receipt by the Company of Indemnitee’s request for indemnification pursuant to Section 11(a) and (ii) the final disposition of the Proceeding for which Indemnitee requested indemnification (the “Determination Period”), the requisite determination of entitlement to indemnification will, to the fullest extent not prohibited by Applicable Law, be deemed to have been made and Indemnitee will be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. The Determination Period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, the Determination Period may be extended an additional fifteen (15) days if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a)(iv) of this Agreement. (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, will not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. (d) For purposes of any determination of good faith, Indemnitee will be deemed to have acted in good faith if Indemnitee acted based on the records or books of account of the   -11- Company, its subsidiaries, or an Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Company, its subsidiaries, or an Enterprise in the course of their duties, or on the advice of legal counsel for the Company, its subsidiaries, or an Enterprise or on information or records given or reports made to the Company or an Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Company, its subsidiaries, or an Enterprise. Further, Indemnitee will be deemed to have acted in a manner “not opposed to the best interests of the Company,” as referred to in this Agreement if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan. Whether or not the foregoing provisions of this Section 13(d) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. The provisions of this Section 13(d) is not exclusive and does not limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement. (e) The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Company or Enterprise may not be imputed to Indemnitee for purposes of determining Indemnitee’s right to indemnification under this Agreement. (f) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Section 14. Remedies of Indemnitee. (a) Indemnitee may commence litigation against the Company in the Court of Chancery of the State of Delaware to obtain indemnification or advancement of Expenses provided by this Agreement in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company does not timely advance Expenses pursuant to Section 10 of this Agreement, (iii) the determination of entitlement to indemnification is not made pursuant to Section 12 of this Agreement within the Determination Period, (iv) the Company does not hold harmless and indemnify Indemnitee pursuant to Section 5 or 6 or the second to last sentence of Section 12(d) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v) the Company does not hold harmless and indemnify Indemnitee pursuant to Section 3, 4, 7, or 8 of this Agreement within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any   -12- litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The Company will not oppose Indemnitee’s right to seek any such adjudication or award in arbitration. (b) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 will be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee may not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company will have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be and will not introduce evidence of the determination made pursuant to Section 12 of this Agreement. (c) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is entitled to indemnification, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. (d) The Company is, to the fullest extent not prohibited by Applicable Law, precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and will stipulate in any such court or before any such arbitrator that the Company is bound by all the (e) It is the intent of the Company that, to the fullest extent permitted by Applicable Law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement or to recover under any directors’ and officers’ liability insurance policy by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company, to the fullest extent permitted by Applicable Law, will (within ten (10) days after receipt by the Company of a written request therefor) advance to Indemnitee such Expenses which are incurred by Indemnitee in connection with any action concerning this Agreement, Indemnitee’s right to indemnification or advancement of Expenses from the Company, or concerning any directors’ and officers’ liability insurance policies maintained by the Company and will hold harmless and indemnify Indemnitee against any and all such Expenses, regardless of whether Indemnitee is ultimately determined to be entitled to such indemnification, unless the court determines that each of the Indemnitee’s claims in such Proceeding were made in bad faith or were frivolous. Section 15. Establishment of Trust.   -13- (a) In the event of a Potential Change in Control or a Change in Control, the Company will, upon written request by Indemnitee, create a trust for the benefit of Indemnitee (the “Trust”) and from time to time upon written request of Indemnitee will fund such Trust in an amount sufficient to satisfy the reasonably anticipated indemnification and advancement obligations of the Company to the Indemnitee in connection with any Proceeding for which Indemnitee has demanded indemnification and/or advancement prior to the Potential Change in Control or Change in Control (the “Funding Obligation”). The trustee of the Trust (the “Trustee”) will be a bank or trust company or other individual or entity chosen by the Indemnitee and reasonably acceptable to the Company. Nothing in this Section 15 relieves the Company of any of its obligations under this Agreement. (b) The amount or amounts to be deposited in the Trust pursuant to the Funding Obligation will be determined by mutual agreement of the Indemnitee and the Company or, if the Company and the Indemnitee are unable to reach such an agreement, by Independent Counsel selected in accordance with Section 12(b) of this Agreement. The terms of the Trust will provide that, except upon the consent of both the Indemnitee and the Company, upon a Change in Control: (i) the Trust may not be revoked, or the principal thereof invaded, without the written consent of the Indemnitee; (ii) the Trustee will advance Expenses, to the fullest extent permitted by Applicable Law, within two (2) business days of a request by the Indemnitee; (iii) the Company will continue to fund the Trust in accordance with the Funding Obligation; (iv) the Trustee will promptly pay to the Indemnitee all amounts for which the Indemnitee is entitled to indemnification pursuant to this Agreement or otherwise; and (v) all unexpended funds in such Trust revert to the Company upon mutual agreement by the Indemnitee and the Company or, if the Indemnitee and the Company are unable to reach such an agreement, by Independent Counsel selected in accordance with Section 12(b) of this Agreement, that the Indemnitee has been fully indemnified under the terms of this Agreement. The terms of the Trust shall provide that New York law (without regard to its conflicts of laws rules) will govern the Trust and the Trustee will consent to the exclusive jurisdiction of Court of Chancery of the State of Delaware, in accordance with Section 25 of this Agreement. Section 16. Non-exclusivity; Survival of Rights; Insurance; Subrogation. (a) The indemnification and advancement of Expenses provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of the Company’s stockholders or a resolution of directors, or otherwise. The indemnification and advancement of Expenses provided by this Agreement may not be limited or restricted by any amendment, alteration or repeal of the Certificate of Incorporation, the Bylaws or this Agreement in any way with respect to any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status occurring prior to any such amendment, alteration or repeal of this Agreement. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate of Incorporation, or this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy is cumulative and in addition to every other right otherwise. The assertion or employment of any right or   -14- remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy. (b) The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of Expenses and/or insurance provided by one or more Persons with whom or which Indemnitee may be associated (including, without limitation, any Associated Firm or Designated Person). i. The Company hereby acknowledges and agrees: 1) the Company is the indemnitor of first resort with respect to any request for indemnification or advancement of Expenses made pursuant to this Agreement concerning any Proceeding arising from or related to Indemnitee’s Corporate Status with the Company; 2) the Company is primarily liable for all indemnification and indemnification or advancement of Expenses obligations for any Proceeding arising from or related to Indemnitee’s Corporate Status, whether created by law, organizational or constituent documents, contract (including this Agreement) or otherwise; 3) any obligation of any other Persons with whom or which Indemnitee may be associated (including, without limitation, any Associated Firm or Designated Person) to hold harmless and indemnify Indemnitee and/or advance Expenses to Indemnitee in respect of any proceeding are secondary to the obligations of the Company’s obligations; 4) the Company will hold harmless and indemnify Indemnitee and advance Expenses to Indemnitee hereunder to the fullest extent provided herein without regard to any rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated (including, without limitation, any Associated Firm or Designated Person) or insurer of any such Person; and ii. the Company irrevocably waives, relinquishes and releases (A) any other Person with whom or which Indemnitee may be associated (including, without limitation, any Associated Firm or Designated Person) from any claim of contribution, subrogation, reimbursement, exoneration or indemnification, or any other recovery of any kind in respect of amounts paid by the Company to Indemnitee pursuant to this Agreement and (B) any right to participate in any claim or remedy of Indemnitee against any Associated Firm or Designated Person (or former Associated Firm or Designated Person), whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Associated Firm or Designated Person (or former Associated Firm or Designated Person), directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right. iii. In the event any other Person with whom or which Indemnitee may be Person) or their insurers advances or extinguishes any liability or loss for Indemnitee, the payor has a right of subrogation against the Company or its insurers for all amounts so paid which would otherwise be payable by the Company or its insurers under this Agreement, and the Company shall execute all   -15- papers reasonably required and shall do all things that may be reasonably necessary to secure such rights, including the execution of such documents as may be necessary to enable such payor to bring suit to enforce such rights. The Company and the undersign agree that the such payor shall be a third-party beneficiary with respect to this Section 16(b)(iii), entitled to enforce this Section 16(b)(iii) as though such payor was a party to this Agreement. In no event will payment by any other Person with whom or which Indemnitee may be Person) or their insurers affect the obligations of the Company hereunder or shift primary liability for the Company’s obligation to hold harmless and indemnify or advance of Expenses to any other Person with whom or which or Designated Person). iv. Any indemnification or advancement of Expenses provided by any other Person with whom or which Indemnitee may be associated (including, without limitation, any Associated Firm or Designated Person) is specifically in excess over the Company’s obligation to hold harmless and indemnify and advance Expenses or any valid and collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Company. (c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or Agents of the Company or an Enterprise, the Company will obtain a policy or policies covering Indemnitee to the maximum extent of the coverage available for any such director, officer, employee or Agent under such policy or policies, including coverage in the event the Company does not or cannot, for any reason, hold harmless and indemnify or advance Expenses to Indemnitee as required by this Agreement. If, at the time of the receipt of a notice of a claim pursuant to this Agreement, the Company has director and officer liability insurance in effect, the Company will give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company will thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. Indemnitee agrees to make reasonable efforts to assist the Company’s efforts to cause the insurers to pay such amounts. (d) The Company has not entered into as of the date hereof, and following the date hereof shall not enter into, any indemnification agreement or similar arrangement, or amend any existing agreement or arrangement, with any existing or future director or officer of the Company that has the effect of establishing rights of indemnification and contribution benefiting such director or officer in a manner more favorable in any respect than the rights of indemnification and contribution established in favor of the Indemnitee by this Agreement, unless, in each such case, the Indemnitee is offered the opportunity to receive the rights of indemnification and contribution of such agreement or arrangement. All such agreements and arrangements shall be in writing. Section 17. Duration of Agreement. This Agreement and the obligations of the Company hereunder continues until and terminates upon the later of: (a) ten (10) years after the date that Indemnitee ceases to serve as a [director / officer] of the Company or (b) one (1) year after the final adjudication or final termination by settlement of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses   -16- hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto. The indemnification and advancement of Expenses rights provided by or granted pursuant to this Agreement are binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), continue as to an Indemnitee who has ceased to be a director, officer, employee or Agent of the Company or of any other Enterprise, and inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives. The Company shall require and shall cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) of all or substantially all of the business or assets of the Company to, by written agreement, expressly assume and agree to Section 18. Severability. If any provision or provisions of this Agreement is held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will not in any way be affected or impaired thereby and remain enforceable to the fullest extent permitted by Applicable Law; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to Applicable Law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will be construed so as to give effect to the intent manifested thereby. Section 19. Interpretation. Any ambiguity in the terms of this Agreement will be resolved in favor of Indemnitee and in a manner to provide the maximum indemnification and advancement of Expenses permitted by law. The Company and Indemnitee intend that this Agreement provide to the fullest extent permitted by Applicable Law for indemnification in excess of that expressly provided, without limitation, by the Certificate of Incorporation, vote of the Company stockholders or disinterested directors, or Applicable Law. Section 20. Enforcement. (a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company. (b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of   -17- Incorporation and applicable law, and is not a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder. this Agreement is binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement will be deemed or constitutes a waiver of any other provisions of this Agreement nor will any waiver constitute a continuing waiver. Section 22. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company does not relieve the Company of any obligation which it may have to the Indemnitee under Section 23. Notices. All notices, requests, demands and other communications under this Agreement will be in writing and will be deemed to have been duly given if (a) delivered by hand to the other party, (b) sent by reputable overnight courier to the other party or (c) sent by facsimile transmission or electronic mail, with receipt of oral confirmation that such communication has been received: (a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee provides to the Company. Advantage Solutions Inc. 18100 Von Karman Avenue, Suite 1000 Irvine, CA 92612 Attention: Board of Directors or to any other address as may have been furnished to Indemnitee by the Company. Section 24. Contribution. (a) Whether or not the indemnification provided in Sections 3, 4 or 8 hereof is available, in respect of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such Proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee. (b) Without diminishing or impairing the obligations of the Company set forth in Section 24(a), if, for any reason, Indemnitee shall elect or be required to pay all or any portion   -18- of any judgment or settlement in any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive. (c) The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee. (d) To the fullest extent permissible under Applicable Law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and Agents) and Indemnitee in connection with such event(s) and/or transaction(s). Section 25. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties are governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or Proceeding arising out of or in connection with this Agreement may be brought only in the Court of Chancery of the State of Delaware and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware for purposes of any action or Proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or Proceeding in the Court of Chancery of the State of Delaware, and (iv) waive, and   -19- agree not to plead or to make, any claim that any such action or Proceeding brought in the Court of Chancery of the State of Delaware has been brought in an improper or inconvenient forum. Section 26. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which will for all purposes be deemed to be an original but all of which together constitutes one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement. Section 27. Headings. The headings of this Agreement are inserted for convenience only and do not constitute part of this Agreement or affect the construction thereof.   -20- IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of   ADVANTAGE SOLUTIONS INC.              INDEMNITEE   By:           By:     Name:         Name:     Title:         Address:                         

Title: [CA] I rear-ended someone on the freeway that cut me off. Who is responsible? Question:I haven't been able to put all the details together as I bumped my head in the accident, but here are the initial claims: * Other party (a woman with a passenger and a dog) was driving 55mph in the fast lane. * I rear-ended her after a very brief (1-2 seconds) of braking. I was likely traveling around 70mph when I began braking. * I believe she had pulled in front of me ~100 feet in front of the scene of the accident, but I really don't know where the car came from... I didn't see it (likely a reason for this being my fault?) * I feel like I had been driving reasonably; not tip-top vigilance, but at least not texting while driving. Perhaps I had been looking in the rear-view mirror when she pulled in front of me. My current course of action is to do various calculations to try to determine the amount of time I would have had to make evasive maneuvers. I'm going to try to put numbers together that somehow illustrate that I could not have reasonably reacted in time. Are my attempts futile? I understand that rear-ending someone when they are fully established in the freeway will very likely return as my fault, but I'd like to try where I can. Topic: Traffic and Parking Answer #1: &gt; I believe she had pulled in front of me In almost all situations, the person doing the rear-ending is at fault. In some cases, when someone makes an improper lane change, the lane changer can be at fault. However, you don't know that she made an improper lane change. You "believe", but that's not enough for court. You also state flatly that you didn't **see** the car, which lends greatly to this being your fault. Unless you can testify that she did something wrong, this defense is unlikely to work.

EXHIBIT 10.558 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT (this “Agreement”) is made as of this 14th day of August, 2007, by and between INLAND WESTERN RETAIL REAL ESTATE TRUST, INC., a Maryland corporation (“IWEST”), and Robert D. Parks (the “Consultant”). RECITALS: A. IWEST is a real estate investment trust which owns, operates and acquires a diversified portfolio of real estate, primarily multi-tenant shopping centers and single-user net lease properties (the “Business”). B. IWEST, IWEST Acquisition 1, Inc., IWEST Acquisition 2, Inc., IWEST Acquisition 3, Inc., IWEST Acquisition 4, Inc., Inland Western Retail Real Estate Advisory Services, Inc. (the “Advisor”), Inland Southwest Management Corp. (“Southwest”), Inland Northwest Management Corp. (“Northwest”), Inland Western Management Corp. (“Western”), Inland Real Estate Investment Corporation, and IWEST Merger Agent, LLC, in its capacity as agent for certain stockholders, have entered into that certain Agreement and Plan of Merger, dated as of August 14, 2007 (the “Merger Agreement”), pursuant to which the Advisor, Southwest, Northwest and Western will each become a wholly-owned subsidiary of IWEST and/or its Affiliates (as defined herein) (collectively, the “Mergers”). C. Consultant, as an officer of an Affiliate of the Advisor has obtained certain unique and particular talents and abilities with regard to the Business and will provide IWEST with strategic and operational assistance for the Engagement Term (as defined herein), including, without limitation making recommendations and providing guidance to IWEST as to prospective investment, financing, acquisition, disposition, development, joint venture and other real estate opportunities contemplated from time to time by IWEST and the Board of Directors (collectively, the “Consulting Services”).  For purposes herein, the term (i) “Affiliate” means a person that directly, or indirectly through one or more the person specified and (ii) “control” or any similar term means the the management and policies of a person, whether through the ownership of voting shares, by contract or otherwise.   D. The Consultant will receive benefits from consummating the Mergers as a shareholder of one or more of the Advisor, Southwest, Northwest and Western. E. IWEST and the Consultant are entering into this Agreement concurrently with the execution of the Merger Agreement, subject to the terms, conditions and covenants hereinafter set forth.  Terms not otherwise defined herein shall have the meaning ascribed to the term in the Merger Agreement. NOW, THEREFORE, in consideration of the foregoing and the agreements, covenants and conditions set forth herein, the receipt and sufficiency of which is hereby acknowledged, the Consultant and IWEST hereby agree as follows: ARTICLE I 1.1 ENGAGEMENT.  IWEST hereby engages Consultant on a non-exclusive basis, and Consultant hereby accepts such engagement upon the terms and conditions hereinafter set forth.  Upon reasonable prior notice to Consultant, the Consultant shall use his commercially reasonable efforts to provide IWEST with the Consulting Services at the Chief Executive Officer of IWEST’s or IWEST’s Board’s request.  At the Chief Executive Officer of IWEST’s or its Board’s request, Consultant shall use commercially reasonable efforts to attend meetings of senior management of IWEST with respect to the near and long-term operations of IWEST and its Affiliates.  Consultant shall also provide such additional services as may be reasonably requested from time to time by the Board, consistent with the services provided to IWEST or any Service Provider prior to the date of this Agreement by Consultant, other than those services that are contemplated to be provided pursuant to the Services Agreements (as defined in the Merger Agreement) as of the date of this Agreement.  The Consulting Services to be provided hereunder require Consultant to attend, at the Chief Executive Officer of IWEST’s or its Board of Directors’ request, certain meetings of the Board of Directors or management team of IWEST of the kind and nature attended by Consultant prior to the date of this Agreement (i.e., Board of Directors meetings, management committee meetings, audit committee meetings and acquisition committee meetings).  Consultant acknowledges the Consulting Services are in addition to, and in no way limit, Consultant’s duties, as applicable, to IWEST as a director of IWEST but nothing in this Agreement shall have the effect of expanding the scope of fiduciary duties that Consultant may owe IWEST under applicable law.  IWEST acknowledges that consultant and not as a director, if applicable, and that, with respect to Consulting Services, Consultant’s status shall be that of an independent contractor, and not that of an agent or employee of IWEST.  Consultant shall not hold himself out as, nor claim to be acting as, an employee or agent of IWEST solely as a result of providing the Consulting Services.  Consultant is not authorized to, and shall not, make or undertake any agreement, understanding, waiver or representation on behalf of IWEST in his capacity as Consultant, except as may be provided in a separate Ancillary Agreement. 1.2 ACTIVITIES AND DUTIES DURING ENGAGEMENT.  Consultant represents and warrants to IWEST that he is able to accept engagement by IWEST as Consultant; provided, however, that Consultant and IWEST acknowledge and agree that Consultant will devote a limited amount of time to his duties hereunder, and nothing contained herein shall restrict Consultant from being employed by or accepting employment, consulting arrangements or other positions with IWEST or other businesses, including businesses that may compete with the business conducted by IWEST, provided that such activities do not violate Article IV hereof. ARTICLE II 2.1 TERM.   (a) Unless terminated earlier in accordance with Section 2.1(b) or Section 2.1(c) hereof, the term of this Agreement shall automatically commence on the Closing Date (as defined in the Merger Agreement) (but only upon the Closing Date) hereof and shall last for a period of three (3) years (such period being hereinafter referred to as the “Term”).  Notwithstanding the foregoing, IWEST may terminate this Agreement at any time, with or without cause (the Term, as it may be extended or terminated pursuant to this Article II, is herein referred to as the “Engagement Term”). (b) The Consultant shall have the option, but not the obligation, to terminate the Engagement Term upon the occurrence of any of the following events: (i) Disability of Consultant.  For purposes of this Agreement, the term “disability” (or any similar term) shall mean any bodily injury, disease, illness, or emotional or nervous disorder that prevents the Consultant from performing any or all Consulting Services for a period of at least thirty (30) consecutive days; 2 (ii) The failure of IWEST to perform its obligations provided herein and the continuance of such failure for a period of thirty (30) consecutive days after receipt by IWEST from the Consultant of written notice of such failure to perform ; or (iii) The occurrence of a Change in Control Event (as defined herein). (c) This Agreement shall automatically terminate upon the death of Consultant. 2.2 DEFINITION OF “CHANGE IN CONTROL EVENT”. A “Change in Control Event” means the occurrence of one or more of the following: (a) Any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of IWEST to any person or group of related persons for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended; provided, however, that any sale, lease, exchange or transfer to (including, without limitation, any merger or other business combination with or into) any of the following shall not constitute a Change in Control Event:  (i) any Affiliate controlled by IWEST, (ii) Inland Real Estate Corporation, (iii) Inland American Real Estate Trust, Inc., (iv) The Inland Group, Inc., or (v) any Affiliate controlled by any of the persons listed in clauses (i) through (iv) above (all of the entities described in clauses (i) through (v) above to be hereinafter sometimes referred to as the “Inland Companies”); (b) The approval by the holders of the outstanding shares of IWEST of any plan or proposal for the liquidation or dissolution of IWEST; (c) Any person or group of related persons (other than any one or more of the Inland Companies) shall become the owner, directly or indirectly, beneficially or of record, of shares of IWEST representing more than twenty-five percent (25%) of the aggregate ordinary voting power represented by the issued and outstanding common shares of IWEST; or (d) Following any change in the composition of the board of directors of IWEST, a majority of the board of directors of IWEST are not either (i) members of the board of directors of IWEST as of the date hereof, or (ii) members of the board of directors of IWEST whose nomination for election or election to the board of directors of IWEST has been recommended, approved or ratified by at least eighty percent (80%) of the board of directors of IWEST then in office who were either members of the board of directors of IWEST as of the date hereof or whose election as a member of the board of directors of IWEST was previously so approved. 2.3 CESSATION OF RIGHTS AND OBLIGATIONS: SURVIVAL OF CERTAIN PROVISIONS.  On the date of expiration or termination of the Engagement Term for any reason, all of the respective rights, duties, obligations and covenants of the parties hereto, as set forth herein, shall, except as specifically provided herein to the contrary, cease and become of no further force or effect as of the date of said termination, and shall only survive as expressly provided for herein. ARTICLE III 3.1 NO COMPENSATION.  During the Engagement Term, IWEST shall not pay to Consultant, and Consultant shall not be entitled to receive, any salary or other compensation for his services provided under this Agreement. 3 3.2 REIMBURSEMENT OF EXPENSES.  IWEST shall reimburse Consultant for all ordinary and necessary out-of-pocket business expenses incurred by him and in connection with performing Consulting Services at the request of IWEST or IWEST’s Board hereunder, in the manner and time consistent with IWEST’s policy governing reimbursement of expenses incurred by employees. ARTICLE IV 4.1 ASSIGNMENT.  This Agreement or any right or interest hereunder may not be hereto.  Consultant shall not, without the prior written consent of IWEST, employ, contract with or use the services of any third party in connection with the performance of any of the services to be rendered under this Agreement, or otherwise designate the responsibility of performance of any services to be rendered under this Agreement to any third party.  Any attempted assignment, designation, employment or use in violation of this Section 4.1 shall be void and of no force or effect. 4.2 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.  Consultant hereby acknowledges and agrees that as a result of his engagement hereunder he may acquire and use information of a special and unique nature and value specifically relating to IWEST that is not generally known to the public such as financial or operating information, business or strategic plans identified as such, property acquisition memorandums or appraisals, entity valuation or models, and employee records (all such information being hereinafter referred to as “Confidential Information”); provided, however, that any information concerning tenants or prospective tenants of, investors or potential investors, or members of any broker-dealer group or potential broker-dealer group to, or of, IWEST shall not constitute “Confidential Information” unless IWEST is subject to a confidentiality agreement concerning such information.  Consultant further acknowledges and agrees that the Confidential Information is of great value to IWEST and that the restrictions and agreements contained in this Agreement are reasonably necessary to protect the Confidential Information and the goodwill of IWEST and its subsidiaries.  Accordingly, Consultant hereby covenants and agrees that: (a) During the Engagement Term or at any time thereafter, except to the extent authorized by IWEST or its Affiliates, Consultant will not, directly or indirectly, divulge to any person, firm, corporation, limited liability, company or other organization, other than IWEST or any of its subsidiaries (collectively, “Third Parties”), or use or cause or authorize any Third Parties to use, any Confidential Information (whether or not identified by IWEST as confidential), except to the extent required by law (and then only to the extent required by law and with reasonable prior notice to IWEST and its Board of Directors of such disclosure); and (b) Upon the termination of the Engagement Term, Consultant shall deliver or cause to be delivered to IWEST any and all Confidential Information, including drawings, notebooks, keys, data and other documents and materials belonging to IWEST or its subsidiaries which is in his possession or under his control relating to IWEST or its subsidiaries, regardless of the medium upon which it is stored, and will deliver to IWEST upon such termination of the Engagement Term any other property of IWEST or its subsidiaries which is in his possession or under his control; provided, however, that notwithstanding the foregoing, Consultant shall not be required to deliver or cause to be delivered to IWEST any Confidential Information (i) in the possession of Consultant received by Consultant in his capacity as a director of IWEST or (ii) if Consultant is otherwise employed by, or providing other services directly or indirectly through an affiliate of The Inland Group, Inc., to IWEST or its subsidiaries. Nothing contained in this Section 4.2 shall prohibit or restrict any party from disclosing any information (including Confidential Information):  (a) the disclosure of which is necessary to comply with 4 any applicable laws, including, without limitation, federal or state securities laws, or any exchange listing or similar rules and regulations; (b) the disclosure of which is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction; (c) which is now, or hereafter is made, generally available to the public other than by disclosure in violation of this Agreement; (d) which was disclosed to the disclosing party by a Third Party that the disclosing party, in good faith, believes was not bound by an obligation of confidentiality; or (e) with respect to which IWEST has consented to the form and content of any such disclosure.  If any party learns that disclosure of such information is sought in or by a court or governmental body of competent jurisdiction or through other means, such party shall (1) give prompt notice to the other party prior to making such disclosure and allow such other party, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information, (2) reasonably cooperate with such other party in its efforts to prevent, or obtain a protective order for, such disclosure, and (3) disclose the minimum amount of information required to be disclosed. 4.3 REMEDIES.  Consultant hereby acknowledges and agrees that the Consulting Services to be rendered by him to IWEST hereunder are of a special and unique nature and that it would be very difficult or impossible to measure the damages resulting from a breach of this Agreement. Consultant hereby further acknowledges and agrees that the restrictions herein are reasonable and necessary for the protection of the business and the goodwill of IWEST and its subsidiaries and that a violation by the Consultant of any such covenant could cause irreparable damage to IWEST or its subsidiaries.  Consultant therefore agrees that any breach by him of any of the covenants or provisions of Article IV of this Agreement shall entitle IWEST or its subsidiaries, in addition to any other remedy available to them under this Agreement, at law or in equity, to a temporary and permanent injunction or any other applicable decree of specific performance, without any bond or security being required thereof, in order to enjoin such breach.  The parties understand and intend that each covenant, provision and restriction agreed to in this Article IV shall be construed as separate and divisible from every other provision and restriction and that the unenforceability of any one provision or restriction shall not limit the enforceability, in whole or in part, of any other provision or restriction and that one or more of all of such provisions or restrictions may be enforced, in whole or in part, as the circumstances warrant. ARTICLE V MISCELLANEOUS 5.1 NOTICES.  All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered: (i) when delivered personally or by commercial messenger; (ii) one business day following deposit with a recognized overnight courier service, provided such deposit occurs prior to the deadline imposed by such service for overnight delivery; (iii) when transmitted, if sent by facsimile copy, provided confirmation of receipt is received by sender and such notice is sent by an additional method provided hereunder, in each case above provided such communication is addressed to the intended recipient thereof as set forth below: To Consultant at: Robert D. Parks 2901 Butterfield Road Facsimile: (630) 218-8033 Jenner & Block LLP 330 N. Wabash Avenue Chicago, IL 60611-7603 Attn:  Arnold S. Harrison 5 Facsimile: (312) 923-2702 To IWEST at: Inland Western Retail Real Estate Trust, Inc. 2901 Butterfield Road Attn:_____________ Facsimile:_____________ Duane Morris LLP 227 West Monroe Street Suite 3400 Chicago, Illinois 60606 Attn:  David J. Kaufman Facsimile: (312) 499-6701 Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above. 5.2 ENTIRE AGREEMENT; AMENDMENTS, ETC.  This Agreement contains the entire agreement and understanding of the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter thereof.  No modification, amendment, waiver or alteration of this Agreement or any provision or term hereof shall in any event be effective unless the same shall be in writing, executed by both parties hereto, and any waiver so given shall be effective only 5.3 SUCCESSORS AND ASSIGNS.  Subject to the terms and restrictions contained in Section 4.1 above, this Agreement shall be binding upon, and inure to the benefit of, and shall be enforceable by, the successors, assignees and transferees of IWEST and its current or future subsidiaries. 5.4 NO CONSTRUCTIVE WAIVERS.  No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder or pursuant hereto shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, of any other right, power or remedy hereunder or pursuant thereto. 5.5 SEVERABILITY. Wherever possible, each provision of this Agreement shall be but, if any provision of this Agreement shall be prohibited by or invalid under prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.  If any part of any covenant or other provision in this Agreement is determined by a court of law to be overly broad thereby making the covenant unenforceable, the parties hereto agree, and it is their desire, that the court shall substitute a judicially enforceable limitation in its place, and that as so modified the covenant shall be binding upon the parties as if originally set forth herein. 5.6 COMPLIANCE AND HEADINGS. The headings in this Agreement are intended to be for convenience and reference only, and shall not define or limit the scope, extent or intent or otherwise affect the meaning of any portion hereof. 6 5.7 GOVERNING LAW. The parties agree that this Agreement shall be governed by, interpreted and construed in accordance with the internal laws of the State of Illinois. 5.8 ARBITRATION.  All disputes under this Agreement among the parties to this Agreement which are not resolved within thirty (30) days of a party’s sending of a notice of dispute with respect thereto (each an “Arbitrated Claim”), shall be resolved by binding arbitration, and each party hereto hereby waives any right it may otherwise have to such a resolution of any Arbitrated Claim by any means other than arbitration pursuant to this Section 5.8.  As a minimum set of rules in the arbitration, the parties agree as follows: (a) The place of the arbitration shall be Chicago, Illinois.  The arbitration must be held in the English language in accordance with the Streamlined Arbitration Rules and Procedures of JAMS in effect on the date hereof, except as modified by this Agreement. The arbitration shall be governed by the Illinois Code of Civil Procedure. (b) The arbitration will be held before a single arbitrator selected by (i) IWEST and (ii) the Consultant.  If the parties in interest cannot agree on an arbitrator within fourteen (14) days of the delivery of an Arbitration Demand, JAMS will appoint such arbitrator.  The arbitrator will be knowledgeable regarding commercial transactions similar in nature to the transactions (c) Any party or parties initiating arbitration (the “Arbitration Claimants”) will give to the other party or parties (the “Arbitration Respondents”) notice of their intention to arbitrate (the “Arbitration Demand”).  The Arbitration Demand will contain a notice regarding the nature of the claim.  The Arbitration Respondents will file an answering statement (the “Arbitration Answer”) within fourteen (14) days after the Arbitration Demand.  The Arbitration Answer will contain a statement setting forth in reasonable detail the Arbitration Respondents’ responses and defenses to the Arbitrated Claim.  If the Arbitration Respondents assert a counterclaim, (i) the Arbitration Respondents shall send it with the Arbitration Answer and such counterclaim must include a statement setting forth in reasonable detail the nature of the counterclaim, the amount involved, if any, and the remedy sought, and (ii) the Arbitration Claimants will file a reply statement (the “Arbitration Reply”) as soon as is reasonably practicable, but in no event later than fourteen (14) days, after the counterclaim. The Arbitration Reply will contain a statement setting forth in reasonable detail the Arbitration Claimants’ responses and defenses to the counterclaim.  If no Arbitration Answer or Arbitration Reply is given within the stated time, the claim or the counterclaim will be assumed to be denied.  Failure to file an Arbitration Answer or Arbitration Reply will not operate to delay the arbitration. (d) Unless the parties to the arbitration agree otherwise, the arbitrator may order depositions only for good cause and each party to the Arbitrated Claim may make such document requests and other discovery (other than depositions) as permitted in accordance with the Streamlined Arbitration Rules and Procedures of JAMS in effect on the date hereof. (e) The arbitration hearings will be conducted over a period not to exceed thirty (30) days commencing as of the date of the first hearing.  The arbitrator shall make a final decision on the Arbitrated Claim within thirty (30) days of the final hearing. The arbitrator may make such orders with regard to scheduling, allocation of hearing time, or otherwise as he or she deems appropriate to achieve compliance with these time limitations.    The parties have included the foregoing provisions limiting the scope and extent of the arbitration with the intention of providing for prompt, economic and fair resolution of any dispute submitted to arbitration. 7 (f) The Arbitration Claimants, on the one hand, and the Arbitration Respondents, on the other, will, as an initial matter, equally bear the costs and fees of the arbitration, if applicable, but the arbitrator shall award such costs in inverse proportion as the Arbitration Claimants, on the one hand, and the Arbitration Respondents, on the other, may prevail on the matters resolved by the arbitrator (based on the variance of their respective proposed Arbitration Demand, Arbitration Answer and/or Arbitration Reply, as applicable, from the determination of the arbitrator), which proportionate allocations shall be determined by the arbitrator at the time the determination of the arbitrator is rendered on the merits of the matters submitted. (g) The arbitrator shall enter a written award specifying the basis for his or her decision, including findings of fact and conclusions of law, the basis for the damages award and a breakdown of the damages awarded, and the basis for any other remedy.  Any Party dissatisfied with the award may invoke the JAMS Optional Arbitration Appeal Procedure (based on the rules therefor in effect at the time of this Agreement).  Such JAMS Optional Arbitration Appeal shall be limited to whether there are any erroneous conclusions of law, or any findings of fact not supported by substantial evidence.  The appellate arbitral panel may vacate, modify, correct, or affirm the award in whole or in any part.  The award (as modified, corrected, or affirmed by the appellate arbitral panel, or if no such JAMS appeal is taken, as originally rendered by the arbitrator) will be considered as a final and binding resolution of the disagreement.   (h)  Any arbitration proceeding will be conducted on a confidential basis, and any Confidential Material disclosed during any such proceeding will be kept confidential by the parties to such proceeding and by the arbitrator. (i) The arbitrator’s discretion to fashion remedies hereunder will be no broader or narrower than the legal and equitable remedies available to a court before which such Arbitrated Claim may have been brought but for this Section 5.8, unless the parties expressly state elsewhere in this Agreement that parties will be subject to broader or narrower legal and equitable remedies than would be available under the law governing this Agreement. (j) The arbitral award will be the exclusive remedy of the parties for all claims, counterclaims, issues or accountings presented or pleaded to the arbitrator.  The award will include interest from the date of the Arbitrated Claim until the award is fully paid, computed at the then-prevailing U.S. prime rate, plus five percent (5%).  Any additional costs, fees or expenses incurred in enforcing the arbitral award (or successfully resisting it) will be borne by the party against which enforcement is sought if such award is successfully enforced (or borne by the party seeking to enforce such award if the resisting party successfully resists its enforcement).  Any party may enforce an arbitral award in any court of competent jurisdiction. 5.9 of which will be deemed an original and all of which together will constitute 5.10 NO PRESUMPTION AGAINST DRAFTER. Each of the parties hereto has jointly participated in the negotiation and drafting of this Agreement.  In the event an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by each of the parties hereto and no presumptions or burdens of proof shall arise favoring any party by virtue of the authorship of any provisions of this Agreement. 5.11 ENFORCEMENT.  In the event either of the parties to this Agreement shall bring an action against the other party with respect to the enforcement or breach of any provision of this 8 Agreement, the prevailing party in such action shall recover from the non-prevailing party the costs incurred by the prevailing party with respect to such action including court costs and reasonable attorneys’ fees. 5.12 RECITALS.  The Recitals set forth above are hereby incorporated in and made a part of this Agreement by this reference. 5.13 INDEMNIFICATION.  IWEST agrees to defend, indemnify and hold harmless Consultant for any and all acts taken or omitted to be taken by Consultant hereunder (except for bad faith, gross negligence or willful misconduct) as if Consultant was a director of IWEST as provided in IWEST’s charter and bylaws in accordance with the same terms, conditions, limitations, standards, duties, rights and obligations as a director.  If IWEST enters into an indemnification or similar agreement covering such indemnification matters with any IWEST director, IWEST will offer and enter into a similar indemnification agreement with Consultant.  The provisions of this Section 5.13 shall survive any termination of this Agreement. 9 INLAND WESTERN RETAIL REAL ESTATE TRUST, INC., a Maryland corporation By: Name: Its: CONSULTANT Robert D. Parks [SIGNATURE PAGE TO CONSULTING AGREEMENT]

Title: [CANADA] Girl accused me of rape in front of almost 20K people. Please help. Question:There has been an Instagram account blowing up in my city recently. It has been up for 2-3 weeks and has over 18 thousand active followers. A girl runs the account and she posts pictures/DM's she gets from other girls with stories of men that have raped them. She posts about 30 of these stories a day and today she posted a story about me. I dont know who sent this story in but they sent in a picture of me and a message that detailed how I showed up to her house and raped her. I have been in a relationship for almost 2 years with the same girl and prior to that I was a virgin. Her story is impossible. People have been reporting this instagram account since it was created and it got taken down but Instagram put it back up a few days ago. I'm scared. My family and friends, even my boss could see this. There was absolutely no proof sent in and the story is entirely made up. It was posted about an hour ago. What can I do? I've reported the account and contacted instagram but I doubt that this will do anything. Topic: Criminal Law Answer #1: You need to speak to a defamation attorney ASAP. This is one of the few really good cases in which to do so on this sub. edit: predictive text and poor proofreading be damnedAnswer #2: Take screen shots. This is defamation. Sorry but you really need to talk to a local lawyer urgently about this. The lawyer may also be able to get an injunction for the removal of the website. Answer #3: Ps a lot of lawyers will do defamation cases on no win, no fee. Get a lawyer who does lots of defamation cases as it is quite a specialised area of law.Answer #4: I would get a lawyer to write a cease and desist letter first or if you really can't afford it (they're not very expensive) look it up and write one yourself. You can contact them via the instagram account, you don't need to know who gave them the info for all you know they made it up. They are personally responsible for posting it. Don't plead or beg, be firm and make it clear this is defamation and there will be consequences. Chances are these are bored teenage girls trying to play gossip girl and any threat of legal action will get them to back down.Answer #5: Op you need to get a lawyer who specializes in defamation ASAP. Some lawyers will do a no win, no fee deal with you. Don’t wait. Search around for a lawyer who will take your case on a no win, no fee basis. You may get lucky and find one that can represent you pro bono. Answer #6: IANAL OP, first things first I'd suggest opening a complaint with your local police, online harassment is taken seriously, if your community is policed by provincial forces or RCMP you may gain quicker traction. If you start receiving threats directed at your person you'll want to escalate them to the authorities as well. Get a papertrail working in your favor should anything negatively impacting comes from this. If you are considered a low income individual low/no cost legal aid solutions may be available, obtaining referrals to community legal clinics, provincial law societies can give you an independent review of the facts and an understanding of your legal options. I think some posters here need to remember that Canada has a judicial system that operates a little differently from the United States, so advice given like: hire a defamation attorney, get a cease and desist, have your lawyer subpoena, have an American legal system slant to them, cases operate a little differently up here. IMHO, this https://www.cbabc.org/For-the-Public/Dial-A-Law/Scripts/Your-Rights/240 from the BC Canadian Bar Associatation gives a great writeup on slander and libel.

EXHIBIT (b) AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC. BY-LAWS as amended and restated as of December 11, 2009 OFFICES Section 1.The registered office shall be in the City of Baltimore, State of Maryland. Section 2.The Corporation may also have offices at such other places both within and without the State of Maryland as the Board of Directors may from time to time determine or the business of the Corporation may require. MEETINGS OF STOCKHOLDERS Section 3.Meetings of the stockholders shall be held at the office of the Corporation in Kansas City, Missouri or at any other place within the United States as shall be designated from time to time by the Board of Directors and stated in the notice of meeting. Section 4.The Corporation shall not be required to hold an annual meeting of its stockholders in any year in which the election of Directors is not required by the Investment Company Act of 1940, as amended (the “Investment Company Act”), to be acted upon by the holders of any class or series of stock of the Corporation.The use of the term “annual meeting,” wherever found in these By-laws, shall not be construed to imply a requirement that a stockholder meeting be held annually.In the event that the Corporation shall be required by the Investment Company Act to hold an annual meeting of stockholders to elect Directors, such meeting shall be held at a date and time set by the Board of Directors in accordance with the Investment Company Act (but in no event later than 120 days after the occurrence of the event requiring the election of Directors).Any annual meeting that is not required by the Investment Company Act shall be held on a date and time during the month of July set by the Board of Directors.At any annual meeting, the stockholders shall elect a Board of Directors and may transact any business within the powers of the Corporation.Any business of the Corporation may be transacted at an annual meeting without being specially designated in the notice, except such business as is specifically required by statute to be stated in the notice. Section 5.The presence at any stockholders meeting, in person or by proxy, of stockholders entitled to cast one third of the votes entitled to vote thereat shall constitute a quorum for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation, or by these By-laws.Where the approval of any particular item of business to come before a meeting requires the approval of one or more than one class or series of stock, voting separately, the holders of one third of the votes of each of such classes or series entitled to be voted must be present to constitute a quorum for the transaction of such item of business.If, however, a quorum shall not be present or represented at any meeting of the stockholders, a majority of the voting stock represented in person or by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws present or represented.At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.If the adjournment is for more than 90 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote thereat. Section 6.When a quorum is present at any meeting, a majority of all the votes cast is sufficient to approve any matter which properly comes before the meeting, unless a different vote for such matter is specified by law, by the Articles of Incorporation or by these By-laws, in which case such different specified vote shall be required to approve such matter. Section 7.Special meetings of the stockholders may be called at any time by the Board of Directors, or by the Chairman of the Board, the President, a Vice President, the Secretary or an Assistant Secretary. Section 8.Special meetings of the stockholders shall be called by the Secretary upon written request of stockholders entitled to cast at least 10 percent of all the votes entitled to be cast at such meeting.Such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on thereat.After verification of the sufficiency of such request, the Secretary shall then inform the requesting stockholders of the reasonably estimated cost of preparing and mailing such notice of the meeting.Upon payment to the Corporation of such costs the Secretary shall give notice stating the purpose or purposes of the meeting to all stockholders entitled to notice of such meeting; provided, however, unless requested by stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting, no special meeting need be called to consider any matter which is substantially the same as a matter voted upon at any special meeting of the stockholders held during the preceding 12 months. Section 9.Not less than ten nor more than 90 days before the date of every stockholders’ meeting, the Secretary shall give to each stockholder entitled to vote at such meeting, and to each stockholder not entitled to vote who is entitled by statute to notice, written or printed notice stating (i)the time and place of the meeting and, (ii)the purpose or purposes for which the meeting is called if the meeting is a special meeting, or if notice of the purpose of the meeting is required by statute to be given.Such notice shall be given either by mail or by presenting it to the stockholder personally or by leaving it at his residence or usual place of business.If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his address as it appears on the records of the Corporation, with postage thereon prepaid. Section 10.Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice of the meeting. Section 11.At all meetings of stockholders, a stockholder may vote the shares owned of record by him on the record date (determined in accordance with Section 42 hereof) for each such stockholders’ meeting either in person or by written proxy signed by the stockholder or by his duly authorized attorney-in-fact.No proxy shall be valid after 11 months from its date, unless otherwise provided in the proxy.At all meetings of stockholders, unless the voting is 2 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws conducted by inspectors, all questions relating to the qualifications of voters and the validity of proxies and the acceptance or rejection of votes shall be decided by the chairman of the meeting. DIRECTORS Section 12.The number of Directors of the Corporation shall be seven.By vote of a majority of the entire Board of Directors, the number of Directors fixed by the Articles of Incorporation or by these By-laws may be increased or decreased from time to time to a number not exceeding 11 nor less than seven, but the tenure of office of a Director shall not be affected by any decrease in the number of Directors so made by the Board.Until the first annual meeting of stockholders or until successors are duly elected and qualify, the Board shall consist of the persons named as such in the Articles of Incorporation.At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect Directors to hold office until the next annual meeting or until their successors are elected and qualify.A plurality of all the votes cast at an annual meeting at which a quorum is present shall be required to elect Directors of the Corporation.Each Director, upon his election, shall qualify by accepting the Office of Director, and his attendance at, or his written approval of the minutes of, any meeting of the newly-elected directors shall constitute his acceptance of such office, or he may execute such acceptance by a separate writing, which shall be placed in the minute book.Directors need not be stockholders of the Corporation.Disinterested Directors shall be required to retire from the Board of Directors when they reach the age of seventy-two (72), unless otherwise extended by a vote of a majority of the Disinterested Directors other than the Director to which such extension shall apply. Section 13.The business and affairs of the Corporation shall be managed by its Board of Directors, which may exercise all the powers of the Corporation, except such as are by law and by the Articles of Incorporation or by these By-laws conferred upon or reserved to the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 14.Meetings of the Board of Directors, regular or special, may be held at any place in or out of the State of Maryland as the Board may from time to time determine. Section 15.The first meeting of each newly-elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting, and no notice of such meeting shall be necessary to the newly-elected Directors in order legally to constitute the meeting, provided a quorum shall be present.In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly-elected Board of Directors, or if such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the Directors. 3 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws Section 16.Regular meetings of the Board of Directors may be held at such time and place as shall from time to time be fixed by resolution adopted by the full Board of Directors.Adoption of such resolution shall constitute notice of all meetings held pursuant thereto. Section 17.Special meetings of the Board of Directors may be called at any time by the Board of Directors or the Executive Committee, if one be constituted, by vote at a meeting, or by the Chairman of the Board, the President or by a majority of the Directors or a majority of the members of the Executive Committee in writing with or without a meeting.Special meetings may be held at such place or places within or without Maryland as may be designated from time to time by the Board of Directors; in the absence of such designation, such meetings shall be held at such places as may be designated in the call. Section 18.Notice of the place and time of every special meeting of the Board of Directors shall be served on each Director or sent to him by telegraph, or by leaving the same at his residence or usual place of business at least three days before the date of the meeting, or by mail at least seven days before the date of the meeting.If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the Director at his address as it appears on the records of the Corporation, with postage thereon prepaid. Section 19.At all meetings of the Board a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the action of a majority of the Directors present at any meeting at which a quorum is present shall be the action of the Board of Directors unless the concurrence of a greater proportion is required for such action by law, the Articles of Incorporation or these By-laws.If a quorum shall not be present at any meeting of Directors, the Directors present thereat may by a majority vote adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 20.Unless otherwise restricted by the Articles of Incorporation or these By-laws, members of the Board of Directors of the Corporation, or any committee designated by the Board, may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by that means shall constitute presence in person at such meeting. Section 21.Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting, if a written consent to such action is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of the proceedings of the Board or committee. COMMITTEES OF DIRECTORS Section 22.The Board of Directors may appoint from among its members an Executive Committee and other committees composed of two or more Directors, and may delegate to such committees any of the powers of the Board of Directors, except the power to recommend to the stockholders any action which requires stockholder approval, amend the By-laws, and approve any merger or share exchange that does not require stockholder approval or issue stock.The 4 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws Board of Directors may also delegate to a committee of the Board or to an officer of the Corporation the power to fix the amount and other terms of distributions, provided that the Board of Directors has given general authorization for such distributions and has established a method or procedures for determining the maximum amount of the distribution.However, if the Board of Directors, subject to the terms and provision of the Articles of Incorporation, has given general authorization for the issuance of stock, a committee of the Board, in accordance with a general formula or method specified by the Board of Directors by resolution or by adoption of a stock option or other plan, may fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued.In the absence of an appropriate resolution of the Board of Directors, each committee may adopt such rules and regulations governing its duties, proceedings, quorum and manner of acting as it shall deem proper and desirable, provided that the quorum shall not be less than two Directors.In the absence of any member of such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a member of the Board of Directors to act in the place of such absent member. Section 23.All committees of the Board of Directors shall keep minutes of their proceedings and shall report the same to the Board of Directors at the next Board of Directors meeting.Any action by any of such committees shall be subject to the revision and alteration by the Board of Directors, provided that no rights of the third persons shall be affected by any such revision or alteration. WAIVER OF NOTICE Section 24.Whenever any notice of the time, place or purpose of any meeting of stockholders, Directors or committee is required to be given under the provisions of a statute or under the provisions of the Articles of Incorporation or these By-laws, each person who is entitled to the notice waives notices if (i)he, before or after the meeting, signs a waiver of notice which is filed with the records of the meeting, or (ii)such person is present in person at the meeting if the meeting in question is of the Board of Directors or a committee or, if the meeting in question is of the stockholders, if such person is present either in person or by proxy. OFFICERS Section 25.The officers of the Corporation shall be chosen by the Board of Directors and shall include a President, a Vice President, a Secretary, a Treasurer and a Chief Compliance Officer.The Board of Directors may also choose a Chairman of the Board, a Vice Chairman of the Board, additional Vice Presidents, one or more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers.If chosen, the Chairman and Vice Chairman of the Board shall be selected from among the Directors but shall not be considered officers of the Corporation.Officers of the Corporation shall be elected by the Board of Directors at its first meeting after each annual meeting of stockholders.If no annual meeting of stockholders shall be held in any year, such election of officers may be held at any regular or special meeting of the Board of Directors as shall be determined by the Board of Directors. Section 26.Two or more offices, except those of President and Vice President, may be held by the same person but no officer shall execute, acknowledge or verify any instrument in 5 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws more than one capacity, if such instrument is required by law, the Articles of Incorporation or these By-laws to be executed, acknowledged or verified by two or more officers. Section 27.The Board of Directors, at any meeting thereof, may appoint such additional officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. Section 28.The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors. Section 29.The officers of the Corporation shall serve for one year and until their successors are chosen and qualify.Any officer or agent may be removed by the Board of Directors whenever, in its judgment, the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed.If the office of any officer or officers becomes vacant for any reason, the vacancy may be filled by the Board of Directors at any meeting thereof. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD Section 30.If a Chairman of the Board be elected, he shall preside at all meetings of the stockholders and Directors at which he may be present and shall have such other duties, powers and authority as may be prescribed elsewhere in these By-laws.The board of Directors may delegate such other authority and assign such additional duties to the Chairman of the Board, other than those conferred by law exclusively upon the President. Section 31.If a Vice Chairman of the Board be elected, he shall preside at all meetings of the stockholders and Directors at which the Chairman is absent and shall have such other duties, powers and authority as may be prescribed elsewhere in these By-laws.The Board of Directors may delegate such other authority and assign such additional duties to the Vice Chairman of the Board, other than those conferred by law exclusively upon the President. PRESIDENT Section 32.Unless the Board otherwise provides, the President shall be the chief executive officer of the Corporation with such general executive powers and duties of supervision and management as are usually vested in the office of the chief executive officer of a corporation, and he shall carry into effect all directions and resolutions of the Board.The President, in the absence of the Chairman of the Board or if there be no Chairman of the Board, shall preside at all meetings of the stockholders and Directors.He shall have such other or further duties and authority as may be prescribed elsewhere in these By-laws or from time to time by the Board of Directors.If a Chairman of the Board be elected or appointed and designated as the chief executive officer of the Corporation, as provided in Section 30, the President shall perform such duties as may be specifically delegated to him by the Board of Directors or are conferred by law exclusively upon him and in the absence, disability, or inability 6 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws or refusal to act of the Chairman of the Board, the President shall perform the duties and exercise the powers of the Chairman of the Board. VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS Section 33.The Vice President, or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President, and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. Section 34.The Assistant Vice President, if any, or if there be more than one, the Assistant Vice Presidents in the order determined by the Board of Directors, shall, in the absence or disability of the Vice President, perform the duties and exercise the powers of the Vice President and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. SECRETARY AND ASSISTANT SECRETARIES Section 35.The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required.He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be.He shall keep in safe custody the seal of the Corporation, and when authorized by the Board, affix the same to any instrument requiring it, and when so affixed it shall be attested by his signature or by the signature of an Assistant Secretary. Section 36.The Assistant Secretary, if any, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURER Section 37.The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipt and disbursements in books belonging to the Corporation and shall deposit all monies, and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. Section 38.The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires an account of all his transactions as Treasurer and of the financial condition of the 7 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws Corporation.He shall perform all of the acts incidental to the office of Treasurer, subject to the control of the Board of Directors. Section 39.If required by the Board of Directors, he shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board for the faithful performance of the duties of his office and for the restoration of the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. Section 40.The Assistant Treasurer, if any, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors, or if there be no such determination, the Assistant Treasurer designated by the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. THE CHIEF COMPLIANCE OFFICER Section 41.The Chief Compliance Officer shall be the principal officer of the Corporation responsible for administering its compliance policies and procedures.The Chief Compliance Officer shall have the power to develop and enforce policies and procedures reasonably designed to prevent the Corporation from violating the securities laws applicable to its operations.The Chief Compliance Officer shall serve at the pleasure of the Board of Directors and reports directly to the Board.The Chief Compliance Officer shall have such other powers and perform such other duties as may be prescribed by the Board of Directors, these Bylaws, or the federal securities laws. GENERAL PROVISIONS CLOSING OF TRANSFER BOOKS Section 42.The Board of Directors may fix, in advance, a date as the record date for the purpose of determining stockholders entitled to notice of, or to vote at, any meeting of stockholders, or stockholders entitled to receive payment of any dividend or the allotment of any rights, or in order to make a determination of stockholders of record for any other proper purpose.Such date, in any case, shall be not more than 90 days, and in case of a meeting of stockholders not less than ten days, prior to the date on which the particular action requiring such determination of stockholders is to be taken.In lieu of fixing a record date, prior to the date on which the particular action requiring such determination of stockholders is to be taken, the Board of Directors may provide that the stock transfer books shall be closed for a stated period not to exceed, in any case, 20 days.If the stock transfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten days immediately preceding such meeting. 8 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws Section 43.The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Maryland. DIVIDENDS Section 44.Dividends upon the capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting.Dividends may be paid in cash, in property, or in its own shares.The authority of the Board of Directors regarding the declaration and payment of dividends is subject, however, to the provisions of the Investment Company Act, the laws of Maryland and the Articles of Incorporation. EXECUTION OF INSTRUMENTS Section 45.All documents, transfers, contracts, agreements, requisitions or orders, promissory notes, assignments, endorsements, checks, drafts, and orders for payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, and other instruments requiring execution by the Corporation, shall be signed by such officer or officers as the Board of Directors may from time to time designate or, in the absence of such designation, by the President. FISCAL YEAR Section 46.The fiscal year of the Corporation shall end on July 31 of each year unless the Board of Directors shall determine otherwise. SEAL Section 47.The corporate seal of the Corporation shall have inscribed thereon the name and the state of incorporation of the Corporation.The form of the seal shall be subject to alteration by the Board of Directors and the seal may be used by causing it or a facsimile to be impressed or affixed or printed or otherwise reproduced.In lieu of affixing the corporate seal to any document it shall be sufficient to meet the requirements of any law, rule, or regulation relating to a corporate seal to affix the word “(Seal)” adjacent to the signature of the authorized officer of the Corporation. STOCK LEDGER Section 48.The Corporation shall maintain at its office in Kansas City, Missouri, an original stock ledger containing the names and addresses of all stockholders and the number of shares of each class held by each stockholder.Such stock ledger may be in written form or any 9 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws other form capable of being converted into written form within a reasonable time for visual inspection. STOCK CERTIFICATES Section 49.Certificates of stock of the Corporation shall be in the form approved by the Board of Directors.Subject to Section 50 below, every holder of stock of the Corporation shall be entitled to have a certificate, signed in the name of the Corporation by the President, or any Vice President and countersigned by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the number and kind of shares owned by him in the Corporation.Such certificate may be sealed with the corporate seal of the Corporation.Such signatures may be either manual or facsimile signatures and the seal may be either facsimile or any other form of seal.In case any officer, transfer agent, or registrar who shall have signed any such certificate, or whose facsimile signature has been placed thereon, shall cease to be such an officer, transfer agent or registrar (because of death, resignation or otherwise) before such certificate is issued, such certificate may be issued and delivered by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Section 50.The Board of Directors, by resolution, may at any time authorize the issuance without certificates of some or all of the shares of one or more of the classes or series of the Corporation’s stock.Such issuances without certificates shall be made in accordance with the requirements therefor set forth in Sections 2-210(c) and 2-211 of the Maryland General Corporation Law and Article 8 of the Maryland Commercial Law Article (or any successor provisions to such statutes).Such authorization will not affect shares already represented by certificates until such shares are surrendered to the Corporation for transfer, cancellation or other disposition. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS Section 51.(a)The Corporation shall indemnify any individual (“Indemnitee”) who is a present or former director, officer, employee, or agent of the Corporation, or who, while a director, officer, employee, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise or employee benefit plan who, by reason of his position was, is, or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (hereinafter collectively referred to as a “Proceeding”) against any judgments, penalties, fines, amounts paid in settlement, and expenses (including attorneys’ fees) actually and reasonably incurred by such Indemnitee in connection with any Proceeding, to the fullest extent that such indemnification may be lawful under Maryland law.The Corporation shall pay any reasonable expenses so incurred by such Indemnitee in defending a Proceeding in advance of the final disposition thereof to the fullest extent that such advance payment may be lawful under Maryland law.Subject to any applicable limitations and requirements set forth in the Corporation’s Articles of Incorporation and in these By-laws, any payment of indemnification or advance of expenses shall be made in accordance with the procedures set forth in Maryland law. 10 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws (b)Anything in this Section 51 to the contrary notwithstanding, nothing in this Section 51 shall protect or purport to protect any Indemnitee against any liability to the Corporation or its stockholders, whether or not there has been an adjudication of liability, to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office (“Disabling Conduct”). (c)Anything in this Section 51 to the contrary notwithstanding, no indemnification shall be made by the Corporation to any Indemnitee unless: (i) there is a final decision on the merits by a court or other body before whom the Proceeding was brought that the Indemnitee was not liable by reason of Disabling Conduct; or (ii) in the absence of such a decision, the Corporation’s Board of Directors, based upon a review of the facts, forms a reasonable belief that the Indemnitee was not liable by reason of Disabling Conduct, which reasonable belief may be formed: (A) by the vote of a majority of a quorum of directors who are neither “interested persons” of the Corporation as defined in Section 2(a)(19) of the Investment Company Act, nor parties to the Proceeding; or (B)based on a written opinion of independent legal counsel. (d)Anything in this Section 51 to the contrary notwithstanding, any advance of expenses by the Corporation to any Indemnitee shall be made only upon the undertaking by such Indemnitee to repay the advance unless it is ultimately determined that such Indemnitee is entitled to indemnification as above provided, and only if one of the Corporation’s Board of Directors: (i) obtains assurances that the advance will be repaid by (A) the Corporation receiving collateral from the Indemnitee for his undertaking or (B) the Corporation obtaining insurance against losses by reason of any lawful advances;; or (ii) has a reasonable belief that the Indemnitee has not engaged in Disabling Conduct and will ultimately be found entitled to indemnification, which reasonable belief may be formed: (A) by a majority of a quorum of directors who are neither “interested persons” of the Corporation as defined in Section 2(a)(19) of the Investment Company Act, nor parties to the Proceeding; or 11 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws (B) based upon a written opinion of an independent legal counsel that in turn is based on counsel’s review of readily available facts (which review shall not require a full trial-type inquiry). (e)The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 51 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. (f)The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 51 shall, unless otherwise provided when authorized or ratified, continue as to an Indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such an Indemnitee. (g)For purposes of this Section 51, references to (i) the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another trust, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section 51 with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued; (ii) “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and (iii) “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves service by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries. (h)This Section 51 does not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in that person’s capacity as such, even though that person may also be an agent of this Corporation as defined in Subsection (a) of this Section 51. Nothing contained in this Section 51 shall limit any right to indemnification to which such a director, investment manager or other fiduciary may be entitled by contract or otherwise which shall be enforceable to the extent permitted by applicable law other than this Section Section 52.To the fullest extent permitted by applicable Maryland law and by Sections 17(h) and 17(i) of the Investment Company Act, or any successor provisions thereto or interpretations thereunder, the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or who is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan, against any liability asserted against him and incurred by him in any such capacity or arising out of his position, whether or not the Corporation would 12 AMERICAN CENTURY ASSET ALLOCATION PORTFOLIOS, INC.Bylaws have the power to indemnify him against such liability pursuant to Section 2-418 of the Maryland General Corporation Law. AMENDMENTS Section 53.The Board of Directors shall have the power, at any regular meeting or at any special meeting if notice thereof be included in the notice of such special meeting, to alter or repeal any or all By-laws of the

EXHIBIT 10(iii)     FAMILY DOLLAR EMPLOYEE SAVINGS AND RETIREMENT PLAN AND TRUST AMENDED AND RESTATED AS OF JANUARY 1, 2002 INCENTIVE PROFIT SHARING PLAN TABLE OF CONTENTS ARTICLE II. DEFINITIONS AND CONSTRUCTION..................................2 ARTICLE III. PARTICIPATION AND SERVICE....................................19 3.4 Participation and Service Upon Reemployment.....................20 ARTICLE IV. CONTRIBUTIONS AND FORFEITURES................................22 4.1 Employer Contributions and Salary Deferral Contributions........22 4.2 Employee After-Tax Contributions by Participants................22 4.3 Participant’s Election to Make Salary Deferral 4.4 Limitations on Salary Deferral Contributions and on Matching Contributions Applicable for Plan Years Beginning After ARTICLE V. ALLOCATIONS TO PARTICIPANTS' ACCOUNTS....................... 31 6.2 Death and Designation of Beneficiary............................36 6.3 Termination for Other Reasons...................................37 6.7 Distributions Pursuant to Qualified Domestic Relations Orders...43 ARTICLE VII. TRUST FUND AND THE TRUSTEE...................................47 7.3 Records and Accounts of Trustee.................................47 7.6 Investment of the Trust Fund....................................48 7.12 Resignation, Removal, and Successor Trustee.....................51 7.14 Insurance For Individual Trustee:...............................52 8.1 Allocation of Responsibility Among Fiduciaries for Plan and 8.5 Other Committee Powers and Duties...............................54 8.8 Authorization of Benefit Payments...............................55 8.9 Application and Forms for Benefits..............................56 8.11 Inability to Locate Participant, Surviving Spouse or 8.16 Plan Administrator's Discretion to Interpret the Plan...........57 ARTICLE IX. ALLOCATED INSURANCE CONTRACTS................................58 9.1 Purchase of Allocated Insurance Contracts.......................58 9.3 Ownership and Beneficiary of Allocated Insurance Contracts......58 9.4 Special Provisions Affecting Allocated Insurance Contracts......58 9.5 Death Prior to Issuance of Allocated Insurance Contract.........59 9.6 Special Rules Regarding Investment in Insurance for Spouse 10.4 Discontinuance of Employer Contributions........................60 ARTICLE XI. AMENDMENTS AND ACTION BY EMPLOYER............................61 11.2 Special Rules Regarding Amendments Relating to Vesting..........61 ARTICLE XII. SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS......62 12.2 Plan Assets in the Event of Merger or Consolidation of Plan.....62 FAMILY DOLLAR EMPLOYEE SAVINGS AND RETIREMENT PLAN AND TRUST AMENDED AND RESTATED As of January 1, 2002         THIS PLAN AND TRUST, amended and restated as of January 1, 2002, by Family Dollar Stores, Inc., and Family Dollar, Inc. for themselves and their related corporations and other entities which have joined or will join as participating employers under this Plan as identified in Appendix A to the Plan (collectively, the “Employer”); ARTICLE I . RECITALS          A.    Effective as of August 1, 1986, the Employer had adopted the Family Dollar Employee Savings and Retirement Plan and Trust to enable its eligible employees to share in its profits.          B.    The Plan and Trust was subsequently amended; and, effective as of January 1, 2002 (or as otherwise provided herein), the Employer has adopted the amended and restated Plan and Trust as set forth herein.          C.    The Plan and Trust are intended to meet the requirements of Sections 401(a), 401(k) and 501(a) of the Internal Revenue Code.          D.    The provisions of this Plan and Trust shall apply only to an employee who has an Hour of Service on or after the Effective Date. The rights and benefits, if any, of a former employee shall be determined in accordance with the prior provisions of the Plan in effect on the date his employment terminated.          NOW, THEREFORE, the Employer hereby amends and restates the Family Dollar Employee Savings and Retirement Plan and Trust in accordance with the following terms and provisions. ARTICLE II. DEFINITIONS AND CONSTRUCTION          2.1        Definitions: The following words and phrases, when used herein, unless their context clearly indicates otherwise, shall have the following respective meanings:                        (1)      ACTUAL CONTRIBUTION PERCENTAGE or ACP: For any Plan Year beginning after December 31, 1986, with respect to Participants who are members of the Highly Compensated Employee group and the Non-Highly Compensated Employee group, the average of the ratios (expressed as a percentage and calculated separately for each Eligible Participant in each group) of:                                 (a)         the Matching Contributions and, prior to January 1, 1994, any employee after-tax contributions paid under the Plan on behalf of each Eligible Participant for such Plan Year (plus, such other Salary Deferral Contributions or qualified non-elective contributions under this or any other plan of the Employer or Aggregated Employer as may be permitted under the Commissioner’s regulations), to                                  (b)          each Eligible Participant’s Compensation for such Plan Year. If other plans of the Employer or any Aggregated Employer have employee contributions or matching contributions under Code§401(m), then all such plans shall be treated as one plan for purposes of calculating the Participants’ ACP (using for this purpose each such plan’s definition of ACP), but such aggregation shall take place only to the extent that such plans are treated as one plan for purposes of Code §410(b).                        (2)      ACTUAL DEFERRAL PERCENTAGE or ADP: For any Plan Year beginning after December 31, 1986, with respect to the Highly Compensated Employee group and Non-Highly Compensated Employee group, the average of the ratios (expressed as a percentage and calculated separately for each Eligible Participant in each group) of:                                  (a)          the amount of Salary Deferral Contributions paid over to the Trust on behalf of each Eligible Participant, (plus such other Matching Contributions and other qualified nonelective contributions allocated to the Participant’s Salary Deferral Account, as may be permitted under the Commissioner’s regulations), to Compensation for the Plan Year. If other plans of the Employer or any Aggregated Employer have cash or deferred arrangements under Code §401(k), then all such plans shall be treated as one plan for purposes of calculating Participants’ ADP, but only to the extent that such plans are treated as one plan for purposes of Code §410(b). Furthermore, for the purpose of determining the ADP of any Highly Compensated Employee, all plans of the Employer and any Aggregated Employer which have cash or deferred arrangements under Code §401(k) shall be treated as one plan.                        (3)       ADDITIONS or ANNUAL ADDITIONS: With respect to each Participant for each Limitation Year, the sum of: all Employer Contributions and Forfeitures allocated to his Employer Contribution Account; plus all Salary Deferral Contributions allocated to his Salary Deferral Account; plus all Employee After-Tax Contributions for such Limitation Year which were allocated - 2 - to his Employee After-Tax Contribution Account (provided, that Employee After-Tax Contributions for Plan Years beginning prior to January 1, 1987 shall be considered to be Additions only to the extent they were considered as Additions under the Code in existence as of that Plan Year). The term “Annual Additions” does not include the following: amounts contributed to an account because of an erroneous Forfeiture or an erroneous failure to allocate in a prior Limitation Year, but such Forfeiture reinstatement or contribution (less actual investment gains attributable to the period subsequent to the Limitation Year to which it relates) will be considered an Annual Addition for the Limitation Year to which it relates; the allowable restoration of accrued benefits following either repayment of withdrawn mandatory Employee contributions or repayments of benefits paid out; amounts distributed from the Plan as permitted by Code §402(g)(2) and Treasury Regulation §1.415-6(b)(6)(iv); or the transfer of funds from another qualified plan. Furthermore, with respect to a Participant’s employee after-tax contributions (if any under the Plan), the term “Annual Additions” does not include the following: rollover contributions as permitted under ERISA; repayments of loans made to a Participant; allowable repayments of either withdrawn mandatory Employee contributions or benefits paid out; qualified voluntary Employee contributions allowed under Code §219(e)(2); or the direct transfer of funds from another qualified plan, if any, pursuant to Section 4.5 of this Plan. Amounts allocated after March 31, 1984 to an individual medical account (as defined in Code §415(1)(2)) which is part of a pension or annuity plan maintained by the Employer shall be treated as Annual Additions to a defined contribution plan. Amounts derived from contributions paid or accrued after December 31, 1985 in taxable years ending after such date, which are attributable to post-retirement medical benefits under a welfare benefit fund (as defined in Code §419(e)) maintained by the Employer which are allocated to the separate account of an Employee who is or was a Key Employee during the Plan Year or the preceding Plan Year, also shall be treated as Annual Additions to a defined contribution plan.                       (4)    AGGREGATED EMPLOYER: An employer (whether or not considered an Employer under the Plan) required to be aggregated with the Employer under subsection b, c, m, n or o of Code §414; provided, that another employer shall be an Aggregated Employer for any Plan Year only to the extent the foregoing subsections of Code §414 applied with respect to that Plan Year, and only to the extent such employer is required to be aggregated notwithstanding the separate lines of business provisions of Code §414(r).                       (5)     ALTERNATE PAYEE: A beneficiary as defined in Section 6.8.                       (6)    ANNIVERSARY DATE: December 31 of each Plan Year.                       (7)    AUTHORIZED LEAVE OF ABSENCE: Any absence authorized in writing by the Employer under the Employer’s standard personnel practices, provided that all persons under similar circumstances must be treated alike in the granting of such Authorized Leaves of Absence and provided further that the Participant returns within the period of authorized absence.                        An absence due to service in the Armed Forces of the United States shall be considered an Authorized Leave of Absence to the extent required by applicable statutes of the - 3 - United States in effect from time to time, provided that the Employee returns to employment with the Employer within the period provided by law.                       (8)    BENEFICIARY: A person or persons (natural or otherwise) designated in accordance with the provisions of Section 6.2(b) to receive any death benefit which shall be payable under this Plan.                       (9)    BOARD OF DIRECTORS: The Board of Directors of the Parent Company; provided, that action by the Executive Committee of the Board of Directors of the Parent Company also shall be considered to be an action of the Board of Directors for purposes of this Plan and Trust.                       (10)    BREAK IN SERVICE: A Break in Service shall occur for any consecutive twelve month period after the Effective Date during which an Employee fails to complete more than 500 Hours of Service due to a termination of employment. For eligibility purposes, before an Employee becomes a Participant, the Break in Service period shall be the consecutive twelve month period beginning on the date of employment; provided, if an Employee does not complete a Year of Service in the first twelve months of employment, thereafter a Break in Service for eligibility shall be determined on the basis of the Plan Year beginning with the first Plan Year after his date of employment. In all other instances, the period used for determining Breaks in Service for vesting, benefit accrual and retention of eligibility shall be the Plan Year. A Break in Service shall not be deemed to have occurred during any period of Authorized Leave of Absence if the Employee returns to the employ of the Employer within the period of authorized absence.                       (11)    CHANGE DATE: January 1, April 1, July 1 and October 1. The Plan’s Effective Date shall be a Change Date for the Plan’s first Plan Year. The Committee may designate additional Change Dates and/or different Change Dates for different purposes, for example, fewer Change Dates may be designated to reduce Salary Deferral Contributions than to increase Salary Deferral Contributions.                       (12)    CODE: The Internal Revenue Code of 1986, as amended.                       (13)    COMMISSIONER: The Commissioner of Internal Revenue. For purposes of this Plan, Commissioner also refers to the Department of the Treasury with respect to official regulations and pronouncements under the Code.                       (14)    COMMITTEE: The person or persons appointed under the provisions of Article VIII to administer the Plan. In the event that no Committee is appointed, any references to the Committee shall be deemed to be the Plan Administrator.                       (15)    COMPENSATION:                                 (a)         For Plan Years beginning on and after January 1, 1987, the total of all amounts paid to a Participant by the Employer within the meaning of Code §3401(a) and all other payments of compensation to a Participant by the Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the Participant a written statement under Code §§6041(d), 6051(a)(3) and 6052 (“Box 1” compensation on 2000 - 4 - Form W-2) for the calendar year ending with or within the Plan Year, but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code §3401(a)(2)), plus any amounts not includible by the Employer in the Participant’s gross income for that Plan Year by virtue of Code §§125, 401(k) or 403(b), or 408(k). Notwithstanding the foregoing, Compensation shall exclude reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, income realized in connection with the exercise of a stock option or similar equity compensation, and welfare benefits.                                 (b)        For Plan Years beginning prior to January 1, 1987, Compensation meant an Employee’s Compensation and earnings from the Employer, as defined in the Plan in effect prior to this restatement. Employer Contribution for the Plan Year in which a Participant begins or resumes Participation, Compensation paid before the Entry Date coincident with or next following the date on which the Participant completes the eligibility requirements shall be disregarded.                                 (d)        The Compensation taken into account for any Employee for determining all benefits provided under the Plan shall not exceed $150,000 for any Plan Year (or such greater amount as authorized by the Commissioner), regardless of whether the Plan is a Top-Heavy Plan. For Plan Years beginning after December 31, 2001, the foregoing $150,000 limit shall be adjusted to $200,000, as adjusted by cost-of-living increases in accordance with Code § 401(a)(17)(B). For Plan Years beginning prior to January 1, 1989 in which the Plan is a Top-Heavy Plan, and for any Plan Year beginning after December 31, 1988 but before January 1, 1994 (regardless of whether the Plan is a Top-Heavy Plan), the Compensation taken into account for any Employee shall not exceed $200,000 for any Plan Year (or such greater amount as authorized by the Commissioner). Solely for Plan Years beginning before January 1, 1997, in determining the Compensation of a Participant for purposes of this adjusted $150,000 (or $200,000) limitation, the family aggregation rules of Code §414(q)(6) shall apply, except that in applying these rules, the term Family Member shall include only the spouse of a Participant and any lineal descendants of a Participant who have not attained age nineteen before the last day of the Plan Year. If the adjusted $150,000 (or $200,000) limitation is exceeded as a result of the application of this family aggregation rule prior to January 1, 1997, then the limitation shall be prorated among the affected individuals in proportion to each such individual’s Compensation as determined under this Section prior to the application of this limitation.                                 (e)        For Limitation Years beginning on and after the earlier of January 1, 2001 or the first day of the first Limitation Year for which the Plan was operated in accordance with the CRA amendment of Code Section 415(c)(3), but in no case earlier than the first day of the first limitation year beginning on or after January 1, 1998, for purposes of applying the limitations described in Section 5.3 of the Plan, Compensation paid or made available during such Limitation Years shall include qualified transportation plan elective amounts that are not includible in the gross income of the Employee by reason of Code §132(f)(4). - 5 -                       (16)    DETERMINATION DATE: The last day of the preceding Plan Year (or, in the case of the first Plan Year of the Plan, the last day of that first Plan Year).                       (17)    DIRECT ROLLOVER: A payment by the Plan to the Eligible Retirement Plan specified by the Distributee.                       (18)    DISABILITY: A physical or mental condition which in the judgment of the Committee, based upon medical reports and other evidence satisfactory to the Committee, permanently prevents an Employee from satisfactorily performing his usual duties for the Employer or the duties of any other position or job which the Employer makes available to him and for which such Employee is qualified by reason of his training, education or experience.                       (19)     DISTRIBUTEE: An Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the Alternate Payee under a Qualified Domestic Relations Order, as defined in Code §414(p), are Distributees with regard to the interest of the spouse or former spouse.                       (20)    DOMESTIC RELATIONS ORDER: An order as defined in Section 6.8.                       (21)    EARLIEST RETIREMENT AGE: The date on which a Participant becomes eligible to elect to receive normal retirement benefits under Section 6.1.                       (22)    EFFECTIVE DATE: January 1, 2002, the date on which the provisions of this amended and restated Plan became effective; provided, that specific provisions of this Plan may be effective as of other dates to the extent specifically stated in the Plan. The Original Effective Date of this Plan was August 1, 1986.                       (23)    ELIGIBLE PARTICIPANT: With respect to any Plan Year, a Participant who is eligible to make a Salary Deferral Contribution (or, prior to January 1, 1994, an employee after-tax contribution), or to receive a Matching Contribution under this Plan.                       (24)    ELIGIBLE RETIREMENT PLAN: An individual retirement account described in Code §408(a), an individual retirement annuity described in Code §408(b), an annuity plan described in Code §403(a), or a qualified trust described in Code §401(a), that accepts the Distributee’s Eligible Rollover Distribution; provided, that in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity.                       (25)    ELIGIBLE ROLLOVER DISTRIBUTION: Any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated Beneficiary, or for a specified period of ten years or more; (ii) any distribution to the extent such distribution is required under Code §401(a)(9); (iii) any hardship distribution described in Code §401(k)(2)(B)(i)(IV) received after December 31, 1999; and (iv) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Employer securities). - 6 -                       (26)    EMPLOYEE: Any person who, on or after the Effective Date, is shown on the Employer’s payroll records as receiving remuneration for personal services rendered to the Employer (or who would be receiving such remuneration except for an Authorized Leave of Absence). Leased employees under Code §414 (and as defined below) shall not be included in the definition of Employee for purposes of Participation or benefit accrual under the Plan; provided, that such leased employees shall be considered as employees for purposes of applying the various tests under Code §§401, 404, 408(k) and 416, and Service as a leased employee shall be counted under the Plan for vesting purposes in the event that a leased employee changes status so as to become eligible for Participation under the Plan. For purposes of the foregoing, a leased employee is any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least 1 year, and such services are performed under primary direction or control by the recipient.                   The term “Employee” shall not include an Employee who is retained by any Employer pursuant to a contract or arrangement that specifies that the Employee is not eligible to participate in the Plan. In addition, the term “Employee” shall only include individuals reflected as employees on the records of an Employer, and shall not include individuals paid by a third-party and/or paid pursuant to a contract stipulating that they are not an Employer’s employees. The foregoing shall apply even if it is subsequently determined by a court or agency or otherwise that such individuals are common law employees of an Employer. The term “Employee” shall not include an individual whose basic compensation for services rendered on behalf of any Employer is not paid directly by the Employer.                       (27)    EMPLOYER: Family Dollar Stores, Inc., a corporation organized and existing under the laws of the State of Delaware and Family Dollar, Inc., a corporation organized and existing under the laws of the State of North Carolina, or their successor or successors that assume Plan liabilities pursuant to Article XII, and any related corporation or entity which adopts this Plan with the consent of the Parent Company. Adopting Employers are listed on Appendix A. Appendix A may be updated from time to time by an authorized officer of the Parent Company.                       (28)    EMPLOYER CONTRIBUTION: Contributions (other than Salary Deferral Contributions) made by the Employer pursuant to Section 4.1.                       (29)    EMPLOYER CONTRIBUTION ACCOUNT: The account maintained to record a Participant’s share of Employer Contributions under Section 4.1, and adjustments relating thereto.                       (30)    ENTRY DATE: The first practicable pay period on or after the date on which the Employee has met the relevant eligibility requirements. Prior to April 1, 2001, the Entry Date was January 1, April 1, July 1 and October 1 of each Plan Year. - 7 -                       (31)    ERISA: Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as amended from time to time.                       (32)    EXCESS CONTRIBUTIONS: With respect to any Plan Year, the excess of:                                 (a)        The aggregate amount of Matching Contributions actually made (plus any Salary Deferral Contribution or qualified non-elective contributions taken into account in computing the ACP) for that Plan Year on behalf of a Highly Compensated Employee, over                                 (b)        The maximum amount of such contributions permitted under the limitations of Section 4.4(b), determined for Plan Years beginning after December 31, 1996 by reducing such contributions made on behalf of Highly Compensated Employees in order of their individual ACPs beginning with the largest amounts of Matching Contributions, as provided in Section 4.4(b)(2)(ii).                       (33)    EXCESS DEFERRALS: With respect to any Plan Year, the excess of:                                 (a)        The aggregate amount of Salary Deferral Contributions (plus such other Matching Contributions and other qualified non-elective contributions taken into account under Code §401(k)(3)(D) in computing the ADP) actually paid over to the Trust for that Plan Year on behalf of a Highly Compensated Employee, over                                 (b)        The maximum amount of such deferrals permitted under the limitations of Section 4.4(a), determined for Plan Years beginning after December 31, 1996 by reducing Salary Deferral Contributions made on behalf of Highly Compensated Employees in order of their individual ADP’s beginning with the largest amounts of Salary Deferral Contributions as provided in Section 4.4(a)(2)(iii).                       (34)    FAMILY MEMBER: With respect to any individual, his spouse and lineal ascendants or descendants, and the spouses of such lineal ascendants and descendants.                       (35)    FIDUCIARIES or NAMED FIDUCIARIES: The Employer, the Committee, and the Trustee, but only with respect to the specific responsibilities of each for Plan and Trust administration, all as described in Section 8.1. If an Investment Manager is appointed as provided in Section 8.1, it also shall be a Fiduciary.                       (36)    FIVE PERCENT OWNER: With respect to a Plan Year, an owner of more than five percent of the outstanding stock (or an owner of stock possessing more than five percent of the total combined voting power, or an owner of more than five percent of the capital or profits interest in an unincorporated business) of the Employer or of any one of the Aggregated Employers (ownership in the Employer and Aggregated Employers not being considered together). In determining ownership, the constructive ownership rules of Code §416(i)(1)(B)(iii) shall apply. In the case of an Employer which is not a corporation, the term “Stock” shall be interpreted also to refer to capital or profits interests. - 8 -                       (37)    FORFEITURE: The portion of a Participant’s Employer Contribution Account which is forfeited under Section 6.3 below because of termination of employment before full vesting.                       (38)    FORMER PARTICIPANT: A Participant whose employment with the Employer has terminated but who has a vested account balance under the Plan which has not been paid in full.                       (39)    415 COMPENSATION: The total of all amounts paid to a Participant by the Employer within the meaning of Code §3401(a) and all other payments of compensation to a Participant by the Employer (in the course of the Employer’s trade or business) for which the Employer is required to furnish the 1” compensation on 2000 Form W-2) for the calendar year ending with or within the Plan Year. In addition, effective for Plan Years beginning after December 31, 1997, 415 Compensation also shall include elective or salary reduction contributions to a cash or deferred arrangement, cafeteria plan, simplified employee pension or tax-sheltered annuity pursuant to Code §§401(k), 125, 408(k) or 403(b). For purposes of computing a Participant’s ACP and ADP, only 415 Compensation paid while a Participant shall be considered. For Plan Years beginning prior to January 1, 1998, 415 Compensation means an Employee’s 415 Compensation as defined in the Plan in effect as of the date such Compensation is determined. The Compensation limitation pursuant to Code §401(a)(17) as described in Section 2.1(15)(d) also shall apply to 415 Compensation. The Compensation limitation pursuant to Code §401(a)(17) as described in Section 2.1(15)(d) also shall apply to 415 Compensation. For limitation years beginning on and after the earlier of January 1, 2001 or the first day of the first Limitation Year for which the Plan was operated in accordance with the CRA amendment of Code Section 415(c)(3), but in no case earlier than the first day of the first Limitation Year beginning on or after January 1, 1998, 415 Compensation paid or made available during such Limitation Years shall include qualified transportation plan elective amounts that are not includible in the gross income of the employee by reason of Code Section 132(f)(4).                       (40)    HIGHLY COMPENSATED EMPLOYEE: Effective for Plan Years beginning on and after January 1, 1997, any Employee of the Employer who is a “highly compensated employee” as defined in Code §414(q) and the regulations thereunder. With respect to any Plan Year, such definition generally shall include any Employee or former Employee who                                 (a)        was a Five Percent Owner at any time during the current Plan Year or preceding 12 month period; or                                 (b)        during the 12 month period preceding the Plan Year both (i) received 415 Compensation from the Employer and all Aggregated Employers in excess of $80,000 (or greater amount authorized by the Commissioner) and (ii) if the Employer elects, was in the Top Paid Group. For Plan Years prior to January 1, 1997, if any employee is a Family Member of (i) a Five Percent Owner or (ii) a Highly Compensated Employee who is in the group consisting of the ten Highly Compensated Employees receiving the most 415 Compensation during the Plan Year, - 9 - then such Employee shall not be considered a separate employee, but shall be aggregated with all his Family Members so that any 415 Compensation and any Plan contributions or benefits (including Salary Deferral Contributions) are treated as if paid to or on behalf of one single Highly Compensated Employee.                        A former employee also shall be considered a Highly Compensated Employee if he was a Highly Compensated Employee (determined based on the rules in effect for that Plan Year applicable to determining Highly Compensated Employee status, in accordance with Section 1.414(q)-1T, A-4 of the temporary Income Tax Regulations and Notice 97-75) for the year of separation from Service or for any Plan Year ending on or after the employee attains age fifty-five.                       (41)    HOUR OF SERVICE or HOUR OF CREDITED SERVICE:                                 (a)         Each hour during the applicable computation period when the Employee is directly or indirectly paid or entitled to payment by the Employer for the performance of duties for the Employer. An Hour of Service also includes each hour for which an Employee is paid or entitled to payment by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), lay-off, jury duty, military duty or Authorized Leave of Absence.                                 (b)        Hours of Service determined under the preceding sentences shall include each hour for which back pay, irrespective of mitigation of damages, has been awarded or agreed to by the Employer; provided that (i) no more than 50l Hours of Service are required to be credited to the Employee on account of any single continuous period during which he performs no duties whether or not such period occurs in a single computation period; (ii) such hours will be credited to the Employee for the computation period or periods to which the award or agreement pertains; (iii) an hour for which an Employee is directly or indirectly paid or entitled to payment on account of a period during which no duties are performed will not be credited if such payment is on account of compliance with worker’s compensation or unemployment compensation or disability insurance laws; and (iv) hours will not be credited for payments which solely reimburse an Employee for medical or medically related expenses incurred by him.                                 (c)        In applying the rules of the preceding sentences, the provisions of paragraphs (b) and (c) of Section 2530.200b-2 of the Department of Labor regulations shall apply and are                                 (d)        For Employees for whom hours of work are required to be maintained, credit for Hours of Service will be given on an hour-for-hour basis as determined by employment records. For Employees whose hours of work are not maintained, Hours of Service will be computed using the following equivalencies: - 10 - Basis Upon Which Records Are Maintained Credit to Employee Who Earns One or More Hours of Service During Each Computation Period Shift Hours for Full Shift Daily 10 Hours of Service Weekly 45 Hours of Service Bi-Weekly 90 Hours of Service Semi-Weekly 95 Hours of Service Monthly 190 Hours of Service                                 (e)         Solely for purposes of determining whether a Break in Service has occurred in a computation period for participation and vesting purposes, an individual who is absent from work for a period by reason of Maternity Leave (as defined in Section 2.1) shall receive credit for the Hours of Service which otherwise would have been credited to such individual but for the Maternity Leave (or, in any case in which the Plan is unable to determine such Hours of Service, then eight Hours of Service per day of Maternity Leave); provided that no more than 501 Hours of Service shall be credited on account of any single period of Maternity Lease and such Hours of Service shall be credited only (1) in the computation period in which the Maternity Leave begins if the crediting is necessary to prevent a Break in Service in that period, or (2) in all other cases, in the immediately following computation period.                                 (f)        Effective December 31, 1996, notwithstanding any provisions of the Plan to the contrary, contributions, provided in accordance with Code §414(u).                       (42)    INCOME: The net gain or loss of the Trust Fund from investments, as reflected by interest payments, dividends, realized and unrealized gains and losses on securities, other investment transactions and expenses paid from the Trust Fund. In determining the Income of the Trust Fund for any period, assets shall be valued on the basis of their fair market value. Amounts which are distributed to Participants as Excess Contributions, Excess Deferrals, or excess amounts under Code §402(g) shall include Income for the Plan Year and for the period from the end of the Plan Year to any subsequent Valuation Date that precedes the distribution date calculated under a reasonable method which does not discriminate in favor of Highly Compensated Employees and which otherwise is in accordance with the Commissioner’s regulations under Code §§401(k), 401(m) and 402(g). No Income on Excess Deferrals, Excess Contributions or excess amounts under Code §402(g) shall be attributed for any “gap period” following the Valuation Date immediately preceding distribution. - 11 -                       (43)    INSURER: Any legal reserve life insurance company authorized to do business in the state where the Plan is domiciled which is selected by the Committee to write insurance contracts to provide benefits under the Plan.                       (44)    INVESTMENT MANAGER: A Fiduciary (other than the Trustee or Named Fiduciary) which:                                 (a)        has the power to manage, acquire or dispose of any asset(s) of the Plan;                                 (b)        is (i) registered as an investment adviser under the Investment Advisers Act of 1940, (ii) a bank as defined in that Act, or (iii) an insurance company qualified to perform services described in subparagraph (a) under the laws of more than one State; and                                 (c)        has acknowledged that it is a Fiduciary with respect to the Plan.                       (45)    KEY EMPLOYEE:                                 (a)         For Plan Years beginning after December 31, 2001, Key Employee shall mean any employee or former employee (including any deceased employee) who at any time during the Plan Year that includes the Determination Date was an officer of the Employer having annual 415 Compensation greater than $130,000 (as adjusted under Code §415(i)(1) for Plan Years beginning after December 31, 2002), a 5 percent owner of the Employer, or a 1-percent owner of the Employer having annual 415 Compensation of more than $150,000. The determination of who is a Key Employee will be made in accordance with Code §416(i)(1) and the applicable regulations and other guidance of general applicability issued thereunder. January 1, 2002, Key Employee shall mean any employee of the Employer or any Aggregated Employer who is at any time during the Plan Year containing the Determination Date, or was during any of the four preceding Plan Years, any one or more of the following:                                              (i)        A duly authorized officer of the Employer in regular and continued service having 415 Compensation during the Plan Year greater than fifty percent of the maximum dollar limitation under Code §415(b)(1)(A) in effect for the calendar year containing the Determination Date, provided that if during such Plan Year the number of employees (whether or not Employees under the Plan) of the Employer plus all other Aggregated Employers is:                                                       (A)        less than thirty, then no more than a total of three individuals shall be considered officers for that Plan Year for the Employer and all Aggregated Employers,                                                       (B)        greater than thirty but less than five hundred, then no more than a total of ten percent of the total employees shall be considered officers for that Plan Year for the Employer and all Aggregated Employers, or - 12 -                                                           (C)        greater than five hundred, then no more than a total of fifty employees shall be Employers; or                                              (ii)         One of the ten employees (whether or not Employees under the Plan) owning the largest interest in the Employer and Aggregated Employers during such Plan Year (the Employer and Aggregated Employers being considered as one unit) if he has 415 Compensation during the Plan Year of more than the maximum dollar limitation under Code §415(c)(1)(A) in effect for the calendar year containing the Determination Date; provided that an employee need not be considered if he does not have an ownership interest of more than one-half of one percent in value, and if two employees have the same interest in the Employer and Aggregated Employer, then the employee having the greater 415 Compensation from the Employer and Aggregated Employers for the calendar year containing the Determination Date shall be treated as having a larger interest; or                                              (iii)        A Five Percent Owner; or                                              (iv)        An owner of one percent of the outstanding stock (or an owner of stock possessing one percent of the total combined voting power) of the Employer or of any one of the Aggregated considered together) for such Plan Year, if he has annual 415 Compensation during the Plan Year from the Employer and all Aggregated Employers totaling more than $150,000. For purposes of determining ownership under subsections (ii), (iii) and (iv) above, the constructive ownership rules of Code §318 shall apply as modified by Code §416(i). The beneficiary of a former Key Employee shall continue to be treated as such former Key Employee. If a maximum number of employees are to be considered officers under subsection (i) above, the officers having the largest annual 415 Compensation during such Plan Year shall be the officers considered under subsection (i). In the case of an Employer which is not a corporation, the term “stock” in subsection (c) and (d) above shall be interpreted also to refer to capital or profits interests.                       (46)     LIMITATION YEAR: The Limitation Year shall be the twelve month period ending on each Anniversary Date.                       (47)     MATCHING CONTRIBUTION: An Employer Contribution which is allocated to the Participant’s Employer Contribution Account by reference to the Participant’s Salary Deferral Contributions for that Plan Year, pursuant to Section 4.1.                       (48)     MATERNITY LEAVE: Absence from work for maternity or paternity reasons by an individual (male or female) on account of and by reason of (a) the pregnancy of the individual, (b) the birth of a child of the individual, (c) the placement of a child with the individual in connection with the adoption of such child by such individual, or (d) caring for a child referred to above for a period beginning immediately following such birth or placement. A period of absence shall not be considered Maternity Leave for purposes of this Plan unless both (i) such absence began on or after the first day of the first Plan Year beginning after December 31, 1984, and (ii) the individual furnishes the Committee such timely information as the Plan - 13 - reasonably may require to establish that the absence from work is for one of the reasons referred to above and the number of days for which there was such an absence. The determination of whether an individual has taken a Maternity Leave for purposes of this Plan shall not have any effect upon whether such absence from work is entitled to any other special treatment by the Employer for any other employment purposes, and the existence of these Maternity Leave provisions in the Plan shall not be in any way determinative of whether the Employer has any other maternity or paternity leave policy or the terms of that policy (if any).                       (49)    NON-HIGHLY COMPENSATED EMPLOYEE: Any Participant who is not a Highly Compensated Employee.                       (50)    NONKEY EMPLOYEE: Any employee (or former employee) of the Employer or any Aggregated Employer who is not a Key Employee. The beneficiary of a Nonkey Employee or a former Nonkey Employee shall continue to be treated as such Nonkey Employee or former Nonkey Employee.                       (51)    NORMAL RETIREMENT AGE: The date a Participant attains age sixty-five.                       (52)    PARENT COMPANY: Family Dollar Stores, Inc., a corporation organized and existing under the laws of the State of Delaware, or its successor or successors.                       (53)    PARTICIPANT: An Employee participating in the Plan in accordance with the provisions of Section 3.1; provided, that for purposes only of making or transferring a rollover contribution to the Plan under Section 4.5, an Employee shall be considered a Participant on the date he has completed at least thirty days of Service with the Employer (or, if earlier, the date on which he has completed the requirements set forth in Section 3.1).                       (54)    PARTICIPATION: The period commencing on the date the Employee becomes a Participant and ending on the date his employment with the Employer terminates.                       (55)    PAYMENT STARTING DATE: The latest date until which the Plan may delay payment of benefits to a Participant in the absence of the Participant’s consent to later payment. Such date shall be the sixtieth day after the close of the Plan Year in which the last of the following events occurs: (a) the Participant attains Normal Retirement Age, (b) the tenth anniversary of the year in which the Participant commenced Participation in the Plan, or (c) the Participant terminates his Service with the Employer; provided further, that, effective January 1, 2000, benefits also must commence not later than April 1 of the calendar year following the later of the calendar year in which a Participant attains age seventy and one-half and the calendar year in which the Participant terminates Service (except as otherwise provided in Section 6.4(e)), except as may otherwise be allowable under §242(b)(2) of the Tax Equity and Fiscal Responsibility Act of 1982 and §521 of the Deficit Reduction Act of 1984 (regarding special designations filed before January 1, 1984), and except as may otherwise be allowable under §1121(d) of the Tax Reform Act of 1986 (regarding Participants, other than certain Five Percent Owners, who reached age seventy and one-half before January 1, 1988 and certain collective bargaining agreements). If the amount of payment cannot be determined or the proper - 14 - recipient located before the Payment Starting Date, retroactive payment may be made to such date in accordance with Treasury Regulation §1.401(a)-14(d).                       (56)    PLAN: The Family Dollar Employee Savings and Retirement Plan and Trust, the Plan set forth herein, as amended from time to time.                       (57)    PLAN ADMINISTRATOR: The Committee appointed pursuant to Section 8.2 or, in the absence of such appointment, the Parent Company.                       (58)    PLAN YEAR: The consecutive twelve month period commencing on January 1 and ending on the following December 31.                       (59)    PRESENT VALUE OF ACCRUED BENEFITS: With respect to any individual and as of any Determination Date, the sum of (a) his Employer Contribution Account and Salary Deferral Account balances on the most recent Valuation Date (which for the first Plan Year of the Plan shall include contributions made after the Determination Date which are allocated as of a date in the first Plan Year, but otherwise shall only include allocated contributions which actually were made after the Valuation Date if such contributions were made on or before the Determination Date), (b) his Employee After-Tax Contribution Account balance (if any) on the most recent Valuation Date less any Employee After-Tax Contributions which were deductible under Code §219(e)(2), and (c) his Rollover Account balance (if any) as of the most recent Valuation Date to the extent it is attributable to any rollover contribution from a plan of an Aggregated Employer and/or any rollover contribution accepted on or before December 31, 1983. For purposes of determining whether the Plan is a Top-Heavy Plan, the Present Value of Accrued Benefits also shall include the amount of Plan distributions (whether made on or after the Effective Date and including distributions from a terminated plan which would have been required to be aggregated under the definition of Top-Heavy Plan) made within the five consecutive Plan Year period (or, for Plan Years beginning after December 31, 2001, the one year period, but only to the extent a distribution is made by reason of separation from service, death, or disability) ending on the Determination Date to any Key Employee or Nonkey Employee or Beneficiary thereof (regardless of whether such individual is employed or has an accrued benefit as of the Determination Date); provided, that distributions of benefits paid on account of death shall be deemed to include only the present value of benefits existing immediately prior to death. If an individual has not performed an Hour of Service for any employer maintaining the Plan at any time during the five year period (or, for Plan Years beginning after December 31, 2001, the one year period) ending on the Determination Date, any account balance or accrued benefit for such individual shall be disregarded.                       (60)    QUALIFIED DOMESTIC RELATIONS ORDER: An order as defined in Section 6.7.                       (61)    ROLLOVER ACCOUNT: The account established pursuant to Section 4.5 hereof to record permissible rollover contributions from another qualified plan or an individual retirement account and adjustments relating thereto.                       (62)    SALARY DEFERRAL CONTRIBUTIONS: Contributions elected to be made by a Participant pursuant to Section 4.3 of the Plan. - 15 -                       (63)    SALARY DEFERRAL ACCOUNT: The account maintained to record a Participant’s Salary Deferral Contributions and adjustments relating thereto.                       (64)    SERVICE: A Participant’s period of employment with the Employer.                       (65)    SUPER TOP-HEAVY PLAN: The Plan will be a Super Top-Heavy Plan with respect to any Plan Year in which as of the Determination Date it is a Top-Heavy Plan in which the Present Value of Accrued Benefits for Key Employees exceeds ninety percent of the Present Value of Accrued Benefits for all Key Employees and Nonkey Employees who are or were Plan Participants. In determining whether a Plan is a Super Top-Heavy Plan, all the rules of determining whether the Plan is a Top-Heavy Plan shall be applied except that “ninety percent” shall be substituted for “sixty percent.”                       (66)    SURVIVING SPOUSE: The surviving spouse of a Participant, but only if the Participant and that spouse had been married throughout the one year period ending on the earlier of (a) the Participant’s Payment Starting Date or (b) the date of the Participant’s death. If a Participant marries within one year before his Payment Starting Date and the Participant and his spouse in such marriage have been married for at least a one year period ending on or before the date of his death, such Participant and his spouse also shall be treated as having been married throughout the one year period ending on the Participant’s Payment Starting Date. A former spouse of a Participant will be treated as a Surviving Spouse to the extent it specifically is provided under a Qualified Domestic Relations Order as described in Article VI of this Plan and Code §414(p).                       (67)    SUSPENSE ACCOUNT: The account maintained for the Trustee to record Forfeitures pending reallocation under Section 4.6 and 5.2(e) and any part of the Employer Contribution which is an excess Annual Addition under Section 5.3 of the Plan, and adjustments relating thereto.                       (68)    TOP-HEAVY PLAN: The Plan will be a Top-Heavy Plan with respect to any Plan Year in which as of the Determination Date the Present Value of Accrued Benefits under the Plan for all Key Employees exceeds sixty percent of the Present Value of Accrued Benefits for all Key Employees and Nonkey Employees who are or were Plan Participants; provided, that if any individual is a Nonkey Employee with respect to any Plan Year but was a Key Employee with respect to any prior Plan Year, the Present Value of Accrued Benefits for such individual shall not be taken into account in determining whether the Plan is a Top-Heavy Plan. In determining whether the Plan is a Top-Heavy Plan, the Plan shall be aggregated with each plan of an Employer or Aggregated Employer in which a Key Employee is a participant and with each other plan of an Employer or Aggregated Employer which enables any such plan to meet the requirements of Code §§401(a)(4) or 410, and may be aggregated with any or all other plans of an Employer or Aggregated Employer if such aggregation group would continue to meet the requirements of Code §§401(a)(4) and 410 with such plan being taken into account. If the Plan must or may be aggregated with any other plan, the top-heavy ratio for the aggregated group shall be determined by adding together the numerators for each plan, and then adding together the denominators for each plan. - 16 -                       (69)    TOP-HEAVY YEAR OF SERVICE: A Year of Service ending in a Plan Year for which the Plan is a Top-Heavy Plan.                       (70)    TOP PAID GROUP: Effective for periods beginning after December 31, 1996, the group consisting of the top twenty percent of employees (other than employees who are Five Percent Owners for the current Plan Year or the preceding 12 month period) who performed services for the Employer during the Plan Year when ranked on the basis of 415 Compensation paid during such year, determined as provided in Code §414(q) and regulations issued thereunder. All active employees and leased employees under Code §414(n) shall be counted in determining the Top Paid Group, without any exclusion for age or service or collective bargaining employees, except that employees who are non-resident aliens with no United States source income shall be excluded.                       (71)    TRUST or TRUST FUND: The fund known as the Family Dollar Employee Savings and Retirement Plan and Trust, maintained in accordance with the terms of the Trust Agreement, as from time to time amended, which constitutes a part of this Plan. Notwithstanding the foregoing, to the extent there is a currently effective written trust agreement outside this document which has been executed by the Employer and which specifies that its terms shall apply in lieu of any other trust language, then the terms of that other trust document, to the extent they differ from the trust provisions in this document, shall supercede and control.                       (72)    TRUSTEE: The corporation or individuals appointed by the Board of Directors of the Parent Company to administer the Trust. For purposes of this Plan and Trust, the Trustee shall be Merrill Lynch Trust Company, until changed as herein provided.                       (73)    VALUATION DATE: The Anniversary Date in each Plan Year, December 31, plus any other interim dates during the Plan Year which the Committee designates as Valuation Dates. Additional Valuation Dates may be designated by the Committee at any time, and if designated shall apply for all purposes under the Plan (including pending distributions).                       (74)    YEAR OF SERVICE:                                 (a)        A Year of Service for eligibility means a consecutive twelve month period in which an Employee completes at least 1,000 Hours of Service. The first consecutive twelve month period for eligibility purposes shall be measured from the first day the Employee is entitled to be credited with an Hour of Service, and the second and subsequent consecutive twelve month periods shall be measured by the Plan Year beginning with the Plan Year that includes the first anniversary of the Employee’s date of employment. The participation computation periods beginning after a one-year Break in Service shall be measured from the date on which an Employee again performs an Hour of Service.                                 (b)        A Year of Service for vesting means a consecutive twelve month period coincidental with the Plan Year in which an Employee completes 1,000 Hours of Service. Solely for vesting purposes, if an Employee completes 1,000 Hours of Service in his first twelve months of employment but fails to complete 1,000 Hours of Service during the Plan Year in - 17 - which he becomes eligible, he shall be given credit for one Year of Service based upon his eligibility period Service and Hours of Service.                                 (c)        A Year of Service shall not be credited for any Authorized Leave of Absence after the Employee incurs a Break in Service during such absence from the employ of the Employer.                                 (d)        Years of Service completed prior to the Original Effective Date of the Plan shall be considered for purposes of eligibility and vesting under the Plan. With respect to Service completed prior to the Original Effective Date, if the Employer has not maintained records sufficient to determine precisely the number of Hours of Service completed during each computation period, then the Employee shall be assumed to have worked continuously during any period of employment, and shall be credited with Hours of Service based on the equivalency under the definition of Hours of Service for the computation period used for him on the Original Effective Date.                                 (e)        Years of Service following reemployment shall be determined in accordance with Section 3.4.          2.2         Construction: The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender, unless the context clearly indicates to the contrary. The words “hereof,” “herein,” “hereunder” and other similar compounds of the word “here” shall mean and refer to the entire Plan and not to any particular provision or Section.          2.3         Governing Law: This Plan and Trust shall be governed to the maximum extent by federal law under ERISA. To the extent not so preempted or otherwise governed by ERISA, the laws of the State of North Carolina shall control on all other matters.          2.4         Effect of Restatement: If the Plan and Trust’s restatement as of January 1, 2002 fails to qualify under the Code upon its submission to the Internal Revenue Service, the Parent Company may elect to make further amendments as requested by the Internal Revenue Service or, alternatively, to withdraw this restatement, return any Salary Deferral Contributions to the Participant, and continue to operate the Plan and Trust under the documents in effect prior to the restatement. - 18- ARTICLE III PARTICIPATION AND SERVICE          3.1        Participation:                        (a)        Pre-Effective Date Participants: An Employee who became a Participant under the prior provisions of the Plan as of the Effective Date shall continue to participate in accordance with the provisions of this amended and restated Plan.                        (b)         Participation On and After March 1, 2002: Each Non-Highly Compensated Employee who is shown on the Employer’s Plan records as a Regular Full-Time Associate shall be eligible to participate in the Plan as of the first Entry Date on or after the date on which he has both attained age eighteen and completed ninety (90) days of employment for the Employer. Each Employee who is shown on the Employer’s Plan records as a Part-Time Associate or as a Full-Time Temporary Associate and each Highly Compensated Employee shall be eligible to participate in the Plan as of the first Entry Date on or after the date on which he both attained age eighteen and completed one Year of Service (provided he is still in the Service of the Employer on such date).                        (c)         Participation On and After April 1, 2001, But Before March 1, 2002: Each Employee who is shown on the Employer’s Plan records as a Full-Time Temporary Associate shall be eligible to participate in the Plan as of the first Entry Date on or after the date on which he both attained age eighteen and completed one Year of Service (provided he is still in the Service of the Employer on such date).                        (d)         Participation Prior to April 1, 2001: Each Employee shall be eligible to participate as of the first Entry Date on or after the date on which he both attains age twenty-one and completes one Year of Service (provided that the Employee is still in the Employer’s Service on such Entry Date).                        (e)         Plan Administrator’s Rules and Procedures: The Plan Administrator shall have rules and procedures for determining how individuals who change status during a Plan Year will be classified, which rules and procedures (without limitation) may include a provision that considers an Employee’s status as that which he had as of a certain day in a Plan Year (e.g., April 1), and which provides that individual who becomes a Highly Compensated Employee after he already has become a Participant in the Plan but before he has completed a Year of Service, will cease Participation for the Plan Year in which he became Highly Compensated until such time as he completes a Year of Service. - 19 -         3.2         Service: A Participant’s eligibility for benefits under the Plan shall be based on his period of Service, determined in accordance with the following: Subject to Section 3.4, a Participant shall accrue a Year of Service for each Plan Year (or twelve month initial eligibility period under the conditions described in paragraph (a) of the definition of Year of Service in Article II) in which he has 1,000 or more Hours of Service.          3.3        Inactive Status: In the event that any Participant shall fail, in any Plan Year of his employment after the Effective Date, to accumulate 1,000 Hours of Service, such Plan Year shall not be considered as a period of Service for the purpose of determining the Participant’s vested interest in accordance with Section 6.3 (except as may otherwise be provided in the Plan’s definition of Year of Service), but he shall continue to receive Income allocations in accordance with Section 5.2(a) and shall share in Employer Contributions if otherwise eligible under Section 5.2(c).          3.4        Participation and Service Upon Reemployment:                       (a)    Participation Ceases Upon Termination of Employment: Participation in the Plan shall cease upon termination of employment with the Employer. Such termination of employment may have resulted from retirement, death or voluntary or involuntary termination of employment, unauthorized absence, or by failure to return to active employment with the Employer by the date on which an Authorized Leave of Absence expired.                       (b)    Special Rules Regarding Reemployment: Upon the reemployment of any person who had previously been employed by the Employer, the following rules shall apply in determining his Participation in the Plan and his Service under Section 3.2:                                 (1)         Plan Participation:                                              (i)         Employee Who Had Not Been a Participant: If the reemployed Employee was not a Participant in the Plan during his prior period of employment, he shall commence Participation after he has met the requirements of Section 3.1 as if he were a new Employee; provided, that, any Service attributable to his prior period of employment shall be taken into account for such reemployed Employee unless the number of consecutive one-year Breaks in Service equals or exceeds the greater of (A) five or (B) the aggregate number of Years of Service before the consecutive Breaks in Service (such aggregate number not including Years of Service disregarded by reason of prior periods of Breaks in Service.                                              (ii)         Employee Who Had Been a Participant: If the reemployed Employee was a Participant in the Plan during his prior period of employment or had completed the eligibility requirements but had not become a Participant due to an Entry Date adjustment, he shall be entitled to reparticipate in the Plan for all purposes on his date of reemployment; provided, that his ability to elect to make Salary Deferral Contributions shall be subject to the Plan’s normal rules and procedures which may delay the election of making Salary Deferral Contributions to the next Change Date. - 20 -                                 (2)        Computation of Service for Vesting Purposes:                                              (i)         Employee Who Previously Had Vested Interest: In the case of a reemployed Employee whose prior employment terminated while he was a Participant with any vested interest in his Employer Contribution Account or his Salary Deferral Account under Article VI, any Service attributable to his prior period of employment shall be reinstated as of the date of his reparticipation.                                              (ii)        Employee Without Previous Vested Interest: In the case of a reemployed Employee who was a Participant whose prior employment terminated without a vested interest in his Employer Contribution Account or Salary Deferral Account under Article VI, any Service which is attributable to his prior period of employment shall be taken into account unless the number of consecutive one-year Breaks in Service equals or exceeds the greater of (i) five or (ii) the aggregate number of Years of Service before the consecutive Breaks in Service (such aggregate number not including Years of Service disregarded by reason of prior periods of Breaks in Service).          3.5         Qualified Military Service: Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code §414(u). - 21 - ARTICLE IV. CONTRIBUTIONS AND FORFEITURES          4.1        Employer Contributions and Salary Deferral Contributions: The Employer may, for each year, contribute an amount determined in the discretion of the Employer. Such amount shall equal the amount which is elected to be deferred by Participants as Salary Deferral Contributions under Section 4.3, plus any additional amount contributed as an Employer Contribution by the Employer in its discretion.         All contributions of the Employer shall be made in cash or other property permitted by ERISA, and shall be conditioned upon their deductibility under Code §404 and shall be paid to the Trustee, and payments shall be made not later than the date prescribed by law for filing the Employer’s federal income tax returns for such year, including extensions which have been granted for the filing of such tax returns; provided, that Salary Deferral Contributions made pursuant to Participants’ elections under Section 4.3 shall be paid to the Trustee on the earliest date on which such contributions can reasonably be segregated from the Employer’s general assets but not later than the 15th business day of the month following the month in which the deferred amount otherwise would have been payable to the Participant (or such other shorter or longer period permitted by the Commissioner or under ERISA). Contributions of the Employer which are determined to be nondeductible shall be returned to the Employer in accordance with Section 7.1. The Trustee shall not be responsible for ensuring the timely payment of contributions.          4.2        Employee After-Tax Contributions by Participants:                        Effective on and after January 1, 1994, participants are not required or permitted to make any after-tax contributions under this Plan. Contributions:                       (a)     Election: By written election, made and filed with the Committee pursuant to the Committee’s rules and regulations and prior to the Change Date at which such election is to take effect, a Participant may elect to have a whole percentage between two percent and eighteen percent (or such higher or lower percentage as may be allowed by the Committee’s rules or regulations) of his Compensation contributed as an Salary Deferral Contribution to the Plan. A Participant’s Salary Deferral Contribution shall at all times be fully vested and nonforfeitable. As an administrative matter, in calculating the amount to be withheld from a Participant’s periodic pay as a Salary Deferral Contribution, the Committee may adopt rules and procedures whereby the amount of periodic withholding is determined by using a dollar figure or by using a percentage of base pay or of some other amount which is not identical to Compensation; provided, that for purposes of applying the various nondiscrimination and other tests required by the Code, the definition of Compensation will still be utilized.                       (b)    General $7,000 Limitation on Salary Deferral Contributions: Notwithstanding the foregoing, for Plan Years beginning after December 31, 1986, no Participant’s Salary Deferral Contributions to this Plan and any other cash or deferred arrangement of any employer may exceed $7,000 for any taxable year (i.e., generally the - 22 - calendar year) of the Participant. The foregoing $7,000 limitation shall be adjusted automatically each year to reflect changes in Code §402(g) and cost-of-living adjustments announced by the Commissioner. Amounts contributed by a Participant in excess of such limit (plus Income attributable thereto through the most recent Valuation Date) may be distributed by the Plan to that Participant in accordance with Code §402(g)(2) on or before April 15 of the following calendar year; provided, that the Plan need not make such distribution unless so requested in writing by the affected Participant on or before March 1 of the following calendar year, but if not distributed, any amount contributed in excess of the amount permitted under Code §402(g) shall be considered an after-tax employee contribution and thereafter separately accounted for under the Plan. Such distributed or redesignated amounts nevertheless shall continue to be considered for Highly Compensated Employees (but not for Non-Highly Compensated Employees) for purposes of the Plan’s Actual Deferral Percentage.                       (c)     Modification or Revocation of Elections: Once made elections under this Section 4.3 may not be modified except with regard to the day following the Change Date at least 30 days subsequent to the filing of a written notice with the Committee, or except as otherwise allowed by the Committee. Elections under this Section 4.3 may not be revoked or modified and Salary Deferral Contributions modified or discontinued except with regard to a Change Date at least thirty days subsequent to the filing of a written notice with the Committee (or at such other time allowed under the Committee’s rules and procedures). If Salary Deferral Contributions are so modified or discontinued, they may not be resumed by that Participant until the following Change Date designated by the Committee for that purpose. The Committee may develop rules and procedures regarding Change Dates and the modification or revocation of elections, which rules and procedures may discriminate against Highly Compensated Employees.                       (d)     Withdrawal and Distribution: A Participant may request to have an in-service withdrawal from his Salary Deferral Account only in accordance with Section 6.5. Upon termination of employment, the Salary Deferral Account shall be distributed in accordance with Article VI. Contributions Applicable for Plan Years Beginning After December 31, 1996:                        (a)        Special Rules Limiting Salary Deferral Contributions under Code §401(k):                                     (1)        Upon receipt of all Salary Deferral Contribution elections at the adoption of the Plan, and periodically thereafter (but no less frequently than as of the Anniversary Date each Plan Year), the Employer shall check the Actual Deferral Percentages against the tests set forth in subsection (4) below. The Committee shall formulate limits and rules regarding the percentage of Compensation which may be deferred by Participants to the extent it deems necessary or desirable in order to meet one of the tests. Any such limits and rules may discriminate against Participants who are Highly Compensated Employees.                                     (2)        In the event that neither test in subsection (4) is met as of the last day of any Plan Year, the Committee shall, to the extent permitted by IRS Notice 98-1 and any superseding guidance, take one or more of the following actions: - 23 -                                                  (i)         If the Employer is utilizing the current year’s Actual Deferral Percentage for Non-Highly Compensated Employees under subsection (4), request that the Employer make an additional contribution to the Plan, which contribution shall be allocated among Salary Deferral Accounts in one of the following manners, as specified by the Committee: (A) as if it were an additional Matching Contribution allocated based upon some stated amount of Salary Deferral Contributions, either among all Participants or just among those Participants who are Non-Highly Compensated Employees; or (B) in the proportion that each Participant’s Compensation bears to the total Compensation of all affected Participants, with such additional contribution either being made with respect to all Participants or just among those Participants who are Non-Highly Compensated Employees.                                                  (ii)         If the Employer is Compensated Employees under subsection (4), in addition to or as an alternative to the foregoing, the Committee may request that the Employer designate that all or part of the Matching Contribution which it will put into the accounts of either all Participants or just those Participants who are Non-Highly Compensated Employees be allocated to such Participants’ Salary Deferral Accounts.                                                  (iii)         In addition to or as an alternative to the foregoing, the Committee may in its discretion require that Participants who are Highly Compensated Employees be required to amend their Salary Deferral Contributions percentage elections and/or to receive as a cash distribution under Code §401(k)(8) Excess Deferrals already contributed to the Plan with respect to the Plan Year, plus any Income attributable thereto (computed in accordance with the Trustee’s usual procedures for allocating Income to Participant’s accounts. If any Salary Deferral Contributions are distributed pursuant to this Section, any Matching Contributions allocated to the Participant’s Employer Contribution Account by reference to those Salary Deferral Contributions also must be distributed (if such Matching Contributions are vested) or forfeited (if such matching Contributions are not vested) as required to comply with the Commissioner’s regulations under§401(a) and§401(m). In all events, the Committee’s determination as to which Participants will be affected under this subparagraph (iii) shall be determined by reducing the maximum dollar amount of deferrals of Participants who are Highly Compensated Employees, beginning with the Highly Compensated Employee with the largest amount of such Salary Deferral Contributions and continuing in descending order until all of the Salary Deferrals Contributions have been allocated. For this purpose, the “largest amount” is determined after distribution of any Excess Contributions. Any cash distributions under the foregoing sentence shall be treated as if they had never been deferred to the Plan under Section 4.3.                                     (3)        The timing of any corrective measures under subsection (2) above should be as follows: (i) any additional amounts contributed pursuant to subsection (2)(i) or (ii) above shall be deposited in the affected Participants’ Salary Deferral Accounts no later than the date prescribed by law for filing the Employer’s federal income tax returns, including extensions which have been granted for the filing of such tax return; and (ii) any cash distribution of Excess Deferrals pursuant to subsection (2)(iii) above must be made to the appropriate Highly Compensated Employees after the close of the Plan Year in which the Excess Deferral arose and within twelve months after the close of that Plan Year. - 24 -                                     (4)        As of each Anniversary Date (and more frequently as deemed necessary by the Committee), all Participants who were directly or indirectly eligible to make a Salary Deferral Contribution for all or a portion of the Plan Year shall be separated into the Highly Compensated Employee group (including, for Plan Years beginning before January 1, 1997, Family Members of Highly Compensated Employees) and the Non-Highly Compensated Employee group. One of the following two tests must be satisfied as of each Anniversary Date for there not to be a further Employer Contribution and/or amendment of salary deferral elections and/or required cash election and/or recharacterization by Highly Compensated Employees under subsection (2) above:   Test I - the Actual Deferral Percentage for the Highly Compensated Employee group is not more than the Actual Deferral Percentage of the Non-Highly Compensated Employee group for the preceding Plan Year multiplied by 1.25.   Test II - the excess of the Actual Deferral Percentage for the Highly Compensated Employee group over the Non-Highly Compensated Employee group for the preceding Plan Year is not more than two percentage points, and the Actual Deferral Percentage for the Highly Compensated Employee group is not more than the Actual Deferral Percentage of the Non-Highly Compensated Employee group multiplied by 2.0. Notwithstanding the foregoing, for Plan Years beginning prior to January 1, 2002, the use of Test II shall be limited to the extent necessary in order to avoid any restrictions on the use of this “alternative limitation” which have been promulgated by the Commissioner, as further described in subsection (b)(5) below. In addition, for the first Plan Year during which deferral elections are permitted under the Plan, the limitations under Test I and II shall be computed using three percent (3%) as the ADP for the Non-Highly Compensated Employee group, or, if the Employer elects, using the ADP of the Non-Highly Compensated Employee group for that first Plan Year. In any other year, the Employer also may elect to use the ADP of the Non-Highly Compensated Employee group for the same Plan Year, but such election must be made, and if made can only be changed, in accordance with the Commissioner’s rules and regulations.                                     (5)        Each group”s ADP and Test I and Test II shall be determined in accordance with Code §401(k) and any related rules or regulations of the Commissioner.                        (b)        Special Rules Limiting Matching Contributions and Any Employee After-Tax Contributions:                                     (1)         At the adoption of the Plan, and periodically thereafter (but not less frequently than twice a year as of the Anniversary Date each Plan Year and the date six months prior thereto), the Employer shall check the ACP against the tests set forth in subsection (4) below. The Committee may formulate limits and rules regarding the contribution and/or allocation of any employee after-tax contributions and Matching Contributions to the extent it deems necessary or desirable in order to meet one - 25 - utilizing the current year’s ACP for Non-Highly Compensated Employees under subsection (4), request that the Employer make an additional Matching Contribution to the Plan, which contribution shall be allocated among Employer Contribution Accounts as an additional Matching Contribution allocated based upon some stated amount of Salary Deferral Contributions either among all Employees. Any amount contributed pursuant to this subparagraph (i) shall be a new Matching Contribution, and no amount previously contributed to the Plan as a Salary Deferral Contribution or as a qualified non-elective contribution as described in § 1.401(m)-1(b)(5) of the Commissioner’s regulations may be redesignated as Matching Contributions under this subparagraph.                                                  (ii)        In addition to or as an alternative to the foregoing, the Committee may, in its discretion, require that Participants who are Highly Compensated Employees be required to elect to receive as a cash distribution under Code §401(m)(6) any Excess Contributions of vested Matching Contributions already contributed to the Plan with respect to the Plan Year, plus any Income attributable thereto (computed in accordance with the Trustee’s usual procedures for allocating Income to Participant’s accounts). In all events, the Committee’s determination as to which Participants will be affected shall be determined under this subparagraph (ii) by reducing the maximum dollar amount of Matching Contributions and after-tax employee contributions (if any) by or on behalf of Participants who are Highly Compensated Employees in order of their ACP, beginning with the largest amounts of Matching Contributions taken into account in calculating the ACP for the Plan Year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such Matching Contributions and continuing in descending order until all of the Excess Contributions have been allocated. For this purpose, the “largest amount” is determined after distribution of any Excess Contributions. Any cash distributions under the foregoing sentence shall be treated as if they had never been contributed to the Plan under Section 4.1. as an alternative to the foregoing, the Committee may require that non-vested Matching Contributions be forfeited to correct Excess Contributions. measures under subsection (2) above shall be as follows: (i) any additional amount to be contributed pursuant to subsection (2)(i) above shall be deposited in the affected Participants’ Employer Contribution Accounts no later than the date prescribed by law for filing the Employers’ federal income tax return, and (ii) any cash distribution of Excess Contributions of Matching Contributions pursuant to subsection (2)(ii) above must be made to the appropriate Highly Compensated Employees after the close of the Plan Year in which the Excess Contribution arose and within twelve months after the close of that Plan Year. more frequently as deemed necessary by the Committee), all Participants shall be divided into the Highly Compensated - 26 - Anniversary Date for there not to be a further Employer Matching Contribution election and/or required cash election by Highly Compensated Employees under subsection (2) above:   Test I - the ACP for the Highly Compensated Employee group is not more than the ACP of the Non-Highly Compensated Employee group for the preceding Plan Year multiplied by 1.25.   Test II - the excess of the ACP for the Highly Compensated Employee group over the Non-Highly Compensated Employee group for the preceding Plan Year is not more than two percentage points, and the ACP for the Highly Compensated Employee group is not more than the ACP of the Non-Highly Compensated Employee group multiplied by 2.0. been promulgated by the Commissioner, as described in subsection (5) below. In addition, for the first Plan Year during which matching contributions are permitted under the Plan (including any predecessor plan), the limitations under Tests I and II shall be computed using three percent (3%) as the ACP for the Non-Highly Compensated Employee group or, if the Employer elects, using the ACP of the Non-Highly Compensated Employee group for the first Plan Year. In any other year, the Employer also may elect to use the ACP of the Non-Highly Compensated Employee group for the same Plan Year, but such election must be made, and if made can only be changed, in accordance with the Commissioner’s rules and regulations.                                     (5)        Restriction on Multiple Use of Test II prior to January 1, 2002: For Plan Years beginning prior to January 1, 2002, the following restrictions shall apply in any case where the Plan is required to use Test II for computing both the maximum ADP and ACP limitations for Highly Compensated Employees. In such case, the sum of the ADP and ACP for Highly Compensated Employees may not exceed the greater of (i) or (ii) below:                                              (i)        the sum of:                                                       (A)        1.25 times the greater of the ADP or the ACP for the Plan Year for Non-Highly Compensated Employees, plus                                                       (B)         2.0 times the lesser of the ADP or the ACP for the Plan Year for Non-Highly Compensated Employees, provided that this figure may not exceed the lesser of the ADP or the ACP for Non-Highly Compensated Employees by more than two percentage points.                                              (ii)        the sum of: Employees, plus - 27 - Employees, provided that this figure may not exceed the greater of the ADP or the ACP for Non-Highly Compensated Employees by more than two percentage points. In the event that such aggregate limitation is exceeded, correction shall be made by reducing the ACP for Highly Compensated Employees in accordance with this subsection (b) to the extent necessary to meet this aggregate limitation.                                     (6)        Each group’s ACP and Test I and Test II shall be determined in accordance with Code §401(m) and any related rules and regulations of the Commissioner.          4.5        Rollover Contributions:                       (a)        In General: Subject to all the provisions of this Plan, a Participant, may direct the appropriate fiduciary of any qualified retirement plan of another employer to distribute or transfer directly to the Trustee any portion or all of such Participant’s interest in the distributing or transferring plan, exclusive of contributions made by the Participant thereunder except that a Participant may roll over into this Plan employee contributions deductible under Code §219(e)(2) to the extent such amounts are thereafter accounted for separately and also may roll over elective contributions considered employer contributions under Code §401(k). Alternatively, the Participant may personally present such amount to the Trustee within sixty days of receipt thereof as a distribution from another qualified retirement plan. In addition, an Employee who has become a Participant who has established an individual retirement account solely for the purpose of serving as a repository for distributions from the qualified retirement plan of a former employer, and who has not made any contributions to such individual retirement account on his own behalf also may transfer or present within sixty days of receipt part or all of the assets of such individual retirement account to the Trustee.                        Upon the receipt of such a rollover contribution, the Trustee shall establish a Rollover Account for the Participant on whose behalf the distribution was received. The value of the Rollover Account so established shall be fully vested and nonforfeitable at all times.                       (b)        Requirements and Conditions With Respect to Rollover Contributions: Rollover contributions shall further be subject to the following conditions:                                     (1)        No Interim Withdrawals: No withdrawals from Rollover Accounts shall be permitted until such time as the Participant is otherwise eligible to receive his vested interest attributable to Employer Contributions (or would have been eligible had he been vested in any part of his Employer Contribution Account) or until such earlier time permitted under Section 6.5.                                     (2)        Certification: The Participant shall at the Committee’s request present a written certification in a form acceptable to the Committee to the effect that: The amount received as a rollover contribution is attributable only to amounts to the Participant’s credit in a qualified retirement plan or rollover individual retirement account; no portion of such amount consists of contributions made by the Participant other than employee contributions - 28 - deductible under Code §219(e)(2) and elective contributions considered employer contributions under §401(k); specifying any amounts transferred which are subject to any restrictions under Code §401(a)(9) or §402(c)(4) or otherwise; and if such amount is being paid by the Participant personally, it was received within the prior sixty calendar days.                                     (3)    Participation for Purposes of this Section: For the sole purpose of determining whether an Employee has become eligible to utilize these rollover provisions, and not for any other purpose under the Plan, an Employee shall be considered a Plan Participant on the date he has completed thirty days of Service with the Employer.                                     (4)    Other Limitations: No rollover contribution shall be accepted (i) directly or indirectly from an individual retirement account to which the Participant contributed on his own behalf; or (ii) which consists in whole or in part of insurance contract(s) with respect to which future premium payments are or may become due, unless there are sufficient other assets being transferred so as to make maintenance of such contract(s) feasible without violation of any limitation on assets which may be applied for that purpose; or (iii) which consists of amounts not eligible for rollover treatment under Code §402(c)(4)(B).                                     (5)    No Transfer Allowed from Plan Subject to Code §417: Except as otherwise described in this Section, no direct or indirect transfer will be permitted into this Plan from (i) a plan which is a defined benefit pension plan, (ii) a defined contribution plan subject to the minimum funding standards of Code §412 (e.g., a money purchase or target benefit pension plan), or (iii) any other defined contribution plan that does not meet the requirements of Code §401(a)(11)(B)(iii)(I) and (II) regarding all death benefits being paid to a Surviving Spouse absent spousal consent and regarding the Participant’s ability to elect a life annuity form of payment. Rollovers into this Plan which are Eligible Rollover Distributions (whether they are transferred directly to this Plan in a trustee to trustee transfer or are distributed to the Participant by the other plan) will be permitted with respect to benefits attributable to such a plan.                        (c)        Directed Rollover Option: Effective January 1, 1993, distributions from this Plan may be directly rolled over to another plan pursuant to the provisions of subsection 6.4(h).         4.6         Disposition of Forfeitures: Upon termination of employment, a Participant’s Forfeiture, if any, shall be maintained in his Employer Contribution Account until his Forfeiture Date, which is the earlier of (a) the date on which he has received a distribution of the entire nonforfeitable portion of his account (or deemed distribution in the case of a Participant without any vesting, which deemed distribution date shall be the date of his termination of employment with the Employer) or (b) the last day of the Plan Year in which the Participant incurs five consecutive one-year Breaks in Service, and shall continue to receive Income allocations pursuant to Section 5.2(a) until such time. If the terminated Participant returns to the employ of the Employer before his Forfeiture Date, the undistributed amount in his Employer Contribution Account, including any Forfeiture still maintained in his Employer Contribution Account, plus Income allocations, shall upon reparticipation become the beginning balance in his new Employer Contribution Account. If the terminated Participant does not return before his Forfeiture Date, any vested amounts remaining in the terminated Participant’s accounts will be distributed to him as hereinafter provided; and his Forfeiture, plus Income allocations shall be - 29 - transferred to the Suspense Account and become available as of such Forfeiture Date for use as provided in Section 5.2(e) as a current or subsequent Employer Contribution of the Employer as of the Valuation Date next following such Forfeiture Date or as soon as practicable thereafter. If a terminated Participant who is less than one hundred percent vested in his Employer Contribution Account is reemployed after five consecutive one-year Breaks in Service, but before distribution of his vested account balance, any portion of his account that has not been distributed will be segregated in the records of the Trust and separately accounted for until such time as the Participant is one hundred percent vested in his Employer Contribution Account.          4.7         Pay Back Provision: If a terminated Participant who is less than one hundred percent vested in the Plan receives a distribution of his entire nonforfeitable benefit derived from his Salary Deferral Account and/or his Employer Contribution Account, and such Former Participant returns to the employ of the Employer, then such reemployed Participant shall be given an opportunity to repay the full amount of any such prior distribution of amounts derived from Salary Deferral Contributions and Employer Contributions as provided below. If such a reemployed Employee repays such prior amounts from his Salary Deferral Account and Employer Contribution Account before the earlier of five years after the first date on which he is subsequently reemployed by the Employer or the close of the first period of five consecutive one-year Breaks in Service commencing after distribution (or, in the case of a distribution from the Plan other than by reason of separation from Service, five Years after the date of the distribution), then his prior account balance shall be restored to the amount which was allocated to such accounts on the date of distribution. In the case of a reemployed Former Participant who had no vested interest in either his Salary Deferral Account or Employer Contribution Account at the time of his previous separation from Service and who therefore was deemed to have received a distribution, if such Former Participant is reemployed before he has incurred five consecutive one-year Breaks in Service, then repayment of his Salary Deferral Account and Employer Contribution Account shall be deemed to be made on the date following the Anniversary Date following reemployment.                   If the Plan is required to restore forfeited amounts by virtue of a pay back under this Section, such restoration shall be made no later than the end of the Plan Year following the Plan Year of repayment, and the Committee may choose among any or a combination of the following permissible sources for restoration: Forfeitures which become available that Plan Year, or additional Employer contributions (which Employer contributions shall be in addition to those required or permitted by Section 4.1 of the Plan).                   In the event a Participant exercises his right to buy back a previous Forfeiture through a repayment of a prior distribution pursuant to this Section, no part of the amount which is repaid to the Plan by the Participant may be invested in any stock or other security of the Employer or any affiliate of the Employer. - 30 - ARTICLE V.         5.1         Individual Accounts: The Committee shall create and maintain adequate records to disclose the interest in the Trust of each Participant, Former Participant and Beneficiary. Such records shall be in the form of individual accounts and credits and charges shall be made to such accounts in the manner herein described. When appropriate, a Participant shall have an Salary Deferral Account, an Employer Contribution Account, a Rollover Account, and (but only for Participants who made after-tax contributions during a time where the Plan permitted after-tax contributions) an after-tax employee contribution account. Subaccounts also may be maintained pursuant to rules and regulations of the Committee to reflect collective investment subaccounts, segregated subaccounts and any other subaccounts deemed necessary or desirable by the Committee. The maintenance of individual accounts is only for accounting purposes, and a segregation of the assets of the Trust Fund to each account shall not be required. Distributions and withdrawals made from an account shall be charged to the account as of the date paid.          5.2        Account Adjustments: The accounts of Participants, Former Participants and Beneficiaries and the Suspense Account shall be adjusted in                       (a)         Income: As of each Valuation Date, the Income of the Trust Fund since the last Valuation Date shall be allocated among the Suspense Account and the accounts of Participants, Former Participants and Beneficiaries who had unpaid balances in their accounts on the Valuation Date in proportion to the balances in such accounts immediately following the prior Valuation Date, but after first reducing each such account balance by the amount of any distributions, withdrawals, directed investments, and loans from the account since the prior Valuation Date, and after increasing the balance in each Salary Deferral Account and Rollover Account since the prior Valuation Date by a weighted proportion of any Salary Deferral Contributions and rollover contributions since the last Valuation Date weighted in accordance with the Trustee’s customary and reasonable accounting procedures and in accordance with non-discriminatory procedures and rules adopted by the Committee. The interest paid by a Participant since the prior Valuation Date in respect of a loan from his accounts as provided in Section 6.6 or in any loan procedures pursuant to Section 6.6 shall be segregated and credited to such accounts under the rules for such accounts. At the Committee’s discretion uniformly applied and otherwise not violative of the Commissioner’s rules and regulations regarding domestic relations orders or otherwise, administrative expenses directly connected or associated with a particular Participant’s account may be charged to that account. The Income since the prior Valuation Date attributable to any investment of any directed investment account which has been established in accordance with Sections 7.8 also shall be allocated to such account as of each Valuation Date, or at such other times (including any distribution date), as may be appropriate under the Trustee’s normal procedures for such accounts. All valuations shall be based on the fair market value of assets in the Trust Fund on the Valuation Date. Notwithstanding the foregoing, in the event that the Plan’s assets are invested among collective investment funds as provided in Section 7.8 of this Plan, the foregoing allocation of Income shall be adjusted to reflect the segregation of each such collective investment fund.                       (b)        Salary Deferral Contributions: A Participant’s Salary Deferral Contributions under Section 4.3 during the Plan Year, and other amounts contributed by the - 31 - Employer to the Salary Deferral Accounts of Participants pursuant to Section 4.4(a)(2)(i), shall be allocated to his Salary Deferral Account when received by the Trustee (less amounts withdrawn as cash under Section 4.4).                       (c)        Employer Contributions: As of each Anniversary Date (or more frequently if designated by the Employer), the Employer Contributions (if any) made with respect to that period in the Plan Year shall be allocated among those Participants who were in the employ of the Employer on that Valuation Date, or at such earlier times as provided by Committee rules and regulations. Such allocations shall be made in accordance with the following formula (subject to subsection (f) below):                                     (1)        Matching Contributions: Any Employer Contribution shall be allocated in a manner specified by the Parent Company so as to provide a uniform stated percentage match of each Participant’s Salary Deferral Contributions up to a uniform stated percentage of each Participant’s Compensation; provided, that no such allocation shall exceed a 100% match of each Participant’s Salary Deferral Contributions which are equal to six percent of his Compensation.                                     (2)        Notwithstanding the foregoing, the allocation of the aforesaid Matching Contribution also may be modified by stipulation of the Parent Company so as to discriminate against Highly Compensated Employees and their Family Members if such modification is deemed necessary or desirable by the Committee in order to comply with one of the tests set forth in Section 4.3.                                     (3)        Nothing in the foregoing shall require the Employer to make any amount of Employer Contribution.                       (d)        Suspension of Accrual Requirements: If, for any Plan Year beginning after December 31, 1988, the Plan fails to satisfy the Participation Test under Code §401(a)(26) or the Coverage Test under Code §410(b) this Section 5.2(d) will apply. The Plan will satisfy the Participation Test for Plan Years beginning before January 1, 1997 if, using any allowable testing method, the number of Employees who benefit under the Plan is at least equal to the lesser of fifty or forty percent of the total number of Includible Employees or the Plan otherwise satisfies Code §401(a)(26). Notwithstanding the foregoing, the Participation Test shall not apply for Plan Years beginning after December 31, 1996. The Plan will satisfy the Coverage Test if, using any allowable testing method, the number of Non-Highly Compensated Employees who benefit under the Plan is at least equal to seventy percent of the total number of Includible Non-Highly Compensated Employees or if the Plan otherwise satisfies Code §410(b). “Includible” Employees are all Employees other than (1) those Employees excluded from participating in the Plan for the entire Plan Year by reason of the collective bargaining unit exclusion or the nonresident alien exclusion or by reason of the age and Service participation requirements of Sections 3.1; and (2) to the extent required by the Commissioner’s then applicable rules and regulations, any Employee who separates from Service during the Plan Year and fails to complete at least 501 Hours of Service for the Plan Year.                        For purposes of the Participation Test and the Coverage Test, an Employee is benefiting under the Plan on a particular date if he is entitled to an allocation for the Plan Year - 32 - under Section 5.2(c). Under the Participation Test, when determining whether an Employee is entitled to an allocation under Section 5.2(c), the Committee shall disregard any allocation required solely by reason of the Top-Heavy minimum allocation under Section 5.2(f), unless the Top-Heavy minimum allocation is the only allocation made under the Plan for the Plan Year.                        If this Section 5.2(d) applies for a Plan Year, the Committee shall suspend the accrual requirements for the Non-Highly Compensated Includible Employees who are Participants, beginning first with the Non-Highly Compensated Includible Employee(s) employed with the Employer on the last day of the Plan Year, then the Non-Highly Compensated Includible Employee(s) who have the latest separation from Service during the Plan Year, and continuing to suspend in descending order the accrual requirements for each Non-Highly Compensated Includible Employee who incurred an earlier separation from Service, from the latest to the earliest separation from Service date, until the Plan satisfies both the Participation Test (for Plan Years beginning before January 1, 1997) and the Coverage Test for the Plan Year. If two or more Non-Highly Compensated Includible Employees have a separation from Service on the same day, the Committee shall suspend the accrual requirements for all such Non-Highly Compensated Includible Employees, irrespective of whether the Plan can satisfy the Participation Test and the Coverage Test by accruing benefits for fewer than all such Non-Highly Compensated Includible Employees. If the Plan suspends the accrual requirements for an Non-Highly Compensated Includible Employee, that Employee shall share in the allocation of Employer Contributions and Participant Forfeitures, if any, without regard to the number of Hours of Service he has earned for the Plan Year and without regard to whether he is employed by the Employer on the last day of the Plan Year.                        The suspension of accrual requirements for Employer Matching Contributions applies separately to the Code §401(m) portion of the Plan, and the Committee will treat an Employee as benefiting under that portion of the Plan if he is an eligible Employee for purposes of the Code §401(m) nondiscrimination test.                        (e)        Forfeitures: Forfeitures assessed against Participants’ accounts as provided in Section 4.6 shall be retained in the Suspense Account and shall be available for reallocation as provided in this Section. As of each Valuation Date (or, if earlier, the Plan’s termination date), Forfeitures which have become available for reallocation since the prior Valuation Date shall be used to reduce current or future Employer Contributions to be made under subsection (c) above and to the extent not so used to pay Plan expenses.                        (f)        Minimum Contributions and Forfeitures for a Top-Heavy Plan: For any Plan Year in which the Plan is a Top-Heavy Plan, the allocation formula will be changed to the extent necessary so that each Participant who is a Nonkey Employee and who has not separated from Service on the Anniversary Date (regardless of whether he has completed at least 1,000 Hours of Service in that Plan Year) will receive a total allocation to his Employer Contribution Account (including both Employer Contributions and Forfeitures for that Plan Year) which is equal to the lesser of the following percentages of his 415 Compensation for that Plan Year: (i) three percent or (ii) the highest percentage provided under the Plan during that Plan Year on behalf of a Key Employee (with the percentage being determined for each Key Employee by using that part of his 415 Compensation which is not in excess of $150,000 (or $200,000 for Plan Years beginning before January 1, 1994) or other higher amount applicable under - 33 - Code §401(a)(17) and, effective for Plan Years beginning after December 31, 1988, by taking into account all elective deferrals under Code §401(k) and matching contributions for that Key Employee); provided, that the minimum contribution may be less than three percent only if the Plan is not used by a defined benefit plan (whether active or wasting) to meet the participation tests of Code §§401(a)(4) or 410. Effective for Plan Years beginning after December 31, 1988, amounts contributed at a Participant’s election under Code §401(k) and any matching contributions (other than Matching Contributions for Plan Years beginning after December 31, 2001) allocated to Nonkey Employees which are necessary in order to satisfy the requirements of Code §§401(k) and 401(m) may not be offset against the aforesaid minimum contribution for a Participant, but amounts contributed by the Employer as qualified non-elective contributions under Code §401(m)(4)(C) and matching contributions not necessary to satisfy Code §401(k) or (m) may be offset. In all cases, Employer contributions and forfeitures allocated to a Participant from any other tax-qualified defined contribution plan of the Employer and any Aggregated Employer required or permitted to be aggregated as described in the definition of Top-Heavy Plan in Section 2.1 which meet the top-heavy minimum contribution shall be offset. In the case of a Participant covered both by tax-qualified defined contribution plan(s) and tax-qualified defined benefit plan(s) of the Employer and any Aggregated Employer required or permitted to be aggregated as described in the definition of Top-Heavy Plan in Section 2.1, each Participant shall receive an aggregate minimum benefit and contribution at least equal (using a comparability analysis) to the minimum defined benefit (as defined in the Employer’s defined benefit plan) in any Plan Year in which the Plan is a Top-Heavy Plan.                        (g)        Rollover Contributions: A Participant’s rollover contributions for the Plan Year shall be allocated to his Rollover Account when received by the Trustee.      5.3        Maximum Additions:                        (a)        415 Limitation: Notwithstanding anything contained herein to the contrary, the total Additions made to the Employer Contribution Account and Salary Deferral Account (or comparable accounts) of a Participant in the Plan and all other defined contribution plans (whether or not terminated) of the Employer and any Aggregated Employer for any Limitation Year shall not exceed the “415 Limitation” which is the lesser of (i) $30,000 (or, effective for Plan Years beginning after December 31, 2001, $40,000) as automatically adjusted each year to reflect cost-of-living adjustments announced by the Commissioner or (ii) twenty-five percent (or, effective for Plan Years beginning after December 31, 2001, one hundred percent) of the Participant’s 415 Compensation for such Limitation Year. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different consecutive twelve month period, the (a)(i) amount will be multiplied by a fraction whose numerator is the number of months in the short Limitation Year and whose denominator is twelve; and the (a)(ii) amount will be based upon the Participant’s 415 Compensation for the short Limitation Year. For Plan Years beginning after December 31, 2001, the compensation percentage limit referred to in (ii) above shall not apply to any contribution for medical benefits after separation from Service (within the meaning of Code §401(h) or §419A(f)(2)) which is otherwise treated as an Annual Addition.                        (b)        Return of Salary Deferral Contributions: The Trustee will return any Salary Deferral Contributions (within the meaning of Code §402(g)) by a Participant (plus - 34 - earnings and gains attributable thereto) to the extent necessary to reduce the total Additions for that Plan Year so as not to exceed the 415 Limitation on Annual Additions. Any Salary Deferral Contributions returned (or transferred to a Suspense Account under subsection (c) below) shall be disregarded for purposes of the ADP test of Code §401(k), the ACP test of Code §401(m) and the limitations of Code §402(g).                        (c)        Suspense Account: If as a result of the allocation of Forfeitures or a reasonable error in estimating a Participant’s annual Compensation, or in determining the amount of elective deferrals within the meaning of Code §402(g) that may be made within the limits of Code §415 (or under other limited facts and circumstances which the Commissioner finds justify the availability of the rules set forth in this Plan pursuant to Commissioner’s Regulation §l.415-6), the Annual Additions for a Participant would exceed the 415 Limitation, then amounts in excess of the 415 Limitation shall be treated in accordance with this subparagraph. Any excess amounts in a Participant’s account shall be used to reduce Employer Contributions for the next Limitation Year (and succeeding years, as necessary) for that Participant if that Participant is covered by the Plan as of the end of the Limitation Year. If that Participant is not covered by the Plan as of the end of the Limitation Year, then the excess amounts shall be transferred to and held unallocated in a Suspense Account for the Limitation Year and allocated and reallocated as necessary to prevent the relevant 415 Limitations from being exceeded in the next Limitation Year (and succeeding Limitation Years as necessary) to all the remaining Participants in the Plan. Furthermore, the excess amounts in the Suspense Account must be used to reduce Employer Contributions for the next Limitation Year (and succeeding Limitation Years as necessary) for all Participants in the Plan. In no event may any excess amounts which are due to Employer Contributions be distributed out to Participants or Former Participants.                        (d)        Aggregate Limitations: Because of the repeal of Code §415(e), no aggregate limitations (restricting the combined benefits which may be payable to a Participant covered by both a defined benefit plan(s) and a defined contribution plan(s)) shall apply for Limitation Years beginning after December 31, 1999. The aggregate limitations for Limitation Years beginning before January 1, 2000 shall be those provided under the terms of the Plan as in effect on that date. - 35 - ARTICLE VI. BENEFITS          6.1         Retirement or Disability: If a Participant has attained Normal Retirement Age or if his employment is terminated at an earlier age because of Disability, he shall be fully vested in the amount allocated to each of his accounts and shall be entitled to receive such amount following the termination of his employment payable in accordance with Section 6.4.          6.2        Death and Designation of Beneficiary:                       (a)         Death Benefits: In the event that the termination of employment of a Participant is caused by his death, the entire amount then allocated to each of his accounts shall be fully vested and shall be payable to his Beneficiary, after receipt by the Committee of an acceptable proof of death, in accordance with this Section. In the event that the Participant’s death occurs after his termination of employment but before he has received all of his Plan benefits, the entire amount then allocated to each of his accounts shall not be fully vested but the vested amount then allocated to each of his accounts as provided in Section 6.3 shall be payable to his Beneficiary, after receipt by the Committee of an acceptable proof of death, in                       (b)        Designation of Beneficiary: Each Participant from time to time may designate any person or persons (who may be designated contingently or successively and who may be an entity other than a natural person) as his Beneficiary or Beneficiaries to whom his Plan benefits will be paid if he dies before receipt of all such benefits; provided, that a Participant’s or Former Participant’s Beneficiary in all cases shall be his Surviving Spouse as defined in Section 2.1, unless either (i) the present value of the Participant’s nonforfeitable account balance is not more than $5,000 (or such larger amount permitted by the Commissioner’s regulations) as of the Payment Starting Date, or (ii) there is no such Surviving Spouse at the time of death or (iii) the Surviving Spouse consents to the appointment of another Beneficiary pursuant to a waiver of spousal rights as provided in subsection (c) below. Each beneficiary designation shall be in a form prescribed by the Committee and will be effective only when filed with the Committee during the Participant’s lifetime, and shall be subject to and conditioned upon any and all provisions of federal law (including, but not limited to, the Retirement Equity Act of 1984) regarding the choice of Beneficiary. Each beneficiary designation filed with the Committee will cancel all beneficiary designations previously filed with the Committee. If any Participant fails to designate a Beneficiary in the manner provided above, or if the designated Beneficiary dies before the deceased Participant or before complete distribution of the Participant’s benefits, then, and in any such event, the person(s) who shall constitute the Beneficiary shall be:                                 (1)        The then surviving spouse of the deceased Participant; or                                 (2)        In the event that there is no such surviving spouse, but the Participant is then survived by a child, children, or issue of a deceased child or children, then the Beneficiary shall be such then surviving children and surviving issue of such deceased children, to share on a per stirpes basis; or - 36 -                                 (3)        In the event that there is no such surviving spouse or surviving children or their issue, then the Beneficiary shall be the estate of the deceased Participant.                       (c)         Requirements of Surviving Spouse Consent to Alternative Beneficiary: A Participant’s or Former Participant’s Surviving Spouse or spouse may consent to the designation of another Beneficiary if such consent is in a writing which is signed by the Participant’s or Former Participant’s Surviving Spouse or spouse, acknowledges the effect of the consent, and is witnessed by a Plan representative or notary public. The spouse’s consent must acknowledge the specific non-spouse Beneficiary, and such Beneficiary may not subsequently be changed to another non-spouse Beneficiary unless the spouse’s consent again is obtained in the form prescribed above, or unless the spouse’s prior consent expressly permitted new designations by the Participant without the requirement of further consent by the spouse. Any consent necessary under this Section will be valid only with respect to the spouse who signs the consent, but shall be irrevocable by that spouse as to the specified non-spouse Beneficiary. However, a Participant or Former Participant may revoke a spouse’s waiver (and thereby cause the spouse to become a Beneficiary) at any time before the commencement of benefits by filing a new Beneficiary designation form, even without the consent of the spouse or Surviving Spouse, and the number of such revocations by a Participant or Former Participant shall not be limited. Notwithstanding the foregoing written consent requirement, if the Participant establishes to the satisfaction of a Plan representative that such written consent may not be obtained because there is no spouse or the spouse cannot be located, or if a Participant has a court order that he either is legally separated or has been abandoned within the meaning of local law, then a valid spousal consent will be deemed to have been made.          6.3         Termination for Other Reasons: If a Participant’s employment with the Employer is terminated before Normal Retirement Age for any reason other than Disability or death, the Participant (or his Beneficiary under Section 6.2 in the event of the Participant’s death prior to his receipt of all Plan benefits shall be entitled to the sum of the amounts determined under (a) and (b) below:                       (a)        Salary Deferral Account and Other Employee Accounts: The entire amount credited to his Salary Deferral Account and his Rollover Account and after-tax employee contribution account (if any), plus                       (b)        Vested Employer Contribution Account: An amount equal to the vested percentage of his Employer Contribution Account balance. Such vested percentage shall be determined in accordance with the following:                                 (1)        For Employer Contributions Made with Respect to Plan Years Beginning on and after January 1, 2002: Solely with respect to Employer Contributions made on account of Plan Years beginning on and after January 1, 2002 (and specifically not including Employer Contributions made on account of Plan Years beginning prior to January 1, 2002, even if such contributions are in fact made on or after January 1, 2002), the vested percentage shall be determined in accordance with the following “non-Top-Heavy” schedule: - 37 -   Vested Forfeited Years of Service Percentage Percentage Less than 2 0% 100% 2 but less than 3 20% 80% 3 but less than 4 40% 60% 4 but less than 5 60% 40% 5 or more 100% 0%                   (2)    For Contributions Made With Respect to Plan Years Beginning Prior to January 1, 2002 but after December 31, 1988: For Participant’s having at least one hour of service with the Employer for Plan Years beginning after December 31, 1988, the vested percentage of Employer Contributions made with respect to Plan Years beginning prior to January 1, 2002 shall be determined in accordance with the following “non-Top-Heavy” schedule:   Vested Forfeited Years of Service Percentage Percentage Less than 5 0% 100% 5 or more 100% 0%                   (3)    Prior to January 1, 1989:                                              (i)         Class Year Vesting: The vested rights of a Participant in his Employer Contribution Account shall be determined separately for Employer Contributions made on account of each Plan Year. A Participant will have no vesting in Employer Contributions for any Plan Year until the end of the second complete Plan Year following the Plan Year for which such Employer Contributions were made. A Participant will be 100% vested in Employer Contributions for any Plan Year if he is employed by the Employer on the last day of the second Plan Year following the Plan Year for which those Employer Contributions were made and he has not separated from service during that time. A Participant’s Employer Contributions for any Plan Year shall be forfeited in accordance with Section 4.5 if he separates from Service before the end of the second Plan Year following the Plan Year for which the Employer Contributions were made.                                              (ii)         Special Rule for Participants with Ten Years of Service: Notwithstanding the above, any Participant who has completed ten or more years of Service shall be 100% vested in all Employer Contributions to his account.                        (4)        Special Top-Heavy Vesting Provisions: Notwithstanding the foregoing, if the Plan becomes a Top-Heavy Plan, the vested percentage of all amounts then existing in the Employer Contribution Account of any Participant who completes at least one Hour of Service after the Plan becomes a Top-Heavy Plan (including amounts attributable to Employer Contributions allocated before the Plan became a Top-Heavy Plan) shall be determined in accordance with the following “Top-Heavy” schedule (unless another vesting - 38 - schedule is permitted by Code §416 which fully vests in a less rapid manner, in which event such other permissible vesting schedule hereby is instead incorporated by reference): If the Plan ceases to be a Top-Heavy Plan, the Plan’s vesting schedule automatically will be changed to the non-Top-Heavy vesting schedule.                        (5)        Special Vesting Provisions Applicable Where Prior Vesting Schedule More Favorable: Notwithstanding any amendment (or automatic change by virtue of the Plan becoming or ceasing to be a Top-Heavy Plan) of the Plan’s vesting schedule, the vested percentage of the amounts allocated to the Employer Contribution Account of a Participant who had been covered under the prior provisions of the Plan (such amounts being determined as of the later of (i) the date the amendment or change is adopted or (ii) the date it becomes effective) shall not be less than the vested percentage of such previously allocated amounts which the Participant would have had if the provisions of the Plan as in effect immediately prior to the effective date had continued without change. In addition, in the event the vesting provisions of the Plan are amended (or are changed automatically by virtue of the Plan becoming or ceasing to be a Top-Heavy Plan), each Participant in the Plan who has had three (or five in the case of a Participant who does not have at least one Hour of Service with the Employer for Plan Years beginning after December 31, 1988) or more Years of Service shall be permitted to make an election as provided under Section 11.2 of this Plan.                        (6)        Effect of Vesting: The percentage of the Participant’s Employer Contribution Account which is not vested shall be a Forfeiture subject to the provisions of Section 4.5. Payment of benefits due under this Section 6.3 shall be made in accordance with Section 6.4.          6.4        Payment of Benefits:                       (a)         Participant’s    Claim for Benefits: Upon a Participant’s entitlement to payment of benefits under Section 6.1 or 6.3, or a Beneficiary’s entitlement to payment under Section 6.2, he shall file with the Committee his written request as to time and manner of payment on such form or forms, and subject to such conditions, as the Committee shall provide.                       (b)        Committee’s Determination: Subject to the provisions of subsections (c) through (h) below, and also subject to the spousal consent requirements of Section 6.2, the Committee shall determine when payment of a Participant’s benefits is to commence and the method by which his benefits will be paid, and shall direct the Trustee accordingly. The - 39 - Committee shall act in accordance with this Plan in making any determinations under this Section and shall not be bound by a Participant’s request under this Section.                       (c)        When Benefit Payments Commence:                                 (1)         Payment of a Participant’s benefits must commence no later than the Payment Starting Date (as defined in Section 2.l of the Plan), unless the Participant elects later payment (subject to the provisions of subsection (e) below) or is deemed to have elected to defer payment of benefits by failing to give consent to a distribution in excess of $5,000 (or such larger amount permitted by the Commissioner’s Regulations).                                 (2)         Unless the Participant has elected payment as soon as possible under Section 6.4(c)(3) below, a distribution will be deferred until Normal Retirement Age, or his death; provided, that if the total of his vested benefits in all accounts does not exceed $5,000 or such other greater cash-out amount as may be provided under the Commissioner’s rulings and regulations, the Committee shall require a mandatory cash-out and provide for distribution of vested benefits in a lump sum as of the earliest date permitted under Section 6.4(c)(3) below. For purposes of this mandatory cash-out provision, if the value of a Participant’s vested account balance is zero, the Participant shall be deemed to have received a distribution of such vested account balance on the date of his termination of employment.                                 Within a period of no less than thirty days and no more than ninety days prior to a distribution, the Committee shall provide the Participant notice of his rights to consent to the distribution in accordance with Code §411 and §417 and applicable Commissioner’s regulations thereunder; provided that, subject to the rules relating to the timing of distributions in Section 6.4(c)(3) below, such distribution may commence less than thirty days after such notice is given, if (i) the Committee clearly informs the Participant that the Participant has a right to a period of at least thirty days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), (ii) the Participant, after receiving the notice, affirmatively elects a distribution, and (iii) the distribution commences more than seven days after such notice is provided.                                 (3)        Distributions to a Participant, Beneficiary or Alternate Payee who has consented to payment to the extent required under Subsection (2) above shall be made as soon as administratively practicable following the Valuation Date following the date on which the Participant, Beneficiary or Alternate Payee has become entitled to payment under the foregoing, subject to the following exceptions:                                              (i)        Distributions to the extent required by Code §401(a)(9) may be made at other times as required by law; and                                              (ii)        Notwithstanding the foregoing, in any event where the Trustee has determined that the value of the Trust has declined since the last Valuation Date in a manner which would cause the distribution of Plan assets based on the prior Valuation Date to injure other Plan Participants or where the Trustee is unable to liquidate assets due to securities laws or other circumstances beyond the Trustee’s control, then distributions under this Plan will - 40 - be delayed (except to the extent required in Code §401(a)(9) and the regulations thereunder) until the next Valuation Date as of which such circumstances no longer exist.                       (d)        Method of Payment: Subject to subsection (e) below and to the spousal consent requirements of Section 6.2, and also subject to any Beneficiary’s right to waive his right to receive Plan benefits, a Participant may direct the Committee to distribute his benefits in a lump sum. No periodic payments are permitted under this Plan.                       (e)        When Distribution Must be Completed and Minimum Amount of Periodic Payments:                                     (1)      Before Death of Participant: Anything to the contrary in this Plan notwithstanding, the entire interest of a Participant or Former Participant in the Plan must be distributed to him not later than the required beginning date indicated below:                                              (i)        With respect to any Participant (other than a Five Percent Owner) reaching age seventy and one-half after 1998, the required beginning date of a Participant is April 1 of the calendar year following the calendar year in which the Participant attains age seventy and one-half or the calendar year he retires, if later.                                              (ii)        With respect to a Five Percent Owner reaching age seventy and one half, the required beginning date is April 1 of the calendar year following the calendar year in which the Participant attains age seventy and one-half.                                              (iii)        With respect to any prior to 1998, the required beginning date is April 1 of the calendar year following the calendar year in which the Participant attains age seventy and one-half; provided, that:                                                           (A)        Any Participant (other than a Five Percent Owner) attaining age seventy and one-half in years after 1995 may elect by April 1 of the calendar year following the year in which the Participant attained age seventy and one-half (or by December 31, 1997 in the case of a Participant attaining age seventy and one-half in 1996) to defer distributions until the calendar year following the calendar year in which the Participant retires. If no such election is made, the Participant will receive a distribution by the April 1 of the calendar year following the year in which the Participant attained age seventy and one-half (or by December 31, 1997 in the case of a Participant attaining age seventy and one-half in 1996).                                                           (B)         Any Participant (other than a Five Percent Owner) reaching age 70½ in years prior to 1997 may elect to not take a distribution until April 1 of the calendar year following the year in which the Participant retires.                                              (iv)        The entire interest of a Participant must be distributed as a lump sum to such Participant or Former Participant not later than the required beginning date specified above. - 41 -                                 (2)         After Death of Participant (or Surviving Spouse): If a Participant or Former Participant dies before distribution of the Participant’s or Former Participant’s interest in the Plan has commenced, then distribution of such interest of the Participant or Former Participant must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s or Former Participant’s death.                                 (3)        Forms of Benefit: Nothing in this Section shall be construed as permitting distribution in a form other than the lump sum form permitted under the other Sections of this Article VI.                                 (4)        Commissioner’s Regulations: This subsection (e) shall be construed in accordance with the Commissioner’s Regulations promulgated under Code §401(a)(9).                       (f)        Form of Payment: The amount which a Participant, Former Participant, or Beneficiary is entitled to receive at any time and from time to time may be paid in cash or in securities, or in any combination thereof, provided no discrimination in value results therefrom.                       (g)        Direct Rollover Option: This subsection applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee’s election under this subsection, a Distributee who otherwise has become entitled to a distribution under the Plan may elect, at the time and in the manner prescribed by the Committee to have any portion of that distribution which is an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. The Committee may establish rules whereby rollovers are not permitted in cases where the anticipated annual distribution is less than $200, in cases where the Participant wishes to have a portion of the distribution paid to him but the entire distribution is $500 or less, where the Participant seeks a rollover to more than one Eligible Retirement Plan, and in other limited circumstances permitted by the Commissioner.      6.5         Hardship Withdrawals by Participants:                   (a)        Withdrawals: Upon a written application to the Committee demonstrating Hardships (as defined below), a Participant may withdraw from his Employer Contribution Account, his Rollover Account and his Salary Deferral Account, an amount up to the total of (1) the value of the vested portion of his Employer Contribution Account as of the Valuation Date preceding the date of withdrawal; plus (2) the value of his Rollover Account as of the Valuation Date preceding the date of withdrawal; plus (3) the value of his Salary Deferral Account (subject to the limitations in this Section ) as of the Valuation Date preceding the date of withdrawal up to the amount authorized by virtue of Hardship. The amount of withdrawn funds from the Employer Contribution Account, Rollover Account, and Salary Deferral Account cannot be less than $500.00 nor in an amount in excess of the amount required by the Hardship and not reasonably available from other resources of the Participant.                       No withdrawals may be made from the vested portion of a Participant’s Employer Contribution Account until the full amount permissible has been withdrawn from his Rollover - 42 - Account, and no withdrawals may be made from a Participant’s Salary Deferral Account until the full amount permissible has been withdrawn from his Employer Contribution Account.                       (b)        Definition of Hardship: The determination of Hardship shall be made by the Committee using uniform, non-discriminatory and objective standards and shall be limited to genuine financial emergencies when the Participant has an immediate and heavy financial need of the funds and the funds are not reasonably available from other resources of the Participant. The amount of an immediate and heavy financial need may include any amounts necessary to pay federal, state or local income taxes or penalties reasonably anticipated to result from the distribution. Hardships justifying withdrawal shall be limited solely to the (1) costs directly related to the purchase of a primary home for the Participant (not including mortgage payments); (2) the need to prevent the eviction of a Participant from his principal residence or foreclosure on the mortgage of the Participant’s principal residence; (3) paying tuition, related educational fees and room and board expenses for the next twelve months of post-secondary education of the Employee, his spouse, children or dependents; (4) providing income for medical expenses described in Code §213(d) incurred by the Participant, his spouse, or any of his dependents (as defined in Code §152) or necessary for these persons to obtain such medical care; or (5) other hardships deemed immediate and heavy financial needs under the Commissioner’s regulations; provided, that the interpretation of Hardship shall in all cases be consistent with final regulations issued under Code §401(k).          6.6        Loans to Participants: Loans shall be available to Participants and Beneficiaries on a reasonably equivalent basis and in accordance with written procedures and rules adopted by the Committee which shall be considered a part of this Plan. Any amendments to such written procedures and rules also shall be in writing, shall be adopted by the Committee, and shall be considered a part of this Plan. Loan repayments will be suspended under the Plan as permitted under Code §414(u)(4).          6.7        Distributions Pursuant to Qualified Domestic Relations Orders:                       (a)        Payments to an Alternate Payee Under a Qualified Domestic Relations Order: The Committee shall pay benefits to the Alternate Payee(s) in accordance with the terms of this Section, any government regulations adopted under ERISA §206, and the applicable provisions of any Qualified Domestic Relations Order entered by a court of competent jurisdiction on or after January 1, 1985. In the case of a Domestic Relations Order entered by a court of competent jurisdiction before January 1, 1985, the Committee (1) shall treat such order as a Qualified Domestic Relations Order under this Section if the Committee is paying benefits pursuant to such order on January 1, 1985 and (2) may, in its discretion, treat any other such order as a Qualified Domestic Relations Order under this Section even if such order does not meet the requirements therefor.                       (b)        Plan Procedures Relative to Qualified Domestic Relations Orders:                            (1)        Notification: Following its receipt of any Domestic Relations Order, the Committee shall promptly notify in writing the affected Participant or Former Participant and Alternate Payee(s) of its receipt of the order, and shall furnish such persons a copy of the order and of these Plan procedures (and any other procedures which may have been - 43 - adopted by the Committee) for determining whether the order is a Qualified Domestic Relations Order. This notice and all other notices pursuant to this Section will be sent to the address included in the Domestic Relations Order (or to such other address as is known to the Committee or as may thereafter be specified in writing by the addressee). Any Alternate Payee shall be permitted to designate a representative for receipt of copies of notices that are to be sent to the Alternate Payee.                                 (2)        Determination of Committee: Within a reasonable time after receipt of the Domestic Relations Order, the Committee shall examine the Domestic Relations Order in light of any comments received and in light of applicable law and regulations, and shall make one of three determinations: (i) that the order is a Qualified Domestic Relations Order; (ii) that the order is not a Qualified Domestic Relations Order; or (iii) that the determination of whether the order is a Qualified Domestic Relations Order should be submitted to and made by a court of competent jurisdiction. If, within eighteen months from the date on which the first payment of benefits would be required to be made under such order, the Committee or court of competent jurisdiction determines that the order (or modification thereof) is a Qualified Domestic Relations Order, the Committee shall pay any separately accounted-for amounts (plus adjustments required by the order) to the specified Alternate Payee, and thereafter shall pay the Alternate Payee the amount specified by the Qualified Domestic Relations Order. If, within the aforesaid eighteen month period, the Committee or a court of competent jurisdiction determines that the order is not a Qualified Domestic Relations Order, or the question of whether the order is a Qualified Domestic Relations Order is not so determined, then the Committee shall pay any amounts (plus any Income or allocated interest or earnings thereon) separately accounted for below to the Participant, Former Participant or other person or persons who would have been entitled thereto if there had been no Domestic Relations Order. Any determination other than that an order is a Qualified Domestic Relations Order after the close of the aforesaid eighteen month period shall be applied prospectively only.                                 (3)        Separate Accounting of Participant’s and Alternate Payee’s Benefits: During any period in which the Participant otherwise would have had a right to payment of Plan benefits and in which the issue of whether an order is a Qualified Domestic Relations Order is being determined, the Committee shall separately account for (but need not physically escrow) the amounts as to which the Participant or Former Participant otherwise would have had a right to payment during such period and which amounts would have been payable to the Alternate Payee during such period if the order had been determined to be a Qualified Domestic Relations Order. Amounts determined to be payable to an Alternate Payee in accordance with a Qualified Domestic Relations Order (or otherwise separately accounted for by this subsection) shall not be considered to be part of the Participant’s account with respect to any other spouse or beneficiary of the Participant.                                 (4)        Expenses of Domestic Relations Order: To the extent permitted by the Code and ERISA, all unusual or unreasonable fees and expenses incurred by the Plan, the Committee and/or the Trustee in evaluating and effecting a Domestic Relations Order above and beyond the usual costs of such an Order may be charged to the Employer Contribution Account, Rollover Account or Salary Deferral Account of the Participant with respect to whom the Domestic Relations Order was received; provided, that if a separate account is established for an Alternate Payee pursuant to a Qualified Domestic Relations Order, such unusual or unreasonable - 44 - fees and expenses shall be charged equally to the Participant’s Plan accounts and the Alternate Payee’s Plan accounts. Such fees and expenses may include, but need not be limited to, attorneys’ fees, accountants’ fees, court costs, mailing expenses and other unusual or unreasonable expenses attributable to the Domestic Relations Order.                        (c)        Notification of Pending Order: In the event the Committee is notified in writing by the attorney representing a potential Alternate Payee that the attorney has commenced legal action in a court of competent jurisdiction and has requested a Qualified Domestic Relations Order or will request an Order in connection with such legal action, the Committee may delay any distribution from the Plan for which the Participant is eligible until such time as the court makes a disposition with respect to the Order or the pending action or such earlier time as the Participant and potential Alternate Payee otherwise agree in writing.                       (d)    Definitions:                                (1)        Alternate Payee: Any spouse, former spouse, child or other dependent of a Participant or Former Participant who is recognized by a Domestic Relations Order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to such Participant or Former Participant.                                (2)         Domestic Relations Order: Any judgment, decree or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of a Participant, and is made pursuant to a state’s domestic relations law or community property law.                                (3)        Qualified Domestic Relations Order: A Domestic Relations Order which:                                              (i)        Creates or recognizes the existence of an Alternate Payee’s right to, or assigns to an Alternate Payee the right to, receive all or a portion of the Plan benefits payable with respect to a Participant or Former Participant; and                                              (ii)        In the order clearly specifies (A) the name and last known mailing address (if any) of the Participant or Former Participant, and of each Alternate Payee covered by the order, (B) the amount or percentage of the Participant’s or Former Participant’s benefits to be paid by the Plan to each Alternate Payee, or the manner in which such amount or percentage is to be determined, (C) the number of payments or period to which such order applies, and (D) each plan to which such order applies; and                                              (iii)        Does not require the Plan to provide any type or form of benefit, or any option, not otherwise provided by the Plan; and                                              (iv)        Does not require the Plan to provide increased benefits, determined on the basis of actuarial value; and - 45 -                                              (v)        Does not require the payment of benefits to an Alternate Payee which are required to be paid to another Alternate Payee under another order previously determined to be a Qualified Domestic Relations Order; and                                              (vi)        In the case of any payment before a Participant has separated from Service, does not require payment to the Alternate Payee before the earlier of (A) the date the Participant or Former Participant is entitled to a distribution under the Plan, or (B) the later of the date the Participant or Former Participant attains age fifty or the earliest date on which he could begin receiving benefits if he separated from Service; and                                              (vii)        In the case of an order which requires benefits to be paid to an Alternate Payee as if the Participant had retired on the date payment is to begin under such order, only takes into account the present value of benefits actually accrued using, in the event the Plan is a defined benefit plan, the interest rate specified in the Plan for determining actuarial equivalence, (or five percent if no interest rate is specified); and                                              (viii)        Requires payment in a form provided by the Plan, except that in no event may payment be in the form of a joint and survivor annuity with respect to the Alternate Payee and his subsequent spouse. - 46 - ARTICLE VII. TRUST FUND AND THE TRUSTEE          7.1         Trust Fund: All contributions under this Plan shall be paid to the Trustee and deposited in the Trust Fund. All assets of the Trust Fund, including investment income, shall be retained for the exclusive benefit of Participants, Former Participants, and Beneficiaries and shall be used to pay benefits to such persons or to pay administrative expenses of the Plan and Trust Fund to the extent not paid by the Employer, and shall not revert to or inure to the benefit of the Employer except as specifically provided by the Plan. The provisions of this Article VII shall apply regarding the Trust Fund, except to the extent that the Employer has subsequently executed a separate trust document with the Trustee in which case the terms of that separate trust document shall control.          At the Employer’s request, a contribution made to the Trust under a good faith mistake of fact or a good faith mistake in determining the deductibility of a contribution will revert and be returned to the Employer in the amount determined as follows: The amount which may be returned is the amount contributed minus the amount which would have been contributed in the absence of the mistake, exclusive of earnings thereon but reduced by losses attributable thereto; provided, no Participant’s account may be reduced by the reversion to an amount less than the account would have been if the mistake had not occurred. If the Plan fails to qualify upon its initial submission to the Internal Revenue Service for a determination under the Code, the entire assets of the Trust will revert to the Employer, except that Salary Deferral Contributions, and rollover contributions shall be returned to the Participant making or electing such contributions. In either case, the return to the Employer of the appropriate amount must be made within one year of the mistaken payment of the contribution or disallowance of the deduction or the date of denial of qualification.          7.2         Trustee: The Trustee shall receive, hold, invest, administer, and distribute the Trust Fund in accordance with the provisions of the Plan as herein set forth. The interest of others in the assets of the Trust Fund shall be only the right to have such assets received, held, invested, administered, and distributed in accordance with the provisions of the Plan.          7.3         Records and Accounts of Trustee: The Trustee shall maintain accurate and detailed records and accounts of all transactions of the Plan, which shall be available at all reasonable times for inspection or audit by any person designated by the Employer and by any other person or entity to the          7.4         Basis for Accounts: All accounts of the Trustee shall be kept on a consistent basis and shall be based on the fair market value of the assets held in the Trust Fund.          7.5         Annual Reports: As soon as practicable following the close of each Plan Year and following the effective date of the termination of the Plan, the Trustee shall file with the Committee, as the Plan Administrator, a written report setting forth all transactions with respect to the Trust Fund during such Plan Year or during the period from the close of the last Plan Year to the date of such termination and listing the assets of the Trust Fund and the fair market value thereof as of the close of the period covered by such report. The Trustee also shall provide the Committee, as the Plan Administrator, with such other information in its possession as may be - 47 - necessary for the Committee and the Employer to conform with the requirements of ERISA §103.          7.6         Investment of the Trust Fund: Except as otherwise provided in the Plan, the net income and profits of the Trust Fund shall be accumulated, added to the principal of the Trust Fund and invested and reinvested therewith as a single fund. Subject to direction by the Investment Manager or the Committee, the Trustee is authorized to invest the Trust Fund in such bonds, notes, debentures, mortgages, equipment trust certificates, investment trust certificates, preferred or common stocks, open-end and closed-end mutual funds, deposit administration contracts, fixed and variable annuity or other insurance contracts, and in such other property, real or personal, within the United States, as the Trustee may deem advisable, subject to the provisions of ERISA §§404 and 406. Furthermore, the Trustee may invest up to fifty percent of the total value of the Trust Fund represented by Employer Contribution Accounts at the time of such investment in qualifying Employer securities of the Employer and/or in qualifying Employer real property of the Employer as those terms are defined in ERISA, and any investment presently maintained in Employer’s securities and/or real property may be continued, subject to the provisions of ERISA. In addition, the Trustee is authorized to invest the Trust Fund in other investments identified herein, in accordance with investment direction received from a Participant, to the extent the Plan is Participant directed, or from an Investment Manager appointed as a Named Fiduciary of the Plan. Notwithstanding the foregoing, no monies in a Participant’s Salary Deferral Account, Rollover Account, or other monies derived from a Participant’s “buy-back” of Forfeitures (as described in Section 4.6) actually may be invested in Employer securities unless it is established that such Plan investments have been registered or otherwise approved under relevant securities laws. The Trustee in its discretion may hold in cash such portion of the Trust Fund as shall be reasonable under the circumstances, pending investment or payment of expenses or distribution of benefits. Trustees may earmark specific investments (including insurance contracts), but only if the Participant for whom such earmarked investment is made has consented to the investment or if such earmarked investments are purchased ratably for all Participants.          7.7         Investments in Pooled Fund: Notwithstanding any other provision of this Article, all or any part of the assets may be invested in any collective investment trust (including a collective investment trust maintained by a bank which is the Trustee) which then provides for the pooling of the assets of plans described in Code §401(a) and exempt from taxation under Code §501(a) (whether or not such collective investment trust provides for the pooling of assets of other tax-exempt trusts), provided that such collective investment trust is exempt from tax under the Code or regulations or rulings issued by the Internal Revenue Service. The provisions of the document governing any such collective investment trust, as amended from time to time, shall govern any investment therein and are hereby made a part of this Plan and Trust.           7.8        Collective Investment Subaccounts:                       (a)         Collective Investment Funds: The Trustee may develop, pursuant to any general investment guidelines or funding policy provided by the Committee, separate Trustee-sponsored or Investment Manager-sponsored or other collective investment funds (which may, without limitation, be pooled funds under Section 7.7, mutual funds or funds in which only this Trust may invest) among which Plan Participants may direct investment of any amounts in their - 48 - accounts, less loans under Section 6.6. Investments of each such collective investment fund shall be managed and otherwise shall be the responsibility of the Trustee (or Investment Manager appointed by the Board of Directors to manage the fund), and separate records shall be maintained to record the performance and Income of each such fund. The Committee shall develop guidelines for collective investments, which guidelines may apply to all Plan Participants or only to certain groups of Participants designated on the basis of age, years of Participation, type of account (for example, Employer Contribution Accounts or Rollover Accounts or accounts relating to a predecessor plan), or other basis, so long as such different groupings do not discriminate in favor of Highly Compensated Employees or violate regulations under Code §401(a)(4).                       (b)        Subaccounts: The Committee shall cause separate subaccounts to be maintained to reflect each Participant’s direction among each collective investment fund, and each such subaccount shall be adjusted each Valuation Date to reflect its share of the Income of the collective investment fund of which it is a part. Distributions and Forfeitures from accounts of a Participant, and contributions allocated to the accounts of a Participant shall be allocated by the Trustee among the Participant’s collective investment subaccounts pursuant to the most recent direction of the Participant, subject to the reasonable rules and procedures of the Committee and Trustee.                       (c)        Direction: Direction among such collective investment funds by a Participant shall be given in writing to the Committee on such forms and pursuant to other reasonable rules and procedures of the Committee and Trustee as to time, percentage and amount. Any such direction once made shall remain in effect as to contributions, Forfeitures and distributions for that Plan Year and succeeding Plan Years, unless the Participant shall file a timely application made in accordance with applicable Committee and Trustee rules and procedures which effectively redesignates the investment of his account. In the event a Participant shall fail for any reason to make an effective direction of his accounts at a time when different collective investment funds are available, then the amounts in his accounts shall be deemed to have been designated to a fund or funds as selected by the Trustee to apply in such instances, subject to any funding policy statement or any other restrictions or guidelines provided by the Committee and to the standards that would be followed by a prudent fiduciary in similar circumstances.          7.9         Trustee’s Powers: The Trustee shall have the following powers, rights and duties in addition to those vested in it elsewhere in the Plan or by law, subject to any funding policy statement or any other restrictions or guidelines by the Committee and to the standards that would be followed by a prudent fiduciary in similar circumstances:                       (a)        Control Assets: To retain, manage, improve, repair, operate and control any assets of the Trust Fund;                       (b)        Dispose of Assets: To sell, convey, transfer, exchange, partition, grant options with respect to, lease for any term (even though such terms extend beyond the duration of this Trust Fund or commence in the future), mortgage, pledge or otherwise deal with or dispose of any asset of the Trust Fund in such manner, for such consideration and upon such terms and conditions as the Trustee, in its discretion, shall determine; - 49 -                       (c)        Bank Deposits: To invest the Trust Fund in deposits (and in certificates of deposit) which bear a reasonable interest rate in any bank, including a bank which is acting as Trustee;                       (d)        Employ Agents: To employ such agents and counsel as may be reasonably necessary in collecting, managing, administering, investing, distributing and protecting the Trust Fund or the assets thereof and to pay them reasonable compensation;                       (e)        Claims: To litigate, settle, compromise or abandon all claims and demands in favor of or against the Trust Fund;                       (f)        Borrow Money: To borrow money for the Trust Fund from anyone, other than a “party in interest” as defined in Section 3(14) of ERISA, with or without giving security from the Trust Fund;                       (g)        Deal with Corporations: To vote any corporate stock either in person or by proxy for any purpose; to exercise any conversion privilege, subscription right, or any other right or option given to the Trustee as the owner of any security owned by the Trust Fund and to make any payments incidental thereto; to consent to, take any action in connection with, and receive and retain any securities resulting from any reorganization, consolidation, merger, readjustment of the financial structure, sale, lease, or other disposition of the assets of any corporation or other organization, the securities of which may be an asset of the Trust Fund;                       (h)         Organize Corporations: To organize and incorporate (or participate in the organization or incorporation of) under the laws of any state, a corporation for the purpose of acquiring and holding title to any property which the Trustee is authorized to acquire for the Trust Fund and to exercise with respect thereto any of the powers, rights and duties it has with respect to other assets of the Trust Fund;                       (i)        Facility of Title: To cause title to the assets of the Trust Fund to be held in the name of the Trustee, in the name of a nominee, in a broker’s street name, in bearer form so that title will pass by delivery, or in any other manner authorized by applicable law in effect from time to time, provided the records of the Trustee shall indicate the true ownership of such asset; and                       (j)        General Powers: To exercise any of the powers and rights of an individual owner with respect to any property of the Trust Fund and to do all other acts in its judgment necessary or desirable for the proper administration of the Trust Fund although the power to do such acts is not specifically set forth herein; and                       (k)        Sub-Trust: The Employer may authorize the Trustee to establish one or more Sub-Trusts to hold designated assets separately from other assets of the Plan.          7.10        Consultation with Counsel: The Trustee may consult with legal counsel, who may be counsel for the Employer, in respect to any of its rights, duties or obligations hereunder.          7.11        Compensation and Expenses: All reasonable costs, charges and expenses incurred by the Trustee in connection with its administration of the Plan and Trust Fund - 50 - (including, without limitation, fees for legal or accounting services rendered to the Employer, Trustee and/or Committee, fees for investment advisors and related services, and such reasonable compensation to the Trustee as may be agreed upon from time to time between the Employer and the Trustee) may be paid by the Employer, but if not paid by the Employer, shall be paid from the Trust Fund. The Trustee also may reimburse the Employer for such reasonable costs, charges and expenses related to the administration of the Plan and Trust in accordance with applicable regulations under ERISA. Provided, however, a Trustee who is an Employee of the Employer shall not receive any compensation from the Trust Fund for serving as Trustee (although such compensation may be paid by the Employer), but may be reimbursed from the Trust Fund or by the Employer for reasonable costs and expenses incurred by him in connection therewith.         Any administration expense paid to the Trust Fund as a reimbursement shall not be considered an Employer Contribution.          7.12        Resignation, Removal, and Successor Trustee:                       (a)        Resignation of Trustee: The Trustee may resign from the Trust at any time by giving sixty days prior written notice thereof to the Employer, and such resignation shall take effect sixty days from the date of the delivery of such written notice (or at such earlier time agreed to by the Employer and the Trustee), or upon the appointment of a successor Trustee pursuant to Section 7.12(c), whichever shall first occur. Upon such resignation becoming effective, the Trustee shall render to the Employer an account of the administration of the Plan during the period following that which was covered by the last annual accounting, and the Trustee shall perform all acts necessary to transfer and deliver the assets of the Trust and any and all information in connection therewith or the administration thereof to its successor Trustee. Notwithstanding the foregoing, even in the event of a Trustee’s resignation or any other removal or termination, a Trustee in all events shall retain its on-going fiduciary relationship with the Plan and its assets and Participants to the extent it has not yet completely transferred all assets and relevant information to the successor Trustee.                       (b)        Removal of Trustee: The Employer may remove the Trustee at any time upon the delivery of prior written notice thereof to the Trustee. In the event of such removal, the Trustee shall be under the same duties to account and to transfer and deliver the assets of the Trust and any and all information in connection therewith or the administration thereof to its successor Trustee as provided hereinabove in the event of the Trustee’s resignation.                       (c)        Successor Trustee: In the event of a vacancy in the trusteeship of the Plan occurring at any time, the Employer shall designate and appoint a qualified successor Trustee of the Plan. Any successor Trustee shall have all the rights and powers and all of the duties and responsibilities herein conferred upon the original Trustee. If a successor Trustee is not appointed within sixty days after the Trustee gives notice of its resignation pursuant to Section 7.12(a) above, the Trustee may apply to any court of competent jurisdiction for appointment of a successor, and the expenses of such application may be paid by the Employer, but if not paid by the Employer, shall be paid by the Trust Fund. - 51 -         7.13          Acts of Multiple Trustee: If the Trustee consists of more than one individual or entity, all acts and decisions of the Trustee shall be by vote of the majority of them, provided, that the signature on any document (other than an amendment to the Plan or Trust provisions requiring the Trustee’s written consent under Section 11.1) of any one such individual or entity constituting the Trustee shall be sufficient evidence to any party that such document is valid and in accordance with the terms of this Plan and Trust.         7.14          Insurance For Individual Trustee: The Board of Directors may in its discretion act to indemnify and save harmless the Trustee up to the maximum extent permitted under ERISA against any and all claims, losses, damages, expenses and liabilities the Trustee may incur in the exercise and performance of its duties hereunder; provided, that the Board of Directors may limit such indemnification to the extent such actions by the Trustee are determined to be due to gross misconduct, negligence, or as otherwise determined by the Board of Directors. The Plan (at the Committee’s discretion) or the Employer may purchase insurance for the Plan and any or all Fiduciaries to cover any liability or loss resulting from Fiduciary acts or omissions; provided, that any such insurance which is purchased by the Plan with the Plan’s assets must permit recourse by the insurer against the Fiduciary to the extent required by ERISA. - 52 - ARTICLE VIII. ADMINISTRATION Trust Administration: The Fiduciaries shall have only those powers, duties, responsibilities, and obligations as are specifically given them under this Plan and Trust.                       (a)        Employer Responsibilities: In general, the Employer shall have the sole responsibility for making the contributions provided for under Section 4.1 and through its Board of Directors shall have the sole authority to appoint and remove the Trustee, members of the Committee, and any Investment Manager and to amend or terminate, in whole or in part, this Plan and Trust.                       (b)        Committee Responsibilities: The Committee shall have the sole responsibility for the administration of this Plan, which responsibility is specifically described in this Plan and the Trust.                       (c)        Trustee Responsibilities: The Trustee (subject to such directions as may be given by the Committee and/or any Investment Manager) shall have the sole responsibility for the administration of the Trust and the management of the assets held under the Trust, all as specifically provided in the Trust or, if there is a subsequent separate trust document executed by the Employer, as provided in that trust document.                       (d)        Investment Manager Responsibilities: If any Investment Manager is appointed as described above, then it shall have the sole responsibility for the management of the Trust assets under its control. Each Fiduciary warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan and Trust authorizing or providing for such direction, information, or action. Furthermore, each Fiduciary may rely upon any such direction, information or action of another Fiduciary as being proper under this Plan and Trust, and is not required under this Plan and Trust to inquire into the propriety of any such direction, information, or action. It is intended under this Plan and Trust that each Fiduciary shall be responsible for the proper exercise of its own powers, duties, and responsibilities and not for any act or failure to act of another Fiduciary. No Fiduciary guarantees the Trust Fund in any manner against investment loss or depreciation in asset value.         8.2          Appointment of Committee: The Plan shall be administered by a Committee consisting of at least one person who shall be appointed by and serve at the pleasure of the Board of Directors. All usual and reasonable expenses of the Committee (including, without limitation, fees for legal services, accounting services and investment related services) may be paid in whole or in part by the Employer, and any expenses not paid by the Employer shall be paid by the Trustee out of the principal or income of the Trust Fund. Except as otherwise provided under ERISA and regulations thereunder, no person who is an Employee of the Employer shall receive any compensation from the Trust Fund with respect to his services for the Committee (although such compensation may be paid to that person by the Employer), but may be reimbursed from the Trust Fund or by the Employer for reasonable costs and expenses incurred in connection - 53 - therewith. Any administrative expenses paid to the Trust Fund as a reimbursement or otherwise shall not be considered an Employer Contribution. In the absence of the appointment of a Committee, the Employer shall be the Plan Administrator whose duties shall include all those duties given to the Committee under this Plan.         8.3          Claims Procedure: The Committee shall make all determinations as to the right of any person to a benefit. All claims for benefits shall be presented by the Participant or his Beneficiary to the Committee on application forms provided by the Committee. Such Participant or Beneficiary will subsequently be notified in writing of acceptance or denial in whole or in part of his claim. In the event of denial, the notification shall specify the reason(s) for denial, refer to Plan provisions on which the denial is based, include a description of any additional material or information necessary and an explanation of why it is necessary, and advise the Participant or Beneficiary of the procedure for appeal of such denial. The Participant or Beneficiary whose claim has been denied shall file a written notice of desire to appeal the denial within sixty days of notification of claim denial by the Committee, including all of the facts upon which the appeal is based. The Committee shall review its original decision within sixty days of the date of appeal. Prior to such review, the Participant or Beneficiary, or his representative may present relevant evidence, written issues and comments. Within sixty days after the review, the Committee shall render a determination upon the appealed claim, accompanied by a written statement as to the reasons therefor. The determination so rendered shall be final and binding upon all parties. Notwithstanding the foregoing, to the extent required by relevant regulations under ERISA, to the extent a claim and appeal thereof involve a determination of Disability under the Plan, the relevant time periods for decision shall be modified, and a special Appeals Committee shall be appointed to hear and determine any appeal which does not consist of any individual who either is on the Committee or reports to a member of the Committee.         8.4         Records and Reports: The Committee shall exercise such authority and responsibility as it deems appropriate in order to comply with ERISA and government regulations issued thereunder relating to records of Participants’ Service, account balances and the percentage of such account balances which are nonforfeitable under the Plan; notifications to Participants; annual registrations with the Internal Revenue Service; and annual reports to the Department of Labor.          8.5        Other Committee Powers and Duties: The Committee shall have such duties and powers as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the following:                       (a)        To construe and interpret the Plan (including, without limitation, any of its terms which are uncertain, doubtful or disputed), decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder;                        (b)        To prescribe requirements, guidelines and procedures to be followed by Participants or Beneficiaries in making Salary Deferral Contributions and in filing applications for benefits, loans or withdrawals;                       (c)        To prepare and distribute, in such manner as the Committee determines to be appropriate, information explaining the Plan; - 54 -                       (d)        To receive from the Employer and from Participants such information as shall be necessary for the proper                       (e)        To furnish the Employer, upon request, such annual reports with respect to the administration of the Plan as are reasonable and appropriate;                       (f)        To receive, review, and keep on file (as it deems convenient or proper) reports of the financial condition, and of the receipts and disbursements, of the Trust Fund from the Trustee;                       (g)        To appoint or employ individuals to assist in the administration of the Plan and Trust, and any other agents it deems advisable, including legal and actuarial counsel;                       (h)        To develop and carry out a funding and/or investment policy in cooperation with the Trustee (and an Investment Manager, if any) consistent with the aims and objectives of the Plan.          The Committee shall have no power to add to, subtract from, or modify any of the explicit terms of the Plan, or to change or add to any specific benefits provided by the Plan, or to waive or fail to apply any specific requirements of eligibility for a benefit under the Plan. However, any construction or interpretation of the Plan’s provisions or decisions as to benefits under this Plan which is adopted by the Committee in good faith shall be binding upon all parties to or Beneficiaries of the Plan, subject only to any administrative intra-Plan rights of review provided by this Plan’s claim procedure.         8.6          Rules and Decisions: The Committee may adopt such rules as it deems necessary, desirable, or appropriate. All rules and decisions of the Committee shall be uniformly and consistently applied to all Participants in similar circumstances. When making a determination or calculation, the Committee shall be entitled to rely upon information furnished by a Participant or Beneficiary, the Employer, the legal counsel of the Employer, or the Trustee.         8.7          Committee Procedures: The Committee may act at a meeting or in writing without a meeting. The Committee shall elect one of its members as chairman, appoint a secretary, who may or may not be a Committee member, and advise the Trustee of such actions in writing. The secretary shall keep a record of all meetings and forward all necessary communications to the Employer or the Trustee. The Committee may adopt such by-laws and regulations as it deems desirable for the conduct of its affairs. All decisions of the Committee shall be made by the vote of the majority including actions in writing taken without a meeting; provided, that the Committee may adopt rules whereby one or more Committee members may act for the Committee either with respect to all Committee duties or only as to specific Committee duties. A dissenting Committee member who, within a reasonable time after he has knowledge of any action or failure to act by the majority, registers his dissent in writing delivered to the other Committee members, the Employer, and the Trustee, shall not be responsible for any such action or failure to act.          8.8         Authorization of Benefit Payments: The Committee shall issue directions to the Trustee concerning all benefits which are to be paid from the Trust Fund pursuant to the provisions of the Plan. - 55 -         8.9         Application and Forms for Benefits: The Committee may require a Participant to complete and file with the Committee an application for a benefit on forms approved by the Committee, and to furnish any other pertinent information requested by the Committee. The Committee may rely upon all such information so furnished it, including the Participant’s current mailing address.         8.10         Facility of Payment: Whenever, in the Committee’s opinion, a person entitled to receive any payment of a benefit or installment of a benefit hereunder is under a legal disability or is incapacitated in any way so as to be unable to manage his financial affairs, the Committee may direct the Trustee to make payments to such person or to his legal representative or to a relative or friend of such person for his benefit, or the Committee may direct the Trustee to apply the payment for the benefit of such person in such manner as the Committee considers advisable. Any payment of a benefit or installment thereof in accordance with the provisions of this Section shall be a complete discharge of any liability for the making of such payment under the provisions of the Plan. Beneficiary: In the event that a Participant, Surviving Spouse or Beneficiary entitled to receive Plan benefits fails to respond or cannot be located by the Committee within six months following the sending of notice by certified mail to his last known address, his Plan benefits shall be declared by the Committee to be forfeited and shall be used to reduce the Employer Contribution on the next Valuation Date. If the Participant, Surviving Spouse or Beneficiary is later located or makes a claim for benefits, any amount treated as a Forfeiture by reason of this Section shall be reinstated by the Committee from a special Employer Contribution or from Forfeitures available in the year of reinstatement.         8.12         Omission of Eligible Employee: If, in any Plan Year, any Employee who should be included as a Participant in the Plan is erroneously omitted and discovery of such omission is not made until after a contribution by the Employer for the year has been made and allocated, the Employer shall make a subsequent contribution with respect to the omitted Employee in the amount which the Employer would have contributed with respect to him had he not been omitted. Such contribution shall be made regardless of whether or not it is deductible in whole or in part in any taxable year under applicable provisions of the Code by such Employer.         8.13         Inclusion of Ineligible Employee: If, in any Plan Year, any person who should not have been included as a Participant in the Plan is erroneously included and discovery of such incorrect inclusion is not made until after a contribution for the year has been made and allocated, the appropriate Employer shall not be entitled to recover the contribution made with respect to the ineligible person regardless of whether or not a deduction is allowable with respect to such contribution. In such event, the amount contributed with respect to the ineligible person shall constitute a Forfeiture for the Plan Year in which the discovery is made.         8.14         Bonding: Every Fiduciary (including any Committee and any employee of the Employer who handles the Plan’s contributions, distributions or assets), except a bank or an insurance company, unless exempted by ERISA and regulations thereunder, shall be bonded in an amount not less than ten percent of the amount of the funds such Fiduciary handles; provided, however, that the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount of funds handled shall be determined at the beginning of each Plan Year by the amount - 56 - of funds handled by such person, group, or class to be covered and their predecessors, if any, during the preceding Plan Year, or if there is no preceding Plan Year, then by the amount of the funds to be handled during the then current year. If the amount handled cannot be determined with reasonable accuracy, then it may be deemed to be the total amount of Plan assets at the end of the preceding Plan Year. The bond shall provide protection to the Plan against any loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in connivance with others. The surety shall be a corporate surety company (as such term is used in ERISA §412(a)(2)), and the bond shall be in a form approved by the Secretary of Labor. Notwithstanding anything in the Plan to the contrary, the cost of such bonds shall be an expense of and may, at the election of the Committee, be paid from the Trust Fund or by the Employer.         8.15         Indemnification: The Employer shall indemnify and save harmless the Committee members to the maximum extent permitted under ERISA against any and all claims, losses, damages, expenses and liabilities the unless such actions are determined to be due to gross negligence or willful misconduct.         8.16         Plan Administrator’s Discretion to Interpret the Plan: It is the Plan settlor’s original intention that the Committee, as Plan Administrator under this Plan (which term includes for these purposes all related documents, including, but not limited to, insurance or trust documents), in addition to the authority granted in Section 8.5 above, has discretionary authority to interpret and construe this Plan’s provisions as necessary to determine eligibility for benefits and otherwise to construe disputed, doubtful or uncertain terms under the Plan. - 57 - ARTICLE IX. ALLOCATED INSURANCE CONTRACTS         9.1         Purchase of Allocated Insurance Contracts: Subject to the limitations as set forth in Section 9.4(a) hereof, the Trustee shall invest such portion or percentage of each Participant’s Salary Deferral Account and/or Employer Contribution Account in individual allocated insurance contracts as the Committee may direct. All premium payments on such insurance contracts shall be an investment for the account of the Participant for whom such contract is issued. The balance of such Participant’s Employer Contribution Account after the payment of such premiums shall, together with such insurance contracts and his employee after-tax contribution account, if any, constitute the Participant’s account.         9.2         Types of Allocated Insurance Contracts: The types of allocated insurance contracts to be made available shall be fixed by agreement between the Committee and the Insurer and may be modified from time to time. Such types may include, but need not be limited to, ordinary life insurance policies with cash values.         9.3         Ownership and Beneficiary of Allocated Insurance Contracts: Any allocated insurance contract issued hereunder shall be held by the Trustee as owner and beneficiary thereof and shall provide that the right to change the beneficiary and to exercise all options and privileges available under the contract shall vest in the Trustee. Such options and privileges shall be exercised only in accordance with the terms of this Plan and Trust.          9.4        Special Provisions Affecting Allocated Insurance Contracts:                       (a)        Limitation on Amount: The aggregate of the premiums paid by the Trustee from Employer Contributions (including contributions made under §401(k) of the Code) with respect to any Participant:                                 (1)        for ordinary life insurance protection, shall always be less than fifty percent; or                                 (2)        for term, universal life insurance protection and all other life insurance contracts that are not ordinary life insurance, shall always be less than twenty-five percent; or                                 (3)        where there is both ordinary, term and/or universal life insurance with respect to a Participant, the sum of one-half of the ordinary life premium(s) and all other life insurance premiums shall always be less than twenty-five percent of the aggregate of the Salary Deferral Contributions plus all Employer Contribution(s) made on behalf of such Participant at any time without regard to Trust earnings, capital gains and losses. If at any time the total investment of a Participant’s account in life insurance premiums, together with the current premium payable, equals or exceeds the maximum above specified, the amount of life insurance in effect with respect to said Participant’s account shall be reduced so that the premium test herein set forth shall be satisfied. - 58 -                       (b)        Valuation of Allocated Insurance Contracts: Allocated insurance contracts shall have a value as determined by the Insurer on the basis of the then current cash value thereof and any accumulations attributable to such contracts by reason of interest or dividend credits. All insurance contracts held as investments by individual accounts shall be valued at zero for the purposes of allocating Income to said individual accounts.                       (c)        Dividends: All dividends payable on allocated insurance contracts held under the terms of this Plan and forming a part of the Trust shall be held by the Insurer and, at the direction of the Participant, shall be used to purchase paid-up additions, or shall be held by the Insurer at interest or shall be paid to the Trustee to be invested in such manner as the Committee may direct.                       (d)        Termination of Employment: Upon a Participant’s termination of employment, subject to the vesting provisions of Section 6.3 hereof, any allocated insurance contract(s) held for such Participant may be (i) surrendered by the Trustee for its cash value, (ii) assigned by the Trustee to the Participant, or (iii) purchased by the Participant from the Trustee.                       (e)        Retirement: At or before the retirement of a Participant, the Trustee shall, at the direction of the Committee, (i) convert the entire value of insurance contracts held as an investment for such Participant’s individual account which provide ordinary life insurance protection into cash, or (ii) distribute such contracts to the Participant; provided that if no annuity distribution option is provided under Article VI, then no insurance contract which is distributed shall contain an annuity option.                       (f)        No Annuity Options Permitted: No insurance contract may be distributed in kind to any Participant, Former Participant, or Beneficiary which is in the form of a life annuity or which contains a life annuity conversion option.          9.5         Death Prior to Issuance of Allocated Insurance Contract: If a Participant shall die after the Trustee has been directed by the Committee to invest a percentage of the contribution made on such Participant’s behalf in insurance contracts, but before a policy shall be in force on his life, there shall be paid to the Beneficiary designated pursuant to Section 6.2(b) hereof death benefits in accordance with the provisions of Section 6.2 hereof as if such direction had not been given. and/or Children: Benefits payable with respect to a life insurance policy on the life of a Participant’s spouse or children shall be paid to the Participant’s account to the extent of the cash value of the policy on the date of the spouse’s or child’s death. Any benefits in excess of the cash value shall be paid directly to the Participant.          9.7         Status of Insurer: The Insurer by issuing allocated insurance contracts pursuant to the Plan shall be deemed to agree to supply annually such information about each transaction affecting a Participant as the Secretary of the Treasury or his delegate or any other regulatory officials, state or federal, shall prescribe, and otherwise to comply with the terms of this Plan and Trust. - 59 - ARTICLE X. MISCELLANEOUS         10.1         Nonguarantee of Employment: Nothing contained in this Plan shall be construed as a contract of employment between the Employer and any Employee, or as a right of any Employee to be continued in the employment of the Employer, or as a limitation of the right of the Employer to discharge any of its Employees, with or without cause.         10.2         Rights to Trust Assets: No Employee or Beneficiary shall have any right to, or interest in, any assets of the Trust Fund upon termination of his employment or otherwise, except as provided from time to time under this Plan, and then only to the extent of the benefits payable under the Plan to such Employee out of the assets of the Trust Fund. All payments of benefits as provided for in this Plan shall be made solely out of the assets of the Trust Fund and none of the Fiduciaries shall be liable therefor in any manner.         10.3         Nonalienation of Benefits: The Trust Fund shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements, or torts of any person entitled to benefits hereunder. Benefits payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a spouse or former spouse, or for any other relative of the Employee, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder, shall be void. The preceding sentence shall not apply to (a) the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to an order which is determined under Section 6.7 to be a Qualified Domestic Relations Order as defined in Code §414(p), which was entered into on or after January 1, 1985 or (b) any other alienation permitted under Code §401(a)(13) or rules and regulations thereunder. Provided, that a Beneficiary who has been designated in accordance with Article VI to receive benefits in the event of a Participant’s death may elect to disclaim all or any part of such benefits in favor of another designated Beneficiary.          10.4        Discontinuance of Employer Contributions: In the event of permanent discontinuance of contributions to the Plan by the Employer, the accounts of all Participants shall, as of the date of such discontinuance, become nonforfeitable. - 60 - ARTICLE XI. AMENDMENTS AND ACTION BY EMPLOYER         11.1         Amendments: The Parent Company reserves the right from time to time to make any amendment or amendments to this Plan, including its related Trust, which does not cause any part of the Trust Fund to be used for, or diverted to, any purpose other than the exclusive benefit of Participants, Former Participants, or their Beneficiaries; provided, however, that the Parent Company may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA. No action of the participating Employers will be required to implement or effectuate any amendment to the Plan made by the Parent Company. The procedure followed for making any amendment shall consist of the preparation of a written Plan amendment and its execution by one or more officers of the Parent Company. Such amendment may, but need not, be authorized (or later ratified) by the Parent Company’s Board of Directors. The Trustee“s signature on the Plan’s documents (including any Plan amendments) shall not be necessary and shall only indicate the Trustee’s receipt of those documents and its consent to any amendment to the Trust provisions of Article VII.           No amendment made by the Parent Company shall:                       (a)        Reduce the vested percentages (determined without regard to such amendment as of the later of the date the amendment was adopted or the date the amendment was effective) of any Participant; or decrease the balance in any Participant’s account; or eliminate an optional form of benefit in violation of Code §411(d)(6) and regulations thereunder, with respect to benefits attributable to Service prior to the amendment; or                       (b)        Provide for the use of any portion of the Trust Fund for any purpose other than for the exclusive benefit of Participants and Beneficiaries, or provide that any portion of the Trust Fund shall ever revert to or be used by the Employer, except as provided in Section 7.1.         11.2         Special Rules Regarding Amendments Relating to Vesting: In the event the vesting provisions of the Plan are amended, each Participant in the Plan who has three (or five in the case of a Participant who does not have at least one Hour of Service with the Employer for Plan Years beginning after December 31, 1988) or more Years of Service shall be given an election to have the nonforfeitable percentage of his Employer Contribution Account determined without regard to such amendment. The election period will begin on the date the amendment is adopted and will end on the last to occur of (a) sixty days after the day the amendment is adopted, (b) sixty days after the day the amendment becomes effective, and (c) sixty days after the date the Participant is given written notice of the amendment and of the election by the Employer or the Committee. If the election, as herein provided, is not given to any such Participant, his nonforfeitable percentage under the Plan, as amended, cannot at any time be less than such percentage determined without regard to such amendment.         11.3         Action by Employer: Any action by the Parent Company or any Employer under this Plan may be by resolution of its board of directors, or by any person or persons duly authorized by said board or having apparent authority by virtue of his corporate office to take such action. - 61 - ARTICLE XII. SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS         12.1         Successor Employer: In the event of the dissolution, merger, consolidation, or reorganization of the Employer, provision may be made by which the Plan and Trust will be continued by the successor; and, in that event, such successor shall be substituted for the Employer under the Plan. The substitution of the successor shall constitute an assumption of Plan liabilities by the successor and the successor shall have all of the powers, duties, and responsibilities of the Employer under the Plan.         12.2         Plan Assets in the Event of Merger or Consolidation of Plan: In the event of any merger or consolidation of the Plan with (or transfer in whole or in part of the assets and liabilities of the Trust Fund to) another trust fund held under any other plan of deferred compensation maintained or to be established for the benefit of all or some of the Participants of this Plan, the assets of the Trust Fund applicable to such Participants shall be transferred to the other trust fund only if: the other plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer (if this Plan had then terminated);                       (b)        The Parent Company shall authorize such transfer of assets; and, in the case of the new or successor employer of the affected Participants, such authorization shall include an assumption of liabilities with respect to such Participants’ inclusion in the new employer’s plan; and                       (c)        Such other plan and trust are qualified under Code §401(a) and §501(a). - 62 - ARTICLE XIII. PLAN TERMINATION         13.1         Right to Terminate: In accordance with the procedure set forth in this Article, the Employer may terminate the Plan at any time. In the event of the dissolution, merger, consolidation, or reorganization of the Employer, the Plan shall terminate and the Trust Fund shall be liquidated unless the Plan is continued by a successor to the Employer in accordance with Section 12.1.         13.2         Partial Termination: Upon termination of the Plan with respect to a group of Participants which constitutes a partial termination of the Plan, the accounts of all Employees affected thereby shall become fully vested and nonforfeitable. The Trustee shall, in accordance with the directions of the Committee, allocate and segregate for the benefit of the affected Employees then or theretofore employed by the Employer with respect to which the Plan is being terminated the amount necessary to pay the proportionate interest of such Employees who are Participants in the Trust Fund. The funds so allocated and segregated shall be used by the Trustee to pay benefits to or on behalf of all affected Employees in accordance with Article VI.         13.3         Liquidation of the Trust Fund: Upon complete termination of vested and nonforfeitable, and the Committee shall direct the Trustee to distribute (or transfer directly in accordance with Section 6.4(g)) the assets remaining in the Trust Fund, after payment of any expenses properly chargeable thereto, to Participants, Former Participants, and Beneficiaries in proportion to their respective account balances; provided, however, that any amounts properly allocated to the Plan’s Suspense Account, pursuant to Section 5.3 of the Plan, shall upon termination of the Plan revert to the Employer. For purposes of calculating Forfeitures with respect to any Former Participants who were not employed on the Plan’s termination date, but who still had account balances in the Plan immediately prior to the Plan’s termination, such Former Participants’ vested percentages shall be calculated in accordance with the Plan’s vesting schedule immediately prior to the Plan’s termination. Any amounts not vested with respect to such Former Participants shall be treated as a Forfeiture under the Plan, and such Former Participants shall be treated as if they had incurred five consecutive Breaks in Service as of the date of Plan termination.         13.4         Forfeitures: Upon a partial or complete termination of the Plan, for purposes of calculating Forfeitures with respect to any Former Participants who were not employed on the Plan’s termination date, but who still had account balances in the Plan immediately prior to the Plan’s termination, such Former Participants’ vested percentages shall be calculated in accordance with the Plan’s vesting schedule in effect on each such Former Participant’s date of termination of employment with the Employer. Any amounts not vested with respect to such Former Participants shall be treated as a Forfeiture under the Plan, and such Former Participants shall be treated as if they had incurred five consecutive Breaks in Service as of the date of Plan termination.         13.5         Manner of Distribution: To the extent that no discrimination in value results, any distribution after termination of the Plan may be made, in whole or in part, in cash, in securities or other assets in kind, as the Committee (in its discretion) may determine; provided, that if no - 63 - annuity distribution option is permitted under Article VI of the Plan, then no distribution upon termination may include an annuity. All noncash distributions shall be valued at fair market value at the date of distribution. - 64 - ARTICLE XIV. RELATED CORPORATIONS         14.1         Joinder: Any corporation or other entity which is related to the Employer by stock or other equity ownership may adopt this Plan and Trust with the consent of the Parent Company.         14.2         Contributions: Each corporation or entity which joins the Plan and Trust and thereby becomes an Employer hereunder shall make its own contributions to the Plan, except to the extent otherwise permitted under the Code.         14.3         Common Service: For purposes of Participation and vesting, transfer from one Employer to another shall not cause an interruption of Service, and Service with an Aggregated Employer shall be credited from the later of the date the Plan was adopted or the date such corporation or entity became an Aggregated Employer. However, in determining a Participant’s Service for benefit accrual purposes, only Service with an Employer during periods of Participation covered under the Plan with any Employer shall be taken into account.         14.4         Commingling of Funds: Notwithstanding that the Plan may for some purposes be considered the separate Plan of each Employer or that contributions are made and Forfeitures are allocated separately, the assets of the Plan and Trust may be invested and commingled as a single fund without allocation, except as among Participants, on the books and records of the Trustee. - 65 -         IN WITNESS WHEREOF, the Employer has caused this Plan and Trust to be properly executed on the ___day of ______, 2002.   FAMILY DOLLAR STORES, INC., and all other Employers listed on the attached Exhibit A By:_________________________________ Title: FAMILY DOLLAR, INC. By:_________________________________ Title:______________________________ - 66 - EXHIBIT A FAMILY DOLLAR STORES, INC. CORPORATIONS AND OTHER ENTITES (ACTIVE AND INACTIVE) Family Dollar Stores, Inc. Family Dollar, Inc. Family Dollar Holdings, Inc. Family Dollar Services, Inc. Family Dollar Operations, Inc. Family Dollar Trucking, Inc. Family Dollar Merchandising, L.P. Family Dollar Stores of Alabama, Inc. Family Dollar Stores of Arkansas, Inc. Family Dollar Stores of Colorado, Inc. Family Dollar Stores of Connecticut, Inc. Family Dollar Stores of Delaware, Inc. Family Dollar Stores of D.C., Inc. Family Dollar Stores of Florida, Inc. Family Dollar Stores of Georgia, Inc. Family Dollar Stores of Indiana, L.P. Family Dollar Stores of Iowa, Inc. Family Dollar Stores of Kentucky, Ltd. Family Dollar Stores of Louisiana, Inc. Family Dollar Stores of Maryland, Inc. Family Dollar Stores of Massachusetts, Inc. Family Dollar Stores of Michigan, Inc. Family Dollar Stores of Mississippi, Inc. Family Dollar Stores of Missouri, Inc. Family Dollar Stores of New Jersey, Inc. Family Dollar Stores of New Mexico, Inc. Family Dollar Stores of New York, Inc. Family Dollar Stores of North Carolina, Inc. Family Dollar Stores of Ohio, Inc. Family Dollar Stores of Oklahoma, Inc. Family Dollar Stores of Pennsylvania, Inc. Family Dollar Stores of Rhode Island, Inc. Family Dollar Stores of South Carolina, Inc. Family Dollar Stores of South Dakota, Inc. - 67 -

TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**). Exhibit 10.6 TERMINAL SERVICES AGREEMENT THIS TERMINAL SERVICES AGREEMENT is made and entered into as of the Effective Date by and between PHILLIPS 66 CARRIER LLC, a Delaware limited liability company (“Carrier”) and PHILLIPS 66 COMPANY, a Delaware corporation (“Company”). Recitals WHEREAS, Carrier owns certain terminal facilities suitable for receiving refined petroleum products, handling and storing such refined petroleum products, and delivering such refined petroleum products into pipelines and transport trucks at Wichita, Kansas (the “Wichita North Terminal”) Kansas City, Kansas (the “Kansas City Terminal”), Paola, Kansas (the “Paola Terminal”), Jefferson City, Missouri (the “Jeff City Terminal”) and Cahokia, Illinois (the “East St. Louis Terminal”) (the Wichita North Terminal, Kansas City Terminal, Paola Terminal, and East St. Louis Terminal are generally referred to individually as a “Terminal” or collectively as the “Terminals”); WHEREAS, Company intends to deliver refined petroleum products to the Terminals and desires to have such refined petroleum products stored, handled and delivered into pipelines or transport trucks, as applicable, and Carrier desires to provide such services for Company, all upon the terms and conditions set of which are hereby acknowledged, and intending to be legally bound, Carrier and Company agree as follows: Article I.    Defined Terms Section 1.01    Defined Terms. The following definitions shall for all purposes apply to the capitalized terms used in this Agreement: (a) “Agreement” means this Terminal Services Agreement, together with all exhibits attached hereto, as the same may be extended, supplemented or restated from time to time in accordance with the provisions hereof. (b) “Argus” means Argus Media Ltd. or any of its subsidiaries. (c) “Barrel” means 42 Gallons. (d) “Base Throughput Fee” has the meaning set forth on Exhibit B. (e) “Biodiesel Blending Deficiency Payment” has the meaning set forth in Section 3.03(b). 1 (f) “Borger Products Facility” means the Rocky Station facility owned by Phillips 66 Pipeline LLC in Borger, Texas. (g) “Business Day” means any Day except for Saturday, Sunday or an official holiday in the State of Texas. (h) “Butane” shall mean butane meeting the specifications set forth in Exhibit D, subject to Section 8.05. (i) “Calendar Quarter” means a period of three consecutive Months beginning on the first Day of each of January, April, July and October. (j) “Carrier” has the meaning set forth in the introductory paragraph. (k) “Carrier Affiliated Parties” means Carrier, Phillips 66 Partners LP and its and their respective contractors, directors, officers, employees and agents. (l) “Claims” means any and all judgments, claims, causes of action, demands, lawsuits, suits, proceedings, governmental investigations or audits, losses, assessments, fines, penalties, administrative orders, obligations, costs, expenses, liabilities and damages, including interest, penalties, reasonable attorneys’ fees, disbursements and costs of investigations, deficiencies, levies, duties and imposts. (m) “Commitment” means the Minimum Quarterly Truck Rack Commitment, Minimum Quarterly Biodiesel Commitment, or Minimum Quarterly Ethanol Commitment, as applicable. (n) “Commodity” or “Commodities” means any of the commodities identified in Exhibit A. (o) “Company” has the meaning set forth in the introductory paragraph. (p) through ownership of voting securities, by contract, or otherwise. (q) “Day” means the period of time commencing at 0000 hours on one calendar day and running until, but not including, 0000 hours on the next calendar day, according to local time in Houston, Texas. (r) “Effective Date” means March 1, 2014. (s) “Ethanol Blending Deficiency Payment” has the meaning set forth in Section 3.02(b). 2 (t) “Force Majeure” means: (i) acts of God, fires, floods or storms; (ii) compliance with orders of courts or Governmental Authorities; (iii) explosions, wars, terrorist acts or riots; (iv) inability to obtain or unavoidable delays in obtaining material or equipment; (v) accidental disruption of service; (vi) events or circumstances similar to the foregoing (including inability to obtain or unavoidable delays in obtaining material or equipment and disruption of service provided by third parties) that prevent a Party’s ability to perform its obligations under this Agreement, to the extent that such events or circumstances are beyond the Party’s reasonable control and could not have been prevented by the Party’s due diligence; (vii) strikes, lockouts or other industrial disturbances; and (viii) breakdown of refinery facilities, machinery, storage tanks or pipelines irrespective of the cause thereof. (u) “Gallon” means a United States gallon of two hundred thirty-one cubic inches of liquid at 60º Fahrenheit, and at the equivalent vapor pressure of the liquid. (v) “Governmental Authority” means any government, any governmental administration, agency, instrumentality or other instrumentality or other political subdivision thereof or any court, commission or other governmental authority of competent jurisdiction. (w) “IIC” means a mutually acceptable independent inspection company. (x) “Initial Term” has the meaning set forth in Section 2.01. (y) “LAC” has the meaning set forth in Section 8.01. (z) “Law” means all constitutions, laws (including common law), treaties, statutes, orders, decrees, rules, injunctions, licenses, permits, approvals, agreements, regulations, codes and ordinances issued by any Governmental Authority, including judicial or administrative orders, consents, decrees, and judgments, published directives, guidelines, governmental authorizations, requirements or other governmental restrictions which have the force of law, and determinations by, or interpretations of any of the foregoing by any Governmental Authority having jurisdiction over the matter in question and binding on a given Person, whether in effect as of the date hereof or thereafter and, in each case, as amended. (aa) “Minimum Quarterly Biodiesel Commitment” has the meaning set forth in Section 3.03(a). (bb) “Minimum Quarterly Ethanol Commitment” has the meaning set forth in Section 3.02(a). 3 (cc) “Minimum Quarterly Truck Rack Commitment” has the meaning set forth in Section 3.01(a). (dd) “Month” or “Monthly” means a calendar month commencing at 0000 hours on the first Day thereof and running until, but not including, 0000 hours on the first Day of the following calendar month, according to local time in Houston, Texas. (ee) “Non-Conforming Commodity” means any Commodity that fails to meet specifications established by Carrier for pipeline transportation of that Commodity (or in the absence of Carrier specifications, specifications established by Phillips 66 Pipeline LLC for such Commodity). (ff) “Normal Business Hours” means the period of time commencing at 0800 hours on one Day and running until 1700 hours on the same Day, according to local time in Houston, Texas. (gg) “Notice” means any notice, request, instruction, correspondence or other communication permitted or required to be given under this Agreement. (hh) “Parties” means Carrier and Company, collectively. (ii) “Partnership Change in Control” means Phillips 66 ceases to Control the general partner of Phillips 66 Partners LP by virtue of any affiliate of Phillips 66 being removed as the general partner of Phillips 66 Partners LP under the terms of the limited partnership agreement of Phillips 66 Partners LP. (jj) “Party” means Carrier or Company, individually. (kk) “Person” means, without limitation, an individual, corporation (including a non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Authority, and shall include any successor (by merger or otherwise) of such entity. (ll) “Ponca City Refinery” means the refinery owned by Phillips 66 located at Ponca City, Oklahoma. (mm) “PPI-FG” has the meaning set forth in Section 4.03. (nn) “Product” means any commodity owned by Company at the Kansas City Terminal, including gasoline. (oo) “Proportionate Share” has the meaning set forth in Section 10.01. 4 (pp) “Regular Terminal Operating Hours” means 24 hours per Day, 7 Days per week. (qq) “Renewal Term” has the meaning set forth in Section 2.01. (rr) “Scheduled Charges” means those fees payable by Company for the services provided by Carrier hereunder, as set forth in Exhibit B. (ss) “Storage Gain” has the meaning set forth in Section 10.01. (tt) “Storage Loss” has the meaning set forth in Section 10.01. (uu) “Storage Variation” has the meaning set forth in Section 10.01. (vv) “Tanks” means the storage tanks and all appurtenant and associated pipelines and pumps used in connection with the storage and handling of Company’s Commodities at a Terminal. (ww) “TARs” has the meaning set forth in Section 8.01. (xx) “Taxes” means any income, sales, use, excise, transfer, and similar taxes, fees and charges (including ad valorem taxes), including any interest or penalties attributable thereto, imposed by any Governmental Authority. (yy) “Truck Rack Deficiency Payment” has the meaning set forth in Section 3.01. Section 1.02    Other Defined Terms. Other terms may be defined elsewhere in this Agreement, and, unless otherwise indicated, shall have such meanings throughout this Agreement. Section 1.03    Terms Generally. The definitions in this Agreement shall apply equally to both singular and plural forms of the terms defined. Whenever the be deemed to be followed by the phrase “without limitation.” All references to Articles, Sections and Exhibits shall be deemed to be references to Articles and Sections of, and Exhibits to, this Agreement unless the context requires otherwise. Article II.    Term and Termination Section 2.01    Term. This Agreement shall have a primary term commencing on the Effective Date and continuing for five (5) years (the “Initial Term”), and may be renewed by Company for up to two successive, five-year renewal terms (each a “Renewal Term”) at Company’s sole option, upon at least 180 Days’ written Notice from Company to Carrier 5 prior to the end of the Initial Term or first Renewal Term, as applicable. The Initial Term, together with any Renewal Terms shall be referred to in this Agreement as the “Term.” Section 2.02    Termination Following a Force Majeure Event. If a Force Majeure event prevents either Carrier or Company from performing its respective obligations under this Agreement for a period of more than 12 consecutive Months, this Agreement may be terminated by either Party at any time after the expiration of such 12-Month period upon at least 30 Days’ Notice to the other Party. Section 2.03    Special Termination by Company. If (a) refinery operations at the Borger Products Facility are totally or partially suspended for a period of at least 12 consecutive Months, the Parties will negotiate in good faith to agree upon a reduction of the applicable Commitment(s) to reflect such suspension of operations. If the Parties are unable to agree to an appropriate reduction of any applicable Commitments(s), then after a public announcement of such suspension has been made, Company may provide written Notice to Carrier of its intent to terminate this Agreement and this Agreement will terminate 12 Months following the date such Notice is received by Carrier. In the event of a public announcement, prior to the expiration of such 12-month period, of an intent to resume operations at the Borger Products Facility, then such Notice shall be deemed revoked and this Agreement shall continue unmodified in full force and effect as if such Notice had never been delivered. Section 2.04    Inventory Settlement. Upon expiration or termination of this Agreement, any outstanding inventory imbalance for each Commodity on Company’s account must be eliminated and will be settled in cash within 60 Days of termination at Argus’s Monthly average price for the applicable Commodity for the Month prior to the effective date of such expiration or termination. Section 2.05    Removal of Commodities. (a) Company, at its own expense, shall remove all of its Commodities from the Terminals no later than the later of (i) the effective date of the termination or expiration of this Agreement and (ii) ten Days after receipt of Notice to terminate this Agreement in accordance with its terms, provided that Carrier may, in its sole discretion, agree in writing to extend the time for such removal. If, at the end of such period, Company has not removed all of its Commodities, then in addition to any other rights it may have under this Agreement, Carrier shall have the right to take possession of such Commodities and sell them at public or private sale. In the event of such a sale, Carrier shall withhold from the proceeds therefrom all amounts owed to it hereunder and all expenses of sale (including but not limited to reasonable attorneys’ fees and any amounts necessary to discharge any and all liens against the Commodities). The balance of the proceeds, if any, shall be remitted to Company. 6 (b) Should any Commodity remain in any Tank beyond the expiration or termination of this Agreement, Company shall remain obligated to perform all of the terms and conditions set forth in this Agreement (including, without limitation, Company’s obligation to pay the Minimum Quarterly Truck Rack Commitment under Section 3.01(a) and any other scheduled charges on Exhibit B that are owed, pro rated for the period between such expiration or termination of this Agreement and the time all Commodities are removed from the Tanks) and, in addition, shall pay an additional Holdover Fee per Barrel per Month or partial Month, as applicable, as set forth on Exhibit B, until all Commodities are removed. (c) Company shall indemnify and hold the Carrier Affiliated Parties harmless from and against all Claims arising from or related to Company’s failure to remove any Commodities in accordance with this Section 2.05 or Carrier’s exercise of its right to take possession of Company’s Commodities and sell the same in accordance with this Section 2.05. (d) Company will reimburse Carrier for any expense incurred by Carrier in connection with its or Company’s withdrawal of Commodities from the Terminals. Article III.    Minimum Commitments Section 3.01    Quarterly Truck Rack Commitment. (a) During each Calendar Quarter, Company shall tender a combined average of at least 80,000 Barrels per Day of Commodities for delivery through the truck racks at the Terminals, in approximately ratable quantities (such combined average, the “Minimum Quarterly Truck Rack Commitment”) at the “Base Throughput Fee” determined in accordance with Exhibit B, and Carrier shall accept, store and redeliver such Commodities in accordance with the terms of this Agreement. (b) If Company fails to meet its Minimum Quarterly Truck Rack Commitment during any Calendar Quarter, then Company will pay Carrier a deficiency payment (each, a “Truck Rack Deficiency Payment”) equal to the volume of the deficiency multiplied by the “Base Throughput Fee” determined in accordance with Exhibit B. (c) The dollar amount of any Truck Rack Deficiency Payment paid by Company shall be applied as a credit against any amounts incurred by Company and owed to Carrier with respect to volumes of Commodities delivered through the Terminal truck racks in excess of Company’s Minimum Quarterly Truck Rack Commitment (or, if this Agreement expires or is terminated, to volumes that would have been in excess of Company’s Minimum Quarterly Truck Rack Commitment if this Agreement were still in effect) during any of the four Calendar Quarters immediately following the 7 Calendar Quarter for which such Truck Rack Deficiency Payment was made, at the end of which time any unused credits arising from such Truck Rack Deficiency Payment will expire. This Section 3.01(c) shall survive the expiration or (d) Carrier shall provide truck rack capacity in addition to Company’s Minimum Quarterly Truck Rack Commitment on an “as available” basis, at the “Base Throughput Fee” determined in accordance with Exhibit B. Section 3.02    Minimum Ethanol Blending Commitment. (a) During each Calendar Quarter, Company shall tender for blending with gasoline, and Carrier shall blend (to the extent tendered), a volume of ethanol equal to 10% of the total volume of Company’s blended gasoline delivered at the Terminals’ truck racks during such Calendar Quarter, in approximately ratable quantities (such volume, the “Minimum Quarterly Ethanol Commitment”), and for each Barrel of ethanol blended into gasoline, Company shall pay the blending fee for ethanol determined in accordance with Exhibit B. Company shall provide any ethanol required for Carrier to discharge its obligations under this Section 3.02. (b) If Company fails to meet its Minimum Quarterly Ethanol Commitment during any Calendar Quarter, then Company will pay Carrier a deficiency payment (each, an “Ethanol Blending Deficiency Payment”) in an amount equal to the volume of the deficiency multiplied by the blending fee for ethanol determined in accordance with Exhibit B. (c) The dollar amount of any Ethanol Blending Deficiency Payment paid by Company may be applied as a credit against any amounts incurred by Company and owed to Carrier with respect to volumes of ethanol blended in excess of Company’s Minimum Quarterly Ethanol Commitment (or, if this Agreement expires or is terminated, to volumes that would have been in excess of Company’s Minimum Quarterly Ethanol Commitment if this Agreement were still in effect) during any of the four Calendar Quarters immediately following the Calendar Quarter for which such Ethanol Blending Deficiency Payment was made, at the end of which time any unused credits arising from such Ethanol Blending Deficiency Payment will expire. This Section 3.02(c) shall survive the expiration or termination of this Agreement. (d) Carrier shall provide ethanol blending services in addition to Company’s Minimum Quarterly Ethanol Commitment on an “as available” basis, at the blending fee for ethanol determined in accordance with Exhibit B. 8 (e) Carrier’s and Company’s obligations under this Section 3.02 shall terminate immediately upon any change of Law that results in Company no longer being required to blend renewable fuel into gasoline offered for sale in the United States. Section 3.03    Minimum Biodiesel Blending Commitment. (a) During each Calendar Quarter, Company shall tender for blending with diesel fuel, and Carrier shall blend (to the extent tendered), a volume of biodiesel equal to 5% of the total volume of Company’s blended diesel fuel delivered at the Terminals’ truck racks during such Calendar Quarter, in approximately ratable quantities (such volume, the “Minimum Quarterly Biodiesel Commitment”), and for each Barrel of biodiesel blended into diesel fuel, Company shall pay the Blending Fee for biodiesel determined in accordance with Exhibit B. Company shall provide any biodiesel required for Carrier to discharge its obligations under this Section 3.03. (b) If Company fails to meet its Minimum Biodiesel Commitment during any Calendar Quarter, then Company will pay Carrier a deficiency payment (each, a “Biodiesel Blending Deficiency Payment”) in an amount equal to the volume of the deficiency multiplied by the blending fee for biodiesel determined in accordance with Exhibit B. (c) The dollar amount of any Biodiesel Blending Deficiency Payment paid by Company may be applied as a credit against any amounts incurred by Company and owed to Carrier with respect to volumes of biodiesel blended in excess of Company’s Minimum Quarterly Biodiesel Commitment (or, if this Agreement expires or is Quarterly Biodiesel Commitment if this Agreement were still in effect) during any of the four Calendar Quarters immediately following the Calendar Quarter for which such Biodiesel Blending Deficiency Payment was made, at the end of which time any unused credits arising from such Biodiesel Blending Deficiency Payment will expire. This Section 3.03(c) shall survive the expiration or termination of this Agreement. (d) Carrier shall provide biodiesel blending capacity in addition to Company’s Minimum Quarterly Biodiesel Commitment on an “as available” basis, at the blending fee for biodiesel determined in accordance with Exhibit B. (e) Carrier’s and Company’s obligations under this Section 3.03 shall terminate required to blend renewable fuel into diesel fuel offered for sale in the United States. Section 3.04    Partial Period Proration. 9 (a) If the Effective Date is any Day other than the first Day of a Calendar Quarter, or if this Agreement is terminated on any Day other than the last Day of a Calendar Quarter, then any calculation determined with respect to a Calendar Quarter will be prorated by a fraction, the numerator of which is the number of Days in that part of the Calendar Quarter beginning on the Effective Date or ending on the date of such termination, as the case may be, and the denominator of which is the number of Days in the Calendar Quarter. (b) If the Effective Date is any Day other than the first Day of a Month, or if this Agreement is terminated on any Day other than the last Day of a Month, then any quantity based on a Monthly determination will be prorated by a fraction, the numerator of which is the number of Days in that part of the Month beginning on the Effective Date or ending on the date of such termination, as the case may be, and the denominator of which is the number of Days in the Month. Section 3.05    Special Reduction of Minimum Quarterly Transportation Commitment. If Carrier’s use of all or part of a Terminal for the storage and handling of Commodities is restrained, enjoined, restricted or terminated by (a) any Governmental Authority, (b) right of eminent domain or (c) the owner of leased land, Carrier, upon being notified of such restraint, enjoinder, restriction or termination, shall notify Company and the applicable Commitment(s) shall be reduced to the extent that Carrier’s use of the applicable Terminal is so restrained, enjoined, restricted or terminated. Article IV.    Charges Section 4.01    Scheduled Charges. As compensation to Carrier for the services provided by it hereunder, Company shall pay to Carrier the Scheduled Charges determined in accordance with Exhibit B. Section 4.02    Recovery of Certain Costs. (a) If Carrier agrees to make any expenditures at Company’s request, Company will reimburse Carrier for such expenditures or, at Carrier’s option and if the Parties agree, any applicable fees set forth on Exhibit B will be increased, or additional fees shall be added to Exhibit B, or an alternate mechanism shall be adopted to allow Carrier to recover such expenditures over time from Company or another entity. (b) If new Laws require Carrier to make substantial and unanticipated expenditures in connection with the services Carrier provides to Company under this Agreement, Company will reimburse Carrier for Company’s proportionate share of the costs of complying with such Laws, or at Carrier’s option and if the Parties agree, relevant periodic or unit charges will be increased or an alternate mechanism shall be adopted 10 to allow Carrier to recover the amount paid for such costs over time from Company or another entity. Section 4.03    Adjustments. As of January 1, 2015, and as of January 1 of each year thereafter while this Agreement is in effect, Carrier may adjust each of the fees set forth on Exhibit B annually by a percentage equal to the greater of zero and the positive change in the Producer Price Index for Finished Goods (Series ID WPUSOP3000) (the “PPI-FG”), as reported during the Month of October immediately before the effective date of the adjustment, with respect to the 12-Month period ending at the end of the Month of September immediately preceding such publication, provided that if, with respect to any such 12-Month period or periods, the PPI-FG has decreased, Carrier may subsequently increase such fees to the extent that the percentage change in the PPI-FG since the most recent previous increase in such fees is greater than the aggregate amount of the cumulative decreases in the PPI-FG during the intervening period or periods. In addition, before each Anniversary, and with both parties’ mutual consent, the current market rate may be determined for each of the fees set forth on Exhibit B, as adjusted pursuant to this Section.  If the current market rate for a fee is higher or lower than the fee to be in effect on the upcoming Anniversary, then Carrier may adjust such fee to the current market rate effective on the Anniversary.  However, in no event shall any fee be reduced below the level of such fee set forth on Exhibit B as of the Effective Date. Article V.    Storage of Commodities Section 5.01    Commingled Storage. The Parties acknowledge that while Carrier will provide storage at the Terminals as part of the “Base Throughput Fee” determined in accordance with Exhibit B, except as may be described in a separate storage service agreement(s), Carrier is not required to store Company’s Commodities in dedicated storage. Each Commodity may be stored in commingled storage in a Tank at a Terminal with a Commodity belonging to another Person; provided, however, that any Commodity belonging to another Person and commingled with a Commodity belonging to Company shall meet or exceed specifications established by Carrier for pipeline transportation of that Commodity (or in the absence of Carrier specifications, specifications established by Phillips 66 Pipeline LLC for such Commodity and delivered to Carrier) in effect on the date of receipt of Company’s Commodity. Carrier shall not commingle Company’s Commodity with any other Commodity that does not meet such minimum Commodity specifications. Article VI.    Redelivery of Commodities Section 6.01    Redelivery of Commodities. Company shall provide any documentation reasonably required by Carrier to authorize withdrawals by or on behalf of Company from a Terminal. Upon redelivery of Commodities to Company or its designated carrier or 11 customer, Carrier shall have no further responsibility for any Claims arising out of possession or use of such Commodities. Section 6.02    Negative Inventory. Company shall not withdraw from any Terminal a greater volume of any Commodity than it has in inventory at that Terminal on the Day of withdrawal. Article VII.    Commodity Quality Section 7.01    Verification by Carrier. At Carrier’s request from time to time, the quality of any Commodity tendered into commingled storage for Company’s account hereunder shall be verified by an IIC analysis indicating that such Commodity so tendered meets Carrier’s minimum Commodity specifications. Company shall provide Carrier with a copy of each such analysis. All costs for each such analysis shall be borne by Company. Carrier shall have the right to sample any Commodity tendered to Carrier for Company’s account hereunder for the purpose of confirming the accuracy of the analysis. The costs of such confirmation shall be borne by Carrier. Section 7.02    Sampling by Company. Company may, at its sole cost and expense, sample its Commodities in storage at a Terminal to satisfy itself that the minimum Commodity specifications are maintained. If any such Company sample indicates the presence of any Commodity that does not meet or exceed Carrier’s minimum specifications for such Commodity in effect on the date of such sample, Company shall immediately notify Carrier by telephone and Company shall confirm such notification in writing by telecopy Notice. If Company does not so notify Carrier, Carrier’s Commodity sample analysis shall be deemed to be conclusive and binding upon both Parties. Section 7.03    Non-Conforming Commodities. (a) Company agrees not to deliver, or cause to be delivered, any Non-Conforming Commodity, into storage in any Terminal. (b) Company shall be liable for all reasonable costs and losses in curing, removing, or recovering any Non-Conforming Commodities except to the extent that such non-conformity is due to the negligence or willful misconduct of Carrier. Carrier, at its sole discretion, may attempt to blend the Non-Conforming Commodities, remove and dispose of the Non-Conforming Commodities, or, if necessary, recover any Non-Conforming Commodities from field locations and, except to the extent that such non-conformity is due to the negligence or willful misconduct of Carrier, Company shall reimburse Carrier for all reasonable costs associated therewith. Except to the extent that a non-conformity is due to the negligence or willful misconduct of Carrier, if Company’s Non-Conforming Commodities cause any contamination, dilution or 12 other damages to Carrier or to the Commodities of other customers of Carrier, Company agrees to indemnify, defend and hold the Carrier Affiliated Parties harmless from and against any Claims incurred by, or charged against any of the Carrier Affiliated Parties, as a result of such event and shall be responsible for all costs and liabilities associated with or incurred as a result of such event. Article VIII.    Other Services Section 8.01    Additive Injection. Company shall provide additives (including red dye for injection into Company’s untaxed distillate Commodities) and skid-based storage for additives that Company desires to be blended into its Commodities at the Terminals. Carrier shall provide an additive injection system and shall blend additives into Company’s Commodities as instructed by Company, and for each Barrel of a Commodity into which one or more additives are blended, Company shall pay to Carrier the “Other Additive” blending fee and “Red Dye Injection” fee determined in accordance with Exhibit B. Company shall provide Carrier with target additization rates (“TARs”) which must be at least as high as the lowest additive concentration (“LAC”) as registered with the United States Environmental Protection Agency. Carrier may increase the TAR as it deems necessary to maintain the LAC. Carrier shall calibrate, monitor and maintain the red dye system and ensure the dyed Commodities meet requirements for untaxed distillates under applicable Law. Section 8.02    Jet Fuel Handling. Carrier shall provide jet fuel handling services at the Terminals, and Company shall pay the Monthly Jet Fuel Handling Fee determined in accordance with Exhibit B. Section 8.03    Laboratory Fees and Services. (a) If Carrier provides sampling, testing and/or other laboratory services requested by Company for Commodities at the Terminals, Carrier shall charge for each sampling and testing procedure performed as set forth in Carrier’s “Schedule of Rates for Laboratory Services” then in effect. If Carrier contracts with another Person to perform laboratory services, all fees for such services shall be billed to Company at Carrier’s cost. (b) Carrier’s liability for sampling and testing services is limited to the charge for the service provided. Section 8.04    Pumpover. Carrier shall provide pumpover services from the Terminals to connecting pipelines, and Company shall pay the applicable “Pumpover Fee” determined in accordance with Exhibit B. 13 Section 8.05    Butane Services. Beginning on the Effective Date, Company shall purchase and arrange for transportation of the Butane from Conway, Kansas to the Kansas City Terminal where Carrier will blend the Butane (to the extent provided and not to exceed Carrier’s capacity for Butane blending) with Company’s Product as the Company directs in writing. Each Month, Carrier shall notify Company as to the quantity of Butane to be blended into Company’s Product at the Kansas City Terminal. Company shall be responsible for making the Butane available to Carrier at the Terminal as needed throughout the month. Company will incur certain expenses associated with purchasing and transporting the Butane to the Kansas City Terminal, which expenses will be reflected as a deduction in the calculation of Carrier’s fee for performing the Butane blending service, as set forth in more detail on the attached Exhibit E. (a) Specifications. Company will use commercially reasonable efforts to assure that all Butane it delivers hereunder shall comply with the applicable specifications as outlined in Exhibit D. Carrier retains the right to inspect and reject any Butane that does not conform to the applicable specifications. (b) If Carrier’s ability to blend Company’s Products with Butane at the Kansas City Terminal is restrained, enjoined, restricted or terminated by (a) any land, Carrier, upon being notified of such restraint, enjoinder, restriction or termination, shall notify Company promptly upon learning of the likelihood of such event and Carrier’s obligation to provide Butane Services, shall, at Carrier’s option, terminate immediately upon delivery of such notice to Company. (c) Carrier shall have the right to terminate the offering of Butane blending services upon 30 Days’ written Notice to Company in the event Carrier determines any testing or upgrading of any portion of the Kansas City Terminal that is used for blending Product with Butane is required to satisfy or comply with Law or to comply with or remedy environmental concerns, or (ii) in the event of damage or destruction to, all or any portion of the Kansas City Terminal that is used for blending Butane with Products, if in Carrier’s sole opinion such testing, upgrading, complying or repairing will require the expenditure of $5,000,000.00 or more to restore the Terminal to normal operations. Section 8.06    Additional Services. For any service or function that is not specifically provided for in this Agreement, requested by Company and agreed to by Carrier, there may be a charge or fee in an amount as agreed upon by the Parties in writing. Article IX.    Terminal Access 14 Section 9.01    Terminal Access. Terminal access by Company or its representatives shall be during Regular Terminal Operating Hours. As a condition to being granted access to a Terminal, Company shall require all contractors, carriers and customers designated by it to deliver, receive, sample or inspect Company’s Commodities at such Terminal or to provide any other service for Company, to sign and comply with a terminal access agreement in such form as Carrier may reasonably specify from time to time. Further, Company shall cause all such designated contractors, carriers and customers to comply with all applicable Terminal rules and regulations and Carrier shall make copies of such rules and regulations available to Company and its designated carriers and customers at the Terminals. Article X.    Storage Variations Section 10.01    Storage Variations. Each Month, Carrier shall determine the physical inventory of each Commodity in storage and calculate the losses (“Storage Losses”) or gains (“Storage Gains”) of a type normally incurred in connection with handling Commodities while in storage (Storage Losses and Storage Gains together, “Storage Variations”) for each Commodity and for each Terminal, provided that for purposes of this Agreement, Storage Gains do not include gains that result from vapor recovery or blending services. Monthly Storage Variations for each Commodity shall be prorated to all Persons using the storage for that Commodity based upon their respective percentages of Terminal receipts of that Commodity for that Month (such proration being such Person’s “Proportionate Share”). Company’s inventory of each such individual Commodity in storage at a Terminal shall then be adjusted each Month (increased or decreased) to reflect its Proportionate Share of the Storage Variation. For clarity, this Article X relates only to the losses or gains of a type normally incurred in connection with handling Commodities while in storage, and is an exception to and not a modification of the general provisions of Section 20.02. Section 10.02    Loss Settlement. Separately for each Terminal, Carrier shall calculate for each Commodity an amount (the “Monthly Storage Variation Amount”) equal to: (a) the average of the midpoint postings published by Argus for the relevant Commodity at the nearest benchmark location on each publication day during the relevant Month, multiplied by (b) either: (1) if there is a Storage Loss of the relevant Commodity during that Month, then the product of multiplying (1) negative one by (2) the volume of that net Storage Loss that is in excess of (a) 0.5% for ethanol and biodiesel, or (b) 0.25% for any other Commodity, or (2) if there is a Storage Gain of the relevant Commodity during that Month, then the volume of that net Storage Gain. 15 Then, separately for each Terminal, Carrier will add each of the Monthly Storage Variation Amounts for each Commodity during the Calendar Year. If the sum of the Monthly Storage Variation Amounts for all Commodities at such Terminal during a Calendar Year (or, with respect to 2014, during the partial Calendar Year during which this Agreement is in effect) is a negative number, then no later than the 22nd day of February of the following Calendar Year (or, if such Day is not a Business Day, on the next Business Day), Carrier shall pay to Company the absolute value of that number. Such payment shall be made by automated clearing house to an account specified by Company from time to time, provided that as long as Carrier is an affiliate of Company, Carrier and Company may settle Carrier’s financial obligations to Company through Company’s normal interaffiliate settlement processes. Any bank charges incurred by Carrier in remitting funds by automated clearing house shall be for Carrier’s account. Article XI.    Monthly Statement; Payment; Liens Section 11.01    Monthly Statement. (a) Promptly after the end of each Month, Carrier shall provide Company with a statement showing the previous Month’s beginning inventory, receipts, withdrawals, ending inventory, Storage Variation adjustment, number of Barrels of Commodities additized (if any), and the Scheduled Charges due to Carrier (after application of any credit to which Company may be entitled pursuant to Section 3.01(c), Section 3.02(c), and Section 3.03(c). If requested by Company, Carrier shall provide Company with copies of individual tank gauge reports, pipeline meter tickets, and truck loading rack meter tickets for receipts and withdrawals at each Terminal for such Month, if available. (b) The Monthly statement for the last Month in each Calendar Quarter shall include any deficiency payment that may be due under Section 3.01(b), Section 3.02(b), and Section 3.03(b). (c) On or before the end of each Month during the Term of this Agreement, Company shall provide Carrier with a statement showing the Company’s purchase price and actual transportation costs associated with the Butane blended with Company’s Product at the Kansas City Terminal during such Month. Promptly after the end of each Month during the Term of this Agreement, Carrier shall provide Company with a statement showing the previous Month’s Butane blending activities for Company and the Scheduled Charges due Carrier. If requested, Company shall provide Carrier with copies of individual invoices documenting Company’s purchase and transportation costs associated with delivering Butane to the Kansas City Terminal. Section 11.02    Payment. 16 (a) Payment of the amount(s) identified on each Monthly statement shall be due, without discount, on the later of (i) two Business Days after such Monthly Statement is received, and (ii) the 22nd Day of the Month in which such Monthly statement is received, provided that if such Day is not a Business Day, then such payment shall be due, without interest, on the next Business Day. Payments not paid by the due date shall bear interest at the rate of the lesser of 1.5% per Month or the maximum rate allowed by Law for each Month or portion of a Month thereafter during which such amount remains unpaid. (b) All payments shall be made to Carrier by automated clearing house to an account specified by Carrier from time to time, provided that as long as Carrier is an affiliate of Company, Carrier and Company may settle Company’s financial obligations to Carrier through Company’s normal interaffiliate settlement processes. Any bank charges incurred by Company in remitting funds by automated clearing house shall be for Company’s account. Acceptance by Carrier of any payment from Company for any charge or service after termination or expiration of this Agreement shall not be deemed a renewal of this Agreement or a waiver by Carrier of any default by Company hereunder. (c) If Company reasonably disputes any Monthly statement, in whole or in part, Company shall promptly notify Carrier in writing of the dispute and shall pay the undisputed portion according to the terms of this Section 11.02, and shall promptly seek to resolve the dispute including, if necessary, by arbitration as provided in Section 24.01. An arbitral panel may award reasonable interest on any unpaid amount determined to have been due to Carrier but withheld in good faith. Section 11.03    Liens. Company hereby grants to Carrier an irrevocable (a) warehouseman’s lien on all of Company’s Commodities in storage at the Terminals and (b) power of attorney to dispose of such Commodities at fair market value to the extent of all amounts owed to Carrier by Company hereunder. Article XII.    Title; Custody Section 12.01    Title. Title to all of Company’s Commodities received, stored, handled and loaded out by Carrier at a Terminal shall remain at all times in Company’s name. Section 12.02    Custody. Custody of all Commodities received by Carrier hereunder from a connecting third party pipeline or from a truck shall pass from such pipeline or truck to Carrier when such Commodities pass the flange connection between such delivering pipeline or truck and the relevant Terminal. Custody of all Commodities withdrawn and delivered to Company hereunder shall pass from Carrier to Company when such Commodities pass 17 through the flange connection (a) between the delivery hose at the relevant Terminal’s truck loading rack and a receiving transport truck or (b) between the relevant Terminal and a receiving pipeline, as the case may be. Article XIII.    Volume Determinations Section 13.01    Volume Determinations - General. (a) All measurements, volume corrections and calibrations will be made in accordance with the most recent edition of the American Petroleum Institute’s Manual of Petroleum Measurement Standards. (b) All volume determinations shall be adjusted to a temperature of 60° Fahrenheit and a pressure of one standard atmosphere (14.7 PSIA) per the most recent edition of the American Petroleum Institute’s Manual of Petroleum Measurement Standards, Chapter 11 (viz., Table 6B, 6C, etc., whichever table is relevant to the Commodity being measured). Section 13.02    Terminal Receipts and Withdrawals. (a) All Commodities (except ethanol and biodiesel) delivered to trucks at racks will be determined by calibrated custody transfer grade meters. Carrier will provide bills of lading indicating the net volume delivered into each truck including language required by the appropriate Governmental Authority to Company. (b) All Commodities (except ethanol and biodiesel) received from or delivered to pipelines will be determined by calibrated custody transfer grade meters. (c) All ethanol, biodiesel and butane received from pipeline or trucks will be determined by calibrated custody transfer grade meters, if such meters are available. If custody transfer grade meters are not available for offloading, the volume shown on truck bills of lading (measured in Gallons or Barrels) shall be deemed to be the volume delivered into a Terminal. Alternate measurement methods may be acceptable subject to review and approval by Carrier and Company. (d) A Company representative may witness testing, calibration of equipment, meter reading, and gauging of Commodities at either Terminal, at Company’s expense. In the absence of a Company representative, Carrier’s measurements shall be deemed to be accurate. Article XIV.    Insurance 18 Section 14.01    Insurance. Property insurance covering loss or damage to Company’s Commodities, if any, that may be desired by Company, shall be carried by Company at Company’s expense. Should Company elect to carry such insurance, then each policy of insurance shall be endorsed to provide a waiver of subrogation rights in favor of the Carrier Affiliated Parties. Notwithstanding anything in this Agreement to the contrary, Carrier shall not be liable to Company for Commodity losses or shortages for which Company is compensated by its insurer. Article XV.    Taxes Section 15.01    Taxes. Except as set forth in Section 15.02, Company shall be responsible for and shall pay all sales Taxes and similar Taxes on goods and services provided hereunder and any other Taxes now or hereafter imposed by any Governmental Authority in respect of or measured by Commodities handled or stored hereunder or the manufacture, storage, delivery, receipt, exchange or inspection thereof, and Company agrees to promptly reimburse Carrier for any such Taxes Carrier is legally required to pay, upon receipt of invoice therefor. Each Party is responsible for all Taxes in respect of its own real and personal property. Section 15.02    Butane. Carrier shall be responsible for and shall pay all sales Taxes and similar Taxes on goods and services provided using the Butane supplied by Company, and Carrier agrees to promptly reimburse Company for any such Taxes that Company is legally required to pay, upon receipt of invoice therefor. Article XVI.    Health, Safety and Environment Section 16.01    Spills; Environmental Pollution. (a) In the event of any Commodity spill or other environmentally polluting discharge caused by Carrier’s operation of a Terminal, any clean-up associated with any such spill or discharge and any liability resulting from such spill or discharge, shall be the responsibility of Carrier, except to the extent such spill or discharge is caused by Company or its affiliates other than Carrier. (b) In the event and to the extent of any Commodity spill or other environmentally polluting discharge caused by Company or its affiliates other than Carrier or in connection with the operation of Company’s or a third party’s pipeline, tank truck or transport trailer receiving Commodities on Company’s behalf, at its request or for its benefit, Carrier is authorized to commence containment or clean-up operations as deemed appropriate or necessary by Carrier or as required by any Governmental Authority, and Carrier shall notify Company of such operations as soon as practicable. All liability and reasonable costs of containment or clean-up shall be borne by Company except that, in the event a spill or discharge is caused by the joint negligence of both 19 Carrier and Company or a third party’s pipeline, tank truck or transport trailer receiving Commodities on Company’s behalf, at its request or for its benefit, liability and costs of containment or clean-up shall be borne jointly by Carrier and Company in proportion to each Party’s respective negligence. (c) For purposes of this Section 16.01, the negligence of a third party pipeline, tank truck or transport trailer receiving Commodities on Company’s behalf, at its request or for its benefit, shall be attributed to Company. (d) The Parties shall cooperate for the purpose of obtaining reimbursement if a third party is legally responsible for costs or expenses initially borne by Carrier or Company. Section 16.02    Inspection. During Normal Business Hours, Company may: (a) inspect a Terminal, including health, safety, and environmental audits by inspector(s) chosen by Company; (b) make physical checks of Commodities in storage at any Terminal, (c) audit Carrier’s health, safety, environmental, and operational records relating to the performance of this Agreement and otherwise observe such performance, and (d) subject to the provisions of 0, enter upon any Terminal property for any of the foregoing purposes. For clarity, none of the rights identified in this Section 16.02 shall be exercised by Company in such manner as to substantially interfere with or diminish Carrier’s complete control and responsibility for the operation of the Terminals. Section 16.03    Incident Notification. Both Parties undertake to notify the other as soon as reasonably practical, but in no event more than 24 hours, after becoming aware of any accident, spill or incident involving the other’s employees, agents, contractors, sub-contractors or their equipment, or Company’s Commodities at a Terminal and to provide reasonable assistance in investigating the circumstances of the accident, spill or incident. Notices required by this Section 16.03 shall be delivered in person, by telephone or by email: If to Carrier (East St. Louis Terminal): Phillips 66 Carrier LLC c/o Phillips 66 Pipeline LLC 3010 Briarpark Dr. Houston, TX 77042 Attn: Jim Mayse – Terminal Supervisor Telephone: 618.857-6053 Email: [email protected] If to Carrier (Kansas City Terminal): Phillips 66 Carrier LLC 20 3010 Briarpark Dr. Houston, TX 77042 Attn: Rusty Lee – Terminal Supervisor Telephone: 913.342-0510 Ext. 12 Email: [email protected] If to Company: Phillips 66 Company 600 North Dairy Ashford Rd. Houston, TX 77079 Attn: John E. Sweeney Manager/Loss Control Telephone: 832-765-3017 Email: [email protected] If to Carrier (Wichita North     If to Carrier (Paola Terminal):     If to Carrier (Jeff City Terminal): Terminal):                          Phillips 66 Carrier LLC        Phillips 66 Carrier LLC        Phillips 66 Carrier LLC c/o Phillips 66 Pipeline LLC    c/o Phillips 66 Pipeline LLC    c/o Phillips 66 Pipeline LLC 3010 Briarpark Dr.        3010 Briarpark Dr.        3010 Briarpark Dr. Houston, TX 77042        Houston, TX 77042        Houston, TX 77042 Attn: Andrew Smith – Terminal     Attn: Rusty Lee – Terminal     Attn: Mark Singleton – Terminal Supervisor            Supervisor            Supervisor Telephone: 316-838-3411 X2258    Telephone: 913.342-0510 Ext. 12    Telephone: 573.636-4984 Ext. 12 Email: [email protected]    Email: [email protected]     Email: [email protected] When an accident, spill or incident involving Company’s Commodities requires a report to be submitted to a Governmental Authority, this notification shall be made as soon as reasonably practical in compliance with applicable Law, and a copy of the required report shall be delivered to Company at [email protected]. Either Party may change its contact information upon Notice to the other in accordance with this Section 16.03 and Section 18.01. Article XVII.    Force Majeure Section 17.01    Suspension during Force Majeure Events. As soon as possible upon the occurrence of a Force Majeure, a Party affected by a Force Majeure event shall provide the other Party with written notice of the occurrence of such Force Majeure event. Subject to Section 2.02, each Party’s obligations (other than an obligation to pay any amounts due to the other Party which shall not be suspended under this Section 17.01) shall be temporarily suspended during the occurrence of, and for the entire duration of, a Force Majeure event to the extent that such an event prevents Carrier from performing its obligations under this Agreement. Each Party’s obligations (other than an obligation to pay any amounts due to the other Party which shall not be suspended under this Section 17.01) shall be temporarily 21 suspended beginning 20 Days after the commencement of, and for the entire remaining duration of, a Force Majeure event to the extent that such event prevents Company from performing its obligations under this Agreement. At the conclusion of the Force Majeure event, the Minimum Quarterly Truck Rack Commitment, Minimum Quarterly Ethanol Commitment, or Minimum Quarterly Biodiesel Commitment with respect to each Calendar Quarter in which the suspension due to the Force Majeure event remained in effect shall be ratably reduced to reflect such suspension. Section 17.02    Obligation to Remedy Force Majeure Events. A Party affected by a Force Majeure event shall take commercially reasonable steps to remedy such situation so that it may resume the full performance of its obligations under this Agreement within a reasonable period of time. Section 17.03    Strikes and Lockouts. The settlement of strikes, lockouts and other labor disturbances shall be entirely within the discretion of the affected Party and the requirement to remedy a Force Majeure event within a reasonable period of time shall not require the settlement of strikes or lockouts by acceding to the demands of an opposing Person when such course is inadvisable in the discretion of the Party having the difficulty. Section 17.04    Action in Emergencies. Carrier may temporarily suspend performance of the services to prevent injuries to persons, damage to property or harm to the environment. Article XVIII.    Notices Section 18.01    Notices. Unless otherwise specifically provided in this Agreement, all Notices between the Parties given under or in relation to this Agreement shall be made in writing and shall be deemed to have been properly given if: (i) personally delivered (with written confirmation of receipt); or (ii) delivered by a recognized overnight delivery service (delivery fees prepaid), in either case to the appropriate address set forth below: If to Carrier: If to Company: Phillips 66 Carrier LLC Phillips 66 Company 3010 Briarpark Dr. 3010 Briarpark Dr. Houston, TX 77042 Houston, TX 77042 Attn: General Counsel Attn: President   Copy to General Counsel   Either Party may change its address for Notice upon Notice to the other in accordance with this Section 18.01. Section 18.02    Effective upon Receipt. Any Notice given in the manner set forth in Section 18.01 shall be effective upon actual receipt if received during Normal Business Hours, or 22 at the beginning of the recipient’s next Business Day if not received during Normal Business Hours. Article XIX.    Applicable Law Section 19.01    Applicable Law. Regardless of the place of contracting, the place of performance or otherwise, this Agreement and all amendments, modifications, alterations or supplements to it, shall be governed and interpreted in accordance with the laws of the state of Texas, without regard to the principles of conflicts of law or any other principle that might apply the law of another jurisdiction. Article XX.    Limitation of Liability Section 20.01    No Liability for Consequential Damages. In no event shall either Party be liable to the other Party for, and no arbitral panel is authorized to award, any punitive, special, indirect or consequential damages of any kind or character resulting from or arising out of this Agreement, including, without limitation, loss of profits or business interruption, however they may be caused. Section 20.02    Limitation of Liability. Notwithstanding anything to the contrary in this Agreement, and except for Storage Variations, Carrier shall in no event be liable for loss of, or damage to, any Commodities of Company except to the extent caused by Carrier’s negligence or willful misconduct, or the negligence or willful misconduct of Carrier’s employees, agents, contractors or subcontractors, in the safekeeping and handling of any Commodity of Company. In no event shall Carrier be liable for more than the replacement of lost or damaged Commodities or, at its option, payment of the replacement cost of any lost or damaged Commodities. Each Party shall be discharged from any and all liability with respect to services performed and any loss or damage Claims arising out of this Agreement unless suit or action is commenced with respect to such services, loss or Claim within two (2) years after the applicable cause of action arises. Article XXI.    Default Section 21.01    Default. Subject to Section 21.03, should either Party default in the prompt performance and observance of any of the terms and conditions of this Agreement, and should such default continue for thirty (30) Days or more after Notice thereof by the non-defaulting Party to the defaulting Party, or should either Party become insolvent, commence a case for liquidation or reorganization under the United States Bankruptcy Code (or become the involuntary subject of a case for liquidation or reorganization under the United States Bankruptcy Code, if such case is not dismissed within thirty (30) Days), be placed in the hands of a state or federal receiver or make an assignment for the benefit of its creditors, 23 then the other Party shall have the right, at its option, to terminate this Agreement immediately upon Notice to the other Party. Section 21.02    Non-Exclusive Remedies. Except as otherwise provided, but subject to Article XX, the remedies of Carrier and Company provided in this Agreement shall not be exclusive, but shall be cumulative and shall be in addition to all other remedies in favor of Carrier or Company, at Law or equity. Section 21.03    Right to Terminate. Subject to Section 21.01, in the event of a default by Company, the Scheduled Charges theretofore accrued shall, at the option of Carrier, become immediately due and payable and Carrier shall also have the right, at its option, to terminate this Agreement. In the event of a default by Carrier, Company shall also have the right, at its option, to terminate this Agreement and withdraw its Commodities from the Terminals, provided Company has paid Carrier for any Scheduled Charges that have accrued to the date of such withdrawal. Article XXII.    Public Use Section 22.01    Public Use. This Agreement is made as an accommodation to Company. In no event shall Carrier’s services hereunder be deemed to be those of a public utility or a common carrier. If any action is taken or threatened by any Governmental Authority to declare Carrier’s services hereunder to be those of a public utility or a common carrier, then, in that event, at the option of Carrier and upon Company’s receipt of Carrier’s Notice, Carrier may restructure and restate this Agreement or terminate this Agreement on the effective date of such action as to any affected Tank, Terminal or services. Article XXIII.    Confidentiality Section 23.01    Confidentiality. The Parties understand and agree that the Scheduled Charges are confidential as between the Parties. Each Party agrees not to disclose such confidential information to any third Person. Each Party may disclose confidential information to its advisors, consultants or representatives (provided that such Persons agree to maintain the confidentiality thereof) or when compelled to do so by Law (but the disclosing Party must notify the other Party promptly of any such request for confidential information before disclosing it, if practicable, so that the other Party may seek a protective order or other appropriate remedy or waive compliance with this Section 23.01). In the event that the other Party does not obtain a protective order or other remedy or does not waive compliance with this Section 23.01, the disclosing Party shall disclose only that portion of the confidential information to which the compelling Person is legally entitled. Article XXIV.     Miscellaneous 24 Section 24.01    Disputes between the Parties. Any dispute between the Parties in connection with this Agreement shall be resolved by arbitration in accordance with the procedures set forth in Exhibit C, provided that either Party may seek a restraining order, temporary injunction, or other provisional relief in any court with jurisdiction over the subject matter of the dispute and sitting in Houston, Texas, if such Party in its sole judgment believes that such action is necessary to avoid irreparable injury or to preserve the status quo ante. Section 24.02    Assignment. (a) Neither Party may assign its rights or delegate its duties under this Agreement without prior written consent of the other Party except: (1) if Company transfers the Borger Products Facility or the Ponca City Refinery, Company may assign all of a portion of this Agreement to the transferee of such asset subject to the provisions of Section 24.02(b); and (2) Carrier may make collateral assignments of this Agreement to secure working capital or other financing; provided, however, that in no event shall Company be required to consent to Carrier’s assignment of this Agreement to any Person that is engaged in the business of refining and marketing petroleum products (or that directly or indirectly Controls or is Controlled by a Person that is engaged in the business of refining and marketing petroleum products) in the states of Illinois, Oklahoma, Kansas, Missouri or Texas. (b) If Company assigns any portion of the volume commitments set forth in this Agreement, then Company’s Minimum Quarterly Truck Rack Commitment, Minimum Quarterly Ethanol Commitment, and Minimum Quarterly Biodiesel Commitment shall be reduced accordingly; provided, however, that such reduction does not result in an adverse economic impact to Carrier (it being understood that a reduction would be deemed to have an adverse economic impact to Carrier if, without limitation (i) the reduction resulted in the truck rack throughput commitment being greater than the maximum practicable throughput capacity for the Terminals, (ii) the sum of Company’s and assignee’s volumetric commitments being less in aggregate than Company’s commitment was immediately prior to such assignment, or (iii) the reduction resulted in increased costs to Carrier. (c) Upon an assignment or partial assignment of this Agreement by either Party, the assigned rights and obligations shall be novated into a new agreement with the assignee, and such assignee shall be responsible for the performance of the assigned obligations unless the non-assigning Party has reasonably determined that the assignee is not financially or operationally capable of performing such assigned 25 obligations, in which case the assignor shall remain responsible for the performance of such assigned obligations. Section 24.03    Partnership Change in Control. Upon the occurrence of a Partnership Change in Control, Carrier shall provide Company with Notice of such Partnership Change in Control at least 60 Days prior to the effective date thereof. Within 180 days following receipt of such Notice, Company may elect to terminate this Agreement, effective no earlier than the effective date of such Partnership Change in Control. Section 24.04    No Third-Party Rights. Except as expressly provided, nothing in this Agreement is intended to confer any rights, benefits or obligations to any Person other than the Parties and their respective successors and assigns. Section 24.05    Compliance with Laws. Each Party shall at all times comply with all Laws as are applicable to its performance of this Agreement. Section 24.06    Severability. If any provision of this Agreement or the application thereof shall be found by any arbitral panel or court of competent jurisdiction to be invalid, illegal or unenforceable to any extent and for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the Parties. In any event, the remainder of this Agreement and the application of such remainder shall not be affected thereby and shall be enforced to the greatest extent permitted by Law. Section 24.07    Non-Waiver. The failure of either Party to enforce any provision, condition, covenant or requirement of this Agreement at any time shall not be construed to be a waiver of such provision, condition, covenant or requirement unless the other Parties are so notified by such Party in writing. Any waiver by a Party of a default by any other Party in the performance of any provision, condition, covenant or requirement contained in this Agreement shall not be deemed to be a waiver of such provision, condition, covenant or requirement, nor shall any such waiver in any manner release such other Party from the performance of any other provision, condition, covenant or requirement. Section 24.08    Entire Agreement. This Agreement, together with all Exhibits attached hereto, constitutes the entire Agreement between the Parties relating to its subject matter and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, between the Parties relating to the subject matter hereof, and there are no warranties, representations or other agreements between the Parties in connection with the subject matter hereof except as specifically set forth in, or contemplated by, this Agreement. Section 24.09    Amendments. This Agreement shall not be modified or amended, in whole or in part, except by a written amendment signed by both Parties. 26 Section 24.10    Survival. Any indemnification granted hereunder by one Party to the other Party or any provision hereof providing for any payment to any Party that has accrued at time of expiration or termination shall survive the expiration or termination of all or any part of this Agreement. Section 24.11    Counterparts; Multiple Originals. This Agreement may be executed in any number of counterparts, all of which together shall constitute one agreement binding on each of the Parties. Each of the Parties may sign any number of copies of this Agreement. Each signed copy shall be deemed to be an original, but all of them together shall represent one and the same agreement. Section 24.12    Exhibits. The Exhibits identified in this Agreement are incorporated in this Agreement and constitute a part of this Agreement. If there is any conflict between this Agreement and any Exhibit, the provisions of the Exhibit shall control. Section 24.13    Table of Contents; Headings; Subheadings. The Table of Contents and the headings and subheadings of this Agreement have been inserted only for convenience to facilitate reference and are not intended to describe, interpret, hereof. Section 24.14    Construction. The Parties have participated jointly in the question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring either Party by virtue of the authorship of any of Section 24.15    Business Practices. Carrier shall use its best efforts to make certain that all billings, reports, and financial settlements rendered to or made with Company pursuant to this Agreement, or any revision of or amendments to this Agreement, will properly reflect the facts about all activities and transactions handled by authority of this Agreement and that the information shown on such billings, reports and settlement documents may be relied upon by Company as being complete and accurate in any further recording and reporting made by Company for whatever purposes. Carrier shall notify Company if Carrier discovers any errors in such billings, reports, or settlement documents. Section 24.16    Right of First Refusal. Carrier may not enter into any agreement with any Person other than Company with respect to terminaling services at the Terminals during the Term of this Agreement or upon the termination of this Agreement without first disclosing to Company all of the material terms and conditions of such an agreement and allowing Company not less than 60 Days within which to enter into an agreement upon the same terms and conditions. 27 Section 24.17    Right of First Offer. Company may not enter into any agreement with any Person other than Carrier with respect to terminaling services in connection with refined petroleum product distribution from the Borger Products Facility or the Ponca City Refinery without allowing Carrier an opportunity to offer to provide such services. Section 24.18    Effect of Company Restructuring. If Company decides to restructure its supply, refining or sales operations at the Borger Products Facility in such a way as could reasonably be expected to materially and adversely affect the economics of Company’s performance of its obligations under this Agreement, then the Parties will negotiate in good faith concerning a reduction in Company’s commitment or an exchange of the applicable Terminals (whichever is adversely affected) for other assets not so affected. Section 24.19 Effect of Discontinuation of Publication. If Argus ceases to provide the information to be obtained therefrom pursuant to this Agreement, the Parties shall negotiate in good faith to agree upon a replacement publication or pricing mechanism. 28 IN WITNESS WHEREOF, Carrier and Company have signed this Agreement as of the Effective Date. PHILLIPS 66 CARRIER LLC By: Phillips 66 Partners Holdings LLC, Sole Member of Phillips 66 Carrier LLC By: Phillips 66 Partners LP, Sole Member of Phillips 66 Partners Holdings LLC By: Phillips 66 Partners GP, LLC, General Partner of Phillips 66 Partners LP By: /s/ J.T. Liberti   J.T. Liberti   Vice President and Chief Operating Officer      PHILLIPS 66 COMPANY By: /s/ T.G. Taylor   T.G. Taylor   Executive Vice President, Commercial, Marketing, Transportation and Business Development Signature Page/ Terminal Services Agreement Exhibit A Commodities • Ultra Low Sulfur Diesel • Aviation Gasoline • Biodiesel • Jet Fuel • Slurry • Natural Gasoline • Reformate • Fuel Oil • Ethanol • Butane • Liquid Petroleum Gas • Non-Premium Gasoline • Non-Premium RBOB Gasoline • Premium Gasoline • Premium RBOB Gasoline • Transmix Exhibit A/Page 1 Exhibit B Scheduled Charges 1. Base Throughput Fee (Rack Rate):    $**/Barrel (applied to total volume blended) 2. Blending Fees: Ethanol Blending: $**/Barrel (applied to volume of neat ethanol blended) Biodiesel Blending: neat biodiesel blended) Other Additive Blending: (applied to total volume blended) Red Dye Injection: $**/Barrel (applied to total dyed volume) 3. Jet Fuel Handling:        $**/Barrel (applied to total volume blended) 4. AvGas Handling at Kansas City:        $**/Barrel (applied to total volume blended) 5. Pumpover Fees: East St. Louis Pumpover Fee:        $**/Barrel (applied to outbound and inbound volume into connecting third party pipelines) 6.    Holdover Fee.                 $**/Barrel/Month                             (or partial Month) 7. Adjustment. Carrier may adjust all charges set forth in Paragraphs 1, 2, 3, 4, 5 and 6 above annually beginning January 1, 2015, in accordance with Section 4.03. Exhibit B/Page 1 Exhibit B/Page 2 Exhibit C Arbitration Procedure Either Party may initiate dispute resolution procedures by sending a Notice to the other Party specifically stating the complaining Party’s Claim and by initiating binding arbitration in accordance with the Center for Public Resources Rules for Non-Administered Arbitration of Business Disputes, by three arbitrators who shall be neutral, independent, and generally knowledgeable about the type of transaction which gave rise to the dispute. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1-16, provided that the arbitrators shall include in their report/award a list of findings, with supporting evidentiary references, upon which they have relied in making their decision. Judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Houston, Texas. Notwithstanding anything herein and regardless of any procedures or rules of the Center for Public Resources, it is expressly agreed that the following shall apply and control over any other provision in this Agreement: (a) All offers, conduct, views, opinions and statements made in the course of negotiation or mediation by any of the Parties, their employees, agents, experts, attorneys and representatives, and by any mediator, are confidential, made for compromise and settlement, protected from disclosure under Federal and State Rules of Evidence and Procedure, and inadmissible and not discoverable for any purpose, including impeachment, in litigation or legal proceedings between the Parties, and shall not be disclosed to any Person who is not an agent, employee, expert or representative of the Parties, provided that evidence otherwise discoverable or admissible is not excluded from discovery or admission as a result of presentation or use in mediation. (b) Except to the extent that the Parties may agree upon selection of one or more arbitrators, the Center for Public Resources shall select arbitrators from a panel reviewed by the Parties. The Parties shall be entitled to exercise peremptory strikes against one-third of the panel and may challenge other candidates for lack of neutrality or lack of qualifications. Challenges shall be resolved in accordance with Center for Public Resource rules. (c) The Parties shall have at least twenty (20) Days following the close of hearing within which to submit a brief (not to exceed eighteen (18) pages in length) and ten (10) Days from date of receipt of the opponent’s brief within which to respond thereto.   (d) The Parties expressly agree that the arbitrators shall not award punitive damages, consequential damages, or attorneys’ fees (except attorneys’ fees specifically authorized by the Agreement). (e) The fees and expenses of any mediator or arbitrator shall be shared equally by the Parties. (f) The Parties may, by written agreement (signed by both Parties), alter any time deadline or location(s) for meetings. Time is of the essence for purposes of the provisions of this Exhibit.   EXHIBIT D BUTANE SPECIFICATIONS Refinery Grade Butane Limits Property Test Method Limit Olefins, max, lv% ASTM D2163 10.0 Aromatics, max, lv% ASTM D2163 2.0 Benzene, max, lv% ASTM D2163 0.03 Sulfur, max, ppm ASTM D6667 (D4468 or D3246 can be used if correlated back to D6667) 30 Bill of lading review Not Applicable must state “refinery” Vapor Pressure at 100F, max, psig ASTM D1267, D2598, or D6897 70 Pentane and heavier, max, vol% ASTM D2163 Report Corrosion, copper strip, max, rating ASTM D1838 1 Hydrogen Sulfide ASTM D2420 Pass Free Water Content Visual inspection None   EXHIBIT E Butane Blending Service Fees Carrier’s fee for performing the Butane blending service shall be calculated as follows: The difference between the dollar value of the Monthly Gasoline Value and the dollar value of the Monthly Butane Value. Definitions: 1. Monthly Gasoline Value (MGV): the number of Barrels of Butane blended during the Month (BVB) at the Kansas City Terminal multiplied by the current per-barrel Monthly average ** posting value for subgrade gasoline. 2. Monthly Butane Value: the BVB at the Kansas City Terminal multiplied by the sum of the following per-Barrel expenses: a. Butane Price (BP):  Current per Barrel Monthly average ** posting value for Butane (non-blended).   b. Transportation (T): ** c. Company Procurement Fee (P): $** per Barrel. d. RIN Fee (RF): Per- Barrel fee associated with any RIN obligation created from blending Butane. RF is calculated as follows: ** As a formula, the Butane Blending Service Fee above is expressed as: **          

SECURITY AGREEMENT      THIS SECURITY AGREEMENT (the “Agreement”), is entered into and made effective as of June 24, 2008, by and between Fox Petroleum, Inc. a Nevada corporation, with headquarters located at 64 Knightsbridge, London, SW1X7JF (the “Company”), and Trafalgar Capital Specialized Investment Fund, Luxembourg (the “Secured Party”). Capitalized words which are otherwise undefined in this Agreement shall have the same definition as in the Securities Purchase Agreement entered into by the parties hereto on the date hereof.      WHEREAS, the Company shall issue and sell to the Secured Party, as provided in the Securities Purchase Agreement dated the date hereof, and the Secured Party shall purchase up to Two Million Five Hundred Thousand U.S. Dollars (US$2,500,000) of secured convertible redeemable debentures (the “Debentures”) in the respective amounts set forth opposite each Buyer(s) name on Schedule I attached to the Securities Purchase Agreement;      WHEREAS, to induce the Secured Party to enter into the transaction contemplated by the Securities Purchase Agreement, the Debentures, the Registration Rights Agreement and the Escrow Agreement (collectively referred to as the “Transaction Documents”), the Company hereby grants to the Secured Party a first priority security interest in and to the pledged property identified on Exhibit “A” hereto (collectively referred to as the “Pledged Property”) until the satisfaction of the Obligations, as defined herein below. herein contained, and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE 1. DEFINITIONS AND INTERPRETATIONS Section 1.1. Recitals.      The above recitals are true and correct and are incorporated herein, in their entirety, by this reference. Section 1.2. Interpretations.      Nothing herein expressed or implied is intended or shall be construed to confer upon any person other than the Secured Party any right, remedy or claim under or by reason hereof. Section 1.3. Obligations Secured.      The obligations secured hereby are any and all obligations of the Company to the Secured Party now existing or hereinafter incurred to the Secured Party, whether oral or written and whether arising before, on or after the date hereof including, without limitation, those obligations of the Company to the Secured Party under the Securities Purchase Agreement and the Debenture and any other amounts now or hereafter owed to the Secured Party by the Company thereunder or hereunder (collectively, the “Obligations”). ARTICLE 2. PLEDGED PROPERTY, ADMINISTRATION OF COLLATERAL AND TERMINATION OF SECURITY INTEREST Section 2.1. Grant of Security Interest.      1. Company hereby pledges to the Secured Party and creates in the Secured Party for its benefit a security interest for such time until the Obligations are paid in full, in and to all of in the property described in “Exhibit A” hereto, whether now existing or hereafter from time to time acquired (collectively, the “Pledged Property.”).      (a) Simultaneously with the execution and delivery of this Agreement, the Company shall make, execute, acknowledge, file, record and deliver to the Secured Party any documents reasonably requested by the Secured Party to perfect its security interest in the Pledged Property. Simultaneously with the execution and delivery of this Agreement, the Company shall make, execute, acknowledge and deliver to the Secured Party such documents and instruments, including, without limitation, financing statements, certificates, affidavits and forms as may, in the Secured Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or to continue and preserve, the security interest of the Secured Party in the Pledged Property, and the Secured Party shall hold such documents and instruments as secured party, subject to the terms and conditions contained herein. Section 2.2. Rights; Interests; Etc.      (a) So long as no Event of Default (as hereinafter defined) shall have occurred and be continuing:           (i) the Company shall be entitled to exercise any and all rights pertaining to the Pledged Property or any part thereof for any purpose not inconsistent with the terms hereof; and           (ii) the Company shall be entitled to receive and retain any and all payments paid or made in respect of the Pledged Property.           (i) All of the Company’s interest in the Genesco-Edwards Fields leases (Kansas) shall be immediately assigned to the Secured Party; and           (ii) All rights of the Company to exercise the rights which it would otherwise be entitled to exercise pursuant to Section 2.2(a)(i) hereof and to receive payments which it would otherwise be authorized to receive and retain pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all such rights shall thereupon become vested in the Secured Party who shall thereupon have the sole right to exercise such rights and to receive and hold as Pledged 2 Property such payments; provided, however, that if the Secured Party shall become entitled and shall elect to exercise its right to realize on the Pledged Property pursuant to Article 5 hereof, then all cash sums received by the Secured Party, or held by Company for the benefit of the Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof, shall be applied against any outstanding Obligations; and           (iii) All interest, dividends, income and other payments and distributions which are received by the Company contrary to the provisions of Section 2.2(b)(i) hereof shall be received in trust for the benefit of the Secured Party, shall be segregated from other property of the Company and shall be forthwith paid over to the Secured Party; or           (iv) The Secured Party in its sole discretion shall be authorized to sell any or all of the Pledged Property at public or private sale in order to recoup all of the outstanding principal plus accrued interest owed pursuant to the Debenture as described herein      (c) Each of the following events, subject to the lapse of applicable cure periods, shall constitute a default under this Agreement (each an “Event of Default”):           (i) any default, whether in whole or in part, shall occur in the payment to the Secured Party of principal, interest or other item comprising the Obligations as and when due or with respect to any other debt or obligation of the Company to a party other than the Secured Party;           (ii) any default, whether in whole or in part, shall occur in the due observance or performance of any obligations or other covenants, terms or provisions to be performed under this Agreement or the Transaction Documents;           (iii) the Company shall: (1) make a general assignment for the benefit of its creditors; (2) apply for or consent to the appointment of a receiver, trustee, assignee, custodian, sequestrator, liquidator or similar official for itself or any of its assets and properties; (3) commence a voluntary case for relief as a debtor under the United States Bankruptcy Code; (4) file with or otherwise submit to any governmental authority any petition, answer or other document seeking: (A) reorganization, (B) an arrangement with creditors or (C) to take advantage of any other present or future applicable law respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief of debtors, dissolution or liquidation; (5) file or otherwise submit any answer or other document admitting or failing to contest the material allegations of a petition or other document filed or otherwise submitted against it in any of the proceedings set forth in this Section 2.2(c)(iii) under any such applicable law, or (6) be adjudicated a bankrupt or insolvent by a court of competent jurisdiction; or           (iv) any case, proceeding or other action shall be commenced against the Company for the purpose of effecting, or an order, judgment or decree shall be entered by any court of competent jurisdiction approving (in whole or in part) anything specified in Section 2.2(c)(iii) hereof, or any receiver, trustee, assignee, custodian, sequestrator, liquidator or other official shall be appointed with respect to the Company, or shall be appointed to take or shall otherwise acquire possession or control of all or a substantial part of the assets and 3 properties of the Company, and any of the foregoing shall continue unstayed and in effect for any period of thirty (30) days. ARTICLE 3. ATTORNEY-IN-FACT; PERFORMANCE Section 3.1. Secured Party Appointed Attorney-In-Fact.      Upon the occurrence of an Event of Default, the Company hereby appoints the Secured Party as its attorney-in-fact, with full authority in the place and stead of the Company and in the name of the Company or otherwise, from time to time in the Secured Party’s discretion to take any action and to execute any instrument which the Secured Party may reasonably deem necessary to accomplish the purposes of this Agreement, including, without limitation, to receive and collect all instruments made payable to the Company representing any payments in respect of the Pledged Property or any part thereof and to give full discharge for the same. The Secured Party may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Pledged Property as and when the Secured Party may determine. To facilitate collection, the Secured Party may notify account debtors and obligors on any Pledged Property or Pledged Property to make payments directly to the Secured Party. Section 3.2. Secured Party May Perform.      If the Company fails to perform any agreement contained herein, the Secured Party, at its option, may itself perform, or cause performance of, such agreement, and the expenses of the Secured Party incurred in connection therewith shall be included in the Obligations secured hereby and payable by the Company under Section 8.3. ARTICLE 4. REPRESENTATIONS AND WARRANTIES Section 4.1. Authorization; Enforceability.      Each of the parties hereto represents and warrants that it has taken all action necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; and upon execution and delivery, this Agreement shall constitute a valid and binding obligation of the respective party, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights or by the principles governing the availability of equitable remedies. Section 4.2. Ownership of Pledged Property.      The Company warrants and represents that it is the legal and beneficial owner of the Pledged Property free and clear of any lien, security interest, option or other charge or encumbrance except for the security interest created by this Agreement and for the Permitted Liens. For purposes hereof, “Permitted Liens” shall mean (i) liens for taxes or other governmental charges which are not yet delinquent or are being contested in good faith by appropriate proceedings, (ii) liens for carriers, contractors, warehousemen, mechanics, 4 materialmen, laborers, employees, suppliers or other similar persons arising by operation of law and incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, (iii) liens relating to deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security or to secure the performance of leases, trade contracts or other similar agreements; and (iv) in the case of real property, any matters, restrictions, covenants, conditions, limitations, rights, rights of way, encumbrances, encroachments, reservations, easements, agreements and other matters of record, such state of facts of which an accurate survey or inspection of the property would reveal and do not materially interfere with the use or value of the property. ARTICLE 5. DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL Section 5.1. Default and Remedies.      (a) If an Event of Default described in Section 2.2(c)(i) or (ii) occurs, then in each such case the Secured Party may declare the Obligations to be due such declaration, the Obligations shall become immediately due and payable. If an Event of Default described in Sections 2.2(c)(iii) or (iv) occurs and is continuing for the period set forth therein, then the Obligations shall act on the part of the Secured Party.      (b) Upon the occurrence of an Event of Default, the Secured Party shall: (i) be entitled to receive all distributions with respect to the Pledged Collateral, (ii) to cause the Pledged Property to be transferred into the name of the Secured Party or its nominee, (iii) to dispose of the Pledged Property, and (iv) to realize upon any and all rights in the Pledged Property then held by the Secured Party as provided herein. Section 5.2. Method of Realizing Upon the Pledged Property: Other Remedies.      Upon the occurrence of an Event of Default, in addition to any rights and remedies available at law or in equity, the following provisions shall govern the Secured Party’s right to realize upon the Pledged Property:      (a) Any item of the Pledged Property may be sold for cash or other value in any number of lots at brokers board, public auction or private sale and may be sold without demand, advertisement or notice (except that the Secured Party shall give the Company ten (10) days’ prior written notice of the time and place or of the time after which a private sale may be made (the “Sale Notice”)), which notice period is hereby agreed to be commercially reasonable. At any sale or sales of the Pledged Property, the Company may bid for and purchase the whole or any part of the Pledged Property and, upon compliance with the terms of such sale, may hold, exploit and dispose of the same without further accountability to the Secured Party. The Company will execute and deliver, or cause to be executed and delivered, such instruments, documents, assignments, waivers, certificates, and affidavits and supply or cause to be supplied such further information and take such further action as the Secured Party reasonably shall require in connection with any such sale. 5      (b) Any cash being held by the Secured Party as Pledged Property and all cash proceeds received by the Secured Party in respect of, sale of, collection from, or other realization upon all or any part of the Pledged Property shall be applied as follows:           (i) to the payment of all amounts due the Secured Party for the expenses reimbursable to it hereunder or owed to it pursuant to Section 8.3 hereof;           (ii) to the payment of the Obligations then due and unpaid.           (iii) the balance, if any, to the person or persons entitled thereto, including, without limitation, the Company.      (c) In addition to all of the rights and remedies which the Secured Party may have pursuant to this Agreement, the Secured Party shall have all of the rights and remedies provided by law, including, without limitation, those under      (d) If the Company fails to pay such amounts due upon the occurrence of an Event of Default which is continuing, then the Secured Party may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of Company, wherever situated.      (e) The Company agrees that it shall be liable for any reasonable fees, expenses and costs incurred by the Secured Party in connection with enforcement, collection and preservation of the Transaction Documents, including, without limitation, reasonable legal fees and expenses, and such amounts shall be deemed included as Obligations secured hereby and payable as set forth in Section 8.3 hereof. Section 5.3. Proofs of Claim.      In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relating to the Company or the property of the Company or of such other obligor or its creditors, the Secured Party (irrespective of whether the Obligations shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Secured Party shall have made any demand on the Company for the payment of the Obligations), shall be entitled and empowered, by intervention in such proceeding or otherwise:      (i) to file and prove a claim for the whole amount of the Obligations and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Secured Party (including any claim for the reasonable legal fees and expenses and other expenses paid or incurred by the Secured Party permitted hereunder and of the Secured Party allowed in such judicial proceeding), and      (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby 6 authorized by the Secured Party to make such payments to the Secured Party and, in the event that the Secured Party shall consent to the making of such payments directed to the Secured Party, to pay to the Secured Party any amounts for expenses due it hereunder. Section 5.4. Duties Regarding Pledged Property.      The Secured Party shall have no duty as to the collection or protection of the Pledged Property or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody and reasonable care of any of the Pledged Property actually in the Secured Party’s possession.  ARTICLE 6. AFFIRMATIVE COVENANTS      The Company covenants and agrees that, from the date hereof and until the Obligations have been fully paid and satisfied, unless the Secured Party shall consent otherwise in writing (as provided in Section 8.4 hereof): Section 6.1. Existence, Properties, Etc.      (a) The Company shall do, or cause to be done, all things, or proceed with due diligence with any actions or courses of action, that may be reasonably necessary (i) to maintain Company’s due organization, valid existence and good standing under the laws of its state of incorporation, and (ii) to preserve and keep in full force and effect all qualifications, licenses and registrations in those jurisdictions in which the failure to do so could have a Material Adverse Effect (as defined below); and (b) the Company shall not do, or cause to be done, any act impairing the Company’s corporate power or authority (i) to carry on the Company’s business as now conducted, and (ii) to execute or deliver this Agreement or any other document delivered in connection herewith, including, without limitation, any UCC-1 Financing Statements required by the Secured Party to which it is or will be a party, or perform any of its obligations hereunder or thereunder. For purpose of this Agreement, the term “Material Adverse Effect” shall mean any material and adverse affect, whether individually or in the aggregate, upon (a) the Company’s assets, business, operations, properties or condition, financial or otherwise or results of operations of the Company, taken as a whole, excluding any change, event, circumstance or effect that is caused by changes in general economic conditions or changes generally affecting the industry in which the Company operates (provided that such changes do not affect the Company in a materially disproportionate manner); or (b) the Company’s ability to make payment as and when due of all or any part of the Obligations; or (c) the Pledged Property. Section 6.2 Accounts and Reports.      The Company shall maintain a standard system of accounting in accordance with generally accepted accounting principles consistently applied and provide, at its sole expense, to the Secured Party the following:      (b) as soon as available, a copy of any notice or other communication alleging any nonpayment or other material breach or default, or any foreclosure or other action respecting 7 any material portion of its assets and properties, received respecting any of the indebtedness of the Company in excess of $25,000 (other than the Obligations), or any demand or other request for payment under any guaranty, assumption, purchase agreement or similar agreement or arrangement respecting the indebtedness or obligations of others in excess of $25,000, including any received from any person acting on behalf of the Secured Party or beneficiary thereof, except for supplier requests in the normal course of business for payment of past due accounts payable invoices so long as such past due amounts do not exceed in the aggregate $50,000 at any time; and      (c) within fifteen (15) days after the making of each submission or filing, a copy of any report, financial statement, notice or other document, whether periodic or otherwise, submitted to the shareholders of the Company, or submitted to or filed by the Company with any governmental authority involving or affecting (i) the Company that could have a Material Adverse Effect; (ii) the Obligations; or (iii) any part of the Pledged Property. Section 6.2. Maintenance of Books and Records; Inspection.      The Company shall maintain its books, accounts and records in accordance with United States generally accepted accounting principles consistently applied, and permit the Secured Party, its officers and employees and any professionals designated by the Secured Party in writing, during business hours and upon reasonable notice to visit and inspect any of its properties (including but not limited to the Pledged Property), corporate books and financial records, and to discuss its accounts, affairs and finances with any employee, officer or director thereof. Section 6.3. Maintenance and Insurance.      (a) The Company shall maintain or cause to be maintained, at its own expense, all of its assets and properties in good working order and condition, making all necessary repairs thereto and renewals and replacements thereof.      (b) The Company shall maintain or cause to be maintained, at its own expense, insurance in form, substance and amounts (including deductibles), which the Company deems reasonably necessary to the Company’s business, (i) adequate to insure all assets and properties of the Company, which assets and properties are of a character usually insured by persons engaged in the same or similar business against loss or damage resulting from fire or other risks included in an extended coverage policy; (ii) against public liability and other tort claims that may be incurred by the Company; (iii) as may be required by the Transaction Documents and/or applicable law and (iv) as may be reasonably requested by Secured Party, all with adequate, financially sound and reputable insurers.      The Company shall perform all of its obligations under or with respect to each instrument, receivable, contract and other intangible included in the Pledged Property to which the Company is now or hereafter will be party on a timely basis and in the manner therein required, including, without limitation, this Agreement. 8 Section 6.5. Defense of Collateral, Etc.      The Company shall defend and enforce its right, title and interest in and to any part of: (a) the Pledged Property; and (b) if not included within the Pledged Property, those assets and properties whose loss could have a Material Adverse Effect, the Company shall defend the Secured Party’s right, title and interest in and to each and every part of the Pledged Property, each against all manner of claims and demands on a timely basis to the full extent permitted by applicable law. Section 6.6. Payment of Debts, Taxes, Etc.      The Company shall pay, or cause to be paid, all of its indebtedness and other liabilities and perform, or cause to be performed, all of its obligations in accordance with the respective terms thereof, and pay and discharge, or cause to be paid or discharged, all taxes, assessments and other governmental charges and levies imposed upon it (other than those being contested by the Company in good faith), upon any of its assets and properties on or before the last day on which the same may be paid without penalty, as well as pay all other lawful claims (whether for services, labor, materials, supplies or otherwise) as and when due Section 6.7. Taxes and Assessments; Tax Indemnity.      The Company shall (a) file all tax returns and appropriate schedules thereto that are required to be filed under applicable law, prior to the date of delinquency, (b) pay and discharge all taxes, assessments and governmental charges or levies imposed upon the Company, upon its income and profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and (c) pay all taxes, assessments and governmental charges or levies that, if unpaid, might become a lien or charge upon any of its properties; provided, however, that the Company in good faith may contest any such tax, assessment, governmental charge or levy described in the foregoing clauses (b) and (c) so long as appropriate reserves are maintained with respect thereto. Section 6.8. Compliance with Law and Other Agreements.      The Company shall maintain its business operations and property owned or used in connection therewith in compliance with (a) all applicable federal, state and local laws, regulations and ordinances governing such business operations and the use and ownership of such property, and (b) all agreements, licenses, franchises, indentures and mortgages to which the Company is a party or by which the Company or any of its properties is bound. Without limiting the foregoing, the Company shall pay all of its indebtedness promptly in accordance Section 6.9. Notice of Default.      The Company shall give written notice to the Secured Party of the occurrence of any default or Event of Default under this Agreement or the Transaction Documents, promptly upon the occurrence thereof. 9 Section 6.10. Notice of Litigation.      The Company shall give notice, in writing, to the Secured Party of (a) any actions, suits or proceedings wherein the amount at issue is in excess of $50,000, instituted by any persons against the Company, or affecting any of the assets of the Company, and (b) any dispute, not resolved within fifteen (15) days of the commencement thereof, between the Company on the one hand and any governmental or regulatory body on the other hand, which might reasonably be expected to have a Material Adverse Effect on the business operations or financial condition of the Company.  ARTICLE 7. NEGATIVE COVENANTS      The Company covenants and agrees that, from the date hereof until the Obligations have been fully paid and satisfied, the Company shall not, unless the Secured Party shall consent otherwise in writing: Section 7.1. Indebtedness.      Other than in the ordinary course of business consistent with past practice or as otherwise permitted herein, without the prior written consent of the Secured Party, the Company shall not directly or indirectly permit, create, incur, assume, permit to exist, increase, renew or extend on or after the date hereof any indebtedness on its part, including commitments, contingencies and credit availabilities, or apply for or offer or agree to do any of the foregoing. Section 7.2. Liens and Encumbrances.      Except for Permitted Liens and for transfers in the ordinary course of business, and except for such assignment, transfer, pledge, mortgage, security interest or other lien or encumbrance as is outstanding on the date of this Agreement, the Company shall not directly or indirectly make, create, incur, assume or permit to exist any assignment, transfer, pledge, mortgage, security interest or other lien or encumbrance of any nature in, to or against any part of the Pledged Property or of the Company’s capital stock, or offer or agree to do so, or own or acquire or agree to acquire any asset or property of any character subject to any of the foregoing encumbrances (including any conditional sale contract or other title retention agreement), or assign, pledge or in any way transfer or encumber its right to receive any income or other distribution or proceeds from any part of the Pledged Property; or enter into any sale-leaseback financing respecting any part of the Pledged Property as lessee, or cause or assist the inception or continuation of any of the foregoing. 10 Section 7.3. Certificate of Incorporation, By-Laws, Mergers, Consolidations, Acquisitions and Sales, Sales of Capital Stock, Incurrence of Debt.      Other than in the ordinary course of business, without the prior express written consent of the Secured Party, the Company shall not: (a) Amend its Articles of Incorporation or ByLaws; (b) issue or sell its common stock without consideration or for a consideration per share less than the bid price of the common stock determined immediately prior to its issuance, (c) issue or sell shares of Common Stock or Preferred Stock without consideration or for a consideration per share less than the bid price of the Common Stock determined immediately prior to its issuance provided that upon such sale with Secured Party’s consent, the Fixed Conversion Price in the Debentures shall be reset to an amount equal to eighty-five percent of such sales price (the “Reset Price”) if such Reset Price would be lower than the then current Fixed Conversion Price, (d) issue or sell any warrant, option, right, contract, call, or other security instrument granting the holder thereof, the right to acquire Common Stock without consideration or for a consideration less than such Common Stock’s bid price value determined immediately prior to it’s issuance, (e) incur any additional debt or permit any subsidiary of the Company to incur any additional debt without the Secured Party’s prior written consent, (f) be a party to any merger, consolidation or corporate reorganization, (g) purchase or otherwise acquire all or substantially all of the assets or stock of, or any partnership or joint venture interest in, any other person, firm or entity, (e) sell, transfer, convey, grant a security interest in (except for Permitted Liens) or lease all or any substantial part of its assets, nor (h) create any new subsidiaries nor convey any of its assets to any subsidiary. Section 7.4. Management, Ownership.      The Company shall not materially change its ownership, executive staff or management without the prior written consent of the Secured Party. The ownership, executive staff and management of the Company are material factors in the Secured Party's willingness to institute and maintain a lending relationship with the Company. Section 7.5. Dividends, Etc.      The Company shall not declare or pay any dividend of any kind, in cash or in property, on any class of its capital stock, nor purchase, redeem, retire or otherwise acquire for value any shares of such stock, nor make any distribution of any kind in respect thereof, nor make any return of capital to shareholders, nor make any payments in respect of any pension, profit sharing, retirement, stock option, stock bonus, incentive compensation or similar plan (except as required or permitted hereunder), without the prior written consent of the Secured Party. Section 7.6. Guaranties; Loans.      Other than in the ordinary course of business, and except for such guarantees or liabilities as are outstanding on the date of this Agreement, the Company shall not guarantee nor be liable in any manner, whether directly or indirectly, or become contingently liable after the date of this Agreement in connection with the obligations or indebtedness of any person or persons, except for (i) the indebtedness currently secured by the liens identified on the Pledged Property identified on Exhibit A hereto and (ii) the endorsement of negotiable instruments payable to the 11 Company for deposit or collection in the ordinary course of business. The Company shall not make any loan, advance or extension of credit to any person other than in the normal course of its business. Section 7.7. Debt. indebtedness as is outstanding on the date of this Agreement, without the prior written approval of Secured Party, the Company shall not create, incur, assume or suffer to exist any additional indebtedness of any description whatsoever in an aggregate amount in excess of $50,000 (excluding any indebtedness of the Company to the Secured Party, indebtedness otherwise permitted by the terms of this Agreement, trade accounts payable and accrued expenses incurred in the ordinary course of business and the endorsement of negotiable instruments payable to the Company, respectively for deposit or collection in the ordinary course of business). Section 7.8. Conduct of Business.      The Company will continue to engage in a business of the general type as conducted by it on the date of this Agreement. Section 7.9. Places of Business.      The location of the Company’s chief place of business is at the address set forth in Section 8.1 hereof. The Company shall not change the location of its chief place of business, chief executive office or any place of business disclosed to the Secured Party or move any of the Pledged Property from its current location without thirty (30) days' prior written notice to the Secured Party in each instance.      ARTICLE 8. MISCELLANEOUS Section 8.1. Notices.      All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on: (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or (b) five (5) days after mailing if mailed from within the continental United States by certified mail, return receipt requested to the party entitled to receive the same: If to the Secured Party: Trafalgar Capital Specialized Investment Fund   8-10 Rue Mathias Hardt   BP 3023   L-1030 Luxembourg   Attention: Andrew Garai, Chairman of the Board of   Trafalgar Capital Sarl, General Partner   Facsimile: 011-44-207-405-0161 and     001-786-323-1651 12 With a copy to: James G. Dodrill II, P.A.   5800 Hamilton Way   Boca Raton, FL 33496   Attention: James Dodrill, Esq.   Telephone: (561) 862-0529   Facsimile: (561) 892-7787             And if to the Company: Fox Petroleum, Inc.   64 Knightsbridge       London, SW1X7JF   Attention: Mr. Richard Joseph Moore, CEO and   Director     Telephone: 011-44-207-590-9630   Facsimile: 011-44-207-590-9601             With a copy to: As above                       Attention: Alex Craven - Director   Telephone: as above   Facsimile: as above      Any party may change its address by giving notice to the other party stating its new address. Commencing on the tenth (10th) day after the giving of such notice, such newly designated address shall be such party’s address for the purpose of all notices or other communications required or permitted to be given Section 8.2. Severability.      If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. Section 8.3. Expenses.      In the event of an Event of Default, the Company will pay to the Secured Party the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel, which the Secured Party may incur in connection with: (i) the custody or preservation of, or the sale, collection from, or other realization upon, any of the Pledged Property; (ii) the exercise or enforcement of any of the rights of the Secured Party hereunder or (iii) the failure by the Company to perform or observe any of the provisions hereof. 13 Section 8.4. Waivers, Amendments, Etc.      The Secured Party’s delay or failure at any time or times hereafter to require strict performance by Company of any undertakings, agreements or covenants shall not waiver, affect, or diminish any right of the Secured Party under this Agreement to demand strict compliance and performance herewith. Any waiver by the Secured Party of any Event of Default shall not waive or affect any other Event of Default, whether such Event of Default is prior or subsequent thereto and whether of the same or a different type. None of the undertakings, agreements and covenants of the Company contained in this Agreement, and no Event of Default, shall be deemed to have been waived by the Secured Party, nor may this Agreement be amended, changed or modified, unless such waiver, amendment, change or modification is evidenced by an instrument in writing specifying such waiver, amendment, change or modification and signed by the Secured Party. Section 8.5. Continuing Security Interest.      This Agreement shall create a continuing security interest in the Pledged Property and shall: (i) remain in full force and effect until payment in full of the Obligations (whether by payment of cash, redemption or conversion); and (ii) be binding upon the Company and its successors and heirs and (iii) inure to the benefit of the Secured Party and its successors and assigns. Upon the payment or satisfaction in full of the Obligations, the Company shall be entitled to the return, at its expense, of such of the Pledged Property as shall not have been sold in accordance with Section 5.2 hereof or otherwise applied pursuant to the terms hereof. Upon payment in full of all Obligations, the Secured Party shall execute and deliver to the Company all instruments and other documents as may be necessary or proper to release the lien on and security interest in the Pledged Property which has been granted hereunder. Section 8.6. Independent Representation.      Each party hereto acknowledges and agrees that it has received or has had the opportunity to receive independent legal counsel of its own choice and that it has been sufficiently apprised of its rights and responsibilities with regard to the substance of this Agreement. Section 8.7. Applicable Law: Jurisdiction.      This Agreement shall be governed by and interpreted in accordance with the laws of the State of Florida without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Florida and expressly consent to the jurisdiction and venue of the Florida State Court sitting in Broward County, Florida or the United States District Court for the Southern District of Florida, for the adjudication of any civil action asserted pursuant to this Paragraph. Section 8.8. Waiver of Jury Trial.      AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN 14 ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION. Section 8.9. Entire Agreement.      This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof. Section 8.10 Further Assurances.      The Company shall do and perform, or cause to be done and performed, all agreements, certificates, instruments and documents, as the Secured Party may of Furthermore, the Company agrees to execute such other documents as are reasonably required by the Secured Party. It shall be deemed a default of this Agreement if the Company fails to sign any such agreement within one business day of the date of request by Secured Party. 15      IN WITNESS WHEREOF, the parties hereto have executed this Security COMPANY: FOX PETROLEUM, INC.     By: /s/ Richard Joseph Moore Name: Mr. Richard Joseph Moore Title: CEO and Director         SECURED PARTY:   TRAFALGAR CAPITAL SPECIALIZED INVESTMENT FUND, LUXEMBOURG By: Trafalgar Capital Sarl   Its: General Partner         By: /s/ Andrew Garai   Name: Andrew Garai Title: Chairman of the Board 16 EXHIBIT A DEFINITION OF PLEDGED PROPERTY        For the purpose of securing prompt and complete payment and performance by the Company of all of the Obligations, the Company unconditionally and irrevocably hereby grants to the Secured Party a continuing security interest in and to, and lien upon, all of the Company’s and its current or future acquired subsidiaries’ assets, including specifically the following Pledged Property of the Company and its current or future acquired subsidiaries:                 (a)        all goods of the Company, including, without limitation, machinery, equipment, furniture, furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles of every kind and description, now or hereafter owned by the Company or in which the Company may have or may hereafter acquire any interest, and all replacements, additions, accessions, substitutions and proceeds thereof, arising from the sale or disposition thereof, and where applicable, the proceeds of insurance and of any tort claims involving any of the foregoing;                 (b)        all inventory of the Company, including, but not limited to, all goods, wares, merchandise, parts, supplies, finished products, other tangible personal property, including such inventory as is temporarily out of Company’s custody or possession and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing;                 (c)        all contract rights and general intangibles of the Company, including, without limitation, goodwill, trademarks, trade styles, trade names, leasehold interests, partnership or joint venture interests, patents and patent applications, copyrights, deposit accounts whether now owned or hereafter created;                 (d)        all documents, warehouse receipts, instruments and chattel paper of the Company whether now owned or hereafter created;                 (e)        all accounts and other receivables, instruments or other forms of obligations and rights to payment of the Company, including specifically an assignment of the receivables from ABB (herein collectively referred to as “Accounts”), together with the proceeds thereof, all goods represented by such Accounts and all such goods that may be returned by the Company’s customers, and all proceeds of any insurance thereon, and all guarantees, securities and liens which the Company may hold for the payment of any such Accounts including, without limitation, all rights of stoppage in transit, replevin and reclamation and as an unpaid vendor and/or lienor, all of which the Company represents and warrants will be bona fide and existing obligations of its respective customers, arising out of the sale of goods by the Company in the ordinary course of business;                 (f)        to the extent assignable, all of the Company’s rights under all present and future authorizations, permits, licenses and franchises issued or granted in connection with the operations of any of its facilities;                 (g)        all products and proceeds (including, without limitation, insurance proceeds) from the above-described Pledged Property; and                 (h)        all equity interests, securities or other instruments in other companies, including, without limitation, any subsidiaries, investments or other entities (whether or not controlled); and                 (i)         an assignment of all of the Company’s interest in the Genesco-Edwards Fields leases (Kansas), which shall be held in escrow and which shall be immediately assigned to the Secured Party upon the occurrence of A-1

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM10-K/A x ANNUAL REPORT PURSUANT TO SECTION13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July31, 2011 o TRANSITION REPORT UNDER SECTION13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number PHOTOAMIGO, INC. (Exact name of registrant as specified in its charter) Nevada 20-5422795 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2532 Foothill Rd. Santa Barbara, CA (Address of principal executive offices) (Zip Code) (805) 965-0699 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None N/A Title of each class Name of each exchange on which registered Securities registered pursuant to Section 12(g) of the Act: No Par Value Common Stock (Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.YesoNoý Indicate by check mark if the registrant is not required to file reports pursuant to Section13 or Section15(d)of the Act.YesýNoo Indicate by check mark whether the issuer (1)filed all reports required to be filed by Sections 13 or 15(d)of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.YesýNoo Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in PartIII of this Form10-K or any amendment to this Form10-K.ý Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.See the definitions of “large accelerated filer,”“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated fileroAccelerated filero Non-accelerated filero Smaller reporting company ý Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).oYesýNo State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:14,425,903 shares of common stock outstanding as of August 1, 2011. i TABLE OF CONTENTS PART I ITEM 1: BUSINESS 3 ITEM 1A: RISK FACTORS 5 ITEM 1B: UNRESOLVED STAFF COMMENTS 5 ITEM 2: PROPERTIES 5 ITEM 3: LEGAL PROCEEDINGS 5 ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 5 PART II ITEM 5: MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES 6 ITEM 6: SELECTED FINANCIAL DATA 6 ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 7 ITEM 8: FINANCIAL STATEMENTS 11 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANS ON ACCOUNTING AND FINANCIAL DISCLOSURE 22 ITEM 9A. CONTROLS AND PRODEDURES (As amended herein) 22 ITEM 9B: OTHER INFORMATION 22 PART III ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 23 ITEM 11: EXECUTIVE COMPENSATION 24 ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 24 ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 25 ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES 25 PART IV ITEM 15: EXHIBITS 25 SIGNATURES 26 ADDITIONAL INFORMATION Descriptions of agreements or other documents contained in this report are intended as summaries and are not necessarily complete. Please refer to the agreements or other documents filed or incorporated herein by reference as exhibits. Please see the exhibitindex at the end of this report for a complete list of those exhibits. 1 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management and information currently available to management. The use of words such as “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates”, “should”, “likely” or similar expressions, indicates a forward-looking statement. The identification in this report of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. Factors that could cause actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: • The worldwide economic situation; • Any change in interest rates or inflation; • The willingness and ability of third parties to honor their contractual commitments; • The Company’s ability to raise additional capital, as it may be affected by current conditions in the stock market and competition for risk capital; • The Company’s capital costs, as they may be affected by delays or cost overruns; • The Company’s costs of production; • Environmental and other regulations, as the same presently exist or may later be amended; • The Company’s ability to identify, finance and integrate any future acquisitions; and • The volatility of the Company’s stock price. 2 PARTI ITEM 1.BUSINESS. General We were incorporated in the State of Nevada on April 2, 2008.Since inception, we have engaged in activities to formulate and implement our business plan. Overview We provide social networking and photo sharing from the website PhotoAmigo.com.As of Januray 31, 2010, our website had 4,402 users using our free photo sharing products.We also maintain the domain names PhotoAmigo.net, fotoamigo.com and fotoamigo.net.These domain names all redirect incoming traffic to our main website, PhotoAmigo.com. Our website currently allows users to upload photos, share comments via photo blogs, and print photos through third-party vendors.Our free services allow users to upload up to ten photos per day.We offer apremium servicewhich ispriced at $19.99 per year and allows for unlimited uploading of photos.As of the date of this prospectus, all of our users are using our free service. In addition to our photo sharing services, we offer display advertising on our site through Google Adsense.We do not currently generate any revenue through advertising, and we estimate that we will require a minimum of six months to begin generating revenue from display advertising.In order to generate revenue from advertising, we will need to increase traffic to our website. Business Strategy Our business strategy is to engage users by offering free photo sharing and social networking services.We believe that by offering a full suite of services for free, we can eventually get users to upgrade their membership for more photo sharing storage space.Currently, we offer the following services to our members: · Full html in guestbooks and photo descriptionsby providing html based pages, users are able to embed video, audio and links within their pages.By allowing users to include this type of data, the PhotoAmigo internal pages can provide rich media to the site’s visitors; · High resolution images—our image compression tools create a repository for higher resolution images for enlargements and printing; · Cell phone uploads—usersare able to send images from their mobile phone directly to their PhotoAmigo pages; · In-house mail program allowing users to send and receive email originated within the site; · Image printing—we have integrated withShutterfly to allow users to print their photos directly from our website. 3 Marketing We will use a variety of marketing strategies to build overall traffic to the site and intend to emphasize our marketing efforts.We plan to gain new members by offering the free subscription level but will use marketing efforts within the site to upgrade our members to a paid program.To cultivate new members, we plan to use the following marketing strategies: · Search Engine Optimization · Google adwords (purchasing key words such as “free photo sharing”) · International Craigslist postings · Guerrilla marketing:handing out postcards and installing street posters · Harvesting existing photo sharing sites (direct email invites) · Press releases to mass publications (magazines, newspapers, radio and TV) · Friends, family and word of mouth. We also believe that our success is dependent on viral marketing, which is implicit in photo sharing since our domain name is presented each time a member shares a photo. In addition to viral marketing strategies, we intend to rely on search engine optimization techniques to increase traffic to our website over the next twelve months.Search engine optimization, or SEO, is the process of improving the volume of traffic generated from search engines such as Google or Yahoo.We intend to optimize our website for key terms such as "photo sharing", "photo blogs", and "free photo hosting."There is significant competition for these keywords and other keywords that direct traffic to photo sharing websites.Given our limited capital resources, we may be unable to optimize our site in order to generate significant traffic from search engines. Competition Several online sites allow for storage and printing of digital photos.Many of these sites have grown to recognized brand names and receive millions of uploaded photos each day.We believe that some users are interested in using a smaller site in which their photos can be featured. Flickrwas acquired by Yahoo! When it had approximately 300,000 members.According to a 2007 article in the weblog TechCrunch.com, “Flickr now has over 1 billion photos and 37.7 million unique monthly visitors.2.5 million new photos are uploaded daily by 15 million registered users. Fotolog:A February 2007 press release from the company cited 6.5 million member accounts from more than 200 countries that have shared more than 200 million photos since the site’s inception in October 2002.The press release went on to call Fotolog “the world’s largest photo-blogging community and the third most trafficked social media network on the Internet.”It added, “Fotolog has grown 100 percent virally since its founding in 2002, with no marketing or member incentives.” Photobucketwas founded in 2003.$15 million was invested before Photobucket was acquired by Fox Interactive Media’s MySpace for $250 million in May of 2007, according to crunchbase.com.“Their main revenue streams are through premium accounts and advertising.” 4 Reports to Security Holders. Photoamigo is subject to reporting obligations under the Exchange Act. These obligations include an annual report under cover of Form 10-K, with audited financial statements, unaudited quarterly reports and the requisite proxy statements with regard to annual shareholder meetings. The public may read and copy any materials Photoamigo files with the SEC at the SEC's Public Reference Room at treet, NE, Washington, DC 20549. The public may obtain information of the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0030.The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Office We are provided rent-free office space by our Chief Executive Officer at 2532 Foothill Rd. Santa Barbara, CA93105. Employees At November 1 , 2011, we had 1 employee, our Chief Executive Officer. ITEM 1A. RISK FACTORS Not required. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Photoamigo owns no property. Photoamigo uses the offices of its Chief Executive Officer for its minimal office facility needs for no consideration. ITEM 3. LEGAL PROCEEDINGS We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our results of operation or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 5 PARTII ITEM 5. MARKET FOR COMMON EQUITY. RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES Market Information There is currently no market for Photoamigo’s common stock and there can be no assurance that a market will develop in the future. The Company has submitted a 15c211 application to the OTC Bulletin Board to have the Company’s common stock quoted on the OTC Bulletin Board. Such application is currently pending. Holders As of November 1, 2011, a total of 3,012,000 shares of our common stock were outstanding and there were approximately 33 holders of record. Penny Stock Rules Due to the price of our common stock, as well as the fact that we are not listed on Nasdaq or a national securities exchange, our stock is characterized as "penny stocks" under applicable securities regulations. Our stock will therefore be subject to rules adopted by the Securities and Exchange Commission (“SEC”) regulating broker-dealer practices in connection with transactions in penny stocks. The broker or dealer proposing to effect a transaction in a penny stock must furnish his customer a document containing information prescribed by the SEC and obtain from the customer an executed acknowledgment of receipt of that document. The broker or dealer must also provide the customer with pricing information regarding the security prior to the transaction and with the written confirmation of the transaction. The broker or dealer must also disclose the aggregate amount of any compensation received or receivable by him in connection with such transaction prior to consummating the transaction and with the written confirmation of the trade. The broker or dealer must also send an account statement to each customer for which he has executed a transaction in a penny stock each month in which such security is held for the customer's account. The existence of these rules may have an effect on the price of our stock, and the willingness of certain brokers to effect transactions in our stock. Transfer Agent We have appointed Corporate Stock Transfer, Inc. (“CST”) as the transfer agent for our common stock. The principal office of CST is located at 3200 Cherry Creek Drive South, Suite 430, Denver, CO80209 and its telephone number is (303) 282-4800. Dividend Policy We have never declared or paid dividends on our common stock. Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including the terms of any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for expansion. At the present time, we intend to retain any earning in our business, and therefore do not anticipate paying dividends in the foreseeable future. Recent Sales of Unregistered Securities; Use of Proceeds From Unregistered Securities None. ITEM 6. SELECTED FINANCIAL DATA Not required. 6 ITEM 7. MANAGEMENTS’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion and analysis was prepared to supplement information contained in the accompanying financial statements and is intended to explain certain items regarding the financial condition as of July 31, 2011, and the results of operations for the years ended July 31, 2011, and 2010.It should be read in conjunction with the audited financial statements and notes thereto contained in this report. Overview of the Business We were incorporated in the State of Nevada on April 2, 2008.Since inception, we have engaged in activities to formulate and implement our business plan. Ability to continue as a “going concern”.The independent registered public accounting firm’s reports on our financial statements as of July 31, 2011 and 2010, includes a “going concern” explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern.Management’s plans in regard to the factors prompting the explanatory paragraph are discussed in the financial statements, including footnotes thereto. Development Stage Company.We are considered to be in the development stage as defined in the accounting standards. We have devoted substantially all of our efforts to business planning and development.Additionally, we have allocated a substantial portion of our time and investment to bringing our product to the market, and to raising capital.We have not yet generated revenue from operations. Plan of Operation We plan to provide social networking and photo sharing from our website PhotoAmigo.com.We also maintain the domain names PhotoAmigo.net, fotoamigo.com and fotoamigo.net.These domain names all redirect incoming traffic to our main website, PhotoAmigo.com. We believe that we can generate significant revenue from the services provided by our website.We need to continue development of the features on the website and attract additional subscribers.PhotoAmigo believes that its brand, product offering and future enhancements will continue to attract users and will make it a premier destination for photo sharing.While there are established photo sharing sites on the Internet, we believe that the continued growth of sharing photos and photo blogging will create an opportunity for additional sites.Our strategy is to engage users by offering free photo sharing and social networking services.We believe that by offering a full suite of services for free, we can eventually get users to upgrade their membership for more photo sharing storage space. As shown in the following table, we have slowly increased the total number of members using our free services. July 31, 2009 October 31, 2009 January 31, 2010 April 30, 2010 July 31, 2010 To become a viable enterprise, we must further increase the number of members visiting our site and convert members from free membership to paid membership.We did not generate revenue from any members using our paid services in any of these periods. Liquidity and Capital Resources As of July 31, 2011, we had working capital (deficit) of $(36,604) comprised of current assets of $1,227 and current liabilities of $37,831. This represents a decrease in working capital of $30,381 from the July 31, 2010 balance of $(6,223). During the year-ended July 31, 2011our working capital decreased as we continued to fund our plan of operations. 7 We believe that our capital requirements for the next twelve months will be approximately $32,000, and we do not currently have these capital resources.We estimate that our cash resources will allow us to operate for one-half month. We have not yet reported any revenue from operations.To fund our operations, we issued 2,850,000 shares of common stock on April 2, 2008 for cash proceeds of $50,000.On April 28, 2008, we issued an additional 138,000 shares of common stock for cash proceeds of $11,500.On January 25, 2010, an additional 24,000 shares of common stock were issued for cash proceeds of $400. In addition, our Chief Executive Officer has periodically advanced funds to us to meet our working capital needs. As of July 31, 2011, we owe our Chief Executive Officer $226 for advances which are non-interest bearing and due on demand. From inception to July 31, 2010, cash used from operating activities was $81,173.We have recently reduced our operating activities so that we can conserve cash. Our lack of capital resources will require us to obtain additional funding to achieve our photo sharing website development goals. In the past we have relied on issuances of common stock to fund our operations. We will seek additional financing in the form of debt or equity.There is no assurance that we will be able to obtain any needed financing on favorable terms, or at all, or that we will find qualified purchasers for the sale of our stock.Any sales of our securities would dilute the ownership of our existing investors. We currently have no written or firm agreement regarding future funding requirements, and we may curtail our efforts or cease activities entirely. Future Capital Expenditures As of and subsequent to July 31, 2011, we have no plans or commitments to acquire capital assets. Off-Balance Sheet Arrangements As of and subsequent to July 31, 2011, we have no off-balance sheet arrangements. Contractual Commitments As of July 31, 2011, we have no material contractual commitments. Results of Operations- Year Ended July 31, 2011Compared to Year Ended July 31, 2010 We reported a net loss of $(30,380) or $ (0.01) per share for the year ended July 31, 2011, compared to a net loss of $(24,935) or $ (0.01) per share for the year ended July 31, 2010.We did not report any revenues from sales or services during the year. Operating expenses totaled $29,977 for the year ended July 31, 2011, compared to $24,951 for the comparable period in 2010, a decrease of $5,026 or 20 %.We incur employee compensation and website development expenses in connection with activities to develop our business.We incur professional fees in connection with the activities required to prepare disclosure documents.Consistent with our current need to conserve capital resources, we have reduced our website development, marketing, and certain general and administrative expenses.Professional fees increased during 2011 in connection with preparation of information to be included in our registration statement. 8 CRITICAL ACCOUNTING POLICIES Use of Estimates Preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.Significant estimates have been used by management in conjunction with the measurement of the valuation allowance relating to deferred tax assets and future cash flows associated with long-lived assets. Actual results could differ from those estimates. Revenue Recognition We recently commenced operations, and have not yet generated any revenues from operations.Revenues are expected to be derived principally from subscriptions to our website.Revenue will be recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the amount is reasonably assured.Certain insignificant amounts collected during the development, testing, and implementation phases are recorded as a recovery of development expense. Deferred revenue will be recorded when amounts are received from customers for future subscriptions.Amounts received are recorded as income each month based on the pro-rata portion of the prepaid subscription that has been fulfilled. Cash and Cash Equivalents For financial statement presentation purposes, we consider short-term, highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Contingencies We are not currently a party to any pending or threatened legal proceedings.Based on information currently available, management is not aware of any matters that would have a material adverse effect on our financial condition, results of operations or cash flows. Fair Value of Financial Instruments Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management.The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values.These financial instruments include cash, accrued compensation, advances from officer, and accounts payable.Fair values are assumed to approximate carrying values for these financial instruments because they are short term in nature, or are receivable or payable on demand. Income Taxes Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes using the asset/liability method of accounting for income taxes.Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. PhotoAmigo provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not. 9 Per Share Amounts We provide for the calculation of "Basic" and "Diluted" earnings per share.Basic earnings per share includes no dilution and is computed by dividing net income (or loss) by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company, assuming the issuance of an equivalent number of common shares pursuant to options, warrants, or convertible debt arrangements.Diluted earnings per share is not shown for periods in which the Company incurs a loss because it would be anti-dilutive.Similarly, potential common stock equivalents are not included in the calculation if the effect would be anti-dilutive. Impairment of Long Lived Assets PhotoAmigo periodically reviews the carrying amount of long lived assets to determine whether current events or changes in circumstances warrant adjustments to such carrying amounts.If an impairment adjustment is deemed necessary, such loss is measured by the amount that the carrying value of such assets exceeds their fair value.Considerable management judgment is necessary to estimate the fair value of assets; accordingly, actual results could vary significantly from such estimates.Assets to be disposed of are carried at the lower of their financial statement carrying amount or fair value less costs to sell. Recent Accounting Pronouncements.There were various accounting standards and interpretations recently issued which have not yet been adopted, including: Derivatives and Hedging - ASU No. 2010-11 was issued in March 2010 and clarifies that the transfer of credit risk that is only in the form of subordination of one financial instrument to another is an embedded derivative feature that should not be subject to potential bifurcation and separate accounting.This ASU will be effective for the Company beginning August 1, 2010. Compensation – Stock Compensation - ASU No. 2010-13 was issued in April 2010 and will clarify the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades.This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted. Fair value measurements and disclosure – In January 2010 the FASB issued ASU No.2010-06, which amends existing disclosure requirements to require additional disclosures regarding fair value measurements, including the amounts and reasons for significant transfers between Level 1 and Level 2 of the fair value hierarchy.Furthermore, the reconciliation for fair value measurements using significant unobservable inputs now requires separate information about purchases, sales, issuances, and settlements.Additional disclosure is also required about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring measurements.This ASU is currently being evaluated to determine its impact on our financial position, operations, or cash flows. There were various other accounting standards updates recently issued, most of which represented technical corrections to the accounting literature of application to specific industries.None of the recent updates are expected to have a material impact on the Company’s financial position, operations, or cash flows. 10 ITEM 8. FINANCIAL STATEMENTS RONALD R. CHADWICK, P.C. Certified Public Accountant 2851 South Parker Road, Suite 720 Aurora, Colorado80014 Telephone (303)306-1967 Fax (303)306-1944 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors PhotoAmigo, Inc. Santa Barbara, California I have audited the accompanying balance sheets of PhotoAmigo, Inc. (a development stage company) as of July 31, 2011 and 2010, and the related statements of operations, stockholders’ equity and cash flows for the years then ended, and for the period from April 2, 2008 (inception) through July 31, 2011. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.I believe that my audit provides a reasonable basis for my opinion. In my opinion, thefinancial statements referred to above present fairly, in all material respects, thefinancial position of PhotoAmigo, Inc. as of July 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, and for the period from April 2, 2008 (inception) through July 31, 2011 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has suffered losses from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Aurora, Colorado /s/Ronald R. Chadwick, P.C. December 3, 2011

EXHIBIT 31.2 CERTIFICATION PURSUANT TO SECTION -OXLEY ACT Certification Pursuant to Section 906 of the Sarbanes-Oxley Act I, Stuart Ducote, Chief Executive Officer of United Mortgage Trust (the "Company"), have executed this certification for furnishing to the Securities and Exchange Commission in connection with the filing with the Commission of the registrant's Quarterly Report on Form 10-Q for the period ended September 30, 2010 (the "Report"). I hereby certify that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the end of that period. UNITED MORTGAGE TRUST Date:November 15, 2010 By /s/Stuart Ducote President

Title: Where can I view US Federal Laws on beach and ocean use/access? Question: Answer #1: Those are generally state laws. Some states have no "private beaches" at all, others everything's private unless otherwise posted, states differ on where the public part starts and so on.

EXHIBIT 32.2 CERTIFICATION PURSUANT TO SECTION -OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350) In connection with theamended Annual Report (the "Amended Report") on Form 10-K/A of First National Energy Corporation, a Nevada corporation (the "Registrant"), for theyear ending December 31, 2009, as filed with the Securities and Exchange Commission on this date, I, Peter Wanner,as Chief Financial Officer of the Registrant, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Amended Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Amended Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: January 4, 2011, 2010 /s/ Peter Wanner Peter Wanner Chief Financial Officer This certification accompanies each Amended Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 10.321 The Charles Schwab Corporation Long Term Incentive Plan (Amended and Restated December 12, 2007) (Amended and Restated October 23, 2008) Section 1. PURPOSE The Charles Schwab Corporation Long Term Incentive Plan (the “Plan”) is intended to provide financial incentives to selected management employees to contribute to the long-term success of The Charles Schwab Corporation and its affiliated companies (collectively the “Company”). Section 2. DEFINITIONS As used in this Plan, the following capitalized terms shall have the meanings set forth below: a) “Administrative Committee” means the committee of the Plan, which shall consist of the individuals occupying the following three offices of the Corporation: Chief Financial Officer b) “Award” means the cash amount payable to a Participant pursuant to the provisions of this Plan. c) “Board” means the Board of Directors of The Charles Schwab Corporation. d) “Change in Control” means the occurrence of any of the following events after the effective date of the Plan but only to the extent that such change in control transaction is a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company as defined in the regulations promulgated under section 409A of the Code:     (1) A change in control required to be reported pursuant to Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act;     (2) A change in the composition of the Board, as a result of which fewer than fifty percent (50%) of the incumbent directors are directors who either (i) had been directors of the Company twelve (12) months prior to such change or (ii) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the directors who had been directors of the Company twelve (12) months prior to such change and who were   1   still in office at the time of the election or nomination;     (3) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); provided, however, that any change in the relative beneficial ownership of securities of any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company. e) “Committee” means the Compensation Committee of the Board of Directors of The Charles Schwab Corporation. f) “Covered Employees” means a Participant who, as of the date of payment of an Award is one of a group of “covered employees,” as defined in the Regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986, or any successor statute. g) “Determination Date” means the date on which the Participants, Performance Goals and Target Awards are determined for any Performance Period. h) “Disability” means the inability to engage in any substantial gainful activity considering the Participant’s age, education and work experience by reason of any medically determined physical or mental impairment that has continued without interruption for a period of at least six months and that can be expected to be of long, continued and indefinite duration. All determinations as to whether a Participant has incurred a Disability shall be made by the Employee Benefits Administration Committee of the Company, the findings of which i) “Participant” means an eligible employee of the Company who has been designated as a Participant in accordance with section 3 hereof. j) “Performance Goal” shall mean a measure of corporate performance (such as cumulative earnings per share), that shall be selected by the Committee to be used as the basis for determining the amounts payable pursuant to the Plan for a Performance Period. Performance goals shall be selected from among the following: revenue growth, net revenue growth, operating revenue growth, consolidated pretax profit margin, consolidated pretax operating margin, consolidated after-tax profit margin, consolidated after-tax operating profit margin, customer net new asset growth, stockholder return, return on assets, earnings per share, return on equity, and return on investment.   2 k) “Performance Period” means a period of four fiscal years of the Company, or such other period as may be specified by the Committee, which has been designated by the Committee as a period for which Awards may be paid pursuant to the Plan. The Committee may authorize more than one Performance Period to be in effect at any one time. l) “Retirement” shall mean any termination of employment of a Participant for any reason other than death at any time after the Participant has attained Retirement Age. For awards granted prior to October 23, 2008, Retirement Age shall mean age fifty (50), but only if, at the time of such termination, the Participant has been credited with at least seven (7) Years of Service under the Schwab Plan Retirement Savings and Investment Plan. For awards granted on or after October 23, 2008, Retirement Age shall mean age fifty-five (55), but only if, at the time of such termination, the Participant has been credited with at least ten (10) Years of Service under the Schwab Plan Retirement Savings and Investment Plan. m) “Target Award” has the meaning assigned thereto in Section 5 (a) hereof. Section 3. ELIGIBILITY a) Participation in the Plan is limited to officers (and officer equivalents) of the Company, as may be selected for participation in the Plan by the Committee as of each Determination Date. b) Participants generally shall be selected at the beginning of the Performance Period. After the Performance Period has commenced, the Committee shall have the authority to designate additional Eligible Participants under this Plan, and the amount of the Award payable to such individuals who become Participants after the Determination Date for that Performance Period shall be pro-rated to reflect the portion of the Performance Period during which such Eligible Participant was a Participant in the Plan. Section 4. PLAN TERM The Plan shall become effective as of January 1, 2003, and shall continue in effect until terminated by the Committee. Section 5. PERFORMANCE CRITERIA AND TARGET AWARDS a) Performance Period and Target Awards. The length of each Performance Period shall be the four year period commencing as of any Determination Date, or such other period as may be specified by the Committee. On the Determination Date for a Performance Period, the Committee shall determine for each Participant an amount, which may be expressed in Plan Units, that shall be payable to the Participant as an Award for that Performance Period if the Performance Goal for that Performance Period is achieved (the “Target Award”). The Committee shall have the authority to delegate to the Company’s executive management the authority to issue Target Awards to Participants, other than executive officers.   3 b) Performance Goals. As of the Determination Date for a Performance Period, the Committee shall establish a Performance Goal for the Performance Period. The Committee may specify that the Performance Goal may include a threshold level of performance below which no Award shall be payable, levels of performance at which specified percentages or multiples of the Target Award shall be payable, and a maximum level of performance above which no additional Award shall be paid; provided that in calculating the value of an Award, the maximum multiple shall be 400% of the Target Award. c) Equitable Adjustment. The Committee shall have the discretion to make equitable adjustments to Performance Goals in recognition of unusual or non-recurring events affecting the Company, its financial statements or its shares, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the acquisition, disposition or discontinuance of a business or a segment of a business, or related to a change in accounting principles, or to reflect capital changes. d) Certification and Restrictions on Amount of Awards. Following the end of each Performance Period, the Committee shall be required to certify whether and the extent to which the Performance Goal for the Performance Period was satisfied before any Award is paid to any Participant. With respect to any Performance Period, at any time before an Award for such Performance Period is paid, the Committee may establish a ceiling on the aggregate amount which may be paid out in Awards for such Performance Period. In the event that such a limit is established for any Performance Period, the Awards otherwise payable to all Participants for such Performance Period shall be reduced pro-rata. The amount of any Award may be pro-rated for any period of time during which the Participant was not an active employee of the Company or any of its Subsidiaries, including leaves of absence and other periods as may be determined by the Company in its discretion. e) Maximum Target Award. In no event shall the total amount of Target Awards granted to any Participant pursuant to the Plan in any calendar year exceed $3,000,000. f) Delegation to Management. The Committee shall have the authority to delegate to the executive officers of the Company the authority to issue Target Awards to Participants, other than executive officers. Section 6. CALCULATION OF AMOUNT OF AWARDS The amount of Awards payable for a Performance Period will be calculated as soon as practicable following the close of each Performance Period, in accordance with the provisions of Section 8 of this plan. Section 7. VESTING Subject to the remaining provisions of the Plan, and subject to the authority of the Committee to authorize a different vesting schedule at   4 the time it authorizes the granting of a Target Award, Awards shall become vested only if the Participant remains continuously employed with the Company from the date the Participant receives a Target Award, in accordance with the following schedule:   Vesting Date    Vested Percentage % of Award (Cumulative)   1st Anniversary of Target Award    0 % 2nd Anniversary of Target Award    25 % 3rd Anniversary of Target Award    50 % 4th Anniversary of Target Award    100 % Section 8. PAYMENT OF AWARDS Awards will be paid in cash on or after January 1st and on or before March 15th of the calendar year immediately following the end of the last fiscal year on which the award is based, but not prior to certification of the Company’s results by its independent auditors for all years of the Performance Period. Subject to the provisions of Section 9, a Participant will be entitled to payment of an Award only if the Participant has been continuously employed by the Company throughout the Performance Period and is still in the employ of (and has not delivered notice of resignation to) the Company on the date of payment of the Award). The Company will withhold from payments all applicable taxes as may be required by applicable law. Section 9. TERMINATION OF EMPLOYMENT DURING A PERFORMANCE PERIOD (a) Death or Disability. Effective for target awards made before July 19, 2004, if a Participant’s employment is terminated as a result of death or disability at any time after the first two years of a Performance Period (and before completion of the Performance Period), such Participant or Participant’s estate shall be entitled to receive the Award such Participant would have been entitled to receive, pro-rated to reflect the actual amount of time that such person was a Participant in the Plan for such Performance Period, valued and payable as determined by the Administrative Committee as soon as practicable following the end of the calendar quarter that includes the date of the Participant’s date of death. Effective for target awards made on or after July 19, 2004, if a Participant’s employment is terminated as a result of death or disability at any time after the first two years of a Performance Period (and before completion of the Performance Period), such Participant or Participant’s estate shall be entitled to receive the entire Award such Participant would have been entitled to, based on Company performance and payable at the time Awards are paid to all other Participants for such Performance Period. If a Participant’s employment is terminated as a result of death or disability at any time during the first two years of a Performance Period (and before completion of the Performance Period), such Participant shall be entitled to receive a pro-rated Award, based on the number of whole months in the Performance Period prior to the Participant’s termination, based on Company performance and payable at the time Awards are paid to all other Participants for such Performance Period. (b) Retirement after first two years of a Performance Period. If a   5 Participant’s employment is terminated on account of Retirement at any time after the first two years of a Performance Period (and before completion of the Performance Period), such Participant shall be entitled to receive the entire Award such Participant would have been entitled to, based on Company performance and payable at the time Awards are paid to all other Participants for such Performance Period. (c) Other Termination of Employment. If a Participant’s employment is terminated for any reason other than death, disability or Retirement at any time after the Performance Period), such Participant shall be entitled to receive the Award such Participant would have been entitled to, multiplied by the Participant’s vested percentage at the time of termination, based on Company performance and Performance Period. (d) Termination of Employment After the End of a Performance Period but Prior to Payment. If, after the completion of a Performance Period and before the payment of an Award, a Participant’s employment with the Company terminates by reason of the Participant’s death, Disability or Retirement, the Participant shall be entitled to the payment of any Award for such Performance Period. Any Award payable to a deceased Participant shall be paid to the Participant’s estate. Section 10. AMENDMENTS, MODIFICATIONS, AND TERMINATION OF THE PLAN The Committee may terminate, modify or amend the Plan at any time, provided that such action shall not affect the rights of the Plan Participants to awards that were granted prior to the date of such termination, modification or amendment. Section 11. NO RIGHT TO CONTINUED EMPLOYMENT The designation of an employee as a Participant for any Performance Period or the receipt of an award by a Participant shall not give the Participant any right to continued employment by the Company for any period of time, and the right to dismiss any employee is specifically reserved by the Company. Section 12. CHANGE IN CONTROL In the event of a Change in Control, all Awards shall become fully payable within seventy (70) days following such Change in Control, and the value of all Awards shall be determined by the Committee as soon as practicable following the end of the calendar quarter immediately preceding the Change in Control. Section 13. GOVERNING LAW The Plan shall be construed and its provisions enforced and administered in accordance with the laws of the State of California.   6

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 8, 2010 CHEYENNE RESOURCES CORPORATION (Exact name of registrant as specified in its charter) Nevada 333-140204 76-0672176 (State or other jurisdiction of incorporation or organization) (Commission File Number) (IRS Employer Identification No.) 7305 Calle Sagrada Bakersfield, California 93309 (Address of principal executive office) Issuer's telephone number:(661) 332-0882 1 Item 5.02 Departure of Directors or Certain Officers; Election of Directors;Appointment of Certain Officers;Compensatory Arrangements of Certain Officers Effective March 8, 2010, Robert A. Bell resigned as Secretary and Director of Cheyenne Resources Corporation (the “Company”).In submitting his resignation, Mr. Bell did not express anydisagreement with the Companyon any matter relating to the registrant’s operations, policies or practices. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Cheyenne Resources Corporation Date: March 30, 2010 By: /s/ Thomas Cunningham Thomas Cunningham, Chief Executive Officer 3

Exhibit 10.1 Execution Version Hercules Offshore, Inc. $250,000,000 of 3.375% Convertible Senior Notes due 2038 Purchase Agreement May 28, 2008       Goldman, Sachs & Co., Banc of America Securities LLC UBS Securities LLC     As representative of the several Purchasers     named in Schedule I hereto, c/o Goldman, Sachs & Co., 1000 Louisiana, Suite 1100 Houston, Texas 77002 Ladies and Gentlemen:      Hercules Offshore, Inc., a Delaware corporation (the “Company”), proposes, subject to the terms and conditions stated herein, to issue and sell to the Purchasers named in Schedule I hereto (the “Purchasers”), for whom Goldman, Sachs & Co., Bank of America Securities LLC and UBS Securities LLC are acting as representatives (the “Representatives”), an aggregate of $250,000,000 original principal amount of the 3.375% Convertible Senior Notes due 2038 (the “Firm Securities”), convertible into shares of common stock, par value $0.01 per share (“Stock”), of the Company, and, at the election of the Purchasers, up to an aggregate of $37,500,000 additional original principal amount of the 3.375% Convertible Senior Notes due 2038 (the “Optional Securities”). The Firm Securities and the Optional Securities are collectively referred to herein as the “Securities”.      1. The Company represents and warrants to, and agrees with, each of the Purchasers that:   (a)   A preliminary offering circular, dated May 27, 2008 (the “Preliminary Offering Circular”) has been prepared, and an offering circular, dated May 28, 2008 (the “Offering Circular”), will be prepared, in connection with the offering of the Securities and shares of the Stock issuable upon conversion thereof. The Preliminary Offering Circular, as amended and supplemented immediately prior to the Applicable Time (as defined in Section 1(b)), is hereinafter referred to as the “Pricing Circular”. Any reference to the Preliminary Offering Circular, the Pricing Circular or the Offering Circular shall be deemed to refer to and include           the Company’s most recent Annual Report on Form 10-K and all subsequent documents filed with the United States Securities and Exchange Commission (the “Commission”) pursuant to Section 13(a), 13(c) or 15(d) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”) on or prior to the date of such Circular (to the extent incorporated by reference therein) and any reference to the Preliminary Offering Circular or the Offering Circular, as the case may be, as amended or supplemented, as of any specified date, shall be deemed to include (i) any documents filed with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act after the date of the Preliminary Offering Circular or the Offering Circular, as the case may be, and prior to such specified date (to the extent incorporated by reference therein) and (ii) any Additional Issuer Information (as defined in Section 5(f)) furnished by the Company prior to the completion of the distribution of the Securities; and all documents filed under the Exchange Act and so deemed to be included in the Preliminary Offering Circular, the Pricing Circular or the Offering Circular, as the case may be, or any amendment or supplement thereto are hereinafter called the “Exchange Act Reports”. The Exchange Act Reports, when they were or are filed with the Commission, conformed or will conform in all material respects to the applicable requirements of the Exchange Act and the applicable rules and regulations of the Commission thereunder; and no such documents were filed with the Commission since the Commission’s close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement, except as set forth on Schedule II(a) hereof. The Preliminary Offering Circular or the Offering Circular and any amendments or supplements thereto and the Exchange Act Reports did not and will not, as of their respective dates, contain an untrue statement of a material misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a Purchaser through the Representatives expressly for use therein;     (b)   For the purposes of this Agreement, the “Applicable Time” is 4:45 pm (Eastern time) on the date of this Agreement; the Pricing Circular as supplemented by the information set forth in Schedule III hereto, taken together (collectively, the “Pricing Disclosure Package”) as of the Applicable Time, did not include any untrue statement of a made, not misleading; and each Company Supplemental Disclosure Document (as defined in Section 6(a)(i)) listed on Schedule II(b) hereto, does not conflict with the information contained in the Pricing Circular or the Offering Circular and each such Company Supplemental Disclosure Document, as supplemented by and taken together with the Pricing Disclosure Package as of the Applicable Time, did not include any untrue statement of a material fact or omit to state any that this representation and warranty shall not 2         apply to statements or omissions made in a Company Supplemental Disclosure Document in reliance upon and in conformity with information furnished in writing to the Company by a Purchaser through the Representatives expressly for use therein;   (c)   Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Pricing Circular any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Circular; and, since the respective dates as of which information is given in the Pricing Circular, there has not been (i) any change in the capital stock (excluding grants of shares of restricted stock and options to employees or directors of the Company under plans existing on the date of the Preliminary Offering Circular and the issuance of shares upon exercise of outstanding stock options) or any increase in the long term debt of the Company or any of its subsidiaries or (ii) any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”), in each case of clauses (i) and (ii) otherwise than as set forth or contemplated in the Pricing Circular;     (d)   The Company and property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Pricing Circular or such as do not materially affect the proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries;     (e)   The Company has been duly incorporated State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Pricing Circular, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; and each subsidiary of the Company has been duly incorporated or organized and is validly existing as a corporation or other organization in good standing under the laws of its jurisdiction of incorporation or organization; 3     (f)   The Company has an authorized capitalization as set forth in the Pricing Circular, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non assessable; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non assessable and (except as otherwise set forth in the Pricing Circular) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims;     (g)   This Agreement has been duly authorized, executed and delivered by the Company;     (h)   The Securities have been duly authorized and, when issued and delivered pursuant to this Agreement and authenticated by the Trustee (as defined below), will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the indenture to be dated as of June 3, 2008 (the “Indenture”) between the Company and The Bank of New York Trust Company, National Association, as Trustee (the “Trustee”), under which they are to be issued, which will be substantially in the form previously delivered to you; the Indenture has been duly authorized and, when executed and delivered by the Company and the Trustee, the Indenture will constitute a valid and legally binding instrument of the Company, enforcement, to bankruptcy, insolvency, reorganization and other laws of general principles; and the Securities and the Indenture will conform in all material respects to the descriptions thereof in the Pricing Disclosure Package and the Offering Circular and will be in substantially the form previously delivered to you;     (i)   Upon issuance and delivery of the Securities in accordance with this Agreement and the Indenture, the Securities will be convertible at the option of the holder thereof into shares of Stock in accordance with the terms of the Securities; the Stock reserved for issuance upon conversion of the Securities has been duly authorized and reserved and, when issued upon conversion of the Securities in accordance with the terms of the Securities and the Indenture, will be duly and validly issued, fully paid and non-assessable, and the issuance of such Stock will not be subject to any preemptive or similar rights; and Stock issuable upon conversion of the Securities will conform in all material respects to the description of the Stock contained in the Pricing Circular and the Offering Circular;     (j)   None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Securities) will violate or result in a violation of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without limitation, Regulations T, U, and X of the Board of Governors of the Federal Reserve System; 4     (k)   Except as described in the Pricing Circular, prior to the date hereof, neither the Company nor any of its affiliates has taken any action which is designed to or which has constituted or which might have been expected to cause or result in stabilization or manipulation of the price of any security of the Company in connection with the offering of the Securities;     (l)   The issue and sale of the Securities and the compliance by the Company with all of the provisions of the Securities, the Indenture and this Agreement and the consummation of the transactions herein and therein contemplated will not (a) require any consent or approval, or conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, property or assets of the Company or any of its subsidiaries is subject, other than any consent, approval, conflict, breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect, (b) result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company or (c) assuming the accuracy of the representations and warranties of the Purchasers contained in Section 3 and their compliance with their agreements set forth therein, result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties other than any violation that would not, individually or in the aggregate, have a Material Adverse Effect; and, assuming the accuracy of the representations and warranties of the Purchasers contained in Section 3 and their compliance with their agreements set forth therein, no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company of the transactions contemplated by this Agreement or the Indenture, except for such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Purchasers;     (m)   Neither the Company nor any of its subsidiaries is (i) in violation of its Certificate of Incorporation or By-laws or similar governing documents, (ii) in default in the performance or observance of any obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound or (iii) in violation of laws applicable to its business and operations, other than, in the case of clauses (ii) and (iii), any such default or violation that would not individually or in the aggregate have a Material Adverse Effect;     (n)   The statements set forth in the Pricing Circular and the Offering Circular under the caption “Description of the Notes” and “Description of Capital Stock”, insofar as they purport to constitute a summary of the terms of the Securities and the Stock, under the caption “Material United States Federal Income Tax 5         Considerations” and under the caption “Plan of Distribution”, insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate and fair in all material respects;     (o)   Other than as set forth in the Pricing Circular, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect; and, to the best of the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;     (p)   When the Securities are issued and delivered pursuant to this Agreement, the Securities will not be of the same class (within the meaning of Rule 144A under the United States Securities Act of 1933, as amended (the “Act”), as securities which are listed on a national securities exchange registered under Section 6 of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), or quoted in a U.S. automated inter-dealer quotation system;     (q)   The Company is subject to Section 13 or 15(d) of the Exchange Act;     (r)   The Company is not, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof, will not be an “investment company”, as such term is defined in the United States Investment Company Act of 1940, as amended (the “Investment Company Act”);     (s)   Neither the Company nor any person acting on its or their behalf (other than the Purchasers, as to which no representation or warranty is made) has offered or sold the Securities by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act;     (t)   Within the preceding six months, neither the Company nor any other person acting on behalf of the Company has offered or sold to any person any Securities, or any securities of the same or a similar class as the Securities, other than Securities offered or sold to the Purchasers hereunder. The Company will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Act) of any Securities or any substantially similar security issued by the Company, within six months subsequent to the date on which the distribution of the Securities has been completed (as notified to the Company by the Representatives), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Securities in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of the Act;     (u)   The Company and its subsidiaries maintain systems of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are 6         executed in accordance with management’s general or specific preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded intervals and appropriate action is taken with respect to any differences;     (v)   Based on the assessment by management of the Company of the effectiveness of the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) as of December 31, 2007, as described in Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, the Company is not aware of (i) any significant deficiencies or material weaknesses in the design or operation of its internal controls over financial reporting that are likely to adversely affect the Company’s ability to record, process, summarize and report financial data; or (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls over financial reporting;     (w)   The Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) which (i) are designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to its principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; (ii) have been evaluated for effectiveness as of the end of the period covered by the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (the “Form 10-Q”) filed with the Commission; and (iii) were effective at the time of such evaluation, in all material respects, with respect to the recording, processing, summarizing and reporting, within the time periods specified in the Commission’s rules and forms, of information required to be Exchange Act, as described in Item 4 of the Form 10-Q;     (x)   Ernst & Young LLP and Grant Thornton LLP, which have audited certain financial statements of the Company and its subsidiaries, are independent registered public accounting firms as required by the Act and the rules and regulations of the Commission thereunder;     (y)   Except as disclosed in the Pricing Circular, neither the Company nor any of its subsidiaries is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “environmental laws”), owns or operates any real property contaminated with any substance that is subject to any environmental 7         laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim would individually or in the aggregate have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim;     (z)   The Company and its subsidiaries own, possess, license or can acquire on reasonable terms, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, “intellectual property rights”) necessary to conduct the business now operated by them, or presently employed by them, except where the lack thereof would not, individually or in the aggregate, have a Material Adverse Effect, and have not received any notice of infringement of or conflict with asserted rights of others with respect to any intellectual property rights that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect;     (aa)   None of the Company nor any of its subsidiaries nor, to the Company’s knowledge, employees has violated in any material respect (i) any anti-bribery laws applicable to the Company and its subsidiaries, including but not limited to the U.S. Foreign Corrupt Practices Act of 1977, (ii) the sanctions program implemented and administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control, including, without limitation, 31 CFR Parts 500-600, with respect to the Company or (iii) financial record keeping and reporting requirements relating to money laundering applicable to the Company and its subsidiaries, and no action, suit or proceeding by or before any court or or any of its subsidiaries with respect to the foregoing is pending or, to the knowledge of the Company, threatened;     (bb)   The Company and its subsidiaries possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them, except where the lack thereof would not, individually or in the aggregate, have a Material Adverse Effect, and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect;     (cc)   The financial statements included or incorporated by reference into the Pricing Circular present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown and their statements have been prepared in conformity with GAAP applied on a consistent basis; and the schedules included in the financial statements present fairly the information required to be stated therein; 8     (dd)   Except as otherwise disclosed in each of the Pricing Disclosure Package and the Offering Memorandum, the Company and its subsidiaries have paid all material federal, state and foreign taxes and filed all material federal, state and foreign tax returns required to be filed through the date hereof except where the failure to so pay or file would not have a Material Adverse Effect, and except as disclosed in the Pricing Disclosure Package and the Offering Circular, there is no material tax deficiency that has been asserted against the Company or any of its subsidiaries;     (ee)   No labor dispute with the employees of the Company or any subsidiary exists or, to the knowledge of the Company, is imminent that would have a Material Adverse Effect;     (ff)   Except as would not, individually or in the aggregate, have a Material Adverse Effect, (i) with respect to each “pension plan” (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) maintained by the Company or any of its subsidiaries, the Company and its subsidiaries are in compliance with ERISA, the Internal Revenue Code of 1986, as amended (the “Code”), and the terms of each plan, if and to the extent applicable; and (ii) none of the Company or its subsidiaries has incurred, or expects to incur, any liability (other than contributions made in accordance with the terms of applicable plans) under Title IV of ERISA with respect to any ongoing, frozen or terminated “pension plan” that is subject to Title IV of ERISA and is, or was, maintained by the Company, its subsidiaries or any other person or entity that, together with the Company and its subsidiaries, is treated as a single employer under Section 414 of the Code;     (gg)   No subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s properties or assets to the Company;     (hh)   Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against any of them or any Purchaser for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Securities;     (ii)   Assuming the accuracy of the representations and warranties of the Purchasers contained in Section 3 and their compliance with their agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Securities to the Purchasers and the offer, resale and delivery of the Securities by the Purchasers in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Offering Circular, to register the Securities under the Act or to qualify the Indenture under the Trust Indenture Act; and 9     (jj)   The Company is a “citizen of the United States” as such term is defined in Section 2 of the Shipping Act of 1916, as amended (46 U.S.C. Section 802), and has been for as long as it has owned or operated any vessels in the United States coastwise trade.      2. Subject to the terms and conditions herein set forth, (a) the Company agrees to issue and sell to each of the Purchasers, and each of the Purchasers agrees, severally and not jointly, to purchase from the Company, at a purchase price of 97.625% of the principal amount thereof, plus accrued interest, if any, from June 3, 2008 to the Time of Delivery (as defined below) hereunder, the principal amount of Firm Securities set forth opposite the name of such Purchaser in Schedule I hereto, and (b) in the event and to the extent that the Purchasers shall exercise the election to purchase the Optional Securities as provided below, the Company agrees to issue and sell to each of the Purchasers, and each of the Purchasers agrees, severally and not jointly, to purchase from the Company, at the same purchase price set forth in clause (a) of this Section 2, that portion of the aggregate principal amount of the Optional Securities as to which such election shall have been exercised (to be adjusted by you so as to eliminate fractions of $1,000), determined by multiplying such aggregate principal amount of Optional Securities by a fraction, the numerator of which is the maximum aggregate principal amount of Optional Securities which such Purchaser is entitled to purchase as set forth opposite the name of such Purchaser in Schedule I hereto and the denominator of which is the maximum aggregate principal amount of Optional Securities which all of the Purchasers are entitled to purchase hereunder.           The Company hereby grants to the Purchasers the right to purchase at their election up to $37,500,000 aggregate principal amount of Optional Securities, at the purchase price set forth in clause (a) of the first paragraph of this Section 2, for the sole purpose of covering sales of securities in excess of the aggregate principal amount of Firm Securities. Any such election to purchase Optional Securities may be exercised (but not more than once) by written notice from the Representatives to the Company, given within a period of 13 calendar days after the date of this Agreement, setting forth the aggregate principal amount of Optional Securities to be purchased and the date on which such Optional Securities are to be delivered, as determined by the Representatives but in no event earlier than the First Time of Delivery (as defined in Section (4) hereof) or, unless you and the Company otherwise agree in writing, earlier than two or later than 10 business days after the date of such notice.      3. Upon the authorization by you of the release of the Securities, the several Purchasers propose to offer the Securities for sale upon the terms and conditions set forth in this Agreement and the Offering Circular and each Purchaser hereby represents and warrants to, and agrees with the Company that:   (a)   It will offer and sell the Securities only to persons who it reasonably believes are “qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A under the Act in transactions meeting the requirements of Rule 144A;     (b)   It is an institutional “accredited investor” within the meaning of Rule 501(a) under the Act; and 10     (c)   It will not offer or sell the Securities by any form of general solicitation or general advertising, including but not limited to the methods described in Rule 502(c) under the Act. 4. (a) The Securities to be purchased by each Purchaser hereunder will be represented by one or more definitive global Securities in book-entry form which will be deposited by or on behalf of the Company with The Depository Trust Company (“DTC”) or its designated custodian. The Company will deliver the Securities to Goldman, Sachs & Co., for the account of each Purchaser, against payment by or on behalf of such Purchaser of the purchase price therefor by wire transfer to the Company in Federal (same day) funds, by causing DTC to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The Company will cause the certificates representing the Securities to be made available to the Representatives for checking at least twenty-four hours prior to the Time of Delivery (as defined below) at the office of Baker Botts L.L.P., One Shell Plaza, 910 Louisiana, Houston, Texas 77002 (the “Closing Location”). The time and date of such delivery and payment shall be, with respect to the Firm Securities, 9:30 a.m., New York City time, on June 3, 2008 or such other time and date as the Representatives and the Company may agree upon in writing, and, with respect to the Optional Securities, 9:30 a.m., New York City time, on the date specified by the Representatives in the written notice given by the Purchasers of the Purchasers’ election to purchase such Optional Securities, or at such other time and date as the Representatives and the Company may agree upon in writing. Such time and date for delivery of the Firm Securities is herein called the “First Time of Delivery”, any time and date for delivery of the Optional Securities, if not the First Time of Delivery, is herein called the “Second Time of Delivery”, and each such time and date for delivery of Securities is herein called a “Time of Delivery”.   (b)   The documents to be delivered at each Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross-receipt for the Securities and any additional documents requested by the Purchasers pursuant to Section 8(j) hereof, will be delivered at such time and date at the Closing Location, and the Securities will be delivered at DTC (or its designated custodian), all at each Time of Delivery. A meeting will be held at the Closing Location at 5:00 p.m., New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.     5.   The Company agrees with each of the Purchasers:     (a)   To prepare the Offering Circular in a form approved by you; to make no amendment or any supplement to the Offering Circular prior to the last Time of 11         Delivery which shall be disapproved by you promptly after reasonable notice thereof; and to furnish you with copies thereof;     (b)   Promptly from time to time to take such action as you may reasonably request to qualify the Securities and the shares of Stock issuable upon conversion of the Securities for offering and sale under the securities laws of such jurisdictions as you may complete the distribution of the Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;     (c)   To furnish the Purchasers with written and electronic copies of the Offering Circular in such quantities as you may from time to time reasonably request, and if, at any time prior to the earlier of the completion of the resale of the Securities by the Purchasers or the expiration of nine months after the date of the Offering Circular, any event shall have occurred as a result of which the Offering Circular as then amended or supplemented would include an untrue which they were made when such Offering Circular is delivered, not misleading, or, if for any other reason it shall be necessary or appropriate during such same period to amend or supplement the Offering Circular, to notify you and upon your request to prepare and furnish without charge to each Purchaser as many written and electronic copies as you may from time to time reasonably request of an amended Offering Circular or a supplement to the Offering Circular which will correct such statement or omission or effect such compliance;     (d)   During the period beginning from the date hereof and continuing until the date 60 days after the date hereof, not to offer, sell, contract to sell or otherwise dispose of, except as provided hereunder, any securities of the Company that are substantially similar to the Securities or the Stock, including but not limited to any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities (other than pursuant to equity plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement), without the Representatives’ prior written consent; provided, however, that the Company may make issuances, offers, sales, contracts to sell or other disposals of Stock in connection with an acquisition of a business or entity or a consolidation or merger with another entity, provided that either (i) the party acquiring such Stock agrees in writing to be bound by the provisions of this paragraph or (ii) the offering or issuance of such Stock is registered pursuant to a registration statement on Form S-4 and such issuance is not consummated within such 60-day period.     (e)   Not to be or become, at any time prior to the expiration of two years after the last Time of Delivery, an open-end investment company, unit investment trust, 12         closed-end investment company or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act;     (f)   At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to time of Securities, to furnish at its expense, upon request, to holders of Securities and prospective purchasers of securities information (the “Additional Issuer Information”) satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act to the extent required by the Indenture;     (g)   If requested by you, to use its commercially reasonable efforts to cause the Securities to be eligible for the PORTAL trading system of the National Association of Securities Dealers, Inc.;     (h)   Except for such documents that are publicly available on EDGAR, to furnish to the holders of the Securities as soon as practicable after the end of each fiscal year an annual report (including a consolidated balance sheet and consolidated statements of income, stockholders’ equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the date of the Offering Circular), to make available to its stockholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail;     (i)   During the period of one year after the last Time of Delivery, not to, and not permit any of its “affiliates” (as defined in Rule 144 under the Securities Act) to, resell any of the Securities which constitute “restricted securities” under Rule 144 that have been reacquired by any of them;     (j)   To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Pricing Circular under the caption “Use of Proceeds”;     (k)   To reserve and keep available at all times, free of preemptive rights, shares of Stock for the purpose of enabling the Company to satisfy any obligations to issue shares of its Stock upon conversion of the Securities;     (l)   To use its commercially reasonable efforts to list, subject to notice of issuance, the shares of Stock issuable upon conversion of the Securities on the NASDAQ Global Select Market (“NASDAQ”);     (m)   Not to, and to cause its affiliates (as defined in Rule 501(b) of Regulation D) not to, directly or through any agent, sell, offer for sale, solicit offers to buy or otherwise negotiate in respect of, any Securities (as defined in the Securities Act), that is or will be integrated with the sale of the Securities in a manner that would require registration of the Securities under the Securities Act; and 13     (n)   Not to, and to cause its affiliates or any other person acting on their behalf (other than the Purchasers, as to which no covenant is given) not to solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.      6.   (a)   (i) The Company represents and agrees that, without the prior consent of each of the Representatives, it has not made and will not make any offer relating to the Securities that, if the offering of the Securities contemplated by this Agreement were conducted as a public offering pursuant to a registration statement filed under the Act with the Commission, would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the Act (any such offer is hereinafter referred to as a “Company Supplemental Disclosure Document”); (ii) each Purchaser represents and agrees that, without the prior consent of the Company and each of the Representatives, other than one or more term sheets relating to the Securities containing customary information and conveyed to purchasers of securities, it has not made and will not make any offer relating to the Securities that, if the offering of the Securities contemplated by this Agreement were conducted as a public offering pursuant to a registration statement filed under the Act with the Commission, would constitute a “free writing prospectus,” as defined in Rule 405 under the Act (any such offer (other than any such term sheets), is hereinafter referred to as a “Purchaser Supplemental Disclosure Document”); and (iii) any Company Supplemental Disclosure Document or Purchaser Supplemental Disclosure Document the use of which has been consented to by the Company and each of the Representatives is listed on Schedule II(b) hereto.      7. The Company covenants and agrees with the several Purchasers that the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the issue of the Securities and the shares of Stock issuable upon conversion of the Securities and all other expenses in connection with the preparation, printing, reproduction and filing of the Preliminary Offering Circular and the Offering Circular and any amendments and supplements thereto and the mailing and delivering of copies thereof to the Purchasers and dealers; (ii) the cost of printing or producing this Agreement, the Indenture, any Blue Sky Circular, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities and the shares of Stock issuable upon conversion of the Securities for offering and the reasonable fees and disbursements of counsel for the Purchasers in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (iv) any fees charged by securities rating services for rating the Securities; (v) the cost of preparing the Securities; (vi) the fees and 14   expenses of the Trustee and any agent of the Trustee and the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities; (vii) any cost incurred in connection with the designation of the Securities for trading in PORTAL and the listing of the shares of Stock issuable upon conversion of the Securities; and (viii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 9 and 12 hereof, the Purchasers will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make.      8. The obligations of the Purchasers hereunder shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company herein are, at and as of each Time of Delivery, true and correct, the condition that the Company shall have performed all of its obligations hereunder theretofore to be performed, and the following additional conditions:   (a)   Andrews Kurth LLP, counsel for the Purchasers, shall have furnished to you such opinion or opinions, dated such Time of Delivery, with respect to such matters as you may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;     (b)   Each of Baker Botts L.L.P., counsel for the Company, and James W. Noe, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary of the Company, shall have furnished to you their written opinions, dated such Time of Delivery, in form and substance satisfactory to you, to the effect set forth in Annex I and Annex II, respectively.;     (c)   On the date of the Offering Circular prior to the execution of this Agreement and also at each Time of Delivery, each of Ernst & Young LLP and Grant Thornton LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you;     (d)   (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Pricing Circular any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Circular, and (ii) since the respective dates as of which information is given in the Pricing Circular there shall not have been any change in the capital stock (excluding grants of shares of restricted stock and options to employees or directors of the Company under plans existing on the date of the Preliminary Offering Circular and the issuance of shares upon exercise of outstanding stock options) or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, otherwise than 15         as set forth or contemplated in the Pricing Circular, the effect of which, in any such case described in clause (i) or (ii), is in your judgment so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Securities being issued at such Time of Delivery on the terms and in the manner contemplated in this Agreement and in the Offering Circular;     (e)   On or after the Applicable Time (i) no downgrading shall have occurred in the rating accorded the Company’s debt securities by any “nationally recognized statistical rating organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has any of the Company’s debt securities;     (f)   On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the NASDAQ; (ii) a suspension or material limitation in trading in the Company’s securities on NASDAQ; (iii) a general moratorium on commercial banking activities declared by either Federal or New York or Texas State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in your judgment makes it impracticable or inadvisable to proceed with the offering or the delivery of the Securities being issued at such Time of Delivery on the terms and in the manner contemplated in the Offering Circular;     (g)   The Securities shall have been designated for trading on PORTAL;     (h)   The shares of Stock issuable upon conversion of the Securities shall have been duly listed, subject to notice of issuance, for quotation on NASDAQ;     (i)   The Company shall have obtained and substantially the form attached hereto as Annex III from each of the executive officers and directors of the Company and from each of LR Holdings, LP, LR2 GP, L.P., LR2 GP, LLC and Kestrel Capital, L.P.; and     (j)   The Company shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company satisfactory to you as to the accuracy of the representations and warranties of the Company herein at and as of such Time of Delivery, as to the performance by the Company of all of its obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsection (d) of this Section and as to such other matters as you may reasonably request. 16   9. (a) The Company will indemnify and hold harmless each Purchaser against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular, the Pricing Circular, the Offering Circular, or any amendment or supplement thereto, any Company Supplemental Disclosure Document, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, and will reimburse each Purchaser for any legal or other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Circular, the Pricing Circular, the Offering Circular or any such amendment or supplement, or any Company Supplemental Disclosure Document, in reliance upon and in conformity with written information furnished to the Company by any Purchaser through the Representatives expressly for use therein.     (b)   Each Purchaser will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Act or otherwise, thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular, the Pricing Circular, the Offering Circular, or any amendment or supplement thereto, or any Company Supplemental Disclosure Document, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Offering Circular, the Pricing Circular, the Offering Circular or any such amendment or supplement, or any Company Supplemental Disclosure Document in reliance upon and in conformity with written information furnished to the Company by such Purchaser through the Representatives expressly for use therein; and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred.     (c)   Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve the indemnifying party from any liability which it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the 17         forfeiture of substantive rights or defenses, as determined by a court of competent jurisdiction) by such omission; and provided further that the omission to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to an indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party.   (d)   If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall by the Company on the one hand and the Purchasers on the other from the offering of the Securities. If, however, the allocation provided by the immediately relative benefits but also the relative fault of the Company on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Purchasers, in each case as set forth in the Offering 18         Circular. The relative fault shall be determined by reference to, among information supplied by the Company on the one hand or the Purchasers on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Purchasers agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities purchased by it and distributed to investors were offered to investors exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers’ obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint.   (e)   The obligations of the Company under this Section 9 shall be in addition to any liability which the Company may otherwise have and shall extend, upon the same terms and conditions, to any affiliate of each Purchaser and each person, if any, who controls any Purchaser within the meaning of the Act; and the obligations of the Purchasers under this Section 9 shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company within the meaning of the Act. 10. (a)   If any Purchaser shall default in its obligation to purchase the Securities which it has agreed to purchase hereunder at a Time of Delivery, you may in your discretion arrange for you or another party or other parties to purchase such Securities on the terms contained herein . If within thirty six hours after such default by any Purchaser you do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of thirty six hours within which to procure another party or other parties satisfactory to you to purchase such Securities on such terms. In the event that, within the respective prescribed periods, you notify the Company that you have so arranged for the purchase of such Securities, or the Company notifies you that it has so arranged for the purchase of such Securities, you or the Company shall have the right to postpone such Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Offering Circular, or in any other documents or arrangements, and the Company agrees to prepare promptly any amendments to the Offering Circular which in your opinion may 19         thereby be made necessary. The term “Purchaser” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Securities.   (b)   If, after giving effect to any arrangements for the purchase of the Securities to be purchased at such Time of Delivery of a defaulting Purchaser or Purchasers by you and the Company as provided in subsection (a) above, the aggregate principal amount of such Securities which remains unpurchased does not exceed one eleventh of the aggregate principal amount of all the Securities, then the Company shall have the right to require each non defaulting Purchaser to purchase the principal amount of Securities which such Purchaser agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non defaulting Purchaser to purchase its pro rata share (based on the principal amount of Securities which such Purchaser agreed to purchase hereunder) of the Securities of such defaulting Purchaser or Purchasers for which such arrangements have not been made; but nothing herein shall relieve a defaulting Purchaser from liability for its default.     (c)   If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Purchaser or aggregate principal amount of Securities which remains unpurchased exceeds one eleventh of the aggregate principal amount of all the Securities to be purchased at such Time of Delivery, or if the Company shall not exercise the right described in subsection (b) above to require non defaulting Purchasers to purchase Securities of a defaulting Purchaser or Purchasers, then this Agreement (or, with respect to an Optional Time of Delivery, the obligations of the Purchasers to purchase and of the Company to sell Optional Securities) shall thereupon terminate, without liability on the part of any non defaulting Purchaser or the Company, except for the expenses to be borne by the Company and the Purchasers as provided in Section 6 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Purchaser from liability for its default.      11. The respective indemnities, agreements, representations, warranties and other statements of the Company and the several Purchasers, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Purchaser or any controlling person of any Purchaser, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the Securities.      12. If this Agreement shall be terminated pursuant to Section 10 hereof, the Company shall not then be under any liability to any Purchaser except as provided in Sections 7 and 9 hereof; but, if for any other reason, the Securities are not delivered by or on behalf of the Company as provided herein, the Company will reimburse the Purchasers through you for all expenses approved in writing by you, including fees and disbursements of counsel, reasonably 20   incurred by the Purchasers in making preparations for the purchase, sale and delivery of the Securities, but the Company shall then be under no further liability to any Purchaser except as provided in Sections 7 and 9 hereof.      13. In all dealings hereunder, you shall act on behalf of each of the Purchasers, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Purchaser made or given by the Representatives on behalf of any Purchaser. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Purchasers shall be delivered or sent by mail, telex or facsimile transmission to you as the representatives in care of Goldman, Sachs & Co., 85 Broad Street, 20th Floor, New York, New York 10004, Attention: Registration Department; in care of Banc of America Securities LLC, 1 Bryant Park, New York, New York 10036, Attention: Equity Capital Markets Legal and in care of UBS Securities LLC, 299 Park Avenue, New York, New York 10171; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Offering Circular, Attention: Secretary; provided, however, that any notice to a Purchaser pursuant to Section 9(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Purchaser at its address set forth in its Purchasers’ Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by you upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Purchasers are required to obtain, verify and record information that identifies their respective clients, including the Company, which information may include the name and address of their respective clients, as well as other information that will allow the Purchasers to properly identify their respective clients.      14. This Agreement shall be binding upon, and inure solely to the benefit of, the Purchasers, the Company and, to the extent provided in Sections 9 and 11 hereof, the officers and directors of the Company and each person who controls the Company or any Purchaser, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from any Purchaser shall be deemed a successor or assign by reason merely of such purchase.      15. Time shall be of the essence of this Agreement.      16. The Company acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the several Purchasers, on the other, (ii) in connection therewith and with the process leading to such transaction each Purchaser is acting solely as a principal and not the agent or fiduciary of the Company, (iii) no Purchaser has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Purchaser has advised or is currently advising the Company on other matters) or any other obligation to the Company except 21   the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company agrees that it will not claim that the Purchaser, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.      17. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Purchasers, or any of them, with respect to the subject matter hereof.      18. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.      19. The Company and each of the Purchasers hereby irrevocably waives, to transactions contemplated hereby.      20. This Agreement may be executed by any one or more of the parties hereto but all such respective counterparts shall together constitute one and the same instrument.      21. Notwithstanding anything herein to the contrary, the Company (and the Company’s employees, representatives, and other agents) are authorized to disclose to any and all persons, the tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company relating to that treatment and structure, without the Purchasers’ imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax treatment” means US federal and state income tax treatment, and “tax structure” is limited to any facts that may be relevant to that treatment. return to us a counterpart hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement between each of the Purchasers and the Company. It is understood that your acceptance of this letter on behalf of each of the Purchasers is pursuant to the authority set forth in a form of Agreement among Purchasers, the form of which shall be submitted to the Company for examination upon request, but without warranty on your part as to the authority of the signers thereof. 22                     Very truly yours,                     By:  /s/ Stephen Butz                         Name:  Stephen Butz             Title:  Vice President - Finance and Treasurer                 Signature Page to Purchase Agreement                 By:   /s/ Goldman, Sachs & Co.           (Goldman, Sachs & Co.)     By:   /s/ Thomas M. Morrison           Name: Thomas M. Morrison         Title: Managing Director               UBS Securities LLC       By:   /s/ Chris Bradshaw           Name: Chris Bradshaw         Title: Director               By:   /s/ Stephen Perich           Name: Stephen Perich         Title: Associate Director     On behalf of each of the Purchasers     SCHEDULE I               Principal       Amount of       Securities       to be   Purchaser   Purchased     $ 86,840,000     $ 57,895,000           UBS Securities LLC   $ 57,895,000           Capital One Southcoast, Inc.   $ 14,474,000             $ 14,474,000           Comerica Securities, Inc.   $ 6,579,000           Fortis Securities LLC   $ 3,947,000           Natixis Bleichroeder Inc.   $ 2,632,000           Nordea Bank Denmark A/S   $ 2,632,000           Mizuho Securities USA Inc.   $ 2,632,000           Total   $ 250,000,000           Schedule I — Page 1     SCHEDULE II (a)   Additional Documents Incorporated by Reference:       None (b)   Approved Supplemental Disclosure Documents:       Investor road show slide presentation, available at www.netroadshow.com on May 28, 2008. Schedule II — Page 1     SCHEDULE III Final Pricing Term Sheet       Issuer:   Hercules Offshore, Inc. (NASDAQ: HERO) (the “Company”)       Issue:   3.375% Convertible Senior Notes due 2038 (the “Notes”)       Aggregate Original Principal Amount:   $250,000,000        Over-allotment Option:   $37,500,000        Offering Price:   100.0% of the original principal amount of the Notes, plus accrued interest, if any, from the Settlement Date       Interest; Accretion:   3.375% per annum, accruing from the Settlement Date through June 1, 2013; principal accretion at an annual yield to maturity of 3.375% per annum thereafter       Contingent Interest:   Beginning with the six-month interest period commencing on June 1, 2013, if the trading price of the Notes for each of the five trading days ending on the second trading day immediately preceding the first day of the applicable interest period equals or exceeds 120% of the accreted principal amount of the Notes, the Company will pay contingent interest of 0.40% of the average trading price over such five trading day period       Interest Payment Dates:   June 1 and December 1 of each year, beginning on December 1, 2008 and ending on June 1, 2013       Maturity:   June 1, 2038       NASDAQ Closing Price for Company’s Common Stock on May 28, 2008:   $33.95        Conversion Premium:   Approximately 47.5% over last reported NASDAQ closing price on May 28, 2008       Conversion Price:   Approximately $50.08 per share of common stock, subject to adjustment       Conversion Rate:   19.9695 shares of common stock per $1,000 in original principal amount of Notes, subject to adjustment       Optional Redemption:   Beginning June 6, 2013, the Company may redeem any or all of the outstanding Notes in cash at a redemption price equal to 100% of the accreted principal amount of the Notes being redeemed, plus accrued and unpaid interest, if any Schedule III — Page 1           Optional Put by the Holders:   Each holder of Notes will have the right to require the Company to repurchase in cash all or part of such holder’s Notes on June 1, 2013, June 1, 2018, June 1, 2023, June 1, 2028 and June 1, 2033 at a repurchase price equal to 100% of the accreted principal amount of the Notes being repurchased, plus accrued and unpaid interest, if any       Fundamental Change Permits Holders to Require the Company to Repurchase the Notes:   Subject to certain exceptions, if a “fundamental change” occurs, each holder of the Notes will have the option to require the Company to repurchase, for cash, all or any portion of such holder’s Notes that is equal to $1,000 in original principal amount of the Notes or an integral multiple of $1,000 in original principal amount of the Notes, at a repurchase price of 100% of the accreted principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any       Ranking:   The Notes will be the Company’s general senior unsecured obligations, ranking equal in right of payment with all of its existing and future senior indebtedness, senior in right of payment to all of its future subordinated indebtedness, effectively subordinate in right of payment to all of the existing and future indebtedness and other liabilities of its subsidiaries and effectively subordinate to any of its existing and future secured indebtedness to the extent of the value of the collateral that secures it. The Company’s obligations under its senior secured credit agreement are secured by liens on a majority of the vessels owned by its domestic subsidiaries and one foreign subsidiary and substantially all of the other personal property owned by the Company, its domestic subsidiaries and one foreign subsidiary. Substantially all of the Company’s domestic subsidiaries and one foreign subsidiary guarantee the Company’s obligations under the senior secured credit agreement. As of March 31, 2008, as adjusted to give effect to the issuance of the Notes, the Company would have had an aggregate of $1,159.4 million of consolidated long-term debt (including current portion), all of which, other than the Notes, would have been secured or owed by the Company’s subsidiaries and therefore effectively senior to the Notes, with respect to the collateral securing the debt or the assets of the subsidiary obligor.       Use of Proceeds:   The Company estimates the net proceeds from the offering of the Notes will be approximately $243.1 million (approximately $279.7 million if the initial purchasers exercise their over-allotment option in full), after deducting the initial purchasers’ discount and estimated offering expenses. The Company intends to use the net proceeds from this offering to repurchase, concurrently with this offering, approximately 1.45 million shares Schedule III — Page 2               of its common stock, for a total cost of approximately $49.2 million, in privately negotiated transactions, to repay outstanding borrowings under its senior secured revolving credit facility and for other general corporate purposes.       Joint Bookrunners:   Goldman, Sachs & Co. Banc of America Securities LLC UBS Securities LLC       Trade Date:   May 28, 2008       Settlement Date:   June 3, 2008       Listing:   None       CUSIP:   427093 AA7        ISIN:   US427093AA76        Comparable Yield:   The Company has determined that the comparable yield for the Notes is 7.75%, compounded semi-annually.       Adjustment to Shares Delivered upon Conversion Upon a Make-Whole Fundamental Change:   The following table sets forth the adjustments to the conversion rate, expressed as a number of additional shares to be received per $1,000 in original principal amount of the Notes, in connection with a make-whole fundamental change (as defined in the Preliminary Offering Circular (as defined below)):                                                       June 3,   June 1,   June 1,   June 1,   June 1,   June 1, Stock Price   2008   2009   2010   2011   2012   2013 $  33.95     9.4855       9.4855       9.4855       9.4855       9.4855       9.4855   $  35.00     8.9667       8.6019       8.6019       8.6019       8.6019       8.6019   $  37.50     7.9060       7.4625       7.0903       6.7553       6.6971       6.6971   $  40.00     7.0203       6.5525       6.1301       5.7040       5.2124       5.0305   $  42.50     6.2746       5.7921       5.3348       4.8427       4.2177       3.5599   $  45.00     5.6420       5.1522       4.6724       4.1349       3.4168       2.2527   $  50.00     4.6366       4.1484       3.6506       3.0696       2.2632       0.0305   $  55.00     3.8845       3.4116       2.9197       2.3375       1.5340       0.0000   $  60.00     3.3093       2.8590       2.3866       1.8277       1.0776       0.0000   $  70.00     2.5044       2.1076       1.6913       1.2088       0.6119       0.0000   $  85.00     1.7839       1.4674       1.1373       0.7711       0.3665       0.0000   $115.00     1.0379       0.8832       0.6736       0.4540       0.2287       0.0000   $150.00     0.6905       0.5882       0.4523       0.3113       0.1624       0.0000   $200.00     0.4505       0.3798       0.2957       0.2070       0.1095       0.0000   $250.00     0.3145       0.2634       0.2066       0.1458       0.0777       0.0000   The exact stock prices and make-whole reference dates may not be set forth in the table above, in which case: Schedule III — Page 3       •   If the stock price is between two stock price amounts in the table or the make-whole reference date is between two dates in the table, the number of additional shares by which the conversion rate for the Notes will be increased will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year.     •   If the stock price is greater than $250.00 per share, subject to adjustment, no adjustments will be made to the conversion rate.     •   If the stock price is less than $33.95 per share, subject to adjustment, no adjustments will be made to the conversion rate. Notwithstanding the foregoing, in no event will the conversion rate exceed 29.4550 shares of common stock per $1,000 in original principal amount of Notes, subject to adjustments as set forth under “Description of the Notes—Conversion Rights—Conversion Rate Adjustments” in the Company’s Preliminary Offering Circular for the offering of the Notes.       Accreted Principal for the Notes:   The following table sets forth the accreted principal amounts for the Notes per $1,000 original principal amount as of the specified dates during the period from June 1, 2013 through the maturity date of the Notes:               Accreted Principal Date   Amount June 1, 2013   $ 1,000.00   December 1, 2013   $ 1,016.88   June 1, 2014   $ 1,034.03   December 1, 2014   $ 1,051.48   June 1, 2015   $ 1,069.23   December 1, 2015   $ 1,087.27   June 1, 2016   $ 1,105.62   December 1, 2016   $ 1,124.28   June 1, 2017   $ 1,143.25   December 1, 2017   $ 1,162.54   June 1, 2018   $ 1,182.16   December 1, 2018   $ 1,202.11   June 1, 2019   $ 1,222.39   December 1, 2019   $ 1,243.02   June 1, 2020   $ 1,264.00   December 1, 2020   $ 1,285.33   June 1, 2021   $ 1,307.02   December 1, 2021   $ 1,329.07   June 1, 2022   $ 1,351.50   December 1, 2022   $ 1,374.31   Schedule III — Page 4                   Accreted Principal Date   Amount June 1, 2023   $ 1,397.50   December 1, 2023   $ 1,421.08   June 1, 2024   $ 1,445.06   December 1, 2024   $ 1,469.45   June 1, 2025   $ 1,494.24   December 1, 2025   $ 1,519.46   June 1, 2026   $ 1,545.10   December 1, 2026   $ 1,571.17   June 1, 2027   $ 1,597.69   December 1, 2027   $ 1,624.65   June 1, 2028   $ 1,652.06   December 1, 2028   $ 1,679.94   June 1, 2029   $ 1,708.29   December 1, 2029   $ 1,737.12   June 1, 2030   $ 1,766.43   December 1, 2030   $ 1,796.24   June 1, 2031   $ 1,826.55   December 1, 2031   $ 1,857.38   June 1, 2032   $ 1,888.72   December 1, 2032   $ 1,920.59   June 1, 2033   $ 1,953.00   December 1, 2033   $ 1,985.96   June 1, 2034   $ 2,019.47   December 1, 2034   $ 2,053.55   June 1, 2035   $ 2,088.20   December 1, 2035   $ 2,123.44   June 1, 2036   $ 2,159.28   December 1, 2036   $ 2,195.71   June 1, 2037   $ 2,232.77   December 1, 2037   $ 2,270.44   June 1, 2038   $ 2,308.76   The accreted principal amount of a Note between the dates listed above will include an amount reflecting the additional principal accretion that has accrued as of such date since the immediately preceding date in the table.   This communication is intended for the sole use of the person to whom it is provided by the sender. Schedule III — Page 5     These securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may only be sold to qualified institutional buyers pursuant to Rule 144A of the Securities Act or pursuant to another applicable exemption from registration. This term sheet relates only to the Notes described herein and should be read together with the Company’s Preliminary Offering Circular dated May 27, 2008 (including the documents incorporated by reference therein) relating to the Notes (the “Preliminary Offering Circular”) before making a decision in connection with an investment in the Notes. The information in this term sheet supersedes the information in the Company’s Preliminary Offering Circular to the extent that it is inconsistent therewith. Terms used herein but not defined herein shall have the respective meanings as set forth in the Preliminary Offering Circular. ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM. Schedule III — Page 6  

Exhibit Letter to Shareholders OVERVIEW 2008 was unquestionably one of the most challenging years ever to be involved in the investment business.While everyone was affected, we avoided most of the investment mishaps experienced by many others, largely due to the type of long-duration hard assets we own. We also thankfully avoided the liquidity issues experienced by many, owing to our long-term, asset-specific, investment grade capital structure. As a result, we were able to record strong cash flow from operations of $1.4 billion or $2.33 per share in 2008. This was one of our highest ever, although less than the total cash flows of the last few years because of a number of one-time items in the recent past. More importantly, these results display the sustainability of our core operating cash flows at a time when stable long-term cash flows are highly valued. The cash flow growth was due to solid performances from most of our operations, an increased contribution from our asset management activities and some realization gains. Net income was approximately $649 million, andwhile not as relevant a measure for our business, was a solid result. We believe many businesses are currently undervalued by the stock markets due to external factors, driven largely by liquidity concerns not necessarily relevant to the businesses. In fact, as we generate substantial free cash flow, the illiquidity of the markets is presenting us with investment opportunities which over the longer term should enable us to earn returns far higher than we would normally expect. We believe we are well positioned to capitalize on these opportunities as a result of our current cash position, available credit lines, the type of assets we own, the institutional relationships we have, and the contractual nature of the free cash flows we generate each year. Short-term fluctuations in our share price therefore have little effect on our business, because over the past 15 years we have seldom utilized our common shares to raise capital. Instead, we have been repurchasing shares at well below what we believe to be long-term net asset value. And while some asset values in our operations have decreased from last year, we believe the declines in the stock market are far greater than the reductions in fundamental asset values. In this regard, it is important to note that none of our major operations have sustained irreparable harm to their businesses, no major dilutions have occurred in the ownership of the company or our investments (in fact the reverse occurred in some cases where we have been able to invest our free cash at exceptional values), our cash flows in our renewable power operations are at record highs, and our office property leases are stable and of very long duration. Despite this, we recognize the performance of our share price in the stock market was dismal, and as substantial shareholders ourselves, we empathize with you. Our share price ended the year down 53% which resulted in our worst share price performance in 20 years. This reduced the compound 20-year return, inclusive of dividends, to approximately 14% or approximately 4% higher than the compound 20-year returns of the principal North American stock indices. 1 Annualized Total Returns Brookfield (NYSE) S&P TSX YEARS 1 (53.4)% (37.0)% (33.0)% 5 26.2% 2.8% 9.7% 10 24.1% 1.1% 8.1% 20 13.8% 9.8% 8.9% Focusing more specifically on our future, we currently have six operating priorities.

Exhibit 31.2 CERTIFICATION PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002 I, Yuen Ching Ho, certify that: 1. I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2014, of Nova LifeStyle, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and Iare responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed underour supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based onour most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: March 26, 2015 By: /s/ Yuen Ching Ho Yuen Ching Ho Chief Financial Officer (Principal Financial Officer)

Exhibit 99.2 VECTREN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (Millions, except per share amounts) (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 2007 2006 2007 2006 OPERATING REVENUES: Gas utility $ 114.0 $ 116.8 $ 890.0 $ 848.6 Electric utility 143.6 123.2 361.6 324.4 Nonutility revenues 123.8 100.5 385.5 259.5 Total operating revenues 381.4 340.5 1,637.1 1,432.5 OPERATING EXPENSES: Cost of gas sold 52.9 59.9 592.0 577.4 Cost of fuel and purchased power 50.5 46.8 129.5 115.8 Cost of nonutility revenues 57.5 48.8 210.2 174.8 Other operating 116.4 101.8 334.4 242.9 Depreciation and amortization 47.3 44.0 139.7 127.5 Taxes other than income taxes 11.7 10.8 50.9 45.7 Total operating expenses 336.3 312.1 1,456.7 1,284.1 OPERATING INCOME 45.1 28.4 180.4 148.4 OTHER INCOME (EXPENSE): Equity in earnings (losses) of unconsolidated affiliates (4.0 ) 3.2 18.7 14.7 Other - net 13.9 1.6 23.1 (4.5 ) Total other income (expense) 9.9 4.8 41.8 10.2 INTEREST EXPENSE 25.7 24.2 74.1 69.9 INCOME BEFORE INCOME TAXES 29.3 9.0 148.1 88.7 INCOME TAXES 12.2 (3.0 ) 44.9 14.8 NET INCOME $ 17.1 $ 12.0 $ 103.2 $ 73.9 AVERAGE COMMON SHARES OUTSTANDING 75.9 75.7 75.9 75.7 DILUTED COMMON SHARES OUTSTANDING 76.4 76.0 76.5 76.0 EARNINGS PER SHARE OF COMMON STOCK BASIC $ 0.23 $ 0.16 $ 1.36 $ 0.98 DILUTED $ 0.22 $ 0.16 $ 1.35 $ 0.97 VECTREN UTILITY HOLDINGS AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (Millions) (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 2007 2006 2007 2006 OPERATING REVENUES: Gas utility $ 114.0 $ 116.8 $ 890.0 $ 848.6 Electric utility 143.6 123.2 361.6 324.4 Other 0.4 0.5 1.3 1.4 Total operating revenues 258.0 240.5 1,252.9 1,174.4 OPERATING EXPENSES: Cost of gas sold 52.9 59.9 592.0 577.4 Cost of fuel and purchased power 50.5 46.8 129.5 115.8 Other operating 65.6 61.6 198.4 182.8 Depreciation and amortization 40.4 38.0 119.4 112.8 Taxes other than income taxes 11.3 10.5 49.6 44.9 Total operating expenses 220.7 216.8 1,088.9 1,033.7 OPERATING INCOME 37.3 23.7 164.0 140.7 OTHER INCOME - NET 1.3 2.0 6.2 4.8 INTEREST EXPENSE 20.8 19.2 58.8 57.4 INCOME BEFORE INCOME TAXES 17.8 6.5 111.4 88.1 INCOME TAXES 7.1 - 41.8 31.1 NET INCOME $ 10.7 $ 6.5 $ 69.6 $ 57.0 VECTREN CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (Millions - Unaudited) September 30, December 31, 2007 2006 ASSETS Current Assets Cash & cash equivalents $ 11.2 $ 32.8 Accounts receivable - less reserves of $3.7 & $3.3, respectively 145.2 198.6 Accrued unbilled revenues 60.7 146.5 Inventories 198.8 163.5 Recoverable fuel & natural gas costs - 1.8 Prepayments & other current assets 132.1 172.7 Total current assets 548.0 715.9 Utility Plant Original cost 3,990.8 3,820.2 Less:accumulated depreciation & amortization 1,499.1 1,434.7 Net utility plant 2,491.7 2,385.5 Investments in unconsolidated affiliates 194.5 181.0 Other investments 73.0 74.5 Nonutility property - net 312.9 294.4 Goodwill - net 238.0 237.8 Regulatory assets 184.8 163.5 Other assets 37.9 39.0 TOTAL ASSETS $ 4,080.8 $ 4,091.6 LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 164.8 $ 180.0 Accounts payable to affiliated companies 33.7 89.9 Refundable fuel & natural gas costs 25.9 35.3 Accrued liabilities 151.0 147.2 Short-term borrowings 486.7 464.8 Current maturities of long-term debt 17.8 24.2 Long-term debt subject to tender 20.0 20.0 Total current liabilities 899.9 961.4 Long-term Debt - Net of Current Maturities & Debt Subject to Tender 1,208.3 1,208.0 Deferred Income Taxes & Other Liabilities Deferred income taxes 256.6 260.7 Regulatory liabilities 303.1 291.1 Deferred credits & other liabilities 199.8 195.8 Total deferred credits & other liabilities 759.5 747.6 Minority Interest in Subsidiary 0.4 0.4 Common Shareholders' Equity Common stock (no par value) – issued & outstanding 76.5 and 76.1 shares, respectively 531.7 525.5 Retained earnings 674.2 643.6 Accumulated other comprehensive income 6.8 5.1 Total common shareholders' equity 1,212.7 1,174.2 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 4,080.8 $ 4,091.6 VECTREN CORPORATION AND SUBSIDIARYCOMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions - Unaudited) Nine months ended September 30, 2007 2006 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 103.2 $ 73.9 Adjustments to reconcile net income to cash from operating activities: Depreciation & amortization 139.7 127.5 Deferred income taxes & investment tax credits 18.0 (1.6 ) Equity in earnings of unconsolidated affiliates (18.7 ) (14.7 ) Provision for uncollectible accounts 12.7 12.4 Expense portion of pension & postretirement periodic benefit cost 7.3 8.1 Other non-cash charges - net - 10.3 Changes in working capital accounts: Accounts receivable & accrued unbilled revenue 126.5 279.1 Inventories (35.3 ) (43.0 ) Recoverable/refundable fuel & natural gas costs (7.6 ) 31.9 Prepayments & other current assets 2.5 (29.7 ) Accounts payable, including to affiliated companies (74.3 ) (146.1 ) Accrued liabilities (15.0 ) (42.0 ) Unconsolidated affiliate dividends 20.0 33.5 Changes in noncurrent assets (13.5 ) (20.7 ) Changes in noncurrent liabilities (33.3 ) (15.3 ) Net cash flows from operating activities 232.2 263.6 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from: Long-term debt - 0.1 Stock option exercises 5.2 (0.4 ) Requirements for: Dividends on common stock (71.8 ) (69.3 ) Retirement of long-term debt, including premiums paid (6.6 ) (0.4 ) Net change in short-term borrowings 21.9 32.3 Net cash flows from financing activities (51.3 ) (37.7 ) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from: Unconsolidated affiliate distributions 11.7 1.9 Other collections 37.3 2.9 Requirements for: Capital expenditures, excluding AFUDC equity (239.0 ) (185.9 ) Unconsolidated affiliate investments (12.4 ) (16.7 ) Other investments (0.1 ) (41.9 ) Net cash flows from investing activities (202.5 ) (239.7 ) Net decrease in cash & cash equivalents (21.6 ) (13.8 ) Cash & cash equivalents at beginning of period 32.8 20.4 Cash & cash equivalents at end of period $ 11.2 $ 6.6 VECTREN CORPORATION AND SUBSIDIARY COMPANIES HIGHLIGHTS (millions, except per share amounts) (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 2007 2006 2007 2006 REPORTED EARNINGS: Utility Group $ 10.7 $ 6.5 $ 69.6 $ 57.0 Non-utility Group Energy Marketing and Services (2.0 ) (0.2 ) 15.6 13.0 Coal Mining 0.4 1.6 2.7 4.3 Energy Infrastructure Services 4.6 3.6 6.6 3.2 Other Businesses 0.1 (0.1 ) 0.2 0.1 Total Non-utility Operations 3.1 4.9 25.1 20.6 Corporate and Other (0.2 ) - 0.2 - Sub-Total Operations 13.6 11.4 94.9 77.6 Synfuels-related 3.5 0.6 8.3 (3.7 ) Vectren Consolidated $ 17.1 $ 12.0 $ 103.2 $ 73.9 VECTREN CORPORATION AND SUBSIDIARY COMPANIES SELECTED GAS DISTRIBUTION OPERATING STATISTICS (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 2007 2006 2007 2006 GAS OPERATING REVENUES (Millions): Residential $ 67.2 $ 68.7 $ 591.2 $ 555.2 Commercial 30.9 33.5 240.7 236.4 Industrial 12.1 12.4 47.5 47.1 Miscellaneous Revenue 3.8 2.2 10.6 9.9 $ 114.0 $ 116.8 $ 890.0 $ 848.6 GAS MARGIN (Millions): Residential $ 35.8 $ 34.6 $ 190.4 $ 171.9 Commercial 10.1 10.2 59.4 54.6 Industrial 9.2 9.5 34.9 34.2 Miscellaneous 6.0 2.6 13.3 10.5 $ 61.1 $ 56.9 $ 298.0 $ 271.2 GAS SOLD & TRANSPORTED (MMDth): Residential 3.8 4.1 51.7 43.5 Commercial 2.6 2.9 23.4 20.2 Industrial 18.0 17.7 62.5 61.2 24.4 24.7 137.6 124.9 AVERAGE GAS CUSTOMERS Residential 889,257 882,366 899,926 893,029 Commercial 82,870 82,358 83,790 83,334 Industrial 1,655 1,636 1,643 1,645 973,782 966,360 985,359 978,008 YTD WEATHERAS A PERCENT OF NORMAL: Heating Degree Days (Ohio) 96 % 87 % VECTREN CORPORATION AND SUBSIDIARY COMPANIES SELECTED ELECTRIC OPERATING STATISTICS (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 2007 2006 2007 2006 ELECTRIC OPERATING REVENUES (Millions): Residential $ 56.2 $ 43.6 $ 123.2 $ 101.7 Commercial 34.3 27.7 84.0 72.2 Industrial 39.1 36.2 105.0 97.0 Municipals 8.3 7.8 20.1 20.0 Miscellaneous Revenue 0.9 3.2 5.6 9.1 Total Retail 138.8 118.5 337.9 300.0 Net Wholesale Revenues 4.8 4.7 23.7 24.4 $ 143.6 $ 123.2 $ 361.6 $ 324.4 ELECTRIC MARGIN (Millions): Residential $ 41.3 $ 31.3 $ 90.7 $ 75.7 Commercial 23.2 18.0 57.2 49.9 Industrial 21.6 18.9 56.4 53.4 Municipals 3.6 3.5 9.3 10.1 Miscellaneous 0.8 3.1 5.4 8.8 Total Retail 90.5 74.8 219.0 197.9 Net Wholesale Margin 2.6 1.6 13.1 10.7 $ 93.1 $ 76.4 $ 232.1 $ 208.6 ELECTRICITY SOLD (GWh): Residential 547.7 474.6 1,290.3 1,147.3 Commercial 406.7 372.4 1,067.4 1,005.1 Industrial 638.7 674.7 1,942.4 1,983.9 Municipals 187.4 178.1 469.4 480.3 Miscellaneous Sales 4.7 4.8 14.1 14.4 Total Retail 1,785.2 1,704.6 4,783.6 4,631.0 Wholesale 96.5 110.8 544.1 763.1 1,881.7 1,815.4 5,327.7 5,394.1 AVERAGE ELECTRIC CUSTOMERS Residential 122,194 121,263 122,078 121,015 Commercial 18,489 18,428 18,478 18,361 Industrial 109 107 109 107 All Others 38 36 37 36 140,830 139,834 140,702 139,519 YTD WEATHERAS A PERCENT OF NORMAL: Cooling Degree Days (Indiana) 127 % 95 % 127 % 95 % Heating Degree Days (Indiana) 90 % 84 %

Exhibit 10.6 Summary of Changes to Executive Compensation Arrangements Adoption of Performance Goals for Fiscal 2009 Cash Bonuses and Performance Unit Awards The Compensation and Management Development Committee of the Board of Directors of Gap Inc. (the “Committee”) determined that executive officers, including those executive officers set forth in the table below, are eligible to earn cash and performance unit awards based on performance during the 2009 fiscal year, and established performance goals and target award percentages for each participant. Cash Awards. The aggregate cash award payable to the named participants is based on two separate components: (1) an award based on the financial performance of Gap Inc. or a division of the Company pursuant to goals established under the Executive Management Incentive Compensation Award Plan (the “Executive MICAP”), and (2) an award based on individual and organizational objectives for certain of the participants. The base target award percentage (as a percentage of base salary) for cash awards in the aggregate for each named participant is as set forth in the table below. The table below also sets forth the percentage of the base target award percentage attributable to each of the two bonus components. The financial component of the aggregate cash award payable is established under the Executive MICAP for each of two performance periods during the 2009 fiscal year. The first performance period (“First Half 2009”) is the period beginning February 1, 2009 and ending on August 1, 2009. The second performance period (“Second Half 2009”) is the period beginning August 2, 2009 and ending on January 30, 2010. The financial performance of a division or Gap Inc., as applicable and as set forth in the table below, will be based on the achievement of objective Earnings performance goals for the division or Gap Inc. (as defined in the Executive MICAP) for First Half 2009 and Second Half 2009, provided that no bonus will be paid under the financial component unless a threshold amount of Earnings of the division or Gap Inc., as the case may be, is achieved for either First Half 2009 or Second Half 2009. The individual objective component of the aggregate cash award payable is based on a qualitative assessment by the Chief Executive Officer of the level of achievement of certain subjective individual and organizational objectives at year-end that vary by individual and include considerations such as expense reduction, talent management initiatives, productivity initiatives, and operational improvements. Executive Officer    Cash Awards      Base Target Percentage     Executive MICAP Financial Component    Individual Objective Component   Marka Hansen    75 %   75% (Gap North America)    25 % Glenn Murphy    150 %   100% (Gap Inc.)    0 % Art Peck    75 %   75% (Outlet)    25 % Sabrina Simmons    75 %   75% (Gap Inc.)    25 % J. Tom Wyatt    75 %   75% (Old Navy)    25 % Actual cash awards payable can be up to two times the base target percentage set forth above for each participant depending upon (1) the extent to which the financial performance of a division and/or Gap Inc. meets, exceeds or is below target for the First Half 2009 and Second Half 2009, and (2) the qualitative assessment of individual objectives. For example, Ms. Hansen is eligible for a bonus of up to 113% (two times 75% times 75%) of base salary under the Executive MICAP financial component and a bonus of up to 38% (two times 75% times 25%) of base salary under the individual objective component. The Committee approves all bonus payouts. Performance Unit Awards. Awards payable in performance units, issued pursuant to the Company’s 2006 Long-Term Incentive Plan to the named participants below, will be based 100% on the financial performance of Gap Inc. or his or her division of the Company. The base target award percentage (as a percentage of base salary) for performance unit awards for each named participant is as set forth in the table below. The financial performance of a division or Gap Inc., as applicable, will be based on the achievement of an objective Earnings performance goal for the division or Gap Inc. for each of two performance periods during the 2009 fiscal year as described under “Cash Bonuses” above. Actual performance unit awards can have a value that ranges from 0 to 200% (up to two times the base target percentage set forth in the table below for each participant) of a participant’s base salary depending upon the extent to which the financial performance of a division or Gap Inc. meets, exceeds or is below target for First Half 2009 and Second Half 2009, provided that no award will be made unless a threshold amount of Earnings of the division or Gap Inc., as the case may be, is achieved. In determining the number of performance units awarded to each participant, the value of each performance unit will equal the closing price at which a share of the Company’s common stock traded on the date of award, rounded down to the nearest whole unit. Each performance unit award will be granted pursuant to a Stock Award Agreement and will be subject to vesting as determined by the Committee on the date of award.        Performance Unit Awards Executive Officer    Base Target Percentage     Gap Inc. or Division Marka Hansen    100 %   Gap North America Glenn Murphy    0     N/A Art Peck    100 %   Outlet Sabrina Simmons    100 %   Gap Inc. J. Tom Wyatt    100 %   Old Navy Summary of Base Salary Changes On January 28, 2009, the Committee considered and approved a proposal from Mr. Fisher to reduce his base salary to $150,000, effective February 24, 2009. Mr. Fisher is also no longer eligible for a bonus or stock compensation.   2

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM8-K CURRENT REPORT Pursuant to Section13 OR 15(d)of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 1, 2012 Vanguard Natural Resources, LLC (Exact name of registrant as specified in its charter) DELAWARE 001-33756 61-1521161 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 5847 San Felipe, Suite 3000 Houston, Texas 77057 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (832) 327-2255 (Former name or former address, if changed since last report.) Check the appropriate box below if the Form8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule14d-2(b)under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule13e-4(c)under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. On August 1, 2012, the Board of Directors (the “Board”) of Vanguard Natural Resources, LLC (the “Company”) approved the grants of new phantom unit awards with tandem distribution equivalent rights (“DERs”) to Scott W. Smith, President and Chief Executive Officer of the Company and Richard A. Robert, Executive Vice President and Chief Financial Officer of the Company. Additionally, the President and Chief Executive Officer of the Company approved the grant of new phantom units with tandem DERs to Britt Pence, Senior Vice President of Operations of the Company.Each phantom unit represents the equivalent of one common unit of the Company. These phantom units are subject to vesting in five equal annual installments, with the first vesting date being May 18, 2013, and each subsequent vesting date occurring on each annual anniversary of the first vesting date.The vested phantom units are payable following each vesting date, in either the Company’s common units or in a cash amount equal to the fair market value of the Company’s common units on the vesting date, as determined by the Board or its Compensation CommitteeThe DERs are subject to vesting in three equal annual installments, with the first vesting date on August 1, 2012, the date of grant of the phantom units, and each subsequent vesting date occurring on each annual anniversary of the first vesting date, regardless of whether the underlying phantom units have vested.The DERs are payable in cash at the time that all other unitholders of the Company receive distributions. Vesting of both the underlying phantom units and the tandem DERs is generally subject to the grantee’s continued employment through the applicable vesting date, with such other terms as set forth in the applicable award agreement.Mr. Smith, Mr. Robert and Mr. Pence receivedgrants of 200,000 phantom units, 125,000 phantom units and 65,000 phantom units, respectively. These grants were made under the Company’s Long-Term Incentive Plan (the “Plan”), and the grants for Mr. Smith and Mr. Robert were made following the recommendation of the Compensation Committee of the Board of the Company. The award agreements evidencing such awards are attached hereto as Exhibits 10.1, 10.2 and 10.3.The foregoing descriptions of the awards issued under the Plan are not complete and are qualified by reference to the award agreements, which are attached as exhibits to this Current Report on Form 8-K and incorporated herein by reference. Item 9.01.Financial Statements and Exhibits. (d) Exhibits. EXHIBITNUMBER DESCRIPTION Exhibit 10.1 Phantom Unit Award Agreement, dated August 1, 2012, by and between Vanguard Natural Resources, LLC, and Scott W. Smith Exhibit 10.2 Phantom Unit Award Agreement, dated August 1, 2012, by and between Vanguard Natural Resources, LLC, and Richard Robert Exhibit 10.3 Phantom Unit Award Agreement, dated August 1, 2012, by and between Vanguard Natural Resources, LLC, and Britt Pence SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VANGUARD NATURAL RESOURCES, LLC By: /s/ Richard A. Robert Name: Richard A. Robert Title: Executive Vice President and Chief Financial Officer August 6, 2012 (Principal Financial Officer and Principal Accounting Officer) EXHIBIT INDEX EXHIBITNUMBER DESCRIPTION Exhibit 10.1 Phantom Unit Award Agreement, dated August 1, 2012, by and between Vanguard Natural Resources, LLC, and Scott W. Smith Exhibit 10.2 Phantom Unit Award Agreement, dated August 1, 2012, by and between Vanguard Natural Resources, LLC, and Richard Robert Exhibit 10.3 Phantom Unit Award Agreement, dated August 1, 2012, by and between Vanguard Natural Resources, LLC, and Britt Pence

Exhibit 10.1(b) SPANSION INC. 2010 EQUITY INCENTIVE AWARD PLAN RESTRICTED STOCK UNIT AWARD The following sets forth the terms of your Spansion Inc. Restricted Stock Unit (“RSU”) Award.   Employee Name:   Stock ID:   Grant Number:   Grant Date:   Number of Shares   Vesting Schedule and Payment Date: Subject to acceleration in certain circumstances, the RSUs vest and are paid on the following dates (each a “Payment Date”): Shares              Date              Shares              Date              Shares              Date              Shares              Date              The Restricted Stock Unit Award that is described and made pursuant to this Restricted Stock Unit Award (this “Award”) is issued under the Spansion Inc. 2010 Equity Incentive Award Plan (as amended from time to time, the “Plan”). By electronically acknowledging and accepting this Award within 30 days after the date of the electronic mail notification to you of the grant of this Award the “Electronic Notification Date”), you agree to be bound by the terms and conditions herein, the Plan and all conditions established by the Company in connection with awards issued under the Plan. In order to vest in the Award you must accept this Award within 30 days of the Electronic Notification Date. If you fail to accept this Award within 30 days of the Electronic Notification the Award will be cancelled and forfeited.   The following terms and conditions apply to the RSUs granted pursuant to this Award.   Company; Defined Terms: “Company” shall mean Spansion Inc., and, except as the context may otherwise require, references to “Company” shall be deemed to include its subsidiaries and affiliates. To the extent not defined herein, capitalized terms shall have the meanings ascribed to them in the Plan.   Type of Award: Restricted Stock Units, or RSUs. The RSUs entitle the Holder to receive an equal number of shares of Common Stock at settlement, as described below.   Brokerage Account Requirement: As a condition to the grant of the RSUs, the Holder agrees to open and maintain a brokerage account at the Company’s designated stock broker at all times that the RSUs remain outstanding.   Vesting and Settlement: The RSUs shall vest and become payable according to the schedule set forth above; provided, however, that the RSUs will vest and be paid on such dates only if the Holder has not had a Termination of Service prior to the applicable Payment Date. Except as provided below, all unvested RSUs will be forfeited upon Termination of Service. Vested RSUs shall be settled through the issuance of shares of Common Stock to the Holder equal to the number of RSUs to be settled and paid. The issuance of shares of Common Stock will be subject to tax withholding, as provided below. Notwithstanding the foregoing, upon a Change in Control prior to Holder’s Termination of Service, one-hundred percent (100%) of the RSUs shall automatically be fully vested and payable. In anticipation of a Change in Control, the Administrator may cause the RSUs to terminate at a specific time in the future, including but not limited to the date of such Change in Control.   Transferability of RSUs: RSUs may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, provided that in the event of the Holder’s death, shares deliverable or amounts payable with respect to the RSUs shall be delivered or paid, as applicable, to the Holder’s designated beneficiary. The Administrator will advise Holders with respect to the procedures for naming and changing designated beneficiaries.   Tax Withholding: The Holder agrees that the Company may deduct from the Holder’s paycheck within a reasonable time following each Payment Date the minimum amount required to satisfy any applicable tax withholding obligations with respect to the issuance of shares of Common Stock on such Payment Date. Notwithstanding the foregoing, if the Company permits an alternative method to satisfy withholding obligations for any Payment Date, the Holder may elect though the Company’s designated stock broker such alternative method to satisfy withholding obligations provided such election is made at least one day prior to the applicable Payment Date and the Holder satisfies all other requirements of such alternative method.   2 If the Company permits as of an applicable Payment Date, the alternative methods by which the Holder may satisfy tax withholding obligations include the following:     •   Depositing cash in an amount equal to the tax withholding obligations in the Holder’s brokerage account designated by the Company and instructing the broker to pay such cash amount to the Company; or     •   Selling that number of shares of Common Stock necessary to provide proceeds in an amount equal to the tax withholding obligations and instructing the broker to pay the proceeds to the Company, provided that if the withholding obligations arise during a period in which the Holder is prohibited from trading in the Common Stock under any policy of the Company or by reason of the Exchange Act, then this alternative shall not be available to the Holder. The Holder is encouraged to consult with a tax advisor regarding the tax consequences of participation in the Plan and acceptance of this Award.   Rights as a Stockholder: Until the shares of Common Stock are issued and delivered, a Holder will have no rights as a stockholder with respect to the shares of Common Stock subject to the RSU.   No Right to Continued Employment: Neither the RSUs nor this Agreement confers upon the Holder any right to continue to be an employee of the Company or any of its subsidiaries or interferes in any way with the right of the Company or any of its subsidiaries to terminate the Holder’s employment at any time.   3 Data Privacy: By acceptance of this Award, the Holder acknowledges and consents to the collection, use, processing and transfer of personal data as described below. The Company, its affiliates and the Holder’s employer hold certain personal information, including the Holder’s name, home address and telephone number, date of birth, social security number or other employee tax identification number, salary, nationality, job title, and any equity compensation grants or Common Stock awarded, cancelled, purchased, vested, unvested or outstanding in the Holder’s favor, for the purpose of managing and administering the Plan (“Data”). The Company and its affiliates will transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the United States, the European Economic Area, or elsewhere. The Holder hereby authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan on behalf of the Holder to a third party with whom the Holder may have elected to have payment made pursuant to the Plan. The Holder may, at any time, review Data, require any necessary amendments to it or withdraw the consent herein in writing by contacting the Company; however, withdrawing the consent may affect the Holder’s ability to participate in the Plan and receive the benefits intended by this Award.   No impact on other rights: Participation in the Plan is voluntary. The value of the RSUs is an extraordinary item of compensation outside the scope of Holder’s normal employment and compensation rights, if any. As such, the RSUs are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pensions or retirement benefits or similar payments unless specifically and otherwise provided in the plans or agreements governing such compensation. The Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The grant of RSUs under the Plan is a one-time benefit and does not create any contractual or other right to receive any other grant of RSUs or other awards under the Plan in the future. Future grants, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of the grant, the form of award, number of shares of Common Stock subject to an award, vesting, and exercise provisions, as relevant.   4