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Name: Commission Implementing Regulation (EU) 2018/1785 of 15 November 2018 concerning the classification of certain goods in the Combined Nomenclature Type: Implementing Regulation Subject Matter: communications; tariff policy; electronics and electrical engineering Date Published: nan 20.11.2018 EN Official Journal of the European Union L 293/5 COMMISSION IMPLEMENTING REGULATION (EU) 2018/1785 of 15 November 2018 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, 15 November 2018. 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) Insulated cables (so-called stack cables) in various lengths fitted with connectors at both ends. Each cable consists of 32 insulated single conductors for a voltage not exceeding 1 000 V, bundled into 16 sheathed pairs which are not twisted. These pairs are covered by a metal foil and metal threads. The cables connect switches that form switching stations (so-called stacks) used in telecommunication networks (Local Area Networks (LAN)). They enable the bidirectional transfer of data between switches using Ethernet technology. The cables do not have any additional functions (for example, to supply electric power). See image (*1) 8544 42 10 Classification is determined by general rules 1 and 6 for the interpretation of the Combined Nomenclature and by the wording of CN codes 8544 , 8544 42 and 8544 42 10 . Data transfer between apparatuses using telecommunication technology, such as Ethernet, is considered telecommunication for the purposes of CN code 8544 42 10 (see Commission Implementing Regulation (EU) No 1112/2012 (1). The cables in question are designed to be used in telecommunication networks configured as LAN. Consequently, they are considered to be electrical conductors, fitted with connectors, used in telecommunication networks (see also CN Explanatory Notes to subheading 8544 42 10 ). The articles are therefore to be classified under CN code 8544 42 10 as other electric conductors for a voltage not exceeding 1 000 V, fitted with connectors, of a kind used for telecommunications. (*1) The image is purely for information. (1) Commission Implementing Regulation (EU) No 1112/2012 of 23 November 2012 concerning the classification of certain goods in the Combined Nomenclature (OJ L 329, 29.11.2012, p. 9).

Exhibit 10.2   Execution Version   REGISTRATION RIGHTS AGREEMENT   July 8, 2020, by and between ELITE PHARMACEUTICALS, INC., a Nevada corporation liability company (together with it permitted assigns, the “Buyer”). Capitalized meanings set forth in the Purchase Agreement by and between the parties hereto,   WHEREAS:   Purchase Agreement, to sell to the Buyer up to Twenty-Five Million Dollars ($25,000,000) of Purchase Shares and to induce the Buyer to enter into the   agree as follows:   1. DEFINITIONS.   meanings:                   2. REGISTRATION.   a. Mandatory Registration. The Company shall, as soon as practicable after the date hereof, file with the SEC an initial Registration Statement on Form S-3 (without reliance upon General Instruction I.B.6. of Form S-3) covering all of the Registrable Securities so as to permit the resale of such Registrable     ineligible to use Form S-3 to register the resale of Registrable Securities in accordance with the terms of this Agreement at any time after the effective date of the initial Registration Statement filed pursuant to Section 2(a), the Company shall (i) as promptly as practicable upon becoming aware of the Company’s ineligibility (or impending ineligibility) to use the Registration   2             Registration Statement.   receives the final version thereof. Company shall furnish to the Investor, Registration Statement.   3       purpose.       4               a written confirmation whether or not the effectiveness of such Registration Securities.   m. The Company shall use its reasonable best efforts to maintain eligibility for   any Registration Statement.   5         Statement hereunder.   of a notice regarding the resolution or withdrawal of the stop order or suspension as contemplated by Section 3(f) or the supplemented or amended prospectus as contemplated by the first sentence of 3(e). Notwithstanding       6     6. INDEMNIFICATION.     Section 9.   7     defend such action.       7. CONTRIBUTION.     8             registration; and     or provisions.       9         11. MISCELLANEOUS.         Elite Pharmaceuticals, Inc.   165 Ludlow Avenue   Northvale, NJ 07647   Telephone:  (201) 750-2646   Facsimile: (201) 750-2755   E-mail:   Attention: Nasrat Hakim, President and CEO     Richard Feiner, Esq.   Wall Street Plaza   88 Pine Street, 22nd Floor   New York, NY 10005   Telephone:  (646) 822-1170   Facsimile: (917) 720-0863   Email: rfeinerlaw@silverfirm.com   Attention: Richard Feiner, Esq.   Scheinfeld/Jonathan Cope   10       Dorsey & Whitney LLP   51 West 52nd Street   New York, NY 10019   Telephone:  (212) 415-9214   Facsimile: (212) 953-7201   E-mail: marsico.anthony@dorsey.com     CONTEMPLATED HEREBY.   hereof and thereof.   11     the parties hereto.     delivering this Agreement.           12       Scheinfeld   Title: President   13     EXHIBIT A   TO REGISTRATION RIGHTS AGREEMENT   OF REGISTRATION STATEMENT   [Date]     Re: Elite Pharmaceuticals, Inc.   Ladies and Gentlemen:   Purchase Agreement, dated as of July 8, 2020 (the “Purchase Agreement”), entered “Buyer”), pursuant to which the Company has issued to the Buyer the Initial Commitment Shares (defined below), and may in the future issue to the Buyer the Additional Commitment Shares (defined below) on a proportionate basis at such times as the Company may issue and sell to the Buyer shares of the Company’s to an additional Twenty-Five Million Dollars ($25,000,000), in accordance with Securities and Exchange Commission (the “SEC”) the following shares of Common Stock:   (1)Up to 250,548,286 shares of Common Stock to be issued to the Buyer upon   (2)5,975,857 shares of Common Stock that have been issued to the Buyer as an     (3) up to 5,975,857 shares of Common Stock to be issued to the Buyer as an   Registration Rights Agreement, dated as of July 8, 2020, with the Buyer (the Rights Agreement, on [________], 2020, the Company filed a Registration   In connection with the foregoing, we advise you that the SEC has entered an order declaring the Registration Statement effective under the Securities Act at [_____] [A.M./P.M.] on [__________], 2020 and we have no knowledge, after review of the stop order notification website maintained by the SEC, that any stop that purpose are pending before, or threatened by, the SEC and the Purchase restrictive legend or stop transfer orders maintained against them.           EXHIBIT B   TO REGISTRATION RIGHTS AGREEMENT       beneficially owned 5,975,857 shares of our common stock. Josh Scheinfeld and      

Exhibit 10.24 FORM OF (this “Agreement”), is made by and between WESCO International, Inc., a Delaware corporation, and WESCO Distribution, Inc., a Delaware corporation (collectively, the “Company”), and _________ (“Indemnitee”). RECITALS: and integrity. need not be subject to the satisfaction of any standard of conduct or otherwise affected by the merits of any claims against the director or officer. increased over the years, chilling the willingness of capable women and men to I.    Federal legislation and rules adopted by the Securities and Exchange penalties. insurance policies. AGREEMENT: 2 initial capital letters: Indemnitee. any Claim. Securities Exchange Act of 1934, as amended) with respect 3 Board. or duty imposed upon Indemnitee by reason of the fact of such status. In Agreement. amounts paid in 4 settlement, including all interest, assessments and other charges paid or Claims and Indemnifiable Losses; provided, however, that (a) except for compulsory counterclaims or as provided in Sections 4 and 21, Indemnitee shall of such Claim and (b) no repeal or amendment of any law of the State of Delaware shall in any way diminish or adversely affect the rights of Indemnitee pursuant to this Agreement in respect of any occurrence or matter arising prior to any such repeal or amendment. connection with any such payment, advancement or reimbursement, if delivery of an undertaking is a legally required condition precedent to such payment, advance or reimbursement, Indemnitee shall execute and deliver to the Company an alternatives therein), which need not be secured and shall be accepted by the Company without reference to Indemnitee’s ability to repay the Expenses. In no event shall Indemnitee’s right to the payment, advancement or reimbursement of Expenses pursuant to 5 this Section 3 be conditioned upon any undertaking that is less favorable to A. the advance related. Indemnitee is entitled. Company has directors’ and officers’ liability insurance in effect 6 under which coverage for such Indemnifiable Claim or Indemnifiable Loss is potentially available, the Company shall give prompt written notice of such insurance coverage. Conduct Determination. of Conduct Determination required under Section 8(b) to be made as promptly as practicable. If 7 faith requires such additional time for the obtaining or evaluation or of Conduct Determination that Indemnitee 8 all respects, including with respect to any litigation or other action or proceeding initiated by Indemnitee to enforce his or her rights hereunder. Any challenged by Indemnitee in the Court of Chancery of the State of Delaware. No to be reasonable. permitted. Company will not adopt 9 (b) The Company acknowledges that Indemnitee has or may have from time to time certain rights of indemnification and advancement of expenses provided by one or more third parties (collectively, the Secondary Indemnitors”). The Company agrees that, as between the Company and the Secondary Indemnitors, the Company is primarily responsible for amounts required to be indemnified or advanced under any of the Constituent Documents or this Agreement and any obligation of the Secondary Indemnitors to provide indemnification or advancement for the same amounts is secondary to those Company obligations. 10 Indemnitee’s request, the Company shall provide Indemnitee with a copy of all declarations, endorsements and other related materials. Without limiting the generality or effect of the two immediately preceding sentences, the Company to this Agreement. the Company). otherwise indemnifiable hereunder. use of counsel chosen by the Company to represent 11 proposed settlement; provided that Indemnitee may withhold consent to any Indemnitee. 12 receipt. shall be deemed to have been in effect during all periods that Indemnitee was a director, officer or employee of the Company, regardless of the date of this Agreement. 13 other than Saturday, Sunday or a United States federal holiday. For the avoidance of doubt, the phrase “to the fullest extent” permitted or permissible by or 14 under law is intended to mean to the fullest extent not prohibited by (and not merely to the extent affirmatively permitted by) law. 15 written. Pittsburgh, PA 15219 By:                         Name: Title: [INDEMNITEE] [Address]                          [Indemnitee] EXHIBIT A UNDERTAKING Indemnification Agreement, dated as of __________,_____ (the “Indemnification Agreement”), between WESCO International, Inc., a Delaware corporation, and WESCO Distribution, Inc., a Delaware corporation (collectively, the “Company”), and the undersigned. Capitalized terms used and not otherwise defined herein have the meanings ascribed to such terms in the Indemnification Agreement.                          [Indemnitee] INDEMNITEE       Name           Position Sandra Beach Lin Director Bobby J. Griffin Director John K. Morgan Director James J. O’Brien Director Steven A. Raymund Director James L. Singleton Director Robert J. Tarr, Jr. Director Lynn M. Utter Director John J. Engel Kenneth S. Parks Diane E. Lazzaris Kimberly G. Windrow                 16

Name: Commission Regulation (EU) 2017/2253 of 4 December 2017 establishing a prohibition of fishing for common sole in areas VIIIa and VIIIb by vessels flying the flag of Belgium Type: Regulation Subject Matter: fisheries; maritime and inland waterway transport; Europe; natural environment; international law Date Published: nan

Exhibit 10.62     LEASE AGREEMENT   THIS LEASE is executed this 26th day of March , 2004, by and between DUKE REALTY   WITNESSETH:       (a) Leased Premises (shown outlined in Exhibit A hereto): Suite A of the building (the “Building”) located at 300 Perimeter Park Drive, Morrisville, North Carolina 27560, within Perimeter Park (the “Park”).   (b) Rentable Area: approximately 16,517 rentable square feet.   (c) Tenant’s Proportionate Share: 29.67%.      07/01/2004 – 06/30/2005    $ 113,554.38 (1)      07/01/2005 – 06/30/2006    $ 23,278.65 (2)      07/01/2006 – 06/30/2007    $ 143,227.20        07/01/2007 – 06/30/2008    $ 146,807.88        07/01/2008 – 06/30/2009    $ 150,478.08        07/01/2009 – 06/30/2010    $ 154,239.96        07/01/2010 – 06/30/2011    $ 158,096.05   (1) represents ten (10) Monthly Rental Installments (2) represents two (2) Monthly Rental Installments      07/01/2004 – 08/31/2004    $ 0.00      09/01/2004 – 06/30/2005    $ 11,355.44      07/01/2005 – 04/30/2006    $ 0.00      05/01/2006 – 06/30/2006    $ 11,639.32      07/01/2006 – 06/30/2007    $ 11,935.60      07/01/2007 – 06/30/2008    $ 12,233.99      07/01/2008 – 06/30/2009    $ 12,539.84      07/01/2009 – 06/30/2010    $ 12,853.33      07/01/2010 – 06/30/2011    $ 13,174.67     (g) Target Commencement Date: 07/01/2004.   (h) Lease Term: Seven (7) years.   (i) Security Deposit: $11,355.44.   (j) Broker(s): Advantis GVA representing Tenant.   (k) Permitted Use: cutting, storage, and sales of silicon carbide products, and office and administrative uses reasonably ancillary thereto.     Landlord:                Duke Realty Limited Partnership      c/o Duke Realty Corporation      Attn.: Raleigh Market – Senior Property Manager      1800 Perimeter Park Drive, Suite 200      Morrisville, North Carolina 27560 INDUSTRIAL LEASE      Duke Realty Limited Partnership      c/o Duke Realty Corporation      Attn.: Elizabeth C. Belden, Vice President/Corporate Counsel      3950 Shackleford Road, Suite 300      Duluth, Georgia 30096 With Rental Payments to:    Duke Realty Limited Partnership      75 Remittance Drive, Suite 3205      Tenant:    Charles & Colvard, Ltd.      300 Perimeter Park Drive, Suite A        (m) Guarantor(s): None.   EXHIBITS       Exhibit B-1 - Scope of Work   Exhibit C -    Letter of Understanding     Section 1.02. Lease of Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Leased Premises, under the terms and conditions following (collectively, the “Common Areas”): the areas of the Building and the underlying land and improvements thereto that are designed for use in common by all tenants of the Building and their respective employees, agents, customers, invitees and others.     Section 2.01. Term. The Lease Term shall commence as of the date (the “Commencement Date”) that Substantial Completion (as defined in Exhibit B hereto) of the Tenant Improvements (as defined in Section 2.02 below) occurs.   Section 2.02. Construction of Tenant Improvements. Landlord shall construct and install all leasehold improvements to the Leased Premises (collectively, the “Tenant Improvements”) in accordance with Exhibit B attached hereto and made a part hereof.   Section 2.03. Surrender of the Premises. Upon the expiration or earlier termination of this Lease, Tenant shall immediately surrender the Leased Premises to Landlord in broom-clean condition and in good condition and repair, normal wear and tear and casualty excepted. Tenant shall also remove its personal property, trade fixtures and any of Tenant’s alterations designated by Landlord (including wiring and cabling), promptly repair any damage caused by such removal, and restore the Leased Premises to the condition existing upon the Commencement Date, reasonable wear and tear excepted. If Tenant fails to do so, Landlord may restore the Leased Premises to such condition at Tenant’s expense, Landlord may cause all of said property to be removed at Tenant’s expense, and Tenant hereby agrees to pay all the costs and expenses thereby reasonably incurred. All Tenant property which is not removed within ten (10) days following Landlord’s written demand therefor shall be conclusively deemed to have been abandoned by Tenant, and Landlord shall be entitled to dispose of such property at Tenant’s cost without thereby incurring any liability to Tenant. The provisions of this section shall survive the expiration or other termination of this Lease.   after the expiration or earlier termination of this Lease, unless Landlord and Tenant otherwise agree in writing, Tenant shall become a tenant from month to month at one hundred forty percent (140%) of the Monthly Rental Installment in effect at the end of the Lease Term, and otherwise upon the terms, covenants and rent in such event shall not result in a renewal of this Lease, and Tenant shall vacate and surrender the Leased Premises to Landlord upon Tenant being given thirty (30) days’ prior written notice from Landlord to vacate whether or not said notice is given on the rent paying date. This Section 2.04 shall in no way in such event.   2 INDUSTRIAL LEASE   ARTICLE 3 - RENT   Section 3.01. Base Rent. Tenant shall pay to Landlord the Minimum Annual Rent in the Monthly Rental Installments, in advance, without deduction or offset, beginning on the Commencement Date and on or before the first day of each and every calendar month thereafter during the Lease Term. The Monthly Rental Installment for partial calendar months shall be prorated.   Section 3.02. Additional Rent.   (a) In addition to the Minimum Annual Rent Tenant shall pay to Landlord for each calendar year during the Lease Term, as “Additional Rent,” Tenant’s Proportionate Share of all costs and expenses incurred by Landlord during the Lease Term for Real Estate Taxes and Operating Expenses for the Building and Common Areas.   (b) “Operating Expenses” shall mean all of Landlord’s expenses for operation, repair, replacement and maintenance to keep the Building and common areas in good order, condition and repair (including all additional direct costs and expenses of operation and maintenance of the Building which Landlord reasonably determines it would have paid or incurred during such year if the Building had been fully occupied), including, but not limited to, management or administrative fees (not to exceed five percent (5%) of the gross rental revenue of the Building); utilities; stormwater discharge fees; license, permit, inspection and other fees; fees and assessments imposed by any covenants or owners’ association; security services; insurance premiums and deductibles; and maintenance, repair and replacement of the driveways, parking areas (including snow removal), exterior lighting, landscaped areas, walkways, curbs, storm conveyance systems, sewer lines, exterior walls, foundation, structural frame, roof and gutters. The cost of any capital improvement shall be amortized over the useful life of such improvement (as reasonably determined by Landlord in accordance with generally accepted accounting principles), and only the amortized portion shall be included in Operating Expenses.   (c) “Real Estate Taxes” shall include any form of real estate tax or assessment or service payments in lieu thereof, and any license fee, commercial rental tax, personal income or estate taxes) imposed upon the Building or common areas (or against Landlord’s business of leasing the Building) by any authority having the power to so charge or tax, together with costs and expenses of contesting the validity or amount of Real Estate Taxes which at Landlord’s option may be calculated as if such contesting work had been performed on a contingent fee basis (whether charged by Landlord’s counsel or representative; provided, however, that said fees are reasonably comparable to the fees charged for similar services by others not affiliated with Landlord, but in no event shall fees exceed thirty-three percent (33%) of the good faith estimated tax savings). Additionally, Tenant shall pay, prior to delinquency, all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all personal property of Tenant contained in the Leased Premises.   (d) Notwithstanding anything to the contrary contained in this Section 3.02,   (i) leasing commissions;   (ii) costs and expenses incurred by Landlord for which Landlord is actually reimbursed by parties other than tenants of the Building, including, without limitation, insurance proceeds;   (iii) the initial construction cost of the Building or any depreciation thereof;   (iv) any debt service or costs related to the sale or financing of the Building or underlying land;   (v) the cost of improvements provided for any other tenant’s space;   (vi) any special services rendered to tenants (including Tenant) for which a separate charge is made; and   (vii) penalties or late fees assessed against Landlord.   Section 3.03. Payment of Additional Rent. Landlord shall estimate the total amount of Additional Rent to be paid by Tenant during each calendar year of the Lease Term, pro-rated for any partial years. After the first two (two) months of the Lease Term, Tenant shall pay to Landlord each   3 INDUSTRIAL LEASE   month, at the same time the Monthly Rental Installment is due, unless otherwise agreed to, an amount equal to one-twelfth (1/12) of the estimated Additional Rent for such year. Within a reasonable time after the end of each calendar year, Landlord shall submit to Tenant a statement of the actual amount of such Additional Rent and within thirty (30) days after receipt of such statement, Tenant shall pay any deficiency between the actual amount owed and the estimates paid during such calendar year. In the event of overpayment, Landlord shall credit the amount of such overpayment toward the next installments of Minimum Rent.   required to be paid by Tenant to Landlord hereunder is paid after the due date, such unpaid amount shall bear interest from the due date thereof to the date of payment at the prime rate (as reported in the Wall Street Journal) of interest   Section 3.05. Maximum Increase in Operating Expenses. Notwithstanding anything in this Lease to the contrary, Tenant will be responsible for Tenant’s Proportionate Share of Real Estate Taxes, insurance premiums, utilities, exterior janitorial services, snow removal, landscaping and management or administrative fees applicable to such expenses (“Uncontrollable Expenses”), without regard to the level of increase in any or all of the above in any year or other period of time. Tenant’s obligation to pay all other Building Operating Expenses which are not Uncontrollable Expenses (herein “Controllable Expenses”) shall be limited to a six percent (6%) per annum increase over the amount the Controllable Expenses for the immediately preceding calendar year would have been had the Controllable Expenses increased at the rate of six percent (6%) in all previous calendar years beginning with the actual Controllable Expenses for the year ending December 31, 2004.   Section 3.06. Right to Audit. Tenant will be entitled from time to time to audit and verify the operations of the Building and the related books and records of Landlord to assure that the Operating Expenses from time to time reported by Landlord are in keeping with the provisions of this Article 3. As to any calendar year, any undertaking by Tenant must be initiated within ninety (90) days of receipt by Tenant of the statement of Additional Rent delivered by Landlord pursuant to Section 3.03 above; and absent fraud or gross negligence on Landlord’s part, the Operating Expenses as timely reported by Landlord for the calendar year will be deemed controlling upon the expiration of Tenant’s audit and verification rights for such calendar year. In the event of any errors, the appropriate party will make a correcting payment in full to the other party within thirty (30) days after the determination and communication to all parties of the amount of such error. Notwithstanding the foregoing, Tenant shall be prohibited from using any third party audit firm that is paid on a contingent fee basis.     Tenant, upon execution of this Lease, shall deposit with Landlord the Security Deposit as security for the performance by Tenant of all of Tenant’s obligations contained in this Lease. In the event of a default by Tenant Landlord may apply and Tenant agrees to promptly, upon demand, deposit such additional sum with Landlord as may be required to maintain the full amount of the Security Deposit. All sums held by Landlord pursuant to this section shall be without interest. At the end of the Lease Term, provided that there is then no uncured default, Landlord shall return the Security Deposit to Tenant.   ARTICLE 5 - USE   Section 5.01. Use of Leased Premises. The Leased Premises are to be used by Tenant solely for the Permitted Use and for no other purposes without the prior   careful, reputable and lawful manner, (ii) comply with all laws, rules, regulations, orders, ordinances, directions and requirements of any governmental authority or agency, now in force or which may hereafter be in force, including without limitation those which shall impose upon Landlord or Tenant any duty with respect to or triggered by a change in the use or occupation of, or any obey all reasonable directions of the Landlord, including directions as to the non-exclusive use of parking spaces, as well as the Building rules and regulations that may be adopted by Landlord from time to time. Tenant shall not do or permit anything to be done in or about the Leased Premises or common areas which constitutes a nuisance or which interferes with the rights of other tenants or injures or annoys them. Landlord shall not be responsible to Tenant for the nonperformance   4 INDUSTRIAL LEASE   by any other tenant or occupant of the Building of its lease or of any rules and regulations; provided, however, that Landlord shall uniformly enforce such reasonable directions, rules and regulations. Tenant shall not overload the floors of the Leased Premises. Landlord acknowledges that Tenant’s installation of its safe (the specifications for which have been heretofore delivered to Landlord) in the Leased Premises shall not overload the floor. All damage to the floor structure or foundation of the Building due to improper positioning or storage of items or materials shall be repaired by Landlord at the sole expense of Tenant, who shall reimburse Landlord immediately therefor upon demand. Tenant shall not use the Leased Premises, or allow the Leased Premises to be used, for any purpose or in any manner which would invalidate any policy of insurance now or hereafter carried on the Building or increase the rate of premiums payable on any such insurance policy unless Tenant reimburses Landlord as Additional Rent for any increase in premiums charged.   regarding the use of the Leased Premises or the common areas, each of which may be exercised without notice or liability to Tenant, (a) Landlord may install such signs, advertisements, notices or tenant identification information as it shall deem necessary or proper (provided, however, that Landlord shall not obscure Tenant’s approved signage); (b) Landlord shall have the right at any time to control, change or otherwise alter the common areas as it shall deem necessary or proper so long as such control, change or alteration does not (i) materially and adversely affect Tenant’s use of the Leased Premises for the Permitted Use, (ii) decrease the number of parking space allocated to Tenant pursuant to Section 17.05 below, or (iii) obscure Tenant’s approved signage; and (c) Landlord or Landlord’s agent, accompanied by a representative of Tenant (provided one is made available to Landlord), shall be permitted to inspect or examine the Leased Premises at any reasonable time upon at least twenty-four (24) hours’ prior notice (except in an emergency when no notice shall be required), and Landlord shall have the right to make any repairs to the Leased Premises which are necessary for its preservation; provided, however, that any repairs made by Landlord that are the responsibility of Tenant hereunder and that Tenant has failed to make within the applicable cure period shall be at Tenant’s expense, except as provided in Section 7.02 hereof. Landlord shall incur no liability to Tenant for such entry, nor shall such entry constitute an eviction of Tenant or a termination of this Lease, or entitle Tenant to any abatement of rent therefor. Without limiting the foregoing, Landlord covenants and agrees that in exercising any of its rights under this Section 5.03, Landlord shall use reasonable efforts to minimize any interference with Tenant’s use of the Leased Premises for the Permitted Use.   ARTICLE 6 - UTILITIES AND SERVICES   the cost of all utilities and services serving the Leased Premises, including janitorial services. However, if any services or utilities are jointly metered with other property, Landlord shall make a reasonable determination of Tenant’s proportionate share of the cost of such utilities and services (at rates that would have been payable if such utilities and services had been directly billed by the utilities or services providers to Tenant) and Tenant shall pay such statement. Landlord shall not be liable in damages or otherwise for any failure or interruption of any utility or other building service and no such failure or hereunder. In the event of utility “deregulation”, Landlord may choose the service provider. Notwithstanding the foregoing, to the extent that (a) such interruption of service is caused by the negligence or willful misconduct of Landlord or its employees and (b) such interruption of service renders the Leased Premises or any portion of the Leased Premises untenantable for a period of four (4) consecutive business days after Landlord receives written notice from Tenant of such interruption of service, Minimum Annual Rent shall abate with respect to the area which is affected for each such consecutive day after said four (4) business day period that such area of the Leased Premises is so rendered until such service is restored. The rent abatement shall equal the Monthly Rental Installment due for the period of the interruption with respect to the square footage affected. Provided, however, to the extent that such interruption is caused or continues as a result of (i) Force Majeure (as defined in Section 16.04 hereof), or (ii) the negligence or willful misconduct of Tenant, its agents, employees, contractors, subtenants, invitees or assignees, Tenant shall not be entitled to any abatement hereunder. The Leased Premises shall be considered untenantable if Tenant does not use the Leased Premises or portion thereof affected in the conduct of its normal business operations as a result of said interruption of service to the Leased Premises. It is agreed and understood that Tenant shall not use nor be entitled to use the Leased Premises or portion thereof affected to conduct its normal business operations during any day for which Landlord is obligated to abate rent hereunder. The abatement herein provided shall be Tenant’s sole and exclusive remedy for interruption of service. Landlord agrees to use its reasonable efforts to restore such utility service as soon as possible.   5 INDUSTRIAL LEASE   ARTICLE 7 - MAINTENANCE AND REPAIRS   Section 7.01. Tenant’s Responsibility. During the Lease Term, Tenant shall, at its own cost and expense, maintain the Leased Premises in good condition, including interior janitorial services, regularly servicing and promptly making all repairs and replacements thereto, including but not limited to the electrical systems (including light bulb replacement), heating and air conditioning systems (the “HVAC systems”), plate glass, floors, windows and doors, and plumbing systems, and shall obtain a preventive maintenance contract on the HVAC systems, and provide Landlord with a copy thereof. The preventive maintenance contract shall meet or exceed Landlord’s standard maintenance criteria, and shall provide for the inspection and maintenance of the heating, ventilating and air conditioning system on not less than a semi-annual basis.   Section 7.02. Landlord’s Responsibility. During the Lease Term, Landlord shall maintain in good condition and repair, and replace as necessary, the roof, exterior walls, foundation and structural frame of the Building and the parking and landscaped areas, the costs of which shall be included in Operating Expenses to the extent provided in Section 3.02; provided, however, that to the extent any of the foregoing items require repair because of the negligence, misuse, or default of Tenant, its employees, agents, customers or invitees, Landlord shall make such repairs solely at Tenant’s expense.   Section 7.03. Alterations. Tenant shall not permit alterations in or to the Leased Premises unless and until the plans have been approved by Landlord in writing (which approval shall not be unreasonably withheld, conditioned or delayed); provided, however, that Tenant shall have the right to make alterations to the Leased Premises without obtaining Landlord’s prior written consent provided that (a) such alterations do not exceed Ten Thousand Dollars ($10,000.00) in cost in any one instance and Sixty Thousand Dollars ($60,000.00) in cost in the aggregate during the Lease Term; (b) such alterations are non-structural in nature; and (c) Tenant provides Landlord with prior written notice of its intention to make such alterations stating in reasonable detail the nature, extent and estimated cost of such alterations together with the plans and specifications for the same. All alterations to the Leased Premises shall become a part of the realty and the property of Landlord, and shall not be removed by Tenant. Tenant shall ensure that all alterations shall be made in construction of the Building. No person shall be entitled to any lien derived through or under Tenant for any labor or material furnished to the Leased Premises, and nothing in this Lease shall be construed to constitute a consent by Landlord to the creation of any lien. If any lien is filed against the Leased Premises for work claimed to have been done for or material claimed to have been furnished to Tenant, Tenant shall cause such lien to be discharged of record within thirty (30) days after filing. Tenant shall indemnify Landlord from all or alteration and any related lien. Notwithstanding anything contained herein to the contrary, Tenant shall have no obligation hereunder to remove any alterations or improvements which have been made by Tenant with the express written consent of Landlord, unless, at the time of granting such consent, Landlord has expressly required the removal of such alterations or improvements.     Section 8.01. Release. All of Tenant’s trade fixtures, merchandise, inventory and all other personal property in or about the Leased Premises, the Building or the Common Areas, which is deemed to include the trade fixtures, merchandise, the Leased Premises, the Building or the Common Areas, except to the extent of personal injury caused directly by the negligence or willful misconduct of Landlord, its agents, employees or contractors. Nothing contained in this Section 8.01 shall limit (or be deemed to limit) the waivers contained in Section 8.06 below. In the event of any conflict between the provisions of Section 8.06 below and this Section 8.01, the provisions of Section 8.06 shall of this Lease.   Section 8.02. Indemnification by Tenant. Tenant shall protect, defend, indemnify and hold Landlord, its agents, employees and contractors harmless from and   6 INDUSTRIAL LEASE   to any of Tenant’s Property, or (c) arising out of any other act or occurrence within the Leased Premises, in all such cases except to the extent of personal injury (but not property loss or damage) caused directly by the negligence or provisions of Section 8.06 below and this Section 8.02, the provisions of Section 8.06 shall prevail. This Section 8.02 shall survive the expiration or   any conflict between the provisions of Section 8.06 below and this Section 8.03, the provisions of Section 8.06 shall prevail. This Section 8.03 shall survive       shall not exclude blanket contractual liability, broad form property damage, Tenant’s use thereof against claims for bodily injury or death and property combined single limit of not less than $3,000,000 per occurrence, and with   (ii) Casualty Insurance. Special Form Insurance (which insurance shall not Tenant’s Property and betterments (including alterations or additions performed   amounts required by applicable law.   (iv) Business Interruption Insurance. Business Interruption Insurance covering rental income of one (1) year.   more insurance companies reasonably acceptable to Landlord, licensed to do be (A) changed in any way that would make such insurance not in compliance with this Section 8.04, (B) canceled, or (C) permitted to lapse, in each case on less than thirty (30) days’ prior written notice to Landlord. In addition, Tenant’s naming Landlord, Landlord’s managing agent, and any mortgagee requested by of insurance in the form of ACORD 27, evidencing all required coverages, together with a copy of the endorsements to Tenant’s commercial general liability policies naming the appropriate additional insureds. If Tenant fails to carry such insurance and furnish Landlord with such certificates of insurance or copies of insurance policies (if applicable), Landlord may obtain such insurance on Tenant’s behalf and Tenant shall reimburse Landlord upon demand for the cost thereof as Additional Rent.     personal injury, or fire damage   7 INDUSTRIAL LEASE   coverage) covering the Common Areas against claims for bodily injury or death and property damage, which insurance shall provide coverage on an occurrence basis with a combined single limit of not less than $3,000,000 per occurrence, and with general aggregate limits of not less than $10,000,000 for each policy year, which limits may be satisfied by any combination of primary and excess or   (b) Casualty Insurance. Special Form Insurance (which insurance shall not to Section 2.02 above, but excluding Tenant’s Property and any other items   Lease to the contrary, Landlord and Tenant hereby waive any rights each may have against the other on account of any loss of or damage to their respective property, the Leased Premises, its contents, or other portions of the Building or Common Areas arising from any risk which is required to be insured against by Sections 8.04(a)(ii) and 8.05(b) above. The special form coverage insurance policies maintained by Landlord and Tenant as provided in this Lease shall by the insurance company against Landlord and Tenant, as applicable.   ARTICLE 9 - CASUALTY   repair same; provided, however, Landlord’s obligation hereunder with respect to destroyed that they cannot be repaired or rebuilt within one hundred eighty (180) days from the casualty date; or (b) destroyed by a casualty that is not covered by the insurance required hereunder or, if covered, such insurance proceeds are not released by any mortgagee entitled thereto or are insufficient to rebuild the Building and the Leased Premises; then, in case of a clause (a) casualty, either Landlord or Tenant may, or, in the case of a clause (b) casualty, then Landlord may, upon thirty (30) days’ written notice to the other party, terminate this Lease with respect to matters thereafter accruing. Tenant waives any right under applicable laws inconsistent with the terms of this paragraph. Notwithstanding the provisions of this paragraph, if any such damage or destruction occurs within the final year of the term hereof, then Landlord, in its sole discretion, may, without regard to the aforesaid one hundred eighty (180) day period, terminate this Lease by written notice to Tenant.     If all or any substantial part of the Building or common areas shall be acquired by the exercise of eminent domain, Landlord may terminate this Lease by giving written notice to Tenant on or before the date that actual possession thereof is so taken. If all or any part of the Leased Premises or parking area shall be become unusable by Tenant for the Permitted Use, Tenant may terminate this Lease as of the date that actual possession thereof is so taken by giving written notice to Landlord. All damages awarded shall belong to Landlord; provided, however, that Tenant may claim dislocation damages if such amount is not subtracted from Landlord’s award.     Section 11.01. Tenant shall not assign this Lease or sublet the Leased Premises in whole or in part without Landlord’s prior written consent, which consent shall not be unreasonably withheld, delayed or denied. In the event of any assignment or subletting, (a) Tenant shall remain primarily liable hereunder, and (b) if the entire Leased Premises is assigned or sublet, any extension, expansion, rights of first offer, rights of first refusal or other options granted to Tenant under this Lease shall be rendered void and of no further force or effect. The acceptance of rent from any other person shall not be to the assignment of this Lease or the subletting of the Leased Premises. Without in any way limiting Landlord’s right to refuse to consent to any assignment or subletting of this Lease, Landlord reserves the right to refuse to give such consent if in Landlord’s opinion (x) the Leased Premises are or may be in any way adversely affected; (y) the business reputation of the proposed assignee or subtenant is unacceptable; or (z) the financial worth of the proposed assignee or subtenant is insufficient to meet the obligations under the proposed assignment or sublease. In the event that Tenant sublets the Leased Premises or any part thereof, or assigns this Lease and at any time receives rent and/or other consideration which exceeds that which Tenant would at that time be obligated to pay to Landlord, Tenant shall pay to Landlord 50% of the gross excess in such rent less   8 INDUSTRIAL LEASE   reasonable cost of subleasing (including commissions, advertising costs, legal costs, and tenant improvement costs) as such rent is received by Tenant and 50% of any other consideration received by Tenant (excluding any consideration received in connection with a sale of Tenant’s assets) from such subtenant in connection with such sublease or, in the case of any assignment of this Lease by Tenant, Landlord shall receive 50% of any consideration paid to Tenant by such assignee in connection with such assignment. In addition, should Landlord agree to an assignment or sublease agreement, Tenant will pay to Landlord on demand the sum of $500.00 to partially reimburse Landlord for its costs, including reasonable attorneys’ fees, incurred in connection with processing such assignment or subletting request. Notwithstanding any provision of this Lease to the contrary, should Tenant receive consent from Landlord to sublease or assign its interest in the Premises and seek to sublease or assign its interest in the Premises in accordance with this paragraph, Tenant shall not use the name of Landlord or any insignia of Landlord in any of its advertising for such sublease or assignment.   Section 11.02. Permitted Transferee. Notwithstanding anything to the contrary contained in Section 11.01 above, Tenant shall have the right, without Landlord’s consent, but upon ten (10) days prior notice to Landlord, to (a) sublet all or part of the Leased Premises to any related corporation or other entity which controls Tenant, is controlled by Tenant or is under common control with Tenant; (b) assign all or any part of this Lease to any related corporation or other entity which controls Tenant, is controlled by Tenant, or is under common control with Tenant, or to a successor entity into which or with which Tenant is merged or consolidated or which acquires substantially all of Tenant’s assets or property; or (c) effectuate any public offering of Tenant’s stock on the New York Stock exchange or in the NASDAQ over the counter market, provided that in the event of a transfer pursuant to clause (b), the tangible net worth after any such transaction is not less than the tangible net worth of Tenant as of the date hereof and provided further that such successor entity assumes all of the obligations and liabilities of Tenant (any such entity hereinafter referred to as a “Permitted Transferee”). For the purpose of this Article 11 (i) “control” shall mean ownership of not less than fifty percent (50%) of all voting stock or legal and equitable interest in such corporation or entity, and (ii) “tangible net worth” shall mean the excess of the value of tangible assets (i.e. assets excluding those which are intangible such as goodwill, patents and trademarks) over liabilities. Any such transfer shall not relieve Tenant of its     hereunder; and such sale shall operate to release Landlord from liability hereunder after the date of such conveyance. In the event a transferee shall agree to assume the obligations and liabilities of Landlord under the Lease prior to the date of the transfer, Landlord shall be released from all obligations and liabilities under the Lease.   Landlord, without cost, any instrument which Landlord deems reasonably necessary or desirable to confirm the subordination of this Lease and an estoppel certificate in such form as Landlord may reasonably request certifying (i) that this Lease is in full force and effect and unmodified or stating the nature of any modification, (ii) the date to which rent has been paid, (iii) that there are not, to Tenant’s knowledge, any uncured defaults or specifying such defaults if any are claimed, and (iv) any other matters or state of facts reasonably required respecting the Lease. Such estoppel may be relied upon by Landlord and by any purchaser or mortgagee of the Building.   Section 12.03. Subordination. Landlord shall have the right to subordinate this Lease to any mortgage presently existing or hereafter placed upon the Building by so declaring in such mortgage provided that the holder of said mortgage agrees not to disturb Tenant’s possession of the Leased Premises so long as Tenant is not in default hereunder, as evidenced by a subordination, non-disturbance agreement signed by said holder. Promptly following Landlord’s request, Tenant shall execute such a subordination and non-disturbance agreement (“SNDA”). Notwithstanding the foregoing, if the mortgagee shall take title to the Leased Premises through foreclosure or deed in lieu of foreclosure, Tenant shall be allowed to continue in possession of the Leased Premises as provided for in this Lease so long as Tenant shall not be in default. Tenant acknowledges that such SNDA may provide that (i) in the event the mortgagee files suit to foreclose the mortgage, the mortgagee will not join Tenant in the foreclosure proceedings so long as Tenant is not in default under any of the terms, covenants and conditions of the Lease, (ii) in the event mortgagee succeeds to the interest of mortgagor, as Landlord, and Tenant is not in default under the terms, covenants or conditions of the Lease, the mortgagee shall be bound to Tenant under all of the terms, covenants and conditions of the Lease, (iii) Tenant agrees to attorn to mortgagee, and (iv) Tenant agrees to give mortgagee notice of Landlord’s default and opportunity to cure.   9 INDUSTRIAL LEASE     “Default”:   five (5) business days following written notice from Landlord on the first occasion in any twelve (12) month period, and (ii) within five (5) business days after the same is due on any subsequent occasion within said twelve (12) month period, or Tenant fails to pay any other amounts due Landlord from Tenant within ten (10) days after the same is due.   default is such that more than thirty days are reasonably required to cure, then performance within said thirty-day period and thereafter diligently completes the required action within a reasonable time.     (d) All or substantially all of Tenant’s assets in the Leased Premises or   (e) Tenant shall fail to vacate the Leased Premises upon termination of the Lease.   Section 13.02. Remedies. Upon the occurrence of any Default, Landlord shall have the following rights and remedies, in addition to those allowed by law or in Tenant:   (a) Landlord may apply the Security Deposit or re-enter the Leased Premises and cure any default of Tenant, and Tenant shall reimburse Landlord as additional rent for any costs and expenses which Landlord thereby incurs; and Landlord shall not be liable to Tenant for any loss or damage which Tenant may sustain by reason of Landlord’s action.   (b) Landlord may terminate this Lease or, without terminating this Lease, terminate Tenant’s right to possession of the Leased Premises as of the date of such Default, and thereafter (i) neither Tenant nor any person claiming under or through Tenant shall be entitled to possession of the Leased Premises, and Tenant shall immediately surrender the Leased Premises to Landlord; and (ii) Landlord may lawfully re-enter the Leased Premises and dispossess Tenant and any effects, without prejudice to any other remedy which Landlord may have. Landlord shall have the right to lawfully secure the Premises against unauthorized entry and allow Tenant supervised access to the Leased Premises to remove those items belonging to Tenant which are not the subject of a security interest by Landlord. Upon the termination of this Lease, Landlord may declare the present value (discounted at the Prime Rate) of all rent which would have been due under this Lease for the balance of the Lease Term to be immediately due and payable, whereupon Tenant shall be obligated to pay the same to Landlord, together with all loss or damage which Landlord may sustain by reason of Tenant’s default (“Default Damages”), which shall include without limitation expenses of preparing the Leased Premises for re-letting, demolition, repairs, Tenant Improvements, brokers’ commissions and attorneys’ fees, it being expressly   and re-let all or any part thereof for a term different from that which would terms and conditions different from those contained herein, Landlord shall have the right to secure the Premises against unauthorized entry, allow Tenant   10 INDUSTRIAL LEASE   supervised access to the Leased Premises to remove those items belonging to Tenant which are not the subject of a security interest by Landlord and Tenant shall be immediately obligated to pay to Landlord as liquidated damages the present value (discounted at the Prime Rate) of the difference between the rent provided for herein and that provided for in any lease covering a subsequent re-letting of the Leased Premises, for the period which would otherwise have constituted the balance of the Lease Term, together with all of Landlord’s Default Damages.     sums due hereunder. As to Landlord’s maintenance and repair obligations under Section 7.02 above, if Landlord has not cured or commenced to cure a maintenance or repair default set forth in said notice from Tenant within said 30-day period, Tenant may undertake all reasonable action to cure Landlord’s failure of performance. If Tenant elects to cure said default, Tenant shall, prior to commencement of said work, provide to Landlord a specific description of the work to be performed by Tenant and the name of Tenant’s contractor. Any materials used shall be of equal or better quality than currently exists in the Building and Tenant’s contractor shall be adequately insured and of good reputation. Landlord agrees to reimburse Tenant on demand for all reasonable, third party out-of-pocket expenses incurred by Tenant in connection therewith, provided that Tenant delivers to Landlord adequate bills or other supporting evidence substantiating said cost.   Section 13.04. Limitation of Landlord’s Liability. If Landlord shall fail to perform any term, condition, covenant or obligation required to be performed by Landlord’s right, title and interest in and to the Building for the collection of such judgment; and Tenant further agrees that no other assets of Landlord shall be subject to levy, execution or other process for the satisfaction of Tenant’s judgment.   omission by Landlord or its employees or agents during the Lease Term shall be   observance of any of the terms, conditions, covenants or obligations contained in this Lease and the non-defaulting party obtains a judgment against the therewith.   ARTICLE 14 - LANDLORD’S RIGHT TO RELOCATE TENANT   Intentionally Omitted   ARTICLE 15 - TENANT’S RESPONSIBILITY REGARDING   Section 15.01. Definitions.   (a) “Environmental Laws” - All present or future federal, state and municipal laws, codes, orders, decrees, ordinances, rules and regulations as well as the rules and regulations of the Federal Environmental Protection Agency or any other federal, state or municipal agency or governmental board or entity concerning any hazardous, toxic or dangerous, waste, substance, or material, gas or petroleum product.   11 INDUSTRIAL LEASE   (b) “Hazardous Substances” - For purposes of this Lease, “Hazardous Substances” means and includes any hazardous or toxic substance, pollutant, contaminant, gas, or petroleum product defined as such in (or for purposes of) any Environmental Laws.   Section 15.02. Compliance. Tenant, at its sole cost and expense, shall promptly pursuant to the Environmental Laws or issued by any insurance company which shall impose any duty upon Tenant with respect to the use, occupancy, maintenance or alteration of the Leased Premises whether such notice shall be served upon Landlord or Tenant.   Section 15.03. Restrictions on Tenant. Tenant shall operate its business and maintain the Leased Premises in compliance with all Environmental Laws. Tenant shall not cause or permit the use, generation, release, manufacture, refining, under or about the Leased Premises, or the transportation to or from the Leased Premises of any Hazardous Substances, except as necessary and appropriate for its Permitted Use in which case the use, storage or disposal of such Hazardous Substances shall be performed in compliance with the Environmental Laws and the highest standards prevailing in the industry.   Section 15.04. Notices, Affidavits, Etc. Tenant shall immediately notify Landlord of (i) any violation by Tenant, its employees, agents, representatives, customers, invitees or contractors of the Environmental Laws on, under or about the Leased Premises, or (ii) the presence or suspected presence of any Hazardous Substances on, under or about the Leased Premises and shall immediately deliver to Landlord any notice received by Tenant relating to (i) and (ii) above from any source. Tenant shall execute affidavits, representations and the like within five (5) days of Landlord’s request therefor concerning Tenant’s best knowledge the Leased Premises.   Section 15.05. Landlord’s Rights. Landlord and its agents shall have the right, but not the duty, upon advance notice (except in the case of emergency when no notice shall be required) to inspect the Leased Premises and conduct tests thereon to determine whether or the extent to which there has been a violation of Environmental Laws by Tenant or whether there are Hazardous Substances on, under or about the Leased Premises. In exercising its rights herein, Landlord shall use reasonable efforts to minimize interference with Tenant’s business but such entry shall not constitute an eviction of Tenant, in whole or in part, and Landlord shall not be liable for any interference, loss, or damage to Tenant’s property or business caused thereby.   Section 15.06. Tenant’s Indemnification. Tenant shall indemnify Landlord and Landlord’s managing agent from any and all claims, losses, liabilities, costs, expenses and damages, including attorneys’ fees, costs of testing and remediation costs, incurred by Landlord in connection with any breach by Tenant of its obligations under this Article 15. The covenants and obligations under this Article 15 shall survive the expiration or earlier termination of this Lease. Notwithstanding anything contained in this Article 15 to the contrary, Tenant shall not have any liability to Landlord under this Article 15 resulting from any conditions existing, or events occurring, or any Hazardous Substances Premises prior to the Commencement Date of this Lease except to the extent Tenant exacerbates the same.   Section 15.07. Landlord’s Representation. To the best of Landlord’s knowledge and belief Landlord represents that as of the Commencement Date of the term hereof, the Leased Premises and Common Areas shall either be in compliance with all governmental codes, ordinances, rules and regulations (including but not limited to all environmental laws) or, if required at such time, shall be brought into such compliance.   ARTICLE 16 - MISCELLANEOUS   benefit of and be binding upon Landlord and Tenant and their respective successors and assigns.   Section 16.02. Governing Law. This Lease shall be governed in accordance with the laws of the State where the Building is located.   Section 16.03. Guaranty. In consideration of Landlord’s leasing the Leased Premises to Tenant, Tenant shall provide Landlord with a Guaranty of Lease executed by the guarantor(s) described in the Basic Lease Provisions, if any.   payment of any monetary obligation) shall be excused for the period of any delay in the performance of any   12 INDUSTRIAL LEASE   obligation hereunder when such delay is occasioned by causes beyond its control, including but not limited to work stoppages, boycotts, slowdowns or strikes; or acts or omissions of governmental or political bodies.     negotiation and execution of this Lease are the Brokers. Each party shall between Landlord and the Brokers.   Section 16.07. Notices. Any notice required or permitted to be given under this Lease or by law shall be deemed to have been given if it is written and delivered in person or by overnight courier or mailed by certified mail, postage prepaid, to the party who is to receive such notice at the address specified in Article 1. If delivered in person, notice shall be deemed given as of the delivery date. If sent by overnight courier, notice shall be deemed given as of the first business day after sending. If mailed, the notice shall be deemed to have been given on the date which is three business days after mailing. Either party may change its address by giving written notice thereof to the other party.   Section 16.08. Partial Invalidity; Complete Agreement. If any provision of this   Section 16.09. Financial Statements. In the event that Tenant is no longer a publicly traded company, Tenant shall provide to Landlord on an annual basis, within ninety (90) days following the end of Tenant’s fiscal year, a copy of Tenant’s most recent financial statements prepared as of the end of Tenant’s fiscal year. Such financial statements shall be signed by Tenant who shall attest to the truth and accuracy of the information set forth in such statements. All financial statements provided by Tenant to Landlord hereunder consistently applied. Landlord agrees that it shall maintain the confidentiality of such financial statements during the Lease Term; provided, however, that said obligation shall not be construed so as to prohibit Landlord from disclosing the contents of the financial statements to (a) officers and employees of Landlord and those agents, attorneys and consultants of Landlord reasonably requiring access, (b) actual or prospective lenders, purchasers, investors or shareholders of Landlord, (c) any entity or agency required by law, or (d) any entity or agency which is reasonably necessary to protect Landlord’s interest in any action, suit or proceeding brought by or against Landlord and relating to the subject matter of this Lease.   Section 16.10. Representations and Warranties. The undersigned represent and warrant that (i) such party is duly organized, validly existing and in good standing (if applicable) in accordance with the laws of the state under which it located, that it is authorized to do business in such state; and (ii) the individual executing and delivering this Lease has been properly authorized to do so, and such execution and delivery shall bind such party.   ARTICLE 17 – SPECIAL PROVISIONS   Section 17.01. Option To Extend.   (a) Grant and Exercise of Option. Provided that (i) Tenant has not been in default beyond any applicable notice and cure period hereunder at any time during the Lease Term, (ii) the creditworthiness of Tenant is then acceptable to Landlord, (iii) Tenant originally named herein (or its Permitted Transferee) remains in possession of and has been continuously operating in the entire Leased Premises throughout the Lease Term and (iv) the current use of the Leased Premises is consistent with the Permitted Use hereunder, Tenant shall have the option to extend the Lease Term for three (3) successive periods of five (5) years each (the “Extension Term(s)”). The leasing of the Leased Premises for the Extension Term shall be upon the same terms and conditions contained in the Lease for the original Lease Term except (i) this provision giving three (3) extension options shall be amended to reflect the remaining options to extend, if any, (ii) any   13 INDUSTRIAL LEASE   improvement allowances or other concessions applicable to the Leased Premises during the original Lease Term shall not apply to the Extension Term, and (iii) the Minimum Annual Rent shall be adjusted as set forth below (the “Rent Adjustment”). Tenant shall exercise such option by delivering to Landlord, no Term, written notice of Tenant’s desire to extend the Lease Term. Tenant’s failure to timely exercise such option shall waive it and any succeeding option. If Tenant properly exercises its option to extend, Landlord shall notify Tenant of Landlord’s determination of the Rent Adjustment no later than eight (8) months prior to the commencement of the Extension Term. Tenant shall have thirty (30) days following its receipt of Landlord’s notice to notify Landlord in writing that Tenant objects to the Rent Adjustment and that Tenant either (x) retracts its option to extend the Lease Term, or (y) elects to determine the Rent Adjustment through an appraisal process. If Tenant elects option (x) above, the Lease Term shall expire on its scheduled expiration date and Tenant’s option to extend shall be void and of no further force and effect. If Tenant elects option (y) above, the Rent Adjustment shall be determined in accordance with the appraisal process set forth in subsection (c) below. If Tenant fails to notify Landlord of such election within said thirty (30) day period, Tenant shall be deemed to have accepted the Rent Adjustment set forth in Landlord’s notice to Tenant.   shall be reasonably determined by Landlord based on the monthly rent charged to prospective renewing tenants for comparable buildings (e.g., age, physical condition, number of stories, total size, comparable location) in the area in which the Leased Premises are located, taking into account all financial terms, including without limitation, base rent, free rent, escalations, work contributions and allowances and leasing and brokerage commissions.   (c) Appraisal Process. If, pursuant to subsection (a) above, Tenant elects to determine the Rent Adjustment through an appraisal process, the Rent Adjustment   (i) Selection of Appraisers. Landlord and Tenant shall, within ten (10) days after Landlord’s receipt of Tenant’s election, each select an appraiser to determine the Fair Market Value Rent for the Leased Premises. Each appraiser so selected shall be either an MAI appraiser or a licensed real estate broker, each having at least ten years prior experience in the appraisal or leasing of comparable space in the metropolitan area in which the Leased Premises are located and with a working knowledge of current rental rates and practices.   (ii) Appraisal. Upon selection, Landlord’s and Tenant’s appraisers shall work together in good faith to agree upon the Rent Adjustment. The estimate chosen by such appraisers shall be binding on both Landlord and Tenant. If the two appraisers cannot agree upon the Rent Adjustment for the Leased Premises within third appraiser meeting the above criteria. Once the third appraiser has been selected as provided for above, then such third appraiser shall within ten (10) days after appointment make its determination of which of the appraisers’ two estimates most closely reflects Rent Adjustment and such estimate shall be binding on both Landlord and Tenant as the Rent Adjustment for the applicable Extension Term. The parties shall share equally in the costs of the third arbitrator.   (d) Monthly Rental. The Monthly Rental Installments shall be an amount equal to Lease.   (e) Amendment. If Tenant properly exercises its option to extend, Landlord and conditions of the applicable Extension Term.   Section 17.02. Right of First Refusal. Provided that (i) Tenant has not been in Leased Premises throughout the Term and (iv) the current use of the Leased Premises is consistent with the Permitted Use hereunder, and subject to any rights of other tenants to the Refusal Space (hereafter defined) superior to Tenant, Landlord shall notify Tenant in writing (“Landlord’s Notice”) upon Landlord’s receipt of a bona fide offer that Landlord desires to accept from an unrelated third party (a “Bona Fide Offer”) to lease any space in the Building (the “Refusal Space”). Landlord’s Notice shall describe in detail the terms of said Bona Fide Offer. Tenant shall have five (5) business days from its receipt of Landlord’s Notice to deliver to Landlord a written acceptance agreeing to lease the Refusal Space on the terms and conditions set forth in the Bona Fide Offer including leasing such other space as may be the subject of such Bona Fide Offer. In the event Tenant fails to notify Landlord of its acceptance within said five (5) business day period, such failure shall be conclusively deemed a waiver   14 INDUSTRIAL LEASE   of Tenant’s rights under this Section 17.02 and a rejection of the Refusal Space, whereupon Landlord shall be free to lease the Refusal Space to the tenant described in said Bona Fide Offer. In the event Tenant accepts the Refusal Space on the terms and conditions set forth in the Bona Fide Offer, Landlord and Tenant shall enter into a lease amendment incorporating such Refusal Space and the increase in Tenant’s Proportionate Share. It is understood and agreed that Tenant’s rights under this Section 17.02 shall not be construed to prevent any tenant in the Building from extending or renewing its lease.   Section 17.03. Option To Terminate. Provided that (i) Tenant has not been in during the Lease Term, and (ii) Tenant originally named herein (or its Permitted Transferee) remains in possession of and has been continuously operating in the entire Leased Premises throughout the Term, Tenant shall have a one time right to terminate the Lease effective as of the end of the sixtieth (60th) month of the Lease Term. In order to exercise such termination right, Tenant shall notify Landlord of such exercise in writing at least twelve (12) months prior to the effective date of such termination, and together with such notice, Tenant shall pay to Landlord $192,000.00. In the event Tenant fails to notify Landlord by such notice deadline, Tenant shall be deemed to have waived Tenant’s termination right for the remainder of the term of the Lease and any extensions thereof.   Section 17.05. Parking. Landlord shall make available to Tenant a number of automobile parking spaces (on an unassigned, non-exclusive basis) in the parking area established for the Building based on a formula of three (3) parking spaces for each 1,000 square feet of rentable area within the Leased Premises, rounded to the nearest whole number of spaces.   Section 17.06. Signage.   (a) Suite. Landlord, at its cost and expense, shall provide Tenant with Building   (b) Building. Tenant shall have the right to install a Building mounted identification sign with Tenant’s name and/or logo on the parapet of the Building (the “Sign”). The Sign shall be installed, maintained and repaired by Tenant at Tenant’s sole cost and expense and shall comply with all laws, rules, regulations, ordinances and covenants applicable to the Building. Landlord shall have the right to approve the Sign, including the location, size, color and style, which approval shall not be unreasonably withheld. Upon the expiration or early termination of this Lease, Tenant shall remove the Sign and repair any damage caused by such removal at Tenant’s sole cost and expense.   Section 17.07. ADA. Subject to the last sentence hereof, Landlord, at its sole cost and expense, shall be responsible for causing the Building to comply with Title III of the American With Disabilities Act of 1990 (the “ADA”), or the regulations promulgated thereunder (as the ADA is in effect and pertains to the general public), as of the Commencement Date. During the Lease Term, Tenant hereby agrees that it shall be responsible, at its sole cost and expense, for causing the Building, the Common Area and the Leased Premises to comply with the ADA as a result of (i) any special requirements of the ADA relating to accommodations for individual employees, invitees and/or guests of Tenant, and (ii) any alterations made to the Leased Premises by Tenant.   Section 17.08. HVAC.   (a) Landlord hereby warrants that the heating, ventilation and air-conditioning systems servicing the Leased Premises (the “HVAC”) shall be in good working order as of the Commencement Date.   (b) Notwithstanding anything to the contrary set forth in Section 7.01 of this Lease, at such time, if at all, as the cost incurred by Tenant to repair the HVAC in a given calendar year exceeds $5,000.00, in the aggregate, (i) Tenant shall promptly notify Landlord, which notice shall be accompanied by copies of paid invoices evidencing such cost, and (ii) Landlord shall perform all further repairs required to the HVAC during such calendar year at Landlord’s sole cost and expense; provided, however, that in the event such repair is needed as a result of Tenant’s failure to maintain the HVAC properly or the negligence or willful misconduct of Tenant or Tenant’s agents, employees, contractors or invitees, Tenant shall be required to perform the necessary repairs at its sole cost and expense.   (c) Notwithstanding anything to the contrary set forth in Section 7.01 of this Lease, and without limiting anything set forth in subsection (b) above, in the event that, during the Lease Term, a particular component of the HVAC requires repair or replacement and the estimated cost for such repair or replacement exceeds $2,000.00 (i) Tenant shall promptly notify Landlord of the need for such repair or replacement, (ii) Landlord shall perform such repair or replacement at its cost and expense (subject to   15 INDUSTRIAL LEASE   clause (iii) below), and (iii) Tenant shall reimburse Landlord, as Additional Rent, for the cost of such replacement up to $2,000.00; provided, however, that in the event such replacement is needed as a result of Tenant’s failure to maintain the HVAC properly or the negligence or willful misconduct of Tenant or Tenant’s agents, employees, contractors or invitees, Tenant shall be required to perform the necessary replacement at its sole cost and expense.   Section 17.09. Memorandum of Lease. The parties agree that this Lease may not be recorded but that either party may request that the other execute a Memorandum of Lease which may be recorded. The parties agree to remove the Memorandum of Lease of record upon the expiration or earlier termination of this Lease. In the event of an early termination as a result of Tenant’s default and vacation of the Leased Premises, Tenant agrees that Landlord can unilaterally remove the Memorandum of Lease of record.     16 INDUSTRIAL LEASE     LANDLORD: an Indiana limited partnership doing business in North Carolina as Duke Realty of Indiana Limited Partnership By:   Duke Realty Corporation,     its General Partner     By:     [SEAL]     Printed:   H. Andrew Kelton         Title:   Senior Vice-President     TENANT: CHARLES AND COLVARD, LTD., a North Carolina corporation     By:     [SEAL]     Printed:   James R. Braun         Title:   V.P.-Finance, CFO, Secretary       END OF EXECUTION SIGNATURES   17 INDUSTRIAL LEASE   EXHIBIT B-1 (Continued)   TENANT ALTERNATES   INDUSTRIAL LEASE   EXHIBIT B   TENANT IMPROVEMENTS   1. Landlord’s Obligations. Tenant has personally inspected the Leased Premises and accepts the same “AS IS” without representation or warranty by Landlord of any kind and with the understanding that Landlord shall have no responsibility with respect thereto except to construct and install within the Leased Premises, in a good and workmanlike manner and in compliance with all applicable federal, state, county and municipal laws, ordinances and codes in effect as of the date of the Lease, the Tenant Improvements, in accordance with this Exhibit B.   2. Construction Drawings. On or before the thirtieth (30th) day following the date hereof, Landlord shall prepare and submit to Tenant a set of construction drawings (the “CD’s”) covering all work to be performed by Landlord in constructing and installing the Tenant Improvements, which shall be based on the scope of work attached as Exhibit B-1 hereto. Tenant shall have five (5) business days after receipt of the CD’s in which to review the CD’s and to give to Landlord written notice of Tenant’s approval of the CD’s or its requested changes to the CD’s. Tenant shall have no right to request any changes to the CD’s that would increase the scope of work (unless Tenant pays for any increase in cost resulting from such requested changes) or materially alter the exterior appearance or basic nature of the Building or the Building systems. If Tenant fails to approve or request changes to the CD’s within five (5) business days after its receipt thereof, Tenant shall be deemed to have approved the CD’s and the same shall thereupon be final. If Tenant requests any changes to the CD’s, Landlord shall make those changes which are reasonably requested by Tenant and portion of the CD’s to Tenant. Tenant may not thereafter disapprove the revised portions of the CD’s unless Landlord has unreasonably failed to incorporate reasonable comments of Tenant and, subject to the foregoing, the CD’s, as said revisions to Tenant. Tenant shall at all times in its review of the CD’s, and of any revisions thereto, act reasonably and in good faith. Without limiting the foregoing, Tenant agrees to confirm Tenant’s consent to the CD’s in writing within three (3) business days following Landlord’s written request therefor.   3. Schedule and Early Occupancy. Landlord shall provide Tenant with a proposed schedule for the construction and installation of the Tenant Improvements and shall notify Tenant of any material changes to said schedule. Tenant agrees to coordinate with Landlord regarding the installation of Tenant’s phone and data wiring and any other trade related fixtures that will need to be installed in the Leased Premises prior to Substantial Completion. In addition, if and to the extent permitted by applicable laws, rules and ordinances, Tenant shall have the right to enter the Leased Premises for thirty (30) days prior to the scheduled date for Substantial Completion (as may be modified from time to time) in order to install fixtures (such as racking) and otherwise prepare the Leased Premises for occupancy, which right shall expressly exclude making any structural modifications. During any entry prior to the Commencement Date (a) Tenant shall comply with all terms and conditions of this Lease other than the obligation to pay rent, (b) Tenant shall not interfere with Landlord’s completion of the Tenant Improvements, (c) Tenant shall cause its personnel and contractors to comply with the terms and conditions of Landlord’s rules of conduct (which Landlord agrees to furnish to Tenant upon request), and (d) Tenant shall not begin operation of its business. Tenant acknowledges that Tenant shall be responsible for obtaining all applicable permits and inspections relating to any such entry by Tenant.   4. Change Orders. Tenant shall have the right to request changes to the CD’s at any time following the date hereof by way of written change order (each, a is reasonably acceptable to Landlord, Landlord shall prepare and submit promptly to Tenant a memorandum setting forth the impact on cost and schedule resulting shall, within three (3) business days following Tenant’s receipt of the Change Order Memorandum of Agreement, either (a) execute and return the Change Order Memorandum of Agreement to Landlord, or (b) retract its request for the Change Order. At Landlord’s option, Tenant shall pay to Landlord (or Landlord’s designee), within ten (10) days following Landlord’s request, any increase in the cost to construct the Tenant Improvements resulting from the Change Order, as set forth in the Change Order Memorandum of Agreement. Landlord shall not be obligated to commence any work set forth in a Change Order until such time as Tenant has delivered to Landlord the Change Order Memorandum of Agreement executed by Tenant and, if applicable, Tenant has paid Landlord in full for said Change Order.   5. Tenant Delay. Notwithstanding anything to the contrary contained in the Lease, if Substantial Completion of the Tenant Improvements is delayed beyond the Target Commencement Date as a result of Tenant Delay (as hereinafter defined), then, for purposes of determining the   1 INDUSTRIAL LEASE   Commencement Date, Substantial Completion of the Tenant Improvements shall be deemed to have occurred on the date that Substantial Completion of the Tenant Improvements would have occurred but for such Tenant Delay. Without limiting the foregoing, Landlord shall use commercially reasonable speed and diligence to Substantially Complete the Tenant Improvements on or before the Target Commencement Date.   6. Penalty. Notwithstanding anything to the contrary contained in this Exhibit B, and provided that this Lease is executed by Tenant on or before March 26, 2004, in the event that the Tenant Improvements are not Substantially Complete on or before the date that is fifteen (15) days following the Target Commencement Date, as such date may be extended as a result of Delay, as hereinafter defined (the “Outside Date”), Tenant shall receive one (1) day of free rent for each day after the Outside Date that the Tenant Improvements are not Substantially Complete. For purposes of this Lease, “Delay” shall mean (i) Tenant Delay, and (ii) such additional time as is equal to the time lost by Landlord or Landlord’s contractors or suppliers as a result of Force Majeure, as described in Section 16.04 of the Lease. Except as set forth in this Paragraph 6, no liability whatsoever shall arise or accrue against Landlord by reason its failure to Substantially Complete the Tenant Improvements on or before the Target Commencement Date.   7. Letter of Understanding. Promptly following the Commencement Date, Tenant Premises and that the condition of the Leased Premises and the Building was at the time satisfactory and in conformity with the provisions of this Lease in all   8. Moving Allowance. Landlord shall pay to Tenant a moving allowance of $4.50 per rentable square foot within the Leased Premises at such time as all of the following events have occurred: (i) Tenant has taken occupancy of the Leased Premises and has begun operating Tenant’s business therein, and (ii) Tenant has executed and delivered to Landlord the Letter of Understanding required under Paragraph 7 of this Exhibit B above.   9. Definitions. For purposes of this Lease (a) “Substantial Completion” (or any Tenant Improvements, subject only to punchlist items to be identified by Landlord and Tenant in a joint inspection of the Leased Premises prior to Tenant’s occupancy, as established by a certificate of occupancy for the Leased Premises or other similar authorization issued by the appropriate governmental authority, and (b) “Tenant Delay” shall mean any delay in the completion of the Tenant Improvements attributable to Tenant, including, without limitation (i) Tenant’s failure to meet any time deadlines specified herein, (ii) Change Orders, (iii) the performance of any other work in the Leased Premises by any person, firm or corporation employed by or on behalf of Tenant, or any failure to complete or delay in completion of such work, (iv) Landlord’s inability to Premises directly by Tenant, and (v) any other act or omission of Tenant.   10. Warranty. Landlord hereby warrants to Tenant, which warranty shall survive for the one (1) year period following the Commencement Date, that (i) the materials and equipment furnished by Landlord’s contractors in the completion of the Tenant Improvements will be of good quality and new, and (ii) such materials and equipment and the work of such contractors shall be free from defects not inherent in the quality required or permitted hereunder. This warranty shall exclude damages or defects caused by Tenant, its agents, employees or contractors, improper or insufficient maintenance, improper operation or normal wear and tear under normal usage.   11. Amortization. In the event Tenant elects to have Landlord construct and install any one or more of the alternatives set forth in Exhibit B-1 hereto, the cost of such alternative(s) (the “Alternative Cost”) shall be paid by Tenant in equal monthly installments over the initial Lease Term at the same time and in the same manner as the Monthly Rental Installments. At the request of either party, Landlord and Tenant shall enter into an amendment to this Lease confirming the Alternative Cost and the amount of said monthly payments. Notwithstanding anything to the contrary contained herein, upon an early termination of the Lease for any reason (including, but not limited to, casualty or condemnation) other than for a Landlord default, Tenant shall immediately pay to Landlord the then unpaid portion of the Alternative Cost.   END OF EXHIBIT B     2 INDUSTRIAL LEASE   EXHIBIT C   RULES AND REGULATIONS   Premises.   Building.     obstructed by Tenant.         by Tenant’s employees for heating beverages and light snacks. Notwithstanding the foregoing, Tenant shall have the right to cook outdoors in connection with outdoor functions and picnics with Landlord’s prior written approval. Except for those odors emitted through the normal use of a toaster or microwave, Tenant or permeate from the Premises.         Tenant’s business offices.   doors, walls, accessways, or windows by Tenant (excluding Tenant’s vault and interior swipe cards), nor shall any changes be made in existing locks or the mechanism thereof, without the prior written approval of Landlord and unless and until a duplicate key or access card, as applicable, is delivered to Landlord. Tenant shall, upon the termination of its tenancy (i) return to Landlord all keys for the Premises and for any area of the Building, or common areas, either furnished to, or otherwise procured by Tenant, (ii) restore the locks, walls, accessways, windows, and doors to their original condition on the date of this Lease by removing any security measures installed by Tenant, repairing any damage to the Premises or to the Building as a result of the restoration and removal, and (iii) in the event of the loss of any keys furnished to Tenant by Landlord, Tenant shall pay to Landlord the cost thereof.   1 INDUSTRIAL LEASE     any form.     illegal purpose.       fire retardant materials.     Building, or on the Land unless such weapon is in the possession of a licensed holder and used specifically for security purposes.   materials in form, substance, coloring, design, and quality are subject to the prior approval of Landlord, and must be designed and constructed in accordance in accordance with plans and specifications that are subject to the prior approval of Landlord.   tenant.   END OF EXHIBIT C   2 INDUSTRIAL LEASE   EXHIBIT D   LETTER OF UNDERSTANDING   Duke Realty Limited Partnership, an Indiana limited partnership Attention:                                               1800 Perimeter Park Drive, Suite 200 Morrisville, NC 27560     RE: Lease Agreement between Duke Realty Limited Partnership, an Indiana limited partnership (“Landlord”) and                                               (“Tenant”) for the Leased Premises located at                                                   (the “Leased Premises”), dated ,                      (the “Lease”). Lease ID No.                                                   The undersigned, on behalf of the Tenant, certifies to the Landlord as follows:   1. The Commencement Date under the Lease is                                              .   2. The Rent Commencement Date is                                              .       .     5. The Landlord has completed the improvements designated as Landlord’s obligation under the Lease (excluding punch-list items as agreed upon by the Landlord and Tenant), if any, and Tenant has accepted the Leased Premises as of the Commencement Date.     be executed this          day of                     , 200    .   By:     Printed Name:     Title:       1

EXHIBIT 10.1 GlenRose Instruments Inc. 4% Convertible Debentures Due 2013 Subscription Agreement 1. Subscription. The undersigned, intending to be legally bound, irrevocably subscribes for and agrees to purchase the aggregate U.S. dollar amount of the 4% Convertible Debentures Due 2013 (each a “Debenture” and collectively, the “Debentures”), of GlenRose Instruments Inc., a Delaware corporation (the “Company”), indicated on the signature page hereof, on the terms and conditions described herein and in the Debenture. transfer funds payable to: GlenRose Instruments Inc., 45 First Avenue, Waltham, MA 02451. The minimum subscription is for $500,000 unless otherwise determined in the discretion of the Company. Capitalized terms not otherwise defined in this Agreement have the meanings specified in the Debenture. 2. Company Representations, Warranties and Covenants. Except as disclosed pursuant to the Company’s publicly available reports filed with the Securities and Exchange Commission (the “SEC”) pursuant to Sections 12, 13 and 15(d)of the represents and warrants to the undersigned as follows as of the date hereof:   2.01 Organization and Standing of the Company. The Company is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction in which it was organized and has all requisite corporate power and on of its business as now conducted and as now proposed to be conducted. The of the property owned or leased, or the nature of the activities conducted, by it makes such licensing or qualification necessary except where the failure to have such licenses, qualifications or authority would not have a material adverse effect on the business of the Company ("Company Adverse Effect"). 2.02 Corporate Action and Valid Issuance. The Company has all necessary under this Agreement, the Investor Rights Agreement executed as of the date hereof, the Debenture and any other agreements and instruments executed in connection herewith (collectively, the “Transaction Agreements”). All corporate necessary for the authorization of the Debentures, the authorization, execution, the transactions contemplated therein has been taken. The execution, delivery and performance of the Transaction Agreements by the Company, the issuance of the Common Stock (the “Conversion Shares”) upon conversion of the Debentures in contemplated herein do not require any approval of the Company’s stockholders (other than such approval as has been obtained). The Transaction Agreements have been duly executed and delivered by the Company and constitute, and all the covenants therein contained constitute the valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject only to the effect of bankruptcy, insolvency, moratorium, and similar laws affecting the rights of creditors generally. Neither the issuance of the Debentures, nor the issuance of shares of Common Stock upon the conversion of the Debentures, is subject to preemptive or other similar statutory or contractual rights and will not conflict with any provisions of any agreement or instrument to which the Company is a party or by which it is bound, including without limitation, the articles of incorporation and bylaws of the Company.   1   2.03 Securities Act. The Company has complied and will comply with all applicable federal and state securities laws in connection with the issuance of the Debentures and any Conversion Shares. Neither the Company nor anyone acting on its behalf has offered or will offer to sell the Debentures, or solicit negotiations relating thereto with, any person, so as to bring the issuance and sale of the Debentures or the issuance of the Conversion Shares under the registration provisions of the Securities Act or any state securities laws. 2.04 Employee Matters. Except as would not reasonably likely to result in a Company Adverse Effect, each benefit plan of the Company has been established and administered in accordance with its terms and in compliance with the applicable provisions of Employee Retirement Income Security Act of 1974, as amended, the Internal Revenue Code of 1986, as amended, and other applicable laws, rules and regulations. The Company and its subsidiaries are in compliance with all federal, state, local and foreign requirements regarding employment. 2.05 Capitalization; Status of Capital Stock (a) On the date of this Agreement and immediately prior to the issuance of Debentures contemplated by this Agreement, the Company has a total authorized capitalization consisting of: (i) 10,000,000 shares of Common Stock of which 3,117,647 are issued and outstanding and (ii) 3,000,000 shares of Preferred Stock, of which none are issued and outstanding. As of the date of this Agreement and immediately prior to the issuance of Debentures contemplated by this Agreement, 700,000 shares of Common Stock have been reserved for issuance in accordance with the Company’s 2005 Stock Option and Incentive Plan. Of those shares the Company granted: (i) nonqualified options to purchase 230,000 shares of the Company’s Common Stock that are currently not exercised and (ii) 15,000 shares of restricted common stock. (b) Schedule 2.05 sets forth the capitalization of the Company immediately following the issuance of the Debentures contemplated by this Agreement Common Stock; (ii) Common Stock reserved for issuance upon conversion of Debenture, including the names of the holders of the Debentures thereof; (iii) issued stock options, including vesting schedule and exercise price; (iv) stock options not yet issued but reserved for issuance; (v) issued and outstanding Preferred Stock; and (vi) warrants or stock purchase rights, if any. All of the are validly issued and are fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws. The Debentures have been duly authorized, and when issued, sold and delivered in accordance validly issued. The Company has duly reserved the Conversion Shares for issuance upon conversion of the Debentures, and the Conversion Shares, when issued and delivered upon conversion of the Debentures, will be duly authorized, validly issued and fully paid and non assessable. Except as set forth on Schedule 2.05, there are no options, warrants or rights to purchase shares of capital stock or other securities of the Company authorized, issued or outstanding, nor is the Company obligated in any other manner to issue shares of its capital stock or other securities. There are no restrictions on the transfer of shares of capital stock of the Company other than those imposed by the Transaction Agreements and state and federal securities laws. No holder of any security of the Company is entitled to preemptive or similar statutory or contractual rights, either arising pursuant to any agreement or instrument to which the Company is a party, or which are otherwise binding upon the Company, which have not been waived. The offer and sale of all shares of capital stock and other securities of the Company issued before the date hereof complied with or were exempt from all   2   2.06 Government Consents and Filings. Assuming the accuracy of the representations made by the undersigned in Section 2 of this Agreement, no   2.07 Litigation. There is no claim, action, suit, proceeding, arbitration, currently threatened against the Company which individually or in the aggregate would reasonably be expected to have a Company Adverse Effect, nor are there any governmental agency or instrumentality and binding upon the Company that would reasonably be expected to have a Company Adverse Effect. To the Company’s knowledge, the Company is not currently subject to any investigation by any governmental body with respect to any allegation of “backdating” options granted to any employees or directors that would reasonably be expected to have a Company Adverse Effect. 2.08 Intellectual Property. Except as would not reasonably be expected to have a Company Adverse Effect: (a) the Company owns, or possesses sufficient rights to to be conducted (collectively, “Company Intellectual Property”) necessary for the conduct of its business as currently conducted; (b) to the Company’s knowledge, the use by the Company of any Company Intellectual Property used in the conduct of the Company’s business as currently conducted does not infringe on or otherwise violate the rights of any person; (c) the use of any licensed Company Intellectual Property by the Company is in accordance with applicable licenses pursuant to which the Company acquired the right to use such Company Intellectual Property and (d) to the knowledge of the Company, no person is challenging, infringing on or otherwise violating any right of the Company with respect to any Company Intellectual Property owned by and/or exclusively 2.09 Compliance with Other Instruments. The Company is not in violation or default (a) of any provisions of its articles of incorporation or bylaws, (b) of any instrument, judgment, order, writ or decree, or (c) under any agreement to which it is a party or by which it is bound, or of any provision of federal or which would have a Company Adverse Effect. 2.10 Absence of Liens. The property and assets that the Company owns are free 2.11 Tax Returns and Payments. There are no federal, state, county, local or   3   2.12 Permits. The Company has all franchises, permits, licenses and any similar reasonably be expected to have a Company Adverse Effect. The Company is not in 2.13 No Brokers or Finders. No person other than Ladenburg Thalman & Co. Inc. act or omission by the Company or any agent of the Company. 2.14 SEC Reports; Financial Statements. The Company has filed all required other documents required to be filed by it with the SEC (the “SEC Reports”) since November 2006. The information contained or incorporated by reference in the SEC Reports was true and correct in all material respects as of the respective dates of the filing thereof with the SEC (or if amended or superseded filing); and, as of such respective dates, the SEC Reports did not contain an circumstances under which they were made, not misleading. All of the SEC Act and the rules and regulations promulgated thereunder. The financial statements of the Company included in the SEC Reports (collectively, the “Financial Statements”) fairly present in all material respects the consolidated therein specified, all in accordance with United States generally accepted quarterly financial statements except for the absence of footnote disclosure and subject, in the case of interim periods, to normal year-end adjustments). Except as disclosed in the SEC Reports, the Company and its Subsidiaries have not incurred any liabilities that are of a nature that would be required to be disclosed on a balance sheet of the Company and its Subsidiaries or the footnotes thereto prepared in conformity with GAAP, other than (i) liabilities incurred in the ordinary course of business since October 1, 2006, and (ii) liabilities that would not reasonably be expected to have a Company Material Adverse Effect. 2.15 Absence of Changes. Since March 30, 2008, there have not been any changes, circumstances, conditions or events which individually or in the aggregate have 2.16. Officers’ Conversion of Debt. Immediately prior to the execution of this Agreement, all officers, directors, managers and affiliates of the Company who had outstanding loans to the Company converted all such loans into the same Debentures and each such persons has executed an Investors Rights Agreement with the same “lockup” provision to which the undersigned has agreed. 3. Investor Representations, Warranties and Covenants. The undersigned hereby acknowledges, represents and warrants to, and agrees with the Company as follows (a) The undersigned is acquiring the Debenture for the undersigned’s own account as principal, for investment purposes only, and not with a view to, or for, resale or distribution of all or any part of the Debenture or any shares of the Company’s Common Stock, par value $0.01 per share, issued upon conversion of the   4   (b) The undersigned acknowledges its understanding that the offering and sale of the Debentures is intended to be exempt from registration under the Securities the Securities Act and Rule 505 of Regulation D (“Regulation D”) promulgated (c) The undersigned is an “accredited investor” as defined in Rule 501(a) of (1) The undersigned understands and has evaluated the risks of a purchase of the Debenture; (2) has been given the opportunity to ask questions of and receive answers from Debentures, and has been given the opportunity to obtain such information as the undersigned has deemed necessary regarding the Company, the Debenture or the Underlying Shares to the extent that the Company possesses such information or can acquire it without unreasonable effort; (3) has not relied on any oral representation, warranty or information in connection with the offering of the Debentures by the Company, or any officer, employee, agent or affiliate of the Company; (4) has determined that the Debenture is a suitable investment for the undersigned and that at this time the undersigned can bear a complete loss of the undersigned’s investment therein; (5) has such knowledge and experience in financial and business matters that the (e)If the undersigned is a corporation, limited liability company, partnership, (f) Any information which the undersigned has heretofore furnished and herewith   5   (g) The foregoing acknowledgments, representations, warranties and agreements shall survive the closing at which the Debenture is issued; (h) The undersigned acknowledges that the undersigned has not purchased the (i) The undersigned’s overall commitment to investments which are not readily marketable is not disproportionate to the undersigned’s net worth, and the 4. Investor Awareness. The undersigned acknowledges that: (a) No federal or state agency has passed upon the Securities or made any (b) There is no established market for the Securities of and no assurance has been given that any public market for them will develop; (c) The Securities may not be sold, pledged or otherwise transferred, except as may be permitted under the Securities Act and applicable state securities laws (d) The undersigned consents to (i) the placing of a legend substantially in the such Act. The shares represented by this certificate are also subject to the provisions of a certain Investor Rights Agreement dated ___________, 2008 and may not be transferred except in accordance with the provisions of that agreement.”   5. Miscellaneous. (a) Indemnity by Investor. The investor agrees to indemnify and hold harmless controlling persons (the Company and each such person being a “Company liabilities and expenses whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever), joint or several, as incurred, to which such Company Indemnified Party may become subject under any applicable United States federal or state law or the laws of any other domestic or foreign jurisdiction, or otherwise, and related to or arising out of or based upon any false representation, warranty or acknowledgment, or breach or failure by the undersigned to comply with any transaction.   6   (b) Indemnity by the Company. The Company agrees to indemnify and hold harmless the undersigned, its affiliates, directors, officers, employees, agents and controlling persons (the undersigned and each such person being an “Investor or several, as incurred, to which such Investor Indemnified Party may become subject arising out of or resulting from (1) any inaccuracy or breach of the Company’s representations and warranties in this Agreement or (2) the Company’s any action, suit, proceeding or investigation by any governmental entity or any other person relating to this Agreement or the transactions contemplated hereby. (c) Modification. Except as otherwise provided herein, neither this Agreement (e) Entire Agreement. This instrument contains the entire agreement of the parties and there are no representations, warranties, acknowledgments, covenants undersigned. (g) Governing Law and Forum. Notwithstanding the place where this Agreement may be executed by any of the parties hereto, all the terms and provisions hereof Commonwealth of Massachusetts, without giving effect to its conflict of law principles. Any dispute which may arise out of or in connection with this Agreement shall be adjudicated before a court located in Middlesex County, Massachusetts and the parties hereby submit to the exclusive jurisdiction of the courts of the Commonwealth of Massachusetts located in Boston, Massachusetts and of the federal courts in Boston, Massachusetts with respect to any action or   7   (h) Expenses and Other Rights. The Company shall pay reasonable out-of-pocket fees and expenses up to $15,000 incurred by the undersigned in connection with the Transaction Agreements. The Company agrees that if it enters into an agreement in connection with the Debentures with another investor that provides for a material economic benefit or material right that is not provided to the undersigned in the Transaction Agreements, the undersigned shall be automatically entitled to such material economic benefit or right without the execution of any amendment to the Transaction Agreements.   8   IN WITNESS WHEREOF, the undersigned has executed this Agreement on this ___ day of _____, 2008.       1. ___ Individual 2. ___ Joint Tenants With Right of Survivorship 3. ___ Community Property 4. ___ Tenants in Common 5. ___ Married with Separate Property EXECUTION BY NATURAL PERSONS   Exact Name(s) in Which Title is to be Held (If Joint Tenant or Tenants in Common, both persons must sign and this page must contain all information for both persons).   ___________________________________   ___________________________________ Signature   Signature       ___________________________________     ___________________________________           __________________________________   __________________________________         ___________________________________   ___________________________________         ___________________________________   ___________________________________ Social Security Number   Social Security Number       ___________________________________     Telephone Number           ___________________________________     Email     Accepted this ___ day of _____ 2008, on behalf of the Company GLENROSE INSTRUMENTS INC. By: __________________________   9   EXECUTION BY SUBSCRIBER THAT IS AN ENTITY (Corporation, Limited Liability Company, Partnership, Trust, Etc.) ______________________________________________ _____________________________________________________   State of Principal Offices: ______________________________________________________________   ___________________________________________________     By: __________________________________         Title: __________________________________         Address: __________________________________         _________________________________________         _________________________________________         _________________________________________   Taxpayer Identification Number GLENROSE INSTRUMENTS INC. By: ___________________________   10   ACCREDITED INVESTOR QUESTIONNAIRE Please check the box below that best characterizes the person or entity subscribing for the Shares under the terms of the foregoing Subscription Agreement.       o     o     o case, not formed for the purpose of this investment, with total assets in excess of US $5,000,000;     o     o Act of 1933;     o Any entity in which all of the equity owners are accredited investors;     o     o Any Small Business Investment Company licensed by the U.S. Small Business of 1958;     o Any investment company registered under the Investment Company Act of 1940 or a     o  acting in either an individual or fiduciary capacity;     o     o Any employee benefit plan within the meaning of Title I of the Employee company, or registered investment advisor, or whose total assets exceed US $5,000,000, or, if a self-directed plan, a plan whose investment decisions are     o Any broker or dealer registered pursuant to Section 15 of the Securities     o     o  Name of Subscriber: _____________________________         Social Security Number / TIN: _____________________________               11  

Exhibit 10.37   [g361092ku01i001.jpg]   UBS Bank USA Variable Credit Line Account Number (if applicable) 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement   Borrower Agreement     A.    The Borrower has received and read a copy of this Borrower Agreement, the   B.    THE BORROWER UNDERSTANDS AND AGREES THAT UBS BANK USA MAY DEMAND FULL OR   C.    UNLESS DISCLOSED IN WRITING TO UBS BANK USA AT THE TIME OF THIS AGREEMENT, AND APPROVED BY UBS BANK USA, THE BORROWER AGREES NOT TO USE THE PROCEEDS OF ANY UBS BANK USA. THE BORROWER WILL BE DEEMED TO REPEAT THIS AGREEMENT EACH TIME THE BORROWER REQUESTS AN ADVANCE.   D.    THE BORROWER UNDERSTANDS THAT BORROWING USING SECURITIES AS COLLATERAL   E.     Neither UBS Bank USA nor UBS Financial Services Inc. provides legal or advice.   F.     Upon execution of this Credit Line Account Application and Agreement, the Borrower’s financial situation.   G.    Subject to any applicable financial privacy laws and regulations, data   H.    The Borrower authorizes UBS Bank USA and UBS Financial Services Inc. to otherwise verify on update credit information given to UBS Bank USA at any time. authorizes UBS Bank USA to exchange Borrower information with any party it reasonably believes is conducting a legitimate credit inquiry in accordance with   I.      UBS Bank USA is subject to examination by various federal, state and appropriate.   J.     To help the government fight the funding of terrorism and money   K.    UBS Bank USA and its affiliates will act as creditors and, accordingly,   L.     The Borrower understands that, if the Collateral Account is a managed   M.   UBS Bank USA may provide copies of all credit line account statements to   1     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement         DATE:   Name of Borrower                   By:   Title: President               By:   Title: Treasurer     designated on the applicable UBS Bank USA supplemental form executed by the Borrower (e.g., the Supplemental Corporate/Resolution Form (HP Form)).   2     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement   Credit Line Agreement — Demand Facility   the Borrower.   1)     DEFINITIONS   ·      “Advance” means any Fixed Rate Advance or Variable Rate Advance made by   ·      “Advance Advice” means a written or electronic notice by the Bank, sent   ·      “Application” means the Credit Line Account Application and Agreement   ·      “Approved Amount” means the maximum principal amount of Advances that is         ·      “Collateral Account” means, individually and collectively, each account     ·      “Credit Line Account” means each Fixed Rate Account and each Variable   ·      “Credit Line Obligations” means, at any time of determination, the obligations of the Borrower and the other respective Loan Parties under this Agreement and the related agreements, whether absolute or contingent, whether or not due or mature.     ·      “Fixed Rate Advance” means any advance made under the Credit Line that   ·      “Guarantor” means any party who guaranties the payment and performance of the Credit Line Obligations.   ·      “Guaranty Agreement” means an agreement pursuant to which a Guarantor   each case, ending on the last day of the period, If the last day is not a monthly or longer Interest Period that commences on the fast Business Day of a     ·      “LIBOR” means, as of any date of determination for Variable Rate Advances, the prevailing London Interbank Offered Rate for deposits U.S. dollars having a maturity of 30 days as published in The Wall Street Journal “Money Rates” Table on the date of the Advance.         jointly held collateral account, and (v) any other Person who executes a pledge agreement with respect to the Credit Line.   ·      “Premier Credit Line” means any Credit Line with an Approved Amount equal to or greater than $100,000.   than $100,000.   3     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement   discretion.   ·      “Securities Intermediary” has the meaning specified in Section 9.     ·      “UBS Financial Services Inc.” means UBS Financial Services Inc. and its successors.   ·      “UBS-I” means UBS International Inc. and its successors.   ·      “Variable Rate Advance” means any advance made under the Credit Line that accrues interest at a variable rate.”   2)     ESTABLISHMENT OF CREDIT LINE; TERMINATION   A)     UPON THE EFFECTIVENESS OF THIS AGREEMENT, THE BANK ESTABLISHES AN UNCOMMITTED, DEMAND REVOLVING LINE OF CREDIT (THE “CREDIT LINE”) IN AN AMOUNT UP TO THE APPROVED AMOUNT. THE BANK MAY, FROM TIME TO TIME UPON REQUEST OF THE BORROWER, WITHOUT OBLIGATION AND IN ITS SOLE AND ABSOLUTE DISCRETION, AUTHORIZE AND MAKE ONE OR MORE ADVANCES TO THE BORROWER. THE BORROWER ACKNOWLEDGES THAT THE BANK HAS NO OBLIGATION TO MAKE ANY ADVANCES TO THE BORROWER. THE BANK MAY CARRY EACH VARIABLE RATE ADVANCE IN A VARIABLE RATE ACCOUNT AND MAY CARRY EACH FIXED RATE ADVANCE IN A FIXED RATE ACCOUNT, BUT ALL ADVANCES WILL CONSTITUTE EXTENSIONS OF CREDIT PURSUANT TO A SINGLE CREDIT LINE. THE APPROVED AMOUNT WILL BE DETERMINED, AND MAY BE ADJUSTED FROM TIME TO TIME, BY THE BANK IN ITS SOLE AND ABSOLUTE DISCRETION.   B)    THE BORROWER AND EACH OTHER LOAN PARTY UNDERSTAND AND AGREE THAT THE BANK DURATION.   C)     UNLESS DISCLOSED IN WRITING TO THE BANK AT THE TIME OF THE APPLICATION,   D)    PRIOR TO THE FIRST ADVANCE UNDER THE CREDIT LINE, THE BORROWER MUST SIGN AND DELIVER TO THE BANK A FEDERAL RESERVE FORM U-1 AND ALL OTHER DOCUMENTATION AS THE BANK MAY REQUIRE. THE BORROWER ACKNOWLEDGES THAT NEITHER THE BANK NOR ANY OF ITS AFFILIATES HAS ADVISED THE BORROWER IN ANY MANNER REGARDING THE PURPOSES FOR WHICH THE CREDIT LINE WILL BE USED.   E)     THE BORROWER CONSENTS AND AGREES THAT, IN CONNECTION WITH ESTABLISHING THE CREDIT LINE ACCOUNT, APPROVING ANY ADVANCES TO THE BORROWER OR FOR ANY OTHER PURPOSE ASSOCIATED WITH THE CREDIT LINE, THE BANK MAY OBTAIN A CONSUMER OR OTHER CREDIT REPORT FROM A CREDIT REPORTING AGENCY RELATING TO THE BORROWER’S CREDIT HISTORY. UPON REQUEST BY THE BORROWER, THE BANK WILL INFORM THE BORROWER (I) WHETHER OR NOT A CONSUMER OR OTHER CREDIT REPORT WAS REQUESTED, AND (II) IF SO, THE NAME AND ADDRESS OF THE CONSUMER OR OTHER CREDIT REPORTING AGENCY THAT FURNISHED THE REPORT.   F)     THE BORROWER UNDERSTANDS THAT THE BANK WILL, DIRECTLY OR INDIRECTLY, PAY A PORTION OF THE INTEREST THAT IT RECEIVES TO THE BORROWER’S FINANCIAL ADVISOR AT UBS FINANCIAL SERVICES INC. OR ONE OF ITS AFFILIATES. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BANK MAY ALSO CHARGE THE BORROWER FEES FOR ESTABLISHING AND SERVICING THE CREDIT LINE ACCOUNT.   G)    FOLLOWING EACH MONTH IN WHICH THERE IS ACTIVITY IN THE BORROWER’S CREDIT LINE ACCOUNT IN AMOUNTS GREATER THAN $1, THE BORROWER WILL RECEIVE AN ACCOUNT STATEMENT SHOWING THE NEW BALANCE, THE AMOUNT OF ANY NEW ADVANCES, YEAR TO DATE INTEREST CHARGES, PAYMENTS AND OTHER CHARGES AND CREDITS THAT HAVE BEEN REGISTERED OR POSTED TO THE CREDIT LINE ACCOUNT.   H)    EACH OF THE LOAN PARTIES UNDERSTANDS AND AGREES THAT THE BANK MAY, AT ANY TIME, IN ITS SOLE AND ABSOLUTE DISCRETION, TERMINATE AND CANCEL THE CREDIT LINE REGARDLESS OF WHETHER OR NOT AN EVENT HAS OCCURRED. IN THE EVENT THE BANK TERMINATES AND CANCELS THE CREDIT LINE THE CREDIT LINE OBLIGATIONS SHALL BE IMMEDIATELY DUE AND PAYABLE IN FULL. IF THE CREDIT LINE OBLIGATIONS ARE NOT PAID IN FULL, THE BANK SHALL HAVE THE RIGHT, AT ITS OPTION, TO EXERCISE ANY OR ALL OF ITS REMEDIES DESCRIBED IN SECTION 10 OF THIS AGREEMENT.   3)     TERMS OF ADVANCES   A)     ADVANCES MADE UNDER THIS AGREEMENT WILL BE AVAILABLE TO THE BORROWER IN THE FORM, AND PURSUANT TO PROCEDURES, AS ARE ESTABLISHED FROM TIME TO TIME BY THE BANK IN ITS SOLE AND ABSOLUTE DISCRETION. THE BORROWER AND EACH LOAN PARTY AGREE TO PROMPTLY PROVIDE ALL DOCUMENTS, FINANCIAL OR OTHER INFORMATION IN CONNECTION WITH ANY ADVANCE AS THE BANK MAY REQUEST. ADVANCES WILL BE MADE BY WIRE TRANSFER OF FUNDS TO AN ACCOUNT AS SPECIFIED IN WRITING BY THE BORROWER OR BY ANY OTHER METHOD AGREED UPON BY THE BANK AND THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT THE BANK WILL NOT MAKE ANY ADVANCE TO THE BORROWER UNLESS THE COLLATERAL MAINTENANCE REQUIREMENTS THAT ARE ESTABLISHED BY THE BANK IN ITS SOLE AND ABSOLUTE DISCRETION HAVE BEEN SATISFIED.   B)    EACH ADVANCE MADE UNDER A PREMIER CREDIT LINE WILL BE A VARIABLE RATE ADVANCE UNLESS OTHERWISE DESIGNATED AS A FIXED RATE ADVANCE IN AN ADVANCE ADVICE SENT BY THE BANK TO THE BORROWER. THE BANK WILL NOT DESIGNATE ANY ADVANCE AS A FIXED RATE ADVANCE UNLESS IT HAS BEEN REQUESTED TO DO SO BY THE BORROWER (ACTING DIRECTLY OR INDIRECTLY THROUGH THE BORROWER’S UBS FINANCIAL SERVICES INC. FINANCIAL ADVISOR OR OTHER AGENT DESIGNATED BY THE BORROWER AND ACCEPTABLE TO THE BANK). EACH ADVANCE ADVICE WILL BE CONCLUSIVE AND BINDING UPON THE BORROWER, ABSENT MANIFEST ERROR, UNLESS THE BORROWER OTHERWISE NOTIFIES THE BANK IN WRITING NO LATER THAN THE CLOSE OF BUSINESS, NEW YORK TIME, ON THE THIRD BUSINESS DAY AFTER THE ADVANCE ADVICE IS RECEIVED BY THE BORROWER.   C)     EACH ADVANCE MADE UNDER A PRIME CREDIT LINE WILL BE A VARIABLE ADVANCE.   D)    UNLESS OTHERWISE AGREED BY THE BANK (I) ALL FIXED RATE ADVANCES MUST BE IN AN AMOUNT OF AT LEAST $100,000, AND (II) ALL VARIABLE RATE ADVANCES TAKEN BY WIRE TRANSFER MUST BE IN AN AMOUNT OF AT LEAST $2,500. IF THE BORROWER IS A NATURAL PERSON, THE INITIAL VARIABLE RATE ADVANCE UNDER THE CREDIT LINE MUST BE IN AN AMOUNT EQUAL TO AT LEAST $25,001 (THE “INITIAL ADVANCE REQUIREMENT”). IF THE INITIAL ADVANCE REQUESTED BY THE BORROWER IS MADE IN THE FORM OF A CHECK DRAWN ON THE CREDIT LINE THAT DOES NOT SATISFY THE INITIAL ADVANCE REQUIREMENT, THEN, IN ADDITION TO AND NOT IN LIMITATION OF THE BANK’S RIGHTS, REMEDIES, POWERS OR PRIVILEGES UNDER THIS AGREEMENT OR APPLICABLE LAW, THE BANK MAY, IN ITS SOLE AND ABSOLUTE DISCRETION   (I)        PAY THE CHECK DRAWN BY THE BORROWER IF, PRIOR TO PAYING THAT CHECK, THE BANK MAKES ANOTHER ADVANCE TO THE BORROWER, WHICH ADVANCE SHALL HE IN AN AMOUNT NOT LESS THAN $25,001; OR   (II)       PAY THE CHECK DRAWN BY THE BORROWER; OR   (III)      DECLINE TO PAY (BOUNCE) THE CHECK.   4     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement     4)     INTEREST   A)     EACH FIXED RATE ADVANCE WILL BEAR INTEREST AT A FIXED RATE AND FOR THE INTEREST PERIOD EACH AS SPECIFIED IN THE RELATED ADVANCE ADVICE. THE RATE OF INTEREST PAYABLE ON EACH FIXED RATE ADVANCE WILL BE DETERMINED BY ADDING A PERCENTAGE RATE TO THE UBS BANK USA FIXED FUNDING RATE, AS OF THE DATE THAT THE FIXED RATE IS DETERMINED.   B)    EACH VARIABLE RATE ADVANCE UNDER A PREMIER CREDIT LINE WILL BEAR INTEREST AT A VARIABLE RATE EQUAL TO LIBOR, ADJUSTED DAILY, PLUS THE PERCENTAGE RATE THAT (UNLESS OTHERWISE SPECIFIED BY THE BANK IN WRITING) IS SHOWN ON SCHEDULE I BELOW FOR THE APPROVED AMOUNT OF THE CREDIT LINE. FOR PREMIER CREDIT LINES, THE RATE OF INTEREST PAYABLE ON VARIABLE RATE ADVANCES IS SUBJECT TO CHANGE WITHOUT NOTICE IN ACCORDANCE WITH FLUCTUATIONS IN LIBOR AND IN THE APPROVED AMOUNT. ON EACH DAY THAT LIBOR CHANGES OR THE APPROVED AMOUNT CROSSES ONE OF THE THRESHOLDS THAT IS INDICATED ON SCHEDULE I (OR THAT IS OTHERWISE SPECIFIED BY THE BANK IN WRITING), THE INTEREST RATE ON ALL VARIABLE RATE ADVANCES WILL CHANGE ACCORDINGLY.   C)     EACH VARIABLE RATE ADVANCE UNDER A PRIME CREDIT LINE WILL BEAR INTEREST AT A VARIABLE RATE EQUAL TO THE PRIME RATE, ADJUSTED DAILY, PLUS THE PERCENTAGE RATE THAT (UNLESS OTHERWISE SPECIFIED BY THE BANK IN WRITING) IS SHOWN ON THE ATTACHED SCHEDULE II AND THAT CORRESPONDS TO THE AGGREGATE PRINCIPAL AMOUNT OUTSTANDING UNDER THE PRIME CREDIT LINE ON THAT DAY. FOR PRIME CREDIT LINES, THE RATE OF INTEREST PAYABLE ON VARIABLE RATE ADVANCES IS SUBJECT TO CHANGE WITHOUT NOTICE IN ACCORDANCE WITH FLUCTUATIONS IN THE PRIME RATE AND IN THE AGGREGATE AMOUNT OUTSTANDING UNDER THE PRIME CREDIT LINE. ON EACH DATE THAT THE PRIME RATE CHANGES OR THE AGGREGATE PRINCIPAL AMOUNT OUTSTANDING UNDER THE PRIME CREDIT LINE CROSSES ONE OF THE THRESHOLDS THAT IS INDICATED ON SCHEDULE II (OR THAT IS OTHERWISE SPECIFIED BY THE BANK IN WRITING), THE INTEREST RATE ON ALL VARIABLE RATE ADVANCES WILL CHANGE ACCORDINGLY.   5)     PAYMENTS   A)     EACH FIXED RATE ADVANCE WILL BE DUE AND PAYABLE IN FULL ON DEMAND OR, IF NOT EARLIER DEMANDED BY THE BANK, ON THE LAST DAY OF THE APPLICABLE INTEREST PERIOD. ANY FIXED RATE ADVANCE AS TO WHICH THE BANK HAS NOT MADE A DEMAND FOR PAYMENT AND THAT IS NOT PAID IN FULL OR RENEWED, WHICH RENEWAL IS IN THE SOLE AND ABSOLUTE DISCRETION OF THE BANK, (PURSUANT TO PROCEDURES AS MAY BE ESTABLISHED BY THE BANK) AS ANOTHER FIXED RATE ADVANCE ON OR BEFORE THE LAST DAY OF ITS INTEREST PERIOD, WILL BE AUTOMATICALLY RENEWED ON THAT DATE AS A U.S. DOLLAR DENOMINATED, VARIABLE RATE ADVANCE IN AN AMOUNT (BASED, IN THE CASE OF ANY CONVERSION OF A NON-U.S. DOLLAR DENOMINATED FIXED RATE ADVANCE, UPON THE APPLICABLE, SPOT CURRENCY EXCHANGE RATE AS OF THE MATURITY DATE, AS DETERMINED BY THE BANK) EQUAL TO THE UNPAID PRINCIPAL BALANCE OF THE FIXED RATE ADVANCE PLUS ANY ACCRUED BUT UNPAID INTEREST ON THE FIXED RATE ADVANCE, WHICH VARIABLE RATE ADVANCE WILL THEN ACCRUE ADDITIONAL INTEREST AT A VARIABLE RATE AS PROVIDED IN THIS AGREEMENT.   B)    EACH VARIABLE RATE ADVANCE WILL BE DUE AND PAYABLE ON DEMAND.   C)     THE BORROWER PROMISES TO PAY THE OUTSTANDING PRINCIPAL AMOUNT OF EACH ADVANCE, TOGETHER WITH ALL ACCRUED BUT UNPAID INTEREST ON EACH ADVANCE, ANY AND ALL FEES OR OTHER CHARGES PAYABLE IN CONNECTION WITH EACH ADVANCE, ON THE DATE THE PRINCIPAL AMOUNT BECOMES DUE (WHETHER BY REASON OF DEMAND, THE OCCURRENCE OF A STATED MATURITY DATE, BY REASON OF ACCELERATION OR OTHERWISE). THE BORROWER FURTHER PROMISES TO PAY INTEREST IN RESPECT OF THE UNPAID PRINCIPAL BALANCE OF EACH ADVANCE FROM THE DATE THE ADVANCE IS MADE UNTIL IT IS PAID IN FULL. ALL INTEREST WILL BE COMPUTED ON THE BASIS OF THE NUMBER OF DAYS ELAPSED AND A 360-DAY YEAR. INTEREST ON EACH ADVANCE WILL BE PAYABLE IN ARREARS AS FOLLOWS.   (I)       FOR FIXED RATE ADVANCES - ON THE LAST DAY OF THE INTEREST PERIOD (OR IF THE INTEREST PERIOD IS LONGER THAN THREE MONTHS, ON THE LAST DAY OF EACH THREE MONTH PERIOD FOLLOWING THE DATE OF THE ADVANCE) AND ON EACH DATE THAT ALL OR ANY PORTION OF THE PRINCIPAL AMOUNT OF THE FIXED RATE ADVANCE BECOMES DUE OR IS PAID, AND   (II)      FOR VARIABLE RATE ADVANCES - ON THE TWENTY-SECOND DAY OF EACH MONTH OTHER THAN DECEMBER, AND ON THE THIRTY-FIRST DAY OF DECEMBER, AND ON EACH DATE THAT ALL OR ANY PORTION OF THE PRINCIPAL AMOUNT OF THE VARIABLE RATE ADVANCE BECOMES DUE OR IS PAID   in full.   D)    ALL PAYMENTS OF PRINCIPAL, INTEREST OR OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT WILL BE MADE IN IMMEDIATELY AVAILABLE FUNDS AND IN THE SAME CURRENCY IN WHICH THE ADVANCE WAS MADE, WHICH UNLESS OTHERWISE AGREED BY THE BANK, WILL BE U.S. DOLLARS. UBS FINANCIAL SERVICES INC. OR UBS INTERNATIONAL INC., AS APPLICABLE, MAY ACT AS COLLECTING AND SERVICING AGENT FOR THE BANK FOR THE ADVANCES. ALL PAYMENTS WILL BE MADE BY WIRE TRANSFER OF FUNDS TO AN ACCOUNT SPECIFIED BY THE BANK OR BY ANOTHER METHOD AGREED UPON BY THE BANK AND THE BORROWER. UPON RECEIPT OF ALL PAYMENTS, THE BANK WILL CREDIT THE SAME TO THE CREDIT LINE ACCOUNT. THE BANK SHALL APPLY THE PROCEEDS OF ANY PAYMENTS IN THE FOLLOWING ORDER, FIRST TO ANY BREAKAGE COSTS, BREAKAGE FEE, OTHER FEES, COSTS OF COLLECTION AND EXPENSES, SECOND TO THE OUTSTANDING PRINCIPAL AMOUNT OF THE RELATED ADVANCE AND THIRD TO ACCRUED INTEREST.   E)     ALL PAYMENTS MUST BE MADE TO THE BANK FREE AND CLEAR OF ANY AND ALL PRESENT ARID FUTURE TAXES (INCLUDING WITHHOLDING TAXES), LEVIES, IMPOSTS, DUTIES, DEDUCTIONS, FEES, LIABILITIES AND SIMILAR CHARGES OTHER THAN THOSE IMPOSED ON THE OVERALL NET INCOME OF THE BANK. IF SO REQUESTED BY THE BANK, THE BORROWER WILL DELIVER TO THE BANK THE ORIGINAL OR A CERTIFIED COPY OF EACH RECEIPT EVIDENCING PAYMENT OF ANY TAXES OR, IF NO TAXES ARE PAYABLE IN RESPECT OF ANY PAYMENT UNDER THIS AGREEMENT, A CERTIFICATE FROM EACH APPROPRIATE TAXING AUTHORITY, OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE AND FROM COUNSEL ACCEPTABLE TO THE BANK IN ITS SOLE AND ABSOLUTE DISCRETION, IN EITHER CASE STATING THAT THE PAYMENT IS EXEMPT FROM OR NOT SUBJECT TO TAXES. IF ANY TAXES OR OTHER CHARGES ARE REQUIRED TO BE WITHHELD OR DEDUCTED FROM ANY AMOUNT PAYABLE BY THE BORROWER UNDER THIS AGREEMENT, THE AMOUNT PAYABLE WILL BE INCREASED TO THE AMOUNT WHICH, AFTER DEDUCTION FROM THE INCREASED AMOUNT OF ALL TAXES AND OTHER CHARGES REQUIRED TO BE WITHHELD OR DEDUCTED FROM THE AMOUNT PAYABLE, WILL YIELD TO THE BANK THE AMOUNT STATED TO BE PAYABLE UNDER THIS AGREEMENT. IF ANY OF THE TAXES OR CHARGES ARE PAID BY THE BANK, THE BORROWER WILL REIMBURSE THE BANK ON DEMAND FOR THE PAYMENTS, TOGETHER WITH ALL INTEREST AND PENALTIES THAT MAY BE IMPOSED BY ANY GOVERNMENTAL AGENCY. NONE OF THE BANK, UBS FINANCIAL SERVICES INC., UBS-I OR THEIR RESPECTIVE EMPLOYEES HAS PROVIDED OR WILL PROVIDE LEGAL ADVICE TO THE BORROWER OR ANY LOAN PARTY REGARDING COMPLIANCE WITH (OR THE IMPLICATIONS OF THE CREDIT LINE AND THE RELATED GUARANTIES AND PLEDGES UNDER) THE LAWS (INCLUDING TAX LAWS) OF THE JURISDICTION OF THE BORROWER OR ANY LOAN PARTY OR ANY OTHER JURISDICTION, THE BORROWER AND EACH LOAN PARTY ARE AND SHALL BE SOLELY RESPONSIBLE FOR, AND THE BANK SHALL HAVE NO RESPONSIBILITY FOR, THE COMPLIANCE BY THE LOAN PARTIES WITH ANY AND ALL REPORTING AND OTHER REQUIREMENTS ARISING UNDER ANY APPLICABLE LAWS.   F)     IN NO EVENT WILL THE TOTAL INTEREST AND FEES, IF ANY, CHARGED UNDER THIS AGREEMENT EXCEED THE MAXIMUM INTEREST RATE OR TOTAL FEES PERMITTED BY LAW. IN THE EVENT ANY EXCESS INTEREST OR FEES ARE COLLECTED, THE SAME WILL BE REFUNDED OR CREDITED TO THE BORROWER. IF THE AMOUNT OF INTEREST PAYABLE BY THE BORROWER FOR ANY PERIOD IS REDUCED PURSUANT TO THIS SECTION 5(F), THE AMOUNT OF INTEREST PAYABLE FOR EACH SUCCEEDING PERIOD WILL BE INCREASED TO THE MAXIMUM RATE PERMITTED BY LAW UNTIL THE AMOUNT OF THE REDUCTION HAS BEEN RECEIVED BY THE BANK.   5     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement   6)     PREPAYMENTS; BREAKAGE CHARGES   A)     THE BORROWER MAY REPAY ANY VARIABLE RATE ADVANCE AT ANY TIME, IN WHOLE OR IN PART, WITHOUT PENALTY.   B)    THE BORROWER MAY REPAY ANY FIXED RATE ADVANCE IN WHOLE. THE BORROWER MAY NOT REPAY ANY FIXED RATE ADVANCE IN PART. THE BORROWER AGREES TO REIMBURSE THE BANK, IMMEDIATELY UPON DEMAND, FOR ANY LOSS OR COST (“BREAKAGE COSTS”) THAT THE BANK NOTIFIES THE BORROWER HAS BEEN INCURRED BY THE BANK AS A RESULT OF (I) ANY PAYMENT OF THE PRINCIPAL OF A FIXED RATE ADVANCE BEFORE THE EXPIRATION OF THE INTEREST PERIOD FOR THE FIXED RATE ADVANCE (WHETHER VOLUNTARILY, AS A RESULT OF ACCELERATION, DEMAND OR OTHERWISE), OR (II) THE CUSTOMER’S FAILURE TO TAKE ANY FIXED RATE ADVANCE ON THE DATE AGREED UPON, INCLUDING ANY LOSS OR COST (INCLUDING LOSS OF PROFIT OR MARGIN) CONNECTED WITH THE BANK’S RE-EMPLOYMENT OF THE AMOUNT SO PREPAID OR OF THOSE FUNDS ACQUIRED BY THE BANK TO FUND THE ADVANCE NOT TAKEN ON THE AGREED UPON DATE.   Agreement) for the Fixed Rate Advance and prevailing UBS Bank USA Fixed funding Rate and multiplying the differential by the sum of the outstanding principal amount of the Fixed Rate Advance (or the principal amount of Fixed Rate Advance not taken by the Borrower) multiplied by the actual number of days remaining in the Interest Period for the Fixed Rate Advance (based upon a 360-day year). The Borrower also agrees to promptly pay to the Bank an administrative fee (“Breakage Fee”) in connection with any permitted or required prepayment. The Breakage Fee will be calculated by multiplying the outstanding principal amount of the Fixed Rate Advance (or the principal amount of Fixed Rate Advance not taken by the Borrower) by two basis points (0.02%) (with a minimum Breakage Fee of $100,00), Any written notice from the Bank as to the amount of the loss or cost will be conclusive absent manifest error.   7)     JOINT CREDIT LINE ACCOUNT AGREEMENT; SUSPENSION AND CANCELLATION   A)     IF MORE THAN ONE PERSON IS SIGNING THIS AGREEMENT AS THE “BORROWER”, EACH PARTY (A “JOINT BORROWER”) WILL BE JOINTLY AND SEVERALLY LIABLE FOR THE CREDIT LINE OBLIGATIONS, REGARDLESS OF ANY CHANGE IN BUSINESS RELATIONS, DIVORCE, LEGAL SEPARATION, OR OTHER LEGAL PROCEEDINGS OR IN ANY AGREEMENT THAT MAY AFFECT LIABILITIES BETWEEN THE PARTIES. EXCEPT AS PROVIDED BELOW FOR THE REINSTATEMENT OF A SUSPENDED OR CANCELLED CREDIT LINE, AND UNLESS OTHERWISE AGREED BY THE BANK IN WRITING, THE BANK MAY RELY ON, AND EACH JOINT BORROWER WILL BE RESPONSIBLE FOR, REQUESTS FOR ADVANCES, DIRECTIONS, INSTRUCTIONS AND OTHER INFORMATION PROVIDED TO THE BANK BY ANY JOINT BORROWER.   B)    ANY JOINT BORROWER MAY REQUEST THE BANK TO SUSPEND OR CANCEL THE CREDIT LINE BY SENDING THE BANK A WRITTEN NOTICE OF THE REQUEST ADDRESSED TO THE BANK AT THE ADDRESS SHOWN ON THE BORROWER’S PERIODIC CREDIT LINE ACCOUNT STATEMENTS. ANY NOTICE WILL BECOME EFFECTIVE THREE BUSINESS DAYS AFTER THE DATE THAT THE BANK RECEIVES IT, AND EACH JOINT BORROWER WILL CONTINUE TO BE RESPONSIBLE FOR PAYING (I) THE CREDIT LINE OBLIGATIONS AS OF THE EFFECTIVE DATE OF THE NOTICE, AND (II) ALL ADVANCES THAT ANY JOINT BORROWER HAS REQUESTED BUT THAT HAVE NOT YET BECOME PART OF THE CREDIT LINE OBLIGATIONS AS OF THE EFFECTIVE DATE OF THE NOTICE. NO NOTICE WILL RELEASE OR IN ANY OTHER WAY AFFECT THE BANK’S INTEREST IN THE COLLATERAL. ALL SUBSEQUENT REQUESTS TO REINSTATE CREDIT PRIVILEGES MUST BE SIGNED BY ALL JOINT BORROWERS COMPRISING THE BORROWER, INCLUDING THE JOINT BORROWER REQUESTING THE SUSPENSION OF CREDIT PRIVILEGES. ANY REINSTATEMENT WILL BE GRANTED OR DENIED IN THE SOLE AND ABSOLUTE DISCRETION OF THE BANK.   C)     ALL CREDIT LINE OBLIGATIONS WILL BECOME IMMEDIATELY DUE AND PAYABLE IN FULL AS OF THE EFFECTIVE DATE OF ANY SUSPENSION OR CANCELLATION OF THE CREDIT LINE. THE BORROWER WILL BE RESPONSIBLE FOR THE PAYMENT OF ALL CHARGES INCURRED ON THE ADVANCES AFTER THE EFFECTIVE DATE. THE BANK WILL NOT RELEASE ANY LOAN PARTY FROM ANY OF THE OBLIGATIONS UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT UNTIL THE CREDIT LINE OBLIGATIONS HAVE BEEN PAID IN FULL AND THIS AGREEMENT HAS BEEN TERMINATED.   8)     COLLATERAL; GRANT OF SECURITY INTEREST; SET-OFF   A)     TO SECURE PAYMENT OR PERFORMANCE OF THE CREDIT LINE OBLIGATIONS, THE BORROWER ASSIGNS, TRANSFERS AND PLEDGES TO THE BANK, AND GRANTS TO THE BANK A FIRST PRIORITY LIEN AND SECURITY INTEREST IN THE FOLLOWING ASSETS AND RIGHTS OF THE BORROWER, WHEREVER LOCATED AND WHETHER OWNED NOW OR ACQUIRED OR ARISING IN THE FUTURE. (I) EACH COLLATERAL ACCOUNT, (II) ANY AND ALL MONEY, CREDIT BALANCES, CERTIFICATED AND UNCERTIFICATED SECURITIES, SECURITY ENTITLEMENTS, COMMODITY CONTRACTS, CERTIFICATES OF DEPOSIT, INSTRUMENTS, DOCUMENTS, PARTNERSHIP INTERESTS, GENERAL INTANGIBLES, FINANCIAL ASSETS AND OTHER INVESTMENT PROPERTY NOW OR IN THE FUTURE CREDITED TO OR CARRIED, HELD OR MAINTAINED IN ANY COLLATERAL ACCOUNT. (III) ANY AND ALL OVER-THE- COUNTER OPTIONS, FUTURES, FOREIGN EXCHANGE, SWAP OR SIMILAR CONTRACTS BETWEEN THE BORROWER AND EITHER UBS FINANCIAL SERVICES INC. OR ANY OF ITS AFFILIATES, (IV) ANY AND ALL ACCOUNTS OF THE BORROWER AT THE BANK OR ANY OF ITS AFFILIATES, (V) ANY AND ALL SUPPORTING OBLIGATIONS AND OTHER RIGHTS ANCILLARY OR ATTRIBUTABLE TO, OR ARISING IN ANY WAY IN CONNECTION WITH, ANY OF THE FOREGOING, AND (VI) ANY AND ALL INTEREST, DIVIDENDS, DISTRIBUTIONS AND OTHER PROCEEDS OF ANY OF THE FOREGOING, INCLUDING PROCEEDS OF PROCEEDS (COLLECTIVELY, THE   B)    THE BORROWER AND IF APPLICABLE, ANY PLEDGOR ON THE COLLATERAL ACCOUNT, WILL TAKE ALL ACTIONS REASONABLY REQUESTED BY THE BANK TO EVIDENCE, MAINTAIN AND PERFECT THE BANK’S FIRST PRIORITY SECURITY INTEREST IN, AND TO ENABLE THE BANK TO OBTAIN CONTROL OVER, THE COLLATERAL AND ANY ADDITIONAL COLLATERAL PLEDGED BY THE PLEDGORS, INCLUDING BUT NOT LIMITED TO MAKING, EXECUTING, RECORDING AND DELIVERING TO THE BANK (AND AUTHORIZES THE BANK TO FILE, WITHOUT THE SIGNATURE OF THE BORROWER AND ANY PLEDGOR WHERE PERMITTED BY APPLICABLE LAW) FINANCING STATEMENTS AND AMENDMENTS THERETO, CONTROL AGREEMENTS, NOTICES, ASSIGNMENTS, LISTINGS, POWERS, CONSENTS AND OTHER DOCUMENTS REGARDING THE COLLATERAL AND THE BANK’S SECURITY INTEREST IN THE COLLATERAL IN SUCH JURISDICTION AND IN A FORM AS THE BANK REASONABLY MAY REQUIRE. EACH LOAN PARTY IRREVOCABLY AUTHORIZES AND APPOINTS EACH OF THE BANK AND UBS FINANCIAL SERVICES INC., AS COLLATERAL AGENT, TO ACT AS THEIR AGENT AND ATTORNEY-IN-FACT TO FILE ANY DOCUMENTS OR TO EXECUTE ANY DOCUMENTS IN THEIR NAME, WITH OR WITHOUT DESIGNATION OF AUTHORITY. EACH LOAN PARTY ACKNOWLEDGES THAT IT WILL BE OBLIGATED IN RESPECT OF THE DOCUMENTATION AS IF IT HAD EXECUTED THE DOCUMENTATION ITSELF.   C)     THE BORROWER (AND, IF APPLICABLE, ANY OTHER PLEDGOR ON THE COLLATERAL ACCOUNT) AGREES TO MAINTAIN IN A COLLATERAL ACCOUNT, AT ALL TIMES, COLLATERAL HAVING AN AGGREGATE LENDING VALUE AS SPECIFIED BY THE BANK FROM TIME TO TIME.   D)    THE BANK’S SOLE DUTY FOR THE CUSTODY, SAFE KEEPING AND PHYSICAL PRESERVATION OF ANY COLLATERAL IN ITS POSSESSION WILL BE TO DEAL WITH THE COLLATERAL IN THE SAME MANNER AS THE BANK DEALS WITH SIMILAR PROPERTY FOR ITS OWN ACCOUNT. THE BORROWER (AND, IF APPLICABLE, ANY OTHER PLEDGOR ON THE COLLATERAL ACCOUNT) AGREES THAT THE BANK WILL HAVE NO RESPONSIBILITY TO ACT ON ANY NOTICE OF CORPORATE ACTIONS OR EVENTS PROVIDED TO HOLDERS OF SECURITIES OR OTHER INVESTMENT PROPERTY INCLUDED IN THE COLLATERAL. THE BORROWER (AND, IF APPLICABLE, ANY OTHER PLEDGOR ON THE COLLATERAL ACCOUNT) AGREES TO (I) NOTIFY THE BANK PROMPTLY UPON RECEIPT OF ANY COMMUNICATION TO HOLDERS OF THE INVESTMENT PROPERTY DISCLOSING OR PROPOSING ANY STOCK SPLIT, STOCK DIVIDEND, EXTRAORDINARY CASH DIVIDEND, SPIN-OFF OR OTHER CORPORATE ACTION OR EVENT AS A RESULT OF WHICH THE BORROWER OR PLEDGOR WOULD RECEIVE SECURITIES, CASH (OTHER THAN ORDINARY CASH DIVIDENDS) OR OTHER ASSETS IN RESPECT OF THE INVESTMENT PROPERTY, AND (II) IMMEDIATELY UPON RECEIPT BY THE BORROWER OR PLEDGOR OF ANY OF THESE ASSETS, CAUSE THEM TO BE CREDITED TO A COLLATERAL ACCOUNT OR DELIVER THEM TO OR AS DIRECTED BY THE BANK AS ADDITIONAL COLLATERAL.   E)     THE BORROWER (AND, IF APPLICABLE, ANY OTHER PLEDGOR ON THE COLLATERAL ACCOUNT) AGREES THAT ALL PRINCIPAL, INTEREST, DIVIDENDS, DISTRIBUTIONS, PREMIUMS OR OTHER INCOME AND OTHER PAYMENTS RECEIVED BY THE BANK OR CREDITED TO THE COLLATERAL ACCOUNT IN RESPECT OF ANY COLLATERAL MAY BE HELD BY THE BANK AS ADDITIONAL COLLATERAL OR APPLIED BY THE BANK TO THE CREDIT LINE OBLIGATIONS. THE BANK MAY CREATE A SECURITY INTEREST IN ANY OF THE COLLATERAL AND MAY, AT ANY TIME AND AT ITS OPTION, TRANSFER ANY SECURITIES OR OTHER INVESTMENT PROPERTY CONSTITUTING COLLATERAL TO A SECURITIES ACCOUNT MAINTAINED IN ITS NAME OR CAUSE ANY COLLATERAL ACCOUNT TO BE REDESIGNATED OR RENAMED IN THE NAME OF THE BANK.   6     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement   F)     THE BORROWER (AND, IF APPLICABLE, ANY OTHER PLEDGOR ON THE COLLATERAL ACCOUNT) AGREES THAT IF A COLLATERAL ACCOUNT HAS MARGIN FEATURES, THE MARGIN FEATURES WILL BE REMOVED BY UBS FINANCIAL SERVICES INC. OR UBS INTERNATIONAL INC., AS APPLICABLE, SO LONG AS THERE IS NO OUTSTANDING MARGIN DEBIT IN THE COLLATERAL ACCOUNT.   G)    IF THE COLLATERAL ACCOUNT PERMITS CASH WITHDRAWALS IN THE FORM OF CHECK WRITING, ACCESS CARD CHARGES, BILL PAYMENT AND/ OR ELECTRONIC FUNDS TRANSFER SERVICES (FOR EXAMPLE, RESOURCE MANAGEMENT ACCOUNT®, BUSINESS SERVICES ACCOUNT BSA®, CERTAIN BASIC INVESTMENT ACCOUNTS AND CERTAIN ACCOUNTS ENROLLED IN UBS FINANCIAL SERVICES INC. INVESTMENT CONSULTING SERVICES PROGRAMS), THE BORROWER (AND, IF APPLICABLE, ANY OTHER PLEDGOR ON THE COLLATERAL ACCOUNT) AGREES THAT THE “WITHDRAWAL LIMIT” FOR THE COLLATERAL ACCOUNT, AS DESCRIBED IN THE DOCUMENTATION GOVERNING THE ACCOUNT WILL BE REDUCED ON AN ONGOING BASIS SO THAT THE AGGREGATE LENDING VALUE OF THE COLLATERAL REMAINING IN THE COLLATERAL ACCOUNT FOLLOWING THE WITHDRAWAL MAY NOT BE LESS THAN THE AMOUNT REQUIRED PURSUANT TO SECTION 8(C).   H)    IN ADDITION TO THE BANK’S SECURITY INTEREST, THE BORROWER (AND, IF APPLICABLE, ANY OTHER PLEDGOR ON THE COLLATERAL ACCOUNT) AGREES THAT THE BANK WILL AT ALL TIMES HAVE A RIGHT TO SET OFF ANY OR ALL OF THE CREDIT LINE OBLIGATIONS AT OR AFTER THE TIME AT WHICH THEY BECOME DUE, WHETHER UPON DEMAND, AT A STATED MATURITY DATE, BY ACCELERATION OR OTHERWISE, AGAINST ALL SECURITIES, CASH, DEPOSITS OR OTHER PROPERTY IN THE POSSESSION OF OR AT ANY TIME IN ANY ACCOUNT MAINTAINED WITH THE BANK OR ANY OF ITS AFFILIATES BY OR FOR THE BENEFIT OF THE BORROWER, WHETHER CARRIED INDIVIDUALLY OR JOINTLY WITH OTHERS. THIS RIGHT IS IN ADDITION TO, AND NOT IN LIMITATION OF, ANY RIGHT THE BANK MAY HAVE AT LAW OR OTHERWISE.   I)      THE BANK RESERVES THE RIGHT TO DISAPPROVE ANY COLLATERAL AND TO REQUIRE THE BORROWER AT ANY TIME TO DEPOSIT INTO THE BORROWER’S COLLATERAL ACCOUNT ADDITIONAL COLLATERAL IN THE AMOUNT AS THE BANK REQUESTS OR TO SUBSTITUTE NEW OR ADDITIONAL COLLATERAL FOR ANY COLLATERAL THAT HAS PREVIOUSLY BEEN DEPOSITED IN THE COLLATERAL ACCOUNT.   9)     CONTROL   UBS Financial Services Inc., UBS-1 or any other securities intermediary (in any foregoing, the Borrower and each Pledger on the Collateral Account acknowledges. the Bank and the Securities Intermediary   A)     THE SECURITIES INTERMEDIARY WILL COMPLY WITH ENTITLEMENT ORDERS ORIGINATED BY THE BANK REGARDING ANY COLLATERAL ACCOUNT WITHOUT FURTHER CONSENT FROM THE BORROWER OR ANY PLEDGOR. THE SECURITIES INTERMEDIARY WILL TREAT ALL ASSETS CREDITED TO A COLLATERAL ACCOUNT, INCLUDING MONEY AND CREDIT BALANCES, AS FINANCIAL ASSETS FOR PURPOSES OF ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE.   B)    IN ORDER TO ENABLE THE BORROWER AND ANY PLEDGOR ON THE APPLICABLE COLLATERAL ACCOUNT TO TRADE FINANCIAL ASSETS THAT ARE FROM TIME TO TIME CREDITED TO A COLLATERAL ACCOUNT, THE SECURITIES INTERMEDIARY MAY COMPLY WITH ENTITLEMENT ORDERS ORIGINATED BY THE BORROWER OR ANY PLEDGOR ON THE APPLICABLE COLLATERAL ACCOUNT (OR IF SO AGREED BY THE BANK, BY AN INVESTMENT ADVISER DESIGNATED BY THE BORROWER OR ANY PLEDGOR ON THE APPLICABLE COLLATERAL ACCOUNT AND ACCEPTABLE TO ONLY UNTIL THE TIME THAT THE BANK NOTIFIES THE SECURITIES INTERMEDIARY, THAT THE BANK IS ASSERTING EXCLUSIVE CONTROL OVER THE COLLATERAL ACCOUNT. AFTER THE SECURITIES INTERMEDIARY HAS RECEIVED A NOTICE OF EXCLUSIVE CONTROL AND HAS HAD A REASONABLE OPPORTUNITY TO COMPLY, IT WILL NO LONGER COMPLY WITH ENTITLEMENT ORDERS ORIGINATED BY THE BORROWER OR ANY PLEDGOR (OR BY ANY INVESTMENT ADVISER DESIGNATED BY THE BORROWER OR ANY PLEDGOR) CONCERNING THE COLLATERAL ACCOUNT. NOTWITHSTANDING THE FOREGOING, HOWEVER, AND IRRESPECTIVE OF WHETHER IT HAS RECEIVED ANY NOTICE OF EXCLUSIVE CONTROL, THE SECURITIES INTERMEDIARY WILL NOT COMPLY WITH ANY ENTITLEMENT ORDER ORIGINATED BY THE BORROWER OR ANY PLEDGOR (OR BY ANY INVESTMENT ADVISER DESIGNATED BY THE BORROWER OR ANY PLEDGOR) TO WITHDRAW ANY FINANCIAL ASSETS FROM A COLLATERAL ACCOUNT OR TO PAY ANY MONEY, FREE CREDIT BALANCE OR OTHER AMOUNT OWING ON A COLLATERAL ACCOUNT (OTHER THAN CASH WITHDRAWALS AND PAYMENTS NOT EXCEEDING THE “WITHDRAWAL LIMIT AS CONTEMPLATED IN SECTION 8 (G)) WITHOUT THE PRIOR CONSENT OF THE BANK.   10)   REMEDIES   A)     IF ANY OF THE FOLLOWING EVENTS (EACH, AN “EVENT”) OCCURS   (I)          THE BORROWER FAILS TO PAY ANY AMOUNT DUE UNDER THIS AGREEMENT,   (II)         THE BORROWER AND/OR ANY OTHER RELEVANT LOAN PARTY FAILS TO MAINTAIN SUFFICIENT COLLATERAL IN A COLLATERAL ACCOUNT AS REQUIRED BY THE BANK OR ANY GUARANTOR FAILS TO MAINTAIN COLLATERAL AS REQUIRED BY THE BANK UNDER ITS GUARANTY AGREEMENT,   (III)        THE BORROWER OR ANY OTHER LOAN PARTY BREACHES OR FAILS TO PERFORM ANY OTHER COVENANT, AGREEMENT, TERM OR CONDITION THAT IS APPLICABLE TO IT UNDER THIS AGREEMENT OR ANY RELATED AGREEMENT, OR ANY REPRESENTATION OR OTHER STATEMENT OF THE BORROWER (OR ANY LOAN PARTY) IN THIS AGREEMENT OR IN ANY RELATED AGREEMENT IS INCORRECT IN ANY MATERIAL RESPECT WHEN MADE OR DEEMED MADE,   (IV)        THE BORROWER OR ANY OTHER LOAN PARTY DIES OR IS DECLARED (BY APPROPRIATE AUTHORITY) INCOMPETENT OR OF UNSOUND MIND OR IS INDICTED OR CONVICTED OF ANY CRIME OR, IF NOT AN INDIVIDUAL, CEASES TO EXIST,   (V)         ANY VOLUNTARY OR INVOLUNTARY PROCEEDING FOR BANKRUPTCY, REORGANIZATION, DISSOLUTION OR LIQUIDATION OR SIMILAR ACTION IS COMMENCED BY OR AGAINST THE BORROWER OR ANY OTHER LOAN PARTY, OR A TRUSTEE IN BANKRUPTCY, RECEIVER, CONSERVATOR OR REHABILITATOR IS APPOINTED, OR AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS IS MADE, WITH RESPECT TO THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTY;   (VI)        THE BORROWER OR ANY LOAN PARTY IS INSOLVENT, UNABLE TO PAY ITS DEBTS AS THEY FALL DUE, STOPS, SUSPENDS OR THREATENS TO STOP OR SUSPEND PAYMENT OF ALL OR A MATERIAL PART OF ITS DEBTS, BEGINS NEGOTIATIONS OR TAKES ANY PROCEEDING OR OTHER STEP WITH A VIEW TO READJUSTMENT, RESCHEDULING OR DEFERRAL OF ALL OR ANY PART OF ITS INDEBTEDNESS, WHICH IT WOULD OR MIGHT OTHERWISE BE UNABLE TO PAY WHEN DUE, OR PROPOSES OR MAKES A GENERAL ASSIGNMENT OR AN ARRANGEMENT OR COMPOSITION WITH OR FOR THE BENEFIT OF ITS CREDITORS,   (VII)       A COLLATERAL ACCOUNT (OR ANY ACCOUNT IN WHICH COLLATERAL PROVIDED BY A LOAN PARTY IS MAINTAINED) OR ANY PORTION THEREOF IS TERMINATED, ATTACHED OR SUBJECTED TO A LEVY,   (VIII)      THE BORROWER OR ANY LOAN PARTY FAILS TO PROVIDE PROMPTLY ALL FINANCIAL AND OTHER INFORMATION AS THE BANK MAY REQUEST FROM TIME TO TIME,   (IX)         ANY INDEBTEDNESS OF THE BORROWER OR ANY OTHER LOAN PARTY IN RESPECT OF BORROWED MONEY (INCLUDING INDEBTEDNESS GUARANTIED BY THE BORROWER OR ANY OTHER LOAN PARTY) OR IN RESPECT OF ANY SWAP, FORWARD, CAP, FLOOR, COLLAR, OPTION OR OTHER DERIVATIVE TRANSACTION, REPURCHASE OR SIMILAR TRANSACTION OR ANY COMBINATION OF THESE TRANSACTIONS IS NOT PAID WHEN DUE, OR ANY EVENT OR CONDITION CAUSES THE INDEBTEDNESS TO BECOME, OR PERMITS THE HOLDER TO DECLARE THE INDEBTEDNESS TO BE, DUE AND PAYABLE PRIOR TO ITS STATED MATURITY,   (X)          FINAL JUDGMENT FOR THE PAYMENT OF MONEY IS RENDERED AGAINST BORROWER (OR ANY LOAN PARTY) AND, WITHIN THIRTY DAYS FROM THE ENTRY OF JUDGMENT, HAS NOT BEEN DISCHARGED OR STAYED   7     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement   PENDING APPEAL OR HAS NOT BEEN DISCHARGED WITHIN THIRTY DAYS FROM THE ENTRY OF A FINAL ORDER OF AFFIRMANCE ON APPEAL,   (XI)         ANY LEGAL PROCEEDING IS INSTITUTED OR ANY OTHER EVENT OCCURS OR CONDITION EXISTS THAT IN THE BANK’S JUDGMENT CALLS INTO QUESTION (A) THE VALIDITY OR BINDING EFFECT OF THIS AGREEMENT OR ANY RELATED AGREEMENT OR ANY OF THE BORROWER’S (OR ANY OTHER LOAN PARTY’S) OBLIGATIONS UNDER THIS AGREEMENT OR UNDER ANY RELATED AGREEMENT OR (B) THE ABILITY OF THE BORROWER (OR ANY LOAN PARTY) TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT, OR UNDER ANY RELATED AGREEMENT, OR   (XII)        THE BANK OTHERWISE DEEMS ITSELF OR ITS SECURITY INTEREST IN THE COLLATERAL INSECURE OR THE BANK BELIEVES IN GOOD FAITH THAT THE PROSPECT OF PAYMENT OR OTHER PERFORMANCE BY ANY LOAN PARTY IS IMPAIRED.     B)    NOTHING CONTAINED IN THIS SECTION 10 WILL LIMIT THE RIGHT OF THE BANK TO DEMAND FULL OR PARTIAL PAYMENT OF THE CREDIT LINE OBLIGATIONS, IN ITS SOLE AND ABSOLUTE DISCRETION AND WITHOUT CAUSE, AT ANY TIME, WHETHER OR NOT AN EVENT HAS   C)     ALL RIGHTS AND REMEDIES OF THE BANK UNDER THIS AGREEMENT ARE CUMULATIVE AND ARE IN ADDITION TO ALL OTHER RIGHTS AND REMEDIES THAT THE BANK MAY HAVE AT LAW OR EQUITY OR UNDER ANY OTHER CONTRACT OR OTHER WRITING FOR THE ENFORCEMENT OF THE SECURITY INTEREST HEREIN OR THE COLLECTION OF ANY AMOUNT DUE UNDER THIS AGREEMENT.   D)    ANY NON-EXERCISE OF RIGHTS, REMEDIES AND POWERS BY THE BANK UNDER THIS AGREEMENT AND THE OTHER DOCUMENTS DELIVERED IN CONNECTION WITH THIS AGREEMENT SHALL NOT HE CONSTRUED AS A WAIVER OF ANY RIGHTS, REMEDIES AND POWERS. THE BANK FULLY RESERVES ITS RIGHTS TO INVOKE ANY OF ITS RIGHTS, REMEDIES AND POWERS AT ANY TIME IT MAY DEEM APPROPRIATE.   11)   REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE LOAN PARTIES   Advance) to the Bank   A)     EXCEPT FOR THE BANK’S RIGHTS UNDER THIS AGREEMENT AND THE RIGHTS OF THE SECURITIES INTERMEDIARY UNDER ANY ACCOUNT AGREEMENT, THE BORROWER AND EACH RELEVANT PLEDGOR OWNS THE COLLATERAL, FREE OF ANY INTEREST, LIEN OR SECURITY INTEREST IN FAVOR OF ANY THIRD PARTY AND FREE OF ANY IMPEDIMENT TO TRANSFER,   B)    EACH LOAN PARTY: (I) IF A NATURAL PERSON, IS OF THE AGE OF MAJORITY, (II) IS AUTHORIZED TO EXECUTE AND DELIVER THIS AGREEMENT AND TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT AND ANY RELATED AGREEMENT, (III) IS NOT AN EMPLOYEE BENEFIT PLAN, AS THAT TERM IS DEFINED BY THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, OR AN INDIVIDUAL RETIREMENT CREDIT LINE ACCOUNT (AND NONE OF THE COLLATERAL IS AN ASSET OF A PLAN OR ACCOUNT), AND (IV) UNLESS THE LOAN PARTY ADVISES THE BANK TO THE CONTRARY, IN WRITING, AND PROVIDES THE BANK WITH A LETTER OF APPROVAL, WHERE REQUIRED, FROM ITS EMPLOYER, IS NOT AN EMPLOYEE OR MEMBER OF ANY EXCHANGE OR OF ANY CORPORATION OR FIRM ENGAGED IN THE BUSINESS OF DEALING, EITHER AS A BROKER OR AS PRINCIPAL, IN SECURITIES, BILLS OF EXCHANGE, ACCEPTANCES OR OTHER FORMS OF COMMERCIAL PAPER,   C)     NEITHER THE BORROWER NOR ANY PLEDGOR ON THE COLLATERAL ACCOUNT HAS PLEDGED OR WILL PLEDGE THE COLLATERAL OR GRANT A SECURITY INTEREST IN THE COLLATERAL TO ANY PARTY OTHER THAN THE BANK OR THE SECURITIES INTERMEDIARY, OR HAS PERMITTED OR WILL PERMIT THE COLLATERAL TO BECOME SUBJECT TO ANY LIENS OR ENCUMBRANCES (OTHER THAN THOSE OF THE BANK AND THE SECURITIES INTERMEDIARY), DURING THE TERM OF THIS AGREEMENT,   D)    NO LOAN PARTY IS IN DEFAULT UNDER ANY MATERIAL CONTRACT, JUDGMENT, DECREE OR ORDER TO WHICH IT IS A PARTY OR BY WHICH IT OR ITS PROPERTIES MAY BE BOUND,   E)     EACH LOAN PARTY HAS DULY FILED ALL TAX AND INFORMATION RETURNS REQUIRED TO BE FILED AND HAS PAID ALL TAXES, FEES, ASSESSMENTS AND OTHER GOVERNMENTAL CHARGES OR LEVIES THAT HAVE BECOME DUE AND PAYABLE, EXCEPT TO THE EXTENT SUCH TAXES OR OTHER CHARGES ARE BEING CONTESTED IN GOOD FAITH AND ARE ADEQUATELY RESERVED AGAINST IN ACCORDANCE WITH GAAP.   F)     THE BORROWER AND EACH RELEVANT PLEDGOR (I) IS AND AT ALL TIMES WILL CONTINUE TO BE THE LEGAL AND BENEFICIAL OWNER OF ALL ASSETS HELD IN OR CREDITED TO ANY COLLATERAL ACCOUNT OR OTHERWISE INCLUDED IN THE COLLATERAL, AND (II) DOES NOT HOLD ANY ASSETS HELD IN OR CREDITED TO ANY COLLATERAL ACCOUNT OR OTHERWISE INCLUDED IN THE COLLATERAL IN TRUST OR SUBJECT TO ANY CONTRACTUAL OR OTHER RESTRICTIONS ON USE THAT WOULD PREVENT THE USE OF SUCH ASSETS TO (A) REPAY THE BANK OR (B) BE PLEDGED AS COLLATERAL IN FAVOR OF THE BANK,   THE PROVISIONS OF THIS SECTION 11 WILL SURVIVE THE TERMINATION OF THIS AGREEMENT OR ANY RELATED AGREEMENT AND THE REPAYMENT OF THE CREDIT LINE OBLIGATIONS.   12)   INDEMNIFICATION; LIMITATION ON LIABILITY OF THE BANK AND THE SECURITIES INTERMEDIARY   any related agreement and the repayment of the Credit Line Obligation.   13)   ACCEPTANCE OF APPLICATION AND AGREEMENT, APPLICABLE LAW     8     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement     14)   ASSIGNMENT     15)   AMENDMENT   Schedule I or (y) “Spread Over Prime’ in Schedule II to this Agreement, at any   16)   SEVERABILITY     17)   CHOICE OF FORUM; WAIVER OF JURY TRIAL   A)     ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS BY THIS AGREEMENT WILL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE THIRD COURT FOR THE STATE OF UTAH. EACH OF THE LOAN PARTIES IRREVOCABLY SUBMITS TO THE     C)     ANY ARBITRATION PROCEEDING BETWEEN THE BORROWER (OR ANY OTHER LOAN PARTY) AND THE SECURITIES INTERMEDIARY, REGARDLESS OF WHETHER OR NOT BASED ON CIRCUMSTANCES RELATED TO ANY COURT PROCEEDINGS BETWEEN THE BANK AND THE BORROWER (OR THE OTHER LOAN PARTY), WILL NOT PROVIDE A BASIS FOR ANY STAY OF THE COURT PROCEEDINGS.   D)    NOTHING IN THIS SECTION 17 WILL BE DEEMED TO ALTER ANY AGREEMENT TO ARBITRATE ANY CONTROVERSIES WHICH MAY ARISE BETWEEN THE BORROWER (OR ANY OTHER LOAN PARTY) AND UBS FINANCIAL SERVICES INC. OR ITS PREDECESSORS, AND ANY CLAIMS BETWEEN THE BORROWER OR THE LOAN PARTY, AS APPLICABLE, AND UBS FINANCIAL SERVICES INC. OR ITS EMPLOYEES (WHETHER OR NOT THEY HAVE ACTED AS AGENTS OF THE BANK) WILL BE ARBITRATED AS PROVIDED IN ANY AGREEMENT BETWEEN THE BORROWER OR THE LOAN PARTY, AS APPLICABLE, AND UBS FINANCIAL SERVICES INC.   18)   STATE SPECIFIC PROVISIONS AND DISCLOSURES   A)     FOR RESIDENTS OF OHIO:     B)    FOR RESIDENTS OF OREGON:     C)     FOR RESIDENTS OF VERMONT:       D)    FOR RESIDENTS OF CALIFORNIA:   (I)       ANY PERSON, WHETHER MARRIED, UNMARRIED, OR SEPARATED, MAY APPLY FOR SEPARATE CREDIT.   (II)      AS REQUIRED BY LAW, YOU ARE NOTIFIED THAT A NEGATIVE CREDIT REPORT REFLECTING ON YOUR CREDIT RECORD MAY BE SUBMITTED TO A CREDIT REPORTING AGENCY IF YOU FAIL TO FULFILL THE TERMS OF YOUR CREDIT OBLIGATIONS.   (III)     THE BORROWER WILL NOTIFY THE BANK, WITHIN A REASONABLE TIME, OF ANY CHANGE IN THE BORROWER’S NAME, ADDRESS, OR EMPLOYMENT.   (IV)     THE BORROWER WILL NOT ATTEMPT TO OBTAIN ANY ADVANCE IF THE BORROWER KNOWS THAT THE BORROWER’S CREDIT PRIVILEGES UNDER THE CREDIT LINE HAVE BEEN TERMINATED OR SUSPENDED.   (V)      THE BORROWER WILL NOTIFY THE BANK BY TELEPHONE, TELEGRAPH, LETTER, OR ANY OTHER REASONABLE MEANS THAT AN UNAUTHORIZED USE OF THE CREDIT LINE HAS OCCURRED OR MAY OCCUR AS THE RESULT OF THE LOSS OR THEFT OF A CREDIT CARD OR OTHER INSTRUMENT IDENTIFYING THE CREDIT LINE, WITHIN A REASONABLE TIME AFTER THE   9     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement   BORROWER’S DISCOVERY OF THE LOSS OR THEFT, AND WILL REASONABLY ASSIST THE BANK IN DETERMINING THE FACTS AND CIRCUMSTANCES RELATING TO ANY UNAUTHORIZED USE OF THE CREDIT LINE.   19)   ACCOUNT AGREEMENT     20)   NOTICES   time to time.   10     UBS Bank USA 5V                57978                CP 5F     SS#/TIN           Internal Use Only     Credit Line Agreement     Aggregate Approved Amount   Spread Over LIBOR/US Bank USA Fixed Funding Rate     5.00 %   3.75 %   2.75 %   2.25 %   2.00 % $5,000,00 to $9,999,999   1.50 % $10,000,000 and over   1.25 %       Spread Over Prime     3.50 %   3.00 %         amount.   record.         tenga que pagar la suma total de la deuda, mas los cargos par tardarse en el   usted.   de la deuda.  

Title: Landlord pays for electric and wants to start imposing limits on things we can own that use electric. (NYC, NY) Question:I live in NYC in a rent-stable apartment. The landlord pays for electric according to the lease. He says electric bills are too high and he wants them lowered. As a result he has announced that apartments will be limited to certain numbers of certain things. For example he says we are now permitted only one television 40" or smaller in the apartment, one computer, etc. The lease does NOT include anything like this, and from what I have been reading he can't change our lease when renewal comes up since it's a rent-stable apt. He can only change it if it's an ordinance put in by the city. (Please correct me if I'm wrong, I'm not good at interpreting these things). So basically what I want to know is, can he actually enforce this and we have to get rid of items that break his rules? Answer #1: Unless it's in the lease I don't see how he can possibly be the arbiter of what you're allowed to own. He may be able to put a cap on the amount of electric he's willing to pay for ("Landlord will pay the electric bill up to $XX, and tenant will be responsible for any overage by the end of the next billing cycle" or something), but I imagine that would also have to be in the lease. If you want to try and placate him, maybe look around and see if there's anything that's in your power to do to decrease electricity usage, including replacing old appliances with newer, more efficient ones (if you can afford it), replacing air conditioning filters, etc.

EXHIBIT 10.7   COLLABORATION AGREEMENT   THIS COLLABORATION AGREEMENT (“Agreement”) is made and entered into as of the 25th day of July, 2013 (“Effective Date”), by and between CANTERBURY LABORATORIES, LLC, a Delaware limited liability company duly organized under law and having an usual place of business at 8 Canterbury Lane, Holden, MA 01520 (“Canterbury”) and FERNDALE PHARMA GROUP, INC., a Michigan corporation duly organized and having an usual place of business at 780 West Eight Mile Road, Ferndale, Michigan 48220 (“Ferndale”). Canterbury and Ferndale are hereinafter sometimes referred to as a “Party” and collectively, as the “Parties”. RECITALS   On March 22, 2012, the Parties entered in a Sub-License Agreement (the “Sublicense Agreement”), pursuant to which Canterbury, as the Sub-Licensor, granted an exclusive Sub-License to Ferndale, as the Sub-Licensee, to develop formulations and to manufacture, market and sell Canterbury’s compound, Methyl 3-(3,17b-dihydroxyestra-1,3,5(10)-trien-16a-yl) propanoate, hereafter identified as CL-214, for topical administration (the “Licensed Products’) through and within the Distribution Channel, as defined below, throughout the Territory, as defined below. By agreement, the Parties limited the Sublicense Agreement to the sale of the Licensed Products by Ferndale by direct sale through the office of surgeons, physicians and other healthcare providers (collectively the “Distribution Channel”) anywhere in the world (the “Territory”). Capitalized terms not defined herein shall have the same meaning as in the Sublicense Agreement. The research and development of the Licensed Products is ongoing and commercialization of the Licensed Products has not yet commenced; however, Ferndale has indicated its interest in being able to sell the Licensed Products outside of the Distribution Channel; and Canterbury is willing to consider expanding the Distribution Channel in accordance with the terms and conditions of this Agreement. NOW, THEREFORE, for good and valuable consideration, including the representations, provisions, warranties, promises, covenants and agreements contained herein, the receipt and legal sufficiency of which is hereby 1.                  At any time during the Term of this Agreement, as hereinafter defined, Ferndale shall have the option to request that the Parties commence negotiations to allow Ferndale to sell the Licensed Products outside of the Distribution Channel by giving Canterbury written notice of such interest (the “Expansion Notice”) and including in the Expansion Notice the proposed consideration and other terms and conditions being suggested to expand the Distribution Channel. Within fifteen (15) days of receiving the Expansion Notice, the Parties shall do the following: (i) enter into a mutual non-disclosure agreement consistent with Canterbury’s customary form and (ii) either meet in person at Canterbury’s offices or by conference call to discuss the terms and conditions proposed in the Expansion Notice. Thereafter, the Parties shall confer for a period of up to thirty (30) days from the date of the meeting or conference call referred to in subsection (ii) above to negotiate the terms and conditions upon which the Distribution Channel could be expanded under the Sublicense Agreement, which period may be extended for an additional period of thirty (30) days by mutual agreement (the “Negotiation Period”). If the Parties reach an agreement during the Negotiation Period on all of the terms and conditions on which the Distribution Channel is to be expanded, then Canterbury will provide a draft amendment within ten (10) business days following the date that agreement is reached and the Parties will then negotiate and finalize the amendment with fifteen (15) business days thereafter. The amendment shall be effective when it is fully executed and delivered by the Parties. 1   2.                  With respect to each and every obligation of the Parties set forth in Article 1 above, it is understood and agreed that the Parties agree to use their commercial efforts, in good faith, to reach agreement on the terms and conditions of, and finalize, an amendment to the Sublicense Agreement as described in Article 1 above, but there is no contractual obligation on either Party to reach an agreement on the terms and conditions of such amendment or the final form thereof and failing to reach such an agreement in a form acceptable to each Party within the time frames set forth in Article 1 above shall not constitute a violation of or default under this Agreement. It is further understood and agreed that the process and procedures set forth in Article 1 shall apply each and every time that Ferndale wishes to expand the Distribution Channel. If an amendment(s) is fully executed and delivered, then the amendment(s) shall be annexed to the Sublicense and made a part therefor as 3.                  The term of this Agreement shall be five (5) years commencing on the Effective Date and terminating on July 24, 2018 (the “Termination Date”) unless extended, in writing, by mutual agreement of the Parties (the “Term”). Notwithstanding the foregoing, either Party may immediately terminate this Agreement if the other Party is adjudicated a bankrupt or becomes insolvent, or enters into a composition with its creditors or if a receiver is appointed for it. 4.                  Any notice required under this Agreement shall be in writing may change the address to which notices shall be given by notice in writing. Any notice to Canterbury shall require a copy, which shall not constitute notice, to Rubin and Rudman LLP, 50 Rowes Wharf, 3rd Floor Boston, MA 02110, attention: Peter B. Finn, Esquire. All notices may be delivered personally in part by registered or certified mail first class United States Mail, postage prepaid, return receipt requested and shall be effective upon receipt. 5.                  The Parties shall not have the right to assign this Agreement, or any rights granted hereunder, without the prior written consent of the other Party (which may be withheld in its sole and absolute discretion); provided that, Ferndale may assign this Agreement or any rights granted hereunder, to any of its Affiliates to which Ferndale has assigned the Sublicense Agreement in accordance with its terms without the consent of Canterbury, provided such Affiliate agrees in writing to be bound by the terms and conditions of this Agreement. Notwithstanding the foregoing, either Party may transfer its rights, duties and privileges under this Agreement and assign this Agreement in connection with a merger or consolidation with another person or firm in which it is not the surviving entity or in connection with the sale of all or substantially all of its assets or securities or in connection with any business combination in which the Party is not the surviving entity, provided that such person or firm shall first have agreed with Canterbury or Ferndale, as the case may be, in writing to perform the transferring Party’s obligations and duties hereunder and provided, further that the Sublicense Agreement has also been assigned to such transferee in accordance with its terms. For purposes of this Article 5 and this Agreement, an Affiliate of Ferndale is defined to mean one (1) of Ferndale’s subsidiary companies, which is One Hundred (100%) percent owned by Ferndale. 2   6.                  Any matters arising out of or related to this Agreement, and any other dispute shall be governed by the substantive laws of the State of New York, without regard to its conflicts of law principles. Any dispute shall be brought in the appropriate courts of competent jurisdiction in New York City, New York. 7.                  This Agreement contains the entire agreement between the Parties regarding its subject matter and supersedes all previous agreements and negotiations. None of the terms of this Agreement shall be amended or modified except in a writing signed and delivered by the Parties. the Effective Date. CANTERBURY LABORATORIES, LLC     By:                                                              Yael Schwartz, Ph.D. President and CEO Hereunto Duly Authorized     FERNDALE PHARMA GROUP, INC.   By:                                                              Michael J. Burns, Ph.D. President and COO Hereunto Duly Authorized         3

Exhibit 10.1   AMENDMENT NO. 10 TO LIMITED PARTNERSHIP AGREEMENT OF GLIMCHER PROPERTIES LIMITED PARTNERSHIP This Amendment No. 10 is made effective as of April 28, 2010, by the General Partner and the Limited Partners of Glimcher Properties Limited Partnership, a Delaware limited partnership (the “Partnership”). Recitals 1.             The Partnership was organized pursuant to a Limited Partnership Agreement dated as of November 30, 1993, as thereby amended from time to time (the “Partnership Agreement”).  Capitalized terms used herein and not defined 2.             By action at a meeting on January 15, 2004, the Board of Trustees (the “Board”) of Glimcher Realty Trust, a Maryland real estate investment trust (the “Trust”), classified and designated 6,900,000 preferred shares of the Trust as 8.125% Series G Cumulative Redeemable Preferred Shares (the “Series G Preferred Shares”), with such preferences, rights, voting powers, restrictions redemption as described in that certain Articles Supplementary to the Trust’s Charter (the “First Articles Supplementary”) filed with the State Department of Assessments and Taxation of Maryland on February 19, 2004, establishing the Series G Preferred Shares, with such preferences, rights, voting powers, conditions of redemption as described in the First Articles Supplementary, and on February 23, 2004 the Trust issued 6,000,000 Series G Preferred Shares. 3.             On April 27, 2010, the Board filed Articles Supplementary to the Charter with the State Department of Assessments and Taxation of Maryland (the “Subsequent Articles Supplementary”), reclassifying and designating 3,500,000 additional shares as Series G Preferred Shares (the “Additional Shares”), with such preferences, rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption as set forth in the Charter, as supplemented by the Subsequent Articles Supplementary, in connection with a public offering by the Trust of the Additional Shares pursuant to an Underwriting Agreement dated as of April 23, 2010 (the “Underwriting Agreement”) with Goldman Sachs & Co. and Banc of America Securities Inc., as representatives of the underwriters (the “Underwriters”). 4.             Pursuant to the Underwriting Agreement, the Underwriters have agreed to purchase the Additional Shares of the Trust, for the purposes and upon the terms and conditions set forth therein, with the proceeds from such series to be contributed by the Trust to the Partnership in exchange for a series of Preferred Interests in the Partnership. 5.             Pursuant to Section 6.3(b) of the Partnership Agreement, upon contribution to the Partnership by the Trust of the proceeds from the issuance of the Additional Shares, the Partnership shall issue to the Trust an interest in the Partnership having designations, preferences and rights such that the economic interests thereof are substantially similar to such Additional Shares.         6.             Pursuant to Section 18.2(iii) of the Partnership Agreement, the General Partner has the power, without the consent of the limited partners of the Partnership, to amend the Partnership Agreement with respect to the issuance of additional interests in the Partnership such as those contemplated herein. 7.             Pursuant to Section 16 of the Partnership Agreement, the General Partner has been appointed as attorney-in-fact by each of the limited partners of the Partnership for purposes, inter alia, of effecting amendments to the Partnership Agreement adopted in accordance with Section 18. Amendment Amendment No. 10 as follows: 1.           Creation and Issuance of Additional Units of Series G Preferred Interest.  In consideration of the Company’s contribution to the Partnership of the net proceeds following the issuance and sale of the Additional Shares by the Trust, there shall be authorized, designated and issued to the Trust an additional 3,500,000 Units of Series G Preferred Interest, with the preferences, redemption as set forth in the Charter, the Subsequent Articles Supplementary and the Partnership Agreement, including but not limited to Amendment No. 8 to the Partnership Agreement. 2.           Additional Documents and Actions.  The General Partner is expressly authorized on behalf of the Partnership to (i) execute and deliver all such other instruments, assignments, assignments, affidavits, notices, agreements, consents, certificates and other documents, and (ii) take all such further and other actions as the General Partner shall deem necessary, advisable or appropriate to carry out the transactions contemplated in this Amendment No. 10. 3.           Construction; Limited Partnership Agreement.  Consistent with Section 6.3(b) of the Partnership Agreement, it is intended that the economic interests of the Series G Preferred Interest shall be substantially similar to the Series G Preferred Shares, and this Amendment No. 10 shall be construed as reasonably required with respect to the preferences and rights of the Series G Preferred Interest to give effect to such intent. Except as expressly provided herein or as so reasonably required to give effect to the provisions hereof, the terms of the Partnership Agreement shall remain in full force and effect and are   2   IN WITNESS WHEREOF, the General Partners and the Limited Partners have executed this Amendment No. 10 effective as of the date first set forth above.   GENERAL PARTNER:   LIMITED PARTNERS:           Glimcher Properties Corporation   Glimcher Realty Trust                           Financial Officer and Treasurer   Financial Officer and Treasurer                       All Other Limited Partners               By: Glimcher Properties Corporation,              pursuant to power of attorney set              forth in Section 16 of the Partnership              Agreement                          Chief Financial Officer and               Treasurer       3

Title: Had the cops called on me for parking in front of someone's house (MS) Question:So a few minutes ago, I was with my girlfriend out in the woods by a lake in our neighborhood that I live in. To get to the woods, I parked in a cul-de-sac, perpendicular to the entry street, not in front of any house in particular, but very vaguely between the two. There is a house on the left and the right of the cul-de-sac if you are coming from the entry street. Well, in one of the houses, a woman called the cops and DEA (suspecting we were doing drugs, I guess) and had a tow truck on the way. Luckily, one of my buddies told me she was out there and called me and told me to come quick, so I got my car and left before any of the presumed authorities arrived. Assuming she's not bluffing, is there any legal repercussions for me parking on a public street, not even on her property? Just being generally vaguely in front of her house? (Also, she claimed to be a federal prosecutor? I don't know if that's relevant) Answer #1: If it's a public street, than anyone can park there and she can't have your car towed just because she doesn't want it parked there. If the woods by the lake are private property, you can be arrested/cited/charged for trespassing if you're there without permission.

Title: Legal advice about covering a shift Question:Info: I work in Washington State and I had a legal question about covering shifts. I work as a Direct Support Professional. I basically help disabled adults live independent lives. I get paid hourly for this job. I covered two shifts for the same co-worker, which was 20 hours. I usually work four shifts (40 hours), so I thought I might as well get some over time. But my manager said that I didn't get paid for those hours I worked, and that my co-worker gets paid for the hours I worked. This made no sense to me, so here I am. Is this legal at all? Answer #1: Step 1: Ask for your money in a polite and respectful way. They are legally obligated to pay you the hours you worked, and it's good business to do so even if it makes them look bad in the very short term. Kicking up a fuss might make them defensive and resistant to doing the thing in their best interest. Step 2: If the above fails, file a wage claim. You can do so [here](http://www.lni.wa.gov/Forms/pdf/F700-148-000.pdf). The linked PDF is the form, it's fillable online so you can just type it in and print it out. This is something of a nuclear option. While you will be protected by whistleblower laws for a few months from retaliatory firings you might want to dust off your resume and go to work elsewhere when practical. Step 2(a): You could, alternatively, file a lawsuit against your employer. It's much the same as above but a much more personal way of doing it instead of relying upon the impersonal state bureaucracy to handle it in your stead.

NATIONWIDE VARIABLE INSURANCE TRUST NVIT Bond Index Fund NVIT International Index Fund NVIT Mid Cap Index Fund NVIT S&P 500 Index Fund NVIT Small Cap Index Fund Supplement dated June 18, 2010 to the Prospectus dated May 1, 2010 Capitalized terms and certain other terms used in the supplement, unless otherwise defined in this supplement, have the meanings assigned to them in the Prospectus. NVIT Bond Index Fund 1.On page 4 of the Prospectus following “Portfolio Management – Portfolio Managers,” the reference to the portfolio managers is deleted and replaced with the following: Portfolio Manager Title Length of Service Lee Sterne Senior Portfolio Manager, BlackRock Since December 2009 Scott Radell Portfolio Manager, BlackRock Since December 2009 2.On page 27 of the Prospectus, the paragraph following “Portfolio Management” that relates to the “NVIT Bond Index Fund” is deleted and replaced with the following: The Nationwide Bond Index Fund is managed by a team comprising of Lee Sterne and Scott Radell.Messrs. Sterne and Radell are jointly and primarily responsible for the day-to-day management of the Fund and the selection of the Fund’s investments. Mr. Sterne joined BlackRock as a senior portfolio manager in December 2009. From 2004 to 2009, he was a senior portfolio manager employed by Barclays Global Fund Advisor and Barclays Global Investors, N.A., which was acquired by BlackRock in December 2009. Mr. Sterne received a B.A. degree in German Language/ Literature Studies with a minor concentration in History from Colgate University. Mr. Radell joined BlackRock as a portfolio manager in December 2009.From 2004 to 2009, Mr. Sterne was a senior portfolio manager employed by Barclays Global Fund Advisor and Barclays Global Investors, N.A., which was acquired by BlackRock in December 2009. Mr. Radell earned a BA degree in economics from quantitative economics and decision sciences from the University of California at San Diego in 1992. PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE NATIONWIDE VARIABLE INSURANCE TRUST AllianceBernstein NVIT Global Fixed Income Fund Federated NVIT High Income Bond Fund NVIT Core Bond Fund NVIT Core Plus Bond Fund NVIT Enhanced Income Fund NVIT Government Bond Fund NVIT Money Market Fund NVIT Multi Sector Bond Fund NVIT Short Term Bond Fund Supplement dated June 18, 2010 to the Prospectus dated May 1, 2010 Capitalized terms and certain other terms used in the supplement, unless otherwise defined in this supplement, have the meanings assigned to them in the Prospectus. I.NVIT Core Bond Fund 1. On page 10 of the Prospectus following “Portfolio Management – Portfolio Managers,” the information regarding the portfolio managers is deleted and replaced with the following: Portfolio Manager Title Length of Service Joel S. Buck Senior Investment Professional, NWAM Since August 1998 Gary S. Davis, CFA Senior Investment Professional, NWAM Since May 1998 II.NVIT Short Term Bond Fund 1.On page 28 of the Prospectus, the paragraph following “Portfolio Management – Portfolio Managers,” the information regarding the portfolio managers is deleted and replaced with the following: Portfolio Manager Title Length of Service Joel S. Buck Senior Investment Professional, NWAM Since August 1998 Gary S. Davis, CFA Senior Investment Professional, NWAM Since May 1998 III.NVIT Core Bond Fund and NVIT Short Term Bond Fund 1.The information on page 43 of the Prospectus following “Portfolio Management” that relates to the “NVIT Core Bond Fund and NVIT Short Term Bond Fund” is deleted and replaced with the following: NVIT Core Bond Fund and NVIT Short Term Bond Fund Joel S. Buck and Gary S. Davis, CFA are co-portfolio managers of the Funds and are jointly responsible for the day-to-day management of the Funds, including the selection of the Funds’ investments.Mr. Buck joined Nationwide Mutual, the parent company of NWAM, in 1998 as a director. He is currently a Senior Investment Professional and manages and co-manages multi-asset class portfolios for Nationwide Mutual and affiliates.Mr. Davis joined Nationwide Mutual, the parent company of NWAM, in 1998 as a senior portfolio manager and is currently a Senior Investment Professional. He manages and co-manages corporate bonds portfolios and securities for Nationwide Mutual and affiliates. PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE NATIONWIDE VARIABLE INSURANCE TRUST AllianceBernstein NVIT Global Fixed Income Fund NVIT Multi-Manager International Growth Fund American Century NVIT Multi Cap Value Fund NVIT Multi-Manager International Value Fund Federated NVIT High Income Bond Fund NVIT Multi-Manager Large Cap Growth Fund Gartmore NVIT International Equity Fund NVIT Multi-Manager Large Cap Value Fund Gartmore NVIT Worldwide Leaders Fund NVIT Multi-Manager Mid Cap Growth Fund Neuberger Berman NVIT Multi Cap Opportunities Fund NVIT Multi-Manager Mid Cap Value Fund Neuberger Berman NVIT Socially Responsible Fund NVIT Multi-Manager Small Cap Growth Fund NVIT Bond Index Fund NVIT Multi-Manager Small Cap Value Fund NVIT Core Bond Fund NVIT Multi-Manager Small Company Fund NVIT Core Plus Bond Fund NVIT Multi Sector Bond Fund NVIT Developing Markets Fund (formerly Gartmore NVIT Developing Markets Fund) NVIT Nationwide Fund NVIT Emerging Markets Fund (formerly Gartmore NVIT Emerging Markets Fund) NVIT Real Estate Fund (formerly Van Kampen NVIT Real Estate Fund) NVIT Enhanced Income Fund NVIT S&P 500 Index Fund NVIT Government Bond Fund NVIT Short Term Bond Fund NVIT Growth Fund NVIT Small Cap Index Fund NVIT International Index Fund Oppenheimer NVIT Large Cap Growth Fund NVIT Mid Cap Index Fund Templeton NVIT International Value Fund NVIT Money Market Fund Van Kampen NVIT Comstock Value Fund Supplement dated June 18, 2010 to the Statement of Additional Information dated May 1, 2010 Capitalized terms and certain other terms used in the supplement, unless otherwise defined in this supplement, have the meanings assigned to them in the Statement of Additional Information (SAI). 1.Effective immediately, Lee Sterne and Scott Radell replaced Matthew Marra and Curtis Arledge as portfolio managers for the NVIT Bond Index Fund. All references to, and information regarding, Messrs. Marra and Arledge in the SAI are deleted. 2.Effective immediately for information with regard to BlackRock Investment Management, LLC, the following information supplements Appendix C to the SAI: APPENDIX C – PORTFOLIO MANAGERS Information as of December 31, 2009 Name of Portfolio Manager Fund Name Dollar Range of Investments in Each Fund BlackRock Investment Management, LLC Lee Sterne* NVIT Bond Index Fund None Scott Radell* NVIT Bond Index Fund None *Messrs. Sterne and Radell became portfolio managers of the NVIT Bond Index Fund on June 14, 2010. DESCRIPTION OF COMPENSATION STRUCTURE I.BlackRock Investment Management, LLC PORTFOLIO MANAGER COMPENSATION OVERVIEW. BlackRock’s financial arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value senior management places on key resources. Compensation may include a variety of components and may vary from year to year based on a number of factors. The principal components of compensation include a base salary, a performance-based discretionary bonus, and participation in various benefits programs. In addition, a Portfolio Manager may have been paid a signing bonus or awarded sign-on equity in connection with initiation of employment with BlackRock. BASE COMPENSATION. Generally, portfolio managers receive base compensation based on their seniority and/or their position with the firm. Senior portfolio managers who perform additional management functions within the portfolio management group or within BlackRock may receive additional compensation for serving in these other capacities. DISCRETIONARY INCENTIVE COMPENSATION. Discretionary incentive compensation is a function of several components: the performance of BlackRock, the performance of the portfolio manager’s group within BlackRock, the investment performance, including risk-adjusted returns, of the firm’s assets under management or supervision by that portfolio manager relative to predetermined benchmarks, and the individual’s seniority, role within the portfolio management team, teamwork and contribution to the overall performance of these portfolios and BlackRock. DISTRIBUTION OF DISCRETIONARY INCENTIVE COMPENSATION. Discretionary incentive compensation is distributed to portfolio managers in a combination of cash and BlackRock, Inc. restricted stock units which vest ratably over a number of years. The BlackRock restricted stock units, if properly vested, will be settled in BlackRock, Inc. common stock. Typically, the cash bonus, when combined with base salary, represents more than 60% of total compensation for the portfolio managers. Paying a portion of annual bonuses in stock puts compensation earned by a portfolio manager for a given year “at risk” based on BlackRock’s ability to sustain and improve its performance over future periods. From time to time long-term incentive equity awards are granted to certain key employees to aid in retention, align their interests with long-term shareholder interests and motivate performance. Equity awards are generally granted in the form of BlackRock, Inc. restricted stock units that, once vested, settle in BlackRock common stock. OTHER MANAGED ACCOUNTS (As of December 31, 2009) Name of Portfolio Manager Number of Accounts Managed by Each Portfolio Manager and Total Assets by Category BlackRock Investment Management, LLC Lee Sterne* Mutual Funds: 27 accounts, $76.1 Billion total assets (0 accounts, $0 total assets for which the advisory fee is based on performance) Other Pooled Investment Vehicles: 31 accounts, $69.3 Billion total assets (2 accounts, $0 total assets for which the advisory fee is based on performance) Other Accounts: 12 accounts, $1.2 Billion total assets (7 accounts, $6.6 Billion total assets for which the advisory fee is based on performance) Scott Radell* Mutual Funds: 1 account, $156 Million total assets (0 accounts, $0 total assets for which the advisory fee is based on performance) Other Pooled Investment Vehicles: 3 accounts, $1.6 Billion total assets (2 accounts, $1.5 Billion total assets for which the advisory fee is based on performance) Other Accounts: 7 accounts, $1.6 Billion total assets (0 accounts, $0 total assets for which the advisory fee is based on performance) * Messrs. Sterne and Radell became portfolio managers of the NVIT Bond Index Fund on June 14, 2010. PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1)* Aware, Inc. (Name of Issuer) Common Stock (Title of Class of Securities) 05453N-10-0 (CUSIP Number) John S. Stafford, Jr. c/o Ronin Capital, LLC 230 South LaSalle Street Suite 400 Chicago, IL60604 (312) 244-5284 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 4, 2010 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.See §240.13d-7 for other parties to whom copies are sent. *The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 05453N-10-0 13D 13D Page 2 of4 Pages 1. Names of Reporting Person. John S. Stafford, Jr. 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) o (b) o 3. SEC Use Only 4. Source of Funds (See Instructions)PF 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o 6. Citizenship or Place of OrganizationUSA Number of Shares Beneficially Owned by Each Reporting Person With 7. Sole Voting Power 636,827 8. Shared Voting Power 0 9. Sole Dispositive Power636,827 Shared Dispositive Power 0 Aggregate Amount Beneficially Owned by Each Reporting Person636,827 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o Percent of Class Represented by Amount in Row (11) 3.2% Type of Reporting Person (See Instructions)IN CUSIP No. 05453N-10-0 Page 3 of4 Pages This Amendment No. 1 (this “Amendment”) to the Statement on Schedule 13D dated May 1, 2009 (the “Schedule 13D”), filed on behalf of John S. Stafford, Jr., (the “Reporting Person”) relating to the Common Stock, par value $.01 per share (the “Common Stock”), of Aware, Inc., (the “Issuer”), amends the Schedule 13D as follows: 1.Item 3 of the Schedule 13D shall hereby be amended and restated in full as follows: “The Reporting Personis the beneficial owner of an aggregate of 636,827 shares of Common Stock, suchshares were purchased by the Reporting Person for an aggregate consideration of $4,203,058.20*.The Reporting Person’s personal funds are the source of such consideration. * The Reporting Person’s ownership includes shares held as a long-term investment and shares purchased over a number of years.The aggregate consideration reflects the Reporting Person’s current basis for filed income tax purposes.” 2.The first paragraph of Item 4 of the Schedule 13D shall hereby be amended and restated in full as follows: “The Reporting Person acquired the above reported shares of the Common Stock based on his belief that the Common Stock represents an attractive investment opportunity, and such purchases have been made in the Reporting Person’s ordinary course of business.” 3.Item 5 of the Schedule 13D shall hereby be amended and restated in full as follows: “(a) In the aggregate, the Reporting Person beneficially owns, as of August 4, 2010, 636,827 shares of the Issuer’s Common Stock, representing approximately 3.2% of such class of securities.This percentage of beneficial ownership is based on a total of 20,039,145 shares of the Common Stock outstanding as ofSeptember 15, 2010, as reported in the most recentpreliminary proxy statementof the Issuer onSchedule 14A,filed on September 24, 2010. All of the shares of the Issuer's Common Stock beneficially owned by the Reporting Person are held of record by John S. Stafford, Jr. 2009 Irrevocable Trust, dated February 17, 2009. (b) The Reporting Person has the sole power to vote or to direct the vote, and the sole power to dispose or to direct the disposition of, 636,827 shares of the Issuer’s Common Stock. (c) On August 4, 2010, the Reporting Person transferred 3,395,025 shares of the Issuer’s Common Stock to his wife, Susan Yang Stafford, as a gift.The Reporting Person disclaims beneficial ownership in the shares of the Issuer’s Common Stock held by Susan Yang Stafford. (d)No person other than the Reporting Person is known to have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of, the 636,827 shares of the Common Stock reported hereby. (e)The Reporting Person ceased to be the beneficial owner of more than five percent of the class of securities on August 4, 2010.” 4.Except as expressly modified hereby, all provisions of the Schedule 13D shall continue in full force and effect. [signature page follows] CUSIP No. 05453N-10-0 Page4 of4 Pages 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: September 28, 2010 By: /s/ John S. Stafford, Jr. John S. Stafford, Jr.

Title: Need guidance on going to court for trespassing. Answer #1: It depends on the facts of the case. Did you do anything else while you were trespassing?

Title: (Va) Injured my back while working, employer is using sick days to pay my wages. Supervisor says workers comp doesn't kick in until after the first year. Question:I did some reading and it looks like VA law says the first 7 days aren't covered unless I exceed 2 weeks away. I thought workers comp aaas required, is my boss ful of shit? Topic: Personal Injury Answer #1: He's full of shit. Stop dealing with your boss. Contact HR and ask how to file a claim. If they won't help you contact these people: http://www.vwc.state.va.us/content/injured-workers

Exhibit 10.1         THIS FIRST AMENDMENT (“Amendment”) is made as of the 14th day of April, 2016, by institution (the “Bank”), and A. DWIGHT UTZ, an adult individual (the “Executive”), and amends that certain Employment Agreement made as of September 17, 2015, among the parties hereto (the “Employment Agreement”). WITNESSETH Employment Agreement to reflect the Executive’s change in position, salary and change in control benefit, all as hereinafter set forth. as follows: 1.        Change in Position. Sections 2, 3(c)(i) and 4(f) of the Employment Agreement are hereby amended and modified to replace the phrase “Executive Vice President and Chief Operating Officer of the Corporation and Bank” with “Executive Vice President and Chief Operating Officer of the Corporation and President and Chief Executive Officer of the Bank”. 2.        Salary Adjustment. Section 4(a) of the Employment Agreement is hereby amended and modified to replace the reference to “three hundred fifty thousand dollars ($350,000)” with “three hundred seventy-five thousand dollars ($375,000)”. 3.        Change in Control Benefit. Section 6(a)(i) is hereby amended and modified to replace the reference to “two times” with “three times” and Section 6(a)(ii) is hereby amended and modified to replace the reference to “two (2) years” with “three (3) years”. 4.        Ratification of Employment Agreement. In all other respects, the Employment Agreement, as amended above, is hereby ratified and confirmed by the parties thereto. All other provisions of the Employment Agreement shall remain in full force and effect as amended hereby.                           Larry J. Miller           Chairman, President & CEO               ATTEST:   By:       Secretary       Larry J. Miller           Executive Chair   WITNESS:                                           A. Dwight Utz                 - 2 -  

Title: (CA,USA) Advice needed on nanny cam in my daughters' shared bedroom (ages 4 & 5) Question:First time posting and visiting this sub so forgove me if i have included too much info. As my username states, I am a concerned mother in California. My daughters and I live with my mother and step dad in their home. My daughters share a room and I have my own just down the hall. My 5 year old daughter has told me twice this week that she has had "scary dreams where a shadow comes in her room and tickles her thigh and underwear." This concerns me because I have woken up a few times from hearing their squeeky door close, and when I get up to check on them they are sleeping and no one is in there. I am going to order a hidden nanny can in the form of a small digital alarm clock with night vision. I have looked over the laws on Google and know that if the recording has audio the evidence could be thrown out. My questions for you guys are, what are the laws for placing a camera in my daughters' bedroom in a home not owned by me? If I do capture my mom's husband sexually assaulting them on camera, can I go straight to the police with it, and will it be enough evidence? I am very concerned and freaking out. Google hasn't given me enough information to go off of and I hope you guys can help me. Link to camera I was planning on buying http://www.spytecinc.com/aetos-1080p-hd-digital-clock-camera-with-night-vision.html Edit: I want to truly thank everyone who has replied to my post and PM'd me. You guys really helped me make my decision, as well as educate me on my rights and the laws. I really appreciate the advice. I dont know if an update is allowed here, but since you all have helped me so much, I would like to update you guys once I find out what is going on. Thanks again. Topic: Other Civil Matters Answer #1: Realizing this is legal advice I will give you just that, legal advice. I'm a cop. Not in your state. If I took a report from you and saw the video I would be able to start my investigation and consult with the district attorney on whether we have enough legal evidence for an arrest. Let's face it, this isn't about an airtight criminal case--this is about the safety of your children. I would absolutely be concerned and I would start sleeping in your children's room if I suspected this. I would get the nanny cam at the very very least and turn it on all of the time. Make sure it's in a position that your kids don't move it. Good luck and please please do something to protect your children. Your gut feeling is something that must be followed.Answer #2: > I have looked over the laws on Google and know that if the recording has audio the evidence could be thrown out. First, California's [eavesdropping law](http://www.leginfo.ca.gov/cgi-bin/displaycode?section=pen&group=00001-01000&file=630-638) prohibit three types of eavesdropping/recording: Those over telephone lines, those by made by intercepting cellular telephone communications, and those that are "confidential communications." Your actions here are not by use of traditional landlines or cellular telephone, which leads the "confidential communications" portion. I hardly think that recording your daughter in her bedroom at night could be considered recording a confidential communication--especially if she is being abused. Therefore, the eavesdropping statute likely would not apply. Further, the statute allows in order to prove felonies of violence against the person: > 633.5. Nothing in Section 631, 632, 632.5, 632.6, or 632.7 prohibits one party to a confidential communication from recording the communication for the purpose of obtaining evidence reasonably believed to relate to the commission by another party to the communication of the crime of extortion, kidnapping, bribery, any felony involving violence against the person, or a violation of Section 653m. Nothing in Section 631, 632, 632.5, 632.6, or 632.7 renders any evidence so obtained inadmissible in a prosecution for extortion, kidnapping, bribery, any felony involving violence against the person, a violation of Section 653m, or any crime in connection therewith. The California Attorney General's Office has specifically considered and determined that this protection extends to the use of eavesdropping in order to gain evidence of child molestation, http://oag.ca.gov/system/files/opinions/pdfs/99-403.pdf , and believes that such evidence would be admissible in court. Second, your concerns of the recordings being barred from evidence in court arise out of the general bar on hearsay evidence. The technical legal definition of hearsay is "an out of court statement offered for the truth of the matter asserted." Even if any video you make contains sound and a statement, the admission of the video would not be used to prove the contents of that statement as truth--instead, it would be admitted to substantiate the fact that your daughter is being abused at night. The video would most likely be admissible as evidence subject to a couple other evidentiary rules that I would not expect to bar its admission. You could consult with a California criminal attorney. These are rather routine questions, and I would assume that most would be willing to give a free or very low cost consultation, especially considering the reasons you are seeking the advice. Good luck.Answer #3: Ok, let's hypothetically say he is abusing them. Will your mom let you stay in the house after he's arrested or throw you out? I only bring this up because maybe you should start contacting other people/help services for a place to stay, if only temporarily. People can be extremely loyal and disbelieving of bad behavior from loved ones, even with actual proof right in front of their eyes. Have a back up-back up plan. Answer #4: Also be prepared for the fact that it may not be the man living in the house but could be your own mother. It's not a pleasant thought but don't just it automatically assume it's the man. Answer #5: >My 5 year old daughter has told me twice this week that she has had "scary dreams where a shadow comes in her room and tickles her thigh and underwear." Not strictly legal advice here. You may not want to tell her what's really happening. Right now it's a scary nightmare, but if she knew the truth it could become an emotionally scarring experience. You should really look into the best way to handle the situation with the least impact on your children.

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES NEWS RELEASE Crosshair Announces $7.0 Million Private Placement February 3, 2012 (NYSE Amex: CXZ) (TSX: CXX) Crosshair Energy Corporation (NYSE Amex: CXZ) (TSX: CXX) (“Crosshair” or the “Company”) is pleased to announce a non-brokered private placement of up to 10,000,000 subscription receipts, at a price of $0.40 per subscription receipt, and up to 6,000,000 flow-through units, at a price of $0.50 per flow through unit, for gross proceeds of $7 million (the “Offering”). Crosshair has engaged Delano Capital Corp. in connection with the Offering. Crosshair will issue up to 10,000,000 subscription receipts (“Subscription Receipts”) at a price of $0.40 per Subscription Receipt for gross proceeds of $4 million. Upon satisfaction of the escrow release conditions set out below, the Subscription Receipts will be automatically converted (for no additional consideration) into units of Crosshair (the “Units”), with each whole Unit being comprised of one common share (“Common Share”) and one-half common share purchase warrant (each whole warrant a “Warrant”).Each Warrant will be exercisable for a period of 24 months from the closing date at an exercise price of $0.70. The gross proceeds from the offering of Subscription Receipts will be released following shareholder approval of the offering of Subscription Receipts in accordance with applicable corporate and securities laws. Crosshair will concurrently issue up to 6,000,000 flow-through units (the “Flow Through Units”) at a price of $0.50 per Flow Through Unit for gross proceeds of $3 million.Each Flow Through Unit consists of one flow through common share (a “Flow Through Share”), which qualifies as a “flow-through share” for purposes of the Income Tax Act (Canada), and one-half of one Warrant. Each Warrant shall be exercisable into one Share for a period of 24 months from the closing date at an exercise price of $0.70. The net proceeds raised from the offering of Subscription Receipts will be used by Crosshair to finance the exploration expenditures on its properties and for general corporate purposes. The gross proceeds raised from the offering of Flow Through Units will be used by Crosshair for exploration expenditures on its Central Mineral Belt Properties, which will constitute Canadian exploration expenditures (as defined in the Income Tax Act (Canada)) and will be renounced for the 2012 taxation year. All securities issued will be subject to a four month hold period. The Offering is subject to the approval of the Toronto Stock Exchange. In addition, the offering of Subscription Receipts is subject to approval by an ordinary resolution of the Company’s shareholders. The Company intends to hold a shareholders’ meeting to approve the offering of Subscription Receipts in March 2012. The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom.This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company's securities in the United States. About Crosshair Crosshair is a prominent player in the exploration and development of uranium and vanadium in the US and Canada.Its flagship projects, Bootheel and Juniper Ridge, are both located in uranium mining friendly Wyoming.Bootheel has the potential to be mined using in-situ recovery methods. The CMB Uranium/Vanadium Project and the CMB JV Uranium Project are located in Labrador, Canada and have four currently defined resources - C Zone, Area 1, Armstrong and Two Time Zone.The Crosshair team is comprised of knowledgeable and experienced professionals with both exploration and mining backgrounds. For more information on Crosshair and its properties, please visit the website at www.crosshairenergy.com. ON BEHALF OF THE CROSSHAIR BOARD "Mark J. Morabito" EXECUTIVE CHAIRMAN T: 604-681-8030 F: 604-681-8039 E: info@crosshairenergy.com www.crosshairenergy.com For Investor Relations, please call: Bevo Beaven 720-932-8300 Cautionary Note Regarding Forward-Looking Information Information set forth in this news release may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. Forward-looking statements or information relate to, among other things, the terms of the Offering, the use of proceeds from the Offering and the exploration potential of the Company's properties. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the risks associated with outstanding litigation, if any; risks associated with project development; the need for additional financing; operational risks associated with mining and mineral processing; fluctuations in uranium and other commodity prices; title matters; environmental liability claims and insurance; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters with certain other projects; the absence of dividends; competition; dilution; the volatility of our common share price and volume; tax consequences to U.S. shareholders and other risks and uncertainties, including those described in the Risk Factors section in the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2011 filed with the Canadian Securities Administrators and available at www.sedar.com. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by law. Investors are cautioned against attributing undue certainty to forward-looking statements.

Exhibit 10.43     NON-COMPETITION AGREEMENT   THIS NON-COMPETITION AGREEMENT dated as of November 23, 2018 (the “Agreement”) is made and entered into by and between National Commerce Corporation (“NCOM”), National Bank of Commerce (“NBC”) and CenterState Bank Corporation (“CenterState”) and CenterState Bank, N.A. (“CenterState Bank”) and John H. Holcomb, III (“Executive”). For purposes of this Agreement, references to NCOM, NBC, CenterState and CenterState Bank collectively shall be the “Banking Entities” or individually, a “Banking Entity.”   WHEREAS, as of the date of this Agreement, Executive is the Vice Chairman of NCOM and Vice Chairman of the Board of NBC; and    WHEREAS, on November 23, 2018, CenterState and NCOM entered into an Agreement things, NCOM will be merged with and into CenterState, with CenterState continuing as the surviving company; and   WHEREAS, as part of the transactions contemplated by the Merger Agreement, Executive has agreed to enter into this Agreement.       1. Covenants of Executive.   (a)      Non-competition. During the Restricted Period (as defined below), Executive shall not, without the prior written consent of CenterState, either directly or indirectly in any capacity, including but not limited to, as an owner, employee, employer, operator, investor, independent contractor, agent, stockholder, partner (general or limited), joint venturer, member, manager, officer, director, consultant, organizer, franchisee, franchiser, adviser, or co-worker, whether or not for compensation, enter into, conduct, participate or engage in a Competing Business (as defined below) within the state of Alabama, or the metropolitan statistical areas of Jacksonville, Orlando or Tampa, Florida or the metropolitan statistical area of Atlanta, Georgia. For purposes of this Agreement, “Competing Business” shall mean any person, firm, corporation or other entity, in whatever form, that engaged or engages in the businesses in which the Banking Entities and their respective affiliates engage, including, but not limited to, the sale or servicing of banking and financial products and services, including business and consumer lending, asset-based financing, residential mortgage warehouse funding, factoring/accounts receivable management services, equipment financing, commercial and residential mortgage lending and brokerage, deposit services (including municipal deposit services) and trade financing, sale of annuities, life and health insurance products, title insurance services, real estate investment trusts, investment advisory services and correspondent banking services; provided that it shall not be a violation of this provision for Executive to have a less than 5.0% ownership interest in any such institution or holding company as a passive investor.         (b)     Non-solicitation of Employees. During the Restricted Period, Executive shall not, without the written consent of CenterState and CenterState Bank, either directly or indirectly, induce any employee of any of the Banking Entities or their affiliates to terminate his or her employment or engagement with any Banking Entity or their affiliates.   shall not solicit, provide any information, advice or recommendation or take any would expect) to have the effect of causing any client, customer or other business relation (whether current or prospective client, customer or business relation) of any Banking Entity or any of its respective affiliates, (i) to terminate an existing business or commercial relationship with any Banking Entity or any of such affiliates or (ii) to reduce the amount of business that any client, customer or other business relation has customarily done or contemplates doing with any Banking Entity or any of such affiliate, whether or not the relationship between the Banking Entity or such affiliate and such client, customer, or other business relation was originally established, in whole or in part, through Executive’s efforts, or in any way interfere with the relationship between any such client, customer, or business relation, on the one hand, and any Banking Entity or any such affiliate, on the other hand. For purposes of this Section 1(c), a prospective client, customer or business relation means persons, firms, companies or corporations (including any subsidiaries, parents, franchisees, partners and/or joint ventures of the same) solicited by or on behalf of any Banking Entity or any of their respective affiliates, employees, directors or representatives within one year prior to the Effective Time (as defined in the Merger Agreement).   (d)     Definition of Restricted Period. For purposes of this Agreement, the “Restricted Period” shall mean the period commencing at the Effective Time and continuing for 24 months thereafter.   2.       Confidentiality. Executive covenants and agrees to keep strictly confidential and not to reveal to any person any Confidential Information of any nature concerning the Banking Entities, or any of their affiliates. For this purpose, the term “Confidential Information” means any information and data, including intangible, electronic or other form, of the Banking Entities identified as confidential or proprietary or is or would be understood to be confidential by the nature of the information, and includes, but is not limited to, any information relating to the Banking Entities, and their affiliates and/or any third party with which any Banking Entity is engaging or has engaged in business transactions, all forms and types of financial and business information, tax information and analyses, processes, formulae, inventions, ideas, know-how, studies, findings, software, research and development (in whatever stage), business plans or strategies, methods of doing business, sales or marketing methods, customer information, including “Nonpublic Personal Information” as that term is used in the Gramm-Leach-Bliley Act of 1999 and implementing regulations and guidelines issued thereunder, employee information, loan and deposit information, financing plans, forecasts and supplier information, as well as any and all reports, analyses, compilations, memoranda, notes, studies or other documents or records or electronic media that contain or otherwise reflect or are generated from Confidential Information. Confidential Information does not include information that: (i) is in the public domain or thereafter enters the public domain through no wrongful act or omission of Executive or the Banking Entities, (ii) is already known by the Executive at the time of disclosure and such information is not otherwise subject to confidentiality obligations; (iii) is received from a third party who, to Executive’s knowledge, may disclose such information without violation of any confidentiality obligation; or (iv) is independently developed by the Executive without reference to Confidential Information. This obligation shall survive the expiration or termination of Executive’s obligations under this Agreement. including providing documents or other information, without notice to any Banking Entity related to the possible securities law violation. This Agreement   2     3.       Consideration. In consideration of the severance payment or benefits that Executive may be entitled to receive under his employment agreement with NCOM and NBC dated November 27, 2017 (the “Employment Agreement”) and an additional payment of $750,000, Executive hereby agrees to be subject to the covenants set forth in Sections 1 and 2 hereof.   4.      Acknowledgment. Executive agrees and acknowledges that: (i)  this Agreement is ancillary to the Merger Agreement; (ii) the provisions hereof are reasonable and necessary to protect the legitimate business interests of CenterState and CenterState Bank from and after the Effective Time; (iii) the breach of this Agreement by Executive will result in irreparable harm to CenterState and the CenterState Bank; and (iv) Executive will not be subject to Sections 1 and 2 of this Agreement or CenterState’s or CenterState Bank’s enforcement thereof.   5.       Remedies. In the event of a breach or threatened breach by Executive of Sections 1 or 2 of this Agreement, Executive hereby consents and agrees that CenterState and/or CenterState Bank shall be entitled to seek, in addition to relief against such breach or threatened breach, without bond, from any court of competent jurisdiction in accordance with Section 6(d) below. The aforementioned      6. Miscellaneous.   (a)     Non-Assignability.  This Agreement may not be assigned by Executive.   parties hereto.  Except as otherwise expressly provided herein, nothing under or in respect of this Agreement or any provision contained herein, it being the intention of the parties to this Agreement that this Agreement shall be for the sole and exclusive benefit of such parties or such successors and   3     (c)     Entire Agreement.  This Agreement, along with any agreements referenced herein, contains the entire and complete agreement among the parties with respect to the subject matter hereof, and supersede any prior or contemporaneous arrangements, agreements or understandings among the parties, written or oral, express or implied, that may have related to the subject matter hereof.  This parties. In the event of any inconsistencies between any provision of this Agreement and the Employment Agreement, the provision of this Agreement shall prevail.   enforced, and governed under the laws of the State of Florida, without regard to conflict-of-laws provisions.  Any action or proceeding by either of the parties located in the State of Florida. The parties hereby irrevocably submit to the     If to CenterState or CenterState Bank   CenterState Bank, N.A. 1101 First Street South, Suite 200 Attention: John C Corbett, President & Chief Executive Officer   With a copy to: Beth DeSimone, General Counsel, at the same address.   If to Executive, to the most recent address on file with CenterState    any respect under any applicable law or rule in any jurisdiction, then such contained herein.    4     Agreement and all of which together will be deemed to constitute one and the same agreement.    7.        Effective Date. This Agreement shall be effective as of the earlier of: (1) the Effective Time; or (2) the date on which Executive receives any severance under his Employment Agreement and shall extend for the Restricted Period. The confidentiality provisions of Section 2 shall survive indefinitely.   In the event the Merger Agreement is terminated for any reason before such time, this Agreement shall be deemed null and void ab initio.     5     first written above.     CENTERSTATE BANK CORPORATION             By: /s/ John C. Corbett              Name: John C. Corbett       Title:    President & CEO                       CENTERSTATE BANK, N.A.                     By: /s/ John C. Corbett              NATIONAL COMMERCE CORP                     By: /s/ Richard Murray, IV               Name: Richard Murray, IV      Title:  Chairman and CEO                     NATIONAL BANK OF COMMERCE                     By: /s/ Richard Murray, IV         EXECUTIVE   6

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14C INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES EXCHANGE ACT OF 1934 Check the appropriate box: [ ] Preliminary Information Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d) (2)) [X] Definitive Information Statement PRINCIPAL FUNDS, INC. (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Payment of Filing Fee (Check the appropriate box) : [x] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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 (set for the amount on which the filing fee is calculated and state how it was determined) : 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] 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: PRINCIPAL FUNDS, INC. – GLOBAL DIVERSIFIED INCOME FUND INFORMATION STATEMENT April 3, 2012 This Information Statement is provided in connection with the addition of a new sub-advisor to the Principal Funds, Inc. (“PFI”)-Global Diversified Income Fund (“the “Fund”). Guggenheim Partners Asset Management, LLC (”GPAM” “or the Sub-Advisor”), entered into a Sub-advisory Agreement with Principal Management Corporation (the “Advisor” or “PMC”), the investment advisor to PFI, on January 18, 2012, and began providing investment advisory services to the Fund on the same date. Under an order from the Securities and Exchange Commission (“SEC”), PFI and the Advisor may enter into and materially amend agreements with sub-advisors without obtaining shareholder approval. The order permits PFI and the Advisor to hire one or more sub-advisors, change sub-advisors and reallocate management fees between the Advisor and the sub-advisors, without obtaining shareholder approval. The address of the Fund’s Advisor and transfer agent (Principal Shareholder Services, Inc.) is 711 High Street, Des Moines, Iowa 50392. The address of the Fund’s principal underwriter (Principal Funds Distributor, Inc.) is 1100 Investment Boulevard, El Dorado Hills, CA 95762-5710. The Fund will furnish, without charge, a copy of the annual report and the most recent semiannual report succeeding the annual report, if any, upon request. To request a report, call 1-800-222-5852 or write Principal Funds, P.O. Box 8024, Boston, MA 02266-8024. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY BACKGROUND On September 13, 2011 the Board of Directors of PFI unanimously approved the addition of Guggenheim Partners Asset Management, LLC (“GPAM”) as a sub-advisor to the Fund along with the current sub-advisors, Guggenheim Investment Management, LLC (“Guggenheim”), Principal Global Investors, LLC (“PGI”), Principal Real Estate Investors, LLC (“Principal-REI”), Spectrum Asset Management, Inc. (“Spectrum”), Tortoise Capital Advisors, LLC (“Tortoise”), and W.H. Reaves & Co., Inc. (“Reaves”).This decision was based on the decision to add a call option overwriting sleeve to the Fund. NEW SUB-ADVISORY AGREEMENT The terms of the Sub-Advisory Agreement is the same in all material respects as the current sub-advisory agreements with Guggenheim, PGI, Principal-REI, Spectrum, Tortoise, and Reaves other than the fees to be paid. The following is a brief summary of the material terms of the Agreements. This summary is qualified in its entirety by reference to the text of the Sub-Advisory Agreement attached. Like the current sub-advisory agreements with Guggenheim, PGI, Principal-REI, Spectrum, Tortoise, and Reaves, the new Sub-Advisory Agreement provides that GPAM will, among other things, (1) provide investment advisory services to the Fund including providing investment advice and recommendations with respect to the Fund’s investments consistent with the Fund’s investment objectives, investment policies and restrictions; (2) arrange for the purchase and sale of the Fund’s portfolio securities; (3) provide, at its expense, all necessary investment and management facilities, including expenses for clerical and bookkeeping services; (4) advise and assist the officers of PFI in taking such steps as are necessary or appropriate to carry out the decisions of PFI’s Board of Directors regarding the general conduct of the investment business of the Fund; and (5) provide periodic reports regarding the investment service provided to the Fund. Under the Sub-Advisory agreement, PMC pays GPAM a fee at an annual rate that is accrued Monthly and payable quarterly based on the net asset value of the portion of the Fund’s assets it manages. The schedules for the fees PMC pays Guggenheim, PGI, Principal-REI, Spectrum, Tortoise, Reaves, as well as GPAM is listed below. FEE SCHEDULE Guggenheim – (High Yield Sleeve) Sub-Advisor’s Fee as a Percentage of Average Daily Net Assets All Assets 0.30% PGI – (Global Value Equity Sleeve) Sub-Advisor’s Fee as a Percentage of Average Daily Net Assets First $500 million 0.34% Next $500 million 0.27% Over $1 billion 0.20% PGI – (Emerging Market Debt Sleeve) Sub-Advisor’s Fee as a Percentage of Average Daily Net Assets All Assets 0.50% Principal-REI – (Global Real Estate Sleeve) Sub-Advisor’s Fee as a Percentage of Average Daily Net Assets First $1 billion 0.54% Next $500 million 0.48% Over $1.5 billion 0.44% Spectrum – (Preferred Securities Sleeve) Sub-Advisor’s Fee as a Percentage of Average Daily Net Assets First $100 million 0.3427% Next $150 million 0.2937% Over $250 million 0.1958% Tortoise – (Master Limited Partnership Sleeve) Sub-Advisor’s Fee as a Percentage of Average Daily Net Assets First $25 million 1.00% Next $25 million 0.85% Next $25 million 0.75% Assets of $75 million or more* 0.75% * During any period when the Fund’s Average Daily Net Assets equal or exceed $75 million, Tortoise’s fee as a percentage of average daily net assets shall be 0.75% on all assets. Reaves – (Publicly Listed Infrastructure Sleeve) Sub-Advisor’s Fee as a Percentage of Average Daily Net Assets First $200 million 0.40% Over $200 million 0.30% GPAM – (Call Option Overwriting Sleeve) Sub-Advisor’s Fee as a Percentage of Average Monthly Net Assets* First $600 million 0.14% Over $600 million 0.10% * “Net Assets” is defined as “the aggregate fair market value of the portfolios contained in the Series (as determined by the Series custodian) that are eligible for the Guggenheim Covered Call overlay program. NEW SUB-ADVISOR Guggenheim Partners Asset Management, LLC Guggenheim Partners Asset Management, LLC , 100 Wilshire Boulevard, Suite 500 Santa Monica, CA 90401 , Guggenheim Partners Asset Management, LLC (“GPAM”) is an indirect subsidiary of Guggenheim Partners, LLC, which is a wholly owned subsidiary of Guggenheim Capital, LLC. Management and Ownership of GPAM. Set forth below are the names and principal occupations of the principal executive officers of GPAM as well as the percentage ownership of GPAM by such principal executive officers. The address for B. Scott Minerd and Erin E. King is 100 Wilshire Boulevard, Suite 500 Santa Monica, CA 90401. The address for Donald C. Cacciapaglia is 135 East 57 th St., New York, NY 10022. Name Position with GPAM Ownership Percentage B. Scott Minerd Chief Executive Officer N/A Donald C. Cacciapaglia President, Chief Operating Officer N/A Erin E. King Chief Compliance Officer N/A Similar Investment Companies Advised by GPAM. GPAM currently acts as investment adviser to the following registered investment companies having similar investment objectives and policies as those of the Fund: Account Size* Fee** Guggenheim Enhanced Equity Income Fund (Closed-End Fund) $177 million 0.80% Guggenheim Strategic Opportunity Fund (Closed-End Fund) $174 million 1.50% Guggenheim Enhanced Equity Strategy Fund (Closed-End Fund) $94 million 0.80% Guggenheim Equal Weight Enhanced Equity Income Fund (Closed-End Fund) ($6.3million)*** 1.00% * Approximate Fund Size as of December 31, 2011 ** Annual fee rate based on net assets of the fund. *** Guggenheim manages the covered call portion of this fund only, so the negative balance reflects the “shorting” of the options positions. When combined with long positions held by the fund, the fund’s total market value was $177 million as of 12/31/11. Fees Paid to GPAM. The Advisor paid no fees to GPAM for the fiscal year ending October 31, 2011 with respect to the Fund. BOARD EVALUATION OF NEW SUBADVISORY AGREEMENT At its September 13, 2011 meeting, the Board considered whether to approve a subadvisory agreement between the Advisor and GPAM for the Global Diversified Income Fund. The Board considered the nature, quality and extent of services expected to be provided under the subadvisory agreement. The Board considered the reputation, qualifications and background of GPAM, the investment approach of GPAM, the experience and skills of GPAM’s investment personnel who would be responsible for the day-to-day management of the Fund, and the resources made available to such personnel. The Board noted that an affiliate of GPAM currently provides subadvisory services for the high yield bond segment of the Global Diversified Income Fund. In addition, the Board considered the Advisor’s program for identifying, recommending, monitoring and replacing subadvisors for the funds and that the Advisor recommended GPAM for the Fund based upon that program. The Board reviewed the historical one-year, three-year, five-year and ten-year or since inception performance as of June 30, 2011 of GPAM in a portfolio with an investment strategy similar to that proposed for the Global Diversified Income Fund, as compared to the strategy’s relevant benchmark index. The Board concluded, based on this information, that investment performance of GPAM was expected to be satisfactory. The Board considered the subadvisory fees proposed to be paid to GPAM. The Board compared the proposed fee schedule to that of the existing subadvisors for the Fund. The Board also considered the fees charged by GPAM to its other subadvisory clients with the same investment mandate. The Board considered whether there are economies of scale with respect to the subadvisory services to be provided to the Fund under each proposed subadvisory agreement. The Board noted that GPAM’s fee schedule includes breakpoints and concluded that the fee schedule reflects an appropriate recognition of economies of scale at the Fund’s current asset level. In evaluating the factor of profitability, the Board considered that the Advisor will compensate GPAM from its own management fees and that the subadvisory agreement was negotiated at arm’s-length. On the basis of the information provided, the Board concluded that the proposed subadvisory fees were reasonable. The Board also considered the character and amount of other incidental benefits to be received by GPAM. Based upon all of the information considered and the conclusions reached, the Board determined that the terms of the subadvisory agreement was fair and reasonable and that approval of the sub-advisory agreement was in the best interests of the Fund. FUND OWNERSHIP As of the close of business March 7, 2012 the officers and directors of the Fund as a group beneficially owned less than one percent of the outstanding shares of the Fund. The following table sets forth information regarding the beneficial ownership of shares of the Fund as of March 7, 2012 by all shareholders known to the Fund to be beneficial owners of more than 5% of the outstanding shares. Name and Address Share Class Percentage of Ownership MORGAN STANLEY SMITH BARNEY A 9.96% HARBOR FINANCIAL CENTER PLAZA 2 3RD FLOOR JERSEY CITY NJ 07311 CITIGROUP GLOBAL MARKETS A 8.29% HOUSE ACCOUNT OWINGS MILLS MD 21117-5184 PERSHING LLC A 14.86% 1 PERSHING PLZ JERSEY CITY NJ 07399-0001 FIRST CLEARING LLC A 6.76% SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2 SAINT LOUIS MO 63103-2523 UBS WM USA A 20.25% 0O0 11011 6100 OMNI ACCOUNT M/F ATTN DEPARTMENT MANAGER 1 WEEHAWKEN NJ 07086-6761 MLPF&S FOR THE SOLE A 7.33% BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4 JACKSONVILLE FL 32246-6484 MORGAN STANLEY SMITH BARNEY C 5.00% HARBOR FINANCIAL CENTER PLAZA 2 3RD FLOOR JERSEY CITY NJ 07311 CITIGROUP GLOBAL MARKETS C 9.00% HOUSE ACCOUNT OWINGS MILLS MD 21117-5184 Name and Address Share Class Percentage of Ownership PERSHING LLC C 5.57% 1 PERSHING PLZ JERSEY CITY NJ 07399-0001 FIRST CLEARING LLC C 15.64% SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2 SAINT LOUIS MO 63103-2523 UBS WM USA C 8.82% 0O0 11011 6100 OMNI ACCOUNT M/F ATTN DEPARTMENT MANAGER 1 WEEHAWKEN NJ 07086-6761 RAYMOND JAMES C 5.77% OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN: COURTNEY WALLER ST PETERSBURG FL 33716-1102 MLPF&S FOR THE SOLE C 26.91% BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4 JACKSONVILLE FL 32246-6484 LPL FINANCIAL Institutional 6.00% A/C 1000-0005 9 SAN DIEGO CA 92121-1968 LIFETIME 2010 FUND Institutional 12.06% ATTN MUTUAL FUND ACCOUNTING-H221 DES MOINES IA 50392-0001 LIFETIME 2020 FUND Institutional 15.13% ATTN MUTUAL FUND ACCOUNTING-H221 DES MOINES IA 50392-0001 LIFETIME STRATEGIC INCOME FUND Institutional 7.70% ATTN MUTUAL FUND ACCOUNTING-H221 DES MOINES IA 50392-0001 SAM BALANCED PORTFOLIO PIF Institutional 10.84% ATTN MUTUAL FUND ACCOUNTING-H221 DES MOINES IA 50392-0001 SAM FLEXIBLE INCOME PORTFOLIO PIF Institutional 10.82% ATTN MUTUAL FUND ACCOUNTING-H221 DES MOINES IA 50392-0001 Name and Address Share Class Percentage of Ownership LPL FINANCIAL P 6.56% FBO CUSTOMER ACCOUNTS ATTN MUTUAL FUND OPERATIONS PO BOX 509046 SAN DIEGO CA 92150-9046 FIRST CLEARING LLC P 30.50% SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2 SAINT LOUIS MO 63103-2523 RAYMOND JAMES P 7.49% OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM 92500015 ATTN: COURTNEY WALLER ST PETERSBURG FL 33716-1102 MLPF&S FOR THE SOLE P 47.05% BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4 JACKSONVILLE FL 32246-6484 PRINCIPAL FUNDS, INC. SUB‑ADVISORY AGREEMENT GUGGENHEIM PARTNERS ASSET MANAGEMENT, LLC SUB-ADVISED FUND AGREEMENT executed as of the January 18, 2012, by and between PRINCIPAL MANAGEMENT CORPORATION, an Iowa corporation (hereinafter called "the Manager"), and GUGGENHEIM PARTNERS ASSET MANAGEMENT, LLC, a Delaware Limited Liability Company (hereinafter called “the Sub-Advisor). W I T N E S S E T H: WHEREAS, the Manager is the manager and investment adviser to each Fund of the Principal Funds, Inc., (the "Fund"), an open‑end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Manager desires to retain the Sub‑Advisor to furnish it with portfolio selection and related research and statistical services in connection with the investment advisory services for each series identified in Appendix A ( hereinafter called the “Series”), which the Manager has agreed to provide to the Fund, and the Sub‑Advisor desires to furnish such services; and WHEREAS, The Manager has furnished the Sub‑Advisor with copies properly certified or authenticated of each of the following and will promptly provide the Sub‑Advisor with copies properly certified or authenticated of any amendment or supplement thereto: (a) Management Agreement (the "Management Agreement") with the Fund; (b) The Fund's registration statement and financial statements as filed with the Securities and Exchange Commission; (c) The Fund's Articles of Incorporation and By‑laws; (d) Policies, procedures or instructions adopted or approved by the Board of Directors of the Fund relating to obligations and services provided by the Sub-Advisor. NOW, THEREFORE, in consideration of the premises and the terms and conditions hereinafter set forth, the parties agree as follows: 1. Appointment of Sub‑Advisor In accordance with and subject to the Management Agreement, the Manager hereby appoints the Sub‑Advisor to perform the services described in Section 2 below for investment and reinvestment of the securities and other assets of the Series, subject to the control and direction of the Manager and the Fund's Board of Directors, for the period and on the terms hereinafter set forth. The Sub‑Advisor accepts such appointment and agrees to furnish the services hereinafter set forth for the compensation herein provided. The Sub‑Advisor shall for all purposes herein be deemed to be an independent contractor and shall, except as expressly provided or authorized, have no authority to act for or represent the Fund or the Manager in any way or otherwise be deemed an agent of the Fund or the Manager. 2. Obligations of and Services to be Provided by the Sub‑Advisor The Sub-Advisor will: (a) Provide investment advisory services, including but not limited to research, advice and supervision for the Series. (b) Furnish to the Board of Directors of the Fund for approval (or any appropriate committee of such Board), and revise from time to time as economic conditions require, a recommended investment program for the Fund consistent with the Series’ investment objective and policies. (c) Implement the approved investment program by placing orders for the purchase and sale of securities without prior consultation with the Manager and without regard to the length of time the securities have been held, the resulting rate of portfolio turnover or any tax considerations, subject always to the provisions of the Fund's Articles of Incorporation and Bylaws, the requirements of the 1940 Act, as each of the same shall be from time to time in effect. (d) Advise and assist the officers of the Fund, as requested by the officers, in taking such steps as are reasonably necessary or appropriate to carry out the decisions of its Board of Directors, and any appropriate committees of such Board, regarding the general conduct of the investment business of the Series. (e) Maintain, in connection with the Sub-Advisor’s investment advisory services provided to the Series, its compliance with the 1940 Act and the regulations adopted by the Securities and Exchange Commission thereunder and the Series’ investment strategies and restrictions as stated in the Fund’s prospectus and statement of additional information, subject to receipt of such additional information as may be required from the Manager and provided in accordance with Section 11(d) of this Agreement. The Sub-Advisor has no responsibility for the maintenance of Fund records except insofar as is directly related to the services it provides to the Series. (f) Report to the Board of Directors of the Fund at such times and in such detail as the Board of Directors may reasonably deem appropriate in order to enable it to determine that the investment policies, procedures and approved investment program of the Series are being observed. (g) Upon request, provide assistance in the determination of the fair value of certain securities in the Series when reliable market quotations are not readily available for purposes of calculating net asset value in accordance with procedures and methods established by the Fund's Board of Directors. For the avoidance of doubt, the parties hereto agree that Sub-Advisor is not acting as a pricing service and shall in no way be liable for any loss or damages associated with Sub-Advisor’s assistance in determining the fair value of certain securities. (h) Furnish, at its own expense, (i) all necessary investment and management facilities, including salaries of clerical and other personnel required for it to execute its duties faithfully, and (ii) administrative facilities, including bookkeeping, clerical personnel and equipment necessary for the efficient conduct of its duties under this Agreement. (i) Open accounts with broker-dealers and futures commission merchants (“broker-dealers”), select broker-dealers to effect all transactions for the Series, place all necessary orders with broker‑dealers or issuers (including affiliated broker-dealers), and negotiate commissions, if applicable. To the extent consistent with applicable law, purchase or sell orders for the Series may be aggregated with contemporaneous purchase or sell orders of other clients of the Sub-Advisor. In such event allocation of securities so sold or purchased, as well as the expenses incurred in the transaction, will be made by the Sub‑Advisor in the manner the Sub-Advisor considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to other clients. The Manager recognizes that, in some cases, this procedure may limit the size of the position that may be acquired or sold for the Series. The Sub-Advisor will report on such allocations at the request of the Manager, the Fund or the Fund’s Board of Directors providing such information as the number of aggregated trades to which the Series was a party, the broker-dealers to whom such trades were directed and the basis for the allocation for the aggregated trades. The Sub-Advisor shall use its best efforts to obtain execution of transactions for the Series at prices which are advantageous to the Series and at commission rates that are reasonable in relation to the benefits received. However, the Sub-Advisor may select brokers or dealers on the basis that they provide brokerage, research or other services or products to the Sub-Advisor. To the extent consistent with applicable law, the Sub-Advisor may pay a broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission or dealer spread another broker or dealer would have charged for effecting that transaction if the Sub-Advisor determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research products and/or services provided by such broker or dealer. This determination, with respect to brokerage and research products and/or services, may be viewed in terms of either that particular transaction or the overall responsibilities which the Sub-Advisor and its affiliates have with respect to the Series as well as to accounts over which they exercise investment discretion. Not all such services or products need be used by the Sub-Advisor in managing the Series. In addition, joint repurchase or other accounts may not be utilized by the Series except to the extent permitted under any exemptive order obtained by the Sub-Advisor provided that all conditions of such order are complied with. (j) Maintain all accounts, books and records with respect to the Series as are required of an investment advisor of a registered investment company pursuant to the 1940 Act and Investment Advisers Act of 1940 (the “Investment Advisers Act”), and the rules thereunder, and furnish the Fund and the Manager with such periodic and special reports as the Fund or Manager may reasonably request. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records that it maintains for the Series are the property of the Fund, agrees to preserve for the periods described by Rule 31a-2 under the 1940 Act any records that it maintains for the Fund and that are required to be maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender promptly to the Fund any records that it maintains for the Series upon request by the Fund or the Manager. (k) Observe and comply with Rule 17j-1 under the 1940 Act and the Sub-Advisor’s Code of Ethics adopted pursuant to that Rule as the same may be amended from time to time. The Manager acknowledges receipt of a copy of Sub-Advisor’s current Code of Ethics. Sub-Advisor shall promptly forward to the Manager a copy of any material amendment to the Sub-Advisor’s Code of Ethics. (l) From time to time as the Manager or the Fund may request, furnish the requesting party reports on portfolio transactions and reports on investments held by the Series, all in such detail as the Manager or the Fund may reasonably request. The Sub-Advisor will make available its officers and employees to meet with the Fund’s Board of Directors at the Fund’s principal place of business on due notice to review the investments of the Series. (m) Provide such information as is customarily provided by a sub-advisor and may be required for the Fund or the Manager to comply with their respective obligations under applicable laws, including, without limitation, the Internal Revenue Code of 1986, as amended (the “Code”), the 1940 Act, the Investment Advisers Act, the Securities Act of 1933, as amended (the “Securities Act”), and any state securities laws, and any rule or regulation thereunder. Sub-Advisor will advise Manager of any changes in Sub-Advisor’s Senior Management (i.e. Chief Investment Officer and Chief Executive Officer) within a reasonable time after any such change. Manager acknowledges receipt of Sub-Advisor’s Form ADV more than 48 hours prior to the execution of this Agreement. (n) Have the responsibility and authority to vote proxies solicited by, or with respect to, the issuers of securities held in the Series. The Manager shall cause to be forwarded to Sub-Advisor all proxy solicitation materials that it receives and shall assist Sub-Advisor in its efforts to conduct the proxy voting process. (o) Have the authority to exercise, on behalf of the Fund and/or Series, rights and remedies associated with securities held by the Series. (p) Have the authority to execute trade confirmations, trade tickets, purchase orders, assignment agreements, and all other documents related to the purchase or sale, of assets of the Series, and shall have the authority to direct the custodian or consolidating broker to perform any and all actions necessary in order to consummate or effectuate any such purchase, sale or other action. 3. Prohibited Conduct In providing the services described in this agreement, the Sub-Advisor will not consult with any other investment advisory firm that provides investment advisory services to any investment company sponsored by Principal Life Insurance Company regarding transactions for the Fund in securities or other assets. 4. Compensation As full compensation for all services rendered and obligations assumed by the Sub‑Advisor hereunder with respect to the Fund, the Manager shall pay the compensation specified in AppendixA to this Agreement. 5. Liability of Sub‑Advisor Neither the Sub‑Advisor nor any of its directors, officers, employees, agents or affiliates shall be liable to the Manager, the Fund or its shareholders for any loss suffered by the Manager or the Fund resulting from any error of judgment made in the good faith exercise of the Sub‑Advisor's duties under this Agreement or as a result of the failure by the Manager or any of its affiliates to comply with the terms of this Agreement except for losses resulting from willful misfeasance, bad faith or gross negligence of, or from reckless disregard of, the duties of the Sub‑Advisor or any of its directors, officers, employees, agents (excluding any broker-dealer selected by the Sub-Advisor), or affiliates. Should Manager or the Fund enter into a securities lending agreement affecting the Series managed under the terms of this Agreement then Manager will provide Sub-Advisor with a copy of the custodial agreement and any securities lending agreements with the custodian as soon as practicable, without creating any additional duty or obligation on Sub-Advisor’s part. To the fullest extent permitted by law, Manager will indemnify, release and hold Sub-Advisor harmless against any losses or damages that Manager may incur, or that Sub-Advisor may incur, in connection with Manager’s securities lending program, including but not limited to, sales of securities subject to a securities lending program 6. Indemnification The Manager agrees to indemnify and hold harmless the Sub-Advisor from and against any and all claims, losses, liabilities or damages (including reasonable attorneys’ fees and other related expenses), (“Losses”) howsoever arising, from or in connection with this Agreement or the performance by the Sub-Advisor of its duties hereunder, so long as the Sub-Advisor shall, after receipt of notice of any claim or commencement of any action, promptly notify the Manager in writing of the claim or commencement of such action; provided any failure to so notify the Manager shall not affect the rights and obligations of the parties hereunder. The Manager shall not be liable for any settlement of any claim or action effected without its written consent. Nothing contained herein shall require the Manager to indemnify the Sub-Advisor for Losses resulting from the Sub-Advisor’s willful misfeasance, bad faith or gross negligence in the performance of its duties or from its reckless disregard of its obligations and duties under this Agreement. In addition, while the Sub-Advisor, in accordance with section 2(h), shall bear its own expenses incurred in the performance of its duties hereunder, it shall not be responsible for any costs or expenses of the Manager or the Fund. 7. Supplemental Arrangements The Sub‑Advisor may enter into arrangements with other persons affiliated with the Sub‑Advisor or with unaffiliated third parties to better enable the Sub-Advisor to fulfill its obligations under this Agreement for the provision of certain personnel and facilities to the Sub‑ Advisor, subject to written notification to and approval of the Manager and, where required by applicable law, the Board of Directors of the Fund. 8. Regulation The Sub‑Advisor shall submit to all regulatory and administrative bodies having jurisdiction over the services provided pursuant to this Agreement any information, reports or other material which any such body may request or require pursuant to applicable laws and regulations. 9. Duration and Termination of This Agreement This Agreement shall become effective as of the date of its execution and, unless otherwise terminated, shall continue in effect for a period of two years and thereafter from year to year provided that the continuance is specifically approved at least annually either by the Board of Directors of the Fund or by a vote of a majority of the outstanding voting securities of the Series and in either event by a vote of a majority of the Board of Directors of the Fund who are not interested persons of the Manager, Principal Life Insurance Company, the Sub-Advisor or the Fund cast in person at a meeting called for the purpose of voting on such approval. If the shareholders of a Series fail to approve the Agreement or any continuance of the Agreement in accordance with the requirements of the 1940 Act, the Sub-Advisor will continue to act as Sub-Advisor with respect to the Series pending the required approval of the Agreement or its continuance or of any contract with the Sub-Advisor or a different manager or Sub-Advisor or other definitive action; provided, that the compensation received by the Sub-Advisor in respect to the Series during such period is in compliance with Rule 15a-4 under the 1940 Act. This Agreement may be terminated at any time without the payment of any penalty by the Board of Directors of the Fund or by the Sub-Advisor, the Manager or by vote of a majority of the outstanding voting securities of the Series on sixty days written notice. This Agreement shall automatically terminate in the event of its assignment. In interpreting the provisions of this Section 9, the definitions contained in Section 2(a) of the 1940 Act (particularly the definitions of "interested person," "assignment" and "voting security") shall be applied. Notwithstanding anything herein to the contrary, the provisions of Sections 5 and 6 shall survive the termination of this Agreement. 10. Amendment of this Agreement No material amendment of this Agreement shall be effective until approved, if required by the 1940 Act or the rules, regulations, interpretations or orders issued thereunder, by vote of the holders of a majority of the outstanding voting securities of the Series and by vote of a majority of the Board of Directors of the Fund who are not interested persons of the Manager, the Sub‑Advisor, Principal Life Insurance Company or the Fund cast in person at a meeting called for the purpose of voting on such approval, and such amendment is signed by both parties. 11. General Provisions (a) Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Iowa. The captions in this Agreement are included for convenience only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. (b) Any notice under this Agreement shall be in writing, addressed and delivered or mailed postage pre‑paid to the other party at such address as such other party may designate for the receipt of such notices. Until further notice to the other party, it is agreed that the address of the Manager for this purpose shall be Principal Financial Group, Des Moines, Iowa 50392‑0200, and the address of the Sub‑Advisor shall be Guggenheim Partners Asset Management, LLC, 100 Wilshire Boulevard, Santa Monica, CA, 90401 ATTN: Chief Compliance Officer. (c) The Sub‑Advisor will promptly notify the Manager in writing of the occurrence of any of the following events: (1) the Sub‑Advisor fails to be registered as an investment adviser under the Investment Advisers Act or under the laws of any jurisdiction in which the Sub‑Advisor is required to be registered as an investment advisor in order to perform its obligations under this Agreement. (2) the Sub‑Advisor is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, involving the affairs of the Fund. (d) The Manager shall provide (or cause the Series custodian to provide) timely information to the Sub-Advisor regarding such matters as the composition of the assets of the Series, cash requirements and cash available for investment in the Series, and all other reasonable information as may be necessary for the Sub-Advisor to perform its duties and responsibilities hereunder. (e) The Sub-Advisor represents that it will not enter into any agreement, oral or written, or other understanding under which the Fund directs or is expected to direct portfolio securities transactions, or any remuneration, to a broker or dealer in consideration for the promotion or sale of Fund shares or shares issued by any other registered investment company. Sub-advisor further represents that it is contrary to the Sub-advisor’s policies to permit those who select brokers or dealers for execution of fund portfolio securities transactions to take into account the broker or dealer’s promotion or sale of Fund shares or shares issued by any other registered investment company. (f) The Sub-Advisor agrees that neither it nor any of its affiliates will in any way refer directly or indirectly to its relationship with the Fund, the Series, or the Manager or any of their respective affiliates in offering, marketing or other promotional materials without the express written consent of the Manager. (g) This Agreement contains the entire understanding and agreement of the parties. IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first above written. Principal Management Corporation By Guggenheim Partners Asset Management, LLC By APPENDIX A Guggenheim Partners Asset Management, LLC (“Guggenheim”) shall serve as an investment sub-advisor for the Series (Global Diversified Income Fund) identified below. The Manager will pay Guggenheim, as full compensation for all services provided under this Agreement, a fee, computed and paid quarterly, at an annual rate as shown below of the Series’ net assets (defined below) as the first day of each month allocated to Guggenheim’s management. In calculating the fee for a Series included in the table, assets of any unregistered separate account of Principal Life Insurance Company and any investment company sponsored by Principal Life Insurance Company to which Guggenheim provides investment advisory services and which have the same investment mandate as the Series for which the fee is calculated, will be combined with the assets of the Series to arrive at net assets. “Net Assets” shall be defined as “the aggregate fair market value of the portfolios contained in the Series (as determined by the Series custodian) that are eligible for the Guggenheim Covered Call overlay program.” Any time between the 15 th business day of each month and the last business day of such month, the Manager shall identify to Guggenheim which portfolios are eligible for the Guggenheim Covered Call overlay program. If this Agreement becomes effective or terminates before the end of any quarter, the fee (if any) for the period from the effective date to the end of such quarter or from the beginning of such quarter to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs. Global Diversified Income Fund Sub-Advisor’s Fee as a Percentage ofAverage Monthly Net Assets First $600 million 0.14% Assets Over $600 million 0.10%

Exhibit 99.1 DOLLAR TREE STORES, INC. HOSTS ANNUAL MEETING OF SHAREHOLDERS CHESAPEAKE, Va.June 21, 2007Dollar Tree Stores, Inc. (NASDAQ: DLTR), the nation's largest $1.00 discount variety store chain, held its Annual Meeting of Shareholders today at the Princess Anne Country Club, in Virginia Beach, Virginia. Shareholders re-elected H. Ray Compton, Bob Sasser, and Alan L. Wurtzel to serve on the Board of Directors for three-year terms, which will expire in 2010. In addition, Mr. Lemuel E. Lewis and Dr. Carl P. Zeithaml have been appointed as new independent directors, effective July 1, 2007.Mr. Lewis and Dr. Zeithaml will stand for election at the 2008 Annual Meeting of Shareholders. Mr. Lewis currently serves as a Board member and Chairman of the Audit Committee at the Federal Reserve Bank of Richmond, Virginia.He is a retired executive with Landmark Communications, Inc. of Norfolk, Virginia, serving most recently as Chief Financial Officer.He has an extensive background in finance, human resources, mergers and acquisitions, and unit operations. Dr. Zeithaml is the Dean of McIntire School of Commerce at the University of Virginia.He specializes in the field of strategic management with an emphasis on global and competitive strategy.He has an extensive resume and educational experience. As previously announced, Mr. John F. Megrue has retired from the Board, effective today. Mr. Megrue served on the Company’s Board since 1993.We appreciate his many contributions to the growth and success of Dollar Tree, and wish him well on his future endeavors. With the addition of Mr. Lewis and Dr. Zeithaml, the Company’s Board will consist of twelve Directors, nine of whom are independent Directors. Dollar Tree operated 3,299 stores in 48 states as of June 21, 2007. CONTACT: Dollar Tree Stores, Inc., Chesapeake Timothy J. Reid, 757-321-5284 www.DollarTree.com

AMENDED AND RESTATED MULTIFAMILY NOTE 1st day of November, 2006, by and between NEW FOREST APARTMENTS, LLC, a Maryland limited liability company ("Borrower") and WELLS FARGO BANK, N.A., a national banking association ("Lender"). PRELIMINARY STATEMENTS A. A loan was made to New Forest General Partnership, a Maryland general partnership, now known as Borrower, in the original principal amount of Twelve Million One Hundred Forty-Three Thousand Eight Hundred and No/100ths Dollars ($12,143,800.00), the repayment of which is evidenced by a Deed of Trust Note dated February 24, 1987 (the "Original Note"). B. The Original Note is secured by a Deed of Trust dated February 24, 1987 and recorded among the Land Records of Charles County, Maryland in Liber 1190, folio 390 (the "Original Deed of Trust"), on certain improved real property located in Charles County, Maryland. C. Lender has purchased the Original Note from its holder. D. Borrower has requested and Lender has agreed to make certain amendments to payment, and increasing the original principal amount from Twelve Million One Hundred Forty-Three Thousand Eight Hundred and No/l00ths Dollars ($12,143,800.00) to Twenty-Three Million and No/l00ths Dollars ($23,000,000.00). The Original Note is being amended and restated in its entirety to reflect such amendments. E. The Original Deed of Trust is concurrently being amended and restated pursuant to the terms of that certain Amended and Restated Multifamily Deed of Trust, Assignment of Rents and Security Agreement of even date herewith (as so amended and restated, the "Security Instrument"). Borrower and Lender agree that the Original Note is hereby amended and restated in its entirety as follows (as amended and restated, the "Note"): MULTIFAMILY NOTE US $23,000,000.00 as of November 1, 2006 than one) promises to pay to the order of WELLS FARGO BANK, N.A., a national banking association, the principal sum of Twenty-Three Million and No/l00ths Dollars (US $23,000,000.00), with interest accruing at the Interest Rate on the under applicable law. First Payment Date:  The first day of December, 2006. Instrument. Interest Rate: The annual rate of six and seventy-five thousandths percent (6.075%). Maturity Date:  The first day of November, 2016, or any earlier date on which acceleration or otherwise. last day of April, 2016. Instrument. 2010 Corporate Ridge, Suite 1000, McLean, VA 22102, or such other place as may follows:     number of days elapsed during the month. Borrower understands that the amount interest, each in the amount of One Hundred Thirty-Nine Thousand Seven and 61/100ths Dollars (US $139,007.61), shall be payable on the First Payment Date full. calculating interest due. interest. Lender's discretion. Borrower agrees that neither Lender's acceptance of a payable nor Lender's application of such payment shall constitute or be deemed satisfaction. reason of the Borrower's delinquent payment and the additional compensation other obligations of Borrower under the Loan Documents, and Lender's only of: and reports; Default: Instrument. following: (i)   (ii)   (iii)   (iv)   prepayment premium. otherwise in writing. additional expense and frustration or impairment of Lender's ability to meet its prepayment premium provisions. 14. Loan Charges. Borrower agrees to pay an effective rate of interest equal to Days. 22. No Novation. This Amended and Restated Multifamily Note does not extinguish the outstanding indebtedness evidenced by the Original Note or discharge or release the Original Deed of Trust or any other security, and the parties do not intend this Amended and Restated Multifamily Note to be a substitution or   [DOCUMENT EXECUTION OCCURS ON FOLLOWING PAGES]     BORROWER:       NEW FOREST APARTMENTS, LLC       By: AMERICAN HOUSING PROPERTIES L.P. a Delaware limited partnership Managing Member By: American Housing Management Company a Delaware corporation General Partner By: _/s/ Paul Resnick___________________(Seal) Name: _Paul Resnik____________________ Title: __Vice President__________________   Borrower’s Employer Identification No. 20-5758721  WELLS FARGO BANK, N.A., holder of the Original Note, signs below to acknowledge its consent to the terms of this Amended and Restated Multifamily Note. a national banking association   By: _/s/Edward D. Hussey______________(SEAL) Edward D. Hussey Senior Vice President Fannie Mae Commitment Number: 943255     ENDORSEMENT TO AMENDED AND RESTATED MULTIFAMILY NOTE dated as of November 1, 2006, given by to a national banking association in the original principal amount of $23,000,000.00 Pay to the order of FANNIE MAE, without recourse. a national banking association By: ___Edward D. Hussey____________________________(Seal) Edward D. Hussey Senior Vice President Date: as of November 1, 2006   the Multifamily Note to which this Acknowledgment is attached (the "Note"). The Instrument. As used in this Acknowledgment, the term "Key Principal" (each if Acknowledgment. discharge of a surety or a guarantor. Key Principal hereby waives the benefit of terms of this Acknowledgment, and agrees that Key Principal's obligations shall equitable discharge of a surety or a guarantor. Key Principal hereby waives the preserve Lender's rights against Key Principal under this Acknowledgment, in whole or in part; (b) the time for Borrower's performance of or compliance after such change of address occurs. Any notices to Key Principal shall be given in the manner provided in Section 31 of the Security Instrument. Key Principal   THIS ACKNOWLEDGMENT IS AN INSTRUMENT SEPARATE FROM, AND NOT A PART OF, THE NOTE. BY SIGNING THIS ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO BECOME AN ACCOMMODATION PARTY TO, OR AN ENDORSER OF, THE NOTE. [DOCUMENT EXECUTION OCCURS ON FOLLOWING PAGE]   under seal or has caused this Acknowledgment to be signed and delivered under seal by its duly authorized representative. Key Principal intends that this Acknowledgment shall be deemed to be signed and delivered as a sealed instrument.     KEY PRINCIPAL       AMERICAN HOUSING PROPERTIES L.P. a Delaware limited partnership       a Delaware corporation General Partner   Name: _Paul Resnik____________________ Title: __Vice President__________________     Address: 222 Smallwood Village Center           Employer ID Number: 52-2106195 SCHEDULE A PREPAYMENT PREMIUM as follows:   (a) of: by   (B) yield rate (the "Yield Rate") on the 9.25% U.S. Treasury Security due February by  r shall be selected at Lender's discretion. If the publication of such Yield Rates   (b) principal being prepaid.   (c) occurs. ____/s/ PR_________________ Borrower Initials

   EXHIBIT A TO FORBEARANCE AGREEMENT   AMENDED DEBENTURE   (issued to [                              ] in exchange for, and in replacement of, the Original Debenture previously issued to [                              ])   Exhibit 10.19 PAGE 1     SECURITIES LAWS.   Original Issuance Date:   December 9, 2011 $225,000.00   Debenture Number: PBGC – 59FF 101   PREMIER BEVERAGE GROUP, CORP.   Secured Amended and Restated Convertible Debenture   FOR VALUE RECEIVED, PREMIER BEVERAGE GROUP, CORP. (hereinafter called the “Obligor” or the “Company”), hereby promises to pay to [ ] (the “Holder”) or its successors and assigns the principal sum of TWO HUNDRED TWENTY FIVE THOUSAND DOLLARS ($225,000) in cash or Obligor common stock on the terms and conditions hereof on or before December 31, 2014 (the “Maturity Date”).   TWENTY PERCENT (20%). Interest shall be calculated on the basis of a 365-day by the Holder.         after the Effective Date (set forth above) (subject to the limitations on continue to be convertible on and after the Demand Date, until it is satisfied in full. The number of shares of Common Stock issuable upon a conversion   Obligor shall maintain records showing the principal amount converted and the manifest error.   Exhibit 10.19 PAGE 2     Debenture to the extent such conversion would result in the Holder, together with any affiliate thereof, beneficially owning (as determined in accordance including shares issuable upon conversion of this Debenture held by such Holder not to any other Holder) upon notice to the Obligor. Other Holders shall be     equal to 50% of the 45 Day VWAP. As used herein, the term “45 Day VWAP” shall mean and refer to the lowest volume weighted average closing market price for the Common Stock for the 45 trading days preceding conversion as posted on the OTCQB or on such US National Exchange upon which the Company may be listed.   to, at its option, (A) convert the then outstanding principal amount and any Stock of the Obligor into which the then outstanding principal amount and any converted immediately prior to such reclassification or share exchange would principal amount of this Debenture, plus all other amounts due and payable       Exhibit 10.19 PAGE 3       (i)          Obligor shall maintain a sufficient amount of authorized common shares to enable conversion of all amounts due under this Debenture.     issuable pursuant to this Section 1 shall, upon issue, be duly and validly authorized, issued and fully paid, and nonassessable.   of Common Stock.     for the Obligor’s failure to deliver certificates representing shares of Common applicable law.   transfer agent fees, and equity issuance fees (collectively, the “Post-Closing Expenses”), which amount shall be payable to Holder in the form of additional interest hereunder.   governmental body):   agreements executed in connection herewith (collectively, the “Transaction Documents”), including, without limitation, that certain Forbearance Agreement dated as of May 15, 2013, by and between Holder and Obligor, and those certain Transfer Agent Instructions executed in favor of Holder by Obligor and its transfer agent in connection with issuance of this Debenture.   voluntary or involuntary.   Exhibit 10.19 PAGE 4     or there shall be commenced against the Company or any Active Subsidiary of the   leasing or factoring arrangement of the Company or any Active Subsidiary of the becoming or being declared due and payable.     substantial portion of its business, or any cessation of operations or admission by Obligor that it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Obligor’s ability to continue as a “going concern” shall not be an admission that the Obligor cannot   any primary market for a period of five (5) consecutive trading days (including, for example, any such failure in which a bid price is not quoted for the Obligor’s Common Stock for such period). The Company shall file all reports required under Section 13 of the Securities Exchange Act of 1934 within the time parameters mandated by the Rules of the Securities and Exchange Commission.   60 days after receipt of Holder’s written notice of default, all outstanding principal, accrued interest, and, in consideration of the equity-based conversion discount afforded Holder hereunder, liquidated damages equal to 200% of all outstanding principal and accrued interest due hereunder, shall be due and payable in full upon demand of the Holder; and, the Conversion Price shall be automatically adjusted to the lesser of 50% of the 45 Day VWAP or $0.0001 per share.     Exhibit 10.19 PAGE 5       reclassified.       regulations promulgated thereunder.   this Debenture.     the Obligor.     Section 7.          Whenever any payment or other obligation hereunder shall be succeeding Business Day.         any nature whatsoever, any and all notices of any nature whatsoever, dishonor, presentment of any kind whatsoever, and protest of or in connection with this Debenture.   Exhibit 10.19 PAGE 6     Section 12.         Entire Agreement. THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS RELATING TO THE SUBJECT MATTER HEREOF.     Exhibit 10.19 PAGE 7       PREMIER BEVERAGE GROUP CORP.     By:     Print: Fouad Kallamni   Title: President     Exhibit 10.19 PAGE 8     EXHIBIT “A”   NOTICE OF CONVERSION     the Debenture into Shares of Common Stock of PREMIER BEVERAGE GROUP CORP., below.       Account Number:     Exhibit 10.19 PAGE 9  

April 29, 2013 VIA EDGAR U.S. Securities and Exchange Commission treet, N.E. Washington, DC20549 Re: Sun Life of Canada (U.S.) Variable Account L File No. 033-19628 Post-Effective Amendment No. 36 Accession No. 0001020523-13-000344 Withdrawal of Amendment Pursuant to Rule 477 Dear Commissioners: On behalf of the Sun Life of Canada (U.S.) Variable Account L of Sun Life Assurance Company of Canada (U.S.), we hereby request that the above-referenced filing under the Securities Act of 1933 be withdrawn, pursuant to Rule 477 under that Act. This filing was done on April 29, 2013.No securities were sold in connection with the amendment that is the subject of this request for withdrawal. If there are any questions or comments concerning this request, please contact the undersigned at (781) 263-6403. Sincerely, /s/Kenneth N. Crowley Kenneth N. Crowley Senior Counsel

Exhibit 10.4 SUPPLEMENTAL CONFIRMATION To: From: Subject: Accelerated Stock Buyback Date: July 31, 2014 Association (“Dealer”) and Darden Restaurants, Inc. (“Counterparty”) (together, Confirmation is a binding contract between Dealer and Counterparty as of the to the Master Confirmation dated as of July 31, 2014 (the “Master Confirmation”) Trade Date: July 31, 2014 USD 0.43 August 1, 2014 Scheduled Termination Date: December 4, 2014 First Acceleration Date: September 30, 2014 Prepayment Amount: USD 250,000,000 Prepayment Date: August 5, 2014 Initial Shares: 4,318,721 Shares; provided that if, in connection with the Transaction, Dealer such number of Shares that Dealer is able to so borrow or otherwise acquire; preceding proviso, then Dealer shall use commercially reasonable efforts to October 1, 2014 Ordinary Dividend Amount: For any calendar quarter, USD 0.55 October 10, 2014 1 Termination Price: USD 23.16 per Share Additional Relevant Days: The 3 Calculation Dates immediately following the Calculation Period. 3.    Calculation Dates: 1.     August 1, 2014 2.     August 5, 2014 3.     August 7, 2014 4.     August 11, 2014 5.     August 13, 2014 6.     August 15, 2014 7.     August 19, 2014 8.     August 21, 2014 9.     August 25, 2014 10.     August 27, 2014 11.     August 29, 2014 12.     September 3, 2014 13.     September 5, 2014 14.     September 9, 2014 15.     September 11, 2014 16.     September 15, 2014 17.     September 17, 2014 18.     September 19, 2014 19.     September 23, 2014 20.     September 25, 2014 21.     September 29, 2014 22.     October 1, 2014 23.     October 3, 2014 24.     October 7, 2014 25.     October 9, 2014 26.     October 13, 2014 27.     October 15, 2014 28.     October 17, 2014 29.     October 21, 2014 30.     October 23, 2014 31.     October 27, 2014 32.     October 29, 2014 33.     October 31, 2014 34.     November 4, 2014 35.     November 6, 2014 36.     November 10, 2014 37.     November 12, 2014 38.     November 14, 2014 39.     November 18, 2014 40.     November 20, 2014 41.     November 24, 2014 42.     November 26, 2014 43.     December 1, 2014 44.     December 3, 2014     Date occurs. 2 executed copy to Dealer Yours sincerely, By: /s/ Thomas Yates_____________________________     Managing Director By: /s/ William R. White, III__________ Name: William R. White, III

Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing EXHIBIT 10.22 TWENTY-SECOND AMENDMENT TO EMPLOYMENT AGREEMENT JOEL F. GEMUNDER (“Employee”), and OMNICARE MANAGEMENT COMPANY, a Delaware corporation with its principal place of business in Covington, Kentucky (the “Company”), hereby agree as follows: 1. Recitals (a) The Company is an indirect subsidiary of Omnicare, Inc. as a result of a corporate restructuring of Omnicare, Inc. and its affiliates; (b) In connection with such restructuring certain assets and liabilities of Omnicare, Inc. have been transferred to the Company, effective December 31, 1988, including the employment agreement between the Employee and Omnicare, Inc., dated August 4, 1988 (the “Employment Agreement”); (c) The Company, as assignee, and Employee amended the Employment Agreement by mutual written agreement on December 31, 1988, May 23, 1989, May 22, 1990, May 21, 1991, May 19, 1992, May 17, 1993, May 16, 1994, May 15, 1995, May 20, 1996, May 19, 1997, May 18, 1998, March 3, 1999, February 25, 2000, March 1, 2000, March 1, 2001, February 6, 2002, September 25, 2002, March 6, 2003, March 11, 2004, March 24, 2005, and April 6, 2006 (the “Prior Amendments”); and (d) The Company and the Employee wish to amend the Employment Agreement as set forth below. 2. Amendments (a) The last sentence of Section 2.2 of the Employment Agreement is hereby deleted and replaced with the following sentence: “Employee’s annual incentive compensation and bonuses with respect to each calendar year shall be paid to the Employee in the next following calendar year, on or before February 10 of such following calendar year.” (b) Section 2.6(a) of the Employment Agreement is hereby amended by adding the following sentence at the end of such Section: “In all events, any reimbursement made to Employee pursuant to this Section 2.6(a) shall be made not later than the end of the calendar year following the year in which the related expense was incurred.” (c) Section 2.6(e) of the Employment Agreement is hereby amended by adding the following sentence at the end of such Section: “In all events, any payment made to Employee pursuant to this Section 2.6(e) shall be made not later than the end of the calendar year following the year in which the related fee was incurred.” (d) Section 2.7(b)(i) of the Employment Agreement is hereby amended to delete the phrase “Sections 4.4 and 4.5 of the” from such Section. (e) Section 2.7(e) of the Employment Agreement is hereby amended by adding the following sentence at the end of such Section: “To the extent that such after-tax benefit is not as favorable to Employee (and his estate) in any particular year, any additional payments made by the Company to Employee (or his estate) pursuant to the preceding sentence shall be made not later than December 31 of such year.” (f) The last sentence of Section 3.3(b) of the Employment Agreement is hereby deleted and replaced with the following two sentences: “Such monthly severance payments shall be made for a period equal to the balance of the term of employment provided for in Section 1.2, with the first such monthly payment to be made not later than thirty (30) days after Employee’s Separation from Service occurs. Employee’s right to receive such monthly severance payments shall be treated as a right to receive a series of separate payments under Treasury Regulation Section 1.409A -2(b)(2)(iii). As used herein, a “Separation from Service” occurs when Employee dies, retires, or otherwise has a termination of employment with the Company that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A -1(h)(1), without regard to the optional alternative definitions available thereunder.” (g) Article 3 of the Employment Agreement is hereby amended by adding a new Section 3.3(d) to read in its entirety as follows: “(d) Notwithstanding any provision of this Agreement to the contrary, if the Employee is a “specified employee” within the meaning of Treasury Regulation Section 1.409A -1(i) as of the date of the Employee’s Separation from Service, then any payment or benefit pursuant to this Section 3.3 or pursuant to any other provision of this Agreement on account of the Employee’s Separation from Service, to the extent such payment (after taking into account all exclusions applicable to such payment under Section 409A of the Internal Revenue Code and all regulations, guidance and other interpretive authority issued thereunder (“Code Section 409A”)) is properly treated as deferred compensation subject to Code Section 409A, shall not be made until the first business day after (i) the expiration of six (6) months from the date of the Employee’s Separation from Service, or (ii) if earlier, the date of the Employee’s death (the “Delayed Payment Date”).

Exhibit 99.1 From:EnviroStar, Inc. treet Miami, FL33138 Michael Steiner(305) 754-4551 Venerando Indelicato(813) 814-0722 FORRELEASE at 11:00AM, Friday, November 14, 2014 EnviroStar, Inc. Reports Improved Revenues and Earnings for the First Quarter Announces Special Dividend Miami, FL – November 14, 2014 – EnviroStar, Inc. (NYSE MKT:EVI) today reported improved operating results for the first three months of fiscal 2015. For the three month period ended September 30, 2014, revenues increased by 7.0% to $9,083,694 from $8,493,230 for the same period of last year.Net earnings increased by 9.0% to $463,961 or $.07 per share during the first quarter of fiscal 2015 compared to $425,771 or $.06 per share during the first quarter of fiscal 2015. The Company also announced that its Board of Directors has declared a $.20 per share special dividend, payable on December 19, 2014 to shareholders of record on December 5, 2014. Venerando J. Indelicato, Chief Financial Officer of EnviroStar, Inc., stated:“We are pleased to report a very successful first quarter of fiscal 2015, as both revenues and net earnings increased. We are also pleased to report that our excellent financial position has enabled the Board of Directors to declare a special dividend and continue our policy of returning value to our shareholders.” EnviroStar, Inc. through its subsidiaries is one of the nation’s leading distributors of commercial and industrial laundry and dry cleaning equipment and steam boilers. This press release contains certain information that is subject to a number of known and unknown risks and uncertainties that may cause actual results and trends to differ materially from those expressed or implied by the forward-looking statements.Information concerning these factors are discussed in Company reports filed with the Securities and Exchange Commission. EnviroStar, Inc. EnviroStar, Inc. (NYSE MKT: EVI) Three months ended September 30, (Unaudited) (Unaudited) Revenues $ $ Earnings before income taxes Provision for income taxes Net earnings $ $ Basic and diluted earnings per share $ $ Weighted average shares outstanding: Basic and diluted

Exhibit 10.27 effective December 15, 2008 (the “Effective Date”) by and between Devon Energy Corporation (the “Company”) and Danny Heatly (the “Employee”).           WHEREAS, the Employee is employed by the Company and is party to a Severance Agreement by and between the Company and the Employee dated as of September 14, 2004; supersede, and fully restate and replace the Severance Agreement. 1. Term of Agreement. This Agreement shall not have any specific duration and shall continue in full force and effect unless and until (a) the Employee’s (b) all obligations and liabilities of the parties arising in connection with provides for certain rights and benefits during the Employee’s employment with 2. Rights and Benefits. Beginning on a Change in Control and continuing at all times thereafter, the Company shall not modify the requirements for eligibility for coverage or the benefits under the Retiree Medical Benefit Plan to adversely affect the Employee’s right to coverage or benefits for the Employee and the Employee’s dependents, if applicable.      (a) Termination Upon Death. The Employee’s employment with the Company shall terminate immediately upon the Employee’s death.      (b) Reassignment of Duties and Termination Due to the Employee Becoming Disabled.           (i) Reassignment. Whether or not the Employee is Disabled, the Company may reassign his or her duties during any time he or she has become physically or mentally incapable of performing his or her essential job functions with or without reasonable accommodation or job protection as required by law and no such reassignment shall be deemed Good Reason for the Employee to terminate his or her employment under Section 3(d).           (ii) Termination. If the Employee becomes Disabled, then the Company may give the Employee written notice of its intent to terminate his or her employment, in which case such employment shall terminate effective on the thirtieth (30th) day after receipt of such notice as long as the Employee has not been medically released and returned to full-time duty before such thirtieth (30th) day. Employee’s employment with the Company at any time whether with or without Cause.      (d) Termination by the Employee; Good Reason. The Employee may terminate his or her employment with the Company at any time whether with or without Good Reason. If the Employee believes Good Reason exists for terminating his or her employment, then he or she shall give the     Company written notice of the acts or omissions constituting Good Reason within thirty (30) days after learning of such acts or omissions constituting Good Reason Notice, the Company fails to either cure such acts or omissions or notify the Employee of the intended method of cure, and (ii) the Employee delivers a Notice of Termination to the Company and subsequently resigns within thirty (30) days after the Company’s deadline in Section 3(d)(i) expires. Notwithstanding the previous sentence and at the Company’s request, the Employee shall provide services consistent with his or her then-current authority, duties, and responsibilities for up to ninety (90) days after having provided the Good Reason Notice to the Company.      (e) Paid Suspensions. Notwithstanding any contrary provision in this Agreement, the Company may suspend the Employee with pay for up to thirty (30) days pending an investigation authorized by the Company or the Board, or pursued by, or at the request of, a governmental authority to determine whether the Employee has engaged in acts or omissions constituting Cause. Any such paid suspension shall not constitute Good Reason for the Employee to terminate his or her employment under Section 3(d). The Employee shall cooperate with the Company in connection with any such investigation. If the Employee’s employment is the Employee shall repay any amounts paid by the Company to the Employee during such paid suspension. Company terminates the Employee’s employment other than for Cause or the Employee becoming Disabled and a Change in Control occurs following the Termination Date, then such Change in Control shall be deemed to have occurred immediately prior to the Termination Date if either (i) the Termination Date occurs following the execution of an agreement that provides for a transaction or transactions that, if consummated, constitutes such Change in Control, or (ii) the Employee reasonably demonstrates that such termination was either (A) requested by a third party who had indicated an intention or taken steps reasonably calculated to effect the Change in Control or who effectuates such Change in Control, or (B) was otherwise in connection with, or in anticipation of, such Change in Control. the Company or by the Employee shall be effective only when communicated by a In the event of a termination by the Employee for Good Reason, a Notice of Termination Date, the Employee is a member of the board of directors (or any similar governing body) or an officer of the Company or any Affiliate, or holds any other position with the Company or an Affiliate, then the Employee shall resign and be deemed to have resigned from all such positions as of the Termination Date. Between the date a Notice of Termination is delivered and the Termination Date, the Employee shall continue to perform his or her regular job duties and such services for the Company as are necessary and appropriate for a smooth transition to the Employee’s replacement, if any. Notwithstanding the foregoing sentence, the Company may relieve the Employee from further duties after receiving a Notice of Termination; provided, however, that prior to the Termination Date, the Employee shall continue to be treated as a Company employee for other purposes and the Employee’s rights to compensation or Date, the Employee shall return to the Company any keys, credit cards, passes, Information. 2        (a) Accrued Obligations. Upon any termination of the Employee’s employment for any reason, the Company shall pay the Employee (i) his or her accrued Annual Base Salary and accrued, unused vacation through the Termination Date in a lump Employee is actively employed during the entire year upon which such Annual Bonus is based before the Termination Date, the Annual Bonus at the same time as such bonuses are paid to similarly situated employees of the Company but in no year in which any substantial risk of forfeiture with respect to such bonus lapses (the payments in (i) and (ii) shall be referred to as the “Accrued Obligations”). (x) the Company terminates the Employee’s employment other than for Cause, the Employee’s death, or the Employee becoming Disabled, or (y) the Employee terminates his or her employment for Good Reason, then the Company shall, in addition to the payment of the Accrued Obligations, have the following obligations to the Employee:           (i) the Company shall pay the Employee within thirty (30) days after the Termination Date                (A) a lump sum in cash equal to two (2) times the sum of:                     (1) the greater of (x) the Employee’s then-current Annual Base Salary, or (y) the Employee’s Annual Base Salary at any time during the two (2) years before the Termination Date; and                     (2) the highest Annual Bonus received by the Employee within three (3) years before the Termination Date (or, if termination occurs during the CIC Period, the greater of (x) the highest Annual Bonus received by the Employee within three (3) years before the Termination Date, and (y) the highest Annual Bonus received by the Employee within three (3) years before the Change in Control); provided, however, if the Employee’s employment began in the same calendar year as the termination of such employment, then the Annual Bonus amount used for calculating the lump sum payment due shall be determined by the Compensation Committee in its discretion; and           (ii) the Company shall pay, or reimburse the Employee, for a reasonable amount of outplacement services from a mutually agreeable service provider for twelve (12) months following the Termination Date. The amount of such outplacement services shall be commensurate with the Employee’s title and position with the Company and other employees similarly situated in other companies within the Company’s peer industry group. Any reimbursement of such expenses shall be made by December 31 of the Employee’s taxable year following the year the expenses were incurred; and           (iii) if the Termination Date occurs during the CIC Period, then                (A) the Employee shall be deemed, for purposes of the Retiree Medical Benefit Plan, (i) to have earned two (2) years of service in addition to the Employee’s actual service at the Termination Date, and (ii) to be two (2) years older than his or her actual age on the Termination Date; provided, reduce the Employee’s right to benefits under the Retiree Medical Benefit Plan subparagraph (A) shall not limit the ability of the Company 3   or an Affiliate to modify the Retiree Medical Benefit Plan for all participants who are similarly situated as the Employee, subject to the restrictions imposed by the plan;                (B) the Company shall provide the Employee (and his or her dependents, if applicable) for the period allowed under Section 4980B of the Code, with the same level of health and dental insurance benefits upon the Employee for such benefits) as existed immediately before the Termination Date (or, if more favorable to the Employee, as such benefits and terms and conditions existed immediately before the Change in Control, if applicable); provided, however, if the Employee is not eligible to continue participating in the Company plans providing such benefits (including the Retiree Medical Benefit Plan), then the Company shall otherwise provide such benefits on the same after-tax basis as if continued participation had been permitted. The Company’s obligations under this subparagraph (B) shall apply against its coverage obligations under COBRA. Notwithstanding the foregoing, if the Employee becomes eligible to receive health and dental insurance benefits through subsequent employment, then the Employee shall ensure that a coordination of benefits occurs so that the medical and dental plan of the Employee’s new employer shall be responsible for such medical and dental benefits that are available under the new employer’s plans before any medical and dental benefits are provided pursuant to this subparagraph (B). This subparagraph (B) shall not limit the ability of the Company or an Affiliate to modify the terms of the Retiree Medical Benefit Plan for all participants who are similarly situated as the Employee, subject to the restrictions imposed by the plan; and                (C) the Company shall provide, for two (2) years following the Termination Date, the Employee with the same level of life insurance benefits upon substantially similar terms and conditions (including contributions required by the Employee for such benefits) as existed immediately before the Termination Date (or, if more favorable to the Employee, as such benefits and terms and conditions existed immediately before the Change in Control); provided, however, that, if the Employee is not eligible to continue                (D) the Company shall pay the Employee, within thirty (30) days after the Termination Date, an amount equal to six (6) times the monthly COBRA premium that applies to the Employee (and his or her dependents if such dependents are then covered by the Company’s medical plans on the Termination Date).      (c) Death or Disabled. If the Employee’s employment terminates due to death or because he or she is Disabled, then this Agreement shall terminate without further obligations to the Employee or his or her legal representatives, as applicable, under this Agreement, other than the obligation to pay, within thirty (30) days after the Termination Date, (i) the Accrued Obligations, and (ii) any applicable Prorated Annual Bonus.      (d) Cause; Other than for Good Reason. If the Employee’s employment is terminated for Cause or the Employee terminates his or her employment without the Employee under this Agreement other than for payment of the Accrued Obligations. paragraphs of this Section 4, if the Company determines that (i) the Employee is (“Section 409A”) as of the date of his or her “separation from service” as defined by Section 409A (“Separation from Service”), and (ii) any amount of any payment to be made under this Section 4 is subject to Section 409A, then such amount shall not be paid to the Employee until 4   earlier, the date of his or her death). In such case, the portion of the payment so delayed shall be paid in a single lump sum in cash on the first (1st) day of the seventh (7th) month following the Employee’s Separation from Service (or, if earlier, upon his or her death). described under Section 4(b) shall be conditioned on the Employee signing and not revoking the general form of release attached as Exhibit “B” or such other form acceptable to the Company within the time periods provided in such release. The Company shall not be required to make any payment under Section 4(b) until the period for the Employee to revoke the release has expired. Sections 4(b)(iii)(A) and (B), nothing in this Agreement shall prevent or limit the Employee’s right to participate in any plan, program, policy, or practice provided by the Company or any Affiliate and for which the Employee may qualify, the Employee may have under any other contract or agreement with the Company or any Affiliate. Amounts that are vested benefits or that the Employee is otherwise entitled to receive under any plan, policy, practice, or program of, or any contract or agreement with, the Company or any Affiliate at or after the Agreement; provided, however, that the Employee shall not be eligible for of employment. defense, or other claim, right, or action against the Employee or others. The Employee shall have no obligation to seek employment or otherwise mitigate his or her damages under this Agreement and amounts payable to the Employee under this Agreement shall not be reduced whether or not the Employee obtains other employment, except as provided in Section 4(b)(iii) of this Agreement.      (a) Gross-Up Payment. Notwithstanding any contrary provision of this Agreement and except as provided below, if any payment, benefit, or distribution by the Company, any Affiliate, or trusts established by the Company or any Affiliate for the benefit of its employees, to or for the benefit of the Employee (whether pursuant to this Agreement or otherwise but determined without regard to any additional payments required under this Section 7) (each, a “Payment”) is determined to be subject to excise tax imposed by the Code, including Section 4999 of the Code, or any interest or penalties are incurred by the Employee with respect to such an excise tax (such excise tax and any such interest and penalties shall referred to as the “Excise Tax”), then the Employee amount such that, after payment by the Employee of all taxes (including any applicable interest or penalties) and Excise Tax imposed upon or related to the Gross-Up Payment, the Employee retains a Gross-Up Payment amount equal to the      (b) Determinations and Tax Notice. Subject to Section 7(c), all determinations required under this Section 7, including whether and when a Gross-Up Payment is required and its amount, shall be made by a nationally recognized certified public accounting firm designated and paid by the Company (the “Accounting Firm”), which shall provide its analysis and detailed supporting calculations to both the Company and the Employee within fifteen (15) business days after the Employee delivers to the Company any written notice of any claim by the Internal Revenue Service that may require the 5   Company’s Gross-Up Payment (the “Tax Notice”). The Company shall pay any Gross-Up Payment due under this Section 7 to the Employee within five (5) days after receiving the Accounting Firm’s determination but in no event later than December 31 of the year next following the taxable year in which the Employee received the Payment. If the Accounting Firm determines that no Excise Tax is payable by the Employee, then it shall furnish the Employee with an opinion supporting the determination not to report an Excise Tax on the Employee’s binding upon the parties. Due to the uncertainty of the application of Section 4999 of the Code when the initial determination is made by the Accounting Firm, it is possible that Gross-Up Payments that will not have been calculations required under this Section 7. If the Company exhausts its remedies pursuant to Section 7(c) and the Employee thereafter is required to pay any Underpayment that has occurred, and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee but in no event later than the December 31 of the year next following the taxable year in which the Employee received the Payment.      (c) Contests. The Tax Notice shall be given as soon as practicable but no later than ten (10) business days after the Employee receives written notice of such claim describing the nature of such claim and indicating the due date for such claim. The Employee shall not pay such claim until thirty (30) days after delivering the Tax Notice to the Company (or such shorter period imposed by the Internal Revenue Service). If the Company notifies the Employee in writing before the expiration of such period that it desires to contest such claim, then the Employee shall:           (i) provide any information reasonably requested by the Company           (ii) contest such claim as the Company shall reasonably request in writing, including, without limitation, accepting legal representation such claim; and such claim. The Company (x) shall pay all costs and expenses (including additional interest and penalties) related to such contest and shall indemnify and hold the Employee of costs and expenses, (y) shall control all proceedings taken in connection authority in respect of such claim, and (z) may, at its sole option, either claim in any permissible manner, in which case, the Employee shall administratively and judicially prosecute such contest to a determination as the Company shall determine; provided, however, that the Company’s control of the would be payable under this Agreement and the Employee shall be entitled to Revenue Service or any other taxing authority. If the Company directs the Employee to pay such claim and sue for a refund, then the Company shall, to the extent permitted by law, advance the amount of such payment to the Employee, on an interest-free basis, and shall indemnify and hold the Employee harmless, on income with respect to such advance. The Company shall make any payment in reimbursement of costs and expenses, Excise Tax, income tax, or other amounts due the Employee under this Section 7(c) no later than December 31 of the year following the year in which (x) the taxes that are the subject of the audit are remitted to the 6   taxing authority, or (y) there is a final and non-appealable settlement or other      (d) Refunds. If, after receiving an advance from the Company pursuant to Section 7(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall promptly pay the Company the amount of such refund (together with any interest paid or credited after applicable taxes). If, after receiving an advance from the Company pursuant to Section 7(c), a its intent to contest such denial of refund before the expiration of thirty (30) days after such determination, such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset the amount of the Gross-Up Payment required to be paid.      (a) Confidential Information. Given his or her position and employment with the Company, the Employee acknowledges that he or she will be using, acquiring, and adding to Confidential Information of a special and unique nature and value to the Company and its strategic plan and financial operations. The Employee further acknowledges that all Confidential Information belongs exclusively to the Company, is material and proprietary, and is critical to the Company’s success. Accordingly, the Employee shall use Confidential Information only to the Company’s benefit and shall not at any time during or after his or her employment with the Company directly or indirectly disclose any Confidential Information to any person or use any Confidential Information for the Employee’s own benefit, for the benefit of others, or to the Company’s detriment. Employee to disclose Confidential Information, then the Employee shall promptly notify the Company and take reasonable steps to prevent such disclosure until the Company receives such notice and has an opportunity to respond to such court or agency. If the Employee obtains information that may be subject to the attorney-client privilege of the Company or any Affiliate, then the Employee      (c) Exceptions. Confidential Information shall not include knowledge that was acquired during the course of the Employee’s employment under this Agreement that is generally known to persons of the Employee’s experience in other Employee’s ability to disclose Confidential Information in any legal proceeding the Employee’s obligations under any Company policy relating to confidential information and any agreement of the Employee relating to confidentiality,      (f) Non-Solicitation. During his or her employment with the Company and for twenty four (24) months following the Termination Date, regardless of the reason for such termination, the Employee shall not directly or indirectly hire, 7             (ii) if the Employee terminates his or her employment with the Company without Good Reason, then the Non-Solicitation Obligation shall expire twelve      (g) Remedies. The Employee acknowledges and agrees that the Company will have no adequate remedy at law and could be irreparably harmed if the Employee breaches or threatens to breach his or her obligations under this Section 8. The other available legal or equitable remedies. The Employee shall not, in any      (h) Survival. The Employee’s obligations under this Section 8 shall survive any termination of the Employee’s employment or of this Agreement. may not be assigned to any entity other than an Affiliate without the Employee’s consent. The Employee’s duties, responsibilities, authorities, compensation, and benefits are personal to the Employee and may not be assigned to any person or entity without written consent from the Company other than by will or the laws enforceable by the Employee’s legal representatives. shall be finally settled by arbitration in Oklahoma City, Oklahoma administered by the AAA under its Employment Arbitration Rules then in effect; provided, however, that the AAA’s Employment Arbitration Rules shall be modified as follows: (i) each arbitrator shall agree to treat as confidential evidence and other information presented, and (ii) there shall be no authority to award punitive damages or liquidated or indirect damages unless such damages could be awarded by a court of competent jurisdiction. The decision of the arbitrator(s) shall be enforceable in any court of competent jurisdiction. jurisdiction in Oklahoma City, Oklahoma to 8   enforce any arbitration award under Section 10(a). The Company also may bring such an action or proceeding, in addition to its rights under Section 10(a) and temporarily, preliminarily, or permanently enforce Sections 8 or 11. The Employee agrees that (i) violating Sections 8 or 11 would damage the Company in ways that cannot be measured or repaired, (ii) the Company shall be entitled to an injunction, restraining order, or other equitable relief restraining any actual or threatened violation of Sections 8 or 11, (iii) the Company shall not be required to post a bond or prove actual damages when seeking such an injunction, restraining order, or other equitable relief, and (iv) remedies at law for such violations would be inadequate. Employment Matter (an “Employment Matter Claim”) is filed by either of the parties, and (B) the Employee is ultimately successful in respect of one or more material claims or defenses brought, raised or pursued in connection with such Employment Matter Claim, then the Company shall reimburse the Employee for all legal fees and expenses reasonably incurred in connection with such Employment Matter Claim, provided that such legal fees are reasonable and are calculated on an hourly rather than a contingency fee basis, as well as all costs and expenses make such reimbursement to the Employee as soon as practicable following final expenses, which shall be provided by the Employee no later than the later of during the CIC Period, or (B) an Employment Matter Claim has been filed prior to a Change in Control but has not been resolved as of the effective date of a Change in Control, then the Employee may submit his or her request for reimbursement of attorneys’ fees, costs and expenses on a monthly basis during the pendency of such Employment Matter Claim. Within sixty (60) days following the Company’s receipt of each such monthly request and appropriate documentation supporting such request for reimbursement of attorneys’ fees, costs and expenses, the Company shall reimburse the Employee (or pay directly to the Employee’s attorney) the Employee’s attorneys’ fees, costs and expenses that the respect to such Employment Matter Claim. In the event the Employee ultimately fails to be successful with respect to at least one of the Employee’s material claims or defenses brought, raised or pursued in connection with such contest or dispute, the Employee shall repay the Company the amount of any such reimbursement received in connection with such dispute in accordance with this Section 10(d) (without interest) as soon as practicable following the final resolution of such matter. obligated to provide benefits to the Employee by this Agreement, then the Company shall take, and cause each such Affiliate (the “Guarantors”) to take, such actions as are necessary to cause the Guarantors to jointly and severally guarantee the payment of benefits otherwise due to the Employee under this Agreement if the Company fails to pay such benefit within thirty (30) days of the due date for such payment; provided, however, that no entity organized under the laws of any jurisdiction outside the United States shall have an obligation to enter into such guarantee. Each of the Guarantors shall be subrogated to the Employee’s rights under this 9   Agreement to the extent of any payments by each such Guarantor to or on account of the Employee under this Section 10(e). 11. Non-Disparagement. The Employee shall not make any negative or disparaging Representatives or their personal or professional reputations. The Employee may Section 11, provided that the Employee delivers written notice of such required defend, indemnify, and hold harmless the Employee and the Employee’s heirs, from, based on, or relating to the Employee’s employment by the Company (and any predecessor of the Company), or the Employee’s service as an officer or member of the board of directors (or any similar governing body) of the Company (or any predecessor of the Company) or any Affiliate, including without limitation Board), and the Employee shall be covered under such insurance to the same extent as other similarly situated employees of the Company; provided, however, the Employee is given written notice of any such determination promptly after it is made. Section 12(a) is subject to income taxes, then the Company shall make a Gross-up Payment (as described in Section 7(a)) to the Employee, by December 31 of the year next following the Employee’s taxable year in which the income taxes were incurred, such that, after payment of all taxes imposed on or related to such Gross-up Payment, the Employee retains an amount equal to 75% of the federal, state, and local income taxes imposed upon such benefits or payment.      13. Employee to Provide Assistance with Claims. During his or her employment with the Company and following the termination of such employment, regardless of the reason for such termination, the Employee shall assist the Company in defending any claims that may be made against the Company, and shall assist the Company in prosecuting any claims that may be made by the Company, to the extent that such claims may relate to the Employee’s services for the Company. The Employee shall promptly inform the Company if he or she learns of any lawsuits involving such claims that may be filed against the Company. The Company shall reimburse the Employee for all reasonable out-of-pocket expenses associated with such assistance, including travel expenses, incurred and accounted for in accordance with its standard policies and procedures for expense reimbursements and deductibles under Section 162(m) of the Code. For periods after the Termination Date, the Company shall provide reasonable compensation to the Employee for such assistance at a rate to be determined by the Company in its discretion. The Employee shall promptly inform the Company if asked to assist in any investigation of the Company that 10   may relate to the Employee’s services for the Company, regardless of whether a lawsuit has then been filed against the Company with respect to such investigation. For purposes of this Section 13, the term “Company” shall include the Employee’s rights under the terms of any option on stock of the Company or 15. Miscellaneous. legal representatives. shall be in writing and sent to the other party by either hand delivery, pre-paid overnight carrier, or registered or certified U.S. mail (return receipt Danny Heatly C/O Devon Energy Corporation 20 North Broadway Devon Energy Corporation C/O Executive Vice President — Human Resources 20 North Broadway Devon Energy Corporation 20 North Broadway registered U.S. 11   no event shall any such notices be deemed to be given later than the date they are actually received. invalid or unenforceable provisions were omitted (but only to the extent such provision cannot be appropriately reformed or modified). If any such provision applicable law. this Agreement all amounts authorized by the Employee or required to be withheld      (h) Representations and Warranties. The Employee represents and warrants that (i) he or she is not, and shall not become, a party to any agreement, contract, arrangement, or understanding, whether of employment or otherwise, that would in any way restrict or prohibit him or her from undertaking or performing the duties required by his or her employment with the Company or that would in any way restrict or prohibit his or her ability to be employed by the Company; (ii) his or her employment by the Company does not and shall not violate the terms of any policy of, or any agreement with, any prior employer regarding confidentiality or competition; and (iii) his or her position with the Company shall not require him or her to improperly use any trade secrets or whom he or she has performed services. 12        IN WITNESS WHEREOF, the Company and the Employee have executed this Amended and Restated Severance Agreement as of the Effective Date.                 /s/ Danny Heatly           Danny Heatly           Devon Energy Corporation                   By: Frank W. Rudolph Its: Executive Vice President — Human Resources 13   Exhibit A Definitions 1.   “AAA” means the American Arbitration Association.   2.   “Accounting Firm” has the meaning ascribed to such term in Section 7(b).   3.   “Act” means the Securities Exchange of Act of 1934, as amended from time to time.   4.   person shall not be considered an Affiliate.   6.   “Agreement” has the meaning set forth in the preamble.   7.   “Annual Base Salary” means the annual base salary of the Employee as in effect from time to time.   8.   “Annual Bonus” means, with respect to any given year, the annual bonus payable to the Employee with respect to that year, as determined by the Compensation Committee in its discretion.   9.   “Board” means, at any given time, the Company’s Board of Directors at that time.   10.   “Cause” means any of the following:   (a)   the willful failure by the Employee to substantially perform the Employee’s duties for the Company or an Affiliate (other than due to physical or mental incapacity) within thirty (30) days after receiving a written demand for substantial performance from the Supervisor, the CEO, or the Board;     (b)   the willful engaging by the Employee in illegal or dishonest conduct or gross misconduct that is materially and demonstrably injurious to the Company or an Affiliate; or     (c)   the conviction of the Employee of a felony or any crime of moral turpitude, a guilty or nolo contendere plea by the Employee with respect to a felony or any crime of moral turpitude, or the deferred adjudication or unadjudicated probation of the Employee with respect to a felony or any crime of moral turpitude; provided, however, that (x) an act or omission by the Employee shall be by the Employee based upon authority granted by resolution duly adopted by the best interests. at that time. - 1 -   12.   “Change in Control” means the occurrence of any one of the following events: majority of the Board;     (b)   any person is or becomes a “beneficial owner” securities representing 30% or more of either (x) the Company’s outstanding shares of common stock or (y) the combined voting power of the Company’s then outstanding securities eligible to vote in the election of directors (each, “Company Securities”); provided, however, that the event described in this the following acquisitions or transactions: (A) by the Company or any to a Non-Qualifying Transaction;     (c)   the consummation of a merger, consolidation, statutory share exchange, or similar form of corporate entity that is not an Affiliate (a “Sale”), unless: such Reorganization or Sale, or hold immediately following the consummation of the Reorganization or Sale, more than 50% of each of the outstanding common stock and the total voting power of securities eligible to vote in the election of directors of (x) the corporation resulting from such Reorganization or the such Reorganization or Sale; - 2 -   14.   “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended from time to time.   15.   “Code” means Internal Revenue Code of 1986, as amended from time to time.   16.   “Company” means the Devon Energy Corporation, as set forth in the preamble to this Agreement, and any successor to or assignee of its business and/or assets that assumes and agrees to perform this Agreement by operation of law or otherwise.   17.   “Compensation Committee” means, at any given time, the Compensation Committee of the Board at that time.   18.   “Confidential Information” means non-public information litigation) concerning the Company and its Affiliates that was acquired by or disclosed to the Employee during his or her employment with the Company and following the Termination Date.   19.   “Disabled” means, with respect to the Employee, that (a) he or she has received disability payments under the Company’s long-term disability plan for a period of three (3) months or more, or (b) based upon the written report (prepared after a complete physical examination of the Employee) of a mutually agreeable qualified physician designated by the Company and the Employee or his or her representative, the Compensation Committee determines, in accordance with Section 409A of the Code, that the Employee has become physically or mentally incapable of performing his or her essential job functions with or without reasonable accommodation or job protection as required by law for a continuous period expected to last for a continuous period of not less than twelve (12) months.   20.   “Effective Date” has the meaning set forth in the preamble to this Agreement.   21.   “Employment Matter” means any dispute, controversy, or claim between the parties arising out of, relating to, or concerning this Agreement, the Employee’s employment with the Company, or the termination of that employment.   22.   “Employment Matter Claim” has the meaning ascribed to such term in Section 10(d)(i). - 3 -   23.   “Excise Tax” has the meaning ascribed to such term in Section 7(a).   24.   “Employee” has the meaning set forth in the preamble to this Agreement.   25.   “Good Reason” means any of the following events, unless the Employee has   (a)   the assignment of any duties materially inconsistent with the Employee’s position (including status, offices, and titles), authority, duties, or responsibilities under this Agreement, other than an isolated, insubstantial, or inadvertent action not taken in bad faith and which the Company remedies promptly after receipt of notice from the Employee; provided, however, that Good Reason shall not exist under this Agreement solely because of a change in the Employee’s reporting relationship;     (b)   any reduction in Annual Base Salary or material failure to provide incentive compensation opportunities or benefits to the Employee that are comparable to the incentive compensation opportunities and benefits provided to similarly situated Company employees;     (c)   any material failure by the Company to comply with any provision of this Agreement, other than an isolated, insubstantial, or inadvertent failure not occurring in bad faith and which and which the Company remedies promptly after receipt of notice from the Employee;     (d)   any failure by the Company to comply with and satisfy Section 9(c); or     (e)   any relocation of the Employee’s principal office to a location more than fifty (50) miles from the Employee’s principal office prior to such relocation. 26.   “Good Reason Notice” has the meaning ascribed to such term in Section 3(d).   27.   “Gross-Up Payment” has the meaning ascribed to such term in Section 7(a).   28.   “Guarantors” has the meaning ascribed to such term in Section 10(e).   29.   “Incumbent Directors” means the members of the Board on the Effective Date; provided, however, that (x) any person becoming a director nomination) shall be deemed an Incumbent Director, and (y) no individual the Act) other than the Board, including by reason of any agreement intended to avoid or settle any such election contest or solicitation of proxies or consents, shall be deemed an Incumbent Director.   30.   “Non-Solicitation Obligation” has the meaning ascribed to such term in Section 8(f).   31.   termination provision of Section 3 that is being relied upon, (ii) to the extent applicable, reasonably describes the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and (iii) specifies the Termination Date; provided, however, that the failure to describe in the Notice of - 4 -       Termination any fact or circumstance constituting Good Reason or Cause shall not waive any right of either party under this Agreement or preclude either party from asserting such fact or circumstance in enforcing rights under this Agreement. 32.   “Payment” has the meaning ascribed to such term in Section 7(a).   33.   A “person” shall have the meaning ascribed by Section 3(a)(9) of the Act and shall also mean a natural person, company, government (and any political subdivision, agency, or instrumentality of a of this Agreement.   34.   “Prorated Annual Bonus” means a prorated amount of an Annual Bonus payable under Sections 4(b)(i)(B) or 4(c). If the Employee’s employment began in a calendar year before the calendar year in which the Termination Date occurs, the Prorated Annual Bonus shall be calculated based on the prior year’s Annual Bonus (if any) times the number of days worked in the year in which the Termination Date occurs divided by three hundred sixty five (365). If the Employee’s employment began in the calendar year in which the Termination Date occurs, then the Prorated Annual Bonus shall be determined by the Compensation Committee in its discretion.   35.   “Representatives” means, with respect to the Company, its Affiliates and any of their respective past or present officers, directors, stockholders, partners, members, managers, agents, and employees.   36.   “Retiree Medical Benefit Plan” means any retiree medical benefit plan applicable to the Employee or that would be applicable to the Employee if his or her employment then terminated and he or she satisfied the applicable age and service requirements.   37.   “Section 409A” has the meaning ascribed to such term in Section 4(e).   38.   “Separation from Service” has the meaning ascribed to such term in Section 4(e).   39.   “Short-Term Disability Payments” means disability payments under the Company’s short-term disability policy or plan that are less than 100% of the then-current Annual Base Salary.   40.   “Supervisor” means, with respect to the Employee, the person to whom the Employee reports, as determined by the CEO or the CEO’s designee from time to time.   41.   “Tax Notice” has the meaning ascribed to such term in Section 7(b).   42.   “Termination Date” means the Employee’s last day of employment by the Company or an Affiliate (including any successor to the Company or such Affiliate as determined in accordance with Section 9).   43.   “Underpayment” has the meaning ascribed to such term in Section 7(b). - 5 -   EXHIBIT B GENERAL RELEASE NOTICE This General Release is being provided to you in connection with the Amended and Restated Severance Agreement previously entered between you and the Company (the “Severance Agreement”). You have at least twenty-one (21) days from the date you receive this General Release, if you want it, to consider whether you wish to sign this General Release and receive the payments and benefits (the “Severance Benefits”) available under the Severance Agreement for doing so. You have at least until the close of business twenty-one (21) days from the date you receive this General Release to make your decision. You may not, however, sign this General Release until, at the earliest, your last effective date of employment. GENERAL RELEASE the Severance Agreement, I hereby (i) release and discharge the Company and its employment relationship with their employees, including 6   any express or implied employment or other contracts, and to any claims I may have against the Released Parties for fraudulent inducement or misrepresentation, defamation, wrongful termination, or other torts or retaliation claims in connection with workers’ compensation, any legally protected activity, or alleged whistleblower status, or on any other basis whatsoever. Company’s obligations under the Severance Agreement. MISCELLANEOUS Severance Agreement and General Release, including the foregoing Notice. I have Severance Agreement or this General Release by the Released Parties that are not set forth in those documents. The Severance Agreement and this General Release, including the foregoing continued compliance with my other obligations under the Severance Agreement. I otherwise eligible to receive under the Severance Agreement in exchange for I fully understand the effects and consequences of the Severance Agreement and Benefits under the Severance Agreement shall be interpreted and construed to 7   Dated this ___ day of _________, 200     .                 [Name]     8

Exhibit 10.1   Execution Version   $650,000,000   ANTERO MIDSTREAM PARTNERS LP ANTERO MIDSTREAM FINANCE CORPORATION   5.750% Senior Notes due 2027   PURCHASE AGREEMENT   February 20, 2019   As Representative of the several Initial Purchasers listed in Schedule 1 hereto   383 Madison Avenue   Ladies and Gentlemen:   Antero Midstream Partners LP, a Delaware limited partnership (the “Partnership”), and Antero Midstream Finance Corporation, a Delaware corporation “Representative”), $650,000,000 aggregate principal amount of their 5.750% (as defined below), among the Issuers, the guarantors listed in Schedule 2 hereto (the “Guarantors”), and Wells Fargo Bank, National Association, as each of the Guarantors (the “Guarantees”).  The Issuers and the Guarantors are referred to collectively herein as the “Antero Entities.”   The Securities will be sold to the Initial Purchasers without registration under an exemption from registration thereunder.  The Antero Entities have prepared a preliminary offering memorandum dated February 20, 2019 (the “Preliminary by the Issuers to the Initial Purchasers pursuant to the terms of this purchase agreement (this “Agreement”).  The Issuers hereby confirm that they have of Sale Information and     such date and incorporated by reference therein.   of Sale”), the Antero Entities prepared the following information (collectively,   The Antero Entities hereby confirm their agreement with the several Initial   equal to 98.875% of the principal amount thereof plus accrued interest, if any, from February 25, 2019 to the Closing Date.  The Issuers will not be obligated   (a)         The Issuers understand that the Initial Purchasers intend to offer Information.  Each Initial Purchaser, severally and not jointly, represents and warrants to, and agrees with, the Issuers that:       or sold, and will not solicit offers for, or offer or sell the Securities as part of its initial offering except within the United States to persons whom it aware that such sale is being made in reliance on Rule 144A; and   of its initial offering except   2   outside of the United States in accordance with the restrictions set forth in Annex D hereto.   (b)         Each Initial Purchaser acknowledges and agrees that the Issuers and, Purchasers pursuant to Sections 6(f) and 6(g), counsel for the Issuers and the Initial Purchasers with their agreements, contained in paragraph (a) above (including Annex D hereto), and each Initial Purchaser hereby consents to such reliance.   (c)          The Issuers acknowledge and agree that the Initial Purchasers may   (d)         The Antero Entities acknowledge and agree that each Initial counterparty to the Antero Entities with respect to the offering of Securities offering) and not as a financial advisor or fiduciary to, or an agent of, the Antero Entities or any other person.  Additionally, neither the Representative nor any other Initial Purchaser is advising the Issuers, the Guarantors or any in any jurisdiction.  The Antero Entities shall consult with their own advisors concerning such matters and shall be responsible for making their own responsibility or liability to the Issuers or the Guarantors with respect Issuers, the Guarantors and the transactions contemplated hereby or other   2.                                      Payment and Delivery.  Payment for and delivery of the Securities will be made at the offices of Vinson & Elkins L.L.P., 1001 Fannin Street, Suite 2500, Houston, Texas 77002 at 10:00 A.M., New York City time, on February 25, 2019, or at such other time or place on the same Representative and the Issuers may agree upon in writing.  The time and date of   (a)         Payment for the Securities shall be made by wire transfer in immediately available funds to the account(s) specified by the Partnership to the Representative against delivery to the nominee of The Depository Trust paid by the Issuers.   3   Antero Entities.  The Antero Entities jointly and severally represent and   first used by the Initial Purchasers to confirm sales of the Securities and as provided, that the Antero Entities make no representation or warranty with with information relating to any Initial Purchaser furnished to the Issuers in Offering Memorandum, which information is specified in the last sentence of   Antero Entities (including their agents and representatives, other than the Initial Purchasers in their capacity as such) have not prepared, made, used, the Antero Entities or their agents and representatives (other than a constitute part of the Time of Sale Information and (iv) any electronic road Antero Entities make no representation and warranty with respect to any the Representative expressly for use in any Issuer Written Communication, which information is specified in the last sentence of Section 7(b).   (c)                                  Incorporated Documents.  The documents Offering Memorandum, when filed with the Securities and Exchange Commission (the respects to the requirements of the Securities Act or the Securities Exchange the Commission thereunder, as applicable, and did not and will not contain any   (d)                                 Financial Statements.  The historical financial statements and the related notes and supporting schedules thereto included or incorporated by reference in each of the Time of Sale   4   Information and the Offering Memorandum present fairly the consolidated financial position of the Partnership and its subsidiaries as of the dates conformity with generally accepted accounting principles accepted in the United States applied on a consistent basis throughout the periods covered thereby, except to the extent disclosed therein.  The other financial information Partnership and its subsidiaries and presents fairly in all material respects the information shown thereby.  The interactive data in eXtensible Business Reporting Language included or incorporated by reference in each of the applicable thereto.   of the most recent audited financial statements included or incorporated by (i) there has not been any change in the equity or long-term debt of the Partnership or any of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Partnership or any of its subsidiaries on any class of equity interests, or any material adverse or affecting the business, properties, management, financial position or results of operations of the Partnership or any of its subsidiaries taken as a whole; (ii) neither the Partnership nor any of its subsidiaries has entered into any transaction or agreement that is material to the Partnership and its contingent, that is material to the Partnership and its subsidiaries taken as a whole; (iii) neither the Partnership nor any of its subsidiaries has sustained any material loss or interference with its business or operations from fire, explosion, flood or other calamity, or from any labor disturbance or dispute or regulatory authority; and (iv) neither the Partnership nor any of its subsidiaries has issued or granted any securities, except in each case as Memorandum.   (f)                                   Organization and Good Standing.  Each of the Antero Entities has been duly organized and is validly existing and in good would not, individually or in the aggregate, (A) have a material adverse effect operations of the Partnership and its subsidiaries taken as a whole; (B) materially impair the ability of any of the Antero Entities to perform their respective obligations under the Transaction Documents (as defined below) (each of clause (A) and (B), a “Material Adverse Effect”); or (C) subject the limited partners of the Partnership to any material liability or disability.  The Partnership does not own or control, directly or indirectly, any corporation, this Agreement.   5   (g)                                  General Partner. Antero Midstream Partners Partnership (the “General Partner”), has full limited liability company power and authority to serve as general partner of the Partnership as disclosed in   (h)                                 Ownership of the General Partner. Antero Midstream GP LP, a Delaware limited partnership (“AMGP”), owns 100% of the limited liability company interests in the General Partner; such limited liability company interests have been duly authorized and validly issued in accordance with the limited liability company agreement of the General Partner, dated as of April 11, 2017 (the “GP LLC Agreement”), and are fully paid (to the extent required under the GP LLC Agreement) and nonassessable (except as such Limited Liability Company Act (the “Delaware LLC Act”)); and such limited liability company interests are owned free and clear of any lien, charge, claim (“Liens”) (except for (i) restrictions on transferability contained in the GP LLC Agreement or as described in the Time of Sale Information and the Offering Memorandum, (ii) Liens created or arising under the Delaware LLC Act, and (iii) pledges of equity interests in connection with the Credit Agreement, dated as of May 9, 2018, by and between AMGP and Wells Fargo Bank, National Association, as amended, supplemented or restated, if applicable, including any promissory notes, pledge agreements, security agreements, mortgages, guarantees and other instruments or agreements entered into by AMGP or its subsidiaries in connection therewith or pursuant thereto, in each case as amended, supplemented or restated, if applicable).   (i)                                     Ownership of the General Partner authorized and validly issued in accordance with the Agreement of Limited Partnership of the Partnership, dated as of November 10, 2014, as amended by Amendment No. 1, dated as of February 23, 2016, and Amendment No. 2, dated as of December 20, 2017 (the “Partnership Agreement”); and the General Partner owns such General Partner Interest free and clear of all Liens (except for (i) restrictions on transferability contained in the Partnership Agreement or as (ii) Liens created or arising under the Delaware Revised Uniform Limited   (j)                                    Due Authorization.  Each of the Antero Entities has or had, as applicable, full right, power and authority to execute and deliver, as applicable, this Agreement, the Securities and the Indenture (including each Guarantee of each Guarantor set forth therein) (collectively, thereunder.   (k)                                 Ownership of Midstream Operating.  The Partnership owns 100% of the limited liability company interests in Antero Midstream LLC, a Delaware limited liability company (“Midstream Operating”); such limited liability company interests have been duly authorized and validly issued in accordance with the Limited Liability Company Agreement of Midstream Operating, dated as of January 16, 2014 (the “Midstream Operating LLC Agreement”), and are fully paid (to the extent required under the Midstream Operating LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 18-607 and 18-804 of   6   the Delaware LLC Act); and such limited liability company interests are owned free and clear of all Liens (except for (i) restrictions on transferability contained in the Midstream Operating LLC Agreement or as described in the Time of Sale Information and the Offering Memorandum, (ii) Liens created or arising under the Delaware LLC Act and (iii) Liens created or arising under that certain Amended and Restated Credit Agreement, dated as of October 26, 2017, by and among the Partnership and certain of its subsidiaries, certain lenders party swingline lender and L/C issuer, and the other parties thereto, as amended, supplemented or restated, if applicable, including any promissory notes, pledge agreements, security agreements, mortgages, guarantees and other instruments or agreements entered into by the Partnership or its subsidiaries in connection therewith or pursuant thereto, in each case as amended, supplemented or restated, if applicable (the “Revolving Credit Facility”)).   (l)                                     Ownership of Antero Treatment.  The Treatment LLC, a Delaware limited liability company (“Antero Treatment”); such limited liability company interests have been duly authorized and validly issued in accordance with the Limited Liability Company Agreement of Antero Treatment, dated as of August 13, 2015 (the “Antero Treatment LLC Agreement”), and are fully paid (to the extent required under the Antero Treatment LLC Agreement) and 18-607 and 18-804 of the Delaware LLC Act); and such limited liability company interests are owned free and clear of all Liens (except for (i) restrictions on transferability contained in the Antero Treatment LLC Agreement or as described in the Time of Sale Information and the Offering Memorandum, (ii) Liens created or arising under the Delaware LLC Act and (iii) Liens created or arising under the Revolving Credit Facility).   (m)                             Ownership of Antero Water.  The Partnership owns 100% of the limited liability company interests in Antero Water LLC, a Delaware limited liability company (“Antero Water”); such limited liability company Limited Liability Company Agreement of Antero Water, dated as of November 6, 2014 (the “Antero Water LLC Agreement”), and are fully paid (to the extent required under the Antero Water LLC Agreement) and nonassessable (except as such LLC Act); and such limited liability company interests are owned free and clear of all Liens (except for (i) restrictions on transferability contained in the Antero Water LLC Agreement or as described in the Time of Sale Information and the Offering Memorandum, (ii) Liens created or arising under the Delaware LLC Act and (iii) Liens created or arising under the Revolving Credit Facility).   (n)                                 Ownership of Finance Corp.  The Partnership owns 100% of the issued and outstanding shares of capital stock of Finance Corp.; such capital stock has been duly authorized and validly issued in accordance with the certificate of incorporation and by-laws of Finance Corp., as amended to date (the “Finance Corp. Organizational Documents”), and is fully paid and nonassessable, were not issued in violation of any preemptive or similar right and, except as set forth in the Time of Sale Information and the Offering Memorandum, are owned free and clear of all Liens (other than transfer restrictions imposed by the Securities Act and the securities or Blue Sky laws of certain jurisdictions).   7   (o)                                 Ownership of Sherwood Midstream Interest.  Midstream Operating owns 50% of the limited liability company interests in Sherwood Midstream LLC, a Delaware limited liability company (“Sherwood Midstream”); such limited liability company interests have been duly authorized and validly issued in accordance with the Limited Liability Company Agreement of Sherwood Midstream, dated as of February 6, 2017 (the “Sherwood LLC Agreement”), and are fully paid (to the extent required under the Sherwood LLC Agreement) and transferability contained in the Sherwood LLC Agreement or as set forth in the arising under the Delaware LLC Act and (iii) Liens created or arising under the   (p)                                 No Other Subsidiaries.  The General Partner does not own, directly or indirectly, any equity or long-term debt securities of association or other entity, other than the Partnership, Midstream Operating, Antero Treatment, Antero Water, Finance Corp., Series B of M3 Appalachia Operating, LLC, a Delaware limited liability company (“M3 Appalachia Operating”), Stonewall Gas Gathering LLC (“Stonewall”), Sherwood Midstream, Sherwood Midstream Holdings LLC, a Delaware limited liability company (“Sherwood Holdings”), MarkWest Ohio Fractionation Company, L.L.C., a Delaware limited liability company (together with M3 Appalachia Operating, Stonewall, Sherwood Midstream and Sherwood Holdings, the “JV Entities”) or other entities that, in the aggregate would not constitute a significant subsidiary as such term is defined in Section 1.02(w) of Regulation S-X under the Securities Act. The Partnership does not own, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity, other than Midstream Operating, Antero Treatment, Antero Water, Finance Corp., the JV Entities or other entities that, in the aggregate would not constitute a significant subsidiary as such term is   (q)                                 The Indenture.  The Indenture has been duly authorized by each of the Antero Entities and, when duly executed and delivered, will constitute a valid and legally binding agreement of each of the Antero Entities enforceable against each of the Antero Entities in accordance with its terms, except as enforceability may be limited (A) by applicable bankruptcy, principles (whether considered in a proceeding at law or in equity) relating to enforceability and (B) by public policy, applicable law relating to fiduciary dealing (collectively, the “Enforceability Exceptions”).   (r)                                    The Securities and the Guarantees.  The Securities have been duly authorized for issuance and sale by the Issuers pursuant to this Agreement and the Indenture and, when duly executed, constitute valid and legally binding obligations of the Issuers enforceable against the Issuers in accordance with their terms, subject to the Indenture; and the Guarantees have been duly authorized for issuance by each of the Guarantors pursuant to this Agreement and the Indenture and, when the Securities have been duly executed, authenticated,   8   of the Indenture.   (s)                                   Purchase Agreement.  This Agreement has been duly authorized, executed and delivered by each of the Antero Entities.   (t)                                    Descriptions of the Transaction Documents.  Each Transaction Document conforms in all material respects to the Offering Memorandum.   (u)                                 No Violation or Default.  Neither the Partnership nor any of its subsidiaries is (i) in violation of its respective certificate of limited partnership, formation or incorporation, agreement of limited partnership, limited liability company agreement or bylaws or similar instrument to which the Partnership or any of its subsidiaries is a party or by which the Partnership or any of its subsidiaries is bound or to which any of the property or assets of the Partnership or any of its subsidiaries is subject; or Adverse Effect.   (v)                                 No Conflicts.  The execution, delivery and performance by each of the Antero Entities of each of the Transaction Documents related Guarantees) and compliance by each of the Antero Entities with the terms thereof, the application of the proceeds from the sale of the Securities as the Offering Memorandum and the consummation of the other transactions property or assets of any of the Partnership or any of its subsidiaries or, to the knowledge of the Partnership and any of its subsidiaries, Sherwood Midstream, pursuant to, any indenture, mortgage, deed of trust, loan agreement, license, lease or other agreement or instrument to which the Partnership or any of its subsidiaries or Sherwood Midstream is a party or by which the Partnership or any of its subsidiaries or Sherwood Midstream is bound or to which any of the property, right or assets of the Partnership or any of its subsidiaries or Sherwood Midstream is subject; (ii) result in any violation of the provisions of the charter or bylaws or similar organizational documents of the Partnership or any of its subsidiaries or Sherwood Midstream or (iii) result in any violation Adverse Effect.   9   (w)                               No Consents.  No consent, approval, authorization or order of, or filing, registration or qualification (“consent”) required for (i) the execution, delivery and performance by each of the Antero Entities of each of the Transaction Documents to which each is a party, (ii) the issuance and sale of the Securities (including the related Guarantees) and compliance by each of the Antero Entities with the terms thereof, (iii) the Memorandum, and (iv) the consummation of the transactions contemplated by the Transaction Documents, except (A) such as have been, or prior to the Closing Date, will be, obtained or made, (B) for such consents as may be required under the Securities by the Initial Purchasers, (C) for such consents that, if not Effect and (D) as described in each of the Time of Sale Information and the Offering Memorandum.   (x)                                 Legal Proceedings.  Except as described in pending to which the Partnership or any of its subsidiaries is or may be a party or to which any property, right or asset of the Partnership or any of its determined adversely to the Partnership or any of its subsidiaries, could of the Antero Entities, no such investigations, actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or by others.   (y)                                 Independent Accountants.  KPMG LLP, which has certified certain financial statements of the Partnership and its subsidiaries is an independent public accounting firm with respect to the Partnership and its subsidiaries within the applicable rules and regulations   (z)                                  Title to Properties.  The Partnership and its subsidiaries have good and marketable title to, or valid rights to lease or otherwise use, all items of real property and personal property that are material to the respective businesses of the Partnership and its subsidiaries, in each case free and clear of all Liens except those (i) created or arising under the Revolving Credit Facility which are described in the Time of Sale Information and the Offering Memorandum, (ii) that do not materially interfere and its subsidiaries or (iii) that could not reasonably be expected,   (aa)                          Rights of Way. The Partnership and its subsidiaries, directly or indirectly, have such consents, easements, subject to the limitations described in each of the Time of Sale Information and the Offering Memorandum, if any, except for (i) qualifications, reservations and encumbrances with respect thereto that would not have a Material Adverse Effect and (ii) such rights-of-way that, if not obtained, would not have, individually or in the aggregate, a Material Adverse Effect; the Partnership and its subsidiaries have fulfilled and performed, in all material respects, its   10   such rights-of-way, except for such revocations, terminations and impairments Effect; and none of such rights-of-way contains any restriction that would Adverse Effect.   (bb)                          Intellectual Property.  The Partnership and its respective businesses, except as could not reasonably be expected, individually   (cc)                            No Undisclosed Relationships.  No relationship, direct or indirect, exists between or among the Partnership or any of its subsidiaries, on the one hand, and the directors, officers, unitholders, holders of equity interests or other affiliates of the Partnership or any of its   (dd)                          Investment Company Act.  Neither the Partnership nor any of its subsidiaries is, and after giving effect to the offer and sale of the Securities and the application of the proceeds therefrom as described in “Investment Company Act”) or (ii) a “business development company” (as defined   (ee)                            Taxes.  Except as disclosed in each of the Time of Sale Information and the Offering Memorandum, or as would not, individually or in the aggregate, have a Material Adverse Effect, the Partnership and its Memorandum or as would not, individually or in the aggregate, have a Material expected to be, asserted against the Partnership or any of its subsidiaries or   (ff)                              Licenses and Permits.  The Partnership and its authorities (“Permits”) that are necessary for the ownership or lease of their the Time of Sale Information and the Offering Memorandum, neither the Partnership nor any of its subsidiaries has received notice of any revocation or modification of any such Permits or has   11   any reason to believe that any such Permits will not be renewed in the ordinary course, except that could not reasonably be expected to have Material Adverse Effect.   (gg)                            No Labor Disputes.  No labor disturbance by, or dispute with, the employees of the Partnership or any of its subsidiaries exists or, to the knowledge of the Antero Entities, is contemplated or threatened, and the Partnership is not aware of any existing or imminent labor disturbance by, or dispute with, the employees of any of the Partnership or any of its subsidiaries, in each case except as could not reasonably be expected to have a Material Adverse Effect.   (hh)                          Environmental Laws.  Except as described in each of the Time of Sale Information and the Offering Memorandum: (i) the Partnership and its subsidiaries (x) are and, during the relevant time periods specified in all applicable statutes of limitations, have been in compliance with all safety (to the extent such human health or safety protection is related to exposure to hazardous or toxic substances or wastes, pollutants or contaminants), the environment, natural resources, hazardous or toxic substances Environmental Laws to conduct their respective businesses and (z) have not received any written notice of any actual or potential liability under or relating to the Partnership or any of its subsidiaries, except in the case of (iii) there are no proceedings that are pending or, to the knowledge of the Antero Entities, threatened against the Partnership or any of its subsidiaries under any Environmental Laws in which a governmental authority is also a party, monetary sanctions of $100,000 or more will be imposed.   (ii)                                  Compliance with ERISA.  Each employee administered or contributed to by the Partnership or any of its affiliates for employees or former employees of the Partnership and its affiliates has been maintained in compliance in all material respects with its terms and the administrative exemption, and transactions which, individually or in the aggregate, would not have a Material Adverse Effect, and no such plan is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA; and neither the Partnership nor any of its subsidiaries has any reasonable expectation of incurring any liabilities under Title IV of ERISA.   12   (jj)                                Disclosure Controls.  The Partnership and its subsidiaries maintain an effective system of disclosure controls and to ensure that information required to be disclosed by the Partnership and its subsidiaries in reports that the Partnership files or submits under the Exchange Partnership’s management, including the principal executive officer(s) and principal financial officer(s) of the General Partner, as appropriate to allow timely decisions regarding required disclosure to be made.  The Partnership’s perform the functions for which they were established.  The Partnership and its Act.   (kk)                          Accounting Controls. The Partnership and its such term is defined in Rule 15d-15(f) of the Exchange Act) that complies with supervision of, the General Partner’s principal executive officer(s) and principal financial officer(s), to provide reasonable assurance regarding the principles in the United States, including, but not limited to, internal preparation of the Partnership’s consolidated financial statements in conformity with U.S. generally accepted accounting principles and to maintain asset Information and the Offering Memorandum is prepared in accordance with the Commission’s rules and guidelines applicable thereto. As of the date of the most recent balance sheet of the Partnership and its consolidated subsidiaries reviewed or audited by KPMG LLP, there were no material weaknesses or significant deficiencies in the internal controls of the Partnership.   (ll)                                  Insurance.  The Partnership and its subsidiaries have insurance covering their respective properties, operations, personnel and businesses, which insurance is in reasonable amounts and insures Partnership and its subsidiaries and their respective businesses; and neither the Partnership nor any of its subsidiaries has (i) received notice from any (other than the payment of premiums due) are required or necessary to be made in   (mm)                  Cybersecurity; Data Protection.  The Partnership and its networks, hardware, software, websites,   13   operate and perform as necessary for the operation of the business of the Partnership and its subsidiaries as currently conducted, except as would not, Partnership and its subsidiaries conduct industry-standard scans of its IT Systems to detect and address material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants.  The Partnership and its subsidiaries information and the integrity and security of all IT Systems and sensitive data (“Sensitive Data”)) used in connection with their businesses, and there have been no known breaches, violations, outages or unauthorized uses of or accesses to same, except as would not, individually or in the aggregate, have a Material Adverse Effect, and the Partnership and its subsidiaries have not had a duty to investigations relating to the same.   The Partnership and its subsidiaries are judgments, orders, and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations applicable to the privacy and security of its IT Systems and Sensitive Data and to the protection of such IT Systems and Sensitive Data from unauthorized use, access, misappropriation or modification.   (nn)                          No Unlawful Payments.  Neither the Partnership nor any of its subsidiaries nor, to the knowledge of each of the Antero Entities, on behalf of the Partnership and its subsidiaries has (i) used any corporate or other unlawful or improper payment or benefit.  The Partnership and its   (oo)                          Compliance with Money Laundering Laws. The operations of the Partnership and its subsidiaries are and have been conducted jurisdictions where the Partnership or any of its subsidiaries conducts agency (collectively, the “Anti-Money Laundering   14   to the knowledge of the Antero Entities, threatened.   (pp)                          No Conflicts with Sanctions Laws.  Neither the Partnership, any of its subsidiaries or, to the knowledge of the Partnership and its subsidiaries, any director, officer, agent, employee, affiliate or other person associated with or acting on behalf of the Partnership or any of its “Sanctions”), nor is the Partnership or any of its subsidiaries located, of Sanctions, including, without limitation, Cuba, Iran, North Korea and Syria (each, a “Sanctioned Country”); and none of the Antero Entities will directly or Partnership and its subsidiaries have not knowingly engaged in, are not now   (qq)                          Solvency.  On and immediately after the Closing Date, the Partnership and its subsidiaries (after giving effect to the issuance of the Securities and the other transactions related thereto as described in fair saleable value) of the assets of the Partnership and its subsidiaries are Partnership and its subsidiaries on their total existing debts and liabilities Partnership and its subsidiaries are able to realize upon their assets and pay their debts and other liabilities, contingent obligations and commitments as Partnership and its subsidiaries are not incurring debts or liabilities beyond their ability to pay as such debts and liabilities mature; and (iv) the Partnership and its subsidiaries are not a defendant in any civil action that would result in a judgment that the Partnership and its subsidiaries are or would become unable to satisfy.   (rr)                                No Restrictions on Subsidiaries.  Except as disclosed in the Time of Sale Information and the Offering Memorandum, no subsidiary of the Partnership is currently prohibited, directly or indirectly, from paying any dividends to the Partnership, from making any other distribution on   15   such subsidiary’s equity interests, from repaying to the Partnership any loans or advances to such subsidiary from the Partnership or from transferring any of such subsidiary’s properties or assets to the Partnership or any other   (ss)                              No Brokers.  Neither the Partnership nor any Securities.   (tt)                                Rule 144A Eligibility.  On the Closing Date,   (uu)                          No Integration.  The Partnership has not, directly or through any agent, issued, sold, offered for sale, solicited offers to buy or Act), that is or will be integrated with the offering and sale of the Securities   (vv)                          No General Solicitation or Directed Selling Efforts.  None of the Partnership or any of its affiliates or any other person   (ww)                      Securities Law Exemptions.  Assuming the accuracy of the representations and warranties of the Initial Purchasers contained in Section 1(b) (including Annex D hereto) and their compliance with their   (xx)                          No Stabilization.  None of the Antero Entities has manipulation of the price of any security of the Partnership in connection with   (yy)                          Statistical and Market-Related Data.  Nothing has come to the attention of the Issuers that has caused the Issuers to believe that the statistical and market-related data included   16     (zz)                            Sarbanes-Oxley.  There has been no failure on the part of the Partnership or any of its directors or officers, in their 2002 and the rules and regulations promulgated in connection therewith applicable to the Partnership, including Section 402 related to loans and Section 302 and 906 related to certifications.   (aaa)                   No Changes in Internal Controls.  Since the date of the most recent balance sheet of the Partnership and its consolidated subsidiaries reviewed or audited by KPMG LLP, (i) the Antero Entities have not been advised Antero Entities to record, process, summarize and report financial data, or any role in the internal controls of the Antero Entities; and (ii) there have been   (bbb)                   Critical Accounting Policies.  The section entitled Operations—Critical Accounting Policies and Estimates” set forth or incorporated by reference in the most recent Preliminary Offering Memorandum accurately and fully describes (i) the accounting policies that the Partnership believes are the most important in the portrayal of the Partnership’s financial condition and or complex judgments (“Critical Accounting Policies”); (ii) the judgments and uncertainties affecting the application of Critical Accounting Policies; and   (ccc)                      Summaries of Law.  The statements made or incorporated by reference in the most recent Preliminary Offering Memorandum under the captions “Business and Properties—Regulation of Operations”; “Business and Properties—Regulation of Environmental and Occupational Safety and Health Matters”; “Business and Properties—Legal Proceedings”; “Certain Relationships and Related Transactions and Director Independence”; “Description of notes”; and “Certain U.S. federal income tax considerations,” insofar as they purport to respects.   Any certificate signed by any officer of an Antero Entity and delivered to the Representative or counsel for the Initial Purchasers in connection with this Agreement or the consummation of the transactions contemplated hereby shall be deemed a representation and warranty by such Antero Entity, as to matters   17   4.                                      Further Agreements of the Antero Entities.  Each of the Antero Entities jointly and severally covenants and   (a)                                 Delivery of Copies.  The Issuers will   be incorporated by reference therein, the Issuers will furnish to the   Written Communication, the Antero Entities will furnish to the Representative   (d)                                 Notice to the Representative.  The Issuers misleading; and (iii) of the receipt by the Issuers of any notice with respect purpose; and the Issuers will use their reasonable best efforts to prevent the   to comply with law, the Issuers will immediately   18   supplements to any of the Time of Sale Information (or any document to be filed misleading or so that any of the Time of Sale Information will comply with law.   Memorandum to comply with law, the Issuers will as soon as practicable notify   (g)                                  Blue Sky Compliance.  The Issuers will resale of the Securities; provided that neither the Issuers nor any of the Guarantors shall be required to (i) qualify as a foreign corporation, limited partnership, limited liability company or other entity or as a dealer in   hereof, each of the Antero Entities will not, without the prior written consent debt securities issued or guaranteed by the Antero Entities and having a tenor of more than one year.   (i)                                     Use of Proceeds.  The Issuers will apply Proceeds.”   of Rule 144(a)(3) under the Securities Act, each of the Antero Entities will, during any period in which the Issuers are not subject to and in compliance with the request of such holders or such   19     (k)                                 DTC.  The Issuers will assist the Initial settlement through DTC.   (l)                                     No Resales by the Partnership.  The Issuers will not, and will not permit any of their affiliates (as defined in been acquired by any of them, except for Securities purchased by the Issuers or any of their affiliates and resold in a transaction registered under the Securities Act.   (m)                             No Integration.  Neither the Issuers nor any of   Efforts.  None of the Issuers or any of their affiliates or any other person meaning of Rule 502(c) of Regulation D without the prior written consent of the Representative or in any manner involving a public offering within the meaning   (o)                                 No Stabilization.  None of the Antero Entities will take, directly or indirectly, any action designed to or that could   Offering Memorandum and the Offering Memorandum, (ii) a written communication that contains either (A) no “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) or (B) “issuer information” that was   the Closing Date as provided herein is subject to the   20   performance by each of the Antero Entities of their respective covenants and other obligations hereunder and to the following additional conditions:   representations and warranties of the Antero Entities contained herein shall be statements of the Antero Entities and their respective officers made in any   any other debt securities or preferred stock issued or guaranteed by the Issuers or any of their subsidiaries by any “nationally recognized statistical rating issued or guaranteed by the Issuers or any of their subsidiaries (other than an   of which, in the judgment of the Representative, makes it impracticable or   (d)                                 Officer’s Certificate.  The Representative officer of the General Partner and of each Guarantor who has specific knowledge of the Partnership’s or such Guarantor’s financial matters and is satisfactory warranties of the Antero Entities in this Agreement are true and correct and that the Antero Entities have complied with all agreements and satisfied all   Representative, at the request of the Partnership, letters, dated the respective   21   the Antero Entities.  Vinson & Elkins L.L.P., counsel for the Antero Entities, shall have furnished to the Representative, at the request of the Partnership, Representative, to the effect set forth in Annex C hereto.   Closing Date an opinion and 10b-5 statement of Latham & Watkins LLP, counsel for matters.     (i)                                     DTC.  The Securities shall be eligible   (j)                                    Indenture and Securities.  The Indenture General Partner, each of the Guarantors and the Trustee, and the Global Note General Partner and duly authenticated by the Trustee.   (k)                                 Additional Documents.  On or prior to the Closing Date, the Antero Entities shall have furnished to the Representative such further certificates and documents as the Representative may reasonably request.   the Initial Purchasers.     Each of the Antero Entities jointly and severally agree to indemnify and hold harmless each Initial Purchaser, its affiliates, selling agents, directors and   22   the Issuers in writing by such Initial Purchaser through the Representative   (b)                                 Indemnification of the Antero Entities.  harmless each of the Antero Entities, each of their respective directors and officers and each person, if any, who controls any of the Antero Entities within information relating to such Initial Purchaser furnished to the Partnership in such information consists of the following: the second and third sentences of the third paragraph and the paragraph regarding overallotment, stabilization transactions and syndicate covering transactions under the caption “Plan of Distribution” in the Preliminary Offering Memorandum, the Time of Sale   Person and representation of both parties by   23   interests between them.  It is understood and agreed that the Indemnifying separate firm for any Initial Purchaser, its affiliates, selling agents, firm for the Antero Entities, their respective directors and officers and any control persons of the Antero Entities shall be designated in writing by the   reflect the relative benefits received by the Antero Entities on the one hand benefits referred to in clause (i) but also the relative fault of the Antero Entities on the one hand and the Initial Purchasers on the other in connection relative benefits received by the Antero Entities on the one hand and the fault of the Antero Entities on the one hand and the Initial Purchasers on the omission to state a material fact relates to information supplied by the Antero Entities or by the Initial Purchasers and the parties’ relative intent, statement or omission.   (e)                                  Limitation on Liability.  The Antero Entities and the Initial Purchasers agree that it would not be just and purpose)   24     in equity.   market; (ii) trading of any securities issued or guaranteed by the Antero Entities shall have been suspended on any exchange or in any over-the-counter   9.                                      Defaulting Initial Purchaser.  If, on Initial Purchasers may in their discretion arrange for the purchase of such Securities by other persons satisfactory to the Partnership on the terms purchase of such Securities, then the Partnership shall be entitled to a further the Partnership may postpone the Closing Date for up to five full business days Partnership or counsel for the Initial Purchasers may be necessary in the Time arrangement, and the Partnership agrees to promptly prepare any amendment or Purchaser” includes, for all   25     (a)                                 If, after giving effect to any arrangements aggregate principal amount of all the Securities, then the Partnership shall principal amount of Securities that such Initial Purchaser agreed to purchase amount of Securities that such Initial Purchaser agreed to purchase hereunder) of the Securities of such defaulting Initial Purchaser or Initial Purchasers for   liability on the part of the Antero Entities, except that each of the Antero Entities will continue to be liable for the payment of expenses as set forth in Section 10 hereof and except that the provisions of Section 7 hereof shall not   (c)                                  Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may have to the Antero Entities   10.                               Payment of Expenses.  Whether or not the terminated, each of the Antero Entities jointly and severally agree to pay or respective obligations hereunder, including without limitation, (i) the costs Documents; (iv) the fees and expenses of the Antero Entities’ counsel, independent accountants and independent reserve engineers; (v) the fees and expenses incurred in connection with the registration or qualification and such jurisdictions as the Representative may designate and the preparation, connection with the   26   incurred by the Partnership in connection with any “road show” presentation to potential investors.   (a)         If (i) this Agreement is terminated pursuant to Section 8(ii), (ii) the Partnership for any reason fails to tender the Securities for delivery the Securities for any other reason permitted under this Agreement, each of the Antero Entities jointly and severally agree to reimburse the Initial Purchasers their counsel) reasonably incurred by the Initial Purchasers in connection with this Agreement and the offering contemplated hereby.   hereto and their respective successors and any controlling persons referred to herein, and the affiliates, selling agents, officers and directors of each Initial Purchaser referred to in Section 7 hereof.  Nothing in this Agreement is   of contribution, representations, warranties and agreements of the Antero Entities and the Initial Purchasers contained in this Agreement or made by or on behalf of the Antero Entities or the Initial Purchasers pursuant to this made by or on behalf of the Antero Entities or the Initial Purchasers.   meaning set forth in Rule 405 under the Securities Act and, for the avoidance of doubt, does not include any of the JV Entities; and (d) the term “written     15.                               Miscellaneous.  Authority of the Representative.  Any action by the Initial Purchasers hereunder may be taken by J.P. Morgan Securities LLC on behalf of the Initial Purchasers, and any such action taken by J.P. Morgan Securities LLC shall be binding upon the Initial Purchasers.   27   York 10179 (fax: (917)-456-3534); Attention: Catherine O’Donnell, with a copy (which shall not constitute notice) to: Ryan J. Maierson, Esq., Latham & Watkins LLP, 811 Main Street, Suite 3700, Houston, Texas  77002 (fax: (713) 546-5401).  Notices to the Antero Entities shall be given to them at 1615 Wynkoop Street, Denver, Colorado 80202, (fax: (303) 357-7299); Attention: Glen C. Warren, Jr., with a copy (which shall not constitute notice) to: Douglas E. McWilliams, Vinson & Elkins, L.L.P., 1001 Fannin Street, Suite 2500, Houston, TX 77002-6760, (fax: (713) 615-5725).   (b)                                 Governing Law.  This Agreement and any York.   (c)                                  Counterparts.  This Agreement may be signed   (d)                                 Amendments or Waivers.  No amendment or   (e)                                  Headings.  The headings herein are included   Regimes.             28         applicable.   promulgated thereunder.     29       Very truly yours,       Issuers:       ANTERO MIDSTREAM PARTNERS LP       By:             By:     Title:       ANTERO MIDSTREAM FINANCE CORPORATION         By:     Title:         Guarantors:           ANTERO MIDSTREAM LLC         By:     Title: Chief Administrative Officer, Regional Senior Vice President and Treasurer       ANTERO TREATMENT LLC         By:     Treasurer       ANTERO WATER LLC         By:     Treasurer       Accepted: February 20, 2019             hereto.         By:   Name: Hunter Bollman   Title: Vice President         SCHEDULE 1   Initial Purchaser   Principal Amount               $ 227,500,000     $ 78,000,000     $ 45,500,000     $ 45,500,000     $ 45,500,000     $ 45,500,000     $ 22,750,000   Barclays Capital Inc.   $ 22,750,000     $ 22,750,000     $ 13,000,000     $ 13,000,000     $ 13,000,000     $ 13,000,000     $ 13,000,000     $ 6,500,000     $ 6,500,000   ING Financial Markets LLC   $ 6,500,000   PNC Capital Markets LLC   $ 6,500,000   BBVA Securities Inc.   $ 3,250,000   Total   $ 650,000,000       SCHEDULE 2   GUARANTORS   Antero Midstream LLC Antero Treatment LLC Antero Water LLC     SCHEDULE 3   SUBSIDIARIES OF THE PARTNERSHIP   Entity Name   Jurisdiction of Incorporation or Formation Antero Midstream LLC   Delaware Antero Treatment LLC   Delaware Antero Water LLC   Delaware Antero Midstream Finance Corporation   Delaware     ANNEX A         ANNEX B   PRICING TERM SHEET   [Attached]     Pricing Term Sheet dated February 20, 2019 to Preliminary Offering Memorandum dated February 20, 2019 Strictly Confidential   ANTERO MIDSTREAM PARTNERS LP ANTERO MIDSTREAM FINANCE CORPORATION 5.750% SENIOR NOTES DUE 2027 PRICING TERM SHEET FEBRUARY 20, 2019   (the “Securities Act”). The notes may not be offered or sold except to only being distributed to such persons. You are hereby notified that sellers of the notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Any sales of the notes outside the United States may only be made in accordance with applicable selling restrictions.   The information in this term sheet supplements Antero Midstream Partners LP and Antero Midstream Finance Corporation’s preliminary offering memorandum dated February 20, 2019 (the “Preliminary Offering Memorandum”) and supersedes the with the information in the Preliminary Offering Memorandum. This pricing term sheet is qualified in its entirety by reference to the Preliminary Offering Memorandum.   Issuers:   Antero Midstream Partners LP and Antero Midstream Finance Corporation       Aggregate Principal Amount:   $650,000,000       Aggregate Net Proceeds (After Estimated Expenses):   $641,000,000       Form of Offering:   144A/Reg S       Maturity:   March 1, 2027       Coupon:   5.750%       Price:   100.0% of face amount plus accrued interest, if any, from February 25, 2019       Spread to Treasury:   +316 basis points       Benchmark Treasury:   UST 2.25% due February 15, 2027       Interest Payment Dates:   March 1 and September 1, commencing September 1, 2019       Record Dates:       Optional Redemption:   At any time prior to March 1, 2022, up to 35% of the aggregate principal amount of the notes at a redemption price equal to 105.75% of the principal amount, plus accrued and unpaid interest, if any, with an amount of cash not greater than the net proceeds from certain equity offerings.   On or after March 1, 2022 and at the following redemption prices (expressed as a the notes redeemed during the twelve-month period beginning on March 1 of the years indicated below:           Date   Percentage       2022   102.875 %     2023   101.917 %     2024   100.958 %     2025 and thereafter   100.000 %         Prior to March 1, 2022, all or a part of the notes, upon prior notice at a redemption price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium, and accrued and unpaid interest, if any       Change of Control:   Following a Change of Control, put at 101% of principal plus accrued interest       Trade Date:   February 20, 2019       Settlement Date:   February 25, 2019 (T+3)   about February 25, 2019, which is the third business day following the date of secondary market generally are required to settle in two business days unless the parties to that trade expressly agree otherwise. Accordingly, purchasers who wish to trade the notes on the date of pricing of the notes will be required, by virtue of the fact that the notes initially will settle in T+3, to specify an settlement and should consult their own advisors.       Denominations:   $2,000 and integral multiples of $1,000       CUSIP/ISIN:   144A: 03690AAD8 / US03690AAD81 Regulation S: U0018YAB8 / USU0018YAB84                         Barclays Capital Inc.       Co-Managers:   ING Financial Markets LLC PNC Capital Markets LLC BBVA Securities Inc.   The information under the captions “Capitalization” in the Preliminary Offering Memorandum and each other location where it appears in the Preliminary Offering Memorandum is hereby modified with the following information:   Capitalization   corresponding entries in the “As adjusted” column as of December 31, 2018 in the table under the heading “Capitalization” on page 14 of the Preliminary Offering Memorandum. Information added to the line item is in bold and underlined.   ·                  Revolving credit facility: $349,000. ·                  5.750% senior notes due 2027 offered hereby: $650,000. ·                  Unamortized discount and debt issuance costs: $(16,853).     This material is strictly confidential and has been prepared by the issuers in the Preliminary Offering Memorandum.  This material is personal to each generally to subscribe for or otherwise acquire the notes.  Please refer to the   Preliminary Offering Memorandum and herein, and it is not a solicitation of an     Any disclaimers or notices that may appear on this Pricing Term Sheet below the text of this legend are not applicable to this Pricing Term Sheet and should be of this Pricing Term Sheet having been sent via, or posted on, Bloomberg or     ANNEX C     a)                                     Each of the Antero Entities and the General Partner has been duly formed and each of the Antero Entities and the State of Delaware, with all corporate, limited liability company or limited partnership, as the case may be, power and authority necessary to own or hold their respective properties and conduct their respective businesses, and in the case of the General Partner, to serve as the general partner of the Partnership, Memorandum.   b)                                     Each of the Antero Entities and the General Partner is duly qualified to do business as a foreign corporation, limited liability company or limited partnership, as applicable, in good standing in all jurisdictions listed on Annex A to such opinion.   c)                                      AMGP is the sole member of the General Partner and owns 100% of the limited liability company interests in the General Partner; such limited liability company interests have been duly authorized and validly issued in accordance with the GP LLC Agreement and are fully paid (to the extent required under the GP LLC Agreement) and nonassessable (except as and clear of any Liens (1) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming AMGP as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the GP LLC Agreement, (B) Liens created by or arising under the Delaware LLC Act and (C) pledges of equity interests in connection with the Credit Agreement, dated as of May 9, 2018, by and between AMGP and Wells Fargo Bank, National Association, as amended, supplemented or restated, if applicable, including any promissory notes, pledge agreements, security agreements, mortgages, guarantees and other instruments or agreements entered into by AMGP or its subsidiaries in connection therewith or pursuant thereto, in each case as amended, supplemented or restated, if applicable.   d)                                     The General Partner is the sole general partner of the Partnership and owns a noneconomic general partner interest in the Partnership; the General Partner Interest has been duly authorized and validly issued in accordance with the Partnership Agreement, is fully paid (to of the Delaware LP Act) and conforms in all material respects to the description Memorandum; and the General Partner Interest is owned free and clear of any Liens (1) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the General Partner as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other     than (A) restrictions on transferability contained in the Partnership Agreement and (B) Liens created by or arising under the Delaware LP Act.   e)                                      IDR Holdings owns all of the Incentive Distribution Rights; the Incentive Distribution Rights, and the limited partner interests represented thereby, have been duly authorized and validly issued in Delaware LP Act); and the Incentive Distribution Rights are owned free and clear Commercial Code of the State of Delaware naming the General Partner as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the Partnership Agreement and (B) Liens created by or arising under the Delaware LP Act.   f)                                       The Partnership is the sole member of Midstream Operating and owns 100% of the limited liability company interests in Midstream Operating; such limited liability company interests have been duly authorized and validly issued in accordance with the Midstream Operating LLC Agreement and are fully paid (to the extent required under the Midstream limited liability company interests are owned free and clear of any Liens (1) in State of Delaware naming the Partnership as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the Midstream Operating LLC Agreement, (B) Liens created by or connection with the Revolving Credit Facility.   g)                                      The Partnership is the sole member of Antero Treatment and owns 100% of the limited liability company interests in Antero Treatment; such limited liability company interests have been duly authorized and validly issued in accordance with the Antero Treatment LLC Agreement and are fully paid (to the extent required under the Antero Treatment LLC Agreement) and nonassessable (except as such nonassessability may be contained in the Antero Treatment LLC Agreement, (B) Liens created by or arising under the Delaware LLC Act and (C) pledges of equity interests in connection with the Revolving Credit Facility.   h)                                     The Partnership is the sole member of Antero Water and owns 100% of the limited liability company interests in Antero Water; such limited liability company interests have been duly authorized and validly issued in accordance with the Antero Water LLC Agreement and are fully paid (to the extent required under the Antero Water LLC Agreement) and interests are owned free and clear of any Liens (1)     the State of Delaware naming the Partnership as debtor is on file in the office contained in the Antero Water LLC Agreement, (B) Liens created by or arising   i)                                         The Partnership owns 100% of the issued and outstanding shares of capital stock of Finance Corp.; such capital stock has been duly authorized and validly issued and is fully paid and nonassessable; such capital stock, except as set forth in the Time of Sale Information and the Offering Memorandum, is owned by the Partnership free and Uniform Commercial Code of the State of Delaware naming the Partnership as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the Finance Corp. Organizational Documents, (B) Liens created by or arising under the Delaware General Corporation Law and (C) pledges of equity interests in connection with   j)                                        Midstream Operating owns 50% of the limited liability company interests in Sherwood Midstream; such limited accordance with the Sherwood Midstream LLC Agreement and are fully paid (to the extent required under the Sherwood Midstream LLC Agreement) and nonassessable of the Delaware LLC Act); and such limited liability company interests are owned free and clear of any Liens (1) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming Midstream Operating as debtor is on file in the office of the Delaware Secretary of State or (A) restrictions on transferability contained in the Sherwood Midstream LLC Agreement, (B) Liens created by or arising under the Delaware LLC Act and (C) pledges of equity interests in connection with the Revolving Credit Facility.   k)                                     The Indenture has been duly authorized, executed and delivered by each of the Antero Entities and, assuming due execution and delivery thereof by the Trustee, constitutes the valid and legally binding agreement of each of the Antero Entities, enforceable against each of the Antero Entities in accordance with its terms, subject to the Enforceability Exceptions.   l)                                         The Notes have been duly authorized, executed and delivered by the Issuers and, when each global certificate representing the Notes has been duly executed and authenticated as provided in the Indenture and the Notes have been paid for as provided in the Purchase Agreement, will constitute valid and legally binding obligations of the Issuers, enforceable against the Issuers in accordance with their terms, subject to the Indenture.   m)                                 The Guarantees have been duly authorized by each of the Guarantors and, when each global certificate representing the Notes has been duly executed and authenticated as provided in the Indenture and the Notes have been paid for as provided in the Purchase Agreement, will constitute against     Indenture.   n)                                     The Purchase Agreement has been duly authorized, executed and delivered by each of the Antero Entities.   o)                                     Each Transaction Document conforms in all   p)                                     The execution, delivery and performance by each of the Antero Entities of each of the Transaction Documents to which it is a party, the issuance and sale of the Securities (including the related the Offering Memorandum and the consummation of the transactions contemplated by or result in the creation or imposition of any lien, charge, encumbrance, third party upon any property or assets of the Antero Entities pursuant to, any agreement or instrument filed or incorporated by reference as an exhibit to the Incorporated Documents (collectively, the “Applicable Contracts”), (ii) result in any violation of the provisions of the certificate of formation or limited partnership agreement or similar organizational documents of the Partnership or any of its subsidiaries or (iii) result in any violation of any Applicable Laws or, to our knowledge, any judgment, order, decree, rule or regulation of any United States federal, New York or Delaware state court or arbitrator or individually or in the aggregate, have a Material Adverse Effect. With respect to clause (iii) above, we express no opinion as to any federal or state regulations.   q)                                     No consent, approval, authorization or order of, or filing, registration or qualification (“consent”) of or with any governmental or regulatory authority is required for (i) the execution, delivery and performance by each of the Antero Entities of each of the Transaction Documents to which it is a party, (ii) the issuance and sale of the Securities (including the related Guarantees) and compliance by each of the Antero Entities with the terms thereof, (iii) the application of the proceeds from the sale of Information and the Offering Memorandum and (iv) the consummation of the transactions contemplated by the Transaction Documents, except (A) such as have been, or prior to the date hereof, will be, obtained or made, (B) for such consents as may be required under applicable state securities laws in connection (C) for such     consents which, if not obtained or made, would not, individually or in the   r)                                        The statements included in each of the Time of Sale Information and the Offering Memorandum under the caption “Certain U.S. federal income tax considerations,” insofar as they refer to statements of law or legal conclusions, are accurate in all material respects.   s)                                       None of the Antero Entities is now and, application of the proceeds therefrom as described in each of the Time of Sale Information and the Offering Memorandum, none of the Antero Entities will be Investment Company Act.   t)                                        Assuming the accuracy of the the Initial Purchasers contained in the Purchase Agreement, it is not necessary, Purchasers and the initial resale and delivery of the Securities by the Initial Purchasers in the manner contemplated by the Purchase Agreement, the Time of Sale Information and the Offering Memorandum, to register the sale or resale of Trust Indenture Act. We express no opinion, however, as to when or under what circumstances any Securities initially sold by the Initial Purchasers may be reoffered or resold.   u)                                     The documents incorporated by reference in each of the Time of Sale Information and the Offering Memorandum (other than the financial statements and other financial information contained therein, as to which we express no opinion), when filed with the Securities and Exchange Commission (the “Commission”), appeared on their face to comply as to form in Act and the rules and regulations of the Commission thereunder, as applicable.   In addition, we have participated in conferences with representatives of the Antero Entities and with representatives of their independent accountants and with the Initial Purchasers and their counsel at which conferences the contents of the Time of Sale Information and the Offering Memorandum (in each case, excluding the Incorporated Documents) and related matters were discussed. Although we have not independently verified, are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the Time of Sale Information and the Offering Memorandum (except as expressly provided in paragraph (r) above), based on the participation described above (relying as to factual matters with respect to the determination of materiality to the extent we deem reasonable upon statements of fact made to us by the Antero Entities), nothing has come to our attention to cause us to believe that (i) the Time of Sale Information (including the Incorporated Documents incorporated or deemed incorporated by reference therein), at the Time of Sale (which we have assumed to be 3:00 p.m., New York time, on February 20, 2019), contained any untrue were made, not misleading, or (ii) that the Offering Memorandum (including the Incorporated Documents incorporated or deemed incorporated by reference untrue statement of a material fact or omitted or     light of the circumstances under which they were made, not misleading. In making the foregoing statement, we express no comment or belief as to the financial statements (including the related notes and schedules thereto), the other financial or accounting information or the oil and natural gas reserve estimates from the Time of Sale Information or the Offering Memorandum.     ANNEX D         and agrees that:     Regulation S.   effect:     Partnership.     taken by the Partnership that would permit a public offering of the Securities,   (d)    Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that it:     (i)     has only communicated or caused to be communicated and will only Section 21(1) of the FSMA does not apply to the Antero Entities; and   (ii)    has complied and will comply with all applicable provisions of the FSMA  

Please note that this letter and other documents are in draft form, and in no way reflect the Registrant’s or Fund management’s final intent with respect to the filing discussed herein. Trust for Professional Managers c/o U.S. Bancorp Fund Services, LLC 615 East Michigan Street Milwaukee, Wisconsin 53202 March […], 2013 VIA EDGAR TRANSMISSION Ms. Deborah O’Neal-Johnson United States Securities and Exchange Commission Division of Investment Management 100 “F” Street, N.E. Washington, D.C.20549 Re: TRUST FOR PROFESSIONAL MANAGERS (the “Trust”) Securities Act Registration No: 333-62298 Investment Company Act Registration No: 811-10401 Dearborn Partners Rising Dividend Fund (S000040371) Dear Ms. O’Neal-Johnson: This amendment is being filed under Rule 485(b) under the Securities Act of 1933, as amended (the “1933 Act”), in response to your oral comments of March 7, 2013 regarding the Trust’s Post-Effective Amendment (“PEA”) No.357 to its registration statement, filed on behalf of its series, Dearborn Partners Rising Dividend Fund (the “Fund”).PEA No. 357 was filed pursuant to Rule 485(a) under the 1933 Act on Form N-1A on January 25, 2013 for the purpose of adding the Fund as new series to the Trust.The Trust is filing this PEANo. […] under Rule485(b) with the revisions discussed herein in response to your comments, to make certain non-material changes as appropriate and to file exhibits to the registration statement. For your convenience in reviewing the Trust’s responses, your comments are included in bold typeface immediately followed by the Trust’s responses. In addition, in connection with this filing, the Trust hereby makes the following representations: 1. The Trust acknowledges that in connection with the comments made by the Staff of the SEC, the Staff has not passed on the accuracy or adequacy of the disclosure made herein, and the Trust and its management are solely responsible for the content of such disclosure; 2. The Trust acknowledges that the Staff’s comments, and changes in disclosure in response to the Staff’s comments, do not foreclose the SEC or other regulatory body from the opportunity to seek enforcement or take other action with respect to the disclosure made herein; and 3. The Trust represents that neither it nor its management will assert the Staff’s comments or changes in disclosure in response to the Staff’s comments as an affirmative defense in any action or proceeding by the SEC or any person. ***** 1 The Trust’s responses to your comments are as follows: Prospectus – Summary Section 1. Staff Comment:Please consider combining the two separate line items for Maximum Deferred Sales Charge (Load) in the “Fees and Expenses of the Fund” table into a single line item, and using a footnote to state that the deferred sales charge for Class A shares is only applied to purchases of $1,000,000 or more. Response:The Trust responds by making the requested revision. 2. Staff Comment:Please include information in the Example for Class A and Class I shares that are not redeemed. Response:The Trust responds by making the requested revision. 3. Staff Comment:Please move the following statement in the “Summary Section” under the “Principal Investment Strategies” subsection to the disclosure in the “Investment Strategies, Risks and Disclosure of Portfolio Holdings” section in the Prospectus provided pursuant to Item 9 of Form N-1A: “The Fund may, from time to time, take temporary defensive positions in high-quality, short-term debt securities and money market instruments that are inconsistent with the Fund’s principal investment strategies in attempting to respond to adverse market, economic, political or other conditions.Taking a temporary defensive position may result in the Fund not achieving its investment objective.” Response:The Trust responds by making the requested revision. ***** If you have any additional questions or require further information, please contact Rachel Spearo at (414) 765-5384. Sincerely, /s/ John P. Buckel John P. Buckel President and Principal Executive Officer Trust for Professional Managers 2

ADVANCED DISPOSAL SERVICES, INC. 2016 OMNIBUS EQUITY PLAN FORM OF PERFORMANCE SHARE UNIT AWARD AGREEMENT FOR EXECUTIVE OFFICERS ______________ (the “Date of Grant”) between Advanced Disposal Services, Inc., a Delaware corporation (the “Company”), and _________________ (the “Participant”). conditions set forth in this Agreement and the Advanced Disposal Services, Inc. 2016 Omnibus Equity Plan (the “Plan”). in the Plan. 1.Grant of the PSUs. Subject to the provisions of this Agreement and the Plan, the Company hereby grants to the Participant, a target award consisting of Plan. The number of PSUs to which the Participant will be entitled as of the Scheduled Vesting Date (defined in Section 2)(the “Earned PSUs”) will be based this Agreement, one Common Share. The Participant shall not be required to pay any additional consideration for the issuance of the Common Shares upon settlement of the Earned PSUs. 2.    Vesting Schedule. Subject to earlier termination and cancellation, and 3.    Settlement. Each Earned PSU shall be settled by delivery of one Common 4.    Termination of Service Generally. In the event that the Participant’s employment or other service with the Company or its Affiliates terminates for any reason other than retirement, termination without Cause, resignation for Good Reason (“Cause” and “Good Reason” having the meanings set forth in Section 7 of this Agreement), death or Disability, the Target Award shall immediately be cancelled without consideration and the Participant shall have no further right or interest therein. 1 5.    Retirement; Termination Without Cause; Resignation for Good Reason. Subject to Section 7 of this Agreement, if the Participant’s employment or other service with the Company or its Affiliates terminates as a result of either the Participant’s retirement, his or her termination without Cause or his or her resignation for Good Reason, the Participant shall be entitled to 100% of the Earned PSUs, subject to the other terms of this Agreement, as if the Participant’s employment or other service had not terminated. Earned PSUs will be settled on the Settlement Date.   1.    Death; Disability. If the Participant’s employment or other service with the Company or its Affiliates terminates as a result of the Participant’s death or Disability, the Participant (or the Participant’s estate or beneficiary) shall be entitled to 100% of the Earned PSUs, subject to the other terms and conditions of this Agreement. Earned PSUs shall be settled on the Settlement Date. 2.    Change in Control. In the event of a Change in Control, prior to the (i)    The number of PSUs that would be considered Earned PSUs based on the most recent fiscal year end results of the Company; and If the successor company fails to assume such Earned PSUs, they shall vest and be settled in accordance with Section 3 upon consummation of the Change in Control. To the extent the successor company (or a subsidiary or parent thereof) assumes such Earned PSUs, the existing vesting schedule will continue to apply; provided, however, that, if upon or within 24 months following the date of a Change in Control, the Participant’s employment or other service with the Company or its Affiliates is terminated without Cause or the Participant resigns for Good Reason, the Earned PSUs shall become fully vested and shall be settled in accordance with Section 3. For purposes of this Section 7, the term “Cause” shall mean (a) with regard to any Participant who is party to an employment or service agreement with the Company or any of its affiliates which contains a definition of “Cause,” the definition set forth in such agreement, and (b) with regard to any other Participant: (i) any act or omission that constitutes a material breach by the Participant of any obligations under an employment or service agreement with the Company or one of its Affiliates or an Award Document; (ii) the continued failure or refusal of the Participant to its Affiliates. For purposes of this Section 7, the term “Good Reason” shall agreement with the Company or any of its affiliates which contains a definition regard to 2 any other Participant: (i) the material diminution of the Participant’s title and/or responsibilities or (ii) the Participant being required to relocate more than twenty-five (25) miles from the Participant’s then-existing office. 3.    Nontransferability of PSUs. Unless otherwise determined by the Committee pursuant to the terms of the Plan, PSUs may not be transferred, pledged, 4.    Rights as a Shareholder. The Participant shall have no rights as a shareholder with respect to the Target Award or Earned PSUs prior to settlement. Upon settlement, the Participant shall have all rights as a shareholder with respect to the Common Shares delivered to the Participant, if any, including, without limitation, voting rights and the right to receive dividends. 5.    Dividend Equivalents. If, after the Date of Grant and prior to the conditions of this Agreement applicable PSUs. The dividend equivalents will be paid on the applicable Settlement Date for the underlying Earned PSUs in cash or Common Shares, as determined by the Company in its discretion. If the underlying Earned PSUs are cancelled prior to the applicable Settlement Date for any reason, any accrued and unpaid dividend equivalents shall be cancelled. (a)    No Right to Continued Employment or Other Service Relationship. This Agreement does not constitute an employment or service agreement and nothing in the Plan or this Agreement shall modify the terms of the Participant’s employment or other service, including, without limitation, the Participant’s status as an “at will” employee of the Company or its Affiliates, if applicable. None of the Plan, the Agreement, the grant of the Target Award, nor any action Participant any right to be retained in the employ of or other service to the Company or its Affiliates, (ii) to interfere with or limit in any way the right of the Company or its Affiliates to terminate the Participant’s employment or other service at any time and for any reason or (iii) to give the Participant any right to be reemployed or retained by the Company or its Affiliates following a termination of employment or other service for any reason. equity‑based awards under the Plan are discretionary. This award does not confer on the Participant any right or entitlement to receive another award of PSUs or future period. 3 7.    Taxes and Withholding. The Participant must satisfy any federal, state, 8.    Securities Laws. The Company shall not be required to issue Common Shares in settlement of or otherwise pursuant to the Earned PSUs unless and until (i) the shares have been duly listed upon each stock exchange on which the Common States as may be applicable in respect of the Earned PSUs. In connection with the grant of the Target Award or vesting of the Earned PSUs, the Participant by the addressee. of this Agreement. (d)    Incorporation of Plan; Entire Agreement. This Agreement, the Target Award and the Earned PSUs shall be subject to the Plan, the terms of which are whether express or 4 implied) that relate to the subject matter hereof. The Participant acknowledges receipt of the Plan, and represents that he is familiar with its terms and provisions. or amend this Agreement and the terms and conditions applicable to PSUs without the consent of the Participant to the extent it deems necessary or desirable in its sole discretion (i) to comply with or take into account changes in, or rescissions or interpretations of, applicable tax laws, securities laws, conditions, or (iv) in any other manner set forth in Section 16 of the Plan. Any notice to the Participant in accordance with Section 13(a) of any such Committee. (i)    The Earned PSUs are intended to constitute “short-term deferrals” for purposes of Section 409A of the Code and the regulations and guidance imposition of such penalty tax. This Section 14(f) does not create an obligation guarantee that the Earned PSUs will not be subject to taxes, interest and (ii)    Notwithstanding anything to the contrary in the Plan or this Agreement, to the extent that the Earned PSUs constitute deferred compensation for purposes of Section 409A and Participant is a “Specified Employee” (within the meaning of respect to the Earned PSUs that are subject to Section 409A may be made before Participant’s Separation from Service from the Company Group (as defined in 5 (i)    Clawback. Any awards made pursuant to the Plan shall be subject to any recoupment policy adopted by the Company or required by law as in effect from time to time.     ADVANCED DISPOSAL SERVICES, INC.         By:     Name:     Title:     By:     Name:     Title:   Agreement. Participant Name (Printed):      Signature:      Date:      6 7

Exhibit 10.29 STARBUCKS CORPORATION GLOBAL KEY EMPLOYEE RESTRICTED STOCK UNIT GRANT AGREEMENT below (the “Participant”) an award (the “Award”) of performance restricted stock units (the “Performance RSUs”) in a target amount as set forth below (“Target RSUs”), effective on the Date of Grant set forth below. The Performance RSUs granted under this Global Key Employee Restricted Stock Unit Grant Agreement, including any additional terms and conditions applicable to the Participant’s country contained in Appendix A attached hereto (together with the Global Key Employee Restricted Stock Unit Grant Agreement, this “Agreement”) shall, subject to the attainment of certain performance goals set forth below (the “Performance Goals”), relating to the Performance Criteria specified in the 2005 Long-Term Equity Incentive Plan, vest and become payable in shares of Common Stock (the “Shares”), subject to earlier expiration or termination of the Performance RSUs as provided in this Agreement. The Performance RSUs and the terms of this Agreement, including the Appendices, shall be subject to the terms and conditions of the 2005 Long-Term Equity Incentive Plan (the “Plan”). Capitalized Partner Name:Target Restricted Stock Units:Date of Grant:Performance Period: 1.Vesting Schedule. The number of Performance RSUs granted under the Award that actually vest and that will be settled shall be determined pursuant to a two-step process: (i) first the maximum number of Performance RSUs that are eligible to vest shall be determined as provided under Section 1.1 hereof on the basis of the level at which the Performance Goals specified on attached Schedule I are actually attained and (ii) then the maximum number of Performance RSUs calculated under clause (i) that will actually vest shall be determined on the basis of the Participant’s completion of the requirements set forth in Section 1.2 hereof. 1.1    Performance Goal Requirements. The attached Schedule I specifies the Performance Goals required to be attained during the Performance Period in order for the Performance RSUs to become eligible to vest. As soon as reasonably practicable following the end of the Performance Period, the Committee shall determine in its sole discretion the attainment level of the Performance Goals. On the basis of the determined level of attainment of the Performance Goals, the Target RSUs will be multiplied by the applicable percentage determined in accordance with the performance matrix set forth in Schedule I. The number of Performance RSUs resulting from such determination shall constitute the maximum number of Performance RSUs in which the Participant may vest under this Award (the “Earned Performance RSUs”). 1.2    Active Status Vesting. Subject to the terms and conditions of this Award, a number of Earned Performance RSUs will vest as detailed in the attached Schedule I of this Agreement, subject to the Participant’s continued Active Status through the date the Performance RSUs are paid pursuant to Section 3. 1 2.Dividend Equivalents. On each date that a cash dividend is paid to holders of Shares during the Performance Period, an amount (the “Dividend Equivalent Amount”) equal to the cash dividend that is paid on each Share, multiplied by the number of Shares subject to the Target RSUs and any Dividend Equivalent RSUs (as defined below) that remain unvested and outstanding as of the dividend payment date, shall be credited for the benefit of the Participant, and such credited amount shall be converted into an additional number of Performance RSUs (“Dividend Equivalent RSUs”) determined by dividing the Dividend Equivalent Amount by the Fair Market Value of a Share on the dividend payment date, rounded up or down to the nearest whole number. At the end of the Performance Period, the number of Dividend Equivalent RSUs will be adjusted to reflect the number of Dividend Equivalent RSUs that would have been credited to the Participant as of the Date of Grant if such calculations had been based on the number of Earned Performance RSUs (such adjusted number, the “Earned Dividend Equivalent RSUs”). During the period beginning immediately following the last day of the Performance Period and ending on the date the Performance RSUs granted hereunder are paid pursuant to Section 3 below, Dividend Equivalent RSUs will accrue on any Earned Performance RSUs and any Earned Dividend Equivalent RSUs. Dividend Equivalent RSUs will be subject to the same conditions as the underlying Performance RSUs with respect to which Dividend Equivalent RSUs were paid, including, without limitation, the vesting conditions and the provisions governing time and form of settlement applicable to the underlying Performance RSUs. Unless expressly provided otherwise, as used elsewhere in this Agreement, “Performance RSUs” shall include any Dividend Equivalent RSUs that have been credited to the Participant’s account. 3.Form and Timing of Payment of Vested Performance RSUs. Subject to the terms and conditions of this Agreement and the Plan, any Performance RSUs that vest will be paid to the Participant solely in whole Shares (and not in cash, as the Plan permits), on, or within sixty (60) days after, (i) the last day of the Performance Period, including upon a vesting resulting from the Participant’s termination due the Participant’s Retirement pursuant to Section 4.3 below or from the Participant’s termination prior to the last day of the Performance Period resulting from the Participant’s termination due to death or Disability pursuant to Section 4.4 below or (ii) a vesting event contemplated in Section 4.2 below or vesting event resulting from the Participant’s termination following the last day of the Performance Period resulting from the Participant’s termination due to death or Disability pursuant to Section 4.4 below. 4.1    Termination of Employment. Except as provided in Sections 4.2, 4.3 or 4.4 below, any unvested Performance RSUs subject to this Agreement shall immediately terminate and be automatically and completely forfeited by the Participant to the Company upon the termination of the Participant’s Active Status for any reason, including without limitation, voluntary termination by the Participant, or termination by the Company or any Subsidiary or affiliate of the Company because of Misconduct. For purposes of the Performance RSUs, the Participant’s Active Status will be providing services to the Company or any of its Subsidiaries or affiliates be invalid or in breach of employment laws in the jurisdiction where that Participant is employed or providing services or the terms of the Participant’s employment or service contract, if any) and will not be extended by any notice period (e.g., the Participant’s Active Status would not include any contractual providing services or the terms of the Participant’s employment or service contract, if any). Actively providing services during only a portion of the vesting period prior to a Vesting Date shall not entitle the Participant to vest in a pro-rata portion of the unvested Earned 2 Performance RSUs (if any) that would have vested as of such Vesting Date, nor will it entitle the Participant to any compensation for the lost vesting. The Committee shall have the exclusive discretion to determine when the Participant’s Active Status for purposes of the Award is terminated (including 4.2    Change of Control. Upon a Change of Control, the vesting of the Performance RSUs shall accelerate, and the Performance RSUs shall become fully vested and payable to the extent and under the terms and conditions set forth in the Plan; provided that, for purposes of this Section 4.2, “Resignation (or by written resignation of the Active Status of a Participant after a Change of (including its Subsidiaries and affiliates) prior to the Change of Control, (3) a material reduction in the Partner’s base salary or total incentive the Partner’s primary work location more than 50 miles from the Partner’s primary work location prior to the Change of Control. Notwithstanding the foregoing, a Participant shall not be deemed to have Resigned for Good Reason unless the Participant, within one year after a Change of Control, (i) notifies the Company of the existence of the condition giving rise to a Resignation for Good Reason within 90 days of the initial existence of such condition, (ii) gives the Company at least 30 days following the date on which the Company receives such notice (and prior to termination) in which to remedy the condition, and (iii) if the Company does not remedy such condition within such 30-day period, actually terminates employment within 60 days after the expiration of such 30-day period (and before the Company remedies such condition). If the Company remedies such condition within such 30-day period (or at any time prior to the Participant’s actual termination), then any Resignation for Good Reason by the Participant on account of such condition will not be a 4.3    Retirement. If the Participant’s Active Status terminates due to Retirement on a day following the date that is six (6) months after the Date of Grant, the Participant will continue to be eligible to vest in a number of Performance RSUs equal to the Earned Performance RSUs. Notwithstanding anything to the contrary herein, if the Company receives an in the Participant’s country that likely would result in any favorable treatment of the Performance RSUs at Retirement under this Agreement being deemed unlawful or discriminatory, the Company may, in its sole discretion, determine not to apply such favorable treatment and treat the Performance RSUs as set forth in 4.4    Disability or Death. If the Participant’s Active Status terminates due to Disability or death on or prior to the last day of the Performance Period, a number of Performance RSUs equal to the Target RSUs will vest in full as of the date of termination of Active Status due to Disability or death. If the Participant’s Active Status terminates due to Disability or death following the last day of the Performance Period, a number of Performance RSUs equal to the Earned Performance RSUs will vest in full as of the date of termination of Active Status due to Disability or death. 5.Misconduct. As a condition to receiving and becoming eligible to vest in the Performance RSUs, the Participant hereby agrees not to engage in Misconduct. 3 6.Clawback. If the Company determines, in its sole discretion, that the Participant has engaged in Misconduct, the Participant agrees and covenants that (a) any unvested portion of the Performance RSUs shall be immediately forfeited as of the date the Company determines that the Participant has engaged in Misconduct (the “Determination Date”); (b) if any part of the Performance RSUs vested and were settled prior to the Determination Date, upon the Company’s demand, the Participant shall immediately deliver to the Company (i) the Shares that the Participant acquired upon settlement of such Performance RSUs, and (ii) to the extent any such Shares were previously sold by the Participant, a cash amount equal to the Fair Market Value as of the Determination Date of the Shares contemplated to be returned to the Company under this clause; and (c) the foregoing remedies set forth in this Section 6 shall not be the Company’s exclusive remedies, which shall include, among other remedies, injunctive relief and damages that may be available to the Company. The Company reserves all other rights and remedies available to it at law or in equity. 7.Code Section 409A. The provisions in this Section 7 shall apply if the Participant is subject to taxation in the United States. 7.1    To the extent the Performance RSUs constitute “nonqualified deferred compensation” that is subject to Code Section 409A (“NQ Deferred Compensation”), any Performance RSUs that are payable upon or with reference to the date that the Participant’s Active Service terminates (i) shall not be paid unless the Section 409A and (ii) if the Participant is a “specified employee” within the meaning of Code Section 409A on the date of the Participant’s separation from service, then the Performance RSUs shall be paid on the first business day of the seventh month following the Participant’s separation from service, or, if earlier, on the date of the Participant’s death, to the extent such delayed payment is required in order to avoid a prohibited distribution under Code Section 409A. 7.2    This Award and payments made pursuant to this Agreement and the Plan are intended to qualify for an exemption from or comply with Code Section 409A. Agreement and/or the Plan so that the Performance RSUs granted to the provided, however, that the Company makes no representations that the Performance RSUs shall be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to the Performance RSUs. Nothing in this Agreement or the Plan shall provide a basis for any person to take action against the Company or any Subsidiary or affiliate of the Company any amount paid or Award made under this Agreement, and neither the Company nor any of its Subsidiaries or affiliates shall under any circumstances have any liability to any Participant or his or her estate or any other party for any taxes, penalties or interest imposed under Code Section 409A for any amounts paid or payable under this Agreement. 7.3    If the vesting of the Performance RSUs is accelerated in connection with a Change of Control, the Performance RSUs are considered NQ Deferred Compensation, and the Change of Control does not constitute a “change in control event,” within the meaning of the U.S. Treasury Regulations, then the cash equivalent of the Performance RSUs as of the date of the Change in Control shall be paid on the earliest of the applicable Vesting Date, the date of the Participant’s death or the date the Participant’s Active Status terminates due to Disability. 4 different, the Participant’s employer (the “Employer”) takes with respect to any is and remains the Participant’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer. The Participant further any aspect of the Performance RSUs, including, but not limited to the grant of the Performance RSUs, the vesting or settlement of the Performance RSUs, the issuance of Shares in settlement of the Performance RSUs, the subsequent sale of Shares acquired at vesting and the receipt of any dividends and/or any dividend the terms of the Award or any aspect of the Performance RSUs to reduce or particular tax result. Furthermore, if the Participant is subject to tax in more Participant hereby authorizes the Company and/or the Employer, or their respective agents, in their sole discretion and without any notice to or additional authorization by the Participant, to satisfy their withholding obligations with regard to all Tax-Related Items, if any, by one or a (a)    withholding from the Participant’s wages, salary or other cash compensation payable to the Participant by the Company, the Employer or any other Subsidiary or affiliate of the Company; or (b)    withholding from proceeds of the sale of Shares issued in settlement of the vested Performance RSUs, either through a voluntary sale or through a this authorization without further consent), to the extent and in the manner permitted by all applicable securities laws, including making any necessary securities registration or taking any other necessary actions; or (c)    withholding in whole Shares to be issued in settlement of the vested Performance RSUs; provided, however, that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable (other than FICA or other employment Tax-Related Items that become payable in a year prior to the year that income Tax-Related Items become payable), unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, the obligation and (b) above; or (d)    any other method of withholding determined by the Company to be permitted under the Plan and, to the extent required by applicable law or under the Plan, statutory or other withholding rates, including minimum or maximum rates applicable in the Participant’s jurisdiction(s), to 5 the extent permitted under the Plan. In the event of over-withholding, the entitlement to the Common Stock equivalent), or if not refunded by the Company, the Participant may seek a refund from the applicable tax authorities. In the event of under-withholding, the Participant may be required to pay additional Tax-Related Items directly to the applicable tax authorities or to the Company and/or the Employer. If the obligation for Tax-Related Items is satisfied by issued the full number of Shares underlying the vested Performance RSUs, Finally, the Participant is required to pay to the Company or the Employer any the Tax-Related Items. The Participant shall have no further rights with respect to any Shares that are retained by the Company pursuant to this provision, and Shares. 9.Nature of Grant. In accepting the Award, the Participant acknowledges, any time; to the extent permitted by the Plan; stock units or other awards, or benefits in lieu of restricted stock units, even if restricted stock units have been granted in the past; (d)    the Award and the Participant’s participation in the Plan shall not create a right to employment or other service relationship, or be interpreted as forming or amending an employment or service relationship with the Company, the Employer or any other Subsidiary or affiliate of the Company, and shall not interfere with the ability of the Company, the Employer or any other Subsidiary or affiliate of the Company, as applicable, to terminate the Participant’s employment or service relationship, if any; (f)    the Performance RSUs and the Shares subject to the Performance RSUs, and rights or compensation; (g)    the Performance RSUs and the Shares subject to the Performance RSUs, and end-of-service payments, holiday pay, holiday top-up, bonuses, long-service awards, leave-related payments, pension or retirement or welfare benefits or similar mandatory payments; 6 (h)    unless otherwise agreed in writing with the Company, the Performance RSUs and the Shares subject to the Performance RSUs, and the income from and value of that the Participant may provide as a director of a Subsidiary or affiliate of the Company; (i)    the future value of the Shares subject to the Performance RSUs is (j)    after termination of the Participant’s Active Status, the Participant is no longer eligible to receive any new restricted stock units under the Plan; forfeiture of the Performance RSUs resulting from (i) the application of the clawback policy described in Section 6 of this Agreement or otherwise adopted by the Company or required by law, or (ii) termination of the Participant’s Active Status (for any reason whatsoever, whether or not later found to be invalid or employed or providing services or the terms of the Participant’s employment or service contract, if any); discretion, the Performance RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the Performance RSUs or any such benefits Common Stock; and (m)    neither the Company, the Employer nor any other Subsidiary or affiliate value of the Performance RSUs or of any amounts due to the Participant pursuant to the settlement of the Performance RSUs or the subsequent sale of any Shares acquired upon settlement. use certain personal information about the Participant, including, but not Company, details of all performance restricted stock units or any other entitlement to Shares or equivalent benefits awarded, cancelled, exercised, legitimate purpose of implementing, administering and managing the Plan. The legal basis, where required, for the processing of Data is the Participant’s consent. 7 similar manner. The Participant may be asked to agree on separate terms and data c)International Data Transfers. The Company and Fidelity are based in the United States. The Participant’s country or jurisdiction may have different data privacy laws and protections than the United States. The Company’s legal basis, where required, for the transfer of Data is the Participant’s consent. including under tax, securities, exchange control and labor laws. This means Data may be retained until after termination of the Participant’s Active Service. e)Voluntariness and Consequences of Consent Denial or Withdrawal. Participation Participant later seeks to revoke his or her consent, the Participant’s salary Company would not be able to grant Performance RSUs or other equity awards to the Participant or administer or maintain such awards. f)Data Subject Rights. The Participant may have a number of rights under data lodge complaints with competent authorities in the Participant’s jurisdiction, resources representative. g)Declaration of Consent. By accepting the Performance RSUs and indicating consent via the Company’s acceptance process, the Participant is declaring that he or she expressly agrees with the data processing practices described herein described above. 12.Governing Law/Choice of Venue. The Award and the provisions of this Agreement jurisdiction of the State of Washington, and agree that such litigation shall be conducted exclusively in the courts of King County, or 8 the federal courts of the United States for the 9th Circuit, and no other 13.Compliance with Law. Notwithstanding any other provision of the Plan or this Performance RSUs prior to the completion of any registration or qualification of have unilateral authority to amend the Plan and this Agreement without the 14.Language. The Participant acknowledges and represents that he or she is proficient in the English language, or has consulted with an advisor who is sufficiently proficient in English, as to allow the Participant to understand the terms of this Agreement and any other documents related to the Plan. If the will control. enforceable. 17.Undertakings. The Participant hereby agrees to take whatever additional 18.No Rights as Shareholder. Except as otherwise provided in Section 2, the Participant will not have dividend, voting or any other rights as a shareholder of the Shares with respect to the Performance RSUs. Upon payment of the vested Performance RSUs in Shares, the Participant will obtain full dividend, voting and other rights as a shareholder of the Company. 19.Restrictions on Transfer. Notwithstanding anything in the Plan to the contrary, the Performance RSUs granted pursuant to this Award may not be sold, Award may be transferred (i) by will or by laws of descent and distribution applicable to a deceased Participant or (ii) pursuant to a domestic relations order. 9 20.Appendix A. Notwithstanding any provisions in this Global Key Employee Restricted Stock Unit Grant Agreement, the Award of Performance RSUs shall be subject to any additional terms and conditions set forth in Appendix A for the Participant’s country. Moreover, if the Participant relocates to one of the countries included in Appendix A, the additional terms and conditions for such or administrative reasons. Appendix A constitutes part of this Global Key Employee Restricted Stock Unit Grant Agreement. Performance RSUs and on any Shares acquired under the Plan, to the extent that undertakings (as provided in Section 17 above) that may be necessary to accomplish the foregoing. 22.Waiver. If the Participant breaches or otherwise does not comply with any provision of this Agreement, but the Company does not act upon this breach or 23.Insider Trading/Market Abuse Laws. Depending on the Participant’s country or the country in which Shares are listed, the Participant may be subject to jurisdictions, including the United States and, if different, the Participant’s country, the Participant’s broker’s country and/or the country where the Shares are listed, which may affect the Participant’s ability directly or indirectly, for the Participant him- or herself or for a third party, to accept, acquire, sell or attempt to sell, or otherwise dispose of Shares, rights to Shares (e.g., Performance RSUs) or rights linked to the value of Shares during such times as (as defined by the laws or regulations in the applicable jurisdiction). Local “tipping” third parties or causing them otherwise to buy or sell Company securities, including third parties who are fellow employees. Any restrictions the Company. The Participant acknowledges that it is the Participant’s should consult with the Participant’s own personal legal and financial advisors on this matter before taking any action related to the Plan. 24.Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country other authorities in the Participant’s country. The Participant also may be Participant acknowledges that it is his or her responsibility to comply with such regulations, and the Participant should consult his or her personal legal 10 Finally, the Company hereby strongly recommends that the Participant seek the concerning the tax and other legal consequences associated with the Performance RSUs. * * * 11 and the Plan. STARBUCKS CORPORATIONBy: Kevin R. JohnsonItsPRESIDENT AND CEOPARTICIPANTSignature APPENDIX A TO STARBUCKS CORPORATION Global Key Employee Restricted Stock Unit Grant Agreement, the Plan or any applicable country-specific sub-plan shall have the same definitions as in the Plan, any applicable country-specific sub-plan and/or the Global Key Employee Restricted Stock Unit Grant Agreement. TERMS AND CONDITIONS This Appendix A, which is part of the Global Key Employee Restricted Stock Unit Grant Agreement, includes additional terms and conditions that govern the Performance RSUs granted to the Participant under the Plan and that will apply to the Participant if he or she is in one of the countries listed below. which he or she is currently residing and/or working, is considered a resident of another country for local law purposes or transfers employment and/or residency between countries after the Date of Grant, the Company shall, in its included herein will apply to the Participant under these circumstances. NOTIFICATIONS Participant should not rely on the information in this Appendix A as the only in the Plan because such information may be outdated when the Performance RSUs vest and/or when the Participant sells any Shares acquired at vesting of the Performance RSUs. apply to the Participant’s particular situation. As a result, the Company is not in a position to assure the Participant of any particular result. The Participant, therefore, should seek appropriate professional advice as to how Finally, if the Participant is a citizen or resident or a country other than that in which he or she is currently residing and/or working, is considered a and/or residency between countries after the Date of Grant, the information contained herein may not be applicable in the same manner to the Participant. 13 AUSTRALIA TERMS AND CONDITIONS Retirement. The Company reserves the right not to apply Section 4.3 of the Global Key Employee Restricted Stock Unit Grant Agreement, in which case, Sections 1, 3 and 4.1 of the Global Key Employee Restricted Stock Unit Grant Agreement shall be deemed amended, accordingly, such that no references to continued vesting after a termination due to Retirement shall apply to the Performance RSUs. Alternatively, provided the Participant is not subject to taxation in the United States, the Company reserves the right to accelerate the vesting of the Performance RSUs, as of the date the Participant’s Active Status terminates due to Retirement, with respect to a number of Performance RSUs determined by the Company at its discretion, in which case, the Award will be payable within sixty (60) days or as soon as practicable following the date the Participant’s Active Service terminates. Australia Offer Document. The offer of Performance RSUs is intended to comply with the provisions of the Corporations Act 2001, Australian Securities & 14/1000. Additional details are set forth in the Offer Document for the offer of Performance RSUs to Australian resident employees, which will be provided to the Participant with this Agreement. Compliance with Law. Notwithstanding anything in the Global Key Employee Restricted Stock Unit Grant Agreement or the Plan to the contrary, the Participant will not be entitled to, and shall not claim, any benefit under the of the Corporations Act 2001 (Cth), any other provision of that Act, or any obtain the approval of its shareholders in general meeting for the purpose of NOTIFICATIONS Tax Information. The Plan is a plan to which subdivision 83A-C of the Income Tax transactions exceeding AUD 10,000 and for international fund transfers. If an CANADA TERMS AND CONDITIONS Termination of Active Status. The following provision replaces the second paragraph of Section 4.1 of the Global Key Employee Restricted Stock Unit Grant Agreement. For purposes of the Performance RSUs, the Participant’s Active Status shall be considered terminated (regardless of the reason for such termination and whether or not the termination is later found to be invalid, unlawful or in breach of agreement, if any) as of the date that is the earliest of (a) the date that the Participant receives notice of termination of employment; (b) the date the Participant terminates employment; or (c) the date the Participant is no longer actively providing services to the Company or any Subsidiary or affiliate of the Company regardless of any notice period or 14 not limited to statutory law, regulatory law and/or common law). The Committee shall have the exclusive discretion to determine when the Participant’s Active Status shall be considered terminated for purposes of the Performance RSUs (including when the Participant may still be considered to be providing services while on a leave of absence). If, notwithstanding the foregoing, applicable employment legislation explicitly requires continued vesting during a statutory notice period, the Participant’s right to vest in the Earned Performance RSUs, if any, will terminate effective as of the last date of the minimum statutory notice period, but the Participant will not earn or be entitled to pro-rated vesting if the Vesting Date falls after the end of the Participant’s statutory notice period, nor will the Participant be entitled to any compensation for lost vesting. Les parties reconnaissent avoir expressement souhaité que cette Convention, ainsi que tous les documents, avis et procédures judiciaries, éxecutés, donnés ou intentés en vertu de, ou lié, directement ou indirectement à la présente Data Privacy Notice and Consent. The following provision supplements the Data Privacy section of the Global Key Employee Restricted Stock Unit Grant Agreement: The Participant hereby authorizes the Company and the Company’s representatives, including broker(s) designated by the Company, to discuss with and obtain all relevant information from all personnel (professional or not) involved with the Company, any Subsidiary and affiliate and the Employer to disclose and discuss the Participant’s participation in the Plan with their advisors. The Participant further authorizes the Company, any Subsidiary and affiliate and the Employer to record such information and to keep it in the Participant’s employee file. NOTIFICATIONS including shares of stock (i.e., Shares), options to purchase Shares and other rights to receive Shares (e.g., Performance RSUs) of a non-Canadian company held by a Canadian resident employee must generally be reported annually on a Form T1135 (Foreign Income Verification Statement), if the total cost of his or her foreign specified property exceeds C$100,000 at any time during the year. Thus, Performance RSUs likely must be reported (generally at a nil cost) if the C$100,000 cost threshold is exceeded because of other foreign specified property the Participant holds. When Shares are acquired, their cost generally is the Participant owns other Shares (acquired separately), this ACB may have to be averaged with the ACB of the other Shares. The Participant should consult with a personal tax advisor to ensure compliance with the applicable reporting obligations. 15 CHINA TERMS AND CONDITIONS Acceptance of Award. The Participant must log on to the Fidelity website and certify his or her Fidelity account as a condition of this Award. If the Participant does not certify his or her Fidelity account in the manner instructed by Fidelity and/or the Company before the first Vesting Date occurs, the Award will be subject to cancellation at the Company’s sole discretion. If the Award is cancelled, the Participant will have no rights to the underlying Shares or any corresponding benefit. The following terms and conditions apply only to Participants who are subject to exchange control restrictions in China, as implemented by the State sole discretion. SAFE Approval Requirement. Notwithstanding anything to the contrary in the Agreement or the Plan, no Shares will be issued to the Participant unless and until all necessary exchange control or other approvals with respect to the Plan have been obtained from SAFE or its local counterpart (“SAFE Approval”) and provided such SAFE Approval is maintained through each Vesting Date. In the event that SAFE Approval has not been obtained or is not maintained prior to any Vesting Date(s), such portion of the Earned Performance RSUs (if any) will not vest until such SAFE Approval is obtained (the “Actual Vesting Date”). If the Participant’s Active Status ceases prior to the Actual Vesting Date, the Participant will not be entitled to vest in any portion of the Earned Performance RSUs and the Award will be forfeited without any liability to the Company or any Subsidiary or affiliate of the Company. Termination of Employment; Change of Control. The following provision supplements the Termination of Employment; Change of Control section of the Global Key Employee Restricted Stock Unit Grant Agreement: reserves the right to force the sale of any Shares to be issued to the Participant upon settlement of the Earned Performance RSUs. The sale may occur (i) immediately upon vesting, (ii) following the termination of the Participant’s Active Status for any reason, including without limitation, voluntary termination by the Participant, termination because of the Participant’s Retirement, Disability or death or termination by the Company or any Subsidiary or affiliate of the Company because of Misconduct, or (iii) within any other timeframe the Company determines to be necessary or advisable to comply with local regulatory requirements. The Participant hereby authorizes the sale of all Shares issued to him or her as soon as administratively practicable after the applicable date, as determined by the Company, and applicable Vesting Date of the Performance RSUs and (if later) the date on which fair market value of the Shares on the applicable Vesting Date (which is the Furthermore, the Company reserves the right not to apply Section 4.3 of the 16 Exchange Control Restriction. Due to exchange control laws and regulations in China, the Participant will be required immediately to repatriate to China the cash proceeds from the sale of Shares and any cash dividends paid on such Shares. The Participant further understands that, under local law, such exchange control account established by the Company or a Subsidiary expressly for this purpose. By accepting the Performance RSUs, the Participant agrees that any cash proceeds from the sale of Shares or the receipt of any dividends may be The proceeds may be paid to the Participant in U.S. dollars or in local currency at the Company’s discretion. If the proceeds are paid in U.S. dollars, the Participant understands that he or she will be required to open a U.S. dollar bank account in China and provide the bank account details to the Company or the Employer. The Participant acknowledges that, if the cash proceeds are paid in currency exchange conversion rate. Furthermore, compliance with local exchange control laws and regulations may delay the conversion of cash proceeds into local currency. The Participant agrees that, if the conversion of the cash proceeds into local currency is delayed, he or she shall bear the risk of any currency exchange conversion rate fluctuation between the date on which the Shares issued at vesting of the Performance RSUs are sold or the cash dividend is paid and the date of conversion of the cash proceeds into local currency. The Participant further agrees to comply with any other requirements that the Company may impose in the future in order to facilitate compliance with exchange NOTIFICATIONS Exchange Control Information. The Participant may be required to report to the State Administration of Foreign Exchange all details of his or her foreign transactions conducted with non-China residents. Under these rules, the Participant may be subject to reporting obligations for the Performance RSUs, Shares acquired under the Plan and Plan-related transactions. The Participant should consult with a personal tax advisor in this regard. COSTA RICA HONG KONG TERMS AND CONDITIONS Sale of Shares. Shares issued at vesting of the Performance RSUs are accepted as a personal investment. In the event that Shares are acquired pursuant to the Performance RSUs within six (6) months of the Date of Grant, the Participant agrees that the Performance RSUs may not be offered to the public or otherwise disposed of prior to the six-month anniversary of the Date of Grant. NOTIFICATIONS 17 Participant should obtain independent professional advice. The Performance RSUs and any Shares issued at vesting do not constitute a public offering of securities under Hong Kong law and are available only to Partners and Consultants of the Company or a Subsidiary or affiliate of the Company. The Agreement, the Plan and other incidental communication materials have not been in Hong Kong. The Performance RSUs and related documents are intended solely for the personal use of each Partner and/or Consultant and may not be distributed to any other person. ITALY TERMS AND CONDITIONS Plan Document Acknowledgment. In accepting the Performance RSUs, the Participant acknowledges a copy of the Plan was made available to the Participant, and that the Participant has reviewed the Plan and the Agreement, in their entirety and and expressly approves the following provision in the Global Key Employee Restricted Stock Unit Grant Agreement: Section 1 (“Vesting Schedule”); Section 3 (“Form and Timing of Payment of Vested Performance RSUs”); Section 4 (“Termination of Employment; Change of Control”); Section 8 (“Responsibility for Taxes”); Section 9 (“Nature of Grant”); Section 11 (“Data Privacy”); Section 13 (“Compliance with Law”); and Section 21 (“Imposition of Other Requirements”). NOTIFICATIONS investments abroad or foreign financial assets (e.g., cash, Shares, Performance RSUs) that may generate income taxable in Italy, the Participant must report them on his or her annual tax return or on a special form if no tax return is due, irrespective of their value. The same reporting duties apply if the Participant is a beneficial owner of the investments, even if he or she does not JAPAN NOTIFICATIONS Foreign Asset/Account Reporting Information. The details of any assets held outside of Japan as of December 31 (including the Shares acquired under the Plan) must be reported annually to the Tax Office to the extent such assets have a total net fair market value exceeding ¥50 million. Such report is due by March 15 each year. The Participant should consult with his or her personal tax whether the Participant will be required to report details of his or her Performance RSUs, as well as the Shares, in the report. 18 SINGAPORE TERMS AND CONDITIONS Settlement of Awards and Sale of Shares. This provision supplements the Form and Timing of Payment of Performance RSUs section of the Global Key Employee Restricted Stock Unit Grant Agreement: The Participant hereby agrees that the Shares acquired pursuant to the Performance RSUs will not be offered for sale in Singapore prior to the than section 280) of the Singapore Securities and Futures Act (Chapter 289, 2006 applicable provisions of the SFA. NOTIFICATIONS SECURITIES LAW INFORMATION: The Performance RSUs are granted to the Participant by the Company pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the SFA and the offer is not made with a view to the Performance RSUs or the Shares subject to Performance RSUs being subsequently offered for Director Notification Requirement. Directors (including associate, alternate, substitute and shadow directors) of a Singaporean Subsidiary or affiliate of the Company are subject to certain notification requirements under the Singapore Companies Act. Directors must notify the Singaporean Subsidiary or affiliate of the Company in writing of an interest in the Company (e.g., Performance RSUs or Shares) or any related company within two (2) business days of (i) the interest’s acquisition or disposal, (ii) any change in a previously disclosed interest (e.g., when the Shares are sold), or (iii) becoming a director, associate director or shadow director. These notification requirements apply regardless of whether the directors are residents of or employed in Singapore. SWITZERLAND NOTIFICATIONS relating to the Performance RSUs (i) constitutes a prospectus according to (ii) may be publicly distributed or otherwise made publicly available in Switzerland to any person other than an employee of the Company or (iii) has been or will be filed with, approved or supervised by any Swiss reviewing body according to article 51 FinSA or any Swiss regulatory authority, including the Swiss Financial Market Supervisory Authority FINMA. 19 UNITED KINGDOM TERMS AND CONDITIONS Responsibility for Taxes. The following provision supplements the Responsibility for Taxes section of the Global Key Employee Restricted Stock Unit Grant Agreement: Without limitation to the Responsibility for Taxes section of the Global Key Employee Restricted Stock Unit Grant Agreement, the Participant agrees that he relevant authority). The Participant also agrees to indemnify and keep are required to pay or withhold on the Participant’s behalf or have paid or will Participant’s behalf. Act), the Participant acknowledges that he or she may not be able to indemnify amount of any income tax not collected within ninety (90) days of the end of the appropriate) the amount of any NICs due on this additional benefit, which may also be recovered from the Participant at any time by any of the means referred to in the Responsibility for Taxes section of the Global Key Employee Restricted 20

Exhibit 10.1     SECOND AMENDED AND RESTATED CREDIT AGREEMENT   dated as of   November 19, 2018   among   CARDTRONICS PLC   The Other Obligors Party Hereto,     as Administrative Agent,   as Alternative Currency Agent,   BARCLAYS BANK PLC and   and   and COMPASS BANK,     BARCLAYS BANK PLC, and       TABLE OF CONTENTS     Page     ARTICLE I Definitions 1 Section 1.01 Defined Terms 1 35 Section 1.03 Terms Generally 36 36 Section 1.05 Determination of Equivalent Amounts 36 Section 1.06 Additional Alternative Currencies 37 Section 1.07 LCT Election 37 Section 1.08 Interest Rates; LIBOR Notification 38 Section 1.09 Divisions 39     ARTICLE II The Credits 39 Section 2.01 Commitments 39 40 41 Section 2.04 Swingline Loans 42 44 50 Section 2.07 Interest Elections 51 52 53 53 Section 2.11 Fees 54 Section 2.12 Interest 55 Section 2.13 Market Disruption; Alternate Rate of Interest 57 Section 2.14 Increased Costs 59 60 Section 2.16 Taxes 61 Section 2.17 Payments; Generally; Pro Rata Treatment; Sharing of Set-offs 67 69 Section 2.19 Increase of Commitments 70 Section 2.20 Defaulting Lenders 71 Section 2.21 Illegality 73 Section 2.22 Judgment Currency 74     74 Section 3.01 Organization 74 Section 3.02 Authority Relative to this Agreement 75 Section 3.03 No Violation 75 Section 3.04 Financial Statements 76 Section 3.05 Reserved 76 Section 3.06 Litigation 76 Section 3.07 Compliance with Law 76   i   Section 3.08 Properties 76 Section 3.09 Intellectual Property 76 Section 3.10 Taxes 77 Section 3.11 Environmental Compliance 77 Section 3.12 Labor Matters 78 Section 3.13 Investment Company Status 78 Section 3.14 Insurance 78 Section 3.15 Solvency 78 Section 3.16 ERISA 79 Section 3.17 Disclosure 79 Section 3.18 Margin Stock 79 Section 3.19 Anti-Corruption Laws and Sanctions 80 Section 3.20 EEA Financial Institution 80     ARTICLE IV Conditions 80 Section 4.01 Effective Date 80 82 Section 4.03 Credit Events for Limited Condition Transactions 82     ARTICLE V Affirmative Covenants 83 Section 5.01 Financial Statements 83 85 86 86 86 86 86 87 Section 5.09 Additional Guarantors; Termination of Guarantees 87 Section 5.10 Additional Borrowers; Removal of Borrowers 89 Section 5.11 Compliance with ERISA 91 Section 5.12 Compliance With Agreements 91 Section 5.13 Compliance with Environmental Laws; Environmental Reports 91 Section 5.14 Maintain Business 92 Section 5.15 Further Assurances 92 Section 5.16 Australian Restructuring 92     ARTICLE VI Negative Covenants 92 Section 6.01 Indebtedness 92 Section 6.02 Liens 93 Section 6.03 Fundamental Changes 94 Section 6.04 Asset Sales 95 Section 6.05 Investments 96 Section 6.06 Swap Agreements 97 Section 6.07 Restricted Payments 97 Section 6.08 Prepayments of Indebtedness 98 Section 6.09 Transactions with Affiliates 99   ii   Section 6.10 Restrictive Agreements 99 Section 6.11 Business Acquisitions 99 Section 6.12 Constitutive Documents 100 Section 6.13 Reserved 100 Section 6.14 Amendment of Existing Indebtedness 100 Section 6.15 Changes in Fiscal Year 100 Section 6.16 Total Net Leverage Ratio 100 Section 6.17 Interest Coverage Ratio 100     100 100 Section 7.02 Cash Collateral 103     103     ARTICLE IX Guarantee 106 Section 9.01 The Guarantee 106 Section 9.02 Guaranty Unconditional 107 Section 9.03 Discharge Only upon Payment in Full; Reinstatement In Certain Circumstances 108 Section 9.04 Waiver by Each Guarantor 109 Section 9.05 Subrogation 109 Section 9.06 Stay of Acceleration 109 Section 9.07 Limit of Liability 109 Section 9.08 Release upon Sale 109 Section 9.09 Benefit to Guarantor 110 Section 9.10 Keepwell 110 Section 9.11 Limitation for German Guarantors 110 Section 9.12 Limitation for South African Guarantors 113     ARTICLE X Miscellaneous 114 Section 10.01 Notices 114 118 119 121 Section 10.05 Survival 124 125 Section 10.07 Severability 125 125 125 126 Section 10.11 Headings 127 Section 10.12 Confidentiality 127 128 128 Section 10.15 Amendment and Restatement 128 Section 10.16 Exiting Lenders 129   iii   Section 10.17 Limitation of Liability of CFC Subsidiaries 129 Section 10.18 Acknowledgement and Consent to Bail-In of EEA Financial Institutions 130 Section 10.19 No Fiduciary Duty, etc. 130 Section 10.20 Limited Release 131   iv   SCHEDULES:   — CFC Guarantors — Credit Facility Guarantors — Non-Pro Rata Alternative Currencies and Lenders — Commitments — Letter of Credit Commitments — Swingline Commitments Schedule 2.05 — Existing Letters of Credit Schedule 6.01 — Existing Indebtedness Schedule 6.02 — Existing Liens Schedule 6.05 — Existing Investments Schedule 6.10 — Restrictive Agreements   EXHIBITS:   Exhibit 1.1A — Form of Addendum Exhibit 1.1B — Exhibit 1.1C — Exhibit 2.03 — Form of Borrowing Request Exhibit 2.07 — Exhibit 2.16 — Exhibit 5.01(c) — Form of Compliance Certificate Exhibit 5.10 — Form of Borrower Accession Agreement   v   November 19, 2018 (the “Effective Date”), among Cardtronics plc, an English public limited company (“Parent”), the other Obligors party hereto, the Lenders Europe Limited, as Alternative Currency Agent, Bank of America, N.A., Barclays Bank plc and Wells Fargo Bank, N.A., as Co-Syndication Agents and Capital One, N.A. and Compass Bank, as Co-Documentation Agent.   PRELIMINARY STATEMENT:   WHEREAS, the Parent is a party to that certain Amended and Restated Credit Agreement dated April 24, 2014 (as amended, the “Existing Credit Agreement”) among the Parent, the other Obligors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent for such lenders, and J.P. Morgan Europe Limited, as alternative currency agent; and   WHEREAS, the Parent, the other Obligors, the Administrative Agent, the Alternative Currency Agent and the Lenders mutually desire to amend and restate the Existing Credit Agreement in its entirety;   forth herein, the Parent, the other Obligors, the Administrative Agent, the Alternative Currency Agent and the Lenders agree that the Existing Credit   ARTICLE I Definitions       “Addendum” means the applicable agreement attached hereto as part of Exhibit 1.1A.   Section 5.10.   Period.     1     “Affiliate” means, with respect to a specified Person at any date, another   “Agreed Alternative Currency” means (a) Pounds Sterling, (b) Euros, (c) Canadian Dollars, (d) Australian Dollars and (e) a currency, in the case of any Loan, that is readily available in the amount required and freely convertible into Dollars in the London interbank market on the Quotation Day for such Loan and the date such Loan is to be advanced and, in the case of any Letter of Credit, in which one or more Issuing Lenders has agreed to issue Letters of Credit, in each case, as such currency has been approved in writing (including by email) by     such day plus ½ of 1% and (c) the Adjusted LIBO Rate for an interest period of one month plus 1%; provided that for the purpose of this definition, the alternate rate of interest pursuant to Section 2.13, then the Alternate Base   “Alternative Currency” means any Agreed Alternative Currency or any Non-Pro Rata Alternative Currency.   Affiliate of the Administrative Agent, acting at the request of the Administrative Agent, together with any other Affiliate or branch of the   applicable to the Parent or its Subsidiaries from time to time concerning or   “Applicable Margin” means, on any day, the applicable per annum percentage set Total Net Leverage Ratio for the most recently ended trailing four-quarter period with respect to which the Parent is required to have delivered the financial statements pursuant to Section 5.01 hereof (as such Total Net   2   Leverage Ratio is calculated on Exhibit C of the Compliance Certificate delivered under Section 5.01(c) by the Parent in connection with such financial statement):   Level   Total Net Leverage Ratio   Applicable Margin for Eurocurrency, CDOR, BBSY and JIBAR Loans   Applicable Margin for ABR and Canadian Prime Rate Loans   I   X > 3.00   1.75 % 0.75 % II   X > 2.00   1.50 % 0.50 % III   X > 1.50   1.25 % 0.25 % IV   X < 1.50   1.00 % 0.00 %   such financial statements and Compliance Certificate are required to be delivered pursuant to Section 5.01, commencing with the date on which such financials statements and Compliance Certificate are required to be delivered for the four-quarter period ending December 31, 2018.  Notwithstanding the foregoing, for the period from the Effective Date through the date the financial statements and Compliance Certificate are required to be delivered pursuant to Section 5.01 for the fiscal quarter ended December 31, 2018, the Applicable Margin shall be determined at Level II.  In the event that any financial statement delivered pursuant to Section 5.01 is shown to be inaccurate when delivered (regardless of whether this Agreement or the Commitments are in effect Period, and only in such case, then the Parent shall immediately (i) deliver to the Administrative Agent corrected financial statements for such Applicable upon the corrected financial statements, and (iii) immediately pay to the promptly applied by the Administrative Agent in accordance with Section 2.17.  This provision is in addition to the rights of the Administrative Agent and the Lenders with respect to Section 2.12(e) and their other respective rights under this Agreement.  If the Parent fails to deliver the financial statements and required pursuant to Section 5.01, then effective as of the date such financial statements and corresponding Compliance Certificate were required to be delivered pursuant to Section 5.01, the Applicable Margin shall be determined at Level I and shall remain at such level until the date such financial statements and corresponding Compliance Certificate are so delivered by the Parent.  In the event that any such financial statement, if corrected, would have led to the application of a lower Applicable Margin for the Applicable Period than the Applicable Margin applied for such Applicable Period, the Administrative Agent shall, at the request of the Parent, send out a single notice to the Lenders requesting refund to the Administrative Agent of any overpayment of interest relating thereto.  The Administrative Agent shall promptly remit any amounts received to the Parent.   3   determined based upon the Revolving Credit Exposure, giving effect to any   “Arrangers” means, collectively, JPMorgan, Barclays, Merrill Lynch, Pierce, lending services or related businesses may be transferred after the Effective Date) and Wells Fargo Securities, LLC, each in its capacity as co-lead arranger and joint bookrunner.   “Asset Sale” means the sale, transfer, lease or disposition (in one transaction or in an series of transactions and whether effected pursuant to a Division or otherwise) by the Parent or any Restricted Subsidiary of (a) any of the Equity Interest in any Restricted Subsidiary, (b) substantially all of the assets of any division, business unit or line of business of the Parent or any Restricted Subsidiary, or (c) any other assets (whether tangible or intangible) of the Parent or any Restricted Subsidiary including, without limitation, any accounts receivable.   by Section 10.04), and accepted by the Administrative Agent (which acceptance may not be unreasonably withheld or delayed), in the form of Exhibit 1.1B or any   “ATM Equipment” means automated teller machines and related equipment.     “Australian Restructuring” means the corporate restructuring of the Parent’s Australian Subsidiaries and operations, as disclosed in writing to the Administrative Agent and the Lenders prior to the Effective Date; provided that, after giving effect to such corporate restructuring, there shall be no adverse effect on the Collateral or Guarantees.   all of the Commitments as set forth herein.   Financial Institution.     4   “Bank Bill Swap Reference Rate” means, with respect to any Borrowing denominated in Australian Dollars for any Interest Period, (a) the applicable Screen Rate at or about 10:30 a.m. Sydney time on the Quotation Day or (b) if no Screen Rate is available for such Interest Period, the applicable Interpolated Rate as of such time on the Quotation Day, or if applicable pursuant to Section 2.13(a), the applicable Reference Bank Rate as of such time on the Quotation Day.     “Bank Products” means each and any of the following bank services provided to (b) commercial checking accounts, (c) stored value cards and (d) treasury management services (including, without limitation, controlled disbursements, automated clearinghouse transactions, return items, overdraft and interstate depository network services); provided that Bank Products shall specifically exclude services and fees in respect of vault cash or cash for use in ATM Equipment.   its business or assets appointed for it, including the Federal Deposit Insurance Corporation or any state or federal regulatory authority acting in such capacity, or, in the good faith determination of the Administrative Agent, has the acquisition of any ownership interest, in such Person or any direct or indirect parent company thereof by a Governmental Authority or instrumentality such Person.   “Barclays” means Barclays Bank plc.   “BBSY” when used in reference to any Loan or Borrowing, refers to whether such determined by reference to the Bank Bill Swap Reference Rate.         5   States of America.   “Borrower Accession Agreement” means an agreement in the form of Exhibit 5.10.   “Borrowers” means the Parent, U.K. Holdco, U.S. Holdco, CATM USA, CATM UK, the Canadian Borrower, CATM Europe Holdings Limited, Cardtronics Australasia Pty Ltd and any other Wholly-Owned Restricted Subsidiary that becomes a Borrower hereunder pursuant to Section 5.10(a), and “Borrower” means any one of them.   continued on the same date and, in the case of Eurocurrency Loans, CDOR Loans, BBSY Loans and JIBAR Loans, as to which a single Interest Period is in effect or   with Section 2.03 and substantially in the form attached hereto as Exhibit 2.03 or such other form reasonably acceptable to the Administrative Agent.   “Business Acquisition” means (a) an Investment by the Parent or any Restricted Subsidiary or shall be merged into, amalgamated with or consolidated with the Parent or any Restricted Subsidiary or (b) an acquisition by the Parent or any Restricted Subsidiary of the property and assets of any Person (other than a Subsidiary) that constitutes substantially all of the assets of such Person or any division or other business unit of such Person.   authorized or required by Law to remain closed; provided that (a) when used in any day on which banks are not open for dealings in the applicable currency in the London interbank market or the principal financial center of the country in which payment or purchase of such currency, (b) when used in connection with a CDOR or Canadian Prime Rate Loan, the term “Business Day” shall also exclude any Law to remain closed, (c) when used in connection with a BBSY Borrowing, the Sydney are authorized or required by Law to remain closed, (d) when used in connection with a JIBAR Borrowing, the term “Business Day” shall also exclude any day on which commercial banks in Johannesburg are authorized or required by Law to remain closed and (e) if the Borrowings which are the subject of a borrowing, draw, payment, reimbursement or rate selection are denominated in Day.   by the Company.   “Canadian Borrower” means Cardtronics Canada Holdings Inc.   “Canadian Dealer Offered Rate” means, with respect to any Borrowing denominated in Canadian Dollars for any Interest Period, (a) the applicable Screen Rate at or about 10:00 a.m.    6   Quotation Day, or if applicable pursuant to Section 2.13(a), the rate quoted by the Administrative Agent as of such time on the Quotation Day, plus, in each case, 0.10% per annum.     Administrative Agent to be the higher of (a) the rate equal to the PRIMCAN Index per annum; provided, that if any of the above rates shall be less than zero,     “Cash Interest Expense” means, for any period, for the Parent and the Restricted Subsidiaries on a consolidated basis, all cash interest payments made during such period (including the portion of rents payable under Capital Lease Obligations allocable to interest); provided that, in the case of any Restricted Subsidiary that is not a Wholly-Owned Subsidiary, the amount of Cash Interest Expense attributed to such Restricted Subsidiary shall be the Owned Percentage of the amount that would otherwise be included in the absence of this proviso.   “CATM UK” means Cardtronics UK Limited, a private company incorporated under English law.   “CATM USA” means Cardtronics USA, Inc., a Delaware corporation.   determined by reference to the Canadian Dealer Offered Rate.   Code.   7   “CFC Borrower” means (a) each Borrower that is a CFC, (b) any Borrower that is owned by a CFC and classified as a partnership or disregarded entity, in each case for U.S. federal income tax purposes and (c) each Additional Borrower that is described in clause (a) or (b) above and designated by the Borrower as a CFC Borrower pursuant to Section 5.10.   “CFC Guarantor” means each CFC Borrower and, subject to Sections 5.09(g) and 9.08, each Material Restricted Subsidiary that is a CFC Subsidiary and each other CFC Subsidiary that is required to be, or has otherwise become, a CFC Guarantor pursuant to Section 5.09; provided, however, that any Material Restricted Subsidiary that is listed as a Credit Facility Guarantor on Schedule 1.01(b) shall be treated as a Credit Facility Guarantor and not as a CFC Guarantor.  Schedule 1.01(a) sets forth the CFC Guarantors as of the Effective Date.   “CFC Subsidiary” means any Subsidiary that is (a) a CFC, (b) a U.S. Subsidiary, owned directly by another U.S. Subsidiary, substantially all of the assets of which consist of Equity Interests in, or Indebtedness of, one or more CFCs or (c) owned directly or indirectly by a CFC.   “Change in Control” means (a) any Person or group (within the meaning of Rule 13d-5 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 as in effect on the date hereof) shall become the ultimate Commission under the Securities Exchange Act of 1934 as in effect on the date hereof) of issued and outstanding Equity Interests of the Parent representing more than 50% of the aggregate voting power in elections for directors of the Parent on a fully diluted basis; or (b) a majority of the members of the board of directors of the Parent shall cease to be either (i) Persons who were members of the board of directors on the Effective Date or (ii) Persons who became members of such board of directors after the Effective Date and whose election or nomination was approved by a vote or consent of the majority of the members of the board of directors that are either described in clause (i) above or who were elected under this clause (ii).     Loans.     8   “Collateral” means all of the property described in the Security Documents serving as security for the Loans.   Lender’s Commitment is set forth on Schedule 2.01(a), or in the Assignment and Lender shall have assumed its Commitment, as applicable.  As of the Effective Date, the aggregate amount of the Lenders’ Commitments is $600,000,000.   “Commitment Fee Rate” means, on any day, the applicable per annum percentage set financial statements pursuant to Section 5.01 hereof (as such Total Net Leverage Ratio is calculated on Exhibit C of the Compliance Certificate delivered under Section 5.01(c) by the Parent in connection with such financial statement):   Level   Total Net Leverage Ratio   Commitment Fee Rate   I   X > 3.00   0.35 % II   X > 2.00   0.25 % III   X > 1.50   0.20 % IV   X < 1.50   0.15 %   Each change in the Commitment Fee Rate shall take effect on each date on which Section 5.01 for the fiscal quarter ended December 31, 2018, the Commitment Fee Rate shall be determined at Level II.  In the event any financial statement delivered pursuant to Section 5.01 is shown to be inaccurate when delivered a higher Commitment Fee Rate for any period (an “Applicable Commitment Fee Period”) than the Commitment Fee Rate applied for such Applicable Commitment Fee Commitment Fee Period, (ii) determine the Commitment Fee Rate for such Applicable Commitment Fee Period based on the corrected financial statements, and (iii) immediately pay to the Administrative Agent the additional accrued commitment fees owing as a result of such increased Commitment Fee Rate for such Applicable Commitment Fee Period, which payment shall be promptly applied in accordance with Section 2.11.  This provision is in addition to the rights of the Administrative Agent and Lenders with respect to   9   Section 2.12(e) and their other respective rights under this Agreement.  If the Parent fails to deliver the financial statements and corresponding Compliance Section 5.01, then effective as of the date such financial statements and corresponding Compliance Certificate were required to be delivered pursuant to Section 5.01, the Commitment Fee Rate shall be determined at Level I and shall remain at such level until the date such financial statements and corresponding Compliance Certificate are so delivered by the Parent.  In the event that any such financial statement, if corrected, would have led to the application of a lower Commitment Fee Rate for the Applicable Commitment Fee Period than the Commitment Fee Rate applied for such Applicable Commitment Fee Period, the Administrative Agent shall, at the request of the Parent, send out a single notice to the Lenders requesting refund to the Administrative Agent of any overpayment of commitment fees relating thereto.  The Administrative Agent shall promptly remit any amounts received to the Parent.     “Company” means Cardtronics, Inc., a Delaware corporation.     “Computation Date” has the meaning assigned to such term in Section 1.05.   branch profits Taxes.   taxes payable during such period, (iii) depreciation, accretion and amortization expense, (iv) cash expenses incurred in connection with the Transactions and the redemption of the 5.125% Senior Notes due 2022 issued by the Company and all non-cash amortization of financing costs (including debt discount, debt issuance costs, commissions, premiums and fees related to Indebtedness) of the Parent and its Restricted Subsidiaries and (v) other extraordinary, non-cash and non-recurring cash expenses reducing such Consolidated Net Income; provided that any such non-recurring cash expenses shall not exceed $35,000,000 in any fiscal year, and minus (b) to the extent included in calculating such Consolidated Net Income, all non-cash items increasing Consolidated Net Income for such period; provided that, in the case of any Restricted Subsidiary that is not a Wholly-Owned Subsidiary, the amount included in the calculation of Consolidated Adjusted EBITDA in respect of any such items or components thereof shall be the Owned Percentage of the amount that would otherwise be included in the absence of this proviso.   “Consolidated Adjusted Pro Forma EBITDA” means, for any period, for the Parent and the Restricted Subsidiaries on a consolidated basis, Consolidated Adjusted EBITDA for such period, adjusted to include the Consolidated Adjusted EBITDA attributable to Business   10   Acquisitions made in accordance with Section 6.11 during such period as if such Business Acquisition occurred on the first day of such period, including adjustments attributable to such Business Acquisitions so long as such adjustments (a) have been certified by a Financial Officer as having been prepared in good faith based upon reasonable assumptions, (b) are expected to occur within nine months of the date such Business Acquisition is consummated, (c) are permitted or required under Regulation S-X of the SEC and (d) do not exceed $35,000,000 in the aggregate in any twelve month period.   “Consolidated Funded Indebtedness” means, as of the date of determination, for the Parent and the Restricted Subsidiaries on a consolidated basis, all Indebtedness evidenced by a note, bond, debenture or similar items with regularly scheduled interest payments and a maturity date; provided that, in the case of any Restricted Subsidiary that is not a Wholly-Owned Subsidiary, the amount of Indebtedness attributed to such Restricted Subsidiary shall be the of this proviso, unless the Parent or any Restricted Subsidiary that is a Wholly-Owned Subsidiary guaranties a greater percentage than the Owned Percentage, in which case the amount included in respect of such Indebtedness shall be the percentage so guarantied.  For all purposes hereof, the term “Consolidated Funded Indebtedness” shall exclude any operating lease that must be recognized on the balance sheet of such Person as a lease liability and right-of-use asset in accordance with the Financial Accounting Standards Board Update No. 2016-02, dated February 2016 (Leases (Topic 842)), which adopts Accounting Standards Codification 842.   “Consolidated Interest Expense” means, for any Person, determined on a consolidated basis, the sum of all interest on Indebtedness paid or payable allocable to interest) plus all original issue discounts and other interest expense associated with Indebtedness amortized or required to be amortized in accordance with GAAP.   Restricted Subsidiaries on a consolidated basis, the net income or loss of the Parent and the Restricted Subsidiaries for such period determined in accordance with GAAP.     “Convertible Senior Notes” means the Company’s 1.00% Convertible Senior Notes in the principal amount of $287,500,000 due 2020.   “Credit Facility Guarantor” means each Borrower, subject to Sections 5.09(g) and 9.08, each Material Restricted Subsidiary, and each other Subsidiary that is required to be, or has otherwise become, a Credit Facility Guarantor pursuant to Section 5.09; provided, however, that a Credit Facility Guarantor shall not include any such Person to the extent such Person is a CFC Subsidiary, other than a CFC Subsidiary that is listed on Schedule 1.01(b).  Schedule 1.01(b) sets forth the Credit Facility Guarantors as of the Effective Date.   11   “Credit Party” means the Administrative Agent, the Alternative Currency Agent, the Issuing Lenders, the Swingline Lenders or any other Lender.   Event of Default.   “Default Rate” means (a) with respect to principal payments on the Loans, the rate otherwise applicable to such Loans plus 2%, and (b) with respect to all other amounts, the rate otherwise applicable to ABR Loans plus 2%.   failed within two Business Days of the date required to be funded or paid, to clause (i) above, such Lender notifies the Administrative Agent and the Parent in writing that such failure is the result of such Lender’s determination that a condition precedent to funding specifically identified (and including the Agreement (unless such writing or public statement relates to such Lender’s such Lender’s determination that a condition precedent specifically identified and including the particular default, if any, to funding a Loan under this written request by a Credit Party or the Parent, to confirm in writing to the direct or indirect parent company that has, become the subject of (i) a Parent and each Credit Party.   “Division”.   survive.     “DTTP Filing” means a HM Revenue & Customs’ Form DTTP2, duly completed and filed by each U.K. Borrower within the applicable time limit, which contains the either (i) in writing to the U.K. Borrowers and the Administrative Agent at the Effective Date, or (ii) if the Lender is   12   not a party to this Agreement at the Effective Date, to the U.K. Borrowers and the Administrative Agent in the Assignment and Assumption of such Lender or such become a party hereto.       Financial Institution.       “Environmental Laws” means all Laws issued or promulgated by any Governmental Authority, relating in any way to the protection of the environment, preservation or reclamation of natural resources or the management, release or   penalties or indemnities), of the Parent or any Restricted Subsidiary directly or indirectly resulting from or based upon (a) violation of any applicable treatment or disposal of any Hazardous Materials performed in violation of applicable Environmental Laws, (c) exposure to any Hazardous Materials, (d) the   equity interest.   “Equivalent Amount” means, for any amount, at the time of determination thereof, determined by using the rate of   13   exchange for the purchase of Dollars with such Alternative Currency last rate of exchange for the purchase of Dollars with such Alternative Currency, as that rate of exchange at such time in place of Reuters chose by the           “Euro” and “Euros” mean the currency of the participating member states of the EMU.     14     Obligation.  If a Swap Obligation arising under a master agreement governing   of such Recipient being organized or resident under the laws of, or having its by the Parent under Section 2.18(b)) or (ii) such Lender changes its lending Recipient’s failure to comply with Section 2.16(g), (h), (i) or (j), as applicable, (d) any U.S. federal withholding Taxes imposed under FATCA, (e) any U.K. Excluded Withholding Taxes and (f) any German Excluded Withholding Taxes.   “Existing Credit Agreement” has the meaning given in the preamble hereto.   “Existing Indebtedness” means Indebtedness existing on the Effective Date and set forth in Schedule 6.01.   2.05.   notified by such Lender to the Administrative Agent in writing on or before the date it becomes a Lender (or, following such date, by not less than five perform its obligations under this Agreement and (b) in respect of any other party to this Agreement (other than an Obligor), the office in the jurisdiction in which such Person is resident for tax purposes.   15   such intergovernmental agreement.   FRBNY based on such day’s federal funds transactions by depositary institutions   “Fee Letter” means the letter agreement dated November 2, 2018, by and between the Parent and JPMorgan pertaining to certain fees payable in connection with this Agreement.     “Finco Entities” means CATM Luxembourg I S.à. r.l., a Luxembourg limited liability company, its Subsidiaries and any other Subsidiary created, formed or acquired, in each case, so long as such Finco Entity’s only assets consist of (i) intercompany Indebtedness owed to it and any payments thereon, (ii) any other assets reasonably necessary for the operation of its business that are insignificant in value and (iii) Equity Interests in Subsidiaries, and it does not engage in any business other than the ownership of such assets and   purposes.       Issuing Lender other than LC Exposure as to which such Defaulting Lender’s collateralized in accordance with the terms of Section 2.05(j), and (b) with of outstanding   16   other Lenders.   America.   “German Excluded Withholding Taxes” means any deduction or withholding for or on account of any German Tax from a payment under any Loan where: (a) the payment could have been made to the relevant Lender without any deduction or withholding if the Lender had been a German Qualifying Lender, but on that date that Lender is not or has ceased to be a German Qualifying Lender other than as a result of interpretation, administration, or application of) any law or treaty or any (b) the relevant Lender is a German Treaty Lender and the Obligor making the Lender without the German Tax deduction had such Lender complied with its obligations under Section 2.16(g) or (i) (as applicable).   Borrower established in Germany, a Lender which is beneficially entitled to and is (a) lending through a Facility Office in Germany or (b) a German Treaty Lender.   “German Tax” means any Tax imposed under the laws of Germany or by any political subdivision, instrumentality or governmental agency in Germany having taxing authority.   respect of a Borrower established in Germany under a Loan Document, a Lender which (a) is treated as a resident of a German Treaty State for the purposes of the German Treaty; (b) does not carry on a business in Germany through a permanent establishment with which that Lender’s participation in a Loan is effectively connected; and (c) fulfils any other conditions which must be fulfilled under the German Treaty and the laws of Germany by residents of that German Treaty State for such residents to obtain full exemption from taxation on interest in Germany (including the completion of any necessary procedural formalities).   “German Treaty”) with Germany which makes provision for full exemption from tax imposed by Germany on interest.   waiver, or exemption, by or with or (b) any required filing or registration by Governmental Authority.   any other nation or of any political subdivision thereof, whether state or   17     Indebtedness; provided, that the term guarantee shall not include endorsements   “Guarantee Termination” has the meaning assigned to such term in Section 5.09(g).     “Guarantors” means the Credit Facility Guarantors and the CFC Guarantors.   substances or wastes of any nature to the extent any of the foregoing are present in quantities or concentrations prohibited under the Environmental Laws but does not include normal quantities of any material present or used in the ordinary course of business, including, without limitation, materials such as substances and materials used in the operation or maintenance of ATM Equipment, office or cleaning supplies, typical building and maintenance materials and employee and invitee vehicles and vehicle fuels.   “HMRC DT Treaty Passport scheme” means the HM Revenue and Customs Double Taxation Treaty Passport Scheme.       earn-out obligations but only once non-contingent and determinable), (f) all   18   such Person of Indebtedness of others, (h) the principal portion of all Capital respect of bankers’ acceptances.  For the avoidance of doubt, Indebtedness of the Parent or any Restricted Subsidiary shall not include obligations of such Person to providers of vault services.  The Indebtedness of any Person shall such Person is not liable therefor; provided that, in the case of any Restricted Subsidiary that is not a Wholly-Owned Subsidiary, the amount of Indebtedness attributed to such Restricted Subsidiary shall be the Owned Percentage of the amount that would otherwise be included in the absence of this proviso, unless the Parent or any Restricted Subsidiary that is a Wholly-Owned Subsidiary guaranties a greater percentage than the Owned Percentage, in which case the amount included in respect of such Indebtedness shall be the percentage so guarantied.  For all purposes hereof, the term “Indebtedness” shall exclude any operating lease that must be recognized on the balance sheet of such Person as a lease liability and right-of-use asset in accordance with the Financial Accounting Standards Board Update No. 2016-02, dated February 2016 (Leases (Topic 842)), which adopts Accounting Standards Codification 842.     of (a) Consolidated Adjusted Pro Forma EBITDA for the four quarter period then ended to (b) Cash Interest Expense during such period.   a Revolving Borrowing in accordance with Section 2.07 and substantially in the form attached hereto as Exhibit 2.07 or such other form reasonably acceptable to the Administrative Agent.   “Interest Payment Date” means (a) with respect to any Canadian Prime Rate Loan or ABR Loan (in each case, other than a Swingline Loan), the last day of each CDOR Loan, BBSY Loan or JIBAR Loan, the last day of the Interest Period Eurocurrency Borrowing, CDOR Borrowing, BBSY Borrowing or JIBAR Borrowing with Section 2.09.   “Interest Period” means with respect to any Eurocurrency, CDOR, BBSY or JIBAR six months (or,   19   with the consent of each relevant Lender, twelve months) thereafter, as the   Rate) determined by the Alternative Currency Agent (which determination shall be Rate for the longest period (for which the applicable rate is available for the applicable currency) that is shorter than the relevant Interest Period and (b) the Screen Rate for the shortest period (for which such rate is available for the applicable currency) that exceeds the relevant Interest Period, in each case, on the Quotation Day for such Interest Period, in each case, at such time.  When determining the rate for a period that is less than the shortest period for which the relevant rate applicable to Loans in an Alternative Currency is available, the applicable rate for purposes of clause (a) above determined by the Alternative Currency Agent from such service as the Alternative Currency Agent may select.   “Investment” means any investment in any Person, whether by means of a purchase of Equity Interests or debt securities, capital contribution, loan, time deposit or other similar investments (but not including any demand deposit).     “Issuing Lender” means JPMorgan, Bank of America, Barclays and Wells Fargo, each in such capacity as provided in Section 2.05(i), and JPMorgan, in its capacity as issuer of the Existing Letters of Credit.  Any Issuing Lender may, in its Each reference herein to the “Issuing Lender” in connection with a Letter of Credit or other matter shall be deemed to be a reference to the relevant Issuing   “JIBAR”, when used in reference to any Loan or Borrowing, refers to whether such determined by reference to the Johannesburg Interbank Agreed Rate.   “Johannesburg Interbank Agreed Rate” means, with respect to any Borrowing denominated in Rand for any Interest Period, (a) the applicable Screen Rate at or about 11:00   20   a.m. Johannesburg time on the Quotation Day or (b) if no Screen Rate is     regulations and Orders of all Governmental Authorities, whether now or hereafter in effect.   of Credit.   “LC Exposure” means, at any time, the Equivalent Amount of the sum of (a) the reimbursed by or on behalf of the Borrowers or converted into a Loan pursuant to Section 2.05(e) at such time.  The LC Exposure of any Lender at any time shall   “LCT Election” has the meaning set forth in Section 1.07(a).   “LCT Test Date” has the meaning set forth in Section 1.07(a).   “Lender Swap Agreement” means (a) any Swap Agreement between the Parent or any Restricted Subsidiary and any Lender or any Affiliate of any Lender which is in existence on the Effective Date or which is entered into while such Person is a Lender or an Affiliate of a Lender even if such Person ceases to be a Lender or an Affiliate of a Lender after entering into such Swap Agreement and (b) any Swap Agreement between the Parent or any Restricted Subsidiary and any Person or any Affiliate of such Person which is in existence on the Effective Date and was entered into while such Person was a “Lender” under the Existing Credit Agreement.   “Lenders” means the Persons listed on Schedule 2.01(a) as Lenders and any other Assumption or other documentation contemplated hereby, but in any event, Assignment and Assumption or other documentation contemplated hereby.  Unless   Agreement.   “Letter of Credit Agreement” has the meaning assigned to it in Section 2.05(b).   commitment of such Issuing Lender to issue Letters of Credit hereunder.  The initial amount of each Issuing Lender’s Letter of Credit Commitment is set forth on Schedule 2.01(b), or if an Issuing Lender has entered into an Assignment and Effective Date, the amount set forth for such Issuing   21   Lender as its Letter of Credit Commitment in the Register maintained by the Administrative Agent.  The Letter of Credit Commitment of an Issuing Lender may be modified from time to time by agreement between such Issuing Lender and the Borrowers, and notified to the Administrative Agent.   approximately 11:00 a.m., London time, on the Quotation Day, or (b) if no Screen Rate is available for such currency or for such Interest Period, the applicable Interpolated Rate as of such time on the Quotation Day or, if applicable pursuant to the terms of Section 2.13(a), the applicable Reference Bank Rate as of such time on the Quotation Day.   “LIBO Screen Rate” means the London interbank offered rate as administered by Period as displayed on page LIBOR01 of the Reuters screen that displays such   pledge, hypothecation, charge or security interest in, on or of such asset to secure or provide for the payment of any obligation of any Person, (b) the   “Limited Condition Transaction” means (a) any Business Acquisition permitted hereunder the consummation of which is not conditioned on the availability of, or on obtaining, third-party financing, (b) any redemption, repurchase, defeasance, satisfaction and discharge or repayment of the Convertible Senior Notes and (c) any redemption, repurchase, defeasance, satisfaction and discharge or repayment of other Indebtedness (i) occurring within ninety (90) days after the Effective Date and (ii) requiring irrevocable notice in advance of such   “Loan Documents” means this Agreement, any Notes, the Letter of Credit Agreements, the Security Documents and the Fee Letter.     denominated in Dollars, Houston, Texas time, (b) with respect to a Loan, (c) with respect to a Loan, Borrowing or Letter of Credit denominated in Australian Dollars, Sydney time, (d) with respect to a Loan,   22   Borrowing or Letter of Credit denominated in Rand, Johannesburg time and (e) with respect to a Loan, Borrowing or Letter of Credit denominated in any other Alternative Currency, London time.   and unused Commitments representing more than 50.0% of the sum of the total Credit Exposure and unused Commitment of any Defaulting Lender shall be disregarded in determining the Majority Lenders at any time.   in the aggregate, materially adversely affect (a) the ability of the Obligors, taken as a whole, to pay the Obligations under the Loan Documents or (b) the Documents.   Subsidiaries in an aggregate principal amount exceeding $50,000,000 (or the equivalent amount thereof in any foreign currency).  For purposes of determining   “Material Restricted Subsidiary” means each Material Subsidiary that is a Restricted Subsidiary.   “Material Subsidiary” means a Wholly-Owned Subsidiary that either generates 5% or more of the consolidated gross revenues of the Parent and its Subsidiaries on a consolidated basis or holds assets that constitute 5% or more of all assets of the Parent and its Subsidiaries on a consolidated basis; provided that none of the Finco Entities will be deemed to be a Material Subsidiary.   “Maturity Date” means the earlier of (a) the fifth (5th) anniversary of the Effective Date and (b) the date that is six months before the maturity of 5.125% Senior Notes due 2022 issued by the Company (unless such Senior Notes are redeemed, repaid or otherwise retired prior to such date).       “New Lender” has the meaning assigned such term in Section 2.19.   in accordance with Section 2.19 and accepted by the Administrative Agent in the form of Exhibit 1.1C, or any other form approved by Administrative Agent.   23     “Non-Pro Rata Alternative Currency” means (a) Rand and (b) a currency, in the case of any Loan, that is readily available in the amount required and freely convertible into Dollars in the London interbank market on the Quotation Day for such Loan and the date such Loan is to be advanced and, in the case of any Letter of Credit, in which one or more Issuing Lenders has agreed to issue Letters of Credit, in each case, as such currency has been approved in writing (including by email) by the Administrative Agent and the Majority Lenders; provided that, (i) for purposes of Swingline Loans, such currency must be approved by all of the Lenders and all of the Swingline Lenders and (ii) for purposes of Letters of Credit, such currency must be approved by all of the Lenders.  Schedule 1.01(c) sets forth, as of the Effective Date, the currencies that are Non-Pro Rata Alternative Currencies, whether each such currency is available for Letters of Credit and Swingline Loans hereunder, the Lenders that have agreed to fund Revolving Loans in such currencies and the Issuing Lenders that have agreed to issue Letters of Credit denominated in such currencies.  After the Effective Date, upon the approval of any other currency as a Non-Pro Rata Alternative Currency or the addition of any new Lenders hereto pursuant to Section 2.19 or 10.04(b), Schedule 1.01(c) shall be deemed to have been amended to (i) add such new Non-Pro Rata Alternative Currency thereto, (ii) state whether such new Non-Pro Rata Alternative Currency is available for Letters of Credit and Swingline Loans and (iii) reflect the identity of (A) the Lenders that have agreed to fund Revolving Loans in such new Non-Pro Rata Alternative Currency or the then existing Non-Pro Rata Alternative Currencies, as the case may be and (B) the Issuing Lenders that have agreed to issue Letters of Credit denominated in such new Non-Pro Rata Alternative Currency.     “Obligations” means, without duplication, (a) all principal, interest (including amounts now or hereafter owed by the Borrowers or any of the Guarantors to the Lenders, the Swingline Lenders, the Issuing Lenders, the Alternative Currency Agent or the Administrative Agent under this Agreement and the Loan Documents, including, such obligations with respect to Letters of Credit, and any creating those obligations, (b) all obligations in respect of any Lender Swap Agreement and (c) all obligations in respect of Bank Products; provided that, with respect to any Guarantor, the Obligations shall specifically exclude the     decision of any Governmental Authority or arbitrator, to the extent the Parent or applicable Restricted Subsidiary has submitted a claim to, or is bound by the decision of, binding arbitration.     24       Alternative Currency Agent at which overnight or weekend deposits in the (3) Business Days, then for such other period of time as the Alternative Currency Agent may reasonably determine) for delivery in immediately available and freely transferable funds would be offered by the Alternative Currency Agent principal amount of the related Loan or LC Disbursement, plus any taxes, levies, to, the Alternative Currency Agent by any relevant correspondent bank in respect of such amount in such relevant currency.   bank funding rate.   “Overnight Foreign Currency Rate” means the rate of interest per annum (rounded upwards, if necessary, to the next 1/16th of 1%) at which overnight deposits in the applicable Alternative Currency (as the case may be) in an amount determined would be offered for such day by a branch or affiliate of the Alternative Currency Agent in the London interbank market for such currency to major banks in the London interbank market.   “Owned Percentage” means, in the case of any Restricted Subsidiary that is not a Wholly-Owned Subsidiary, the percentage of Equity Interests therein owned directly or indirectly by the Parent or any Restricted Subsidiary.   “Parent” has the meaning given in the preamble hereto.         25   options purchased by the Company from the Call Spread Counterparties to hedge the Company’s payment and/or delivery obligations due upon conversion of the Convertible Senior Notes.       materialmen’s, repairmen’s, landlord’s and other like Liens imposed by law or by contract provided such contract does not grant Liens in any property other than such property covered by Liens imposed by operation of law, arising in the   (c)                                  Liens arising in the ordinary course of business associated with workers’ compensation, unemployment insurance and other social security laws or regulations (including, without limitation, pursuant to Section 8a of the German Old Age Employees Act (Altersteilzeitgesetz) or Section 7e of the Fourth Book of the German Social Code (Sozialgesetzbuch IV));     (e)                                  Liens of financial institutions on accounts or deposits maintained therein to the extent arising by operation of law or within the documentation establishing said account to the extent same secure charges, fees and expenses owing or potentially owing to said institution;   (f)                                   judgment liens in respect of judgments   property or interfere with the ordinary conduct of business of the Parent or any Restricted Subsidiary; and   (h)                                 an interest that is a Lien by virtue only of the operation of section 12(3) of the Australian Personal Property Securities Act 2009 (Cth) provided that it does not secure the payment or performance of an obligation.   “Permitted Indebtedness” means Indebtedness that the Obligors and their respective Restrictive Subsidiaries are permitted to create, incur, assume or permit to exist pursuant to Section 6.01.   26     States of America, an EEA Member Country or Switzerland (or by any agency or faith and credit of the relevant state), in each case, maturing within one year   within 270 days from the date of acquisition thereof and issued by any Lender, any Affiliate of a Lender or any commercial banking institution or corporation   banker’s acceptances and time deposits maturing within 270 days from the date of deposit accounts issued or offered by, any domestic office of any Lender or any     which hold investments substantially of the type described in clauses (a) through (d) above, and (iii) have portfolio assets of at least $2,000,000,000; and   (f)                                   any Permitted Bond Hedge Transaction(s).   “Permitted Liens” means Liens that the Obligors and their respective Restricted Subsidiaries are permitted to create, incur, assume or permit to exist pursuant to Section 6.02.   “Permitted Warrant Transaction(s)” means one or more net share or cash settled warrants sold by the Company to the Call Spread Counterparties, concurrently with the purchase by the Company of the Permitted Bond Hedge Transactions, to offset the cost to the Company of the Permitted Bond Hedge Transactions.   or other entity.     27       effective.     “Qualified ECP Guarantor” has the meaning set forth in Section 9.10.   to be determined:   (a)                                 (if the relevant currency is Dollars) two Business Days before the first day of that period;   (b)                                 (if the relevant currency is Pounds Sterling, Canadian Dollars or Australian Dollars) the first day of that period;   (c)                                  (if the relevant currency is Euro) two (2) TARGET Days before the first day of that period; or   (d)                                 (if the relevant currency is any other Alternative Currency) two (2) Business Days before the first day of that period,   unless market practice differs in the relevant interbank market for any the relevant interbank market on more than one day, the Quotation Day will be     “Ratification Agreement” means, collectively, those certain documents executed by certain of the Obligors as of the Effective Date that ratify the Security Documents.   “Recipient” means (a) the Administrative Agent, (b) the Alternative Currency Agent, (c) any Lender and (d) any Issuing Lender, as applicable.   28   Day for Loans in the applicable currency and the applicable Interest Period (a) in relation to the LIBO Rate, as the rate quoted by the relevant Reference applicable Interest Period, (b) in relation to the Bank Bill Swap Reference Rate, as the buying rate quoted by the relevant Reference Bank for bills of exchange accepted by leading Australian banks which have a term equivalent to the applicable Interest Period and (c) in relation to the Johannesburg Interbank Agreed Rate, as the rate quoted by the relevant Reference Bank to leading banks in the Johannesburg interbank market for the offering of deposits in Rand and for a period comparable to the applicable Interest Period.   Agent in consultation with the Parent.  No Lender shall be obligated to be a         of any such Equity Interests in the Parent or any Restricted Subsidiary or any Parent or any Restricted Subsidiary; provided that the term “Restricted Payment” Equity Interests so long as such warrants, options or other rights do not have mandatory repayment or redemption rights.   Subsidiary.   sum of the Equivalent Amount of the outstanding principal amount of such time.     29       Assets Control of the U.S. Department of The Treasury, the U.S. Department of controlled or 50% or more owned by any such Person or Persons described in the     Interest Period, (i) in the case of Dollars, the LIBO Screen Rate and (ii) in the case of any other Alternative Currency, the London interbank offered rate as over the administration of such rate) appearing on Reuters Screen LIBOR02 Page for such currency for such Interest Period (or, in each such case under this clause (a), on any successor or substitute page on such screen or service Agent from time to time in its reasonable discretion), (b) in respect of the Canadian Dealer Offered Rate, the average rate for bankers acceptances with a tenor equal in length to such Interest Period as displayed on CDOR page of the Reuters screen (or on any successor or substitute page on such screen or service service that publishes such rate as shall be selected by the Alternative Currency Agent from time to time in its reasonable discretion), (c) in respect of the Bank Bill Swap Reference Rate, the Australian Bank Bill Swap Reference Rate (Bid) administered by ASX Benchmarks Pty Limited (or any other Person that takes over the administration of that rate) displayed on page BBSY of the Thomson Reuters Screen (or any replacement Thomson Reuters page which displays that rate) for a term equivalent to such Interest Period and (d) in respect of the Johannesburg Interbank Agreed Rate, the Johannesburg interbank agreed rate, JSE Limited) for deposits in ZAR for the relevant Interest Period which appears on the Reuters Screen SAFEY Page at the applicable time (or, if the agreed page is replaced or service ceases to be available, such other page or service displaying such rate selected by the Alternative Currency Agent); provided, that   “Security Agreement” means, collectively, (a) the Security and Pledge Agreement dated July 15, 2010, among certain of the Obligors and the Administrative Agent, and (b) the Security   30   and Pledge Agreement dated May 26, 2015, among certain of the Obligors and the Administrative Agent, in each case, as amended, modified, supplemented or   “Security Documents” means the Security Agreement, the Ratification Agreements, each Addendum, and each other security document, pledge agreement or debenture perfected security interest in any property, and all UCC or other financing statements or instruments of perfection required by this Agreement, any security agreement or mortgage to be filed with respect to the security interests in property and fixtures created pursuant to the Security Agreement or any mortgage and any other document or instrument utilized to pledge as collateral for the Obligations any property of whatever kind or nature.   “South Africa” means the Republic of South Africa.     date, owned, controlled or held (whether directly or indirectly).  Unless otherwise indicated, “Subsidiary” means a Subsidiary of the Parent.   any combination of these transactions; provided that, no phantom stock or current or former directors, officers, employees or consultants of the Parent and its Subsidiaries shall be a Swap Agreement.     31   “Swap Termination Value” means, in respect of one or more Swap Agreements, after   “Swingline Commitment” means as to any Lender (a) the amount set forth opposite such Lender’s name on Schedule 2.01(c) attached hereto or (b) if such Lender has Swingline Commitment in the Register maintained by the Administrative Agent.   “Swingline Exposure” means, at any time, the Equivalent Amount of the aggregate Swingline Lender and (b) the Equivalent Amount of the aggregate principal amount of all Swingline Loans made by such Lender as a Swingline Lender outstanding at such time (less the amount of participations funded by the other Lenders in such Swingline Loans).   “Swingline Lenders” means JPMorgan, Bank of America, Barclays and Wells Fargo (including each of their respective branches and affiliates), each in its     “Swingline Rate” means (a) for Swingline Loans in Dollars, a rate per annum equal to the Alternate Base Rate plus the Applicable ABR Margin, (b) for Swingline Loans in Canadian Dollars, the Canadian Prime Rate plus the Applicable Margin for Canadian Prime Rate Loans, and (c) for Swingline Loans in any other Alternative Currencies, the Overnight Foreign Currency Rate plus the Applicable Margin, or, if in the determination of JPMorgan, in its capacity as a Swingline Lender, there is not an Overnight Foreign Currency Rate applicable to the currency in which such Swingline Loans are denominated, such other rate as may be designated by JPMorgan, in its capacity as a Swingline Lender (in consultation with the Parent), plus the Applicable Margin.   “TARGET Day” means any day on which the Trans-European Automatic Real-time Gross payments in Euros.   “Tax Credit” means a credit against, relief or remission for, or refund or   32     “Total Net Leverage Ratio” means, as of the date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date minus Unencumbered Balance Sheet Cash as of such date to (b) Consolidated Adjusted Pro Forma EBITDA for the most recently completed four quarter period.     Canadian Dealer Offered Rate, the Canadian Prime Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate.   “U.K.” and “United Kingdom” each means the United Kingdom of Great Britain and Northern Ireland.   “U.K. Borrower” means any Borrower that is organized under the laws of the United Kingdom or otherwise a tax resident in the United Kingdom.   “U.K. Excluded Withholding Taxes” means any deduction or withholding for or on account of any U.K. Tax from a payment under any Loan where:   (a)                                 the payment could have been made to the relevant Lender without any deduction or withholding if the Lender had been a   (b)                                 the relevant Lender is a U.K. Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the U.K. Tax deduction had that Lender complied with its obligations under Section 2.16(g) or (h) (as applicable).   “U.K. Holdco” means Cardtronics Holdings Limited, a private company incorporated under English law.   and is:   33     (i)                                     which is a bank (as defined for the purpose of section 879 of the UK Income Tax Act 2007) making an advance under a Loan Document and is within the charge to United Kingdom corporation tax as within such charge as respects such payments apart from section 18A of the UK   (ii)                                  in respect of an advance made under a Loan of the U.K. Income Tax Act 2007) at the time that that advance was made and   (b)                                 a U.K. Treaty Lender.   “U.K. Tax” means any Tax imposed under the laws of the U.K. or by any political subdivision, instrumentality or governmental agency in the U.K. having taxing authority.   “U.K. Treaty Lender” means a Lender which:   State for the purposes of the relevant U.K. Treaty;     (c)                                  meets all other conditions in the relevant U.K. Treaty for full exemption from Tax imposed by the U.K. on interest, except that for this purpose it shall be assumed that the following are satisfied:   (i)                                     any condition which relates (expressly or by implication) to there not being a special relationship between the U.K. Borrower and a Lender or between both of them and another person, or to the amounts or terms of any Loan; and     from Tax imposed by the United Kingdom on interest.   “U.S. Borrower” means any Borrower that is a U.S. Subsidiary.   “Unencumbered Balance Sheet Cash” means, as of the last day of the most recently ended fiscal quarter, the balance of unencumbered balance sheet cash (excluding any vault cash or cash for use in ATM Equipment) of the Obligors in excess of $15,000,000 for the quarter of determination.   determination shall have been designated as an Unrestricted Subsidiary by the Parent in the manner provided below (and shall not have been subsequently designated or deemed to have been designated as a   34   Restricted Subsidiary) and (b) any Subsidiary of an Unrestricted Subsidiary.  Subject to Section 5.09(b), the Parent may from time to time designate any Subsidiary (other than any Borrower and a Subsidiary that, immediately after such designation, shall hold any Indebtedness or Equity Interest in any Borrower or any Restricted Subsidiary) as an Unrestricted Subsidiary, and may designate any Unrestricted Subsidiary as a Restricted Subsidiary, so long as, immediately after giving effect to such designation, no Default shall have occurred and be continuing.  Any designation by the Parent pursuant to this definition shall be made in an officer’s certificate delivered to the Administrative Agent and containing a certification that such designation is in compliance with the terms of this definition.  As of the Effective Date, there are no Unrestricted Subsidiaries.   “U.S. Holdco” means CATM Holdings LLC, a Delaware limited liability company.     United States, any state thereof or the District of Columbia, other than a CFC Subsidiary.   Section 2.16(g)(ii)(B)(iii).     Equity Interests (other than directors’ qualifying shares mandated by applicable law), on a fully diluted basis, are owned by the Parent or one or more of the Wholly-Owned Subsidiaries or by the Parent and one or more of the Wholly-Owned Subsidiaries.       Legislation Schedule.     35   contract rights.   provision (or if the Administrative Agent notifies the Parent that the Majority provision amended in accordance herewith.  References to quarters and months with respect to compliance with financial covenants and financial reporting obligations of the Parent shall be fiscal quarters and fiscal months, except where otherwise indicated.  Notwithstanding anything to the contrary contained in this Section or in the definition of “Capital Lease Obligations,” in the   Section 1.05  Determination of Equivalent Amounts.  The Administrative Agent will determine the Equivalent Amount of   (a)                                 each Borrowing as of the date two (2) Business Days prior to the date of such Borrowing and, if applicable, the date of conversion or continuation of any Borrowing;   Credit; and   36   (c)                                  all outstanding Loans and the LC Exposure on and as of the last Business Day of each month and, during the continuation of Agent in its discretion or upon instruction by the Majority Lenders.   Each day upon or as of which the Administrative Agent determines Equivalent described as a Computation Date with respect to each Borrowing, Letter of Credit or LC Exposure for which an Equivalent Amount is determined on or as of such date.   Section 1.06  Additional Alternative Currencies.   (a)                                 If, pursuant to clause (e) of the definition of Agreed Alternative Currency, the Administrative Agent and each Lender consent to the addition of a requested currency as an Agreed Alternative Currency, the Administrative Agent shall notify the Parent and (i) the Administrative Agent and each Lender may amend the definition of LIBO Rate to the extent necessary to add the applicable interest rate for such currency and (ii) to the extent the definition of LIBO Rate reflects the appropriate interest rate for such currency or has been amended to reflect the appropriate interest rate for such currency, Currency for the purposes of any Eurocurrency Borrowings hereunder.   (b)                                 If, pursuant to clause (b) of the definition of Non-Pro Rata Alternative Currency, the Administrative Agent and the Majority Lenders consent to the addition of a requested currency as a Non-Pro Rata Alternative Currency, the Administrative Agent shall notify the Parent and (i) the Administrative Agent and such Lenders may amend the definition of LIBO Rate to the extent necessary to add the applicable interest rate for such currency and (ii) to the extent the definition of LIBO Rate reflects the appropriate interest rate for such currency, such currency shall thereupon be deemed for all purposes to be an Alternative Currency for the purposes of any Eurocurrency Borrowings hereunder.   Section 1.07  LCT Election.   or any Loan Document to the contrary, when (i) calculating any applicable ratio, the Total Net Leverage Ratio, Interest Coverage Ratio and the components of each such ratio in connection with the incurrence of Indebtedness, the making of an Investment, the making of a Restricted Payment or the prepayment of Indebtedness, (ii) determining compliance with any provision of this Agreement or would result therefrom, (iii) determining compliance with any provision of this Agreement which requires compliance with any representation or warranties set forth herein or (iv) determining the satisfaction of all other conditions precedent to the incurrence of Indebtedness, the making of an Investment, the making of a Restricted Payment or the prepayment of Indebtedness, in each case in connection with a Limited Condition Transaction, the date of determination of such ratio or other provisions, determination of whether any Default or Event of Default has occurred, is continuing or would result therefrom, determination of compliance with any representations or warranties or the satisfaction of any other conditions shall, at the option of the Parent (the   37   Parent’s election to exercise such option in connection with any Limited of one or more of clauses (i), (ii), (iii) and (iv) above), be deemed to be the date the definitive agreements (or other relevant definitive documentation) for such Limited Condition Transaction are entered into (the “LCT Test Date”).   (b)                                 Upon the making of an LCT Election pursuant to the terms hereof, the Parent shall give written notice thereof to the Administrative Agent.   (c)                                  If on a pro forma basis after giving effect to such Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence or issuance of Indebtedness, and the use of proceeds thereof), with such ratios and other provisions calculated as if such Limited Condition Transaction or other transactions had occurred at the beginning of the most recent four quarters ending prior to the LCT Test Date for which financial statements have been (or the Parent could have taken such action on the relevant LCT Test Date in compliance with the applicable ratios or other provisions, such provisions shall Section 7.01(a), (h) or (i) shall be continuing on the date such Limited Condition Transaction is consummated.   (d)                                 For the avoidance of doubt, (i) if, following the LCT Test Date, any of such ratios or other provisions are exceeded or breached as a result of fluctuations in such ratio or other provisions at or prior to the consummation of the relevant Limited Condition Transactions, such ratios and other provisions will not be deemed to have been exceeded or failed to have been satisfied as a result of such fluctuations solely for purposes of time of consummation of such Limited Condition Transaction, unless, other than if an Event of Default pursuant to Section 7.01(a), (h) or (i) shall be continuing on such date, the Parent elects, in its sole discretion, to test such Transaction or related Specified Transactions is consummated.   (e)                                  If the Parent has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent provision hereunder (other than actual compliance with Sections 6.16 and 6.17) on which such Limited Condition Transaction is consummated, the date that the expires without consummation of such Limited Condition Transaction or the date the Parent makes an election pursuant to clause (d)(ii) above, any such ratio, basket or compliance with any other provision hereunder shall be calculated on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence or issuance of Indebtedness, and the use of proceeds thereof) had been consummated on the LCT Test Date.   Section 1.08  Interest Rates; LIBOR Notification.  The interest rate on borrowings from each other in the London interbank   38   available or in certain other circumstances as set forth in Section 2.13(c) of this Agreement, such Section 2.13(c) provides a mechanism for determining an alternative rate of interest.  The Administrative Agent will notify the Parent,   Section 1.09  Divisions.  For all purposes under the Loan Documents, in connection with any Division, (a) if any asset, right, obligation or liability   ARTICLE II The Credits   herein, each Lender agrees to make Revolving Loans in Dollars or Alternative Currencies to the Borrowers from time to time during the Availability Period in an aggregate principal amount that will not result in such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment, subject to Sections 1.05 and 2.10; provided that (a) Revolving Loans in Canadian Dollars shall be made only to the Canadian Borrower or a U.S. Borrower and (b) with respect to Revolving Loans in a Non-Pro Rata Alternative Currency, only the Lenders that are designated on Schedule 1.01 as having agreed to fund Revolving Loans in such Non-Pro Rata Alternative Currency shall participate in making such Revolving Loans, notwithstanding that this results in such Lenders having amounts owing by the Borrowers on a non-pro rata basis.  Following the advance of Revolving Loans in a Non-Pro Rata Alternative Currency, the provisions of Section 2.02(e) shall apply to subsequent Revolving Loans in Dollars and Agreed Alternative Currencies, to the extent provided therein.  Within the foregoing limits and   39     a Borrowing consisting of Revolving Loans made by the Lenders ratably in as required.   (b)                                 Subject to Section 2.13, (a) each Revolving Borrowing requested in Dollars shall be comprised entirely of ABR Loans or Eurocurrency Loans as the relevant Borrower may request in accordance herewith, (b) each Revolving Borrowing requested in Canadian Dollars shall be comprised entirely of Canadian Prime Rate Loans or CDOR Loans as the relevant Borrower may request in accordance herewith, (c) each Revolving Borrowing requested in Australian Dollars shall be comprised entirely of BBSY Loans, (d) each Revolving Borrowing requested in Rand shall be comprised entirely of JIBAR Loans and (e) each Revolving Borrowing requested in any other Alternative Currency shall be comprised entirely of Eurocurrency Loans.  Each Swingline Loan (a) denominated in Dollars shall be an ABR Loan, (b) denominated in Canadian Dollars shall be a Canadian Prime Rate Loan and (c) denominated in any other Alternative Currency shall bear interest based upon the applicable Swingline Rate.  Each Lender may   for any Eurocurrency Borrowing denominated in Dollars, such Borrowing shall be than $1,000,000.  At the commencement of each Interest Period for any Eurocurrency Borrowing denominated in an Alternative Currency, any CDOR Borrowing, any BBSY Borrowing or any JIBAR Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Equivalent Amount of $100,000 in the relevant currency and not less than the Equivalent Amount of $1,000,000 in the relevant currency; provided that a Eurocurrency Borrowing, BBSY Borrowing or JIBAR Borrowing may be in an aggregate amount that is equal to (i) that which is required to repay a Swingline Loan in the same Alternative Currency or (ii) that which is required to finance the reimbursement of an LC Disbursement in the same Alternative Currency as contemplated by Section 2.05(e).  At the time that each ABR Revolving Borrowing or Canadian Prime Rate is an integral multiple of the Equivalent Amount of $500,000; provided that an ABR Revolving Borrowing or a Canadian Prime Rate Borrowing may be in an aggregate amount that is equal to (i) the entire unused balance of the total Commitments, (ii) that which is required to repay a Swingline Loan in the same currency, or (iii) that which is required to finance the reimbursement of an LC Disbursement in the same currency as contemplated by Section 2.05(e).  provided that there shall not at any time be more than a total of 25 Revolving Borrowings (other than ABR Revolving Borrowings and Canadian Prime Rate Revolving Borrowings) outstanding.   40     (e)                                  If a Revolving Borrowing is made in a Non-Pro Rata Alternative Currency, as contemplated by Section 2.01, subsequent Revolving Loans requested in Dollars and Agreed Alternative Currencies shall be advanced first by Lenders that did not fund such Revolving Loans included in such earlier Borrowing until such time as the amount owing to each of the Lenders in respect of the outstanding Revolving Loans is equal to its Applicable Percentage of the aggregate Commitments.  Thereafter, such Revolving Loans will be advanced by the Lenders in accordance with their respective Applicable Percentages of the aggregate Commitments.   Section 2.03  Requests for Borrowings.  To request a Revolving Loan, the relevant Borrower shall provide notice of such request by telephone in the case of a Borrowing in Dollars and in writing (including by email) in the case of a Borrowing in an Alternative Currency (a) in the case of a CDOR Borrowing or a Eurocurrency Borrowing in Dollars, to the Administrative Agent not later than Currency, to the Alternative Currency Agent not later than 12:00 p.m., Local Time, three (3) Business Days before the date of the proposed Borrowing, (c) in the case of a BBSY Borrowing, to the Alternative Currency Agent not later than Borrowing, (d) in the case of a JIBAR Borrowing, to the Alternative Currency date of the proposed Borrowing, (e) in the case of an ABR Borrowing, to the proposed Borrowing and (f) in the case of a Canadian Prime Rate Borrowing, to signed by the relevant Borrower.  Each such telephonic and written Borrowing   Borrowing;   a Business Day;   Borrowing, a Eurocurrency Borrowing, a CDOR Borrowing, a Canadian Prime Rate Borrowing, a BBSY Borrowing or a JIBAR Borrowing, as applicable;   (iv)                              in the case of a Eurocurrency Borrowing, a CDOR Borrowing, a BBSY Borrowing or a JIBAR Borrowing, the initial Interest   (v)                                 the location and number of the relevant   41   Borrowing shall be (A) in the case of a Borrowing denominated in Dollars, an ABR Borrowing, (B) in the case of a Borrowing denominated in Canadian Dollars, a Canadian Prime Rate Borrowing, (C) in the case of a Borrowing denominated in Australian Dollars, a BBSY Borrowing, (D) in the case of a Borrowing denominated in Rand, a JIBAR Borrowing and (E) in the case of a Borrowing denominated in any other Alternative Currency, a Eurocurrency Borrowing.  If no Interest Period is specified with respect to any requested Eurocurrency Borrowing, CDOR Borrowing, BBSY Borrowing or JIBAR Borrowing, then the relevant Borrower shall be deemed to Borrowing.     forth herein, each Swingline Lender severally agrees to make Swingline Loans in Dollars or any Alternative Currency to the Borrowers from time to time during Swingline Loans made by such Swingline Lender exceeding such Swingline Lender’s Swingline Commitment, (ii) such Swingline Lender’s Revolving Credit Exposure exceeding its Commitment, (iii) the total Swingline Exposure exceeding $50,000,000 or (iv) the total Revolving Credit Exposure exceeding the total Commitments, in each case, subject to Sections 1.05 and 2.10; provided that (A) Swingline Loans in Canadian Dollars shall be made only to the Canadian Borrower or a U.S. Borrower and (B) a Swingline Lender shall not be required to make a may borrow, prepay and reborrow Swingline Loans.  Each Swingline Loan shall be in an amount that is not less than $100,000 or the Equivalent Amount in an Alternative Currency.   (b)                                 To request a Swingline Loan, the relevant (confirmed by telecopy), not later than (i) 3:00 p.m., Local Time, on the day of a proposed Swingline Loan in Dollars, (ii) 12:00 p.m., Local Time, on the day of a proposed Swingline Loan in Canadian Dollars or (iii) 11:00 a.m., Local Time, on the day of a proposed Swingline Loan in an Alternative Currency.  Each such a Business Day), the amount of the requested Swingline Loan and the requested Alternative Currency, if such Swingline Loan is to be made in an Alternative Currency.  The Administrative Agent will promptly advise the Swingline Lenders of any such notice received from a Borrower.  Each Swingline Lender shall make its ratable portion of the requested Swingline Loan (such ratable portion to be calculated based upon such Swingline Lender’s Swingline Commitment to the total Swingline Commitments of all of the Swingline Lenders) available to the relevant Borrower to such account or accounts of such Borrower designated by it in its Borrowing Request (or, in the case of a Swingline Loan made to finance the remittance to the Issuing Lender) by (i) 3:30 p.m., Local Time, on the requested date of any Swingline Loan in Dollars or Canadian Dollars or (ii) 2:00 p.m., Local Time, on the requested date of any Swingline Loan in any other Alternative Currency.   42   (c)                                  The failure of any Swingline Lender to make its ratable portion of a Swingline Loan shall not relieve any other Swingline Lender of its obligation hereunder to make its ratable portion of such Swingline Loan on the date of such Swingline Loan, but no Swingline Lender shall be date of any Swingline Loan.   (d)                                 Any Swingline Lender may by written notice in all or a portion of its Swingline Loans outstanding.  Such notice shall specify the aggregate amount of Swingline Loans in which the Lenders will absolutely and unconditionally agrees, promptly upon receipt of notice from the Administrative Agent (and in any event, if such notice is received by 11:00 a.m., Houston time, on a Business Day, no later than 4:00 p.m., Houston time, on such Business Day and, if such notice is received after 11:00 a.m., Houston time, on a Business Day, no later than 9:00 a.m., Houston time, on the the account of such Swingline Lenders, such Lender’s Applicable Percentage of such Swingline Loans.  Such payments by the Lenders shall be made in the same currency as such Swingline Loan or Loans.  Each Lender acknowledges and agrees notify the applicable Borrowers of any participations in any Swingline Loan Swingline Loan shall be made to the Administrative Agent and not to such Swingline Lenders.  Any amounts received by a Swingline Lender from any Borrower to this paragraph and to such Swingline Lenders, as their interests may appear; provided that any such payment so remitted shall be repaid by such Swingline payment is required to be refunded to such Borrower for any reason.  The not relieve the Borrowers of any default in the payment thereof.   (e)                                  Any Swingline Lender may be replaced at any replaced Swingline Lender and the successor Swingline Lender.  The Administrative Agent shall notify the Lenders of any such replacement of a relevant   43   Borrowers shall pay all unpaid interest accrued for the account of the replaced Swingline Lender pursuant to Section 2.12(c).  From and after the effective date of any such replacement, (x) the successor Swingline Lender shall have all the rights and obligations of the replaced Swingline Lender under this Agreement with respect to Swingline Loans made thereafter and (y) references herein to the Lenders, as the context shall require.  After the replacement of a Swingline Lender hereunder, the replaced Swingline Lender shall remain a party hereto and shall continue to have all the rights and obligations of a Swingline Lender under this Agreement with respect to Swingline Loans made by it prior to its replacement, but shall not be required to make additional Swingline Loans.   (f)                                   Subject to the appointment and acceptance of a successor Swingline Lender, any Swingline Lender may resign as a Swingline Lender at any time upon thirty days’ prior written notice to the Administrative Agent, the Borrower and the Lenders, in which case, such Swingline Lender shall be replaced in accordance with Section 2.04(e) above.     conditions set forth herein, (i) each Borrower may request the issuance of Letters of Credit in Dollars or any Alternative Currency (other than Canadian Dollars) and (ii) the Canadian Borrower and each U.S. Borrower may request the issuance of Letters of Credit in Canadian Dollars, in each case, for its own account or the account of any of its Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the Issuing Lender and at any time and conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control.  This Section shall not be construed to impose an obligation upon any Issuing Lender to issue any Letter of Credit if (i) any Credit, or any law applicable to such Issuing Lender or any request or directive Letter of Credit in particular or, in the case of any Borrower, shall impose upon such Issuing Lender with respect to such Letter of Credit any restriction, reserve or capital or liquidity requirement, or shall impose upon such Issuing Lender any unreimbursed loss, cost or expense, in each case for which such Issuing Lender is not otherwise compensated hereunder, (ii) the issuance of such Letter of Credit would violate one or more policies of general applicability of such Issuing Lender or (iii) such Letter of Credit is not in the currency approved for issuance by such Issuing Lender.  The issuance of Letters of Credit by any Issuing Lender shall be subject to customary procedures of such Issuing Lender.   relevant Borrower shall hand deliver or telecopy (or transmit by electronic Lender) to the Administrative Agent and the Issuing Lender at least five Business Days (or such shorter period acceptable to the Issuing Lender) in   44   Letter of Credit, the name and address of the beneficiary thereof, the requested Alternative Currency, if such Letter of Credit is to be issued in an Alternative Currency, and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  Each such notice shall be irrevocable.  In addition, as a condition to any such Letter of Credit issuance, the relevant credit agreement) for the issuance of letters of Credit and/or shall submit a letter of credit application, in each case, as required by the Issuing Lender and using such Issuing Lender’s standard form (each, a “Letter of Credit Credit the relevant Borrower shall be deemed to represent and warrant that), Issuing Lender at such time plus (y) the aggregate amount of all LC Disbursements made by the Issuing Lender that have not yet been reimbursed by or on behalf of the Borrowers at such time shall not exceed its Letter of Credit Commitment, (ii) the LC Exposure shall not exceed $150,000,000, (iii) no Lender’s Revolving Credit Exposure shall exceed its Commitment and (iv) the total Revolving Credit Exposure shall not exceed the total Commitments.  The Commitment of any Issuing Lender with the consent of such Issuing Lender; provided that the Borrowers shall not reduce the Letter of Credit Commitment of any Issuing Lender if, after giving effect of such reduction, the conditions set forth in clauses (i) through (iii) above shall not be satisfied.  Each Issuing Lender agrees that it shall not permit any issuance, amendment, renewal or Administrative Agent written notice thereof required under paragraph (m) of this Section.     and without any further action on the part of the Issuing Lender, or the Applicable Percentage of each LC Disbursement made by the Issuing Lender and not relevant Borrower for   45   any reason.  Such payments shall be made in the same currency in which such Letter of Credit was issued.  Each Lender acknowledges and agrees that its Letter of Credit or the occurrence and continuance of a Default or an Event of whatsoever.   (e)                                  Reimbursement.  If the Issuing Lender shall make any LC Disbursement in respect of a Letter of Credit for the relevant Borrower’s own account or the account of any of its Subsidiaries, such Borrower amount equal to, and in the same currency as, such LC Disbursement not later than (i) in the case of an LC Disbursement in Dollars or Canadian Dollars, 12:00 Time, on the Business Day immediately following the day that such Borrower receives such notice or (ii) in the case of an LC Disbursement in any other Alternative Currency, not later than 1:00 p.m., Local Time, on the Business Day immediately following the day that such Borrower received such notice; provided that, (A) in the case of an LC Disbursement in Dollars or Canadian Dollars, if such LC Disbursement is not less than the Equivalent Amount of $100,000, such Borrower may, subject to the conditions to borrowing set forth herein, request, in accordance with Section 2.03 or 2.04, that such payment be financed with an ABR Revolving Borrowing or a Canadian Prime Rate Revolving Borrowing, as applicable, or a Swingline Loan in the amount of such payment and, to the extent and replaced by the resulting Revolving Borrowing or Swingline Loan and (B) in the case of an LC Disbursement in an Alternative Currency, if such LC Disbursement is not less than the Equivalent Amount of $100,000, such Borrower may, subject to the conditions to borrowing set forth herein, request, in accordance with Section 2.03 or 2.04, that such payment be financed with a Revolving Borrowing or Swingline Loan in the same currency in the amount of such payment and, to the extent so financed, such Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Revolving Borrowing or Swingline Loan.  If the relevant Borrower fails to make such payment when due, Disbursement, the payment then due from the relevant Borrower in respect thereof Percentage of the payment then due from the relevant Borrower in the same manner Lenders), and the Administrative Agent shall promptly pay to the Issuing Lender the amounts so received by it from the Lenders.  Such payments by the Lenders shall be made in the currency of the applicable LC Disbursement.  Promptly any LC Disbursement   46   (other than the funding of Revolving Borrowing or a Swingline Loan as relevant Borrower of its obligation to reimburse such LC Disbursement.   (f)                                   Obligations Absolute.  Each Borrower’s Issuing Lender from liability to a Borrower to the extent of any direct damages waived by each Borrower to the extent permitted by applicable Law) suffered by such Borrower or any of its Subsidiaries that are caused by (a) the Issuing documents presented under a Letter of Credit comply with the terms thereof, or (b) the Issuing Lender’s gross negligence, willful misconduct or bad faith, as finally determined by a court of competent jurisdiction.  The parties hereto expressly agree that, in the absence of gross negligence, willful misconduct or bad faith on the part of the Issuing Lender (as finally determined by a court of limiting the generality thereof (except with respect to gross negligence, willful misconduct and bad faith in which case the immediately prior sentence will apply), the parties agree that, with respect to documents presented which of Credit, the Issuing Lender may, in its sole discretion, either accept and   Issuing Lender shall promptly notify the Administrative Agent and the relevant provided   47   relevant Borrower of its obligation to reimburse the Issuing Lender and the   (h)                                 Interim Interest.  If the Issuing Lender shall make any LC Disbursement, then, unless the relevant Borrower shall relevant Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans in the case of an LC Disbursement in Dollars and at the rate per annum then applicable to Revolving Loans in the relevant currency in the case of an LC Disbursement in an Alternative Currency; provided that, if the relevant Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (d) of this Section, then Section 2.12(e) shall apply.  Issuing Lender except that interest accrued on and after the date of payment by   (i)                                     Replacement and Resignation of an Issuing Lender.  (i)  An Issuing Lender may be replaced at any time by written agreement among the Borrowers, the Administrative Agent, the replaced Issuing replacement shall become effective, the Parent shall pay, or shall cause to be paid, all unpaid fees accrued for the account of the replaced Issuing Lender Issuing Lenders or to such successor and all previous Issuing Lenders, as the   (ii)                                  Subject to the appointment and acceptance of a successor Issuing Lender, any Issuing Lender may resign as an Issuing Agent, the Borrowers and the Lenders, in which case, such resigning Issuing Lender shall be replaced in accordance with Section 2.06(i) above.   Default shall occur and be continuing, on the Business Day that the Parent receives notice from the Administrative Agent, the Majority Lenders (or, if the maturity of the Loans has been accelerated, the Lenders with LC Exposure cash collateral pursuant to this paragraph), the Borrowers shall deposit in an and for the benefit of the Lenders, an amount in cash equal to, and in the same currencies as, the aggregate undrawn amount of all Letters of Credit as of such date and the aggregate amount of all LC Disbursements in respect of Letters of   48   Credit that have not been reimbursed by or on behalf of the Borrowers or converted into a Loan pursuant to Section 2.05(e) as of such date and, in each case, any accrued and unpaid interest thereon; provided that the obligation to discretion of the Administrative Agent (but, if so made, shall be limited to overnight bank loans or investments generally comparable to those described in clauses (a) through (e) of Permitted Investments) and at the Borrowers’ risk and the Borrowers for the LC Exposure at such time or, subject to the consent of Lenders with LC Exposure representing greater than 50% of the total LC Exposure, be applied to satisfy other obligations of the Borrowers under this Agreement.  If the Borrowers are required to provide an amount of cash collateral hereunder, or waived.   (k)                                 Existing Letters of Credit.  The Existing Letters of Credit shall be Letters of Credit hereunder for all purposes.   Subsidiary of a Borrower, or states that a Subsidiary of a Borrower is the “account party,” “applicant,” “customer,” “instructing party” or the like of or otherwise) against such Subsidiary in respect of such Letter of Credit, such Borrower shall (i) reimburse, indemnify and compensate the applicable Issuing account of such Borrower and (ii) irrevocably waives any and all defenses that might otherwise be available to it as a guarantor or a surety of any or all of the obligations of such Subsidiary in respect of such Letter of Credit.  Each business derives substantial benefits from the business of such Subsidiaries.   (m)                             Issuing Lender Reports to the Administrative Agent.  Unless otherwise agreed by the Administrative Agent, each Issuing Lender Section, (i) report in writing to the Administrative Agent periodic activity Lender, including all issuances, extensions, amendments and renewals, all expirations and cancellations and all disbursements and   49   issuance, amendment, renewal or extension, and the currency and stated amount of which such Issuing Lender makes any LC Disbursement, the date, currency and amount of such LC Disbursement, (iv) on any Business Day on which any Borrower Lender on such day, the date of such failure and the currency and amount of such   (n)                                 Cash Collateral upon Termination of Commitments or Maturity Date.  Upon the Maturity Date or in the event that the Parent terminates the Commitments pursuant to Section 2.08, if there are outstanding Letters of Credit at such time, the Borrowers shall pledge to, and deposit in an account with, the relevant Issuing Lenders an amount in cash equal to, and in the same currencies as, the aggregate undrawn amount of all such Letters of Credit.     available funds (i) in the case of Loans in Dollars or Canadian Dollars, by 2:00 of Loans in any other Alternative Currency, by 2:00 p.m., Local Time, to the account of the Alternative Currency Agent most recently designated by it for received, in like funds, to such account or accounts of such Borrower designated by it in the applicable Borrowing Request; provided that Revolving Borrowings or Swingline Loans made to finance the reimbursement of an LC Disbursement as Issuing Lender.   with interest thereon plus any customary charges paid by the Alternative Currency Agent to its correspondent bank, for each day from and including the greater of the FRBNY Rate and a rate determined by the Administrative Agent in without limitation the Overnight Alternative Currency Rate in the case   50   of Loans denominated in an Alternative Currency) or (ii) in the case of such     Eurocurrency Borrowing, a CDOR Borrowing, a BBSY Borrowing or a JIBAR Borrowing, Borrowing, a CDOR Borrowing, a BBSY Borrowing or a JIBAR Borrowing, may elect continued.   Section, the relevant Borrower shall notify the Administrative Agent or the Alternative Currency Agent, as applicable, of such election by telephone in the case of the Administrative Agent and in writing in the case of the Alternative Currency Agent by the time that a Borrowing Request would be required under promptly by hand delivery or telecopy to the Administrative Agent or the Alternative Currency Agent, as applicable, of a written Interest Election Request signed by the relevant Borrower.   Section 2.02:   Borrowing);     ABR Borrowing, a Canadian Prime Rate Borrowing, a Eurocurrency Borrowing, a CDOR Borrowing, a BBSY Borrowing or a JIBAR Borrowing; and   Borrowing, CDOR Borrowing, BBSY Borrowing or JIBAR Borrowing, the Interest Period to be applicable   51     If any such Interest Election Request requests a Eurocurrency Borrowing, CDOR Borrowing, BBSY Borrowing or JIBAR Borrowing but does not specify an Interest Period, then the relevant Borrower shall be deemed to have selected an Interest   Election Request, the Administrative Agent shall advise each affected Lender of   timely Interest Election Request with respect to a Eurocurrency Borrowing, a CDOR Borrowing, a BBSY Borrowing or a JIBAR Borrowing prior to the end of the the case of a Eurocurrency Borrowing denominated in Dollars, be converted to an ABR Borrowing, (ii) in the case of a CDOR Borrowing, be converted to a Canadian Prime Rate Borrowing and (iii) in the case of a Borrowing denominated in any other Alternative Currency, automatically continue as a Eurocurrency Borrowing, a CDOR Borrowing, a BBSY Borrowing or a JIBAR Borrowing, as the case may be, with an interest period of one month.  Notwithstanding any contrary provision Borrowing in Dollars may be converted to or continued as a Eurocurrency Borrowing, (ii) unless repaid, each Eurocurrency Borrowing in Dollars shall be thereto, (iii) no outstanding Borrowing in Canadian Dollars may be converted to or continued as a CDOR Borrowing and (iv) unless repaid, each CDOR Borrowing shall be converted to a Canadian Prime Rate Borrowing at the end of the Interest Period applicable thereto.     (a)                                 Unless previously terminated, the   (b)                                 The Parent may at any time terminate or from time to time reduce the Commitments; provided that (i) each reduction of the not less than $1,000,000 and (ii) the Parent shall not terminate or reduce the the total Commitments.   (c)                                  The Parent shall notify the Administrative Parent pursuant to this Section   52   shall be irrevocable.  Any termination or reduction of the Commitments shall be   Section 2.09  Repayment of Loans; Evidence of Debt.  Each Borrower hereby such Borrower on the Maturity Date, and (ii) to the Administrative Agent for the account of the Swingline Lenders the then unpaid principal amount of each Swingline Loan made to such Borrower on the Maturity Date; provided that on each Loans then outstanding that are denominated in the same currency as such Revolving Borrowing and the proceeds of such Revolving Borrowing shall be applied by the Administrative Agent to repay such outstanding Swingline Loans.     the Class, Type and currency thereof and the Interest Period applicable thereto,   Borrowers to repay the Loans in accordance with the terms of this Agreement, and provided further, that to the extent there is any inconsistency between the accounts maintained pursuant to paragraph (a) or (b) of this Section and the Section 10.04(b)(iv), the entries in the Register shall control.   be evidenced by a promissory note.  In such event, the applicable Borrowers     time and from time to time to prepay any Borrowing selected by it in whole or in part, subject to prior notice in accordance with this   53   paragraph.  The relevant Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lenders) by telephone prepayment of a Eurocurrency Borrowing in Dollars or a CDOR Borrowing, not later prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing or a date of prepayment, (iii) in the case of prepayment of a Swingline Loan in Dollars or Canadian Dollars, not later than 12:00 noon, Local Time, on the date of prepayment, (iv) in the case of prepayment of a JIBAR Borrowing, not later payment and shall provide written notice thereof to the Alternative Currency Agent at the same time or (v) in the case of prepayment of a Borrowing in any other Alternative Currency, not later than 11:00 a.m., Local Time, three (3) Business Days before the date of prepayment and shall provide written notice thereof to the Alternative Currency Agent at the same time.  Each such notice receipt of any such notice relating to a Borrowing (other than a Swingline Loan), the Administrative Agent shall advise the appropriate Lenders of the shall be applied to reduce pro rata all Loans comprising the designated Borrowing being prepaid.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12 and any amounts required to be paid under Section 2.15.   of fluctuations in currency exchange rates, the Revolving Credit Exposures (calculated in accordance with Section 1.05 as of the most recent Computation Date) exceed the total Commitments, or (ii) solely as a result of fluctuations in currency exchange rates, the Revolving Credit Exposures (calculated in accordance with Section 1.05 as of the most recent Computation Date) exceed 105% of the total Commitments, the Borrowers shall in each case, within three (3) Business Days after the relevant Computation Date, repay Borrowings or cash collateralize LC Exposure in an account with the Administrative Agent, as applicable, in an aggregate principal amount sufficient to eliminate such excess condition.   Section 2.11  Fees.   (a)                                 The Parent shall pay, or shall cause to be paid, to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the Commitment Fee Rate on the daily amount of the unused Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which the Commitments terminate.  June, September and December of each year during the Availability Period and on to occur after the date hereof.  All commitment fees shall be paid in Dollars and computed on the basis of a year of 360 days and shall be payable for the day).  For purposes of calculating the unused Commitment of each Lender, Swingline Loans made by or deemed made or attributable to such Lender shall not count as usage.   54   (b)                                 The Parent shall pay, or shall cause to be paid, (i) to the Administrative Agent for the account of each Lender a fee shall accrue at the same Applicable Margin used to determine the interest the date on which it ceases to have any LC Exposure and (ii) to the Issuing Exposure, but in no event less than $500, as well as the Issuing Lender’s September and December of each year during the Availability Period shall be payable on the third Business Day following such last day of such months, All participation fees and fronting fees shall be paid in Dollars and computed   (c)                                  The Parent shall pay, or shall cause to be paid, to the Administrative Agent, for its own account, fees payable in the amounts and at the times specified in the Fee Letter, or otherwise separately agreed upon, between the Parent and the Administrative Agent.   to the Issuing Lender in the case of fees payable to it) for distribution, in   Section 2.12  Interest.   (a)                                 The Loans comprising each ABR Revolving Margin.  The Loans comprising each Canadian Prime Rate Revolving Borrowing shall bear interest at the Canadian Prime Rate plus the Applicable Margin.   in effect for such Borrowing plus the Applicable Margin.  The Loans comprising each CDOR Borrowing shall bear interest at the Canadian Dealer Offered Rate for The Loans comprising each BBSY Borrowing shall bear interest at the Bank Bill Swap Reference Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.   55   The Loans comprising each JIBAR Borrowing shall bear interest at the Johannesburg Interbank Agreed Rate for the Interest Period in effect for such   (c)                                  Each Swingline Loan shall bear interest at a rate per annum equal to the Swingline Rate.     Borrower hereunder is not paid when due, such overdue amount shall bear interest   (f)                                   Accrued interest on each Loan shall be of Revolving Loans, upon termination of the Commitments; provided that (i) a prepayment of an ABR Loan or Canadian Prime Rate Loan prior to the end of the event of any conversion of any Eurocurrency Loan, CDOR Loan, BBSY Loan or JIBAR   (g)                                  All interest hereunder shall be paid in the same currency as the relevant Loan and computed on the basis of a year of 360 days, except that (i) interest on Borrowings denominated in Pounds Sterling, Canadian Dollars and Australian Dollars and (ii) interest computed by reference (or, except in the case of Borrowings denominated in Pounds Sterling, 366 days Alternate Base Rate, Adjusted LIBO Rate, Canadian Prime Rate, Canadian Dealer Offered Rate, Eurocurrency Rate, Bank Bill Swap Reference Rate, Johannesburg Interbank Agreed Rate or LIBO Rate shall be determined by the Administrative   (h)                                 For purposes of the Interest Act (Canada), based on a year of 360 days or 365 days (or such other period that is less than a calendar year), as the case may be, the rate determined pursuant to such applicable rate based on a year of 360 days or 365 days (or such other period that is less than a calendar year), as the case may be, (y) multiplied by the (or such other period that is less than a calendar year), as the case may be, rates or yields.   56   Section 2.13  Market Disruption; Alternate Rate of Interest.   (a)                                 Market Disruption.  If, at the time the Administrative Agent or Alternative Currency Agent shall seek to determine the relevant Screen Rate on the Quotation Day for any Interest Period, the for the applicable currency for any reason and the Administrative Agent or Alternative Currency Agent shall determine that it is not possible to determine manifest error), then (i) the LIBO Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate, as the case may be, for such Interest Period for the relevant currency shall be the Reference Bank Rate and (ii) the Canadian Dealer Offered Rate for such Interest Period shall be the rate quoted by the Administrative Agent as of the applicable time on the Quotation Day; that if less than two Reference Banks shall supply a rate to the Administrative Agent or the Alternative Currency Agent, as the case may be, for purposes of determining the LIBO Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate, as the case may be, for such Borrowing, (A) if the ABR Borrowing, (B) if the Borrowing shall be requested in Canadian Dollars, then such Borrowing shall be made as a Canadian Prime Rate Borrowing and (C) if such Borrowing shall be requested in any other currency, the request for such   (b)                                 Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurocurrency Borrowing, a CDOR Borrowing, a BBSY Borrowing or a JIBAR Borrowing:   and reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the LIBO Rate, the Canadian Dealer Offered Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate, as applicable, for such Interest Period (including, for the avoidance of doubt, pursuant to Section 2.13(a)); or   Majority Lenders that the Adjusted LIBO Rate, the LIBO Rate, the Canadian Dealer Offered Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate, as applicable, for such Interest Period will not adequately and   circumstances giving rise to such notice no longer exist, (A) no outstanding Borrowing of Dollars or Canadian Dollars shall be converted to or continued as a Eurocurrency Borrowing or CDOR Borrowing, as applicable, and any Interest Election Request requesting such conversion or continuation shall be ineffective, (B) no outstanding Eurocurrency Borrowing in any Alternative Currency, BBSY Borrowing or JIBAR Borrowing shall be continued and any Interest Election Request requesting such continuation shall be ineffective, (C) if any Borrowing Request requests a Eurocurrency Borrowing in   57   Dollars, such Borrowing shall be made as an ABR Borrowing, (D) if any Borrowing Request requests a CDOR Borrowing, such Borrowing shall be made as a Canadian Prime Rate Borrowing and (E) if any Borrowing Request requests a Eurocurrency Borrowing in an Alternative Currency, a BBSY Borrowing or a JIBAR Borrowing, such request shall be ineffective; provided that if the circumstances giving rise to such notice affect less than all Types of Borrowings, then the other Types of Borrowings shall be permitted.   interest for syndicated loans of this type in the United States at such time, to the contrary in Section 10.02, (A) in the event such alternate rate of interest relates to Loans in Dollars, such amendment shall become effective Lenders object to such amendment and (B) in the event such alternate rate of interest relates to Loans in an Alternative Currency, such amendment shall become effective upon the written consent of the Parent, the Administrative Agent and each Lender.  Until an alternate rate of interest shall be determined sentence of this Section 2.13(c), only to the extent the LIBO Screen Rate for ABR Borrowing and (z) if any Borrowing Request requests a Eurocurrency Borrowing in an Alternative Currency, a BBSY Borrowing or a JIBAR Borrowing, such request shall be ineffective.   58     Law shall:       (iii)                               impose on any Lender or Issuing Lender or   to increase the cost to such Lender, Issuing Lender or other Recipient of then, upon request of such Lender, Issuing Lender or other Recipient, the Parent will pay, or will cause to be paid, to such Lender, Issuing Lender or other   Issuing Lender, to a level below that which such Lender or Issuing Lender or such Lender’s or Issuing Lender’s holding company could have achieved but for with respect to capital adequacy), then from time to time the Parent will pay, or will cause to be paid, to such Lender or Issuing Lender, as the case may be, reduction suffered.   59   certificate of a Lender or Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or Issuing Lender or its respective holding error.  The Parent shall pay, or shall cause to be paid, to such Lender or   Section shall not constitute a waiver of such Lender’s or Issuing Lender’s right to demand such compensation; provided that the Parent shall not be required to compensate, or cause to be compensated, a Lender or Issuing Lender pursuant to or reductions, and of such Lender’s or Issuing Lender’s intention to claim to above shall be extended to include the period of retroactive effect thereof); provided further that no Lender shall seek compensation from the Parent unless such Lender is actively seeking compensation from other similarly situated borrowers as well.   Section 2.15  Break Funding Payments.  In the event of (a) the payment by an Obligor of any principal of any Eurocurrency Loan, CDOR Loan, BBSY Loan or JIBAR Eurocurrency Loan, CDOR Loan, BBSY Loan or JIBAR Loan other than on the last day or continue any Eurocurrency Loan, CDOR Loan, BBSY Loan or JIBAR Loan on the any Eurocurrency Loan, CDOR Loan, BBSY Loan or JIBAR Loan other than on the last Parent pursuant to Section 2.18, then, in any such event, the Parent shall compensate, or cause to be compensated, each Lender for the loss, cost and expense attributable to such event (but excluding any anticipated lost such event not occurred, at the Adjusted LIBO Rate, the Canadian Dealer Offered Rate. the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate, as applicable, that would have been applicable to such Loan for the period banks in the interbank market for such currency, or for Canadian deposits of a comparable amount and period to such CDOR Loan from other banks in the Canadian bankers’ acceptable market.  A certificate of any Lender setting forth any receipt thereof.   60   Section 2.16  Taxes.   Section 2.16, the term “Lender” includes any Issuing Lender and the term   payments by or on account of any obligation of any Obligor under any Loan Tax is an Indemnified Tax, then the sum payable by the applicable Obligor shall made (including such deductions and withholdings of Indemnified Taxes applicable withholding been made.   (c)                                  Payment of Other Taxes by the Obligors.  The applicable Obligor shall timely pay to the relevant Governmental Authority   (d)                                 Indemnification by the Obligors.  Each Obligor shall indemnify each Recipient, within ten (10) days after demand Section) payable or paid by such Recipient with respect to a payment by such Obligor, or required to be withheld or deducted from a payment by such Obligor or asserted by the relevant Governmental Authority.  Notwithstanding the preceding sentence, the Obligors shall not be required to indemnify a Recipient pursuant to this Section 2.16(d) for any Indemnified Taxes unless such Recipient (or the Administrative Agent on such Recipient’s behalf) notifies the Parent of the indemnification claim for such Indemnified Taxes no later than 180 days makes written demand upon such Recipient for payment of such Indemnified Taxes, Taxes to the relevant Governmental Authority (except that, if the Indemnified retroactive effect thereof).  A certificate as to the amount of such payment or liability delivered to the Parent by a Lender (with a copy to the Administrative Lender, shall be conclusive absent manifest error.  For the avoidance of doubt, no Obligor shall be required to indemnify any Person under this Section 2.16(d) in respect of any Indemnified Taxes for which the applicable Recipient has already been compensated by way of an increased payment under   after demand therefor, for (i) any Indemnified Taxes   61     practicable after any payment of Taxes by any Obligor to a Governmental Authority pursuant to this Section 2.16, such Obligor shall deliver to the   payments made under any Loan Document shall notify the Parent and the Administrative Agent of such exemption or reduction and shall deliver to the than the documentation required to be provided by a Lender in accordance with Section 2.16(h) or such other documentation set forth in Section 2.16(g)(ii)(A),   foregoing,   to the Parent and the Administrative Agent on or prior to the date on which such upon the reasonable request of the Parent or the Administrative Agent), an   62   legally entitled to do so, deliver to the Parent and the Administrative Agent from time to time thereafter upon the reasonable request of the Parent or the     (ii)                                  in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed copy of IRS Form W-8ECI;   Code, (x) a certificate substantially in the form of Exhibit 2.16-1 to the Form W-8BEN-E (or applicable successor form); or   beneficial owner, an executed copy of IRS Form W-8IMY, accompanied by IRS Exhibit 2.16-2 or Exhibit 2.16-3, IRS Form W-9, and/or other certification of Exhibit 2.16-4 on behalf of each such direct and indirect partner;   (in such number of copies   63     (D)                               if a payment made to a Recipient under any time or times reasonably requested by the Parent or the Administrative Agent reasonably requested by the Parent or the Administrative Agent as may be necessary for the Parent and the Administrative Agent to comply with their   (iii)                               Each Lender shall, at the Effective Date or, if it becomes a party to this Agreement after the Effective Date, in the Assignment and Assumption or other documentation contemplated hereby, which it executes on becoming a party, indicate which of the following categories it falls in:   (A)                               not a U.K. Qualifying Lender and/or not a German Qualifying Lender;   Treaty Lender) and/or a German Qualifying Lender (other than a German Treaty Lender); or   (C)                               a U.K. Treaty Lender and/or a German Treaty Lender.   If a Lender fails to indicate its status in accordance with this Section 2.16(g)(iii), then such Lender shall be treated for the purposes of this Agreement (including by the U.K. Borrowers or by a Borrower established in Germany) as if it is not a U.K. Qualifying Lender or a German Qualifying Lender (as applicable) until such time as it notifies the Administrative Agent which notification, shall inform the U.K. Borrowers or the relevant Borrower established in Germany).  For the avoidance of doubt, an Assignment and Assumption or such other documentation shall not be invalidated by any failure of a Lender to comply with this Section 2.16(g)(iii).   64   pursuant to this Section 2.16(g) expires or becomes obsolete or inaccurate in Parent and the Administrative Agent in writing of its legal inability to do so.   (h)                                 Additional United Kingdom Withholding Tax Matters.   each U.K. Borrower shall cooperate in completing any procedural formalities necessary for the U.K. Borrowers to obtain authorization to make such payment Kingdom.   number and its jurisdiction of tax residence to the U.K. Borrowers and the Administrative Agent in writing on the Effective Date; and   (B)                               a Lender that becomes a Lender hereunder after the Effective Date that (x) holds a passport under the HMRC DT Treaty Passport scheme reference number and its jurisdiction of tax residence to the U.K. Borrowers and the Administrative Agent in the Assignment and Assumption, and   (C)                               upon satisfying either clause (A) or (B) above, such Lender shall have satisfied its obligation under paragraph (h)(i) above.   paragraph (h)(ii) above, each U.K. Borrower shall make a DTTP Filing with respect to such Lender within thirty (30) Business Days following the Effective Date or (if applicable) the date of the Assignment and Assumption or, if later, thirty (30) Business Days before the last interest payment is due to such Lender, and shall promptly provide such Lender with a copy of such filing; provided that, if:   (A)                               any U.K. Borrower has not made a DTTP Filing in respect of such Lender; or   (B)                               any U.K. Borrower has made a DTTP Filing in respect of such Lender but (1) such DTTP Filing has been rejected by HM Revenue & Customs; or (2) HM Revenue & Customs has not given such U.K. Borrower authority to make payments to such Lender without a deduction for tax within 60 days of the date of such DTTP Filing;   and in each case, such U.K. Borrower has notified that Lender in writing of either (1) or (2) above, then such Lender and such U.K. Borrower shall cooperate in completing any additional procedural formalities necessary for such U.K.   65   Borrower to obtain authorization to make that payment without withholding or     (h)(ii) above, no U.K. Borrower shall make a DTTP Filing or file any other form Commitment or its participation in any Loan unless the Lender otherwise agrees.   (v)                                 Each Lender which had given confirmation to the U.K. Borrowers that it was a U.K. Treaty Lender but determines in its sole discretion that it is ceases to be a U.K. Treaty Lender shall promptly notify the U.K. Borrowers and the Administrative Agent of such change in status.   (i)                                     Additional German Tax Matters.   (i)                                     A Lender and each Obligor established in Germany which makes a payment to which that Lender is entitled shall cooperate in completing or assisting with the completion of any procedural formalities necessary for that Obligor to obtain authorization to make that payment without a German Tax deduction and maintain that authorization where an authorization expires or otherwise ceases to have effect.  If an Obligor is required to make a German Tax deduction, such Obligor shall make that deduction and any payment required in connection with that deduction within the time allowed and in the minimum amount required by law.   (ii)                                  Within thirty (30) Business Days of making either a German Tax deduction or any payment required in connection with such deduction, the relevant Obligor making such deduction shall deliver to the evidence reasonably satisfactory to such Lender that the deduction has been made authority.   (iii)                               If an Obligor established in Germany makes a payment under Section 2.16(d) and the relevant Lender determines, acting reasonably and in good faith, that it has obtained and utilized a Tax Credit or other similar benefit which is attributable to that payment (or an increased payment of which that payment forms part), such Lender shall pay to the relevant Obligor such amount as such Lender determines, acting reasonably and in good faith, will leave such Lender (after such payment) in the same after-Tax position as it would have been in if the relevant payment had not been made by such Obligor.   (j)                                    Administrative Agent Documentation.  On or before the Effective Date, JPMorgan shall (and any successor or replacement Administrative Agent shall on or before the date on which it becomes the Administrative Agent hereunder) deliver to the Borrower two duly executed copies of either (i) IRS Form W-9 or (ii) IRS Form W-8ECI (with respect to any payments to be received on its own behalf) and IRS Form W-8IMY (for all other payments), establishing that the Borrowers can make payments to the Administrative Agent without   66   deduction or withholding of any Taxes imposed by the United States, including   (k)                                 Treatment of Certain Refunds.  If any party a Tax Credit as to which it has been indemnified pursuant to this Section 2.16 it shall pay to the indemnifying party an amount equal to such Tax Credit (but the Taxes giving rise to such Tax Credit), net of all out-of-pocket expenses interest paid by the relevant Governmental Authority with respect to such Tax Credit).  Such indemnifying party, upon the request of such indemnified party, paragraph (k) (plus any penalties, interest or other charges imposed by the required to repay such Tax Credit to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (k), in no event will pursuant to this paragraph (k) the payment of which would place the indemnified Tax Credit had not been deducted, withheld or otherwise imposed and the any other Person.   (l)                                     Survival.  Each party’s obligations under this Section 2.16 shall survive the resignation or replacement of the   Section 2.17  Payments; Generally; Pro Rata Treatment; Sharing of Set-offs.   required to be made by it hereunder on Loans or Letters of Credit made to or on account of such Borrower denominated in Dollars or Canadian Dollars (whether of principal, interest, fees or reimbursement of LC Disbursements in Dollars, or of p.m., Houston, Texas time, on the date when due in Dollars or Canadian Dollars, respectively, in immediately available funds, without set-off or counterclaim.  Each Borrower shall make each payment required to be made by it hereunder on Loans or Letters of Credit made to or on account of such Borrower denominated in any other Alternative Currency (whether of principal, interest, fees or reimbursements of LC Disbursements in such Alternative Currency, or of amounts Local Time, on the date when due in the applicable Alternative Currency, in Business Day for purposes of calculating interest thereon.  All payments in Dollars shall be made to the Administrative Agent at its offices at 712 Main Street, Houston, Texas, except payments to be made directly to the Issuing Lenders or Swingline Lenders as expressly provided herein and   67   made directly to the Persons entitled thereto.  All payments in Alternative Currencies shall be made to the Alternative Currency Agent at the place designated by the Alternative Currency Agent in its notice therefor, except payments to be made directly to the Issuing Lenders or Swingline Lenders as The Administrative Agent or the Alternative Currency Agent shall distribute any such extension.   received by and available to the Administrative Agent or the Alternative Currency Agent to pay fully all amounts of principal, unreimbursed LC   in LC Disbursements to any assignee or participant, other than to the Parent or   payment is due to the Administrative Agent for the   68   account of the Lenders or the Issuing Lenders hereunder that such Borrower will upon such assumption, distribute to the applicable Lenders or the Issuing to the Administrative Agent, at the greater of the FRBNY Rate and a rate Alternative Currency Rate in the case of Loans denominated in Alternative Currencies).   2.06(b) or 2.17(d) or 10.03(c), then the Administrative Agent may, in its Lender for the benefit of the Administrative Agent, the Swingline Lenders or the Issuing Lenders to satisfy such Lender’s obligations under such Section until     Section 2.14, or if any Obligor is required to pay any Indemnified Taxes or be disadvantageous to such Lender.  The Parent shall pay, or cause to be paid,   Lender, or any Lender suspends its obligation to fund Eurocurrency Loans, CDOR Loans, BBSY Loans or JIBAR Loans pursuant to Section 2.13, or any Lender refuses requires consent of 100% of the Lenders pursuant to Section 10.02, or if any Lender delivers a notice of illegality pursuant to Section 2.21, then the Parent its   69   accepts such assignment); provided that (i) the Parent shall have received the prior written consent of the Administrative Agent, the Issuing Lenders and the Swingline Lenders, in each case, to the extent such consent would be required for an assignment pursuant to Section 10.04(b), which consent shall not be to be made pursuant to Section 2.16, such assignment is expected to result in a waiver by such Lender or otherwise, the circumstances entitling the Parent to   Section 2.19  Increase of Commitments.  Provided there exists no Event of Default, the Parent may, during the period commencing on the Effective Date to and including the date that is six months prior to the Maturity Date, by written notice to the Administrative Agent executed by the Borrowers and one or more cause the Commitments to be extended by the Increasing Lender (or cause the amount for each Increasing Lender set forth in such notice; provided, that (i) each extension of new Commitments or increase in existing Commitments pursuant to this paragraph shall result in the aggregate Commitments being increased by no less than $25,000,000, (ii) no extension of new Commitments or increase in existing Commitments, in each case, pursuant to this paragraph may result in the aggregate Commitments exceeding $700,000,000, (iii) each Increasing Lender, if not already a Lender hereunder (any such Increasing Lender, a “New Lender”), shall be subject to the consent of the Administrative Agent, each Issuing Lender and each Swingline Lender, in each case, to the extent such consent would be required for an assignment to such New Lender pursuant to Section 10.04(b), which consent shall not be unreasonably withheld, (iv) each Lender shall become a party to this Agreement by completing and delivering to the Administrative Agent a duly executed New Lender Agreement and (v) in no event shall any existing Lender be required to increase its Commitment.  New Commitments and increases in Commitments shall become effective on the date specified in the applicable notices delivered pursuant to this paragraph.  Upon the effectiveness of any New Lender Agreement to which any New Lender is a party, (i) such New Lender shall thereafter be deemed to be a party accorded a Lender hereunder and subject to all obligations of a Lender hereunder, (ii) Schedule 1.01(c) shall be deemed to have been amended to reflect the Non-Pro Rata Alternative Currencies (if any) in which such New Lender has agreed to fund Revolving Loans and (iii) Schedule 2.01(a) shall be deemed to have been amended to reflect the Commitment of such New Lender as provided in such New Lender Agreement.  Upon the effectiveness of any increase pursuant to this Section 2.19 in a Commitment of a Lender already a party hereto, Schedule 2.01(a) shall be deemed to have been amended to reflect such increased Commitment of such Lender.  Notwithstanding the foregoing, no increase in the this Section   70   2.19 unless, on the date of such increase, the Administrative Agent shall have received a certificate, dated as of the effective date of such increase and executed by a Financial Officer, to the effect that the conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied (with all references and attaching resolutions of the Borrowers approving such increase).  Following to this paragraph, any Loans outstanding prior to the effectiveness of such increase or extension shall continue to be outstanding until the ends of the respective Interests Periods applicable thereto, and shall then be repaid and, if the relevant Borrowers shall so elect, refinanced with new Loans made following such extension or increase.       Majority Lenders.   Administrative Agent from a Defaulting Lender pursuant to Section 2,17 shall be basis of any amounts owing by such Defaulting Lender to any Issuing Lender or Swingline Lender hereunder; third, to cash collateralize the Issuing Lenders’ Section 2.05(j); fourth, as the Parent may request (so long as no Default or (y) cash collateralize the Issuing Lenders’ future Fronting Exposure with issued under this Agreement, in accordance with Section 2.05(j); sixth, to the against such Defaulting   71   Exposure and Swingline Loans are held by the Lenders pro rata in accordance with hereto.   Lender is a Defaulting Lender (and the Parent shall not be required to pay or cause to be paid any such fee that otherwise would have been required to have   receive participation fees for any period during which that Lender is a the stated amount of Letters of Credit for which it has provided cash collateral pursuant to Section 2.05(j).   (C)                               With respect to any participation fee not (B) above, the Parent shall (x) pay, or cause to be paid, to each Non-Defaulting with respect to such Defaulting Lender’s participation in LC Exposure or to clause (iv) below, (y) pay, or cause to be paid, to each Issuing Lender and required to pay or cause to be paid the remaining amount of any such fee.   LC Exposure and Swingline Loans shall be reallocated among the Non-Defaulting such reallocation (and, unless the Parent shall have otherwise notified the Administrative Agent at such time, the Parent shall be deemed to have (B) such   72   reallocation does not cause (1) the Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Commitment, or (2) the Revolving Credit Exposure of any Non-Defaulting Lender denominated in Alternative Currencies to exceed such Non-Defaulting Lender’s Commitment in Alternative Currencies, in each case, calculated at the time of such reallocation.  Subject to Section 10.18, no reallocation hereunder shall   cash collateralize the Issuing Lenders’ Fronting Exposure in accordance with the   (b)                                 Defaulting Lender Cure.  If the Parent, the fees accrued or payments made by or on behalf of the Parent while that Lender   long as any Lender is a Defaulting Lender, (i) no Swingline Lender shall be giving effect thereto.   Section 2.21  Illegality.  If, in any applicable jurisdiction, the Administrative Agent, any Issuing Lender or any Lender determines that any Law (a) perform any of its obligations hereunder or under any other Loan Document, (b) to fund or maintain its participation in any Loan or (c) issue, make, Credit to any Borrower that is organized under the laws of a jurisdiction other than the United States, a state thereof or the District of Columbia, such Person shall promptly notify the Administrative Agent,   73   then, upon the Administrative Agent notifying the Parent, and until such notice maintain, fund or charge interest or fees with respect to any such Loan or Law, cancelled.  Upon receipt of such notice, the Parent shall, or shall cause the applicable Borrower to, (i) repay that Person’s participation in the Loans the Parent or, if earlier, the date specified by such Person in the notice applicable grace period permitted by applicable Law), (ii) to the extent applicable to such Issuing Lender, cash collateralize that portion of the LC Exposure comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise cash collateralized and (iii) take all reasonable actions   Section 2.22  Judgment Currency.  If, for the purposes of obtaining a judgment Document from one currency into another currency, the rate of exchange used for such conversion shall be the rate of exchange at which in accordance with normal with such other currency on the Business Day preceding the date on which final judgment is given.  The obligation of each Obligor in respect of any such sum Currency”), be discharged only to the extent that on the next Business Day sum originally due to the Administrative Agent or such Lender from any Obligor in the Agreement Currency, such Obligor agrees, as a separate obligation and Administrative Agent or such Lender in such currency, the Administrative Agent such Obligor (or to any other Person who may be entitled thereto under applicable Law).   ARTICLE III Representations and Warranties   The Parent, for itself and for each Restricted Subsidiary, and each Guarantor, for itself, represent and warrant to the Lenders that:   Section 3.01  Organization.  Each of the Parent and the Restricted Subsidiaries on the date this representation is made or deemed to be made (a) to the extent applicable, is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, (b) has the requisite power and conducted, and (c) to the extent applicable, is duly qualified or licensed to   74   conduct business and is in good standing in each such jurisdiction.  As of the Effective Date, there are no jurisdictions in which the Parent’s or any Restricted Subsidiary’s failure to be qualified or be in good standing, Material Adverse Effect.  As of the Effective Date, no proceeding to dissolve any Obligor is pending or, to the Parent’s knowledge, threatened.   Section 3.02  Authority Relative to this Agreement.  Each of the Obligors has corporate, partnership or limited liability company action on the part of each   Section 3.03  No Violation.  The Transactions will not:   (a)                                 result in a breach of the articles or certificate of incorporation, bylaws, partnership agreement or limited liability company agreement of the Parent or any Restricted Subsidiary or any resolution currently in effect adopted by the Board of Directors, shareholders, partners, members or managers of the Parent or any Restricted Subsidiary;   (b)                                 result in the imposition of any Lien on any of the Equity Interests of the Parent or any Restricted Subsidiary or any of their respective assets other than the Liens created under the Loan Documents;   (c)                                  result in, or constitute an event that, with the passage of time or giving of notice or both, would be, a breach, violation or default (or give rise to any right of termination, cancellation, prepayment or acceleration) under (i) any agreement evidencing Indebtedness or any other material agreement to which the Parent or any Restricted Subsidiary is a party or by which its properties or assets may be bound or (ii) any Governmental Approval held by, or relating to the business of, the Parent or any Restricted Subsidiary;   (d)                                 require the Parent or any Restricted Subsidiary to obtain any consent, waiver, approval, exemption, authorization or other action of, or make any filing with or give any notice to, any Person (ii) filings necessary to perfect or assign Liens created under the Loan Documents, (iii) filings required under applicable securities Laws, (iv) such as are required regardless of whether this Agreement is entered into by the Parent or any Restricted Subsidiary, or (v) those which, if not made or obtained, could   (e)                                  violate any Law or Order applicable to the Parent or any Restricted Subsidiary or by which their respective properties or   75   Section 3.04  Financial Statements.  The Parent has previously furnished to the Administrative Agent the audited consolidated balance sheets of the Parent and its Subsidiaries as of December 31, 2017, and the related consolidated statements of operation, cash flows and changes in shareholders’ equity for the fiscal year then ended, the notes accompanying such financial statements, and the report of KPMG LLP.  Such financial statements fairly present in all Parent and its Subsidiaries for the periods ended on such dates in accordance with GAAP for the periods covered thereby, subject, in the case of interim financial statements, to normal year-end adjustments, reclassifications and absence of footnotes.  Since December 31, 2017, there has been no change that   Section 3.05  Reserved.   Section 3.06  Litigation.  Except as disclosed to the Administrative Agent and each Lender in accordance with Section 5.02(c), the Parent’s most recent form 10-K and form 10-Q filed with the SEC describe each action, suit or proceeding pending before any Governmental Authority or arbitration panel, or to the knowledge of the Parent or any Restricted Subsidiary, threatened, (a) involving the Transactions, or (b) against the Parent or any Restricted Subsidiary regarding the business or assets owned or used by the Parent or any Restricted   Section 3.07  Compliance with Law.  Each of the Parent and the Restricted Subsidiaries is in compliance with each Law that is or was applicable to it or its assets except where the failure to be in compliance, individually or in the Effect; and, as of the Effective Date, neither the Parent nor any Restricted Subsidiary has received any notice of, nor does any of them have knowledge of, the assertion by any Governmental Authority or other Person of any such violation.   Section 3.08  Properties.  Each of the Parent and the Restricted Subsidiaries owns (with good and defensible title in the case of real property, subject only to the matters permitted by the following sentence), or have valid leasehold interests in, all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) material to its business, except for minor do not interfere with its ability to conduct its business as currently conducted.  All such properties and assets are free and clear of all Liens except Permitted Liens and are not, in the case of real property, subject to any or limitations of any nature which would materially interfere with an Obligor’s ability to conduct its business as currently conducted.  The properties of the Parent and the Restricted Subsidiaries, taken as a whole, as to tangible, personal property, are in good operating order, condition and repair (ordinary     patents, patent applications, trademarks (whether registered or not), trademark applications, trade names, service marks, and copyrights   76   owned by the Parent or any Restricted Subsidiary (the “Intellectual Property”) has been declared invalid or is the subject of a pending or, to the knowledge of the Parent or any Restricted Subsidiary, threatened action for cancellation or a declaration of invalidity, and there is no pending judicial proceeding involving any claim, and neither the Parent nor any Restricted Subsidiary has received any written notice or claim of any infringement, misuse or misappropriation by the Parent or any Restricted Subsidiary of any patent, trademark, trade name, copyright, license or similar intellectual property right owned by any third party, except as described in Schedule 3.09.   (b)                                 To the knowledge of the Parent and the Restricted Subsidiaries, the conduct by the Parent and the Restricted conflict with, infringe on, or otherwise violate any copyright, trade secret, or patent rights of any Person except where such conflict, infringement or   Section 3.10  Taxes.  The Parent and the Restricted Subsidiaries have filed all paid all Federal, state and other Taxes imposed upon them or their properties, income or assets otherwise due and payable, except (a) where the failure to file such tax returns or pay such Taxes could not be reasonably expected to have a Material Adverse Effect or (b) to the extent such Taxes are being actively contested by the Parent or any Restricted Subsidiary in good faith and by appropriate proceedings; provided that such reserves or other appropriate   Section 3.11  Environmental Compliance.   (a)                                 Neither the Parent nor any Restricted Subsidiary is in violation of any Environmental Law or is subject to any Environmental Liability, except to the extent such violation or such liability, Material Adverse Effect;   (b)                                 neither the Parent nor any Restricted Subsidiary has received any written notice of any claim with respect to any Environmental Liability which claims are currently outstanding or know of any basis for any Environmental Liability, except to the extent such liability, Material Adverse Effect;   (c)                                  neither the Parent nor any Restricted Subsidiary has arranged for the disposal of Hazardous Material at a site listed for investigation or clean-up by any Governmental Authority or in violation of any Environmental Law except to the extent such disposal, individually or in the   (d)                                 there is no proceeding pending against the Parent or any Restricted Subsidiary by any Governmental Authority with respect to the presence of any Hazardous Material on or release of any Hazardous Material from any real property owned or operated at any time by the Parent or any Restricted Subsidiary or otherwise used in connection with their respective businesses, except to the extent that if such proceeding were determined adversely to the Parent   77   or any Restricted Subsidiary, such determination, individually or in the   (e)                                  neither the Parent nor any Restricted Subsidiary has knowledge that any Hazardous Material has been or is currently being generated, processed, stored or released (or is subject to a threatened release) from, on or under any real property owned or operated by the Parent or any Restricted Subsidiary, or otherwise used in connection with their respective businesses in a quantity or concentration that would require remedial action under any Environmental Law if reported to or discovered by the relevant Governmental Authority except to the extent such remedial action, individually Effect; and   (f)                                   to the knowledge of the Parent and the real property owned or operated by the Parent or any Restricted Subsidiary, except to the extent that the presence of such tank, individually or in the   Section 3.12  Labor Matters.  As of the Effective Date, there are no strikes, lockouts or slowdowns against the Parent or any Restricted Subsidiary pending or, to the knowledge of the Parent or any Restricted Subsidiary, threatened.  The hours worked by and payments made to employees of the Parent and the Act or any other Law dealing with such matters except to the extent such have a Material Adverse Effect.  All payments due from the Parent or any benefits, have been paid or accrued as a liability on the books of the Parent or any Restricted Subsidiary except to the extent that the nonpayment of such, Material Adverse Effect.  The consummation of the Transactions to occur on the Effective Date and the borrowing of Loans, use of proceeds thereof and issuance of Letters of Credit hereunder after the Effective Date will not give rise to under any collective bargaining agreement to which the Parent or any Restricted Subsidiary is bound.   Section 3.13  Investment Company Status.  Neither the Parent nor any Restricted   Section 3.14  Insurance.  Insurance maintained in accordance with Section 5.05   to occur on the Effective Date, and immediately following the making of each (a) the fair value of the assets of the Parent and the Restricted Subsidiaries on a going concern basis and on a consolidated basis, is greater than the total amount of debts and other liabilities of the Parent and the Restricted   78   and the Restricted Subsidiaries on a going concern basis and on a consolidated basis is not less than the amount that could reasonably be expected to be required to pay the probable liability of their debts and other liabilities, on a consolidated basis, as they become absolute and matured; (c) the Parent and the Restricted Subsidiaries, on a consolidated basis, are able to pay their debts and liabilities as they become absolute and mature; and (d) the Parent and the Restricted Subsidiaries are not engaged in, and are not about to be engaged in, business or a transaction for which the Parent’s and the Restricted Subsidiaries’ assets, on a consolidated basis, would constitute unreasonably small capital.  For purposes of this Section 3.15, (a) “fair value” shall mean the amount at which the assets of an entity would change hands between a willing each having knowledge of the relevant facts, neither being under any compulsion to act, with equity to both; and (b) “present fair saleable value” shall mean value, conceiving the latter as the amount which could be obtained for such properties within such period by a capable and diligent businessman from an interested buyer who is willing to purchase under ordinary selling conditions.   Section 3.16  ERISA.  No ERISA Event has occurred or is reasonably expected to   Section 3.17  Disclosure.   (a)                                 None of the other reports, financial Parent and the Restricted Subsidiaries to the Administrative Agent or any Lender information and forward-looking statements, the Parent represents only that such   (b)                                 As of the Effective Date, to the best knowledge of the Parent, the information included in each Beneficial Ownership Certification provided on or about the Effective Date to any Lender in   Section 3.18  Margin Stock.  No part of any Borrowing or any Swingline Loan shall be used at any time, to purchase or carry margin stock (within the meaning of Regulation U) in violation of Regulation U or to extend credit to others for Regulation U.  Neither the Parent nor any Restricted Subsidiary is engaged credit for the purposes of purchasing or carrying any such margin stock.  No part of the proceeds of any Borrowing will be used for any purpose which violates, or which is inconsistent with, any regulations promulgated by the Board.   79   Section 3.19  Anti-Corruption Laws and Sanctions.  The Parent has implemented the Parent, its Subsidiaries and their respective directors, officers, employees knowledge of the Parent, its directors and agents (acting in such agent’s capacity as agent for the Obligors), are in compliance with Anti-Corruption Laws to the knowledge of Parent, any agent of the Parent or any Subsidiary acting in its capacity as agent for the Obligors in connection with the credit facility Anti-Corruption Laws or applicable Sanctions.  This Section shall not be interpreted or applied in relation to any Obligor, any director, officer, employee or agent, or any Lender to the extent that the representations made pursuant to this Section violate or expose such entity or any director, officer, employee or agent thereof to any liability under any anti-boycott or blocking law, regulation or statute that is in force from time to time in the European Union (and/or any of its member states) that are applicable to such entity (including EU Regulation (EC) 2271/96) and Section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung, AWV) in connection with the German Foreign Trade Act (Außenwirtschaftsgesetz)).   Section 3.20  EEA Financial Institution.  No Obligor is an EEA Financial Institution.   ARTICLE IV Conditions   Section 4.01  Effective Date.  The effectiveness of this Agreement is subject to the conditions precedent that each of the following conditions is satisfied (or     the Ratification Agreements executed by the parties thereto.   standing, to the extent applicable, of each Obligor and each Restricted Subsidiary, the authorization of the Transactions to occur on the Effective Date, the authority of each natural Person executing any of the Loan Documents on behalf of any Obligor and any other legal matters relating to the Obligors, this Agreement or the Transactions to occur on the Effective Date, all in form   80   (d)                                 Each Lender requesting a promissory note evidencing Loans made by such Lender shall have received from the Borrowers a promissory note payable to such Lender in a form approved by the Administrative   (e)                                  The Lenders, the Administrative Agent and or prior to the Effective Date, including reimbursement or payment of all hereunder.   received a certificate from the Parent confirming receipt of all material financing contemplated hereby.   (g)                                  The Lenders shall have received (i) audited consolidated financial statements of the Parent for the fiscal years ended December 31, 2016 and December 31, 2017 and (ii) satisfactory unaudited interim consolidated financial statements of the Parent for each quarterly period ended clause (i) of this subsection as to which such financial statements are available.   Lenders and dated the Effective Date) of (i) Weil, Gotshal & Manges LLP, as U.S. counsel to the Obligors; (ii) Ashurst LLP, as English and Australian counsel to the Obligors and (iii) Stikeman Elliot LLP, as Canadian counsel to the Obligors, Administrative Agent.   received reports of UCC, tax and judgment Lien searches conducted by a reputable search firm with respect to each of the Parent and the Restricted Subsidiaries from their respective jurisdiction of formation and such reports shall not disclose any Liens other than Permitted Liens.   (j)                                    To the extent not previously delivered pursuant to the Existing Credit Agreement, all membership and stock certificates of each Subsidiary of the Parent described on Annex 3 to the Security Agreement shall have been delivered to Administrative Agent together with related stock and membership powers executed in blank by the relevant Obligor.   evidence of insurance coverage of the Parent and the Restricted Subsidiaries, which coverage shall be consistent with the requirements set forth in Section 5.05 and shall name the Administrative Agent as an additional insured and as a loss payee on the liability and casualty insurance policies.   Officer of the Parent, confirming compliance with the matters specified in   (m)                             The Administrative Agent and the Lenders shall have received, at least three days prior to the Effective Date, (i) all documentation and other information regarding the Parent requested in connection   81   and regulations, including the Patriot Act, and their respective internal policies and (ii) to the extent the Parent or any Obligor qualifies as a “legal Ownership Certification in relation to the Parent or such other Obligor.   on the occasion of any Borrowing, and of each Issuing Lender to issue, amend, following conditions:   Parent and the Restricted Subsidiaries set forth in this Agreement or any other Loan Document shall be deemed to have been made as a part of said request for each Borrowing and shall be true and correct in all material respects on and as extension of such Letter of Credit, as applicable; provided, that to the extent such representations and warranties were made as of a specific date, the same shall be required to have been true and correct in all material respects as of such specific date; provided further, in either case, to the extent any such in all respects;     received a Borrowing Request as required by Section 2.03 or the Administrative Agent and the Issuing Lender shall have received a request for the issuance of a Letter of Credit as required by Section 2.05(b).   this Section 4.02.   Section 4.03  Credit Events for Limited Condition Transactions.  Notwithstanding Section 4.02 above to the contrary, if the Parent has made an LCT Election pursuant to Section 1.07, then in the case of any Borrowing or Letter of Credit the proceeds of which are to be used solely to finance a Limited Condition Transaction, the obligation of each Lender to make a Loan on the occasion of such Borrowing, and of each Issuing Lender to issue such Letter of Credit, shall be subject to satisfaction of the following conditions:   (a)                                 (i) The representations and warranties of the Parent and the Restricted Subsidiaries set forth in this Agreement in Sections 3.01, 3.02, 3.03(a) and (e) (except, with respect to violation of any Law or Order, to the extent such violation could not reasonably be expected to have a Material Adverse Effect), 3.07, 3.13, 3.15 (after giving effect to such Limited Condition Transaction), 3.18 and 3.19 shall be true and correct in all issuance of such Letter of Credit, as applicable, and (ii) in the case of a Limited Condition Transaction that is a Business Acquisition, the representations and warranties made by the target of such Business Acquisition and its subsidiaries in the definitive agreement for such Business Acquisition that are material to the   82   interests of the Lenders and only to the extent that the Parent or its agreement as a result of a breach of such representations shall be true and date of issuance of such Letter of Credit, as applicable; provided that, in either case, to the extent any such representation or warranty is qualified by Material Adverse Effect or materiality qualifier, such representation or   effect to such Borrowing or the issuance of such Letter of Credit, as applicable, no Event of Default under Section 7.01(a), (h) or (i) shall have     this Section 4.03.   ARTICLE V Affirmative Covenants   Disbursements shall have been reimbursed, the Parent, for itself and each Restricted Subsidiary, and each Guarantor, for itself, covenant and agree with the Lenders that:   Section 5.01  Financial Statements.  The Parent will furnish to the   year of the Parent, the audited consolidated balance sheet and related and for such year of the Parent, setting forth in each case in comparative form qualification, or exception as to the scope of such audit by reason of any limitation which is imposed by the Parent) to the effect that such consolidated   (b)                                 within 45 days after the end of the first three fiscal quarters of each fiscal year of the Parent, the consolidated portion of the fiscal year for the Parent, setting forth in each case in Subsidiaries on a   83   adjustments, reclassifications and the absence of footnotes;   substantially in the form attached hereto as Exhibit 5.01(c) (“Compliance Certificate”) and (i) certifying that the representations and warranties of the Parent and the Restricted Subsidiaries contained in Article III and the Security repeated at and as of the date of such Compliance Certificate and are true and correct in all material respects at and as of such date, except for such specific date, (ii) certifying that, since the later of the Effective Date or the most recent Compliance Certificate, no change has occurred in the business, financial condition or results of operations of the Parent or any Restricted (iii) certifying as to whether a Default has occurred and, if a Default has taken with respect thereto, (iv) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.16 and 6.17, (v) certifying compliance with Section 5.09(b) and (c), (vi) containing any notification by the Parent of the elimination of the effect of any change in GAAP in accordance with Section 1.04, (vii) setting forth a comparison of the Consolidated Adjusted Pro Forma EBITDA as shown on most recent Compliance Certificate to the Consolidated Adjusted EBITDA for the same period, and (viii) including a reasonably detailed description of any adjustments attributable to Business Acquisitions as described in the definition of Consolidated Adjusted Pro Forma EBITDA which are included by the Parent in its calculation of Consolidated Adjusted Pro Forma EBITDA for the period covered by such Compliance Certificate;   (d)                                 promptly upon receipt of any written Person with respect to, or upon the Parent or any of its Subsidiaries obtaining knowledge of, (i) the existence or alleged existence of a violation of any applicable Environmental Law or any Environmental Liability in connection with any property now or previously owned, leased or operated by the Parent or any Restricted Subsidiary, (ii) any release of Hazardous Materials on such property or any part thereof in a quantity that is reportable under any applicable Environmental Law, and (iii) any pending or threatened proceeding for the applicable Environmental Law, in each case under clause (i), (ii) or (iii) above, in which there is a reasonable likelihood of an adverse decision or determination that could reasonably be expected to result in a Material Adverse Effect, a certificate of a Financial Officer, setting forth the details of such matter and the actions, if any, that the Parent or such Restricted Subsidiary is   reasonably request, including, without limitation, (i) updated Beneficial Ownership Certifications for the Obligors as so requested, or written confirmation that the information provided in the Beneficial Ownership Certifications delivered to the Administrative Agent or any Lender on or about the Effective Date in connection with this Agreement remains true and correct in all   84   respects and (ii) all documentation and other information reasonably requested rules and regulations, including the Patriot Act, and the internal policies of the Administrative Agent or such Lender;   such information evidencing any adjustments attributable to Business Acquisitions as described in the definition of Consolidated Adjusted Pro Forma EBITDA and included in a Compliance Certificate delivered pursuant to clause (c) above;   (g)                                  within 90 days after the end of each fiscal year, copies of certificates evidencing or other evidence of all material insurance coverage maintained by the Parent and the Restricted Subsidiaries; and   (h)                                 within 90 days after the end of each fiscal year, an annual budget of the Parent and the Restricted Subsidiaries for the following fiscal year.   Documents required to be delivered pursuant to Section 5.01(a) and (b) (to the provides a link thereto on the Parent’s website on the Internet; or (ii) on instance the Parent shall be required to provide paper or electronic copies of the Compliance Certificates required by Section 5.01(c) to the Administrative   Section 5.02  Notices of Material Events.  The Parent will furnish to the Business Days after acquiring knowledge thereof, written notice of the following:   (a)                                 the occurrence of any Event of Default and the action that the Parent or any Restricted Subsidiary is taking or proposes to   (b)                                 the incurrence of any material liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) by the Parent or any Restricted Subsidiary, other than such liabilities and obligations referenced in clauses (a) through (e) of Section 3.05;   (c)                                  the filing or commencement of any action, or affecting the Parent or any Restricted Subsidiary or any Affiliate thereof Material Adverse Effect or that in any manner questions the validity of the Loan Documents; and   85   reasonably be expected to result in unfunded liability of any Obligor resulting   thereto.   Section 5.03  Existence; Conduct of Business.  Each Obligor shall and shall cause each Restricted Subsidiary to do or cause to be done all things necessary its business except to the extent failure to maintain or preserve could not liquidation or dissolution permitted under Section 6.03 or any other transaction   Section 5.04  Payment of Obligations.  Each Obligor shall and shall cause each Restricted Subsidiary to pay its obligations, including liabilities for Taxes before the same shall become delinquent or in default, except (a) past due Taxes for which no fine, penalty, interest, late charge or loss has been assessed, (b) appropriate proceedings, and such Obligor or Restricted Subsidiary has set aside (c) where the failure to make payment could not reasonably be expected to result   Section 5.05  Maintenance of Properties; Insurance.  Each Obligor shall and shall cause each Restricted Subsidiary to (a) keep and maintain all property material to the conduct of the business of the Obligors and the Restricted wear and tear excepted, and (b) subject to Section 5.14, maintain, with   Section 5.06  Books and Records; Inspection Rights.  Each Obligor shall and shall cause each Restricted Subsidiary to keep proper, complete and consistent books of record that are true and correct in all material respects with respect to such Person’s operations, affairs, and financial condition.  Each Obligor shall and shall cause each Restricted Subsidiary to permit any representatives reasonably requested (provided that in the absence of an Event of Default, the representatives of the Administrative Agent shall not visit or inspect such properties more often than once per calendar year), subject in each case, to any restrictions or confidentiality agreements existing in favor of third parties.   Section 5.07  Compliance with Laws.  Each Obligor shall and shall cause each Restricted Subsidiary to comply with all Laws (excluding Laws referenced in Sections 5.10 and 5.12, which compliance shall be governed by such Sections) and Orders applicable to it or its   86   Parent will maintain in effect and enforce policies and procedures designed to ensure compliance by the Parent, its Subsidiaries and their respective applicable Sanctions.   and Letters of Credit will be used only to (a) pay the fees, expenses and other transaction costs of the Transactions and (b) fund working capital needs and general corporate purposes of the Parent and the Restricted Subsidiaries, including the making of Business Acquisitions and other acquisitions of property.  No part of the proceeds of any Loan will be used, whether directly or Section shall not be interpreted or applied in relation to any Obligor, any director, officer, employee or agent, or any Lender to the extent that the obligations under this Section would violate or expose such entity or any director, officer, employee or agent thereof to any liability under any to time in the European Union (and/or any of its member states) that are applicable to such entity (including EU Regulation (EC) 2271/96) and Section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung, AWV) in connection with the German Foreign Trade Act (Außenwirtschaftsgesetz)).   Section 5.09  Additional Guarantors; Termination of Guarantees.   (a)                                 The Parent at all times shall cause (i) all Material Restricted Subsidiaries to be Credit Facility Guarantors, other than any Material Restricted Subsidiary that is designated as a CFC Subsidiary (other than a CFC Subsidiary that is a Credit Facility Guarantor), and (ii) all Material Restricted Subsidiaries that are CFC Subsidiaries to be CFC Guarantors.  Notwithstanding the forgoing, the Parent shall cause any CFC Subsidiary that becomes a Material Restricted Subsidiary after the Effective Date to become a Credit Facility Guarantor, except (i) any such Material Restricted Subsidiary that is owned, in whole or in part, by a Subsidiary that is a U.S. Person or (ii) if the designation of such Material Restricted Subsidiary as a Credit Facility Guarantor could reasonably result in material adverse consequences to Parent, its Subsidiaries or its shareholders.   (b)                                 If as of the end of any fiscal quarter, (i) the aggregate consolidated revenues generated by the Unrestricted Subsidiaries exceed ten percent (10%) of the aggregate total consolidated revenue of the Parent and all of its Subsidiaries for the most recently ended period of four (4) fiscal quarters or (ii) the book value of the aggregate consolidated assets held by the Unrestricted Subsidiaries exceeds ten percent (10%) of the book value of the aggregate total   87   consolidated assets of the Parent and all of its Subsidiaries for the most recently ended period of four (4) fiscal quarters, the Parent shall promptly cause one or more of said Unrestricted Subsidiaries to be designated as a Restricted Subsidiary, such that, after giving effect to such designation, both the aggregate consolidated revenues and the book value of the aggregate consolidated assets of all Unrestricted Subsidiaries are less than ten percent (10%) of the total consolidated revenue and total book value of the consolidated assets of the Parent and all of its Subsidiaries.  In addition, to the extent that such new Restricted Subsidiary is a Material Subsidiary, the Parent shall (i) cause such new Restricted Subsidiary to become a Credit Facility Guarantor (in the case of any Restricted Subsidiary that is not a CFC Subsidiary) or a CFC Guarantor (in the case of any Restricted Subsidiary that is a CFC Subsidiary) by executing the applicable Addendum and (ii) deliver to the Administrative Agent such documents relating to such new Restricted Subsidiary as the Administrative   (c)                                  If as of the end of any fiscal quarter, (i) the aggregate consolidated revenues generated by Immaterial Subsidiaries (other than the Finco Entities) that are not Guarantors exceed fifteen percent (15%) of the aggregate total consolidated revenue of the Parent and all of its Subsidiaries for the most recently ended period of four (4) fiscal quarters or (ii) the book value of the aggregate consolidated assets held by the Immaterial Subsidiaries (other than the Finco Entities) that are not Guarantors exceeds fifteen percent (15%) of the book value of the aggregate total consolidated assets of the Parent and all of its Subsidiaries for the most recently ended period of four (4) fiscal quarters, the Parent shall promptly cause one or more of said Immaterial Subsidiaries (other than the Finco Entities) to become a Credit Facility Guarantor (in the case of any Immaterial Subsidiary that is not a CFC Subsidiary) or a CFC Guarantor (in the case of any Immaterial Subsidiary that is a CFC Subsidiary) by executing the applicable Addendum, such that, after giving effect to such Addendum, both the aggregate consolidated revenues and the book value of the aggregate consolidated assets of all Immaterial Subsidiaries (other than the Finco Entities) that are not Guarantors are less than fifteen percent (15%) of the total consolidated revenue and total book value of the consolidated assets of the Parent and all of its Subsidiaries.  Any such Immaterial Subsidiary that becomes a Guarantor shall also be designated as a Restricted Subsidiary, to the extent not already a Restricted Subsidiary.  The Parent shall deliver to the Administrative Agent such documents relating to such Immaterial Subsidiary as the Administrative Agent shall reasonably request.   (d)                                 Within 30 days after the Parent acquires or creates a new Material Subsidiary, by way of Division or otherwise (other than a Finco Entity), the Parent shall notify the Administrative Agent and shall provide the constituent documents for such new Material Subsidiary, and to the extent that such Material Subsidiary is a Material Restricted Subsidiary or to the extent such Material Subsidiary would otherwise be required to be a Guarantor under clause (b) or (c) above, the Parent shall (i) cause such new Material Subsidiary to become a Credit Facility Guarantor (in the case of any new Material Subsidiary that is not a CFC Subsidiary) or a CFC Guarantor (in the case of any new Material Subsidiary that is a CFC Subsidiary) by executing the applicable Addendum and (ii) deliver to the Administrative Agent such documents relating to such new Material Subsidiary as the Administrative Agent shall reasonably request.   (e)                                  Within 30 days after the occurrence of any event that results in a Subsidiary ceasing to be a CFC Subsidiary, to the extent such Subsidiary is a Material Restricted Subsidiary   88   or to the extent such Subsidiary would otherwise be required to be a Guarantor under clause (b) or (c) above, the Parent shall (i) cause such Subsidiary to become a Credit Facility Guarantor by executing the applicable Addendum and (ii) deliver such documents relating to such Subsidiary as the Administrative Agent shall reasonably request.   (f)                                   At any time, the Parent may, in its sole discretion, elect to cause one or more Restricted Subsidiaries that are not then Guarantors to become Guarantors by notifying the Administrative Agent of such election, designating that such Restricted Subsidiary will be a CFC Guarantor (if applicable) and causing such Restricted Subsidiary to execute an Addendum and deliver such Addendum to the Administrative Agent together with such other documents relating to such new Guarantor as the Administrative Agent shall reasonably request.   (g)                                  At any time, the Parent may elect to terminate any Guarantee by any Guarantor (a “Guarantee Termination”); provided that (i) no such Guarantee Termination shall be given or take effect with respect to any Subsidiary that is at the time a Borrower or Material Restricted Subsidiary and (ii) such Guarantee Termination shall only become effective on the date that is ten days after receipt by the Administrative Agent of a certificate of a Financial Officer certifying that (A) the Parent will be in pro forma compliance with Sections 5.09(b) and (c) and (B) no Default or Event of Default shall have occurred, in each case, at the time of and after giving effect to such Guarantee Termination.  Upon the effectiveness of any Guarantee Termination, (i) such Guarantor shall be released from its obligations as a Guarantor hereunder, (ii) all Liens granted by such Guarantor to secure its Guarantee shall automatically be terminated and released and (iii) the Administrative Agent will, at the expense of the Parent, execute and deliver such documents as are reasonably necessary to evidence said releases and terminations.   Section 5.10  Additional Borrowers; Removal of Borrowers.   (a)                                 (i)  If after the Effective Date, the Parent desires another Wholly-Owned Restricted Subsidiary to become a Borrower hereunder, the Parent shall (A) provide at least ten Business Days’ prior written notice to the Administrative Agent, which notice shall specify, if applicable, whether such Subsidiary shall be a CFC Borrower hereunder; (B) deliver to the Administrative Agent a Borrower Accession Agreement duly executed by all parties thereto; (C) satisfy all of the conditions with respect thereto set forth in this Section 5.10(a) in form and substance reasonably satisfactory to the Administrative Agent; (D) deliver satisfactory documentation and other information reasonably requested by the Administrative Agent or the Lenders regulations, including the Patriot Act and the Beneficial Ownership Regulation, and their respective internal policies; and (E) in the case of a proposed Additional Borrower that is organized under the laws of a jurisdiction other than the United States (or any state thereof or the District of Columbia) or the United Kingdom, obtain the consent of each Lender that such Additional Borrower is acceptable as a Borrower hereunder.   (ii)                                  Each Subsidiary’s addition as a Borrower shall also be subject to satisfaction of the following conditions: (A) the Administrative Agent shall have received (1) a certificate signed by a duly authorized officer of such Subsidiary, dated the date of such Borrower Accession Agreement certifying that (x) the representations and warranties contained in each Loan Document are true and correct in all material respects   89   on and as of such date (or in all respects if already qualified by Material Adverse Effect or materiality), before and after giving effect to such date (except to the extent such representations and warranties related solely to been true and correct in all material respects (or in all respects if already qualified by Material Adverse Effect or materiality)) and (y) no Default or Event of Default has occurred and is continuing as of such date or would occur as a result of such Subsidiary becoming an Additional Borrower; and (2) such supporting resolutions, incumbency certificates, legal opinions and other documents or information pertaining to the Additional Borrower as the Administrative Agent and (B) in the case of a proposed Additional Borrower that is organized under the laws of a jurisdiction other than the United States (or any state thereof or the District of Columbia), (1) each Lender shall have met to such Lender’s satisfaction all applicable regulatory, licensing and internal policy requirements and shall be legally permitted to make loans to such Additional Borrower and (2) no Lender shall be subject to any administrative or operational issues as a result of lending to such Additional Borrower, unless such Lender, in its sole discretion, waives the condition set forth in this   (iii)                               No Subsidiary’s addition as an Additional Borrower shall become effective unless and until all applicable conditions set forth above in paragraphs (i) and (ii) have been satisfied in the reasonable discretion of the Administrative Agent.  Upon the effective date of such Subsidiary’s addition as an Additional Borrower, such Subsidiary shall be deemed to be a Borrower and, if applicable, a CFC Borrower, as specified in the Parent’s notice delivered pursuant to paragraph (i) above, hereunder.  The Administrative Agent shall promptly notify each Lender upon each Additional Agreement.  With respect to the accession of any Additional Borrower, each Lender shall be responsible for making a determination as to whether it is capable of making advances to such Additional Borrower without the incurrence of withholding Taxes, provided that such Additional Borrower and its tax advisors shall cooperate in all reasonable respects with the Administrative Agent and such Lender in connection with any analysis necessary for such Lender to make such determination and such Additional Borrower shall bear all costs and expenses incurred in connection with such determination.   has occurred and is then continuing or would result therefrom, the Parent may remove any Subsidiary as a Borrower under this Agreement by providing written notice of such removal to the Administrative Agent which shall promptly give the Lenders notice of such removal; provided that (i) in the event Loans are outstanding to such Subsidiary, (A) such Loans shall be repaid in full in accordance with the terms hereof or (B) the Parent shall designate in such notice the existing Borrower or Borrowers to which such Loans will be assigned and such Loans shall be assigned to said Borrower or Borrowers prior to or contemporaneously with the removal of such Subsidiary as a Borrower pursuant to an agreement reasonably satisfactory to the Administrative Agent and (ii) in the event outstanding Letters of Credit are issued for the account of such Subsidiary (or any of its   90   Subsidiaries), the related LC Exposure shall be cash collateralized in an account with the Administrative Agent.  After receipt of such written notice by the Administrative Agent and, if applicable, the conditions set forth in clauses (i) and (ii) of the foregoing sentence, such Subsidiary shall cease to be a Borrower hereunder, but shall continue to be a Guarantor hereunder to the extent provided in Section 5.09.  Once removed pursuant to this Section 5.10(b), such Subsidiary shall have no right to borrow under this Agreement unless the Parent provides notice as required pursuant to Section 5.10(a) of the request again to add such Subsidiary as an Additional Borrower hereunder and such Subsidiary complies with the conditions set forth in Section 5.10(a) to become an Additional Borrower hereunder.   Section 5.11  Compliance with ERISA.  In addition to and without limiting the generality of Section 5.07, each Obligor shall and shall cause each Restricted Subsidiary to (a) comply in all material respects with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all employee benefit plans (as defined in ERISA) except where the expected to result in a Material Adverse Effect, (b) not take any action or fail to take action the result of which could be (i) a liability to the PBGC (other than liability for PBGC premiums) or (ii) a past due liability to any Multiemployer Plan, except to the extent such liability could not reasonably be expected to result in a Material Adverse Effect, (c) not participate in any tax under the Code, except to the extent such penalty or tax could not reasonably be expected to result in a Material Adverse Effect, (d) operate each employee benefit plan in such a manner that could not reasonably be expected to result in the incurrence of any material tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code except to the extent such tax liability or liability to any qualified beneficiary could not reasonably be expected to have a Material Adverse Effect and (e) furnish to the Administrative Agent upon the benefit plan as may be reasonably requested by the Administrative Agent.   Section 5.12  Compliance With Agreements.  Each Obligor shall and shall cause each Restricted Subsidiary to comply in all respects with each material contract or agreement to which it is a party, except where the failure to so comply could such Obligor or Restricted Subsidiary may contest any such contract or agreement or any portion thereof in good faith through applicable proceedings so long as   Section 5.13  Compliance with Environmental Laws; Environmental Reports. Each Obligor shall and shall cause each Restricted Subsidiary to (a) comply with all Environmental Laws applicable to its operations and real property except to the extent that the failure to comply could not reasonably be expected to result in a Material Adverse Effect; (b) obtain and renew all Governmental Approvals required under Environmental Laws applicable to its operations and real property except to the extent that the failure to obtain or renew such approvals could conduct any Response in accordance with Environmental Laws except to the extent Material Adverse Effect; provided that neither such Obligor nor any Restricted Subsidiary shall be required to undertake any Response to the extent that its   91     Section 5.14  Maintain Business.  Each Obligor shall and shall cause each Restricted Subsidiary to continue to engage in all material respects primarily in the business or businesses being conducted on the Effective Date and other businesses reasonably related or ancillary thereto as determined by the board of   Section 5.15  Further Assurances.  Each Obligor shall and shall cause each Restricted Subsidiary to execute, acknowledge and deliver, at its own cost and expense, all such further acts, documents and assurances as may from time to time be reasonably necessary or as the Majority Lenders may from time to time Documents, including all such actions to establish, preserve, protect and (to the extent required under the Security Documents or as otherwise provided in this Agreement) perfect the estate, right, title and interest of the Lenders, or the Administrative Agent for the benefit of the Lenders, to the Collateral (including Collateral acquired after the date hereof).   Section 5.16  Australian Restructuring.  The Parent shall cause the Australian Restructuring to be consummated substantially as disclosed in writing to the   ARTICLE VI Negative Covenants     Section 6.01  Indebtedness.  None of the Obligors or any Restricted Subsidiary     (b)                                 Existing Indebtedness and any Indebtedness incurred in connection with the refinancing thereof, so long as (i) the principal amount of such Indebtedness does not increase, (ii) such Indebtedness does not have a maturity date shorter than six (6) months following the Maturity Date and (iii) such Indebtedness has covenants, taken as a whole, that are no more restrictive than the terms of the Loan Documents in any material respects;   (c)                                  Indebtedness incurred to finance the thereof, and extensions, renewals and replacements of any of such Indebtedness that do not increase the outstanding principal amount thereof; provided that the aggregate principal amount of Indebtedness outstanding under this clause (c) shall not exceed $75,000,000 at any time;   92   (d)                                 Indebtedness (i) owed by an Obligor to any other Obligor, (ii) owed by a Restricted Subsidiary that is not an Obligor to any other Restricted Subsidiary that is not an Obligor, (iii) owed by an Obligor to any Restricted Subsidiary that is not an Obligor or (iv) owed by a Restricted Subsidiary that is not an Obligor to any Obligor; provided that the aggregate amount of Indebtedness outstanding pursuant to this clause (iv) shall not exceed $100,000,000, at any time, when combined with amounts outstanding under Section 6.05(e), without duplication;   (e)                                  Indebtedness of any Restricted Subsidiary in existence on the date on which such Restricted Subsidiary is acquired directly or indirectly by the Parent (but not incurred or created in connection with such acquisition); provided (i) neither the Parent nor any other Restricted Subsidiary has any obligation with respect to such Indebtedness, (ii) none of the properties of the Parent or any other Restricted Subsidiary is bound with respect to such Indebtedness and (iii) the aggregate principal amount of all Indebtedness outstanding under this clause (e) shall not exceed $15,000,000 at any time;   (f)                                   Indebtedness in respect of endorsements of   (g)                                  Indebtedness associated with accounts ninety (90) days past due or which are being actively contested by the Parent or the applicable Restricted Subsidiary in good faith and by appropriate action and   (h)                                 Indebtedness constituting Investments permitted by clauses (f) and (h) of Section 6.05;   (i)                                     Indebtedness incurred pursuant to Swap Agreements permitted by Section 6.06;   (j)                                    other Indebtedness in an aggregate amount not to exceed $100,000,000 outstanding at any time;   (k)                                 guarantees of Indebtedness permitted by clauses (c), (i) and (j) of this Section;   (l)                                     other unsecured Indebtedness so long as the Total Net Leverage Ratio at the time of incurrence of such Indebtedness, and after giving pro forma effect thereto, is less than 4.25 to 1.0; provided, the proceeds of any such newly incurred Indebtedness shall not be included in the calculation of the Total Net Leverage Ratio for purposes of determining pro forma compliance with such ratio (it being understood that this proviso shall not exclude Unencumbered Balance Sheet Cash that is not attributable to such newly incurred Indebtedness); and   (m)                             Indebtedness incurred to consummate the Australian Restructuring.   Section 6.02  Liens.  None of the Obligors or any Restricted Subsidiary will     93   (b)                                 Liens created by the Security Documents;   (c)                                  Liens on any property or assets of the Parent or any Restricted Subsidiary existing on the Effective Date and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any property or asset of the Parent or any Restricted Subsidiary other than such property or asset to which such Lien applies on the Effective Date and (ii) such Lien shall extensions, renewals and replacements thereof in accordance with Section 6.01;   (d)                                 Liens on assets acquired, constructed or improved by the Parent or any Restricted Subsidiary; provided that (i) such Liens secure Indebtedness permitted by clause (c) of Section 6.01, (ii) such cost of acquiring, constructing or improving such assets and (iv) such Liens shall not apply to any other property or assets of the Parent or any Restricted Subsidiary other than the proceeds of, and insurance proceeds related to, such assets;   (e)                                  Liens on assets of any Restricted Subsidiary in existence on the date such Restricted Subsidiary is acquired by the Parent (but not created in connection with such acquisition) securing Indebtedness permitted under Section 6.01(e); provided that (i) such Lien shall not apply to any property of asset of the Parent or any other Restricted   (f)                                   Liens on cash securing obligations of the Parent or any Restricted Subsidiary to providers of vault services with respect to such cash; and   (g)                                  Liens securing Indebtedness or other obligations of the Parent or any Restricted Subsidiary in an aggregate principal amount not to exceed $10,000,000 outstanding at any time.   Section 6.03  Fundamental Changes.  None of the Obligors or any Restricted Subsidiary will merge into, amalgamate with or consolidate with any other with it, consummate a Division as the Dividing Person or liquidate or dissolve, no Default or Event of Default shall have occurred and be continuing and, if such transaction involves a Borrower, such Borrower shall survive such transaction or the surviving entity shall become a Borrower in accordance with Section 5.10(a):   (a)                                 any Restricted Subsidiary may merge into, amalgamate with or consolidate with a Borrower;   (b)                                 any Restricted Subsidiary that is a Wholly-Owned Subsidiary may merge into, amalgamate with or consolidate with any other Restricted Subsidiary that is a Wholly-Owned Subsidiary; provided that if such transaction involves an Obligor, the Obligor survives such transaction (or the surviving entity becomes an Obligor in accordance with Section 5.09 or Section 5.10(a), as applicable);   94   (c)                                  any Restricted Subsidiary may merge into, amalgamate with or consolidate with any other Person so long as either (i) such Restricted Subsidiary is the surviving entity of such merger, amalgamation or consolidation or (ii) if such Restricted Subsidiary is not the surviving entity, the surviving entity and/or the Parent, as applicable, complies with the provisions of Section 5.09(d) within thirty (30) days of such merger, amalgamation or consolidation;   (d)                                 any Obligor or any Restricted Subsidiary that is not an Obligor may change its jurisdiction of organization so long as, in the case of an Obligor, it complies with Section 6.12 hereof;   (e)                                  any Restricted Subsidiary that is not an Obligor may liquidate or dissolve if the Parent determines in good faith that such liquidation or dissolution is in the best interests of the Parent and could not be reasonably expected to result in a Material Adverse Effect; and   (f)                                   any Unrestricted Subsidiary may merge into, amalgamate with or consolidate with any Obligor or any Restricted Subsidiary that is not an Obligor so long as (i) such Obligor or such Restricted Subsidiary that is not an Obligor is the surviving entity of such merger, amalgamation or consolidation and (ii) the Parent provides an officer’s certificate to the Administrative Agent, executed by a Financial Officer, certifying that, after giving effect to such merger, amalgamation or consolidation, the Parent is in pro forma compliance with Sections 6.16 and 6.17.   Section 6.04  Asset Sales.  None of the Obligors or any Restricted Subsidiary will make any Asset Sale except, if at the time thereof and immediately after giving effect thereto, with respect to clause (a), no Default or Event of   (a)                                 the Parent or any Restricted Subsidiary may make any Asset Sale, including sale-leaseback transactions, if (i) the consideration therefor is not less than the fair market value of the related asset and (ii) after giving effect thereto, the aggregate book value of the assets disposed of in all Asset Sales (other than Asset Sales permitted under the other clauses of this Section 6.04) during the term of this Agreement would not exceed twenty-five percent (25%) of the book value of the total assets of the Parent and its Subsidiaries on a consolidated basis as of the time such Asset Sale is consummated, which amount shall be diminished by the aggregate book value of all prior Asset Sales made during the term of this Agreement pursuant to this clause (a);   (b)                                 (i) any Obligor may sell, transfer, lease or otherwise dispose of its assets to another Obligor, and (ii) any Restricted Subsidiary that is not an Obligor may sell, transfer, lease or otherwise dispose of its assets to any Obligor or any other Restricted Subsidiary;   (c)                                  sales, exchanges and transfers consisting of Investments permitted by Section 6.05;   (d)                                 sales, exchanges and transfers of inventory   (e)                                  sales, exchanges and transfers of equipment and other property which is replaced by equipment or property of at least comparable value and use or which is discontinued,   95   obsolete, worn out or no longer used or useful to such Person’s business, all in   (f)                                   sales, exchanges and transfers of chattel paper to third parties pursuant to arm’s-length transaction for fair value in   (g)                                  leases entered into by any Obligor with any Restricted Subsidiary that is not an Obligor to lease assets to such Restricted Subsidiary that is not an Obligor so long as (i) the fair market value of the assets leased under this clause (g) shall not exceed $120,000,000 at any time and (ii) such leases are at prices and on terms and conditions not less favorable to such Obligor than could be obtained on an arm’s-length basis from unrelated third parties;   (h)                                 leases or financing contracts entered into with third parties to lease or finance such third parties’ purchase of ATM Equipment; and   (i)                                     Assets Sales to consummate the Australian Restructuring.   Section 6.05  Investments.  None of the Obligors or any Restricted Subsidiary will make an Investment in any other Person, except:     (b)                                 Business Acquisitions permitted by Section 6.11;   (c)                                  Investments existing as of the Effective Date and listed on Schedule 6.05;   (d)                                 Investments by an Obligor in another Obligor;   (e)                                  Investments by any Obligor in any Restricted Subsidiary that is not an Obligor; provided that the aggregate amount of Investments (valued as of the date the applicable Investment was made) outstanding pursuant to this clause (e) shall not exceed $75,000,000 at any time when combined with amounts outstanding under Section 6.01(d)(iv), without duplication;   (f)                                   Investments arising out of loans and advances for expenses, travel per diem and similar items in the ordinary course of business to directors, officers and employees in an aggregate amount not to   (g)                                  shares of stock, obligations or other securities received in the settlement of claims arising in the ordinary course of business;   (h)                                 Investments by any Restricted Subsidiary that is not an Obligor in (i) any Obligor or (ii) any other Restricted Subsidiary that is not an Obligor;   (i)                                     Investments not otherwise permitted under this Section 6.05 in an aggregate amount not to exceed $50,000,000 at any time;   (j)                                    Guarantees permitted by Section 6.01;   96   (k)           Investments by any Obligor in any Finco Entity; provided that, substantially contemporaneously with such Investment, substantially all of the proceeds of such Investment are loaned, transferred, distributed to, or invested in, one or more Obligors;   (l)            Investments made to consummate the Australian Restructuring; and   (m)          any Investments made to comply with the requirements of Section 8a of the German Old Age Employees Act (Altersteilzeitgesetz) or Section 7e of the Fourth Book of the German Social Code (Sozialgesetzbuch IV).   Section 6.06  Swap Agreements.  None of the Obligors nor any Restricted Subsidiary will enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or manage the interest rate exposure associated with vault cash procurement, any debt securities, debt facilities or leases (existed or forecasted) of the Parent or any Restricted Subsidiary, (b) any Permitted Bond Hedge Transaction(s), (c) any Permitted Warrant Transaction(s), (d) Swap Agreements for foreign exchange or currency exchange management or (e) Swap Agreements to hedge or manage any exposure that the Parent or any Restricted Subsidiary may have to counterparties under other Swap Agreements such that, in each case, such Swap Agreements are entered into in the ordinary course of business and the combination of such Swap Agreements, taken as a whole, is for risk management purposes and not speculative.   Section 6.07  Restricted Payments.  None of the Obligors nor any Restricted Subsidiary will declare or make, or agree to pay or make, any Restricted Payment, except:   (a)           (i) Restricted Payments by the Parent in any amount so long as at the time of such Restricted Payment, and after giving pro forma effect thereto, (A) no Event of Default exists and (B) the Total Net Leverage Ratio is equal to or less than 3.75 to 1.0 and (ii) Restricted Payments by the Parent up to an aggregate amount of $50,000,000 in any fiscal year if at the time of such Restricted Payment, and after giving pro forma effect thereto, (A) no Event of Default exists and (B) the Total Net Leverage Ratio is greater than 3.75 to 1.0;   (b)           dividends or distributions on Equity Interests of Restricted Subsidiaries ratably with respect to such Equity Interests;   (c)           payments of dividends and distributions made with shares or units of capital stock of the Parent;   (d)           redemptions of capital stock of employees, directors or officers of the Parent or any of its Subsidiaries so long as (i) the amount of such redemption, when combined with all other redemptions made under this clause (d) in the same calendar year, does not exceed $20,000,000 and (ii) the Parent demonstrates pro forma compliance with Sections 6.16 and 6.17;   (e)           the payment by or on behalf of the Company of the purchase price for any Permitted Bond Hedge Transaction(s);   (f)            the receipt of cash and/shares of common stock of the Parent upon exercise and settlement or termination of any Permitted Bond Hedge Transaction(s);   97   (g)           the payment and/or delivery of cash or common stock of the Parent, as the case may be, by or on behalf of the Company upon exercise and settlement, termination or redemption of any Permitted Warrant Transaction(s);   (h)           the payment and/or delivery of cash or common stock of the Parent, as the case may be, by or on behalf of the Company in satisfaction of the Company’s obligations in respect of the Convertible Senior Notes whether upon conversion of such securities, upon a fundamental change (or similar event, however so defined by the terms of such securities), upon repurchase of such securities, at maturity of such securities or otherwise; provided that neither the Parent nor the Company shall satisfy such obligations with the payment of cash unless at the time of such payment and after giving pro forma effect thereto, no Event of Default shall exist;   (i)            Restricted Payments (other than those contemplated by Section 6.07(b)) made to any Obligor or made by any Restricted Subsidiary that is not an Obligor to any other Restricted Subsidiary that is not an Obligor; and   (j)            Restricted Payments made to consummate the Australian Restructuring.   Section 6.08  Prepayments of Indebtedness.  The Obligors will not voluntarily prepay or redeem any Indebtedness, except:   (a)           prepayments of Indebtedness created under the Loan Documents in   (b)           refinancings of Permitted Indebtedness to the extent such refinancing is permitted by Section 6.01 of this Agreement;   (c)           the payment of secured Indebtedness that becomes due as a result Indebtedness to the extent such sale or transfer is permitted by this Agreement;   (d)           voluntary prepayments and redemptions made with shares of capital stock of the Parent and proceeds of offerings of capital stock of the Parent;   (e)           voluntary prepayments of Indebtedness permitted by   (f)            voluntary prepayments and redemptions, other than those made under the other clauses of this Section, so long as, at the time of such prepayment or redemption and after giving pro forma effect thereto, no Event of   (g)           prepayments or redemptions of intercompany Indebtedness in connection with the Australian Restructuring.   For the avoidance of doubt, neither of the payment of cash nor the delivery of common stock by or on behalf of the Company or the Parent, as the case may be, upon conversion of the Convertible Senior Notes shall be prohibited by this Section 6.08, so long as, in the case of the payment of cash, the applicable conditions set forth in Section 6.07(h) are satisfied.   98   Section 6.09  Transactions with Affiliates.  None of the Obligors nor any Restricted Subsidiary will sell, lease or otherwise transfer any property or or otherwise engage in any other transactions with any of its Affiliates, except (a) at prices and on terms and conditions not less favorable to such Obligor or unrelated third parties, (b) any Restricted Payment permitted by Section 6.07, (c) any transaction between or among Obligors, (d) any transaction between or among Restricted Subsidiaries that are not Obligors; (e) Investments permitted by Section 6.05; and (f) any transaction entered into to consummate the Australian Restructuring.   Section 6.10  Restrictive Agreements.  None of the Obligors nor any Restricted condition upon (a) the ability of any Obligor or any Restricted Subsidiary to create, incur or permit to exist any Lien securing the Obligations under the Loan Documents upon any of its property or assets, (b) the ability of any Guarantor or any Restricted Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock, (c) the ability of any Obligor or any Restricted Subsidiary to make or repay loans or advances to any Obligor or (d) the ability of any Obligor to guarantee the Obligations; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by Law Indebtedness permitted by this Agreement, including, without limitation, secured Indebtedness permitted by Section 6.01(e), provided that such restrictions or leases and other contracts restricting the assignment thereof or encumbrances on the property that is the subject thereof.   Section 6.11  Business Acquisitions.  None of the Obligors nor any Restricted Subsidiary will make any Business Acquisitions except that an Obligor or any Restricted Subsidiary shall be permitted to make Business Acquisitions; provided that (a) no Event of Default shall exist before or immediately after giving effect to such Business Acquisition, (b) the Total Net Leverage Ratio at the time of such Business Acquisition, and after giving pro forma effect thereto, shall be equal to or less than 4.00 to 1.0, (c) the Parent shall be in pro forma compliance with Section 6.17 and (d) if the cash consideration for such Business Acquisition is equal to or greater than $75,000,000 (or the equivalent amount thereof in any foreign currency), the Parent shall have given the Administrative Agent at least ten (10) days prior written notice of such Business Acquisition together with an officer’s certificate executed by a Financial Officer, certifying as to compliance with the requirements of this Section and containing calculations demonstrating compliance with clauses (b) and (c) of this Section, together with such other information in respect of the proposed Business Acquisition as may be reasonably requested by the Administrative Agent.  The consummation of each Business Acquisition shall be deemed to be a representation and warranty by the Parent that all conditions thereto have been satisfied and   99   that same is permitted under the terms of this Agreement, which representation purposes hereunder.   Section 6.12  Constitutive Documents.  None of the Obligors nor any Restricted Subsidiary will amend its charter or by-laws or other constitutive documents in on the rights of the Lenders under this Agreement or their ability to enforce the same; provided, however, the Obligors or any Restricted Subsidiary shall be permitted after the date hereof to amend its constitutive documents for the purpose of (a) changing its jurisdiction of organization within the same country so long as the Administrative Agent is given thirty (30) Business Days prior written notice of such change and (b) effecting any transaction permitted under   Section 6.13  Reserved.   Section 6.14  Amendment of Existing Indebtedness.  The Obligors will not amend any term of any document evidencing Existing Indebtedness, if (a) the effect thereof would be to shorten the maturity or average life thereof or increase the period for payment of interest thereon or (b) such action would add any covenant or event of default which is more onerous in any material respect than those contained therein on the Effective Date.   Section 6.15  Changes in Fiscal Year.  The Parent shall not change the end of its fiscal year to a date other than December 31 of each year.   Section 6.16  Total Net Leverage Ratio.  The Parent shall not, as of the last day of any fiscal quarter, permit the Total Net Leverage Ratio to exceed 4.25 to 1.0.   Section 6.17  Interest Coverage Ratio.  The Parent shall not, as of the last day of any fiscal quarter, permit the Interest Coverage Ratio to be less than 3.00 to 1.0.   ARTICLE VII       Section 7.01) payable under this Agreement or the other Loan Documents which amount has been invoiced, when and as the same shall become due and payable, and   100   of any Borrower or any Restricted Subsidiary in or in connection with this Agreement, any Loan Document or any amendment or modification hereof or waiver made or deemed made in any material respect;   (with respect to any Borrower’s existence), 5.08 or in Article VI;   days following the earlier of (i) the date on which such failure first became known to any Financial Officer or (ii) notice of such failure from the Administrative Agent;     Indebtedness becoming due prior to its scheduled maturity or (ii) that requires the property or assets securing such Indebtedness, (B) the occurrence of a fundamental change (or similar event, however so defined) as such term is defined in the Convertible Senior Notes or the exercise of any put right in connection with such fundamental change by holders of the Convertible Senior Notes, (C) the occurrence of any event or condition that permits the conversion, whether into cash, shares of Parent common stock, or a combination thereof, of the Convertible Senior Notes and (D) any conversion, whether into cash (subject to Section 6.07(h)), shares of Parent common stock, or a combination thereof, of the Convertible Senior Notes by the holders thereof;   in respect of any Borrower or any Restricted Subsidiary or their debts, or of a conservator or similar official for any Borrower or any Restricted Subsidiary or   (i)            any Borrower or any Restricted Subsidiary shall (i) voluntarily or other relief under any   101     become due;   (k)           one or more judgments for the payment of money that is not covered by insurance in an aggregate amount in excess of $20,000,000 (or the equivalent amount thereof in any foreign currency) shall be rendered against any Borrower remain undischarged or unstayed for a period of 60 consecutive days during which execution shall not be effectively stayed, or any attachment or levy shall be entered upon any assets of such Borrower or such Restricted Subsidiary to   all other ERISA Events that have occurred and are continuing, could reasonably   (m)          a proceeding shall be commenced by any Borrower or any Restricted Subsidiary seeking to establish the invalidity or unenforceability of any Loan Document (exclusive of questions of interpretation thereof), or any Obligor shall repudiate or deny that it has any liability or obligation for the payment of principal or interest or other obligations purported to be created under any Loan Document;   (n)           any Lien created by any of the Security Documents shall at any time fail to constitute a valid and (to the extent required by the Security Documents or as otherwise permitted under this Agreement) perfected Lien on any material portion of the Collateral purported to be subject thereto, securing the Loan Documents, or any Obligor shall so assert in writing, in each case other than as a result of action or inaction of the Administrative Agent or any Lender; or   (o)           a Change in Control occurs;   request of the Majority Lenders shall, by notice to the Parent, take any or all   102   demand, protest notice of acceleration or the intent to accelerate or any other (iii) increase the rate charged on all Loans to the Default Rate (after the it under any of the Loan Documents, at Law or in equity (including, without limitation, conducting a foreclosure sale of any of the Collateral).   Section 7.02  Cash Collateral.  In addition to the remedies contained in Section 7.01, upon the occurrence and continuance of any Event of Default, each Borrower shall pay to the Administrative Agent cash collateral in such amounts   ARTICLE VIII The Administrative Agent     in any kind of business with the Parent or other Affiliate thereof as if it were   provided in Section 10.02) or in the absence of its   103   written notice thereof is given to the Administrative Agent by the Parent or a       notifying the Lenders, the Issuing Lenders and the Parent.  Upon any such Parent, which shall not be unreasonably withheld, conditioned or delayed, and shall not be required during the existence of an Event of Default, to appoint a Houston, Texas, or an Affiliate of any such bank.  Upon the acceptance of its payable by or on behalf of the Parent to a successor Administrative Agent shall the Parent and such successor.  After the Administrative Agent’s resignation   104       Each Lender (a) represents and warrants, as of the date such Person became a Lender party hereto, to, and (b) covenants, from the date such Person became a the avoidance of doubt, to or for the benefit of any Obligor, that at least one   Loans, the Letters of Credit or the Commitments;   Agreement;     105   Lender.   In addition, unless subclause (i) above is true with respect to a Lender or such provided in subclause (iv) above, such Lender further (A) represents and or for the benefit of any Obligor, that the Administrative Agent is not a fiduciary with respect to the Collateral or the assets of such Lender (including   ARTICLE IX Guarantee   Section 9.01  The Guarantee.   (a)           Each Credit Facility Guarantor hereby jointly and severally with each other Credit Facility Guarantor unconditionally and irrevocably guarantees acceleration or otherwise) of the principal of and interest on each Loan, and the full and punctual payment of all other Obligations.  Upon failure by any Borrower, any Guarantor or any Restricted Subsidiary to pay punctually any Obligations, each Credit Facility Guarantor shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement, the other Loan Documents or such other documents evidencing the Obligations.  This Guarantee is a guaranty of payment and not of collection.  Neither the Lenders nor any other Person to whom such Obligations are owed shall be required to exhaust any right or remedy or take any action against the Borrowers, the Guarantors or any other Person or any Collateral.  Each Credit Facility Guarantor agrees that, as between the Credit Facility Guarantors and the Lenders and any other Person to whom such Obligations are owed, such Obligations may be declared to be due and payable for the purposes of this Guarantee delay or vitiate any declaration as regards any Borrower and that in the event of a declaration or attempted declaration, such Obligations shall immediately become due and payable by each Credit Facility Guarantor for the purposes of this Guaranty.   (b)           Each CFC Guarantor hereby jointly and severally with each other CFC Guarantor unconditionally and irrevocably guarantees the full and punctual payment when due (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Loan made to a CFC Borrower, and the full and punctual payment of all other Obligations of any CFC Borrower, any other CFC Guarantor and any other Restricted Subsidiary that is a CFC Subsidiary; provided that no CFC Subsidiary (other than a CFC Subsidiary that is a Credit Facility Guarantor) shall guarantee any Obligations of any Person that is (i) a U.S. Person or (ii) owned by a U.S. Person and classified as a partnership or disregarded entity, in each case for U.S. federal income tax purposes.  Upon failure by any CFC Borrower, any CFC Guarantor or any Restricted Subsidiary that is a CFC Subsidiary to pay punctually any such Obligations, each   106   CFC Guarantor shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement, the other Loan Documents or such other documents evidencing the Obligations; provided that no CFC Subsidiary (other than a CFC Subsidiary that is a Credit Facility Guarantor) shall be required to pay any Obligations of any Person that is (i) a U.S. Person or (ii) owned by a U.S. Person and classified as a partnership or disregarded entity, in each case for U.S. federal income tax purposes.  This Guarantee is a guaranty of payment and not of collection.  Neither the Lenders nor any other Person to whom such Obligations are owed shall be required to exhaust any right or remedy or take any action against the CFC Borrowers, the Guarantors or any other Person or any Collateral.  Each CFC Guarantor agrees that, as between the CFC Guarantors and the Lenders and any other Person to whom such Obligations are owed, such Obligations may be declared to be due and payable for the purposes of this Guarantee notwithstanding any stay, injunction or other prohibition which may prevent, delay or vitiate any declaration as regards any CFC Borrower and that in the event of a declaration or attempted declaration, such Obligations shall immediately become due and payable by each CFC Guarantor for the purposes of this Guarantee; provided that no CFC Subsidiary (other than a CFC Subsidiary that is a Credit Facility Guarantor) shall be required to pay any Obligations of any Person that is (i) a U.S. Person or (ii) owned by a U.S. Person and classified as a partnership or disregarded entity, in each case for U.S. federal income tax purposes.   Section 9.02  Guaranty Unconditional.  The obligations of each Guarantor affected by:   in respect of any Obligations, by operation of law or otherwise other than the full payment thereof;   Documents, any Lender Swap Agreements or any other document evidencing the Obligations;   direct or indirect security for any Obligations;   any Borrower or any other Guarantor or any Restricted Subsidiary, or any Borrower, any other Guarantor, any Restricted Subsidiary or their respective assets or any resulting release or discharge of any Obligation;   Guarantor may have at any time against any Borrower, any other Guarantor, any Restricted Subsidiary, the Administrative Agent, any Lender or any other Person, compulsory counterclaim;   Borrower, any other Guarantor or any Restricted Subsidiary for any reason of the Loan Documents, any Lender Swap Agreement, any other document evidencing the Obligations or any provision of applicable law or regulation purporting to prohibit the payment by any Borrower or any other Guarantor or any   107   Restricted Subsidiary of the principal of or interest on any Loan or any other amount payable by any Borrower or any other Guarantor or any Restricted Subsidiary in respect of the Obligations; or   Borrower, any other Guarantor, any Restricted Subsidiary, the Administrative discharge of the Guarantor’s obligations hereunder.   Furthermore, notwithstanding that a Borrower may not be obligated to the Administrative Agent and/or the Lenders for interest and/or attorneys’ fees and expenses on, or in connection with, any Obligations from and after the Petition Date (as hereinafter defined) as a result of the provisions of the federal bankruptcy law or otherwise, Obligations for which the Guarantors shall be obligated shall include interest accruing on the Obligations at the Default Rate from and after the date on which any Borrower files for protection under the federal bankruptcy laws or from and after the date on which an involuntary proceeding is filed against any Borrower under the federal bankruptcy laws (herein collectively referred to as the “Petition Date”) and all reasonable and each other Person to whom the Obligations are owed from and after the Petition Date in connection with the Obligations.   force and effect until (a) all Obligations shall have been paid in full (other than indemnity obligations which survive but are not yet due and payable), (b) all Commitments shall have expired or been terminated and (c) the LC Exposure has been reduced to zero or fully cash collateralized as provided in this Agreement, except, in each case, to the extent any Subsidiary has been released from its obligations as a Guarantor hereunder pursuant to Section 5.09(g) or Section 9.08.  If at any time any payment of the principal of or interest on any Loan or any other amount payable by the Obligors under the Loan Documents or otherwise in respect of the Obligations is rescinded or must reorganization of any Obligor or otherwise, each Guarantor’s obligations though such payment had been due but not made at such time.  The Credit Facility Guarantors jointly and severally agree to indemnify each Lender and the CFC Guarantors jointly and severally agree to indemnify each Lender with respect to payments of Obligations of the CFC Borrowers and CFC Guarantors, in each case, on demand for all reasonable costs and expenses (including reasonable fees of counsel) incurred by such Lender in connection with such rescission or other than any costs or expenses resulting from the bad faith, gross negligence or willful misconduct of such Lender; provided that no CFC Guarantor shall be required to pay any Obligations of, or any costs or expenses related to, any as a partnership or disregarded entity, in each case for U.S. federal income tax purposes.   108   Section 9.04  Waiver by Each Guarantor.  Each Guarantor irrevocably waives in this Article other than to the extent expressly provided for in favor of the Guarantors in any of the Loan Documents, as well as any requirement that at any time any action be taken by any Person against any Borrower or any other   Section 9.05  Subrogation.  Each Guarantor shall be subrogated to all rights of the Lenders, the Administrative Agent and the holders of the Loans and other Obligations against the Borrowers in respect of any amounts paid by such Guarantor pursuant to the provisions of this Article IX; provided that such out of or based upon such right of subrogation until (a) all Obligations shall have been paid in full (other than indemnity obligations which survive but are not yet due and payable), (b) all Commitments shall have expired or been terminated and (c) the LC Exposure has been reduced to zero or fully cash collateralized as provided in this Agreement, except, in each case, to the extent any Subsidiary has been released from its obligations as a Guarantor hereunder pursuant to Section 5.09(g) or Section 9.08.  If any amount is paid to any Guarantor on account of subrogation rights under this Guaranty at any time when the conditions set forth in clauses (a), (b) and (c) of the foregoing sentence have not been satisfied, the amount shall be held in trust for the benefit of the Lenders and the other Persons to whom the Obligations are owed applied to the Obligations, whether matured or unmatured or absolute or contingent, in accordance with the terms of this Agreement.   Section 9.06  Stay of Acceleration.   (a)           If acceleration of the time for payment of any amount payable by any Obligor under the Loan Documents is stayed upon insolvency, bankruptcy or each Credit Facility Guarantor hereunder forthwith on demand by the   any CFC Borrower or any other CFC Guarantor under the Loan Documents is stayed upon insolvency, bankruptcy or reorganization of any CFC Borrower, all such shall nonetheless be payable by each CFC Guarantor hereunder forthwith on demand by the Administrative Agent made at the request of the requisite proportion of the Lenders specified in Article X of this Agreement.   Section 9.07  Limit of Liability.  The obligations of each Guarantor hereunder state law.   Section 9.08  Release upon Sale.  Upon any sale of any Guarantor permitted by this Agreement, (a) such Guarantor shall be released from its obligations as a Guarantor hereunder,   109   (b) all Liens granted by such Guarantor to secure its Guarantee shall automatically be terminated and released and (c) the Administrative Agent will, at the expense of the Parent, execute and deliver such documents as are reasonably necessary to evidence said releases and terminations, following written request from the Parent and receipt by the Administrative Agent of a certificate from a Financial Officer certifying that no Default or Event of Default exists.   Section 9.09  Benefit to Guarantor.  Each Guarantor acknowledges that the Loans and other extensions of credit made to the Borrowers may be, in part, re-loaned to, or used for the benefit of, such Guarantor and its Affiliates, that each Guarantor, because of the utilization of the proceeds of the Loans and such other extensions of credit, will receive a direct benefit from the Loans and such other extensions of credit and that, without the Loans and such other extensions of credit, such Guarantor would not be able to continue its operations and carry on its business as presently conducted.   Section 9.10  Keepwell.  Each Qualified ECP Guarantor (as hereinafter defined) time by each other Obligor to honor all of its obligations under the Guarantees Guarantor shall only be liable under this Section 9.10 for the maximum amount of under this Section 9.10, or otherwise under the Guarantees, voidable under this Section shall remain in full force and effect until termination of the Guarantees as described in Section 9.03 hereof.  Each Qualified ECP Guarantor intends that this Section 9.10 constitute, and this Section 9.10 shall be deemed any Swap Obligation, each Obligor that has total assets exceeding $10,000,000 at Notwithstanding the foregoing, no CFC Subsidiary (other than a CFC Subsidiary that is a Credit Facility Guarantor) shall be required to provide such funds or other support under this Section 9.10 with respect to obligations of any Person purposes.   Section 9.11  Limitation for German Guarantors.   (a)           The restrictions in this Section 9.11 shall apply to any guarantee and indemnity granted by, and any liability and other payment obligations of a Guarantor (for the avoidance of doubt, save for any of its own obligations incurred in its capacity as a Borrower) under the laws of Germany as a limited liability company (GmbH) (a “German Guarantor”) under this Agreement or any other provision in the Loan Documents in respect of liabilities of its current or any future direct or indirect shareholder(s) (upstream) or a Subsidiary of such shareholder (but   110   excluding any direct or indirect Subsidiary of such German Guarantor) (cross-stream) (an “Up-Stream or Cross-Stream Guarantee”).   (b)           The restrictions in this Section 9.11 shall not apply:   (i)            with respect to a Capital Impairment (as defined below), to the extent the German Guarantor secures any indebtedness under any Loan Document in respect of (i) loans to the extent such loans are (directly or indirectly) on-lent or otherwise passed on to the relevant German Guarantor or its Subsidiaries or (ii) bank guarantees or letters of credit that are issued for the benefit of any of the creditors of the German Guarantor or the German Guarantor’s Subsidiaries, in each case, to the extent that any such on-lending or otherwise passing on or bank guarantees or letters of credit are still outstanding at the time of the enforcement of the Up-Stream or Cross-Stream Guarantee; for the avoidance of doubt, nothing in this paragraph (b) shall have the effect that such on-lent amounts may be enforced multiple times (no double dip);   (ii)           with respect to a Capital Impairment (as defined below), if, at the time of enforcement of the Up-Stream or Cross-Stream Guarantee, a domination Gewinnabführungsvertrag) as per § 291 of the German Stock Corporation Act (Aktiengesetz, AktG) (either directly or indirectly through an unbroken chain of domination and/or profit transfer agreements) exists between the relevant German Guarantor as a dominated company, and (x) if that German Guarantor is a Subsidiary of the relevant Obligor whose obligations are secured by the relevant Up-Stream or Cross-Stream Guarantee, that Obligor or (y) if the German Guarantor and the relevant Obligor (whose obligations are secured by the relevant Up-Stream or Cross-Stream Guarantee) are both Subsidiaries of a joint (direct or indirect) parent company and such parent company as dominating entity (beherrschendes Unternehmen) in each case to the extent the existence of such domination and/or profit and loss pooling agreement (Beherrschungs- und/oder Gewinnabführungsvertrag) leads to the inapplicability of § 30 paragraph 1 sentence 1 of the German Limited Liabilities Company Act (“GmbHG”);   (iii)          with respect to a Capital Impairment (as defined below), to the extent any payment under the Up-Stream or Cross-Stream Guarantee is covered (gedeckt) by a fully valuable and recoverable consideration or recourse claim (vollwertiger Gegenleistungs- oder Rückgewähranspruch) of the German Guarantor   (iv)          if the relevant German Guarantor has not complied with its obligations pursuant to paragraphs (d) and (e) below;   (v)           if the enforcement of such Up-stream or Cross-Stream Guarantee would not lead to a breach of § 30 of the German Statue on Companies with Limited Liability (Gesetz betreffend die Gesellschaften mit beschränkter Haftung, GmbHG) and would not cause any liability risk of the managing directors of the German Guarntor provided that this is confirmed by a ruling of the German Federal Supreme Court.   111   (c)           The parties to this Agreement agree that the Up-Stream or Cross-Stream Guarantee shall not be enforced if and to the extent payment under that Up-Stream or Cross-Stream Guarantee would cause the amount of a German Guarantor’s Net Assets, as calculated and defined pursuant to paragraph (f) below, to fall below the amount required to maintain its registered share capital (Stammkapital) or increase an existing shortage (Vertiefung einer Unterbilanz) of its registered share capital (Stammkapital) (such event, a   (d)           The relevant German Guarantor shall notify the Administrative Agent within ten (10) Business Days after the making of a demand under the Up-Stream or Cross-Stream Guarantee to what extent a Capital Impairment would occur as a result of a payment under such guarantee (setting out in reasonable detail the amount of its Net Assets, providing an up-to-date pro forma balance sheet) (a “Management Notification”).   (e)           If the Administrative Agent disagrees with the Management Notification, it may request the relevant German Guarantor to provide to the Administrative Agent within thirty (30) Business Days of receipt of such request a determination by auditors appointed by the German Guarantor (at its own cost and expense) setting out in reasonable detail the amount in which the payment would cause a Capital Impairment (an “Auditors Determination”).  Save for manifest errors, the Auditor’s Determination shall be binding on all parties.   (f)            The net assets (Reinvermögen) of the German Guarantor (the “Net Assets”) shall be calculated in accordance with § 42 GmbHG, §§ 242, 264 of the German Commercial Code (Handelsgesetzbuch, “HGB”) and the generally accepted ordnungsgemäßer Buchführung) and for the purposes of calculating the Net Assets, the following balance sheet items shall be adjusted as follows:   (i)            the amount of any increase in the registered share capital of the Guarantor became a party to this Agreement and made from retained earnings (Kapitalerhöhung aus Gesellschaftsmitteln) shall be deducted from the amount of the registered share capital (Stammkapital);   (ii)           the amount of non-distributable assets according to §§ 253 (6) and 268 (8) of the HGB shall not be included in the calculation of Net Assets;   (iii)          the amount of any increase in the registered share capital which is not permitted under any of the Loan Documents shall be deducted from the amount of the registered share capital (Stammkapital);   (iv)          loans or other liabilities incurred by the relevant German Guarantor in violation of the Loan Documents shall not be taken into account as liabilities; and   (v)           loans provided to the German Guarantor shall be disregarded if such loans are made by a direct or indirect shareholder (or any subsidiary of such direct or indirect shareholder) of the German Guarantor unless a waiver (Erlass) of the repayment claim from such loan is not possible because such repayment claim has been assigned as security to the Administrative Agent or any of the Lenders.   112   (g)           Where a German Guarantor claims that the Up-Stream or Cross-Stream Guarantee can only be enforced in a limited amount, it shall realize, to the extent lawful and within reasonable opinion commercially justifiable, any and (Buchwert) that is significantly lower than the market value of the assets and are not necessary (betriebsnotwendig) for the relevant German Guarantor’s business.   (h)           Nothing in this Section 9.11 shall constitute a waiver (Verzicht) of any right granted under this Agreement or any other Loan Document to the Administrative Agent or any of the Lenders or shall prevent the Administrative Agent or any of the Lenders from claiming that the restrictions of this Section 9.11 are not or no longer required to prevent personal liability of the directors of the relevant German Guarantor.   (i)            The provisions of this this Section 9.11 shall apply to a limited partnership with a limited liability company as its general partner (GmbH & Co. KG) mutatis mutandis and all references to Capital Impairment and Net Assets shall be construed as a reference to the Capital Impairment and Net Assets of the general partner (Komplementär) of such Guarantor.   Section 9.12  Limitation for South African Guarantors.   (a)           The restrictions in this Section 9.12 shall apply to any guarantee Guarantor incorporated under and in accordance with the laws of South Africa (a “South African Guarantor”) or any other provision in the Loan Documents in respect of liabilities of its current or any future direct or indirect shareholder(s) or a Subsidiary of such shareholder.   (b)           The Lenders or any other Person to whom such Obligations are owed shall be required to have first exercised its rights to seek payment of any amounts then due from any other Obligor (other than any other South African Guarantor) and shall use its reasonable endeavors to recover such amounts from such other Obligors.   (c)           In addition to the above, the parties to this Agreement agree that the Guarantee shall not be enforced if and to the extent payment under that the Guarantee would cause the amount of a South African Guarantor’s Net Assets, as calculated and defined pursuant to paragraph (f) below, to fall below the amount required to maintain its registered share capital or increase an existing shortage of its registered share capital (such event, a “South African Guarantor Capital Impairment”).   (d)           The relevant South African Guarantor shall notify the Administrative Agent within ten (10) Business Days after the making of a demand under the Guarantee to what extent a South African Guarantor Capital Impairment would occur as a result of a payment under such guarantee (setting out in reasonable detail the amount of its Net Assets, providing an up-to-date pro forma balance sheet) (a “South African Guarantor Management Notification”).   (e)           If the Administrative Agent disagrees with the South African Guarantor Management Notification, it may request the relevant South African Guarantor to provide to the Administrative Agent within thirty (30) Business Days of receipt of such request a determination by auditors appointed by the South African Guarantor (at its own cost and expense) setting out in   113   reasonable detail the amount in which the payment would cause a South African Guarantor Capital Impairment (a “South African Guarantor’s Auditors Determination”). Save for manifest errors, the South African Guarantor’s Auditors Determination shall be binding on all parties.   (f)            The net assets of the South African Guarantor (the “South African Guarantor’s Net Assets”) shall be as stated in its most recently available audited accounts or balance sheet, determined by reference to its financial statements most recently provided to the Administrative Agent or any more recently available audited financial statements.   ARTICLE X Miscellaneous   Section 10.01  Notices.     (i)            if to the Parent or any other Obligor, to:   Houston, Texas 77042 Attention:  Treasurer Telecopy No.: (832) 308-4750 Telephone No. (for confirmation): (832) 308-4200   and   Trident Place First Floor, Building 4 Mosquito Way Hatfield, Hertfordshire AL10 9UL. Attention: Jana Hile Telecopy No.: (+44) (0) 1707 632801 Telephone No. (for confirmation): +441707248803     767 Fifth Avenue Attention:  Douglas R. Urquhart Telephone No. (for confirmation):  (212) 310-8001   and   114   Houston, Texas 77042 Attention:  General Counsel Telecopy No.: (832) 308-4001 Telephone No. (for confirmation): (832) 308-4484     Loan and Agency Service Group Pastell Jenkins Telecopy No: (877) 379-7755 Telephone No. (for confirmation):  312-732-2568 Email:  jpm.agency.servicing.1@jpmchase.com     Hunton Andrews Kurth LLP Houston, Texas 77002 Attention:  Callie Parker Bradford Telecopy No.:  (713) 220-4285 Telephone No. (for confirmation): (713) 220-3914   (iii)          if to the Alternative Currency Agent (in the case of a Borrowing in an Alternative Currency (other than Canadian Dollars), to   25 Bank Street Canary Wharf London E14 5JP Attn: Loans Agency   (iv)          if to the Alternative Currency Agent (in the case of a Borrowing in Canadian Dollars), to:   Chicago, IL  60603 Attention:  Jessica Gallegos Telephone Number:  (312) 954-2097 Email: CLS.CAD.Chicago@jpmorgan.com   115   (v)           if to JPMorgan in its capacity as an Issuing Lender (in the case of Letters of Credit denominated in Dollars or an Alternative Currency (other than Canadian Dollars), to   Sudeep Kalakkar Sarjapur Outer Ring Road, Vathur Hobli, Floor 04 Telephone No. (for confirmation):  91-80-66766154 ext 66154   (vi)          if to JPMorgan in its capacity as an Issuing Lender (in the case of Letters of Credit denominated in Canadian Dollars), to   Suite 4500, TD Bank Tower 66 Wellington Street West Toronto, ON M5K 1E7 Attention: Jennifer McLaughlin Telephone No.: 416-981-2324 Telecopy No.:  416-981-2375 Email: jennifer.i.mclaughlin@jpmorgan.com   (vii)         if to any other Issuing Lender:   Vincent Leonardo or Timothy Rogers Tel.:  1 800 370 7519 Email:  Scranton_standby_lc@bankofamerica.com   Barclays Bank plc Barclays Loan Operations Level 21, 1 Churchill Place Canary Wharf, London, E14 5HP Instructions Telecopy No.:  +44 (0) 20 7516 3867 Instructions Email: 442033201066@tls.ldsprod.com Queries Email:  emeaparticipationloans@barclays.com Escalations Email:  BOT@barclays.com Telephone No.:  + 44 (0) 20 3134 0516   U.S. Trade Services Standby Letters of Credit MAC D4004-017 Winston-Salem, North Carolina 27101-4157   116   Telephone No.:  800-776-4157, Option 2 Email:  sblc-new@wellsfargo.com   (viii)        if to JPMorgan in its capacity as a Swingline Lender, to   Pastell Jenkins   with a copy to the Alternative Currency Agent, in the case of a Swingline Loan   (ix)          if to any other Swingline Lender:   Adilakshmi Andrapalli Hitec City, Madhapur Hyderabad Telangana 500081 India Tel.:  +914033866483 Email:  adilakshmi.andrapalli@bankofamerica.com   Barclays Bank plc Barclays Loan Operations   Adrian Newbill, Loan Admin 7711 Plantation Rd Roanoke, VA 24019 Telecopy No:  844-879-0845 Telephone No.:  540-561-6250 Email:  RKELCFX@wellsfargo.com adrian.newbill@wellsfargo.com   117     notices or communications.         entered into by the Borrowers and the Majority Lenders or by the Borrowers and of Section 2.20 or the definition of “Defaulting Lender”, without the written consent of the Administrative Agent, the Issuing Lenders and the Swingline Lenders (in addition to the Majority Lenders), (vi) change   118   any of the provisions of this Section 10.02(b) or the definition of “Majority each Lender, (vii) release all or a material portion of the Collateral without the written consent of each Lender, provided, that nothing herein shall prohibit the Administrative Agent from releasing any Collateral, or require the consent of the other Lenders for such release, in respect of items sold, leased, transferred or otherwise disposed of to the extent such transaction is permitted hereunder, or (viii) release all or substantially all of the Guarantees (other than in connection with any transactions permitted by this Agreement) without Administrative Agent, the Alternative Currency Agent, the Issuing Lenders or the Swingline Lenders, as the case may be.     (a)           The Parent shall pay, or shall cause to be paid, (i) all and consultants for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, due diligence undertaken by the Administrative Agent with respect to the financing contemplated by this Agreement, the preparation and administration of this Agreement or any the Transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Lenders in connection expenses incurred by the Administrative Agent, the Issuing Lenders or any Lender for fees, charges and disbursements of one primary law firm as counsel, local counsel as needed and consultants for the Administrative Agent, the Issuing Lenders or any Lender and all other reasonable out-of-pocket expenses of the Administrative Agent, the Issuing Lenders or any Lender, in connection with the of Credit.   (b)           THE PARENT SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE ISSUING LENDERS, AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS AGREEMENT OR ANY   119   AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR ANY OTHER TRANSACTIONS PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING LENDERS TO HONOR A MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE PARENT OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE PARENT OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL CLAIM, LITIGATION, INVESTIGATION OR REGARDLESS OF WHETHER SUCH CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING IS BROUGHT BY THE PARENT OR ANY GUARANTOR, THEIR RESPECTIVE EQUITY HOLDERS, THEIR RESPECTIVE AFFILIATES, THEIR RESPECTIVE CREDITORS OR ANY OTHER PERSON; AND WHETHER OR NOT CAUSED BY THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF ANY INDEMNITEE, PROVIDED FURTHER THAT SUCH INDEMNITY SHALL NOT, AS TO ANY NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.  THIS SECTION 10.03(b) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT   (c)           To the extent that the Parent fails to pay, or fails to cause to be paid, any amount required to be paid by it to the Administrative Agent, any Issuing Lender or any Swingline Lender under paragraph (a) or (b) of this Issuing Lender or such Swingline Lender, as the case may be, such Lender’s pro Administrative Agent, such Issuing Lender or such Swingline Lender in its   of the   120   proceeds thereof; provided that nothing in this paragraph (d) shall be deemed to relieve the Parent of any obligation it may have to indemnify an Indemnitee such Indemnitee by a third party to the extent such Indemnitee would otherwise be entitled to indemnification hereunder.   ten (10) Business Days from written demand therefor.     Letter of Credit), except that (i) except as expressly set forth in Section 5.10(b), no Borrower may assign or otherwise transfer any of its rights any attempted assignment or transfer by any Borrower without such consent shall assigns permitted hereby (including any Affiliate of any Issuing Lender that this Agreement.     required for an assignment to an Affiliate of a Lender or if any Event of Default has occurred and is continuing; provided further that the Parent shall   (B)          the Administrative Agent, each Issuing Lender and each Swingline Lender;   conditions:   to   121   such assignment, the assigning Lender Commitment or Loans shall not be less than consent or unless the assignment is of 100% of the assigning Lender’s Commitment and Loans, provided that no such consent of the Parent shall be required if an and is continuing;   this Agreement;     (which may include material non-public information about the Parent or securities laws and (2) notice of the Non-Pro Rata Alternative Currencies (if any) in which such assignee has agreed to fund Revolving Loans;   (E)           prior to any assignment to an assignee that is not a Lender, the Lender making such an assignment shall first offer the assignment to the other Lenders who shall have five (5) Business Days to purchase the assignment on the same terms as are proposed to such non-Lender assignee; and   (F)           no such assignment shall be made to (i) a natural Person (or a primary benefit of, a natural Person), (ii) the Parent or any of the Parent’s Affiliates or Subsidiaries or (iii) to any Defaulting Lender or any of its constitute any of the foregoing Persons described in this clause (iii).   or   122   this Section.   non-fiduciary agent of the Parent, shall maintain at one of its offices a copy Parent, the Issuing Lenders and any Lender, at any reasonable time and from time     Administrative Agent, the Issuing Lenders or the Swingline Lenders, sell provided that (A) such participations must be approved by the Parent so long as no Event of Default has occurred and is continuing, such approval not to be unreasonably withheld, (B) such Lender’s obligations under this Agreement shall parties hereto for the performance of such obligations, (D) such Lender shall notify the Administrative Agent in writing immediately upon any such participation, and (E) the Borrowers, the Administrative Agent, the Issuing this Section, the Parent agrees that each Participant shall be entitled to the limitations therein, including the requirements under Sections 2.16(g), (h) and (i) (it being understood that the documentation required under Section 2.16(g) shall be delivered to the participating Lender) to   123     entitled to the benefits of Section 2.16 unless the Parent is notified of the benefit of the Parent, to comply with Section 2.16(g) as though it were a Lender.   this purpose as a non-fiduciary agent of the Parent, maintain a register on     warranties made by the Borrowers and each Guarantor herein and in the fee or any other amount payable under this Agreement is outstanding and   124   regardless of the consummation of the Transactions contemplated hereby, the hereof.   executed in counterparts and may be delivered in original or facsimile form (and   jurisdiction.   Section 10.08  Right of Setoff.  Each Lender and each of its Affiliates is is continuing, to the fullest extent permitted by law, to set off and apply any Affiliate to or for the credit or the account of the Borrowers or any Guarantor against the obligations of the Borrowers and each Guarantor now or hereafter such obligations may be unmatured.  Notwithstanding the foregoing, no Lender or Affiliate thereof shall set off or apply any deposits of a CFC Subsidiary (other than a CFC Subsidiary that is a Credit Facility Guarantor) or any other of such CFC Subsidiary on account of any or all of the obligations of any Person purposes.  The rights of each Lender under this Section are in addition to other have.     accordance with and governed by the Law of the State of New York without regard to any choice-of-law   125   provisions that would require the application of the Law of another jurisdiction provided, to the extent any of the Security Documents recite that they are governed by the Law of another jurisdiction, or any action or event taken thereunder (such as foreclosure of any Collateral) requires application of or compliance with the Law of another jurisdiction, such provisions and concepts shall be controlling.   (b)           Each of the Borrowers and the Guarantors hereby irrevocably and jurisdiction of the Supreme Courts of the State of New York sitting in New York City and of the United States District Court sitting in New York City, and any bring any action or proceeding relating to this Agreement against the Borrowers or Guarantors or their properties in the courts of any jurisdiction.   (c)           Each of the Borrowers and the Guarantors hereby irrevocably and       126     Information (as defined below) and use such Information solely in connection with the consideration, administration, documentation, implementation, syndication or negotiation of the Transactions, except that Information may be disclosed (a) to its Related Parties who need to know the Information in order to consider, administer, document, implement, syndicate or negotiate the terms of the Transactions (it being understood that the Persons to whom such to any Obligor and its obligations, this Agreement or payments hereunder, Section by any party hereto or (ii) becomes available to the Administrative Agent, any Issuing Lender or any Lender on a nonconfidential basis from a source other than the Parent, any of its Subsidiaries or any of its Affiliates.  Notwithstanding the foregoing, none of the Lenders, the Administrative Agent or the Alternative Currency Agent shall (i) use the Information in connection with the performance by the Administrative Agent of services for other companies or (ii) furnish any Information to other companies.  For the purposes of this Section, “Information” means all information received from the Borrowers on a non-confidential basis prior to disclosure by the Borrowers, any of their respective Subsidiaries, any of its Affiliates or any Related Party of the foregoing and other than information pertaining to this Agreement routinely Person would accord to its own confidential information.  If the Administrative Agent, any Issuing Lender or any Lender is requested or required, by oral civil investigative demand or similar process, to disclose any or all of the Information, the Administrative Agent, such Issuing Lender or such Lender will provide the Parent with prompt notice of such event (to the extent that such notice does not contravene any applicable law or similar regulation) so that the Parent may seek a protective order or other appropriate remedy or waive compliance with the applicable provisions of this Agreement by the Administrative Agent, such Issuing Lender or such Lender.  If the Parent determines to seek such protective order or other remedy, the Administrative Agent, any Issuing Lender or such Lender will cooperate with the Parent in seeking such protective order or   127   other remedy.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, nothing in this Agreement shall (a) restrict the Administrative Agent, any Issuing Lender or any Lender from providing information to any bank regulatory authority or any other regulatory or governmental authority, including the Board and its supervisory staff; (b) require or permit the Administrative Agent, any Issuing Lender or any Lender to disclose to the Parent that any information will be or was provided to the Board or any of its supervisory staff; or (c) require or permit the Administrative Agent, any Issuing Lender or any Lender to inform the Parent of a current or upcoming Board examination or any nonpublic Board   reimbursement obligation, together with all fees, charges and other amounts that are treated as interest on such Loan or reimbursement obligation under or reserved by the Lender holding such Loan or reimbursement obligation in Loan or reimbursement obligation hereunder, together with all Charges payable in reimbursement obligation but were not payable as a result of the operation of Lender in respect of other Loans, reimbursement obligations or periods shall be together with interest thereon at the FRBNY Rate to the date of repayment, shall have been received by such Lender.  Without limiting the generality of the foregoing provisions of Section 10.13, if any provision of any of the Loan Documents would obligate any Obligor formed or organized under the laws of Canada or any province or territory thereof to make any payment of interest or other amount payable to any Lender in an amount or calculated at a rate which would be prohibited by applicable law or would result in a receipt by such prohibited by applicable law or so result in a receipt by such Lender of necessary, as follows: firstly, by reducing the amount or rate of interest required to be paid to such Lender under the applicable Credit Document, and   Section 10.14  USA Patriot Act.  Each Lender hereby notifies each Obligor that includes the name and address of the Obligor and other information that will allow such Lender to identify the Obligor in accordance with the Act.   Section 10.15  Amendment and Restatement.  Upon the Effective Date, the Existing Credit Agreement shall be amended, restated and superseded in its entirety by this Agreement.   128   The parties hereto acknowledge and agree that (a) this Agreement, any notes and the other Loan Documents executed and delivered herewith do not constitute a novation or termination of the “Obligations” as defined in the Existing Credit Agreement as in effect prior to the Effective Date and (b) such “Obligations” are in all respects continuing only with the terms thereof being modified as   Section 10.16  Exiting Lenders.  Each of Bank of Nova Scotia, Frost Bank, Santander, N.A. and Zions Bancorporation, N.A. dba Amegy Bank, as “Lenders” under the Existing Credit Agreement (collectively, the “Exiting Lenders”), hereby sells, assigns, transfers and conveys to the Lenders hereto, and each of the Lenders hereto hereby purchases and accepts, so much of the aggregate commitments under, and loans outstanding under, the Existing Credit Agreement such that, after giving effect to this Agreement (a) each of the Exiting Lenders shall (i) be paid in full for all amounts owing under the Existing Credit Agreement as agreed and calculated by such Exiting Lenders and the Administrative Agent in accordance with the Existing Credit Agreement, Documents” as defined therein and (iii) relinquish its rights (provided that it circumstance or event or condition arising prior to the Effective Date) and be released from its obligations under the Existing Credit Agreement and the other “Loan Documents” as defined therein, and (b) the Commitments of each Lender shall be as set forth on Schedule 2.01(a) hereto.  The foregoing assignments, prior to the adjustment date among themselves.  Each Exiting Lender is executing this Agreement for the sole purpose of evidencing its agreement to this Section 10.16 only and for no other purpose.   Section 10.17  Limitation of Liability of CFC Subsidiaries.  Notwithstanding anything to the contrary in this Agreement or any other Loan Document, it is the express intent of the parties under this Agreement that (a) no CFC Subsidiary treated as a pledgor or guarantor with respect to the Loans or any other Person and classified as a partnership or disregarded entity, in each case for U.S. federal income tax purposes for any purpose (including for purposes of Code Section 956(d) and Treasury Regulation Section 1.956-2(c)) and (b) (i) no assets of any CFC Subsidiary (other than a CFC Subsidiary that is a Credit Facility Guarantor) and (ii) no amounts paid or payable by or on behalf of any CFC Subsidiary (whether through payment, credit, setoff, or otherwise), in each case, shall be used (or deemed to be used) to satisfy any Loans or other U.S. federal income tax purposes, and the provisions of this Agreement shall be interpreted in a manner consistent with that intent.  Notwithstanding anything to the contrary herein or under any Loan Documents, no CFC Subsidiary (other than a CFC Subsidiary that is a Credit Facility Guarantor) shall have any liability whatsoever in respect of any Obligations of any Person that is (i) a   129   income tax purposes.   be bound by:       liability;     Authority.     (a)           Each Obligor acknowledges and agrees, and acknowledges its length contractual counterparty to the Obligors with respect to the Loan financial advisor or a fiduciary to, or an agent of, the Obligors or any other Person.  Each Obligor agrees that it will not assert any claim against any Additionally, each Obligor acknowledges and agrees that no Credit Party is advising the Obligors as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction.  The Obligors shall consult with their responsibility or liability to the Obligors with respect thereto.   (b)           Each Obligor further acknowledges and agrees, and acknowledges its trading and brokerage activities as well as   130   instruments (including bank loans and other obligations) of, the Obligors and other companies with which the Obligors may have commercial or other   (c)           In addition, each Obligor acknowledges and agrees, and the Obligors may have conflicting interests regarding the transactions described obtained from the Obligors by virtue of the transactions contemplated by the Loan Documents or its other relationships with the Obligors in connection with Credit Party will furnish any such information to other companies.  Each Obligor Obligors, confidential information obtained from other companies.   Section 10.20  Limited Release.  The Administrative Agent and Lenders hereby release and discharge each of Cardtronics Canada Holdings Inc., Cardtronics Australasia Pty Ltd, Cardtronics Canada Limited Partnership and Cardtronics Canada ATM Processing Partnership (each, a “Prior Credit Facility Guarantor”) from its liabilities and obligations under the Loan Documents as a Credit Facility Guarantor and release any and all property of each Prior Credit Facility Guarantor from the Liens of the Security and Pledge Agreement dated July 15, 2010 among the Credit Facility Guarantors and Administrative Agent, as amended; provided that the foregoing release shall not release or discharge any Prior Credit Facility Guarantor from its liabilities and obligations under the Loan Documents as a CFC Guarantor.     131   above written.     BORROWERS:       CARDTRONICS PLC               By: /s/ Gary Ferrera   Name: Gary Ferrera   Title: Chief Financial Officer             CARDTRONICS HOLDINGS LIMITED               By:   Name: E. Brad Conrad   Title: Director         CATM EUROPE HOLDINGS LIMITED               By:   Name: Jana Hile   Title: Director             CATM HOLDINGS LLC             By:   Name: E. Brad Conrad   Title: President                         By:   Name: E. Brad Conrad   Title: Treasurer                 CARDTRONICS UK LIMITED               By:   Name: Jana Hile   Title: Director             CARDTRONICS AUSTRALASIA PTY LTD         in accordance with section 127 of the Corporations Act 2001 (Cth) by a director and secretary/director:               By:   Name: Jana Hile   Title: Director               By: /s/ Patrick Moriarty   Name: Patrick Moriarty   Title: Company Secretary             CARDTRONICS CANADA HOLDINGS INC.             By:   Name: Patrick Moriarty   Title: Senior Vice-President, North America, Accounting Operations         CREDIT FACILITY GUARANTORS:       CARDTRONICS, INC.               By:   Name: E. Brad Conrad   Title: Director               ATM NATIONAL, LLC               By:   Name: E. Brad Conrad   Title: Treasurer               CATM NORTH AMERICA HOLDINGS LIMITED               By:   Name: E. Brad Conrad   Title: Director               CATM AUSTRALASIA HOLDINGS LIMITED               By:   Name: E. Brad Conrad   Title: Director                             By: /s/ Michael Pinder   Name: Michael Pinder   Title: Director         CFC GUARANTORS:       CARDTRONICS HOLDINGS, LLC               By:   Name: E. Brad Conrad   Title: President               CARDPOINT LIMITED               By:   Name: Jana Hile   Title: Director               CARDTRONICS CANADA LIMITED PARTNERSHIP         By: Cardtronics Canada Operations Inc., its General Partner               By:   Name: Patrick Moriarty   Title:               CARDTRONICS CANADA ATM PROCESSING PARTNERSHIP         By: Cardtronics Canada Operations Inc., its Managing Partner               By:   Name: Patrick Moriarty   Title:                       By:   Name: Min Park   Title: Vice President                           By:   Name: Deborah Booth   Title: Executive Director                           By:   Name: Belinda Lucas   Title: Authorised Signatory                   By:   Name: Adam Rose   Title: SVP         BARCLAYS BANK PLC           By: /s/ Gill Skala   Name: Gill Skala   Title: Director   Executed in New York                   By:   Name: Joanna Mitchell   Title: SVP         COMPASS BANK           By:   Name: Collis Sanders   Title: Executive Vice President                   By:   Name: Yasmin Huebinger   Title: Senior Vice President         BANK OF MONTREAL           By:   Name: Christina Boyle   Title: Managing Director                   By:   Name: Tom Woolgar   Title:           By:   Name: Jeff Couch   Title: Managing Director                   By: /s/ Mario Frison   Name: Mario Frison   Title: Authorized Signatory           By: /s/ R. Andrew H. Roberts   Name: R. Andrew H. Roberts   Title: Authorized Signatory                   By:   Name: Divyang Shah   Title: Senior Vice President           PNC BANK CANADA BRANCH           By:   Name: Caroline Stade   Title: Senior Vice President         CITIBANK, N.A.           By: /s/ Chris Hartzell   Name: Chris Hartzell   Title: Managing Director                   By:   Name: Ryan Durkin   Title: Authorized Signatory                   By:   Name: Michael Bustios   Title: Senior Vice President         NATIONAL WESTMINSTER BANK PLC           By: /s/ Krishan Patel   Name: Krishan Patel   Title: Vice President       Acknowledged and agreed to only with   respect to Section 10.16 of the Agreement   by:       FROST BANK           By:   Name: Michelle Huth   Title: Market President             by:       BANK OF NOVA SCOTIA           By:   Name: Winston Lua   Title: Director             by:                 By:   Name: Andres Barbosa   Title: Executive Director           By:   Name: Carolina Gutierrez   Title: Vice President             by:       ZIONS BANCORPORATION DBA   AMEGY BANK           By: /s/ Ryan Kim   Name: Ryan Kim   Title: Vice President      

Exhibit ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (this "Agreement") is dated as of February 11, 2009 by and between Pharmos Corporation ("Pharmos US"), Pharmos Ltd. ("Pharmos IL" and together with Pharmos US, the "Seller") and Reperio Pharmaceuticals Ltd., an Israeli company ("Buyer") (Seller and Buyer shall sometimes be referred to collectively as the “Parties”, and severally as a “Party”). W I T N E S S E T H: WHEREAS, Seller has been engaged in the research and development of CB2 synthetic small molecular drugs; WHEREAS, Seller is the owner of the patent applications specified in Exhibit A (the "Applications") and the related Know How (as defined below). WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase from Seller all right, title and interest in and to the Applications, any Patent Rights thereto, and the Know How (as defined below), on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt, adequacy, and sufficiency of all of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows: DEFINITIONS “Additional Ingredient” shall mean any compound or substance which (i) is contained in a product and (ii) when administered to a patient has a therapeutic or prophylactic clinical effect independent of a Product (as defined below), either directly or by acting synergistically with or otherwise enhancing the effect of other compounds or substances other than the Product (as defined below) contained in such product. "Affiliate" shall mean, with respect to a Party, any person, organization or entity controlling, controlled by or under common control with, such Party. For purposes of this definition only, “control” of another person, organization or entity shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the activities, management or policies of such person, organization or entity, whether through the ownership of voting securities, by contract or otherwise. Without limiting the foregoing, control shall be presumed to exist when a person, organization or entity (i) owns or directly controls more than fifty percent (50%) of the outstanding voting shares or other ownership interest of the other organization or entity, or (ii) possesses, directly or indirectly the power to elect or appoint more than fifty percent (50%) of the members of the governing body of the organization or other entity. "Assets" means: (i) the Patent Rights; (ii) the Know How; (iii) any quantity of those compounds described in or covered by the Applications, held by Seller; (iv) any documentation in connection with the Sponsored Programs in either digital and/or hard copy, including without 1 limitation, the actual OCS grants received starting 2004, as reflected in the financial files prepared by the independent auditor of the Seller; and (v) the Contracts. "Contracts" means the agreements with any of the following: (i) Prof. Manuel Guzman, Department of Biochemistry and Molecular Biology. School of Biology, Complutense University, Madrid, Spain, and (ii) CHDI Foundation Inc, the Huntingdon's Disease Research Group, US attached hereto as Exhibit B. “Closing” shall have the meaning ascribed thereto in Section 1.5 hereof; including the closing of the transactions contemplated thereby; “Combination Product” shall mean a product, compound or substance which comprises a Product (as defined below) and at least one Additional Ingredient. "Exit Event" shall mean (a) a merger of the Buyer with any third party, following which the Buyer is not the surviving entity; (b) the sale of all or substantially all of the Buyer’s assets in one transaction or series of related transactions; or (c) the sale of all or substantially all of the issued and outstanding share capital of the Buyer by its then current shareholders to any third party. “Encumbrances” means any and all leases, charges, claims, equitable interests, liens, options, rights of refusal, pledges, mortgage, assignments, security interests, sales contracts, license agreements or arrangements, any liability whatsoever to make any payment by way of royalties, fees or otherwise, restrictions, obligations or encumbrances of any kind with the exception of the Assumed Liabilities as defined below. "Know How" means the know how, information, technology, formulae, data, designs, drawings, specifications, associated to and inventions described in the Applications, any other proprietary information required or useful for the exploitation of the Patent Rights and any intellectual property rights related thereto including: (i) all technical reports and documentation, chemical data and laboratory data and notebooks available at Pharmos IL relating solely to the Application, the compounds described therein and the process of the development thereof; (ii) the research and development programs conducted at Pharmos IL, with the support of the OCS resulting in the inventions described in the Applications and the supporting documentation; (iii) any customer and supplier lists (including contact details), pricing and cost information, and business and marketing plans, proposals and information relating solely to the compounds covered under the Applications; (iv) any material, data, correspondences and information in connection with the discussions and negotiations between Seller and any potential partner or collaborator, including without limitations,the entities specified in Section 1.4(b) in connection with the Assets; and (v) any material, data, correspondences and information in connection with the Contracts and the activities taken thereunder. Certain items specified above are subject to confidentiality undertaking by Seller and shall be assigned subject to Buyer assuming such limitation. “Liabilities” means (i) any and all indebtedness of Seller, whether or not evidenced by any contract, and (ii) all liabilities, duties and obligations of, and claims against, or relating to Seller, or to the operation of the business or the ownership, possession or use of any of the Assets 2 or any other assets by the Seller on or prior to the Closing, in each case whether accrued, unaccrued, matured, unmatured, absolute, contingent, known or unknown, asserted or unasserted and whether now existing or arising at any time prior to, at, or after the Closing. “License Payment” shall mean any payments or other consideration that Buyer receives from an unaffiliated third party ("Licensee"), in consideration of or under a license, or the grant of an option to obtain a license, of some or all of the rights in the Patent Rights (whether or not any such grant of right is actually referred to as a license but specifically excluding any M&A type of transaction), including without limitation royalty payment, license fees, milestone payments and license maintenance fees but specifically excluding: (i) reimbursement for research and development and patent related expenses; (ii) payments specifically committed to cover future costs to be incurred by Buyer under further research and development program; and (iii) Royalties payable in accordance with Section 1.4 below in connection with sales by the Buyer ("Transaction"). In the event that the Transaction with the Licensee involves additional technology and/or intellectual property of the Buyer, then License Payment shall be determined by multiplying the amount received by the Buyer from the Licensee under the Transaction by the fraction of C/(C+D) where “C” is the fair market value of the Patent Rights; and “D” is the fair market value of all other technology and intellectual property included in the Transaction with Licensee.In such event, the Parties shall negotiate in good faith to arrive at a determination of the respective fair market values of the Patent Rights and all other technology and intellectual property included in the Transaction. "Patent Rights" means the Applications including, without limitation, all provisional applications, continuations, continuations-in-part, divisions, reissues, renewals, and all patents granted thereon, and all patents-of-addition, reissue patents, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including, without limitation, supplementary protection certificates or the equivalent thereof. "Sponsored Programs" the research and development programs conducted at Pharmos IL, with the support of the Office of the Chief Scientist of the Israeli Ministry of Industry, Trade and Labor (the “OCS”) and specified in Exhibit C. ARTICLE I TERMS OF THE TRANSACTION Section 1.1Sale and Purchase of the Assets.On and subject to the terms and conditions set forth hereunder and in reliance upon the representations and warranties of the Parties set forth herein, effective as of and contingent upon the Closing, Seller shall and hereby does sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase from Seller, all of Seller's Assets, rights, title and/or interest in the Assets as of the Closing.The Assets shall be conveyed free and clear of all liabilities, obligations, or Encumbrances other than the Assumed Liabilities specified in Section 1.3 below; Following the Closing the Seller shall not have any right title or interest whatsoever in any of the Assets, other than that the Buyer shall and hereby grants the Seller or any successor or assignee a non exclusive right to use the information covered under items (iv) and (v) of the definition "Know How" for any use or purpose without limitation to the extent such information is applicable other than to the Assets. Nothing contained 3 herein shall derogate from Seller's undertaking under Section 7.2 below or be deemed or interpreted as a grant of license or right in and to any of the other Assets. Section 1.2Consideration. In consideration of the transfer and assignment of the Assets, Buyer shall, at the Closing: (i) assume the Assumed Liabilities as specified in Section 1.3 below; (ii) pay Pharmos US an amount equal to US$ 200,000 (Two Hundred Thousand US Dollars), V.A.T, if applicable, not included (the “Upfront Payment”); and (iii) issue to Pharmos US 11,111 ordinary shares of the Buyer with nominal value of NIS0.01 each (the "Shares"),constituting 10% (ten percent) of the issued and outstanding share capital of the Buyer as of the date hereof. Thereafter, Pharmos US shall be further entitled to Royalty Payment and License Payment as set forth in Section 1.4 below. Section 1.3Assumed Liabilities.At the Closing, the Buyer shall and hereby does assume and agree to pay, perform and discharge when due all liabilities and obligations of Seller under the Sponsored Programs to the extent such liability or obligation relates to the inventions described in the Applications and specified in the letter provided to the OCS in the form attached hereto as Exhibit D (the "Assumed Liabilities") and as may be further amended with the consent of the Parties and the OCS and reflected in the final approval of the OCS, which will be attached as Exhibit D and replace the attached letter. Other than as set forth herein, Buyer shall not assume or have any responsibility or obligation, with respect to any Liability of the Seller. Section 1.4The Contingent Payments. Following the Closing, the Buyer shall pay Pharmos US additional amounts, as follows: (a)Royalties.Royalty payment equal to 3.5% (three and a half) of the gross amount invoiced or billed by the Buyer or its Affiliate on its behalf (but not any of its Licensees or assignees) in connection with the sale of any product, process or service that is derived from, comprises of or incorporates the Patent Rights and/or the Know How or any part thereof, or that uses the Patent Rights and/or the Know How as a basis for subsequent modifications of the compounds covered under the Patent Rights and that are standard in drug development including, without limitation, the construction of modified compounds based on the Patent Rights that work essentially in a chemically analogues manner to the Patent Rights (the "Product" and the "Royalties" respectively). Notwithstanding anything to the contrary set forth herein, in the event a Product is sold by the Buyer in the form of a Combination Product, Royalties from such Combination Product, shall be determined by multiplying the gross amount invoiced or billed by the Buyer (but not any of its Licensees or assignees) in connection with the sale of the Combination Product during the applicable royalty reporting period, by the fraction A/(A+B) where: “A” is the average sale price of the Product contained in the Combination Product when sold separately by the Buyer; and “B” is the average price of the other Additional Ingredients included in the Combination Product when sold separately by its supplier, in each case during the applicable royalty reporting period or if sales of both the Product and/or other Additional Ingredients did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred.In the event that such average sale price cannot be determined for either the Product and all other Additional Ingredients included in the Combination Product, Royalties from such Combination Product, shall be determined by multiplying the gross amount 4 invoiced or billed by the Buyer (but not any of its licensees or assignees) in connection with the sale of the Combination Product during the applicable royalty reporting period, by the fraction of C/(C+D) where “C” is the fair market value of the Product; and “D” is the fair market value of all other Additional Ingredients included in the Combination Product.In such event, the Parties shall negotiate in good faith to arrive at a determination of the respective fair market values of the Product and all other Additional Ingredients included in the Combination Product. (b)License Payment.

Exhibit32 CERTIFICATION Each of the undersigned in the capacity indicated hereby certifies that, to his knowledge, this Annual Report on Form10-K for the fiscal year ended December29, 2007 fully complies with the requirements of

RESTRUCTURING AGREEMENT THIS RESTRUCTURING AGREEMENT (the “Agreement”) is made this 29th day of July, 2015, (“Effective Date”) by and among Northern Comstock LLC (“Northern Comstock”) and Comstock Mining Inc., as a member of Northern Comstock (“Comstock Mining”), DWC Resources Inc., as a member of Northern Comstock (“DWC”), The InterGroup Corporation, a shareholder of Comstock Mining (“InterGroup”), Santa Fe Financial Corporation, a shareholder of Comstock Mining and subsidiary of InterGroup (“Santa Fe”), Portsmouth Square, Inc., a shareholder of Comstock Mining and subsidiary of Santa Fe (“Portsmouth”), and John V. Winfield, as a member and manager of Northern Comstock (“Winfield,” and together with Northern Comstock, Comstock Mining, DWC, InterGroup, Portsmouth and Sante Fe, the WHEREAS, Northern Comstock, InterGroup, Santa Fe, Portsmouth and Winfield are holders of outstanding shares of 7 ½% Series A-1 Convertible Preferred Stock of Comstock Mining (“Series A-1”); and WHEREAS, Comstock Mining has also issued and outstanding shares of 7 ½% Series A-2 Convertible Preferred Stock (“Series A-2”) and 7 ½% Series B Convertible Preferred Stock (“Series B,” and together with the Series A-1 and Series A-2, WHEREAS, the rights of the holders of the Shares are governed by the certificates of designation of rights, preferences, rights and limitations filed with the Secretary of State of the State of Nevada on or about October 20, 2010 (the “Charters”); and WHEREAS, on October 19, 2010, Comstock Mining entered into an operating agreement (the “Operating Agreement”) to form Northern Comstock with Winfield and DWC, pursuant to which Comstock Mining obtained rights relating to certain property formerly owned by DWC in Storey County, Nevada (the “DWC Property”) and two groups of properties formerly leased by Winfield in Storey County, Nevada from the Sutro Tunnel Company (the “Sutro Property”) and Virginia City Ventures (the “VCV Property,” and together with the DWC Property and the Sutro Property, the “Land”) in exchange for annual capital contributions in the amount of $862,500, in the form of Series A-1 or cash that on each anniversary of the Operating Agreement, up to and including the thirty-ninth (39th) anniversary, of which thirty-six (36) installments valued at $31.05 million remain to be paid; and WHEREAS, in order to: (i) create a simpler, more efficient, effective and liquid capital structure for Comstock Mining, that is more typical of similar companies, more attractive to value investors and better positioned to enhance the value of Comstock Mining for all shareholders; (ii) to reduce the remaining obligations of Comstock Mining under the Operating Agreement; (iii) eliminate the additional dilution caused by dividends payable on the Shares; (iv) strengthen Comstock Mining’s balance sheet; (v) enhance the overall quality of governance by increasing the industry experience, increasing the number of independent Board members, eliminating the special voting and representation rights associated with the Series A-1; and (vi) position Comstock Mining to capitalize on near term industry and business opportunities; Comstock Mining has determined to: (x) propose a revision to the Charters that would cause all outstanding Shares to automatically convert (the “Conversion”) into $0.000666 par value, per share, common stock of Comstock Mining (the “Common Stock”) at the Conversion Price set forth in Section 6(d) of the Charters; (y) eliminate the special voting rights and Board representation rights associated with the Series A-1; and (z) reduce Comstock Mining's remaining capital contributions under the Operating Agreement and, under certain circumstances, permit the form of such capital contributions to include contributions made in the form of common shares, $0.000666 par value, per share ("Common Shares"), of Comstock Mining, subject to the terms and conditions hereof; and of which hereby are acknowledged, and for the mutual promises hereinafter set 1. Consent to Conversion. Each of Northern Comstock, InterGroup, Santa Fe, Portsmouth, DWC and Winfield hereby agrees to execute and deliver a consent to the Conversion, substantially in the form attached hereto as Exhibit A attached hereto. Each of Northern Comstock, InterGroup, Santa Fe, Portsmouth, DWC and Winfield hereby agrees and acknowledges that after giving effect to the Conversion, the Winfield Group (as defined in the Charters) shall have no further special voting rights or Board representation rights. 2. Amendments Related to the Land. Each of DWC, Winfield and Comstock Mining agrees to execute and deliver the First Amendment to the Operating Agreement in the form attached hereto as Exhibit B (the "Amendment"). The obligation of DWC, Winfield and Comstock Mining to enter into the Amendment shall be conditioned on the receipt of the requisite approval of the Conversion. 3. Entire Agreement. This Agreement together with any exhibits or attachments contains all of the terms and provisions of the Parties’ agreement and supersedes all other agreements or understandings between the Parties. Any prior or contemporaneous agreements, promises, negotiations or representations, either oral or written, relating to the subject matter of this Agreement, not expressly set forth herein, are of no force. 4. Successors and Assigns. Each of the Parties hereby agrees that this Agreement shall be binding upon them and upon their respective agents, employees, heirs, executors, administrators, successors in interest and assigns. 5. Governing Law; Forum Selection. This Agreement shall be governed by the laws of the State of Nevada without regard to any choice of law provisions. Any controversy, claim or dispute of whatever nature arising between the parties, including those arising out of or relating to any agreement between the parties or the breach, termination, enforceability, scope or validity thereof, whether such claim existed prior to or arises on or after the Effective Date, shall be adjudicated in a state or federal court in the City of New York, in the State of New York, USA. The prevailing party in such dispute shall be entitled to recover all reasonable fees and expenses including, without limitation, reasonable attorneys’ fees and expenses incurred in connection therewith. By: /s/ John V. Winfield Name: John V. Winfield NORTHERN COMSTOCK LLC Title: Manager THE INTERGROUP CORPORATION Title: Chairman PORTSMOUTH SQUARE, INC. Title: Chairman SANTA FE FINANCIAL CORPORATION Title: Chairman DWC RESOURCES, INC. Title: Chairman COMSTOCK MINING INC. Exhibit A Form of Conversion Consent Notice of Proposed Amendments and Consent Solicitation COMSTOCK MINING INC. P.O. Box 1118 You are receiving this notice because you are a holder of outstanding shares of 7 ½% Series A-1 Convertible Preferred Stock (“Series A-1”), 7 ½% Series A-2 Convertible Preferred Stock (“Series A-2”) and/or 7 ½% Series B Convertible the “Shares”) issued by Comstock Mining Inc. (the “Company”). Your rights as a holder of the Shares are governed by the certificates of designation of rights, preferences, rights and limitations filed with the Secretary of State of the State of Nevada on or about October 20, 2010 (the “Charters”). In order to simplify the Company’s capital structure and achieve other strategic objectives of the Company (as more fully described below), the Company has determined to propose a revision to the Charters that would cause all outstanding Shares to automatically convert into $0.000666 par value, per share, common stock of the Company (the “Common Stock”) at the Conversion Price set forth in Section 6(d) of the Charters. In connection with the proposed amendments to the Charters, the Company has determined to make a one-time payment of 127 shares of Common Stock per Share converted. All shares of Common Stock will be delivered by the same method that dividend share payments are presently made. Consistent with its intentions to simplify the capital structure, the Company has entered into a Restructuring Agreement (the “Restructuring Agreement”) on July 29, 2015, with Northern Comstock LLC (“Northern Comstock”), the members of Northern Comstock and other entities affiliated with our Chairman and largest shareholder, John V. Winfield. Pursuant to the Restructuring Agreement, the Company’s shareholders party thereto agreed to consent to the proposed amendments to the Charters thereby eliminating the special voting rights and Board representation rights associated with the Series A-1 and the Company and the other members of Northern Comstock have agreed to amend the terms of the operating agreement for Northern Comstock (the "Operating Agreement") to reduce the Company's remaining capital contributions and, under certain circumstances, permit such capital contributions to be made in the form of Common Stock. The foregoing description of the Restructuring Agreement does not purport to be complete and is qualified in its entirety by the full text of the Restructuring Agreement, which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities Exchange Commission on July 29, 2015, and is The purpose and strategic objectives of the revisions to the Charters and the amendments to the Operating Agreement are to : (i) create a simpler, more efficient, effective and liquid capital structure for the Company, that is more typical of similar companies, more attractive to value investors and better positioned to enhance the value of the Company for all shareholders; (ii) reduce the Company's remaining obligations under the Operating Agreement; (iii) eliminate the dilution caused by dividends payable on the Shares; (iv) strengthen the Company’s balance sheet; (v) enhance the overall quality of governance by increasing the industry experience, enhancing the independence of all Board members, eliminating the special voting and representation rights associated with the Series A-1; and (vi) position the Company to capitalize on near term industry and business opportunities. Pursuant to Section 8(a)(vi) of the Charters, the affirmative vote of the holders of a majority of the then outstanding Shares (which shall, as long as the Winfield Group (as defined in the Charters) still holds at least 25% of the Shares that were originally issued, include the Winfield Group) is required to amend the Company’s certificate of incorporation, by-laws or the certificate of designation of any of the Shares in any manner that materially affects any of the rights, preferences or privileges of the holders of such Shares. A majority of the holders of the Shares, including the Winfield Group, have indicated their intention to authorize the amendments described in this notice. In order to revise the Charters to cause all outstanding Shares to automatically convert into Common Stock at the Conversion Price set forth in Section 6(d) of the Charters, the Section 6(b) of each of the Charters shall be amended and restated as follows: “Automatic Conversion. Notwithstanding any provision contained herein to the contrary, if: (i) the Corporation shall have received written authorization from the holders of a majority of the then outstanding Parity Securities (including the Winfield Group) to amend this Certificate of Designation; and (ii) the Corporation shall have provided instructions to its transfer agent to deliver a special dividend of 127 shares of Common Stock per share of the Parity Securities to each holder thereof, then all outstanding shares of Parity Securities shall automatically be converted into shares of Common Stock, based on the then-effective Conversion Price. Each Holder shall deliver the certificate(s) representing all of its shares of Parity Securities to the Corporation in accordance with a letter of transmittal or other instructions provided by the Corporation. Shares of Parity Securities converted into Common Stock pursuant to this Section 6(b) shall be canceled and shall not be reissued. Not later than ten (10) Trading Days after receipt of each Holder’s shares of Parity Securities, the Corporation shall deliver, or cause to be delivered, to the converting Holder a certificate or certificates representing the Conversion Shares which shall be free of restrictive legends and trading restrictions or, if an account is designated by such Holder, Conversion Shares delivered clearing corporation performing similar functions.” The revision to the Charters, described above, will be approved by written consent if holders holding a majority of the Shares submit written consents in favor of such actions on or prior to August 26, 2015. There will be no shareholders’ meeting to vote, and instead the Company is requesting that you fill out and return the consent card attached to this notice to indicate your vote with respect to such revisions. Consents will be tabulated by the Company. The enclosed consent, if executed and returned, will be counted as set forth as directed in the consent. YOUR CONSENT IS IRREVOCABLE. the matter to be voted upon pursuant to this consent solicitation. By the order of the Board of Directors   Corrado De Gasperis Virginia City, Nevada July 29, 2015   PLEASE BE ASSURED THAT YOUR CONSENT IS IMPORTANT. TO ENSURE THAT YOUR CONSENT WILL BE COUNTED TOWARD THE NUMBER OF SHARES NECESSARY FOR MAJORITY CONSENT, PLEASE SIGN THE ENCLOSED CONSENT FORM AND RETURN TO THE COMPANY VIA THE INSTRUCTIONS SET FORTH ON THE CONSENT FORM NO LATER THAN AUGUST 26, 2015. COMSTOCK MINING INC. P.O. Box 1118 CONSENT CARD FOR THE WRITTEN CONSENT IN LIEU OF A SPECIAL MEETING OF PREFERRED STOCKHOLDERS OF COMSTOCK MINING INC. The undersigned, a preferred stockholder of Comstock Mining Inc., a Nevada corporation (the “Corporation”), do hereby consent to the implementation of the following resolutions, in lieu of a special Meeting of the Shareholders of the Corporation, to have the same full force and effect as if passed at a special meeting of the preferred stockholders of the Corporation. To either consent, not consent or abstain on the issue, please fill out the Consent Card and return it to the Corporation pursuant to the instructions set forth. Note that you must indicate your approval/disapproval/abstention for the matter to be passed upon by only checking ONE box. If you do not check a box or do not sign and return this Consent Card, your shares will not be voted FOR the resolutions.   Please fill out and sign this card promptly and return to the Corporation via regular mail at P.O. Box 1118, Virginia City, Nevada 89440, Attention: Investor Relations or via email at shipley@comstockmining.com. Proposed Resolutions: IT IS RESOLVED, that Section 6(b) of each Certificate of Designations of Preferences, Rights and Limitations, filed with the Secretary of State of the State of Nevada on or about October 20, 2010, as an amendment to Articles of Incorporation of the Corporation is hereby amended to read as follows: FURTHER IT IS RESOLVED, that the officers of the Corporation hereby are, and each of them hereby is, authorized to execute and deliver any documents and take any actions necessary to comply with the terms and intent of the foregoing resolution and to consummate the transactions contemplated thereby. This consent may be executed in counterparts all of which taken together shall constitute one original consent. Indicate vote by checkmark below: Yes No Abstain □ □ □ this __ day of ______________, 2015.    Signature   Name of Stockholder     Address City, State, Zip Code, Country (for cash payment)   E Mail Address   Telephone Number   Number of Preferred Shares Owned   Custodian Account Information for Conversion Shares (if shares are to be delivered electronically)   Exhibit B Form of First Amendment to Operating Agreement Northern Comstock LLC FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY OPERATING AGREEMENT FIRST AMENDMENT TO THE LIMITED LIABILITY COMPANY OPERATING AGREEMENT dated as of [_], 2015 among the undersigned signatories hereto. WHEREAS, a Certificate of Formation was filed with the Secretary of State of the State of Nevada for the purpose of forming the limited liability company governed hereby under Chapter 86 of the Nevada Revised Statutes Act and such Certificate of Formation became effective; and WHEREAS, the name of such limited liability company is Northern Comstock LLC; and WHEREAS, the undersigned constitute all of the members of such limited liability company and executed and delivered that certain limited liability company operating agreement dated as of October 19, 2010 to govern the affairs of such limited liability company (the “Original Agreement”), which the undersigned hereby desire to amend certain provisions of the Original Agreement. and the mutual covenants and set forth herein and other good, valuable and sufficient consideration, the receipt of which is hereby acknowledged, the Section 1. Amendments to Section 3.1. Section 3.1 of the Original Agreement is "3.1 Previous Capital Contributions. Prior to the date hereof, each of the Initial Members have contributed the real property rights or capital stock to the capital of the Company as set forth on Schedule A opposite its name in consideration for its Ownership Interest." Section 2. Amendments to Section 3.2. Section 3.2 of the Original Agreement is "3.2 Additional Capital Contributions. (a) Subject to Section 3.2(b), Comstock Mining shall make cash Capital Contributions to the Company in the amount and on the dates indicated on the table set forth below. Capital Contribution Amount Capital Contribution Date $812,500 August 28, 2016 $812,500 August 28, 2017 $812,500 August 28, 2018 $812,500 August 29, 2019 $812,500 August 28, 2020 $812,500 August 28, 2021 $812,500 August 28, 2022 $812,500 August 28, 2023 $812,500 August 28, 2024 $812,500 August 28, 2025 $812,500 August 28, 2026 $812,500 August 28, 2027 (b) Notwithstanding Section 3.2(a), at any time that Comstock Mining’s cash and cash equivalents are less than Twelve Million Five Hundred Thousand Dollars ($12,500,000) (such occurrence, a “Liquidity Threshold Event”), then Comstock Mining shall notify the Company that a Liquidity Threshold Event has occurred and at any time that a Liquidity Threshold Event has occurred and is occurring, Comstock Mining shall have the option in its discretion to make any accelerated Capital Contributions in the form of shares of $0.000666 par value, per share common stock, of Comstock Mining ("Common Stock"), the number of shares to be calculated by dividing the amount of the Capital Contribution to be made, by the closing price of the Common Stock on its primary trading market on the date prior to such Capital Contribution. Notwithstanding Section 3.2(a), at the initial time that Comstock Mining’s cash and cash equivalents are greater than Twelve Million Five Hundred Thousand Dollars ($12,500,000) (such occurrence, a “Liquidity Surplus Event”), then Comstock Mining shall notify the Company that a Liquidity Surplus Event has occurred and within five (5) business days of delivering such notice, Comstock Mining agrees to make a one-time payment equal to One Million Six Hundred Twenty Five Thousand ($1,625,000), with such Capital Contribution being applied against the scheduled Capital Contributions in reverse order. For the sake of clarity, the right such Capital Contribution is a one-time right. Notwithstanding Section 3.2(a), Comstock Mining shall have the option to prepay such Capital Contributions from time to time or at any time without any penalty. Notwithstanding Section 3.2(a), to the extent production has commenced on DWC Property or Leased Property, then Comstock Mining agrees to accelerate Capital Contributions by making accelerated payments (the amount of the accelerated payment is determined as equal to 3% of Net Smelter Returns with respect to the ore producing Property, with such Capital Contributions being applied against the scheduled Capital Contributions in reverse order. For purposes of clarity, this is not an additional payment nor a royalty payment, but a mechanism to accelerate and prepay the existing capital obligation without interest or penalty. Except as provided in this Section 3.2, no Member shall be permitted to make any additional Capital Contributions to the Company without the prior written consent of all Members." Section 3. Amendments to Section 5.1(a). Section 5.1(a) is hereby amended and "5.1 Allocations of Net Income and Net Losses. "(a) Subject to Section 5.1(b), the Net Income and Net Losses of the Company for each Fiscal Year will be allocated to Comstock Mining." Section 4. Amendments to Section 5.2. Section 5.2 of the Original Agreement is "5.2 Distributions; Record Dates. (a) To the extent the Company holds Common Stock, and subject to Section 5.3, the Company shall make: (i) to DWC on October 20, 2016 and on each anniversary of such date thereafter (each such date a “Yearly Distribution Date”), a distribution of fifty-eight percent (58%) of shares of Common Stock then held by the Company; provided, that prior to October 20, 2025, the Company shall not make such distribution unless DWC shall deliver written notice to the Company at least sixty (60) days prior to such Yearly Distribution Date requesting that such shares be distributed; and (ii) to Winfield on each Yearly Distribution Date, a distribution of forty-two percent (42%) of shares of Common Stock then held by the Company; provided, that Winfield shall deliver written notice to the Company at least sixty (60) days prior to such Yearly Distribution Date requesting that such shares be distributed. (b) For as long as the Company shall exist, the Company shall make to Comstock Mining (or its permitted Assigns), a distribution of the cash flows on the Minerals Produced from the DWC Property and the Sutro Property and all cash flows on the Minerals Produced from the VCV Property. Distributions made pursuant to Section 5.2(b) shall be made no later than thirty (30) days after receipt of payment from the smelter or other purchaser; provided, that upon request by Comstock Mining (or its respective Assigns), the Company shall give a written instruction to the smelter, refinery or other purchaser that such distributions are to be paid directly to Comstock Mining (or its Assigns) from the sums payable to the Company. If Comstock Mining shall Assign less than all of its Ownership Interests to another Person in accordance with this Agreement, distributions made pursuant to Section 5.2(b) shall be prorated between or among Comstock Mining and its Assign(s) in proportion to the respective Capital Accounts of Comstock Mining and its Assign(s) (or as otherwise agreed to by Comstock Mining and its Assigns). All payments shall be accompanied by a statement explaining the manner in which the payment was calculated, including a determination of weights and values of the Minerals Produced. (c) Except as provided in Section 5.2(b) or Article 10, without the prior written consent of each Member, the Company shall not be permitted, and none of the Manager(s), any Managing Director or any other Person shall cause the Company, to make any distributions of cash or any other property of the Company to the Members except for distributions in the form of Common Stock or cash. To the extent deemed to be necessary or appropriate by the Manager, the Manager may fix a record date for the determination of Members entitled to receive any such distribution." Section 5. Insertion of New Section 5.5. The following new Section 5.5 is hereby inserted in its entirety as follows: "5.5 Special Redemption Right. Commencing on August 28, 2027 (or the date of Comstock Mining’s last capital contribution pursuant to Section 3.2(a), if earlier) and thereafter, in exchange for a one-time payment of one-thousand dollars ($1,000), the Company shall have the right, but not the obligation, to redeem all of the then owned Ownership Interests of each of Winfield and DWC at any time.                       COMSTOCK MINING INC.                       By:                                                           By:   /s/ John V. Winfield             Title: Chairman                     JOHN V. WINFIELD      SCHEDULE A Capital Contribution Table Member                        Contribution DWC Resources, Inc. The property described in Exhibit A contributed on October 19, 2010. (Fair Market Value = $7,656,000) John V. Winfield The rights of the “Lessee” under the Leases attached hereto as Exhibit B and Exhibit C contributed on October 19, 2010. (Fair Market Value = $5,544,000) Comstock Mining Inc. 3,450 shares of 7 ½% Series A-1 Convertible Preferred Stock contributed in four increments on October 20, 2010, October 20, 2011, October 20, 2012 and October 20, 2013. (Fair Market Value = $3,450,000)            

Exhibit 10.1 MEMBERSHIP INTEREST PURCHASE AGREEMENT dated as of May 24, 2007 among Forest Alaska Holding LLC, As Seller; Forest Alaska Operating LLC, As the Company; Forest Oil Corporation (for purposes of Sections 7.6, 7.14, 10.1 and Article XII only) AND Pacific Energy Resources Ltd. As Buyer TABLE OF CONTENTS       Page   ARTICLE I   DEFINITIONS   1   ARTICLE II   EFFECTIVE DATE; CLOSING   7   2.1   Effective Date; Closing   7   2.2   Proceedings at Closing   8   ARTICLE III   SALE AND PURCHASE OF MEMBERSHIP INTERESTS; CONSIDERATION   8   3.1     8   3.2   Amount and Form of Consideration   8   3.3   Payment of Consideration   8   3.4   Price Adjustments   8   ARTICLE IV     9   4.1   Organization and Power   9   4.2   Authorizations; Execution and Validity   10   4.3   Capitalization   10   4.4     10   4.5   Consents   11   4.6   No Defaults or Conflicts   11   4.7     11   4.8   Litigation   12   4.9   Taxes   12   4.10   Fees   13   4.11     13   4.12   Compliance with Laws   14   4.13   Transactions with Related Parties   14   4.14   Books and Records   14   4.15   Information Furnished   14   4.16   Directors and Officers   14   4.17   Bank Accounts   14   4.18   Owned Real Property   15   4.19   Leased Real Property   15   4.20   Intentionally left blank   15   4.21     15   4.22   Environmental Matters   16   4.23   Bonding Matters   17   4.24   Insurance   17   4.25   ERISA   17   4.26   Condition of Assets   17   4.27   Lease Operating Expenses   17   4.28   Hedging Transactions   17   4.29   Prepayment Premium; Total Company Debt   18   ARTICLE V     18   5.1   Organization and Good Standing   18   5.2   Authorization of Agreement   18     i   5.3   Conflicts, Consents of Third Parties   18   5.4   Brokers   19   5.5   Litigation   19   5.6   Ownership of Membership Interests   19   5.7   Tax Status   19   5.8   Marketable Title   19   ARTICLE VI     19   6.1   Organization and Good Standing   19   6.2   Authorization of Agreement   20   6.3     20   6.4   No Default   20   6.5   Litigation   20   6.6   Investment Intent   20   6.7   Disclosure of Information   20   6.8   Funding Commitments   21   6.9   Brokers   21   ARTICLE VII   ADDITIONAL AGREEMENTS   21   7.1   Further Actions   21   7.2     21   7.3   Title Defects   22   7.4   Environmental Defects   24   7.5   Gas Imbalances   25   7.6   Access to Information   26   7.7   Regulatory Approvals   26   7.8   Agreement to Defend   26   7.9   Other Actions   26   7.10   LIMITATION AND DISCLAIMER OF IMPLIED REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER   26   7.11   Change of Company Name   27   7.12   Account Signatories   27   7.13   Cooperation with Financing   27   7.14   Hedge Assumption   28   ARTICLE VIII   CONDITIONS TO CLOSING   28   8.1   Buyer’s Conditions   28   8.2   Seller’s Conditions   29   ARTICLE IX   DELIVERIES AT CLOSING   29   9.1   Deliveries by Seller to Buyer   29   9.2   Deliveries by Buyer to Seller and the Company   30   ARTICLE X   TRANSITION OPERATIONS   31   10.1   Transition Operations   31   ARTICLE XI   TERMINATION   31   11.1   Termination   31   11.2   Effect of Termination   32     ii   ARTICLE XII   INDEMNIFICATION   32   12.1   Seller and FOC Indemnification   32   12.2   Buyer Indemnification   32   12.3   Indemnification Procedures   32   12.4   Limits on Indemnification   33   ARTICLE XIII   TAXES   34   13.1   Sales and Use Taxes; Property Taxes   34   13.2   Tax Proceedings   35   13.3     35   13.4   Property Tax Reporting   35   13.5   Production Taxes   35   13.6   Income Taxes   36   13.7   Purchase Price Allocation   36   ARTICLE XIV   GENERAL   36   14.1     36   14.2   Amendments   36   14.3   Waivers   36   14.4   Notices   36   14.5   Successors and Assigns, Parties in Interest   37   14.6   Severability   37   14.7   Entire Agreement   37   14.8   Schedules   38   14.9   Remedies   38   14.10   Expenses   38   14.11   Release of Information; Confidentiality   38   14.12   Certain Construction Rules   38   14.13   Counterparts   39     iii   MEMBERSHIP INTEREST PURCHASE AGREEMENT This Membership Interest Purchase Agreement dated as of May 24, 2007 (the “Agreement”) is entered into by and among Pacific Energy Resources Ltd., a Delaware corporation (“Buyer”), Forest Alaska Operating LLC, a Delaware limited liability company (the “Company”), Forest Alaska Holding LLC, a Delaware limited liability company (“Seller”), and, for purposes of Sections 7.6, 7.14, 10.1 and Article XII only, Forest Oil Corporation, a New York corporation (“FOC”) pertaining to the purchase and sale of 100% of the membership interests of the Company. WHEREAS, the Seller owns all the outstanding membership interests (the Buyer all of the Membership Interests on the terms and subject to the conditions warranties and subject to the conditions contained herein, the parties hereto ARTICLE I DEFINITIONS “Affiliate” means, as to any Person, a Person that, directly or indirectly, “Aggregate Title Defect Value” has the meaning specified in Section 7.3(d). “Aggregate Environmental Defect Value” has the meaning specified in Section “Allocated Values” means the allocation of values of the Oil and Gas Properties included in the Ownership Interests set forth on Exhibit “A-2” attached hereto.  The Allocated Values for each Oil and Gas Property has been agreed to by Buyer and Seller and represents a good faith allocation of value of the Oil and Gas Properties. “Base Purchase Price” has the meaning specified in Section 3.2. “Basket Amount” has the meaning specified in Section 11.4(a). “Buyer” has the meaning specified in the preamble hereof. 1 “Closing Date Amounts” means the aggregate of the amounts set forth in Subsections 3.3(a)(i), (ii) and (iii). “Company Debt” means (a) all indebtedness of the Company for the repayment of borrowed money, whether or not represented by bonds, debentures, notes or similar instruments, all accrued and unpaid interest thereon, and, solely with respect to the Credit Agreement, all unpaid premiums, prepayment penalties, fees and other amounts; (b) all other indebtedness of the Company evidenced by bonds, interest thereon, including intercompany debt; and (c) all obligations of the Company as lessee under capital leases as determined in accordance with GAAP. “Company’s Senior Lender” means Credit Suisse. between Forest Oil Corporation and Buyer dated March 8, 2007. insurance policy or commitment, whether written or oral. “Credit Agreement” means the First Lien Credit Agreement and the Second Lien Credit Agreement, each dated as of December 8, 2006 (together with all ancillary agreements) by and among the Company, as Borrower, the Company’s Senior Lender, and certain other financial institutions, as Lenders (as amended and supplemented as of the date hereof). “Defensible Title” means such right, title and interest that is (a) with respect to Ownership Interests of record, evidenced by an instrument or instruments filed of record in accordance with the conveyance and recording laws of the applicable jurisdiction to the extent necessary to give the Company and Buyer, through its ownership of the Membership Interests, the right to enjoy the benefits of possession of the Ownership Interests reflected on Exhibit “A”, and, with respect to Ownership Interests not yet earned under a farmout agreement, if any, is described in and subject to a farmout agreement containing terms and provisions reasonably consistent with terms and provisions used in the domestic oil and gas business and under which there exists no default by the Company and (b) subject to Permitted Liens, free and clear of all Liens, claims, infringements, and other burdens. 2 “Environmental Defect” has the meaning specified in Section 7.4(b). “Environmental Law” means any Law of any Governmental Authority whose purpose is resources, including, without limitation, the Clean Air Act, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Hazardous and Title 18 of the Alaska Administrative Code. “Financial Statements” has the meaning specified in Section 4.4. “FOC” has the meaning specified in the preamble hereof. America, as in effect from time to time and applied on a consistent basis. Act, as amended; or (c) petroleum, petroleum hydrocarbons, or any fraction or byproducts thereof. “Hedging Transaction” means any futures, hedge, swap, collar, put, call, floor, cap, option or other contract that is intended to benefit from, relate to or including Hydrocarbons, interest rates, currencies or securities. gaseous hydrocarbons. “Income Taxes” means all taxes, assessments, levies or other charges, including any interest, penalties and additions thereto which are imposed upon a Party (whether disputed or not), and i.              which are based or assessed upon a Party’s capital, income or receipts, including, without limitation, federal, state, local or foreign income, franchise and gross receipts Taxes assessed by a Governmental Authority (but only to the extent the same are assessed upon income or receipts), and 3 ii.             any payroll taxes, capital taxes or withholding taxes, or any other taxes, assessments, levies or other charges which are imposed by a Governmental Authority other than Property Taxes. “Indemnified Party” has the meaning specified in Section 12.3(a). “Indemnifying Party” has the meaning specified in Section 12.3(a). “Injunction” means a temporary restraining order, preliminary or permanent injunction or other order issued by a court of competent jurisdiction, an order of a Governmental Entity having jurisdiction over any Party hereto, or any legal restraint or prohibition. “Knowledge”, with respect to any entity, means knowledge of such entity’s executive officers, after reasonable investigation. “Lands” has the meaning specified in the definition of “Oil and Gas Properties.” statute, rule, rule, writ, order, decree, ordinance, code or regulation. “Leases” has the meaning specified the definition of “Oil and Gas Properties.” proceeding (public or private), litigation, investigation, complaint, claim or governmental proceeding. attachment, right of first refusal, option, easement, covenant, encroachment, or any other adverse claim whatsoever. “Litigation” means the Legal Proceedings, Orders and Official Actions listed on Schedule 4.8. “Losses” has the meaning specified in Section 12.1. (i)            As to Buyer, any breach of Buyer’s representations and warranties, which individually or in the aggregate with other breaches would materially impair Buyer’s ability to consummate the transactions contemplated by this Agreement or prevent the consummation of any of the transactions contemplated hereby. (ii)           As to  Seller, any breach of Seller’s representations and by this Agreement or prevent the consummation of any of the transactions contemplated hereby. (iii)          As to the Company, (A) any breach of the Company’s representations and warranties which individually or in the aggregate with other breaches, would result in a 4 decrease in the Company’s value by an amount greater or equal to five percent (5%) of the Purchase Price, or (B) any change in its financial condition or results of operations which has or would, with the passage of time, result in a (5%) of the Purchase Price; provided, however, that any effect, direct or indirect, occasioned by a decline in the price of crude oil or natural gas, whether in global, national or local markets shall be excluded from any Material Adverse Effect calculation hereunder. “Material Contracts” has the meaning specified in Section 4.7. “Membership Interests” has the meaning specified in the preamble hereof. “Notification Deadline” has the meaning specified in Section 7.3(a). “Official Action” shall mean any domestic or foreign decision, order, writ, injunction, decree, judgment, award or any determination, both as presently existing and effective or presently existing and as may become effective in the future, by any court, administrative body, or other tribunal. “Oil and Gas Properties” means all right, title, interest and estate, real or in and to: (i) oil and gas leases, oil, gas and mineral leases, subleases and other leaseholds, royalties, overriding royalties, net profit interests, mineral fee interests, carried interests and other properties and interests (the “Leases”) and the lands covered thereby (“Land(s)”) and any and all oil, gas, water or injection wells thereon or applicable thereto (the “Wells”); (ii) any pools or units which include all or a part of any Land or include any Well (the “Units”) and including without limitation all right, title and interest in production from any such Unit, whether such Unit production comes from wells located on or off of the Lands, and all tenements, hereditaments and appurtenances belonging to, used or useful in connection with the Leases, Lands and Units; (iii) interests under or derived from all contracts, agreements and instruments applicable to or by which such properties are bound or created, to the extent applicable to such properties, including, but not limited to, operating agreements, gathering agreements, marketing agreements (including commodity swap, collar and/or similar derivative agreements), transportation agreements, processing agreements, unitization, pooling and communitization agreements, declarations and orders, joint venture agreements, and farmin and farmout agreements; (iv) easements, permits, licenses, servitudes, or held for use to the extent applicable to such properties; and (v) equipment, machinery, fixtures and other tangible personal property and improvements located on or used or obtained in connection with such properties.  Attached hereto as Exhibit “A” is a description of the Oil and Gas Properties.  The respective “net revenue interest” and “working interest” of the Company in the Oil and Gas Properties described on Exhibit “A” (the “Ownership Interests”) shall be a part of the definition of “Oil and Gas Properties.” “Order” means any order, judgment, Injunction, ruling, writ, award, decree, statute, law, ordinance, rule or regulation. 5 “Ownership Interests” has the meaning specified in the definition of “Oil and Gas Properties.” “Party” mean Seller, the Company, FOC, the Buyer or any permitted successor or assignee thereof. “Permit” means any permit, license, certificate (including a certificate of occupancy) registration, authorization, application, filing, notice, qualification, waiver of any of the foregoing or approval of a Governmental Authority. “Permitted Liens” means:  (a) Liens for Taxes that are not yet due and payable or that are being contested in good faith by appropriate proceedings and as to operators’ liens and statutory liens for labor and materials, where payment is not due (or that, if delinquent, are being contested in good faith); (c) operating agreements, unit agreements, unitization and pooling designations and declarations, gathering and transportation agreements, processing agreements, gas, oil and liquids purchase, sale and exchange agreements and other contracts, agreements and installments; (d) statutory or regulatory authority of governmental agencies; (e) easements, surface leases and rights, plat restrictions, pipelines, grazing, logging, canals, ditches, reservoirs, telephone lines, power lines, railways and similar encumbrances that have not materially affected or interrupted, and are not reasonably expected to materially affect or interrupt, the claimed ownership of the party, the operation of the Oil and Gas Properties or the receipt of production revenues from the Oil and Gas Properties affected thereby; (f) liens, charges, encumbrances and irregularities in the chain of title which, because of remoteness in or passage of time, statutory cure periods, marketable title acts or other similar reasons, have not materially affected or interrupted, and are not reasonably expected to materially affect or interrupt, the claimed ownership of the party, the operation of the Oil and Gas Properties or the receipt of production revenues from the Oil and Gas Properties affected thereby; and (g) other liens set forth in Schedule 4.21. company, trust, unincorporated organization, Governmental Authority, or other entity. other charges, which are imposed upon the Oil and Gas Properties or other real and personal property owned by the Company, including, without limitation, ad valorem, property, documentary or stamp, as well as any interest, penalties and fines assessed or due in respect of any such taxes, whether disputed or not. “Production Taxes” means all federal, state or local taxes, assessments, levies or other charges, which are imposed upon production from the Oil and Gas Properties, including, without limitation, excise taxes on production, severance or gross production, as well as any interest, penalties and fines assessed or “Purchase Price” has the meaning specified in Section 3.2. “Real Property Leases” has the meaning specified in Section 4.19. “Related Party” means (i) any Affiliate of the Company or Seller. 6 “Schedule” means a disclosure schedule provided by Seller to Buyer pursuant to this Agreement. “Seller” has the meaning specified in the preamble hereof. “Subsidiaries” means, with respect to any Person, each entity as to which such Person (either alone or through or together with any other Subsidiary) (i) owns beneficially or of record or has the power to vote or control, 50% or more of the voting securities of such entity or of any class of equity interests of such entity the holders of which are ordinarily entitled to vote for the election of the members of the Board of Directors or other persons performing similar in the case of a limited liability company, serves as a managing member or owns a majority of the equity interests or (iv) otherwise has the ability to elect a majority of the directors, trustees or managing members thereof. “Taxes” means, collectively, Income Taxes, Property Taxes and Production Taxes. “Tax Return” means any return, report, information statement, or similar “Title Defect” has the meaning specified in Section 7.3(a). “Title Defect Value” means, with respect to each Title Defect, the reduction of the Allocated Value of the affected Ownership Interest as a result of such Title Defect as determined in Section 7.3. “Units” has the meaning specified in the definition of “Oil and Gas Properties”. “Wells” has the meaning specified in the definition of “Oil and Gas Properties.” ARTICLE II EFFECTIVE DATE; CLOSING 2.1           EFFECTIVE DATE; CLOSING.  THE EFFECTIVE DATE (FOR ACCOUNTING PURPOSES ONLY) OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE AT 7:00 A.M., ALASKA STANDARD TIME, ON JANUARY 1, 2007 (THE “EFFECTIVE DATE”).  THE CLOSING OF THE TRANSACTIONS CONTEMPLATED HEREBY (THE “CLOSING”) SHALL TAKE PLACE AT THE OFFICES OF SELLER, 707 SEVENTEENTH ST., SUITE 3600, DENVER, CO 80202 AT 10:00 A.M., MOUNTAIN STANDARD TIME, ON THE LATER OF (I) TWO BUSINESS DAYS AFTER SATISFACTION OF ALL CONDITIONS TO CLOSING (INCLUDING AGREEMENT OF THE PARTIES ON ALL PURCHASE PRICE ADJUSTMENTS PURSUANT TO SECTION 3.4), OR JUNE 30, 2007 (THE “CLOSING DATE”).  NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY, IN NO EVENT SHALL THE CLOSING OCCUR LATER THAN JULY 31, 2007. 7 2.2           PROCEEDINGS AT CLOSING.  ALL PROCEEDINGS TO BE TAKEN AND ALL DOCUMENTS TO BE EXECUTED AND DELIVERED BY ALL PARTIES AT THE CLOSING SHALL BE DEEMED TO HAVE BEEN TAKEN AND EXECUTED SIMULTANEOUSLY, AND NO PROCEEDINGS SHALL BE DEEMED TAKEN NOR ANY DOCUMENTS EXECUTED OR DELIVERED UNTIL ALL HAVE BEEN TAKEN, EXECUTED AND DELIVERED. ARTICLE III 3.1           SALE AND PURCHASE OF MEMBERSHIP INTERESTS.  ON THE CLOSING DATE, SUBJECT TO THE TERMS AND CONDITIONS SET FORTH HEREIN, THE SELLER WILL SELL, TRANSFER, CONVEY, ASSIGN AND DELIVER TO BUYER, AND BUYER WILL PURCHASE FROM THE SELLER, THE MEMBERSHIP INTERESTS. 3.2           AMOUNT AND FORM OF CONSIDERATION.  THE TOTAL PURCHASE PRICE TO BE PAID BY BUYER TO SELLER IN CONSIDERATION OF THE MEMBERSHIP INTERESTS IS FOUR HUNDRED TWENTY MILLION DOLLARS AND NO/CENTS (US$420,000,000.00) (THE “BASE PURCHASE PRICE”), SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 3.4 (THE BASE PURCHASE PRICE, AS SO ADJUSTED, IS THE “PURCHASE PRICE”). 3.3           PAYMENT OF CONSIDERATION. (A)           IN CONSIDERATION OF THE SALE, TRANSFER, CONVEYANCE, ASSIGNMENT AND DELIVERY OF THE MEMBERSHIP INTERESTS, BUYER WILL, SUBJECT TO ADJUSTMENT PURSUANT TO SECTION 3.4 HEREOF: (I)            PAY THE SELLER A PERFORMANCE DEPOSIT (THE “DEPOSIT”) IN THE AMOUNT OF FOUR MILLION TWO HUNDRED THOUSAND DOLLARS AND NO/CENTS (US$4,200,000.00) BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS UPON THE EXECUTION OF THIS AGREEMENT; (II)           PAY THE SELLER AN AMOUNT EQUAL TO THE BALANCE OF THE PURCHASE PRICE BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS ON THE CLOSING DATE; AND (B)           THE PURCHASE PRICE SHALL BE PAID BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO SELLER IN ACCORDANCE WITH THE INSTRUCTIONS OF SELLER DELIVERED TO BUYER NOT LATER THAN 48 HOURS PRIOR TO THE CLOSING). 3.4           PRICE ADJUSTMENTS.  THE BASE PURCHASE PRICE WILL BE ADJUSTED: (A)                                  UPWARD BY THE AMOUNT OF US$18,433,160 BEING CONSIDERATION FOR THE COMPANY’S WORKING CAPITAL AS AT DECEMBER 31, 2006; (B)           DOWNWARD AS MAY BE REQUIRED IN SECTION 7.3 OR 7.4; (C)           DOWNWARD BY THE AMOUNT OF THE DEPOSIT; 8 (D)           DOWNWARD BY THE AMOUNT OF $380,000,000, BEING $375,000,000 IN DEBT AS REFLECTED ON THE DECEMBER 31, 2006 BALANCE SHEET PLUS THE $5,000,000 PUT PREMIUM WHICH ARISES UPON THE EARLY TERMINATION OF THE CREDIT AGREEMENT; (E)           UPWARD BY THE AMOUNT OF ANY CASH EQUITY CONTRIBUTION TO THE COMPANY BY SELLER OR FOC BETWEEN THE DATE HEREOF AND CLOSING, BUT SOLELY TO THE EXTENT SUCH CONTRIBUTION (I) REDUCES THE PRINCIPAL OR THE PUT PREMIUM UNDER THE CREDIT AGREEMENT OR (II) IS MADE PURSUANT TO SECTION 7.02 OF THE FIRST LIEN CREDIT AGREEMENT; AND (F)            UPWARD OR DOWNWARD AS MAY BE REQUIRED IN SECTION 13.3. No later than ten days before Closing, Seller will deliver to Buyer a statement setting forth the Purchase Price as adjusted pursuant to this Section 3.4. Buyer shall have five days to review the statement and, if Buyer agrees with Seller’s calculations, the Parties shall proceed to Closing as scheduled. If Buyer disagrees with Seller’s calculations, the Parties shall negotiate in good faith for five days to resolve their differences. If the Parties still cannot agree after such five day period, they shall proceed to mediation with a mutually agreeable mediator. If they cannot agree on a mediator within five days, or if they are unable to reach agreement within ten days after selecting a mediator, Closing shall proceed with the Purchase Price adjusted per the adjustment demand of the Buyer.  The allocated value of the adjusted assets subject to dispute, as set forth in Exhibit A-2, shall be placed by Buyer in an interest-bearing escrow account pending resolution of the dispute, and, following Closing, the Parties shall immediately refer the adjustment dispute to binding arbitration. Such arbitration shall be conducted in Houston, Texas under the auspices of the US Chamber of Commerce (the “Chamber”).  It shall be conducted by a single arbitrator chosen by mutual agreement of the Parties.  Should the Parties fail to reach agreement on an arbitrator, an arbitrator shall be chosen by the Chamber in accordance with their Rule of Arbitration; provided that such arbitrator shall be an expert in the valuation of oil & gas properties with at least 10 years of experience in the industry and may, but need not, be an attorney.  The arbitration shall be conducted with the greatest possible haste. The award of the arbitrator shall be limited to an award to Seller of cash money, bounded by the initial claims of the Parties as to the proper value of the adjustments. Each Party shall bear its own costs, and the jointly incurred arbitration fees shall be split equally between the Parties. The foregoing arbitration clause shall apply only to disputes as to potential Purchase Price adjustments made under this Section 3.4. ARTICLE IV The Seller and the Company hereby represent and warrant to Buyer as of the date 4.1           ORGANIZATION AND POWER.  THE COMPANY IS A LIMITED LIABILITY THE STATE OF DELAWARE AND IS 9 QUALIFIED AND IN GOOD STANDING TO TRANSACT BUSINESS IN EACH JURISDICTION IN WHICH SUCH QUALIFICATION IS REQUIRED BY LAW, EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED WOULD NOT HAVE A MATERIAL ADVERSE EFFECT.  THE COMPANY HAS ALL REQUISITE CORPORATE POWER AND AUTHORITY TO EXECUTE, DELIVER AND PERFORM ITS HEREBY.  THE COMPANY HAS HERETOFORE DELIVERED TO BUYER COMPLETE AND CORRECT COPIES OF ITS CONSTITUENT DOCUMENTS, EACH AS AMENDED TO DATE. 4.2           AUTHORIZATIONS; EXECUTION AND VALIDITY.  THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE COMPANY, THE PERFORMANCE OF THIS AGREEMENT BY THE COMPANY AND THE CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY TO BE CONSUMMATED BY IT, HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION AND NO OTHER CORPORATE ACTION ON THE PART OF THE COMPANY IS NECESSARY WITH RESPECT THERETO.  THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY THE COMPANY AND, WHEN DULY AND VALIDLY EXECUTED AND DELIVERED BY BUYER AND SELLER, WILL CONSTITUTE A VALID AND BINDING OBLIGATION OF REORGANIZATION, MORATORIUM AND SIMILAR LAWS OF GENERAL APPLICABILITY AND BY 4.3           CAPITALIZATION. (A)           THE AUTHORIZED EQUITY OWNERSHIP OF THE COMPANY CONSISTS SOLELY OF THE MEMBERSHIP INTERESTS, WHICH ARE OWNED 100% OF RECORD AND BENEFICIALLY, FREE AND CLEAR OF ANY LIENS (OTHER THAN LIENS THAT SHALL BE RELEASED AT OR PRIOR TO CLOSING) BY SELLER, AND HAVE BEEN DULY AUTHORIZED AND VALIDLY ISSUED, AND ARE FULLY PAID AND NON-ASSESSABLE.  THERE ARE NO OUTSTANDING OPTIONS, SUBSCRIPTIONS, WARRANTS, CALLS, COMMITMENTS, PRE-EMPTIVE RIGHTS OR OTHER RIGHTS OBLIGATING THE COMPANY TO ISSUE OR SELL ANY MEMBERSHIP INTERESTS OR ANY SECURITIES CONVERTIBLE INTO OR EXERCISABLE FOR ANY MEMBERSHIP INTERESTS, OR OTHERWISE REQUIRING SELLER OR THE COMPANY TO GIVE ANY PERSON THE RIGHT TO RECEIVE ANY BENEFITS OR RIGHTS SIMILAR TO ANY RIGHTS ENJOYED BY OR ACCRUING TO THE HOLDERS OF MEMBERSHIP INTERESTS OR ANY RIGHTS TO PARTICIPATE IN THE EQUITY OR NET INCOME OF THE COMPANY.  ALL OF THE ISSUED MEMBERSHIP INTERESTS OF THE COMPANY WERE ISSUED, AND TO THE EXTENT PURCHASED OR TRANSFERRED, HAVE BEEN SO PURCHASED OR TRANSFERRED, IN COMPLIANCE WITH ALL APPLICABLE LAWS, INCLUDING FEDERAL AND STATE SECURITIES LAWS, AND ANY PREEMPTIVE RIGHTS AND ANY OTHER STATUTORY OR CONTRACTUAL RIGHTS OF ANY SELLER. (B)           THE COMPANY HAS NO SUBSIDIARIES.  THE COMPANY DOES NOT OWN, DIRECTLY OR INDIRECTLY, ANY CAPITAL OF OR OTHER EQUITY INTEREST IN OR HAS ANY OTHER INVESTMENT IN OR OUTSTANDING LOANS TO ANY CORPORATION, PARTNERSHIP OR OTHER ENTITY OR ORGANIZATION.  THERE ARE NO STOCKHOLDERS’ AGREEMENTS, VOTING TRUSTS OR OTHER AGREEMENTS OR UNDERSTANDINGS TO WHICH SELLER OR THE COMPANY IS A PARTY OR BY WHICH EITHER IS BOUND WITH RESPECT TO THE TRANSFER OR VOTING OF ANY MEMBERSHIP INTERESTS. 4.4           FINANCIAL STATEMENTS; OTHER FINANCIAL DATA.  ATTACHED HERETO ON SCHEDULE 4.4 ARE CORRECT AND COMPLETE COPIES OF (I) THE AUDITED BALANCE SHEET OF THE COMPANY AS OF DECEMBER 31, 2006, TOGETHER WITH THE RELATED AUDITED STATEMENTS OF INCOME AND RETAINED EARNINGS AND OF CASH FLOWS FOR THE PERIOD ENDED DECEMBER 31, 2006 AND (II) THE UNAUDITED BALANCE SHEET OF THE COMPANY AS OF MARCH 31, 2007, TOGETHER WITH THE RELATED UNAUDITED STATEMENTS OF INCOME AND 10   RETAINED EARNINGS AND OF CASH FLOWS FOR THE QUARTER ENDED MARCH 31, 2007 (THE “FINANCIAL STATEMENTS”).  THE FINANCIAL STATEMENTS PRESENT FAIRLY IN ALL MATERIAL RESPECTS THE FINANCIAL POSITION OF THE COMPANY AS OF THE DATES INDICATED, AND THE RESULTS OF ITS OPERATIONS FOR THE RESPECTIVE PERIODS INDICATED. THE FINANCIAL STATEMENTS HAVE BEEN PREPARED IN CONFORMITY WITH GAAP. 4.5           CONSENTS.  SCHEDULE 4.5 SETS FORTH THE CONSENTS, AUTHORIZATIONS AND APPROVALS THAT MUST BE OBTAINED OR WAIVED PRIOR TO THE CONSUMMATION OR PERFORMANCE BY THE COMPANY AND SELLER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; EXCLUDING, THEREFROM ANY CONSENTS, AUTHORIZATIONS AND APPROVALS THAT THE BUYER MAY BE REQUIRED TO OBTAIN IN ORDER TO LAWFULLY CONDUCT BUSINESS IN ALASKA GENERALLY AND TO OPERATE THE OIL AND GAS PROPERTIES, SPECIFICALLY. 4.6           NO DEFAULTS OR CONFLICTS.  NEITHER THE EXECUTION AND DELIVERY BY THE COMPANY OF THIS AGREEMENT NOR THE CONSUMMATION OR PERFORMANCE BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT TO BE CONSUMMATED OR PERFORMED BY IT (I) RESULTS OR WILL RESULT IN ANY VIOLATION OF ITS CONSTITUENT DOCUMENTS; (II) SUBJECT TO OBTAINING ANY REQUIRED CONSENT UNDER THE CREDIT AGREEMENT, VIOLATES OR CONFLICTS WITH, OR CONSTITUTES A BREACH OF ANY OF THE TERMS OR PROVISIONS OF OR A DEFAULT UNDER, OR RESULTS IN THE CREATION OR IMPOSITION OF ANY LIEN UPON ANY PROPERTY OR ASSET OF THE COMPANY, THE TRIGGER OF ANY CHARGE, PAYMENT OR REQUIREMENT OF CONSENT, OR THE ACCELERATION OR INCREASE OF THE MATURITY OF ANY PAYMENT DATE UNDER: (A) ANY CONTRACT OR (B) ANY APPLICABLE LAW OR ORDER TO WHICH THE COMPANY OR ANY OF ITS RESPECTIVE PROPERTIES IS SUBJECT. 4.7           AGREEMENTS, CONTRACTS AND COMMITMENTS.  EXCEPT FOR THE LEASES OR THE UNITS, ALL OF WHICH ARE LISTED ON EXHIBIT “A,” THE COMPANY HAS LISTED IN SCHEDULE 4.7 ALL LEASES, CONTRACTS, AGREEMENTS AND INSTRUMENTS TO WHICH IT IS A PARTY AS OF THE DATE HEREOF (I) WHICH IS AN EMPLOYMENT AGREEMENT BETWEEN THE COMPANY, ON THE ONE HAND, AND ITS OFFICERS AND EMPLOYEES, ON THE OTHER HAND, (II) WHICH, UPON CLOSING, WILL (EITHER ALONE OR UPON THE OCCURRENCE OF ANY ADDITIONAL ACTS OR EVENTS, INCLUDING THE PASSAGE OF TIME) RESULT IN ANY MATERIAL PAYMENT OR BENEFIT (WHETHER OF SEVERANCE PAY OR OTHERWISE) BECOMING DUE, OR THE ACCELERATION OR VESTING OF ANY RIGHT TO ANY MATERIAL PAYMENT OR BENEFITS, FROM BUYER OR THE COMPANY TO ANY OFFICER, DIRECTOR, CONSULTANT OR EMPLOYEE OF THE COMPANY, (III) WHICH INVOLVES PAYMENT BY OR TO THE COMPANY OF MORE THAN US$250,000 OR EXTENDS FOR A TERM OF SIX MONTHS OR MORE, (IV) WHICH EXPRESSLY LIMITS THE ABILITY OF THE COMPANY TO COMPETE IN OR CONDUCT ANY LINE OF BUSINESS OR COMPETE WITH ANY PERSON OR IN ANY GEOGRAPHIC AREA OR DURING ANY PERIOD OF TIME, IN EACH CASE, IF SUCH LIMITATION IS OR IS REASONABLY LIKELY TO BE MATERIAL TO THE COMPANY, (V) WHICH IS A MATERIAL JOINT VENTURE AGREEMENT, JOINT OPERATING AGREEMENT, PARTNERSHIP AGREEMENT OR OTHER SIMILAR CONTRACT OR AGREEMENT INVOLVING A SHARING OF PROFITS AND EXPENSES WITH ONE OR MORE THIRD PERSONS, (VI) THE BENEFITS OF WHICH WILL BE INCREASED, OR THE VESTING OF THE BENEFITS OF WHICH WILL BE ACCELERATED, BY THE OCCURRENCE OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR THE VALUE OF ANY OF THE BENEFITS OF WHICH WILL BE CALCULATED ON THE BASIS OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (INCLUDING ANY STOCK OPTION PLAN, STOCK APPRECIATION RIGHTS PLAN, RESTRICTED STOCK PLAN OR STOCK PURCHASE PLAN) OR (VII) WHICH IS A LIMITED LIABILITY OPERATING AGREEMENT OR EQUITY HOLDER RIGHTS AGREEMENT OR WHICH OTHERWISE PROVIDES FOR THE ISSUANCE OF ANY SECURITIES IN RESPECT OF THIS AGREEMENT (THE “MATERIAL CONTRACTS”).  THE COMPANY HAS NOT BREACHED, NOR TO THE COMPANY’S OR SELLER’S KNOWLEDGE IS THERE ANY CLAIM OR ANY LEGAL BASIS FOR A CLAIM THAT THE COMPANY OR ANY THIRD PARTY HAS BREACHED, ANY OF THE TERMS OR CONDITIONS OF ANY MATERIAL 11 CONTRACT, EXCEPT WHERE ANY SUCH BREACH, WHETHER CONSIDERED INDIVIDUALLY OR IN THE AGGREGATE, COULD NOT BE REASONABLY EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT. 4.8           LITIGATION.  THERE ARE NO LEGAL PROCEEDINGS PENDING OR, TO THE COMPANY’S KNOWLEDGE, THREATENED AGAINST OR AFFECTING THE COMPANY OR ANY OF ITS ASSETS THAT ARE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY.  THE COMPANY IS NOT SUBJECT TO ANY ORDER OR OFFICIAL ACTION.  THERE ARE NO LEGAL PROCEEDINGS PENDING AGAINST OR, TO THE COMPANY’S OR SELLER’S KNOWLEDGE, THREATENED IN WRITING AGAINST, THE COMPANY THAT QUESTIONS THE VALIDITY OR LEGALITY OF ANY OF THIS AGREEMENT OR ANY ACTION TAKEN OR TO BE TAKEN BY THE COMPANY IN CONNECTION HEREWITH OR THEREWITH. 4.9           TAXES. (A)           EXCEPT AS DISCLOSED ON SCHEDULE 4.9: (I)            THERE ARE NO LIENS FOR TAXES UPON ANY OF THE PROPERTIES OR ASSETS OF THE COMPANY (EXCEPT FOR PERMITTED LIENS). (II)           NO AGREEMENTS RELATING TO ALLOCATION OR SHARING OF, OR LIABILITY OR INDEMNIFICATION FOR, TAXES EXIST BETWEEN THE COMPANY AND ANY OTHER PERSON.  ANY INTERNAL TAX ALLOCATION AGREEMENT SHALL TERMINATE AT THE CLOSING. (III)          THE COMPANY IS NOT A PARTY TO ANY ARRANGEMENT, NOR DOES IT HOLD ANY OIL AND GAS PROPERTY IN AN ENTITY TREATED AS A TAX PARTNERSHIP FOR TAX PURPOSES. (IV)          WITHIN THE TIMES AND IN THE MANNER PRESCRIBED BY LAW, THE COMPANY HAS FILED ALL FEDERAL, STATE AND LOCAL TAX RETURNS AND ALL TAX RETURNS FOR FOREIGN COUNTRIES, PROVINCES AND OTHER GOVERNING BODIES HAVING JURISDICTION TO LEVY TAXES UPON IT. (v)           To the Company’s and Seller’s knowledge, all tax returns filed by the Company for the taxable years ending in 2000 through 2006 constitute complete and accurate representations of their respective tax liabilities for such years and accurately set forth all items (to the extent required to be included or reflected in such returns) relevant to their future tax liabilities, including the tax bases of its properties and assets. (V)           THE COMPANY HAS NOT WAIVED OR EXTENDED ANY APPLICABLE STATUTE OF LIMITATIONS RELATING TO THE ASSESSMENT OF FEDERAL, STATE, LOCAL OR FOREIGN TAXES. (VI)          NO EXAMINATION OF THE FEDERAL, STATE, LOCAL OR FOREIGN TAX RETURNS OF THE COMPANY ARE CURRENTLY IN PROGRESS NOR, TO THE COMPANY’S AND SELLER’S KNOWLEDGE, IS ANY SUCH EXAMINATION THREATENED. (B)           THE COMPANY IS A DISREGARDED ENTITY FOR FEDERAL INCOME TAX PURPOSES UNDER SECTION 7701 OF THE CODE. 12 4.10         FEES.  THE COMPANY HAS NOT PAID OR BECOME OBLIGATED TO PAY ANY FEE OR COMMISSION TO ANY BROKER, FINDER OR INTERMEDIARY IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY FOR WHICH THE COMPANY OR BUYER SHALL HAVE LIABILITY FOLLOWING THE CLOSING. 4.11         ABSENCE OF CERTAIN CHANGES OR EVENTS.  EXCEPT AS SET FORTH ON SCHEDULE 4.11, AS DISCLOSED IN THE FINANCIAL STATEMENTS, SINCE DECEMBER 31, 2006, OR OTHERWISE WHERE THE BUYER HAS CONSENTED IN WRITING, (I) THE COMPANY HAS CONDUCTED ITS BUSINESS ONLY IN THE ORDINARY COURSE CONSISTENT WITH PAST PRACTICE IN ALL MATERIAL RESPECTS, AND (II) THERE HAS NOT BEEN ANY TRANSACTION OR OCCURRENCE BY WHICH THE COMPANY HAS: (A)           SUFFERED ANY MATERIAL ADVERSE EFFECT; (B)           DECLARED, SET ASIDE OR PAID ANY DIVIDEND OR OTHER DISTRIBUTION (WHETHER IN CASH, STOCK OR PROPERTY) WITH RESPECT TO ANY OF ITS OUTSTANDING MEMBERSHIP INTEREST, OR MADE ANY REDEMPTION, PURCHASE OR OTHER ACQUISITION OF ANY OF ITS EQUITY SECURITIES; (C)           OTHER THAN THE PRINCIPAL PAYMENT OF US$625,000 MADE UNDER THE CREDIT AGREEMENT ON MARCH 30, 2007 AND PAYMENTS THAT ARE WITHIN THE SCOPE OF SECTION 3.4(E) ABOVE, CANCELLED OR PAID ANY COMPANY DEBT (IN ANY AMOUNT) OR WAIVED ANY RECEIVABLES, CLAIMS OR RIGHTS IN EXCESS OF US$100,000 INDIVIDUALLY OR IN THE AGGREGATE; (D)           SUFFERED ANY UNINSURED CASUALTY LOSS OR DAMAGE IN EXCESS OF US$100,000 INDIVIDUALLY OR IN THE AGGREGATE; (E)           AMENDED ANY MATERIAL TERM OF ANY EQUITY SECURITY OR MATERIAL CONTRACT OF THE COMPANY; (F)            HIRED ANY EMPLOYEES; (G)           MADE ANY PAYMENTS TO ANY AFFILIATES EXCEPT IN THE ORDINARY COURSE OF BUSINESS PURSUANT TO THE INTERCOMPANY SERVICES AGREEMENT REFERRED TO IN SECTION 10.1; (H)           INCURRED ANY OBLIGATION TO MAKE CAPITAL EXPENDITURES IN EXCESS OF US$250,000 INDIVIDUALLY OR IN THE AGGREGATE; (I)            SOLD, LEASED, ENCUMBERED OR OTHERWISE DISPOSED OF, OR AGREED TO SELL, LEASE (WHETHER SUCH LEASE IS AN OPERATING OR CAPITAL LEASE), ENCUMBER OR OTHERWISE DISPOSED OF ANY PORTION OF ITS ASSETS, OTHER THAN IN THE ORDINARY (J)            AMENDED ANY OF ITS ORGANIZATIONAL DOCUMENTS, INCLUDING ITS LIMITED LIABILITY COMPANY OPERATING AGREEMENT; (K)           ADOPTED ANY PLAN OR AGREEMENT OF MERGER OR LIQUIDATION; OR (L)            MADE ANY CHANGE IN ITS ACCOUNTING METHODS, PRINCIPLES OR PRACTICES. 13 4.12         COMPLIANCE WITH LAWS.  SCHEDULE 4.12 LISTS ALL MATERIAL PERMITS.  THE COMPANY HOLDS ALL MATERIAL PERMITS NECESSARY FOR THE LAWFUL CONDUCT OF ITS BUSINESS AND IS IN COMPLIANCE IN ALL MATERIAL RESPECTS, WITH ALL LAWS AND ORDERS APPLICABLE TO ITS BUSINESS AND HAS FILED WITH THE PROPER AUTHORITIES ALL STATEMENTS AND REPORTS REQUIRED BY THE LAWS AND ORDERS TO WHICH THE COMPANY OR ANY OF ITS PROPERTIES OR OPERATIONS ARE SUBJECT.  NO CLAIM HAS BEEN MADE BY ANY GOVERNMENTAL AUTHORITY (AND, TO THE COMPANY’S AND SELLER’S KNOWLEDGE, NO SUCH CLAIM IS ANTICIPATED) TO THE EFFECT THAT THE BUSINESS CONDUCTED BY THE COMPANY FAILS TO COMPLY, IN ANY RESPECT, WITH ANY LAW. 4.13         TRANSACTIONS WITH RELATED PARTIES.  EXCEPT AS SET FORTH IN SCHEDULE 4.13: (A)           NO RELATED PARTY OF THE COMPANY OTHER THAN SELLER HAS ENTERED INTO, OR HAS HAD ANY DIRECT OR INDIRECT FINANCIAL INTEREST IN, ANY MATERIAL CONTRACT, TRANSACTION OR BUSINESS DEALINGS INVOLVING THE COMPANY; (B)           NO RELATED PARTY OF THE COMPANY OWNS OR HAS ANY INTEREST IN, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, ANY TANGIBLE OR INTANGIBLE PROPERTY USED IN THE CONDUCT OF THE BUSINESS OF THE COMPANY; AND (C)           THE COMPANY HAS NOT, DIRECTLY OR INDIRECTLY, GUARANTEED OR ASSUMED ANY INDEBTEDNESS FOR BORROWED MONEY OR OTHERWISE FOR THE BENEFIT OF ANY RELATED PARTY OF THE COMPANY. 4.14         BOOKS AND RECORDS.  THE MINUTE BOOKS AND RECORDS OF THE COMPANY ARE CURRENT AS OF THE DATE HEREOF (AND SHALL BE CURRENT AS OF THE CLOSING) WITH RESPECT TO ALL UNDERTAKINGS AND AUTHORIZATIONS, AND CONTAIN A TRUE, COMPLETE AND CORRECT RECORD OF ALL ACTIONS TAKEN AT ALL MEETINGS AND BY ALL WRITTEN CONSENTS IN LIEU OF MEETINGS OF THE COMPANY’S BOARD OF DIRECTORS, OR ANY COMMITTEES THEREOF, AND MEMBERS OF THE COMPANY.  THE CAPITAL LEDGER AND RELATED MEMBERSHIP INTEREST TRANSFER RECORDS OF THE COMPANY CONTAIN A TRUE, COMPLETE AND CORRECT RECORD OF THE ORIGINAL ISSUANCE, TRANSFER AND OTHER CAPITALIZATION MATTERS OF THE MEMBERSHIP INTERESTS.  THE ACCOUNTING, FINANCIAL REPORTING, AND BUSINESS BOOKS AND RECORDS OF THE COMPANY ACCURATELY AND FAIRLY REFLECT IN ALL MATERIAL RESPECTS THE BUSINESS AND CONDITION OF THE COMPANY AND THE TRANSACTIONS AND THE ASSETS AND LIABILITIES OF THE COMPANY WITH RESPECT THERETO.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY HAS NOT ENGAGED IN ANY TRANSACTION WITH RESPECT TO ITS BUSINESS OR OPERATIONS, MAINTAINED ANY BANK ACCOUNT THEREFOR OR USED ANY FUNDS OF THE COMPANY IN THE CONDUCT THEREOF EXCEPT FOR TRANSACTIONS, BANK ACCOUNTS AND FUNDS THAT HAVE BEEN AND ARE REFLECTED IN THE NORMALLY MAINTAINED BOOKS AND RECORDS OF THE BUSINESS. 4.15         INFORMATION FURNISHED.  THE COMPANY HAS MADE AVAILABLE TO BUYER AND ITS DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, FINANCING SOURCES, CUSTOMERS, CREDITORS, ACCOUNTANTS AND AUDITORS, TRUE AND CORRECT COPIES OF ALL AGREEMENTS, DOCUMENTS, AND OTHER ITEMS LISTED ON THE SCHEDULES TO THIS AGREEMENT AND ALL BOOKS AND RECORDS OF THE COMPANY. 4.16         DIRECTORS AND OFFICERS.  SCHEDULE 4.16 LISTS ALL OF THE DIRECTORS AND OFFICERS OF THE COMPANY AS OF THE CLOSING DATE. THE COMPANY HAS NO EMPLOYEES. 4.17         BANK ACCOUNTS.  ATTACHED HERETO AS SCHEDULE 4.17 IS A LIST OF ALL BANKS OR OTHER FINANCIAL INSTITUTIONS WITH WHICH THE COMPANY HAS AN ACCOUNT, SHOWING THE TYPE AND ACCOUNT 14 NUMBER OF EACH SUCH ACCOUNT, AND THE NAMES OF THE PERSONS AUTHORIZED AS SIGNATORIES THEREON OR TO ACT OR DEAL IN CONNECTION THEREWITH. 4.18         OWNED REAL PROPERTY.  OTHER THAN THE OIL AND GAS PROPERTIES AND THOSE PROPERTIES LISTED ON SCHEDULE 4.18, THE COMPANY DOES NOT OWN ANY REAL PROPERTY. 4.19         LEASED REAL PROPERTY.  SCHEDULE 4.19 CONTAINS A COMPLETE AND CORRECT LIST OF ALL REAL PROPERTY LEASES AND ANY AND ALL AMENDMENTS THERETO RELATING TO THE LEASED REAL PROPERTY TO WHICH THE COMPANY IS A PARTY OR IS BOUND (THE “REAL PROPERTY LEASES”).  THE COMPANY HAS PROVIDED TO BUYER CORRECT AND COMPLETE COPIES OF THE REAL PROPERTY LEASES.  EXCEPT AS DISCLOSED IN SCHEDULE 4.19, (I) EACH OF THE REAL PROPERTY LEASES IS IN FULL FORCE AND EFFECT, AND, TO THE COMPANY’S AND SELLER’S KNOWLEDGE, IS ENFORCEABLE AGAINST THE LANDLORD WHICH IS PARTY THERETO IN ACCORDANCE WITH ITS TERMS (EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION AND SIMILAR LAWS AFFECTING CREDITORS GENERALLY AND BY THE AVAILABILITY OF EQUITABLE REMEDIES), (II) THERE ARE NO SUBLEASES UNDER THE REAL PROPERTY LEASES AND NONE OF THE REAL PROPERTY LEASES HAS BEEN ASSIGNED (OTHER THAN COLLATERAL ASSIGNMENTS TO COMPANY’S SENIOR LENDER WHICH WILL BE RELEASED IN THEIR ENTIRETY AT OR PRIOR TO THE CLOSING), (III) NO NOTICES OF DEFAULT OR NOTICES OF TERMINATION HAVE BEEN RECEIVED BY THE COMPANY WITH RESPECT TO THE REAL PROPERTY LEASES WHICH HAVE NOT BEEN WITHDRAWN OR CANCELED AND (IV) THE COMPANY IS NOT, AND TO THE COMPANY’S AND SELLER’S KNOWLEDGE, NO OTHER PARTY IS, IN DEFAULT UNDER ANY REAL PROPERTY LEASE.  TO THE COMPANY’S AND SELLER’S KNOWLEDGE  THERE HAS BEEN NO RECEIPT OF ANY WRITTEN NOTICE OF A PROCEEDING IN EMINENT DOMAIN OR OTHER SIMILAR PROCEEDING AFFECTING PROPERTY LISTED ON SCHEDULE 4.19. 4.20         INTENTIONALLY LEFT BLANK. 4.21         TITLE TO OIL AND GAS PROPERTIES.  THE COMPANY NOW HAS AND WILL HAVE AT CLOSING DEFENSIBLE TITLE TO ALL OIL AND GAS PROPERTIES INCLUDED IN THE OWNERSHIP INTERESTS.  EACH OIL AND GAS PROPERTY INCLUDED OR REFLECTED IN THE OWNERSHIP INTERESTS ENTITLES THE COMPANY TO RECEIVE NOT LESS THAN THE UNDIVIDED INTEREST SET FORTH IN (OR DERIVED FROM) THE OWNERSHIP INTERESTS OF ALL HYDROCARBONS PRODUCED, SAVED AND SOLD FROM OR ATTRIBUTABLE TO SUCH OIL AND GAS PROPERTY, AND THE PORTION OF THE COSTS AND EXPENSES OF OPERATION AND DEVELOPMENT OF SUCH OIL AND GAS PROPERTY THAT IS BORNE OR TO BE BORNE BY THE COMPANY IS NOT GREATER THAN THE UNDIVIDED INTEREST SET FORTH IN THE OWNERSHIP INTERESTS.  NO FACT, CIRCUMSTANCE OR CONDITION OF THE TITLE TO AN OIL AND GAS PROPERTY SHALL BE CONSIDERED TO EFFECT A REDUCTION IN THE VALUE OF THE ASSETS, UNLESS DUE CONSIDERATION HAS BEEN GIVEN TO (A) THE LENGTH OF TIME THAT SUCH OIL AND GAS PROPERTY HAS BEEN PRODUCING HYDROCARBONS AND HAS BEEN CREDITED TO AND ACCOUNTED FOR BY THE COMPANY AND ITS PREDECESSORS IN TITLE, IF ANY, AND (B) WHETHER ANY SUCH FACT, CIRCUMSTANCE OR CONDITION IS OF THE TYPE THAT CAN GENERALLY BE EXPECTED TO BE ENCOUNTERED IN THE AREA INVOLVED AND IS USUALLY AND CUSTOMARILY ACCEPTABLE TO REASONABLE AND PRUDENT OPERATORS, INTEREST OWNERS AND PURCHASERS ENGAGED IN THE BUSINESS OF THE OWNERSHIP, DEVELOPMENT AND OPERATION OF OIL AND GAS PROPERTIES. ALL PROCEEDS FROM THE SALE OF THE COMPANY’S SHARE OF THE HYDROCARBONS BEING PRODUCED FROM ITS OIL AND GAS PROPERTIES ARE CURRENTLY BEING PAID IN FULL TO THE COMPANY BY THE PURCHASERS THEREOF ON A TIMELY BASIS, AND NONE OF SUCH PROCEEDS ARE CURRENTLY BEING HELD IN SUSPENSE BY SUCH PURCHASER OR ANY OTHER PARTY. 15 4.22         ENVIRONMENTAL MATTERS.  EXCEPT AS SET FORTH IN SCHEDULE 4.22 OR IN THE CASE OF MATTERS WHICH HAVE BEEN RESOLVED TO THE EXTENT REQUIRED BY ENVIRONMENTAL LAWS AND FOR WHICH NO FURTHER REMEDIATION OBLIGATION OR LIABILITY UNDER ENVIRONMENTAL LAWS EXISTS: (A)           THE COMPANY HAS CONDUCTED AND CONTINUES TO CONDUCT ITS BUSINESS AND OPERATED ITS ASSETS, AND THE CONDITION OF EACH FACILITY AND PROPERTY CURRENTLY OWNED, LEASED AND OPERATED BY THE COMPANY IS, IN MATERIAL COMPLIANCE WITH ALL ENVIRONMENTAL LAWS; (B)           THE COMPANY HAS NOT BEEN NOTIFIED BY ANY GOVERNMENTAL AUTHORITY OR OTHER THIRD PARTY THAT ANY OF THE OPERATIONS OR ASSETS OF THE COMPANY IS THE SUBJECT OF ANY INVESTIGATION OR INQUIRY BY ANY GOVERNMENTAL AUTHORITY EVALUATING WHETHER ANY MATERIAL REMEDIAL ACTION IS NEEDED TO RESPOND TO A RELEASE OR THREATENED RELEASE OF ANY HAZARDOUS MATERIAL OR TO THE IMPROPER STORAGE OR DISPOSAL (INCLUDING STORAGE OR DISPOSAL AT OFFSITE LOCATIONS) OF ANY HAZARDOUS MATERIAL WHERE SUCH INVESTIGATION OR INQUIRY REMAINS UNRESOLVED AS OF THE DATE HEREOF; (C)           NEITHER THE COMPANY NOR, TO THE COMPANY’S AND SELLER’S KNOWLEDGE, ANY OTHER PERSON HAS FILED ANY NOTICE UNDER ANY FEDERAL, STATE OR LOCAL LAW INDICATING THAT (I) THE COMPANY IS RESPONSIBLE FOR THE IMPROPER RELEASE INTO THE ENVIRONMENT, OR THE IMPROPER STORAGE OR DISPOSAL, OF ANY HAZARDOUS MATERIAL, OR (II) ANY HAZARDOUS MATERIAL IS IMPROPERLY STORED OR DISPOSED OF UPON ANY PROPERTY OF THE COMPANY; (D)           THE COMPANY DOES NOT HAVE ANY MATERIAL CONTINGENT LIABILITY IN CONNECTION WITH (I) THE RELEASE OR THREATENED RELEASE INTO THE ENVIRONMENT AT, BENEATH OR ON ANY OF THE OIL AND GAS PROPERTIES, OR (II) THE STORAGE OR DISPOSAL OF ANY HAZARDOUS MATERIAL; (E)           THE COMPANY HAS NOT RECEIVED ANY CLAIM, COMPLAINT, NOTICE, INQUIRY OR REQUEST FOR INFORMATION WITH RESPECT TO ANY ALLEGED VIOLATION OF ANY ENVIRONMENTAL LAW OR REGARDING POTENTIAL LIABILITY UNDER ANY ENVIRONMENTAL LAW RELATING TO OPERATIONS OR CONDITIONS OF ANY FACILITY OR PROPERTY (INCLUDING OFF SITE STORAGE OR DISPOSAL OF ANY HAZARDOUS MATERIAL FROM SUCH FACILITIES OR PROPERTY) CURRENTLY OR FORMERLY OWNED, LEASED OR OPERATED BY THE COMPANY; (F)            NONE OF THE OIL AND GAS PROPERTIES IS LISTED ON THE NATIONAL PRIORITIES LIST PURSUANT TO CERCLA OR ON THE CERCLIS OR ON ANY OTHER FEDERAL OR STATE LIST AS SITES REQUIRING INVESTIGATION OR CLEANUP; (G)           THE COMPANY IS NOT DIRECTLY TRANSPORTING AND IS NOT DIRECTLY ARRANGING FOR THE TRANSPORTATION OF, ANY HAZARDOUS MATERIAL TO ANY LOCATION WHICH IS LISTED ON THE NATIONAL PRIORITIES LIST PURSUANT TO CERCLA, ON THE CERCLIS, OR ON ANY SIMILAR FEDERAL OR STATE LIST OR WHICH IS THE SUBJECT OF FEDERAL, STATE OR LOCAL ENFORCEMENT ACTIONS OR OTHER INVESTIGATIONS THAT MAY LEAD TO MATERIAL CLAIMS AGAINST THE COMPANY FOR REMEDIAL WORK, DAMAGE TO NATURAL RESOURCES OR PERSONAL INJURY, INCLUDING CLAIMS UNDER CERCLA; (H)           THERE ARE NO SITES, LOCATIONS OR OPERATIONS AT WHICH THE COMPANY IS CURRENTLY UNDERTAKING ANY REMEDIAL OR RESPONSE ACTION RELATING TO ANY SUCH DISPOSAL OR RELEASE, AS REQUIRED BY ENVIRONMENTAL LAWS; AND 16 (I)            ALL UNDERGROUND STORAGE TANKS AND SOLID WASTE DISPOSAL FACILITIES OWNED OR OPERATED BY THE COMPANY ARE USED AND OPERATED IN MATERIAL COMPLIANCE WITH ENVIRONMENTAL LAWS. (J)            THE COMPANY AND ITS SUBSIDIARIES HAVE OBTAINED AND ARE IN COMPLIANCE WITH ALL MATERIAL PERMITS UNDER ALL ENVIRONMENTAL LAWS REQUIRED FOR THE OPERATION OF THE BUSINESSES OF THE COMPANY AS CURRENTLY CONDUCTED AND, TO THE KNOWLEDGE OF THE COMPANY AND SELLER, THERE ARE NO PENDING OR THREATENED, ACTIONS OR PROCEEDINGS ALLEGING VIOLATIONS OF OR SEEKING TO MODIFY, REVOKE OR DENY RENEWAL OF ANY SUCH PERMITS. SCHEDULE 4.12 LISTS ALL SUCH PERMITS. 4.23         BONDING MATTERS.  SCHEDULE 4.23 LISTS ALL OF THE BONDS AND OTHER SECURITY ARRANGEMENTS THAT SELLER OR COMPANY MAINTAINS AS TO THE OIL AND GAS PROPERTIES OR ANY PORTION THEREOF.  NO CLAIM HAS BEEN MADE BY ANY GOVERNMENTAL AUTHORITY THAT THE COMPANY HAS FAILED TO COMPLY WITH ANY LAW OR REGULATION GOVERNING THE REQUIREMENTS OF BONDS AS TO THE SELLER’S OR COMPANY’S OPERATIONS OF THE OIL AND GAS PROPERTIES. 4.24         INSURANCE.  SCHEDULE 4.24 LISTS ALL OF THE INSURANCE POLICIES AND COVERAGES OF ANY SORT MAINTAINED BY THE COMPANY, SELLER OR ANY OF THEIR AFFILIATES WHICH, ANY WAY, AFFECT THE COMPANY’S OPERATIONS RELATING TO THE OIL AND GAS PROPERTIES. SUCH INSURANCE COVERAGE COMPLIES WITH ALL LEGAL AND CUSTOMARY REQUIREMENTS FOR A BUSINESS CONDUCING OPERATIONS SUCH AS THOSE CONDUCTED BY THE COMPANY ON OR RELATING TO THE OIL AND GAS PROPERTIES. THE COMPANY HAS COMPLIED IN ALL MATERIAL RESPECTS WITH THE TERMS AND PROVISIONS OF SUCH POLICIES. BETWEEN THE EFFECTIVE DATE AND CLOSING, SELLER SHALL INSURE THAT POLICIES SUBSTANTIALLY EQUIVALENT TO THOSE SET FORTH ON SCHEDULE 4.24 SHALL 4.25         ERISA. THE COMPANY DOES NOT EMPLOY AND HAS NOT AT ANY TIME EMPLOYED ANY INDIVIDUAL. THE COMPANY NEITHER MAINTAINS NOR CONTRIBUTES TO, NOR HAS IT PREVIOUSLY MAINTAINED OR CONTRIBUTED TO, ANY “EMPLOYEE BENEFIT PLANS,” AS AS AMENDED (“ERISA”), WHETHER OR NOT SUBJECT TO ERISA, AND THE COMPANY HAS NOT, NOR WILL IT HAVE ANY LIABILITIES OR OBLIGATIONS WITH RESPECT TO EMPLOYEE BENEFIT PLANS MAINTAINED OR CONTRIBUTED TO OR PREVIOUSLY MAINTAINED OR CONTRIBUTED TO BY THE COMPANY OR ANY TRADE OR BUSINESS, WHETHER OR NOT INCORPORATED THAT TOGETHER SECTION 4001(A)(15) OF ERISA, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. 4.26         CONDITION OF ASSETS.  THE COMPANY HAS MAINTAINED ALL OF THE COMPANY’S TANGIBLE ASSETS AND PROPERTIES OWNED OR LEASED ON THE DATE HEREOF IN GOOD WORKING ORDER AND OPERATING CONDITION, SUBJECT ONLY TO ORDINARY WEAR AND TEAR. 4.27         LEASE OPERATING EXPENSES.  THE INFORMATION PROVIDED TO BUYER BY SELLER AND THE COMPANY WITH RESPECT TO THE COMPANY’S HISTORICAL LEASE OPERATING EXPENSES IS ACCURATE AND COMPLETE IN ALL MATERIAL RESPECTS. 4.28         HEDGING TRANSACTIONS.  SCHEDULE 4.28 CONTAINS A COMPLETE AND CORRECT LIST OF ALL HEDGING TRANSACTIONS (INCLUDING EACH OUTSTANDING COMMODITY OR FINANCIAL HEDGING POSITION) ENTERED INTO BY OR ASSIGNED TO THE COMPANY OR FOR THE ACCOUNT OF ANY OF ITS CUSTOMERS AS OF THE 17 DATE OF THIS AGREEMENT (“FOREST HEDGES”). ALL MATERIAL FOREST HEDGES WERE, AND ANY MATERIAL FOREST HEDGES ENTERED INTO AFTER THE DATE OF THIS AGREEMENT WILL BE, ENTERED INTO IN ACCORDANCE WITH APPLICABLE LAWS, AND IN ACCORDANCE WITH THE INVESTMENT, SECURITIES, COMMODITIES, RISK MANAGEMENT AND OTHER POLICIES, PRACTICES AND PROCEDURES EMPLOYED BY THE COMPANY, AND WERE, AND WILL BE, ENTERED INTO WITH COUNTERPARTIES BELIEVED AT THE TIME AND STILL BELIEVED TO BE FINANCIALLY RESPONSIBLE AND ABLE TO UNDERSTAND (EITHER ALONE OR IN CONSULTATION WITH ITS ADVISERS) AND TO BEAR THE RISKS OF SUCH MATERIAL FOREST HEDGES. THE COMPANY HAS, AND WILL HAVE, DULY PERFORMED ALL OF ITS OBLIGATIONS UNDER THE MATERIAL FOREST HEDGES TO THE EXTENT THAT SUCH OBLIGATIONS TO PERFORM HAVE ACCRUED, AND, TO THE KNOWLEDGE OF THE COMPANY AND SELLER, THERE ARE AND WILL BE NO BREACHES, VIOLATIONS, COLLATERAL DEFICIENCIES, REQUESTS FOR COLLATERAL OR DEMANDS FOR PAYMENT, OR DEFAULTS OR ALLEGATIONS OR ASSERTIONS OF SUCH BY ANY PARTY THEREUNDER. 4.29         PREPAYMENT PREMIUM; TOTAL COMPANY DEBT. THE TOTAL OF ALL PENALTIES, PREMIUMS, FEES, COST REIMBURSEMENTS OR OTHER PAYMENTS (OTHER THAN PRINCIPAL AND ACCRUED INTEREST) PAYABLE AS A RESULT OF THE EARLY TERMINATION OF THE CREDIT AGREEMENT DUE TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT DO NOT EXCEED US$5,000,000, AND THE TOTAL PRINCIPAL AMOUNT OF COMPANY DEBT DOES NOT EXCEED $375,000,000. THE COMPANY IS CURRENT WITH RESPECT TO ALL INTEREST PAYMENTS ON COMPANY DEBT. ARTICLE V 5.1           ORGANIZATION AND GOOD STANDING.  SELLER IS DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF DELAWARE AND HAS ALL REQUISITE POWER AND AUTHORITY SELLER TO EXECUTE, DELIVER AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY TO BE CONSUMMATED BY IT.  SELLER IS NOT A “FOREIGN PERSON” WITHIN THE MEANING OF SECTION 1445 OF THE CODE. 5.2           AUTHORIZATION OF AGREEMENT.  THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY SELLER AND THE PERFORMANCE OF THE TRANSACTIONS CONTEMPLATED HEREIN BY SELLER HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION, AND NO OTHER ACTION ON THE PART OF SELLER IS NECESSARY TO AUTHORIZE THIS AGREEMENT OR CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.  THIS AGREEMENT HAS BEEN DULY AND VALIDLY EXECUTED AND DELIVERED BY SELLER AND CONSTITUTES A VALID AND BINDING OBLIGATION OF SELLER, ENFORCEABLE AGAINST SELLER IN ACCORDANCE WITH ITS TERMS, EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM AND SIMILAR LAWS OF GENERAL APPLICABILITY AND BY GENERAL PRINCIPLES OF EQUITY. 5.3           CONFLICTS, CONSENTS OF THIRD PARTIES.  NEITHER THE EXECUTION AND DELIVERY BY SELLER OF THIS AGREEMENT NOR CONSUMMATION OR PERFORMANCE BY SELLER OF THE TRANSACTIONS CONTEMPLATED HEREBY TO BE CONSUMMATED OR PERFORMED BY SELLER WILL: (A) VIOLATE ANY LAW, (B) VIOLATE ITS CONSTITUENT DOCUMENTS, (C) VIOLATE ANY ORDER TO WHICH SELLER IS A PARTY OR BY WHICH SELLER IS BOUND OR (D) REQUIRE ANY CONSENT, APPROVAL OR AUTHORIZATION, EXCEPT FOR THOSE LISTED ON SCHEDULE 5.3. 18 5.4           BROKERS.  SELLER HAS NOT PAID OR BECOME OBLIGATED TO PAY ANY FEE TRANSACTIONS CONTEMPLATED HEREBY FOR WHICH THE BUYER SHALL HAVE ANY LIABILITY FOLLOWING THE CLOSING. 5.5           LITIGATION.  AS OF THE DATE OF THIS AGREEMENT THERE ARE NO LEGAL PROCEEDINGS, OR, TO THE KNOWLEDGE OF SELLER, THREATENED AGAINST OR AFFECTING SELLER THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON SELLER OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, NOR IS THERE ANY JUDGMENT, DECREE, INJUNCTION, RULE OR ORDER OF ANY GOVERNMENTAL ENTITY OR ARBITRATOR OUTSTANDING AGAINST SELLER THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON SELLER OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. 5.6           OWNERSHIP OF MEMBERSHIP INTERESTS.  SELLER IS THE RECORD AND BENEFICIAL OWNER OF ALL OF THE MEMBERSHIP INTERESTS, AND THOSE MEMBERSHIP INTERESTS ARE OWNED BY SELLER FREE AND CLEAR OF ALL LIENS (OTHER THAN THOSE THAT SHALL BE RELEASED AT CLOSING), INCLUDING, WITHOUT LIMITATION, VOTING TRUSTS OR STOCKHOLDERS AGREEMENTS.  SELLER HAS FULL AUTHORITY TO TRANSFER PURSUANT TO THIS AGREEMENT ALL OF THE MEMBERSHIP INTERESTS, FREE AND CLEAR OF ALL LIENS (OTHER THAN THOSE THAT SHALL BE RELEASED AT CLOSING), INCLUDING, WITHOUT LIMITATION, VOTING TRUSTS OR STOCKHOLDERS AGREEMENTS. 5.7           TAX STATUS. (A)           SELLER IS A NOT A NON-RESIDENT ALIEN, FOREIGN CORPORATION, FOREIGN PARTNERSHIP, FOREIGN TRUST, OR FOREIGN ESTATE (AS THOSE TERMS ARE DEFINED IN THE INTERNAL REVENUE CODE AND INCOME TAX REGULATIONS). (B)           SELLER SHALL PROVIDE TO BUYER THE CERTIFICATE OF NON-FOREIGN STATUS IN THE FORM SET FORTH IN EXHIBIT “B”. (C)           SELLER IS A DISREGARDED ENTITY FOR FEDERAL INCOME TAX PURPOSES UNDER SECTION 7701 OF THE CODE, SUCH THAT THIS TRANSACTION WILL BE TREATED, FOR FEDERAL INCOME TAX PURPOSES, AS A SALE OF ASSETS BY ITS PARENT COMPANY, FOC. 5.8           MARKETABLE TITLE.  THE DELIVERY BY SELLER TO BUYER AT THE CLOSING OF THE MEMBERSHIP INTERESTS VEST BUYER AT SUCH TIME OF DELIVERY WITH GOOD AND MARKETABLE TITLE TO ALL OF THE MEMBERSHIP INTERESTS, FREE AND CLEAR OF ALL LIENS (OTHER THAN RESTRICTIONS ON TRANSFER PURSUANT TO APPLICABLE SECURITIES LAWS). ARTICLE VI 6.1           ORGANIZATION AND GOOD STANDING.  BUYER IS A CORPORATION DULY DELAWARE.  PRIOR TO THE CLOSING DATE, BUYER SHALL BE DULY QUALIFIED TO DO BUSINESS IN AND SPECIFICALLY TO OPERATE OIL AND GAS PROPERTIES IN THE STATE OF ALASKA.  BUYER HAS ALL REQUISITE POWER AND AUTHORITY TO EXECUTE, DELIVER AND 19 CONTEMPLATED HEREBY AND THEREBY TO BE CONSUMMATED BY IT. 6.2           AUTHORIZATION OF AGREEMENT.  THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY BUYER AND THE PERFORMANCE OF THE TRANSACTIONS CONTEMPLATED HEREIN BY THE BUYER HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION BY THE BUYER, AND NO OTHER ACTION ON THE PART OF BUYER IS NECESSARY TO AUTHORIZE THIS AGREEMENT OR DULY AND VALIDLY EXECUTED AND DELIVERED BY BUYER AND CONSTITUTES A VALID AND BINDING OBLIGATION OF BUYER AND IS ENFORCEABLE AGAINST BUYER IN ACCORDANCE WITH INSOLVENCY, REORGANIZATION, MORATORIUM AND SIMILAR LAWS OF GENERAL APPLICABILITY 6.3           CONFLICTS, CONSENTS OF THIRD PARTIES.  NEITHER THE EXECUTION AND DELIVERY BY BUYER OF THIS AGREEMENT NOR CONSUMMATION OR PERFORMANCE BY BUYER OF THE TRANSACTIONS CONTEMPLATED HEREBY TO BE CONSUMMATED OR PERFORMED BY BUYER WILL: (A) VIOLATE ANY LAW, (B) VIOLATE THE CERTIFICATE OF INCORPORATION OR BYLAWS OF BUYER, (C) VIOLATE ANY ORDER TO WHICH BUYER IS A PARTY OR BY WHICH BUYER IS BOUND (D) VIOLATE ANY LOAN OR CREDIT AGREEMENT (SUBJECT TO OBTAINING REQUIRED CONSENT UNDER ITS CREDIT AND GUARANTY AGREEMENT DATED NOVEMBER 30, 2006 WITH J. ARON & COMPANY (THE “PERL CREDIT AGREEMENT”)), NOTE, BOND, MORTGAGE, INDENTURE, LEASE OR OTHER AGREEMENT, INSTRUMENT, PERMIT, CONCESSION, FRANCHISE, OR LICENSE APPLICABLE TO BUYER, (III) ANY JOINT VENTURE OR OTHER OWNERSHIP ARRANGEMENT OF BUYER OR (E) REQUIRE ANY CONSENT FROM, AUTHORIZATION OR APPROVAL OR OTHER ACTION BY, AND NO NOTICE TO OR DECLARATION, FILING OR REGISTRATION WITH ANY GOVERNMENTAL AUTHORITY, , EXCEPT FOR THOSE REGULATORY APPROVALS AND CONSENTS AS WOULD BE REQUIRED OF ANY COMPANY SIMILARLY SITUATED. 6.4           NO DEFAULT.  EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON BUYER, BUYER IS NOT IN DEFAULT OR VIOLATION OF ANY TERM, CONDITION OR PROVISION OF (A) THE ITS CONSTITUENT DOCUMENTS, (B) ANY LOAN OR CREDIT AGREEMENT (SUBJECT TO OBTAINING REQUIRED CONSENT UNDER THE PERL CREDIT AGREEMENT, NOTE, BOND, MORTGAGE, INDENTURE, LEASE OR OTHER AGREEMENT, INSTRUMENT, PERMIT, CONCESSION, FRANCHISE OR LICENSE TO WHICH BUYER IS NOW A PARTY OR BY WHICH BUYER OR ANY OF ITS PROPERTIES OR ASSETS IS BOUND, OR (C) ANY ORDER APPLICABLE TO BUYER. 6.5           LITIGATION.  AS OF THE DATE OF THIS AGREEMENT THERE IS NO SUIT, ACTION OR PROCEEDING PENDING, OR, TO THE KNOWLEDGE OF BUYER, THREATENED AGAINST OR AFFECTING BUYER THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON BUYER, NOR IS THERE ANY JUDGMENT, DECREE, INJUNCTION, RULE OR ORDER OF ANY GOVERNMENTAL ENTITY OR ARBITRATOR OUTSTANDING AGAINST BUYER THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON BUYER. 6.6           INVESTMENT INTENT.  BUYER IS ACQUIRING THE MEMBERSHIP INTERESTS FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TOWARDS DISTRIBUTION THEREOF WITHIN THE MEANING OF SECTION 2(11) OF THE SECURITIES ACT. 6.7           DISCLOSURE OF INFORMATION.  BUYER REPRESENTS THAT IT HAS HAD A FULL OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY REGARDING THE COMPANY AND ITS BUSINESS, ASSETS, RESULTS OF OPERATION, AND FINANCIAL CONDITION. 20 6.8           FUNDING COMMITMENTS.  BUYER HAS IN PLACE SUCH FINANCING COMMITMENTS AS ARE NECESSARY TO PAY THE CLOSING DATE AMOUNTS IN FULL AT THE CLOSING. BUYER HAS PROVIDED EVIDENCE OF SUCH COMMITMENTS ON SCHEDULE 6.8, WHICH COMMITMENTS ARE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH ON SCHEDULE 6.8 (THE FINANCING CONTEMPLATED BY SUCH COMMITMENTS IS REFERRED TO HEREIN AS THE “DEBT FINANCING”). 6.9           BROKERS.  BUYER HAS NOT PAID OR BECOME OBLIGATED TO PAY ANY FEE OR COMMISSION TO ANY BROKER, FINDER OR INTERMEDIARY IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY FOR WHICH THE SELLER SHALL HAVE ANY LIABILITY FOLLOWING THE CLOSING. ARTICLE VII ADDITIONAL AGREEMENTS 7.1           FURTHER ACTIONS.  AT ANY TIME FROM AND AFTER THE CLOSING, AT THE REQUEST OF A PARTY AND WITHOUT FURTHER CONSIDERATION, EACH OTHER PARTY SHALL EXECUTE AND DELIVER SUCH FURTHER AGREEMENTS, CERTIFICATES, INSTRUMENTS AND DOCUMENTS AND PERFORM SUCH OTHER ACTIONS AS THE REQUESTING PARTY MAY REASONABLY REQUEST IN ORDER TO FULLY CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND CARRY OUT THE PURPOSES AND INTENT OF THIS AGREEMENT. 7.2           CONDUCT OF BUSINESS PENDING CLOSING.  PRIOR TO THE CLOSING DATE, THE COMPANY WILL (EXCEPT AS APPROVED IN WRITING BY BUYER OR OTHERWISE PERMITTED UNDER THIS AGREEMENT): (A)           CARRY ON ITS BUSINESS ONLY IN THE ORDINARY COURSE AND IN A MANNER (B)           MAINTAIN ITS PROPERTIES AND FACILITIES, INCLUDING THOSE HELD UNDER LEASES, IN THEIR CURRENT GOOD WORKING ORDER AND CONDITION, ORDINARY WEAR AND TEAR EXCEPTED; (C)           NOT SELL, LEASE, ENCUMBER OR OTHERWISE DISPOSE OF, OR AGREE TO OTHERWISE DISPOSE OF ANY PORTION OF ITS ASSETS, OTHER THAN IN THE ORDINARY COURSE CONSISTENT WITH PAST PRACTICE; (D)           USE ALL COMMERCIALLY REASONABLE EFFORTS TO MAINTAIN AND PRESERVE ITS BUSINESS ORGANIZATION INTACT, RETAIN ITS PRESENT OFFICERS AND MAINTAIN ITS RELATIONSHIPS WITH SUPPLIERS, VENDORS, CUSTOMERS, CREDITORS AND OTHERS HAVING BUSINESS RELATIONS WITH IT; (E)           NOT DECLARE, SET ASIDE OR PAY ANY DIVIDEND OR OTHER DISTRIBUTION (WHETHER IN STOCK OR PROPERTY) WITH RESPECT TO ANY OF ITS EQUITY SECURITIES, OR MAKE ANY REDEMPTION, PURCHASE OR OTHER ACQUISITION OF ANY OF ITS EQUITY SECURITIES; (F)            NOT ISSUE ANY MEMBERSHIP INTERESTS OR OPTIONS, WARRANTS OR OTHER RIGHTS TO PURCHASE MEMBERSHIP INTERESTS, OR ANY SECURITIES CONVERTIBLE INTO, OR EXCHANGEABLE FOR MEMBERSHIP INTERESTS; (G)           NOT BORROW ANY MONEY OR INCUR OR GUARANTEE ANY INDEBTEDNESS FOR BORROWED MONEY; 21 (H)           NOT ENTER INTO OR AMEND ANY MATERIAL CONTRACTS OR AGREEMENTS; (I)            NOT AMEND ITS ORGANIZATIONAL DOCUMENTS, INCLUDING WITHOUT LIMITATION ITS LIMITED LIABILITY OPERATING AGREEMENT; (J)            NOT ADOPT ANY PLAN OR AGREEMENT OF MERGER OR LIQUIDATION; (K)           NOT CANCEL OR PAY ANY COMPANY DEBT (IN ANY AMOUNT, BUT EXCEPT FOR PAYMENTS THAT ARE WITHIN THE SCOPE OF SECTION 3.4(E) ABOVE) OR WAIVE ANY RECEIVABLES, CLAIMS OR RIGHTS IN EXCESS OF US$100,000 INDIVIDUALLY OR IN THE AGGREGATE; (L)            NOT MAKE ANY PAYMENTS TO ANY AFFILIATES EXCEPT IN THE ORDINARY COURSE OF BUSINESS PURSUANT TO THE CONTRACT OPERATING AGREEMENT REFERRED TO IN SECTION 10.1; (M)          NOT MAKE ANY CHANGE IN ITS ACCOUNTING METHODS, PRINCIPLES OR PRACTICES (N)           NOT ENTER INTO ANY COMMITMENTS FOR CAPITAL EXPENDITURES IN EXCESS OF US$250,000 (WITH THE EXCEPTION OF EMERGENCY OR LEASE-SAVING EXPENSES, WHICH SHALL BE DISCLOSED TO BUYER AS SOON AS IS PRACTICABLE); AND (O)           NOT ENTER INTO ANY EMPLOYMENT, CONSULTING OR SIMILAR CONTRACT OR AGREEMENT WITH ANY OFFICER OR DIRECTOR OF THE COMPANY, OR HIRE ANY EMPLOYEES. 7.3           TITLE DEFECTS. (A)           BUYER MUST DELIVER TO THE COMPANY IN WRITING AT LEAST THREE BUSINESS DAYS PRIOR TO THE CLOSING DATE (THE “NOTIFICATION DEADLINE”) A WRITTEN NOTICE SPECIFYING EACH ALLEGED DEFECT ASSOCIATED WITH THE OWNERSHIP INTERESTS IN THE OIL AND GAS PROPERTIES THAT IT ASSERTS CONSTITUTES A VIOLATION OF THE REPRESENTATIONS SET FORTH IN SECTION 4.21 (A “TITLE DEFECT”), A DESCRIPTION OF EACH SUCH TITLE DEFECT AND BUYER’S PROPOSED TITLE DEFECT VALUE FOR SUCH TITLE DEFECT.  IF SUCH NOTICE IS NOT TIMELY SUBMITTED, BUYER WILL BE DEEMED TO HAVE WAIVED ANY BASIS FOR AN ADJUSTMENT BASED ON A VIOLATION OF THE REPRESENTATIONS SET FORTH IN SECTION 4.21, AS WELL AS WAIVED ITS BASIS FOR ANY CLAIM OR OTHER ASSERTION OF RIGHTS OR DAMAGES BASED ON A BREACH OF SUCH REPRESENTATIONS. (B)           BUYER MAY REQUEST AN ADJUSTMENT TO THE BASE PURCHASE PRICE AT ANY TIME ON OR BEFORE THE NOTIFICATION DEADLINE, IF THE ADJUSTMENT IS BASED ON A TITLE DEFECT. A NOTICE REQUESTING AN ADJUSTMENT MUST BE MADE IN ACCORDANCE WITH SECTION 7.3(A).  IF BUYER GIVES NOTICE UNDER SUBSECTION (A) ABOVE, THE PARTIES WILL MEET AND USE THEIR BEST EFFORTS TO AGREE ON THE VALIDITY OF THE CLAIM AND, IF APPLICABLE, THE AMOUNT OF THE ADJUSTMENT, USING THE FOLLOWING CRITERIA: (I)            IF THE CLAIM IS BASED ON THE COMPANY OWNING A DIFFERENT NET REVENUE INTEREST THAN THAT SHOWN ON EXHIBIT “A”, THEN THE ADJUSTMENT WILL BE THE ABSOLUTE VALUE OF THE NUMBER DETERMINED BY THE FOLLOWING FORMULA: 22 A  =        Allocated Value for the affected Ownership Interest B  =         Correct net revenue interest for the affected Ownership Interest C  =         Net revenue interest for the affected Ownership Interest as shown (II)           IF THE CLAIM IS BASED ON AN OBLIGATION OR BURDEN THAT IS LIQUIDATED, THE ADJUSTMENT WILL BE THE SUM NECESSARY TO REMOVE THE OBLIGATION OR BURDEN FROM THE AFFECTED OWNERSHIP INTEREST. (III)          IF THE CLAIM IS BASED ON AN OBLIGATION OR BURDEN THAT IS NOT LIQUIDATED, BUT CAN BE ESTIMATED WITH REASONABLE CERTAINTY, THE ADJUSTMENT WILL BE THE SUM NECESSARY TO COMPENSATE BUYER FOR THE ADVERSE ECONOMIC EFFECT ON THE AFFECTED PROPERTY. (C)           IF THE AMOUNT OF THE ADJUSTMENT FOR EACH TITLE DEFECT CANNOT BE DETERMINED BASED ON THE ABOVE CRITERIA, AND IF BUYER, SELLER AND THE COMPANY CANNOT OTHERWISE AGREE ON THE AMOUNT OF AN ADJUSTMENT OR THE PARTIES ARE UNABLE TO AGREE UPON WHETHER A TITLE DEFECT EXISTS, SUBJECT TO THE PROVISIONS OF SECTION 7.3(D) BELOW, THE PARTIES SHALL AGREE TO RESOLVE THE DISPUTE UNDER THE ARBITRATION PROVISIONS IN THIS AGREEMENT. (D)           NO ADJUSTMENT TO THE BASE PURCHASE PRICE FOR TITLE DEFECTS SHALL BE MADE UNLESS AND UNTIL THE AGGREGATE VALUE OF ALL TITLE DEFECTS (HEREIN CALLED THE “AGGREGATE TITLE DEFECT VALUE”) EXCEEDS ONE PERCENT (1%) OF THE BASE PURCHASE PRICE, AND ONCE THE DEDUCTIBLE IS EXCEEDED, ONLY THE VALUE OF ALL TITLE DEFECTS IN EXCESS OF SUCH DEDUCTIBLE SHALL BE CONSIDERED IN APPLYING THIS SECTION 7.3. (E)           FOR PURPOSES OF THIS SECTION, THE COSTS TO CURE A TITLE DEFECT UNDER SECTION 7.3(B) ABOVE SHALL NOT BE COUNTED TOWARDS THE AGGREGATE TITLE DEFECT VALUE. (F)            SELLER MAY, AT ITS SOLE OPTION, NOTIFY BUYER ON OR BEFORE THE CLOSING THAT IT ELECTS TO CURE SOME OR ALL OF THE TITLE DEFECTS.  NO PRICE ADJUSTMENT WILL BE MADE FOR TITLE DEFECTS THAT SELLER ELECTS TO CURE.  IF ANY TITLE DEFECT IS NOT CURED PRIOR TO CLOSING, AN ADJUSTMENT TO THE BASE PURCHASE PRICE WILL BE CALCULATED UNDER THE CRITERIA SET FORTH IN THIS SECTION, BUT ONLY IF THE NET AMOUNT OF ALL ADJUSTMENTS BASED ON THE TITLE DEFECTS EXCEEDS THE AGGREGATE TITLE DEFECT VALUE. (G)           IF, PRIOR TO THE CLOSING, ANY PORTION OF THE OIL AND GAS PROPERTIES OR RELATED EQUIPMENT IS DESTROYED OR IMPAIRED BY FIRE OR OTHER CASUALTY, BUYER MAY ELECT: (I)            TO TREAT SUCH DESTRUCTION OR IMPAIRMENT AS A TITLE DEFECT IN ACCORDANCE WITH THIS SECTION 7.3, OR (II)           TO PURCHASE THE MEMBERSHIP INTERESTS NOTWITHSTANDING ANY SUCH DESTRUCTION (WITHOUT ADJUSTMENT TO THE PURCHASE PRICE THEREFOR), IN WHICH CASE, SELLER SHALL, AT THE CLOSING, PAY TO BUYER ALL SUMS PAID TO THE COMPANY OR SELLER 23 BY THIRD-PARTIES (INCLUDING INSURANCE PROCEEDS RELATING THERETO) AND ASSIGN TO BUYER ALL SUMS TO WHICH SELLER IS ENTITLED, AS THE CASE MAY BE, BY REASON OF THE DESTRUCTION OF SUCH OIL AND GAS PROPERTIES OR RELATED EQUIPMENT AND SHALL ASSIGN, TRANSFER AND SET OVER UNTO THE COMPANY OR BUYER ALL OF THE RIGHT, TITLE AND INTEREST OF SELLER IN AND TO ANY UNPAID AWARDS OR OTHER PAYMENTS FROM THIRD-PARTIES ARISING OUT OF THE DESTRUCTION OF SUCH OIL AND GAS PROPERTIES OR RELATED EQUIPMENT. (H)           NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 7.3, THE ADJUSTMENTS ATTRIBUTABLE TO THE EFFECTS OF ALL TITLE DEFECTS UPON ANY OIL AND GAS PROPERTY SHALL NOT EXCEED THE ALLOCATED VALUE OF SUCH PARTICULAR OIL AND GAS PROPERTY. (I)            ALL TITLE DEFECTS NOT RAISED WITHIN THE TIME PERIOD PROVIDED IN PARAGRAPH (B) ABOVE SHALL BE WAIVED BY BUYER FOR ALL PURPOSES, INCLUDING BUT NOT LIMITED TO ARTICLE XII. 7.4           ENVIRONMENTAL DEFECTS. (A)           BUYER SHALL HAVE THE RIGHT TO CONDUCT AN ENVIRONMENTAL ASSESSMENT OF THE OIL AND GAS PROPERTIES DURING THE PERIOD BEGINNING ON THE DATE OF THIS AGREEMENT AND ENDING AT THE CLOSE OF BUSINESS ON THE NOTIFICATION DEADLINE.  THE CONFIDENTIALITY OBLIGATIONS OF THE CONFIDENTIALITY AGREEMENT SHALL BE APPLICABLE TO ALL INFORMATION ACQUIRED BY BUYER IN THE COURSE OF ITS ENVIRONMENTAL ASSESSMENT.  DURING NORMAL BUSINESS HOURS AND AFTER PROVIDING THE COMPANY AND SELLER REASONABLE PRIOR NOTICE OF ANY SUCH ACTIVITIES, BUYER AND ITS REPRESENTATIVES SHALL BE PERMITTED TO ENTER UPON THE OIL AND GAS PROPERTIES AND ALL BUILDINGS AND IMPROVEMENTS THEREON, INSPECT THE SAME, REVIEW FILES AND GENERALLY CONDUCT SUCH TESTS, EXAMINATIONS, AND INVESTIGATIONS AS ARE CONSISTENT WITH THE AMERICAN SOCIETY FOR TESTING AND MATERIALS STANDARD PHASE I ENVIRONMENTAL AUDIT AND WHICH HAVE BEEN APPROVED BY COMPANY IN WRITING.  SELLER WILL HAVE THE RIGHT TO (I) WITNESS SUCH INVESTIGATION AND (II) PROMPTLY RECEIVE A COPY OF ALL RESULTS, ANALYSES AND REVIEWS. (B)           BUYER WILL NOTIFY SELLER ON OR BEFORE THE NOTIFICATION DEADLINE OF (I) THE EXISTENCE OF ANY ENVIRONMENTAL CONDITION ON THE OIL AND GAS PROPERTIES THAT BUYER REASONABLY BELIEVES CONSTITUTES A BREACH OF THE COMPANY’S REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 4.22 (“ENVIRONMENTAL DEFECT”), AND (II) THE ESTIMATED COST TO REMEDIATE OR CURE SUCH CONDITION ON EACH INDIVIDUAL OIL AND GAS PROPERTY, DETERMINED UTILIZING THE MOST COST EFFECTIVE AND APPROPRIATE METHOD OF CURE OR REMEDIATION AVAILABLE UNDER THE CIRCUMSTANCES.  WITH RESPECT TO ANY ENVIRONMENTAL DEFECT: (I)            SELLER SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO UNDERTAKE SUCH REMEDIAL ACTION AS MAY BE REQUIRED ENVIRONMENTAL LAW AS CURRENTLY APPLIED TO CURE BY SUCH ENVIRONMENTAL DEFECT BY SENDING WRITTEN NOTICE OF ITS BINDING COMMITMENT TO EFFECTUATE SUCH CURE AND THE DETAILS AND TIMING OF SUCH CURATIVE ACTION, AND IF SUCH COMMITMENT IS REASONABLY SATISFACTORY TO BUYER, THE BASE PURCHASE PRICE WOULD NOT BE REDUCED ON ACCOUNT OF SUCH ENVIRONMENTAL DEFECT 24 (II)           BUYER AND SELLER MAY ALSO, UPON THEIR MUTUAL AGREEMENT, SET THE COSTS TO CURE THE ENVIRONMENTAL DEFECT AND THE BASE PURCHASE PRICE SHALL BE REDUCED BY SUCH AGREED COSTS WHILE BUYER SHALL BE RESPONSIBLE FOR ANY CURE; AND (III)          IF, WITHIN FIFTEEN (15) DAYS FOLLOWING THE NOTICE OF AN ENVIRONMENTAL DEFECT AS TO ANY OIL AND GAS PROPERTY, BUYER AND SELLER CANNOT REACH MUTUAL AGREEMENT AS CONTEMPLATED IN SECTION 7.4(B)(I) OR (II) ABOVE ON EITHER THE VALUE OF AN ENVIRONMENTAL DEFECT OR WHETHER AN ENVIRONMENTAL DEFECT EXISTS, THE PARTIES AGREE TO RESOLVE THE DISPUTE UNDER THE ARBITRATION PROVISIONS IN THIS AGREEMENT. (C)           NO ADJUSTMENT TO THE BASE PURCHASE PRICE FOR ENVIRONMENTAL DEFECTS SHALL BE MADE UNLESS AND UNTIL THE AGGREGATE VALUE OF ALL ENVIRONMENTAL DEFECTS (HEREIN CALLED THE “AGGREGATE ENVIRONMENTAL DEFECT VALUE”) EXCEEDS ONE PERCENT (1%) OF THE BASE PURCHASE PRICE, AND ONCE THE DEDUCTIBLE IS EXCEEDED, ONLY THE VALUE OF ALL ENVIRONMENTAL DEFECTS IN EXCESS OF SUCH DEDUCTIBLE SHALL BE CONSIDERED IN APPLYING THIS SECTION 7.4. (D)           FOR PURPOSES OF THIS SECTION, THE COSTS TO CURE AN ENVIRONMENTAL DEFECT DETERMINED UNDER SECTION 7.4(B)(I) AND (II) ABOVE SHALL NOT BE COUNTED TOWARDS THE AGGREGATE ENVIRONMENTAL DEFECT VALUE. (E)           NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 7.4, THE ADJUSTMENTS ATTRIBUTABLE TO THE EFFECTS OF ALL ENVIRONMENTAL DEFECTS UPON ANY OIL AND GAS PROPERTY SHALL NOT EXCEED THE ALLOCATED VALUE OF SUCH PARTICULAR OIL AND GAS PROPERTY. (F)            ALL ENVIRONMENTAL DEFECTS NOT RAISED WITHIN THE TIME PERIOD PROVIDED IN PARAGRAPH (B) ABOVE SHALL BE WAIVED BY BUYER FOR ALL PURPOSES, INCLUDING BUT NOT LIMITED TO ARTICLE XII. 7.5           GAS IMBALANCES.  WITHIN 120 DAYS AFTER THE CLOSING DATE, SELLER AND BUYER SHALL, BASED UPON DATA AVAILABLE AT THAT TIME, DETERMINE (A) THE TOTAL AMOUNT OF OVERPRODUCTION OF GAS ATTRIBUTABLE TO AND ACCOUNTED FOR UNDER THE NAME OF THE COMPANY AND RELATED TO THE OIL AND GAS PROPERTIES (E.G., VOLUMES OF GAS TAKEN FROM THE LEASES, OR ON LANDS UNITIZED THEREWITH, BY THE COMPANY IN EXCESS OF THOSE VOLUMES WHICH THE COMPANY WOULD BE ENTITLED TO RECEIVE) AND (B) THE TOTAL AMOUNT OF UNDERPRODUCTION OF GAS ATTRIBUTABLE TO AND ACCOUNTED FOR UNDER THE NAME OF THE COMPANY AND RELATED TO THE OIL AND GAS PROPERTIES (E.G., VOLUMES OF GAS NOT TAKEN FROM THE LEASES, OR ON LANDS UNITIZED THEREWITH, DESPITE THE COMPANY’S OWNERSHIP INTEREST IN AND RIGHT TO RECEIVE SUCH VOLUMES).  IF THE TOTAL AMOUNT OF OVERPRODUCTION (AS SO DETERMINED) EXCEEDS THE TOTAL AMOUNT OF UNDERPRODUCTION (AS SO DETERMINED) THE BASE PURCHASE PRICE SHALL BE ADJUSTED DOWNWARD IN AN AMOUNT EQUAL TO US$5.72 PER MCF TIMES SUCH EXCESS. IF THE TOTAL AMOUNT OF UNDERPRODUCTION (AS SO DETERMINED) EXCEEDS THE TOTAL AMOUNT OF OVERPRODUCTION (AS SO DETERMINED) THE BASE PURCHASE PRICE SHALL BE ADJUSTED UPWARD IN AN AMOUNT EQUAL TO  US$5.72 PER MCF TIMES SUCH EXCESS. THE AMOUNT OF ANY UPWARD ADJUSTMENT SHALL BE PAID BY BUYER TO SELLER, OR THE AMOUNT OF ANY DOWNWARD ADJUSTMENT SHALL BE PAID BY SELLER TO BUYER, WITHIN FIVE DAYS AFTER DETERMINATION THEREOF. NOTWITHSTANDING THE FOREGOING, ONLY IMBALANCES SUBJECT TO LEGALLY ENFORCEABLE RIGHTS OF RECOVERY WILL BE SUBJECT TO THE DETERMINATION HEREUNDER. 25 7.6           ACCESS TO INFORMATION.  UPON REASONABLE NOTICE, THE COMPANY, FOC AND SELLER SHALL AFFORD TO BUYER’S OFFICERS, EMPLOYEES, ACCOUNTANTS, COUNSEL AND OTHER REPRESENTATIVES ACCESS, FROM THE DATE HEREOF UNTIL THE CLOSING DATE, TO ALL OF THE PROPERTIES, BOOKS, CONTRACTS, COMMITMENTS, FILES AND RECORDS OF THE COMPANY AND, TO THE EXTENT THAT THEY PERTAIN TO THE OIL AND GAS PROPERTIES, FOC, AS WELL AS TO THE COMPANY’S, SELLER’S AND FOC’S OFFICERS AND EMPLOYEES (TO THE EXTENT THAT ANY OF FOC’S OFFICERS AND EMPLOYEES ARE RESPONSIBLE FOR MATTERS PERTAINING TO THE COMPANY OR ITS ASSETS AND PROPERTIES) AND, DURING SUCH PERIOD, THE COMPANY SHALL FURNISH TO BUYER (A) A COPY OF EACH MATERIAL REPORT, SCHEDULE, REGISTRATION STATEMENT AND OTHER DOCUMENT FILED OR RECEIVED BY IT DURING SUCH PERIOD AND (B) ALL OTHER INFORMATION CONCERNING ITS BUSINESS, PROPERTIES AND PERSONNEL AS BUYER MAY REASONABLY REQUEST. BUYER AGREES THAT IT WILL NOT, AND WILL CAUSE ITS RESPECTIVE REPRESENTATIVES NOT TO, USE ANY INFORMATION OBTAINED PURSUANT TO THIS SECTION 7.6 FOR ANY PURPOSE UNRELATED TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  THE CONFIDENTIALITY AGREEMENT SHALL APPLY WITH RESPECT TO THE INFORMATION FURNISHED THEREUNDER AND HEREUNDER, AND ANY OTHER ACTIVITIES CONTEMPLATED THEREBY. BUYER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE COMPANY AND THE SELLER FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS, CAUSES OF ACTION, DEMANDS, ASSESSMENTS, LOSSES, DAMAGES, LIABILITIES, JUDGMENTS, SETTLEMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES), OF ANY NATURE WHATSOEVER ASSERTED AGAINST OR SUFFERED BY THE COMPANY OR THE SELLER RELATING TO, RESULTING FROM OR ARISING OUT OF THE CONDUCT OF BUYER OR ITS REPRESENTATIVES IN THE COURSE OF ANY EXAMINATIONS OR INSPECTIONS MADE BY BUYER OR ITS REPRESENTATIVES UNDER THIS SECTION 7.6, EXCEPT TO THE EXTENT OF GROSS NEGLIGENCE OR WILFULL MISCONDUCT ON THE PART OF COMPANY, OR ANY OF ITS EMPLOYEES, AGENTS OR AFFILIATES. 7.7           REGULATORY APPROVALS.  EACH PARTY HERETO SHALL COOPERATE AND USE ITS REASONABLE BEST EFFORTS TO PROMPTLY PREPARE AND FILE ALL NECESSARY DOCUMENTATION TO EFFECT ALL NECESSARY APPLICATIONS, NOTICES, PETITIONS, FILINGS AND OTHER DOCUMENTS, AND USE ALL COMMERCIALLY REASONABLE EFFORTS TO OBTAIN (AND WILL COOPERATE WITH EACH OTHER IN OBTAINING) ANY CONSENT, ACQUIESCENCE, AUTHORIZATION, ORDER OR APPROVAL OF, AND ANY EXEMPTION OR NONOPPOSITION BY, ANY GOVERNMENTAL ENTITY REQUIRED TO BE OBTAINED OR MADE BY COMPANY, THE SELLER OR BUYER OR ANY OF THEIR RESPECTIVE AFFILIATES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR THE TAKING OF ANY ACTION CONTEMPLATED THEREBY OR BY THIS AGREEMENT. 7.8           AGREEMENT TO DEFEND.  IN THE EVENT ANY CLAIM, ACTION, SUIT, INVESTIGATION OR OTHER PROCEEDING BY ANY GOVERNMENTAL BODY OR OTHER PERSON OR OTHER LEGAL OR ADMINISTRATIVE PROCEEDING IS COMMENCED THAT QUESTIONS THE VALIDITY OR LEGALITY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR SEEKS DAMAGES IN CONNECTION THEREWITH, THE PARTIES HEREBY AGREE TO COOPERATE AND USE THEIR COMMERCIALLY REASONABLE EFFORTS TO DEFEND AGAINST AND RESPOND THERETO. 7.9           OTHER ACTIONS.  EXCEPT AS CONTEMPLATED BY THIS AGREEMENT, NEITHER THE COMPANY, THE SELLER NOR BUYER SHALL, NOR PERMIT ANY OF ITS AFFILIATES TO, TAKE OR AGREE OR COMMIT TO TAKE ANY ACTION THAT IS REASONABLY LIKELY TO RESULT IN ANY OF ITS RESPECTIVE REPRESENTATIONS OR WARRANTIES HEREUNDER BEING UNTRUE IN ANY MATERIAL RESPECT OR IN ANY OF THE CONDITIONS TO THE TRANSACTIONS CONTEMPLATED HEREBY SET FORTH IN ARTICLE VIII NOT BEING SATISFIED.  EACH OF THE PARTIES AGREES TO USE ITS REASONABLE BEST EFFORTS TO SATISFY THE CONDITIONS TO CLOSING SET FORTH IN THIS AGREEMENT. 7.10         LIMITATION AND DISCLAIMER OF IMPLIED REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER.  THE EXPRESS REPRESENTATIONS 26 AND WARRANTIES OF THE COMPANY AND SELLER CONTAINED IN THIS AGREEMENT ARE IMPLIED, STATUTORY OR OTHERWISE.  AT OR PRIOR TO CLOSING, BUYER SHALL HAVE CONDUCTED SUCH INSPECTIONS OF THE COMPANY AND ITS ASSETS AS BUYER DEEMS NECESSARY AND SHALL HAVE SATISFIED ITSELF AS TO THE CONDITION OF THE COMPANY AND ITS ASSETS; HOWEVER, NO SUCH INSPECTION SHALL BE DEEMED BE IN LIEU OR CONSTITUTE A WAIVER OF ANY EXPRESS REPRESENTATION OR WARRANTY CONTAINED IN THIS AGREEMENT.  EXCEPT AS OTHERWISE PROVIDED IN THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, THE COMPANY AND SELLER MAKE NO WARRANTY OR REPRESENTATION, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER OR ITS REPRESENTATIVES BY THE COMPANY, SELLER OR BY THE AGENTS OR REPRESENTATIVES OF EITHER; ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS FURNISHED BY THE COMPANY, SELLER OR BY THE AGENTS OR REPRESENTATIVES OF EITHER OR OTHERWISE MADE AVAILABLE TO BUYER OR BUYER’S REPRESENTATIVES ARE PROVIDED TO OR FOR THE BENEFIT OF BUYER AS A CONVENIENCE, AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST THE COMPANY, SELLER OR ANY AGENT OR REPRESENTATIVE OF EITHER; AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT BUYER’S SOLE RISK. 7.11         CHANGE OF COMPANY NAME.  EACH OF BUYER AND THE COMPANY UNDERTAKES AND AGREES THAT PROMPTLY AFTER THE CLOSING, IT WILL TAKE ALL ACTIONS NECESSARY TO CHANGE THE NAME OF THE COMPANY TO DELETE THE USE OF THE NAME “FOREST”, ANY DERIVATIVE THEREOF AND/OR ANY LOGOS OR TRADEMARKS RELATED THERETO BY SIXTY (60) DAYS AFTER CLOSING. 7.12         ACCOUNT SIGNATORIES.  SELLER SHALL CAUSE THE COMPANY TO CHANGE THE NAMES OF THE ACCOUNTS AND THE NAMES OF THE OFFICERS, EMPLOYEES, AGENTS OR OTHER SIMILAR REPRESENTATIVES OF THE COMPANY, AS DESIGNATED BY BUYER AT OR PRIOR TO THE CLOSING, WHO THEREAFTER SHALL BE AUTHORIZED TO TRANSACT BUSINESS WITH RESPECT TO THE ACCOUNTS, SAFE DEPOSIT BOXES, LOCK BOXES OR OTHER RELATIONSHIPS WITH THE BANKS, TRUST COMPANIES, SECURITIES BROKERS AND OTHER FINANCIAL INSTITUTIONS SET FORTH IN SCHEDULE 4.17. 7.13         COOPERATION WITH FINANCING.  IN ORDER TO ASSIST WITH OBTAINING FINANCING FOR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE COMPANY SHALL PROVIDE AND SHALL USE THEIR COMMERCIALLY REASONABLE BEST EFFORTS TO CAUSE ITS REPRESENTATIVES (INCLUDING LEGAL AND ACCOUNTING ADVISORS) TO PROVIDE ALL COOPERATION REASONABLY REQUESTED BY BUYER IN CONNECTION WITH SUCH FINANCING, INCLUDING, BUT NOT LIMITED TO, (I) ASSISTING BUYER AND ITS FINANCING SOURCES IN PREPARING ANY OFFERING DOCUMENT AND MATERIALS FOR RATING AGENCY PRESENTATIONS, (II) FURNISHING INFORMATION FOR THE PREPARATION OF FINANCIAL STATEMENTS, PRO FORMA STATEMENTS AND OTHER FINANCIAL DATA CUSTOMARILY INCLUDED IN OFFERINGS OF THE TYPE CONTEMPLATED BY THE FINANCING, AND (III) COOPERATION WITH PROSPECTIVE LENDERS IN PERFORMING THEIR DUE DILIGENCE.  BUYER SHALL USE ITS COMMERCIALLY REASONABLE BEST EFFORTS TO OBTAIN THE DEBT FINANCING (OR, IF THE DEBT FINANCING IS NOT AVAILABLE TO 27 BUYER, ALTERNATIVE ACQUISITION FINANCING SUFFICIENT TO FUND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT) AND TO OBTAIN THE REQUIRED CONSENT UNDER BUYER’S CREDIT AND GUARANTY AGREEMENT DATED NOVEMBER 30, 2006 WITH J. ARON & COMPANY (THE “PERL CREDIT AGREEMENT”). 7.14         HEDGE ASSUMPTION. BETWEEN THE DATE HEREOF AND THE CLOSING DATE, SELLER AND FOC WILL USE REASONABLE COMMERCIAL EFFORTS, AT NO COST TO SELLER OR FOC, TO ASSIST BUYER IN FINALIZING ITS HEDGING STRATEGY FOLLOWING CLOSING, INCLUDING EFFORTS TO ASSIGN AND NOVATE ALL OF THE FOREST HEDGES TO A FINANCIAL COUNTERPARTY OF BUYER’S CHOOSING.  IN THE EVENT THAT BUYER FAILS TO SO NOVATE AND ASSIGN ALL OF THE FOREST HEDGES, BUYER SHALL HAVE THE FOLLOWING OPTION: BETWEEN THE DATE OF EXECUTION HEREOF AND FIVE BUSINESS DAYS PRIOR TO CLOSING, BUYER SHALL ELECT EITHER: (A)           TO HAVE THE COMPANY ASSIGN AND NOVATE, AT NO COST AND WITH NO FURTHER LIABILITY OR OBLIGATION TO BUYER OR THE COMPANY, ALL OF THE FOREST HEDGES TO FOC; OR (B)           TO HAVE THE COMPANY ASSIGN AND NOVATE, AT NO COST AND WITH NO HEDGES TO FOC, WHEREUPON FOC SHALL IMMEDIATELY ENTER INTO IDENTICAL TRANSACTIONS (EACH, A “MIRROR HEDGE”) WITH BUYER, EACH OF WHICH SHALL BE SUPPORTED BY CUSTOMARY DERIVATIVE AGREEMENTS AND SHALL PROVIDE BUYER THE SAME ECONOMIC BENEFITS, RIGHTS AND OBLIGATIONS THAT THE COMPANY WOULD HAVE UNDER ALL OF THE FOREST HEDGES BUT FOR THE NOVATION TO FOC; PROVIDED, HOWEVER, THAT SUCH MIRROR HEDGE SHALL HAVE A TERM OF NO MORE THAN 60 DAYS. ARTICLE VIII CONDITIONS TO CLOSING 8.1           BUYER’S CONDITIONS.  UNLESS OTHERWISE WAIVED IN WRITING PRIOR TO THE CLOSING, THE OBLIGATION OF BUYER TO COMPLETE THE CLOSING IS SUBJECT TO FULFILLMENT PRIOR TO OR AT THE CLOSING OF EACH OF THE FOLLOWING CONDITIONS: (A)           NO LEGAL PROCEEDING.  AT THE CLOSING, NO LEGAL PROCEEDING SHALL BE PENDING OR THREATENED SEEKING TO ENJOIN OR PREVENT, NOR SHALL AN INJUNCTION, ORDER OR OFFICIAL ACTION HAVE BEEN ISSUED PROHIBITING CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY. (B)           BANK ACCOUNTS.  SELLER SHALL HAVE CAUSED THE COMPANY TO CHANGE THE AUTHORIZED ACCOUNT SIGNATORIES AS CONTEMPLATED BY SECTION 7.12. (C)           FULFILLMENT OF OBLIGATIONS.  SELLER SHALL HAVE DULY PERFORMED OR COMPLIED WITH ALL OF THE OBLIGATIONS AND COVENANTS TO BE PERFORMED OR TO WHICH COMPLIANCE IS REQUIRED UNDER THE TERMS OF THIS AGREEMENT AT OR PRIOR TO THE CLOSING DATE. (D)           ACCURACY OF REPRESENTATIONS AND WARRANTIES.  THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER SET FORTH HEREIN SHALL BE TRUE AND CORRECT (WITHOUT GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR “MATERIAL ADVERSE EFFECT” SET FORTH THEREIN) AT AND AS OF THE CLOSING DATE, AS IF MADE AT AND AS OF SUCH TIME EXCEPT WHERE THE FAILURE OF SUCH REPRESENTATIONS AND WARRANTIES TO BE SO TRUE AND CORRECT (WITHOUT GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR “MATERIAL ADVERSE EFFECT” SET FORTH THEREIN) 28 INDIVIDUALLY OR IN THE AGGREGATE HAS NOT HAD, AND WOULD NOT BE REASONABLY LIKELY TO HAVE OR RESULT IN, A MATERIAL ADVERSE EFFECT ON THE COMPANY. (E)           CLOSING DELIVERIES.  SELLER OR THE COMPANY AS IS APPROPRIATE SHALL HAVE DELIVERED AT OR BEFORE CLOSING ALL OF THE ITEMS LISTED IN SECTION 9.1. (F)            OTHER ITEMS.  BUYER SHALL HAVE RECEIVED (I) THE PROCEEDS OF THE DEBT FINANCING OR ALTERNATIVE FINANCING SUFFICIENT TO FUND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND (II) THE REQUIRED CONSENT UNDER THE PERL CREDIT AGREEMENT. 8.2           SELLER’S CONDITIONS.  UNLESS OTHERWISE WAIVED IN WRITING PRIOR TO CLOSING, THE OBLIGATION OF SELLER TO COMPLETE THE CLOSING IS SUBJECT TO FULFILLMENT PRIOR TO OR AT CLOSING OF EACH OF THE FOLLOWING CONDITIONS. (A)           NO LEGAL PROCEEDINGS.  AT THE CLOSING, NO LEGAL PROCEEDING SHALL BE PENDING OR THREATENED SEEKING TO ENJOIN OR PREVENT, NOR SHALL AN INJUNCTION, TRANSACTIONS CONTEMPLATED HEREBY. (B)           ACCURACY OF REPRESENTATIONS AND WARRANTIES.  THE REPRESENTATIONS AND WARRANTIES OF BUYER SET FORTH HEREIN SHALL BE TRUE AND CORRECT (WITHOUT GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR “MATERIAL ADVERSE EFFECT” SET FORTH THEREIN) AT AND AS OF THE CLOSING DATE, AS IF MADE AT AND AS OF SUCH TIME EXCEPT WHERE THE FAILURE OF SUCH REPRESENTATIONS AND WARRANTIES TO BE SO TRUE AND CORRECT (WITHOUT GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR “MATERIAL ADVERSE EFFECT” SET FORTH THEREIN) INDIVIDUALLY OR IN THE AGGREGATE HAS NOT HAD, AND WOULD NOT BE REASONABLY LIKELY TO HAVE OR RESULT IN, A MATERIAL ADVERSE EFFECT ON BUYER. (C)           CLOSING DELIVERIES.  BUYER SHALL HAVE DELIVERED AT OR BEFORE CLOSING ALL OF THE ITEMS LISTED IN SECTION 9.2. ARTICLE IX DELIVERIES AT CLOSING 9.1           DELIVERIES BY SELLER TO BUYER.  AT THE CLOSING, SELLER OR THE COMPANY AS IS APPROPRIATE SHALL DELIVER, OR SHALL CAUSE TO BE DELIVERED, TO BUYER THE FOLLOWING: (A)           APPROPRIATE EVIDENCE OF THE MEMBERSHIP INTERESTS, AND SUCH INSTRUMENTS OR DOCUMENTS EVIDENCING THE SALE, ASSIGNMENT, TRANSFER AND CONVEYANCE BY THE SELLER TO BUYER OF THE MEMBERSHIP INTERESTS IN ACCORDANCE WITH THE TERMS HEREOF; (B)           A CERTIFICATE OF BOTH THE COMPANY AND THE SELLER, DATED AS OF THE CLOSING DATE, SETTING FORTH THOSE RESOLUTIONS AUTHORIZING THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND CERTIFYING THAT SUCH RESOLUTIONS WERE DULY ADOPTED AND HAVE NOT BEEN RESCINDED OR AMENDED AS OF THE CLOSING DATE; 29 (C)           CERTIFICATE OF BOTH THE COMPANY AND THE SELLER ATTESTING AS TO THE INCUMBENCY AND SIGNATURE OF EACH OFFICER OF THE COMPANY AND THE SELLER, AS APPLICABLE, WHO SHALL EXECUTE THIS AGREEMENT AND ANY OTHER AGREEMENT IN CONNECTION HEREWITH ON BEHALF OF THE COMPANY OR THE SELLER, AS THE CASE MAY BE, AND CERTIFYING AS BEING COMPLETE AND CORRECT THE COPIES ATTACHED TO SUCH CERTIFICATE OF THE COMPANY’S CONSTITUENT DOCUMENTS, EACH AS IN EFFECT ON SUCH DATE; (D)           A CERTIFICATE OF EXISTENCE OF THE COMPANY FROM THE SECRETARY OF STATE OF THE STATE OF DELAWARE AND A CERTIFICATE OF THE GOOD STANDING OF THE COMPANY FROM STATE OF DELAWARE, AND A CERTIFICATE OF QUALIFICATION OF THE COMPANY AS AN ENTITY AUTHORIZED TO DO BUSINESS IN ALASKA, IN EACH CASE DATED AS OF A DATE NOT EARLIER THAN 10 DAYS PRIOR TO THE CLOSING DATE; (E)           THE ORIGINALS OF ALL MINUTE BOOKS, MEMBERSHIP INTERESTS TRANSFER RECORDS, ELECTRONIC DATA AND CORPORATE AND ALL OTHER RECORDS OF THE COMPANY, INCLUDING BUT NOT LIMITED TO, ALL LAND, GEOLOGICAL, ENGINEERING AND GEOPHYSICAL WORK FILES RELATING TO THE COMPANY’S OIL AND GAS PROPERTIES; (F)            PAY-OFF LETTERS FROM CREDIT SUISSE, JP MORGAN CHASE AND ANY OTHER PROVIDERS OF COMPANY DEBT IN FORM AND SUBSTANCE SATISFACTORY TO BUYER AND ITS FINANCING SOURCE, SPECIFYING, AMONG OTHER THINGS, THAT ALL OF THE CREDIT AGREEMENT AND ALL OTHER LOAN DOCUMENTS RELATED THERETO SHALL BE CANCELED UPON PAYMENT OF THE PAY-OFF AMOUNTS SET FORTH THEREIN, TOGETHER WITH EVIDENCE THAT ALL LIENS IN FAVOR OF CREDIT SUISSE, JP MORGAN AND ANY OTHER SECURED LENDERS HAVE BEEN OR, UPON PAYMENT OF THE PAY-OFF AMOUNTS SET FORTH THEREIN WILL BE, RELEASED (THE “PAY-OFF LETTERS”); (G)           GENERAL RELEASES OF CLAIMS AGAINST THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO BUYER AND ITS FINANCING SOURCE, FROM SELLER, FOC AND THEIR AFFILIATES, AND ALL OFFICERS AND DIRECTORS OF THE COMPANY; (H)           THE RESIGNATION OF EACH OF THE PRESENT DIRECTORS AND OFFICERS OF THE COMPANY; AND (I)            ALL CONSENTS OR WAIVERS REFERRED TO ON SCHEDULE 4.5. 9.2           DELIVERIES BY BUYER TO SELLER AND THE COMPANY.  AT THE CLOSING, IN ADDITION TO MAKING THE PAYMENTS DESCRIBED IN SECTIONS 3.2 AND 3.3, BUYER SHALL DELIVER TO SELLER THE FOLLOWING: (A)           A CERTIFICATE OF A DULY AUTHORIZED REPRESENTATIVE OF BUYER, DATED THE CLOSING DATE, AUTHORIZING THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND CERTIFYING THAT SUCH AUTHORIZATIONS ARE IN FULL FORCE AND EFFECT AND HAVE NOT BEEN RESCINDED OR AMENDED AS OF THE CLOSING DATE; (B)           EVIDENCE SATISFACTORY TO SELLER INDICATING (I) PAYMENT IN FULL OF THE AMOUNTS REFLECTED IN THE PAY-OFF LETTERS OR (II) A COMPLETE AND GENERAL RELEASE OF THE SELLER AND FOC FROM ALL LIABILITIES AND OBLIGATIONS UNDER THE COMPANY DEBT; AND 30 (C)           A CERTIFICATE OF A DULY AUTHORIZED REPRESENTATIVE OF BUYER ATTESTING AS TO THE INCUMBENCY AND SIGNATURE OF EACH PERSON WHO SHALL EXECUTE THIS AGREEMENT OR ANY OTHER MATERIAL DOCUMENT RELATED TO THIS TRANSACTION. ARTICLE X TRANSITION OPERATIONS 10.1         TRANSITION OPERATIONS.  WITH RESPECT TO ANY PORTION OF THE OIL AND GAS PROPERTIES OPERATED BY COMPANY OR ITS AGENT, AFTER CLOSING AND UNTIL SUCH TIME AS BUYER MAY BE RECOGNIZED AND APPROVED BY THE APPLICABLE FEDERAL OR STATE AGENCY AS OPERATOR OF SUCH PORTION OF THE OIL AND GAS PROPERTIES, FOC SHALL OPERATE SUCH PORTION OF THE OIL AND GAS PROPERTIES FOR THE ACCOUNT OF BUYER, UNDER THE TERMS OF THE INTERCOMPANY SERVICES AGREEMENT LISTED ON SCHEDULE 4.7 BETWEEN THE COMPANY AND FOC.  IN CONNECTION WITH SUCH OPERATIONS UNDER THE INTERCOMPANY SERVICES AGREEMENT, THE COMPANY SHALL PAY FOC CONSISTENT WITH THE PROVISIONS OF THEREOF, PLUS AN ADDITIONAL FEE EQUAL TO US$200,000 PER MONTH, PROVIDED THAT SUCH ADDITIONAL FEES SHALL BEGIN TO ACCRUE FROM THE FIRST DAY OF THE FIRST MONTH BEGINNING AT LEAST 90 DAYS AFTER CLOSING. UPON BUYER BEING RECOGNIZED AS OPERATOR AS TO ALL OF THE OIL AND GAS PROPERTIES, BUYER SHALL DELIVER TO FOC WRITTEN NOTICE OF ITS INTENTION TO ASSUME OPERATIONS, DESIGNATING THE DATE OF ITS INTENDED ASSUMPTION.  ON SUCH DATE, THE INTERCOMPANY SERVICES AGREEMENT SHALL IMMEDIATELY TERMINATE AND BE OF NO FURTHER FORCE AND EFFECT, WITH NO FURTHER LIABILITY THEREUNDER ON THE PART OF EITHER BUYER OR THE COMPANY, EXCEPT FOR REIMBURSEMENTS AND A PRO RATA PORTION OF THE OPERATING FEE FOR THE PERIOD THROUGH THE DATE OF TERMINATION AND ANY INDEMNITY PROTECTIONS THAT SURVIVE TERMINATION PER THE TERMS OF THE INTERCOMPANY SERVICES AGREEMENT. ARTICLE XI TERMINATION 11.1         TERMINATION.  THIS AGREEMENT MAY BE TERMINATED AND THE TRANSACTIONS CONTEMPLATED HEREBY MAY BE ABANDONED AT ANY TIME PRIOR TO THE CLOSING DATE: (A)           BY MUTUAL WRITTEN CONSENT OF THE COMPANY, SELLER AND BUYER; (B)           BY ANY OF THE COMPANY, SELLER OR BUYER IF ANY GOVERNMENTAL ENTITY SHALL HAVE ISSUED ANY INJUNCTION OR TAKEN ANY OTHER ACTION PERMANENTLY RESTRAINING, ENJOINING OR OTHERWISE PROHIBITING THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND SUCH INJUNCTION OR OTHER ACTION SHALL HAVE (C)           (I) BY SELLER IN THE EVENT OF A MATERIAL BREACH BY THE BUYER OF ONE OR MORE PROVISIONS OF THIS AGREEMENT, IN PARTICULAR THE REPRESENTATIONS AND WARRANTIES IN ARTICLE VI ABOVE AND (II) BY BUYER IN THE EVENT OF A MATERIAL BREACH BY EITHER THE SELLER OR THE COMPANY OF ONE OR MORE PROVISIONS OF THIS AGREEMENT, IN PARTICULAR THE REPRESENTATIONS AND WARRANTIES IN ARTICLES IV AND V ABOVE; (D)           BY SELLER OR BUYER IF THE TOTAL AMOUNT OF UNCURED AND UNWAIVED TITLE DEFECTS AND/OR ENVIRONMENTAL DEFECTS EXCEEDS 10% OF THE BASE PURCHASE PRICE; 31 11.2      EFFECT OF TERMINATION. (A)           IN THE EVENT OF TERMINATION OF THIS AGREEMENT BY SELLER PURSUANT TO SECTION 11.1(C)(I) ABOVE OR IF ALL OTHER CLOSING CONDITIONS HAVE BEEN SATISFIED (OTHER THAN THOSE THAT CAN ONLY BE SATISFIED AT CLOSING), EXCEPT THAT THE CONDITION IN SECTION 8.1(F) HAS NOT BEEN SATISFIED, SELLER SHALL BE ENTITLED TO RETAIN THE DEPOSIT, TOGETHER WITH ANY INTEREST EARNED THEREON. THIS SHALL BE IN THE NATURE OF LIQUIDATED DAMAGES FOR BUYER’S BREACH, AND NOT A PENALTY. IF THE CLOSING DOES NOT OCCUR BY JULY 31, 2007 OR IS TERMINATED AS A RESULT OF A BREACH BY BUYER AS CONTEMPLATED BY SECTION 11.1(C)(I) ABOVE OR IF THE FAILURE TO CLOSE IS THE RESULT OF THE CONDITION IN SECTION 8.1(F) NOT BEING SATISFIED AS CONTEMPLATED ABOVE, THE SELLER’S RETENTION OF THE DEPOSIT IS SELLER’S SOLE REMEDY AGAINST THE BUYER.  HOWEVER, IF THIS AGREEMENT DOES NOT CLOSE ON THE DATE SPECIFIED ABOVE OR IS TERMINATED DUE THE NEGLIGENCE, FAULT OR WILLFUL FAILURE OF THE SELLER OR FOR THE REASONS DESCRIBED IN SECTION 11.1(A), (B), (C)(II), OR (D), THE DEPOSIT, TOGETHER WITH ANY INTEREST EARNED THEREON SHALL BE DELIVERED TO BUYER. (B)           IN THE EVENT OF TERMINATION OF THIS AGREEMENT BY ANY PARTY HERETO AS PROVIDED IN SECTION 11.1, THIS AGREEMENT SHALL FORTHWITH BECOME VOID AND THERE SHALL BE NO LIABILITY OR OBLIGATION ON THE PART OF ANY PARTY HERETO EXCEPT (I) UNDER THE CONFIDENTIALITY AGREEMENT, (II) WITH RESPECT TO THIS SECTION 11.2, THE SECOND AND THIRD SENTENCES OF SECTION 7.6, AND SECTION 14.10, AND (III) TO THE EXTENT THAT SUCH TERMINATION RESULTS FROM THE WILLFUL BREACH BY A PARTY HERETO OF ANY OF ITS REPRESENTATIONS AND WARRANTIES OR OF ANY OF ITS COVENANTS OR AGREEMENTS CONTAINED IN THIS AGREEMENT. ARTICLE XII INDEMNIFICATION 12.1         SELLER AND FOC INDEMNIFICATION.  SUBJECT TO THE LIMITATIONS SET FORTH IN SECTION 12.4 HEREOF, THE SELLER AND FOC HEREBY JOINTLY AND SEVERALLY AGREE TO INDEMNIFY AND HOLD BUYER AND EACH OF ITS AFFILIATES, AND THE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS THEREOF, HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, JUDGMENTS, CAUSES OF ACTION, LIABILITIES, OBLIGATIONS, GUARANTEES, DAMAGES, LOSSES, DEFICIENCIES, COSTS, PENALTIES, INTEREST AND EXPENSES, INCLUDING WITHOUT LIMITATION, COST OF INVESTIGATION AND DEFENSE, AND REASONABLE ATTORNEYS’ FEES AND EXPENSES, NET OF ANY COLLECTED INSURANCE PROCEEDS (COLLECTIVELY, “LOSSES”), ARISING OUT OF, BASED UPON, ATTRIBUTABLE TO OR RESULTING FROM ANY, BREACH OF A REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT OF THE COMPANY OR SELLER CONTAINED IN OR MADE PURSUANT TO THIS AGREEMENT (WITHOUT GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR “MATERIAL ADVERSE EFFECT” SET FORTH THEREIN). 12.2         BUYER INDEMNIFICATION.  BUYER HEREBY AGREES TO INDEMNIFY AND HOLD SELLER, THE COMPANY, EACH OF THEIR RESPECTIVE AFFILIATES AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS HARMLESS FROM AND AGAINST ANY AND ALL LOSSES ARISING OUT OF, BASED UPON, ATTRIBUTABLE TO OR RESULTING FROM ANY BREACH OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT ON THE PART OF BUYER CONTAINED IN OR MADE PURSUANT TO THIS AGREEMENT (WITHOUT GIVING EFFECT TO THEREIN). 32 12.3         INDEMNIFICATION PROCEDURES. (A)           IF ANY THIRD PARTY ASSERTS ANY CLAIM AGAINST A PARTY TO THIS AGREEMENT WHICH, IF SUCCESSFUL, WOULD ENTITLE THE PARTY TO INDEMNIFICATION UNDER THIS ARTICLE XII (THE “INDEMNIFIED PARTY”), IT SHALL GIVE NOTICE OF SUCH CLAIM TO THE PARTY FROM WHOM IT INTENDS TO SEEK INDEMNIFICATION (THE “INDEMNIFYING PARTY”) AND THE INDEMNIFYING PARTY SHALL HAVE THE RIGHT TO ASSUME THE DEFENSE AND, SUBJECT TO SECTION 12.3(B), SETTLEMENT OF SUCH CLAIM AT ITS EXPENSE BY REPRESENTATIVES OF ITS OWN CHOOSING ACCEPTABLE TO THE INDEMNIFIED PARTY (WHICH ACCEPTANCE SHALL NOT BE UNREASONABLY WITHHELD).  THE FAILURE OF THE INDEMNIFIED PARTY TO NOTIFY THE INDEMNIFYING PARTY OF SUCH CLAIM SHALL NOT RELIEVE THE INDEMNIFYING PARTY OF ANY LIABILITY THAT THE INDEMNIFYING PARTY MAY HAVE WITH RESPECT TO SUCH CLAIM, EXCEPT TO THE EXTENT THAT THE DEFENSE IS MATERIALLY PREJUDICED BY SUCH FAILURE.  THE INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO PARTICIPATE IN THE DEFENSE OF SUCH CLAIM AT ITS EXPENSE (WHICH EXPENSE SHALL NOT BE DEEMED TO BE A LOSS), IN WHICH CASE THE INDEMNIFYING PARTY SHALL COOPERATE IN PROVIDING INFORMATION TO AND CONSULTING WITH THE INDEMNIFIED PARTY ABOUT THE CLAIM.  IF THE INDEMNIFYING PARTY FAILS OR DOES NOT ASSUME THE DEFENSE OF ANY SUCH CLAIM WITHIN 20 DAYS AFTER WRITTEN NOTICE OF SUCH CLAIM HAS BEEN GIVEN BY THE INDEMNIFIED PARTY TO THE INDEMNIFYING PARTY, THE INDEMNIFIED PARTY MAY DEFEND AGAINST OR, SUBJECT TO SECTION 12.3(B), SETTLE SUCH CLAIM WITH COUNSEL OF ITS OWN CHOOSING AT THE EXPENSE (TO THE EXTENT REASONABLE UNDER THE CIRCUMSTANCES) OF THE INDEMNIFYING PARTY. (B)           IF THE INDEMNIFYING PARTY DOES NOT ASSUME THE DEFENSE OF A CLAIM INVOLVING THE ASSERTED LIABILITY OF THE INDEMNIFIED PARTY UNDER THIS ARTICLE XII, NO SETTLEMENT OF SUCH CLAIM SHALL BE MADE BY THE INDEMNIFIED PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF THE INDEMNIFYING PARTY, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  IF THE INDEMNIFYING PARTY ASSUMES THE DEFENSE OF SUCH A CLAIM, (I) NO SETTLEMENT THEREOF MAY BE EFFECTED BY THE INDEMNIFYING PARTY WITHOUT THE INDEMNIFIED PARTY’S CONSENT UNLESS (A) THERE IS NO FINDING OR ADMISSION OF ANY VIOLATION OF LAW OR ANY VIOLATION OF THE RIGHTS OF ANY PERSON AND NO EFFECT ON ANY OTHER CLAIM THAT MAY BE MADE AGAINST THE INDEMNIFIED PARTY, (B) THE SOLE RELIEF PROVIDED IS MONETARY DAMAGES THAT HAVE BEEN PAID IN FULL BY THE INDEMNIFYING PARTY AND (C) THE SETTLEMENT INCLUDES, AS AN UNCONDITIONAL TERM THEREOF, THE GIVING BY THE CLAIMANT OR THE PLAINTIFF TO THE INDEMNIFIED PARTY OF A RELEASE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE INDEMNIFIED PARTY, FROM ALL LIABILITY IN RESPECT OF SUCH CLAIM, AND (II) THE INDEMNIFIED PARTY SHALL HAVE NO LIABILITY WITH RESPECT TO ANY COMPROMISE OR SETTLEMENT THEREOF EFFECTED WITHOUT ITS CONSENT. 12.4         LIMITS ON INDEMNIFICATION.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT: (A)           SELLER SHALL NOT HAVE ANY OBLIGATION TO PROVIDE INDEMNIFICATION FOR LOSSES ARISING OUT OF BREACHES OF REPRESENTATIONS AND WARRANTIES, UNLESS THE AMOUNT OF ALL SUCH LOSSES PURSUANT TO SECTION 12.1 EXCEEDS US$250,000 (THE “BASKET AMOUNT”).  THE MAXIMUM AGGREGATE AMOUNT FOR WHICH SELLER MAY BE LIABLE UNDER THIS ARTICLE XII FOR BREACHES OF REPRESENTATIONS AND WARRANTIES SHALL BE LIMITED TO TWENTY-FIVE PERCENT (25%) OF THE BASE PURCHASE PRICE. THIS PARAGRAPH (A) SHALL NOT APPLY TO LOSSES SUFFERED BY A BUYER INDEMNIFIED PARTY PURSUANT TO SECTIONS 4.3, 4.4 (BUT AT ONLY AS TO THE LAST SENTENCE THEREOF), 4.8, 4.9, 4.10, 4.11, 4.13, 4.25, 5.4, 5.6, 5.7 AND 5.8. 33 (B)           BUYER SHALL NOT HAVE ANY OBLIGATION TO PROVIDE INDEMNIFICATION FOR LOSSES PURSUANT TO SECTION 12.2 ARISING OUT OF OR RELATED TO BREACHES OF REPRESENTATIONS AND WARRANTIES UNLESS THE AGGREGATE AMOUNT OF ALL SUCH LOSSES PURSUANT TO SUCH SECTION EXCEEDS THE BASKET AMOUNT IN WHICH CASE BUYER SHALL BE ONLY LIABLE TO SELLER FOR THE AMOUNT OF SUCH LOSSES THAT EXCEED THE BASKET AMOUNT.  THE MAXIMUM AGGREGATE AMOUNT FOR WHICH BUYER MAY BE LIABLE UNDER THIS ARTICLE XII SHALL BE LIMITED TO TWENTY-FIVE PERCENT (25%) OF THE BASE PURCHASE PRICE. (C)           EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF (I) THE COMPANY IN SECTIONS 4.21 AND 4.22, THE EXCLUSIVE REMEDIES FOR WHICH ARE PROVIDED IN SECTIONS 7.3 AND 7.4, RESPECTIVELY, (II) SELLER CONTAINED IN SECTION 5.6, WHICH SHALL SURVIVE INDEFINITELY, AND SECTION 4.25, WHICH SHALL SURVIVE UNTIL THE EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS, THE RESPECTIVE REPRESENTATIONS OF THE COMPANY, SELLER AND BUYER CONTAINED IN THIS AGREEMENT SHALL SURVIVE THE CLOSING FOR A PERIOD OF ONE YEAR, AND THEREAFTER NONE OF THE COMPANY, SELLER OR BUYER SHALL HAVE ANY LIABILITY WHATSOEVER (WHETHER PURSUANT TO THIS AGREEMENT OR OTHERWISE) WITH RESPECT TO SUCH REPRESENTATION OR WARRANTY.  THIS SECTION 12.4(C) SHALL HAVE NO EFFECT UPON ANY OTHER OBLIGATIONS OF THE PARTIES HERETO UNDER THIS AGREEMENT, WHETHER TO BE PERFORMED BEFORE, AT OR AFTER THE CLOSING, WHICH SHALL SURVIVE UNTIL FULFILLED OR THE EXPIRATION IN (D)           ANY PAYMENTS MADE TO SELLER, THE COMPANY OR THE BUYER PURSUANT TO THIS ARTICLE XII SHALL CONSTITUTE AN ADJUSTMENT OF THE PURCHASE PRICE FOR TAX PURPOSES AND SHALL BE TREATED AS SUCH BY THE BUYER AND SELLER ON THEIR TAX RETURNS. (E)           AN INDEMNIFYING PARTY SHALL NOT BE LIABLE UNDER THIS ARTICLE XII FOR LOSSES RESULTING FROM ANY EVENT RELATING TO A BREACH OF A REPRESENTATION OR WARRANTY IF THE INDEMNIFYING PARTY CAN ESTABLISH THAT THE INDEMNIFIED PARTY HAD ACTUAL KNOWLEDGE ON OR BEFORE THE CLOSING DATE OF SUCH EVENT. (F)            NOTWITHSTANDING ANYTHING ELSE CONTAINED IN THIS ARTICLE XII, SELLER HEREBY AGREES TO INDEMNIFY AND HOLD BUYER AND EACH OF ITS AFFILIATES (INCLUDING THE COMPANY), AND THE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS THEREOF, HARMLESS FROM AND AGAINST ANY AND ALL LOSSES ARISING FROM ANY LITIGATION (I) WHICH ARISES OUT OF ACTIONS, CONDUCT OR EVENTS WHICH OCCUR PRIOR TO THE EFFECTIVE DATE OR (II) THAT WAS NOT DISCLOSED TO BUYER AND WHICH ARISES OUT OF ACTIONS, CONDUCT OR EVENTS THAT OCCURRED BETWEEN THE EFFECTIVE DATE AND THE CLOSING DATE.  THIS INDEMNITY SHALL BE SUBJECT TO THE PROCEDURES OF SECTION 12.3, AND SHALL SURVIVE INDEFINITELY. ARTICLE XIII TAXES 13.1         SALES AND USE TAXES; PROPERTY TAXES.  THE PURCHASE PRICE, AS ADJUSTED HEREIN, IS EXCLUSIVE OF ANY SALES TAXES AND OTHER TRANSFER TAXES IN CONNECTION WITH THE SALE OF THE MEMBERSHIP INTERESTS.  BUYER SHALL BEAR THE COST OF ALL APPLICABLE SALES TAXES, REAL PROPERTY TRANSFER TAXES, AND FILING AND RECORDING FEES PAYABLE AS A RESULT OF THE TRANSFER OF THE MEMBERSHIP INTERESTS.  IF AT ANY TIME AFTER THE CLOSING, SELLER OR ANY AFFILIATE SHALL BECOME LIABLE FOR TAXES OR 34 FEES FOR WHICH BUYER IS RESPONSIBLE UNDER THIS PARAGRAPH, BUYER SHALL PROMPTLY REIMBURSE SELLER OR SUCH AFFILIATE FOR SUCH TAXES AND FEES, INCLUDING ANY PENALTIES AND INTEREST THEREON.  BUYER SHALL DEFEND, INDEMNIFY AND HOLD SELLER HARMLESS WITH RESPECT TO THE PAYMENT OF ANY SUCH TAXES AND FEES, INCLUDING ANY INTEREST OR PENALTIES ASSESSED THEREON. 13.2         TAX PROCEEDINGS.  IN THE EVENT SELLER RECEIVES NOTICE OF ANY PAYMENTS DUE, CLAIM, ADJUSTMENT OR OTHER PROCEEDING RELATING TO REAL OR PERSONAL PROPERTY TAXES FOR THE YEAR IN WHICH THE EFFECTIVE DATE OCCURS, SELLER SHALL NOTIFY BUYER IN WRITING WITHIN 30 DAYS OF RECEIVING NOTICE THEREOF.  AS TO ANY SUCH TAXES BUYER SHALL, AT BUYER’S EXPENSE, CONTROL OR SETTLE THE CONTEST OF SUCH EXAMINATION, CLAIM, ADJUSTMENT, OR OTHER PROCEEDING, AND SHALL INDEMNIFY SELLER AGAINST ALL LOSSES, DAMAGES, COSTS, EXPENSES, LIABILITIES, CLAIMS, DEMANDS, PENALTIES, FINES, ASSESSMENTS, SETTLEMENTS, AND ANY RELATED EXPENSES IN CONNECTION THEREWITH.  IF, ON EXECUTION OF THIS AGREEMENT, SELLER OR THE COMPANY IS ACTIVELY DISPUTING ANY REAL OR PERSONAL PROPERTY TAX ASSESSMENTS INVOLVING THE OIL AND GAS PROPERTIES FOR THE YEAR IN WHICH THE EFFECTIVE DATE OCCURS, SELLER SHALL FULLY INFORM BUYER OF THE BASIS FOR, AND STATUS OF, THE DISPUTE AND SHALL PERMIT BUYER TO DIRECT AND/OR PARTICIPATE IN THE DISPUTE TO THE FULL 13.3         REAL AND PERSONAL PROPERTY TAXES.  ALL AD VALOREM TAXES, REAL PROPERTY TAXES AND PERSONAL PROPERTY TAXES (“REAL AND PERSONAL PROPERTY TAXES”) FOR THE YEAR IN WHICH THE EFFECTIVE DATE OCCURS SHALL BE APPORTIONED AS OF THE EFFECTIVE DATE BETWEEN SELLER AND BUYER.  SELLER SHALL BE LIABLE FOR THE PORTION OF SUCH REAL AND PERSONAL PROPERTY TAXES BASED UPON THE NUMBER OF DAYS IN THE YEAR OCCURRING PRIOR TO THE EFFECTIVE DATE, AND BUYER SHALL BE LIABLE FOR THE PORTION OF SUCH TAXES BASED UPON THE NUMBER OF DAYS IN THE YEAR OCCURRING ON AND AFTER THE EFFECTIVE DATE.  AT LEAST 5 DAYS PRIOR TO CLOSING, SELLER WILL PROVIDE BUYER WITH THE AMOUNT OF REAL AND PERSONAL PROPERTY TAXES PAID BY SELLER WITH RESPECT TO THE YEAR WHICH INCLUDES THE EFFECTIVE DATE AND THE  AMOUNT OF SUCH TAXES ALLOCABLE TO BUYER, WHICH AMOUNT SHALL BE DEDUCTED FROM THE PURCHASE PRICE AT CLOSING. 13.4         PROPERTY TAX REPORTING.  COMPANY HAS, OR WILL HAVE, FILED ANY SUCH RENDITIONS, REPORTS, OR RETURNS REQUIRED TO BE FILED WITH RESPECT TO REAL AND PERSONAL PROPERTY TAXES BEFORE CLOSING.  BUYER SHALL FILE ALL REPORTS AND RETURNS REQUIRED TO BE FILED OR SUBMITTED AFTER CLOSING THAT ARE INCIDENT TO REAL AND PERSONAL PROPERTY TAXES ASSESSED FOR THE YEAR IN WHICH THE EFFECTIVE DATE OCCURS BUT THAT ARE NOT SUBMITTED BY SELLER PRIOR TO THE CLOSING DATE.  BUYER SHALL PAY ANY ASSESSED REAL AND PERSONAL PROPERTY TAXES ASSESSED AFTER CLOSING AND SHALL INVOICE SELLER FOR ITS ALLOCABLE SHARE OF SUCH TAXES, IF ANY, PURSUANT TO SECTION 13.3 ABOVE, WHICH INVOICE SHALL BE PAID PROMPTLY BY SELLER. 13.5         PRODUCTION TAXES.  ALL PRODUCTION TAXES (INCLUDING DEDUCTIONS, CREDITS OR REFUNDS PERTAINING THERETO) ATTRIBUTABLE TO THE OWNERSHIP OR OPERATION OF, OR PRODUCTION AND REVENUE FROM, THE OIL AND GAS PROPERTIES PRIOR TO THE EFFECTIVE DATE ARE SELLER’S RESPONSIBILITY, AND SHALL BE ALLOCATED TO AND PAID BY SELLER. ALL PRODUCTION TAXES (INCLUDING DEDUCTIONS, CREDITS OR REFUNDS PERTAINING THERETO) ATTRIBUTABLE TO THE OWNERSHIP OR OPERATION OF, OR PRODUCTION AND REVENUE FROM, THE OIL AND GAS PROPERTIES ON AND AFTER THE EFFECTIVE DATE ARE THE RESPONSIBILITY OF BUYER, AND SHALL BE ALLOCATED TO AND PAID BY BUYER. PRODUCTION TAXES WILL BE ALLOCATED BY THE PARTIES SO THAT THE PARTY WHICH IS ENTITLED TO THE REVENUE FROM PRODUCTION SHALL BEAR THE BURDEN OF THE PRODUCTION TAX IN RESPECT THERETO.  NOTWITHSTANDING THE FOREGOING, ANY EXCESS PRODUCTION TAX CREDITS 35 AVAILABLE TO THE COMPANY OR SELLER, BUT UNUSED AS OF CLOSING SHALL ACCRUE TO THE COMPANY OR BUYER TO THE EXTENT PERMITTED BY APPLICABLE LAW. 13.6         INCOME TAXES.  SELLER SHALL BE RESPONSIBLE FOR INCOME TAXES IMPOSED ON SELLER TO THE EXTENT THEY RELATE TO ANY PERIOD, WHETHER BEFORE, ON, OR AFTER THE EFFECTIVE DATE, AND ALL ITEMS OF DEDUCTION, CREDIT, LOSS OR GAIN OR REFUND PERTAINING TO INCOME TAXES IMPOSED ON SELLER SHALL REMAIN AND BELONG TO SELLER, NO MATTER WHEN RECEIVED, ASSESSED OR PAID.  BUYER SHALL BE RESPONSIBLE FOR INCOME TAXES IMPOSED ON BUYER TO THE EXTENT THEY RELATE TO ANY PERIOD, WHETHER BEFORE, ON, OR AFTER THE EFFECTIVE DATE, AND ALL ITEMS OF DEDUCTION, CREDIT, LOSS OR GAIN OR REFUND PERTAINING TO INCOME TAXES IMPOSED ON BUYER SHALL REMAIN AND BELONG TO BUYER, NO MATTER WHEN RECEIVED, ASSESSED OR PAID. 13.7         PURCHASE PRICE ALLOCATION.  THE ALLOCATION OF THE PURCHASE PRICE IN ACCORDANCE WITH EXHIBIT A-2 IS INTENDED TO COMPLY WITH THE ALLOCATION METHOD REQUIRED BY SECTION 1060 OF THE CODE.  BUYER AND SELLER SHALL COOPERATE TO COMPLY WITH ALL SUBSTANTIVE AND PROCEDURAL REQUIREMENTS OF SECTION 1060 AND THE TREASURY REGULATIONS THEREUNDER, INCLUDING WITHOUT LIMITATION THE FILING BY BUYER AND SELLER OF IRS FORM 8594 WITH THEIR FEDERAL INCOME TAX RETURNS FOR THE TAXABLE YEAR IN WHICH THE CLOSING OCCURS.  BUYER AND SELLER AGREE THAT NEITHER WILL TAKE, NOR WILL THEY PERMIT ANY AFFILIATE TO TAKE, A POSITION FOR INCOME TAX PURPOSES THAT IS INCONSISTENT WITH THE ALLOCATION OF THE PURCHASE PRICE. ARTICLE XIV GENERAL 14.1         GOVERNING LAW; CHOICE OF FORUM.  THIS AGREEMENT SHALL BE GOVERNED REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.  ANY DISPUTE ARISING HEREUNDER SHALL BE BROUGHT, IF AT ALL, IN THE STATE OR FEDERAL COURTS LOCATED IN DELAWARE. EACH PARTY AGREES NOT TO ASSERT ANY ARGUMENT OF INCONVENIENT FORUM IN RESPONSE TO THE FILING OF AN ACTION IN ANY SUCH COURT. 14.2         AMENDMENTS.  THIS AGREEMENT MAY ONLY BE AMENDED BY AN INSTRUMENT IN WRITING EXECUTED BY COMPANY, BUYER AND SELLER. 14.3         WAIVERS.  THE OBSERVANCE OF ANY TERM OF THIS AGREEMENT MAY BE PROSPECTIVELY) BY THE PARTY ENTITLED TO ENFORCE SUCH TERM, BUT SUCH WAIVER SHALL BE EFFECTIVE ONLY IF IT IS IN A WRITING SIGNED BY THE PARTY ENTITLED TO ENFORCE SUCH TERM AND AGAINST WHICH SUCH WAIVER IS TO BE ASSERTED.  UNLESS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NO DELAY OR OMISSION ON THE PART OF ANY PARTY IN EXERCISING ANY RIGHT OR PRIVILEGE UNDER THIS AGREEMENT SHALL OPERATE AS PRIVILEGE UNDER THIS AGREEMENT OPERATE AS A WAIVER OF ANY OTHER RIGHT OR PRIVILEGE UNDER THIS AGREEMENT NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY RIGHT OR PRIVILEGE PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT OR PRIVILEGE UNDER THIS AGREEMENT. 14.4         NOTICES.  ANY NOTICE OR OTHER COMMUNICATIONS REQUIRED OR PERMITTED HEREUNDER SHALL BE IN WRITING AND SHALL BE SUFFICIENTLY GIVEN (AND SHALL BE DEEMED TO HAVE BEEN DULY GIVEN 36 UPON RECEIPT) IF SENT BY OVERNIGHT MAIL, REGISTERED MAIL OR CERTIFIED MAIL, POSTAGE PREPAID, OR BY HAND, TO THE PARTIES AT THE FOLLOWING ADDRESSES (OR AT SUCH OTHER ADDRESS FOR A PARTY AS SHALL BE SPECIFIED BY LIKE NOTICE): (A)                                   IF TO BUYER, TO: 111 W. OCEAN BOULEVARD SUITE 1240 LONG BEACH, CA 9080 ATTN: PRESIDENT TEL.: 562.628.1531 FAX: 562.628.1536 (B)           IF TO SELLER AND/OR THE COMPANY, TO: 707 Seventeenth Street Suite 3600 Denver, CO 80202 Attn: General Counsel Tel.: 303.812.1701 Fax: 303.812.1445 14.5         SUCCESSORS AND ASSIGNS, PARTIES IN INTEREST.  THIS AGREEMENT SHALL BE BINDING UPON AND SHALL INURE SOLELY TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS, LEGAL REPRESENTATIVES AND PERMITTED ASSIGNS.  NEITHER THIS AGREEMENT NOR ANY RIGHTS OR OBLIGATIONS HEREUNDER MAY BE ASSIGNED WITHOUT THE WRITTEN CONSENT OF THE OTHER PARTIES, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD, EXCEPT THAT BUYER MAY MAKE AN ASSIGNMENT OF ITS RIGHTS HEREUNDER TO ITS FINANCING SOURCE FOR COLLATERAL SECURITY PURPOSES.  NOTHING IN THIS AGREEMENT, EXPRESS OR IMPLIED, IS INTENDED TO OR SHALL CONFER UPON ANY PERSON, OTHER THAN THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS, LEGAL REPRESENTATIVES AND PERMITTED ASSIGNS, ANY RIGHTS, BENEFITS OR REMEDIES OF ANY NATURE WHATSOEVER UNDER OR BY REASON OF THIS AGREEMENT, AND NO PERSON SHALL BE DEEMED A THIRD PARTY BENEFICIARY UNDER OR BY REASON OF THIS AGREEMENT. 14.6         SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT OR THE APPLICATION OF ANY SUCH PROVISION TO ANY PERSON OR CIRCUMSTANCE, SHALL BE DECLARED JUDICIALLY TO BE INVALID, UNENFORCEABLE OR VOID, SUCH DECISION SHALL NOT HAVE THE EFFECT OF INVALIDATING OR VOIDING THE REMAINDER OF THIS AGREEMENT, IT BEING THE INTENT AND AGREEMENT OF THE PARTIES THAT THIS AGREEMENT SHALL BE DEEMED AMENDED BY MODIFYING SUCH PROVISION TO THE EXTENT NECESSARY TO RENDER IT VALID, LEGAL AND ENFORCEABLE WHILE PRESERVING ITS INTENT OR, IF SUCH MODIFICATION IS NOT POSSIBLE, BY SUBSTITUTING THEREFOR ANOTHER PROVISION THAT IS VALID, LEGAL AND ENFORCEABLE AND THAT ACHIEVES THE SAME OBJECTIVE. 14.7         ENTIRE AGREEMENT.  THIS AGREEMENT (INCLUDING THE CONFIDENTIALITY AGREEMENT, THE EXHIBITS AND SCHEDULES HERETO, AND THE DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH) CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS AGREEMENTS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, AMONG THE PARTIES OR ANY OF THEM WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND THERE ARE NO REPRESENTATIONS, UNDERSTANDINGS OR AGREEMENTS RELATING TO 37 THE SUBJECT MATTER HEREOF THAT ARE NOT FULLY EXPRESSED IN THIS AGREEMENT AND THE DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH.  ALL EXHIBITS AND SCHEDULES ATTACHED TO THIS AGREEMENT ARE EXPRESSLY MADE A PART OF, AND INCORPORATED BY REFERENCE INTO, THIS AGREEMENT. 14.8         SCHEDULES.  NOTHING IN THE SCHEDULES IS INTENDED TO BROADEN THE SCOPE OF ANY REPRESENTATION OR WARRANTY CONTAINED IN THE AGREEMENT OR TO CREATE ONE SCHEDULE SHALL BE DEEMED TO BE DISCLOSED ON ALL SCHEDULES AND UNDER THE AGREEMENT.  INCLUSION OF ANY ITEM IN THE SCHEDULES (A) SHALL BE DEEMED TO BE DISCLOSURE OF SUCH ITEM ON ALL SCHEDULES AND UNDER THE AGREEMENT, (B) DOES NOT REPRESENT A DETERMINATION THAT SUCH ITEM IS MATERIAL NOR SHALL IT BE DEEMED TO ESTABLISH A STANDARD OF MATERIALITY, (C) DOES NOT REPRESENT A DETERMINATION THAT SUCH ITEM DID NOT ARISE IN THE ORDINARY COURSE OF BUSINESS, (D) DOES NOT REPRESENT A DETERMINATION THAT THE TRANSACTIONS CONTEMPLATED BY THE AGREEMENT REQUIRE THE CONSENT OF THIRD PARTIES AND (E) SHALL NOT CONSTITUTE, OR BE DEEMED TO BE, AN ADMISSION TO ANY THIRD PARTY CONCERNING SUCH ITEM.  THE SCHEDULES INCLUDE DESCRIPTIONS OF INSTRUMENTS OR BRIEF SUMMARIES OF CERTAIN ASPECTS OF THE COMPANY AND ITS BUSINESS AND OPERATIONS.  THE DESCRIPTIONS AND BRIEF SUMMARIES ARE NOT NECESSARILY COMPLETE AND ARE PROVIDED IN THE SCHEDULES TO IDENTIFY DOCUMENTS OR OTHER MATERIALS PREVIOUSLY DELIVERED OR MADE AVAILABLE. 14.9         REMEDIES.  EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT (I) THE PROVISIONS OF THIS AGREEMENT ARE REASONABLE AND NECESSARY TO PROTECT THE PROPER AND LEGITIMATE INTERESTS OF THE OTHER PARTIES HERETO, AND (II) THE OTHER PARTIES HERETO WOULD BE IRREPARABLY DAMAGED IN THE EVENT ANY OF THE PROVISIONS WERE OTHERWISE BREACHED.  IT IS ACCORDINGLY AGREED THAT THE PARTIES HERETO SHALL BE ENTITLED TO PRELIMINARY AND PERMANENT INJUNCTIVE RELIEF TO PREVENT BREACHES OF THE PROVISIONS OF THIS AGREEMENT BY OTHER PARTIES HERETO WITHOUT THE NECESSITY OF PROVING ACTUAL DAMAGES UPON POSTING OF A SUITABLE BOND, AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF AND THEREOF, WHICH RIGHTS SHALL BE CUMULATIVE AND IN ADDITION TO ANY OTHER REMEDY TO WHICH THE PARTIES HERETO MAY BE ENTITLED HEREUNDER OR AT LAW OR EQUITY. 14.10       EXPENSES.  THE SELLER, ON THE ONE HAND, AND BUYER, ON THE OTHER HAND, SHALL BEAR THEIR RESPECTIVE EXPENSES (INCLUDING, WITHOUT LIMITATION, FEES AND DISBURSEMENTS OF COUNSEL, ACCOUNTANTS AND OTHER EXPERTS) INCURRED IN CONNECTION WITH THE PREPARATION, NEGOTIATION, EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT, EACH OF THE OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION WITH OR CONTEMPLATED BY THIS AGREEMENT AND THE 14.11       RELEASE OF INFORMATION; CONFIDENTIALITY.  THE PARTIES SHALL COOPERATE WITH EACH OTHER IN RELEASING INFORMATION CONCERNING THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.  NO PRESS RELEASES OR OTHER PUBLIC ANNOUNCEMENTS CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE MADE BY ANY PARTY WITHOUT PRIOR CONSULTATION WITH AND WRITTEN CONSENT OF EACH OTHER PARTY, EXCEPT FOR ANY LEGALLY REQUIRED COMMUNICATION BY ANY PARTY AND THEN ONLY WITH PRIOR CONSULTATION AND AT LEAST 12 HOURS NOTICE TOGETHER WITH COPIES OF ALL DRAFTS OF THE PROPOSED TEXT, PRIOR TO THE TIME THE COMMUNICATION IS MADE PUBLIC. 14.12       CERTAIN CONSTRUCTION RULES.  THE ARTICLE AND SECTION HEADINGS AND THE TABLE OF CONTENTS CONTAINED IN THIS AGREEMENT ARE FOR CONVENIENCE OF REFERENCE ONLY AND SHALL IN NO WAY 38 DEFINE, LIMIT, EXTEND OR DESCRIBE THE SCOPE OR INTENT OF ANY PROVISIONS OF THIS AGREEMENT.  WHENEVER THE CONTEXT MAY REQUIRE, ANY PRONOUN USED IN THIS AGREEMENT SHALL INCLUDE THE CORRESPONDING MASCULINE, FEMININE OR NEUTER FORMS, AND THE SINGULAR FORM OF NOUNS, PRONOUNS AND VERBS SHALL INCLUDE THE PLURAL AND VICE VERSA.  IN ADDITION, AS USED IN THIS AGREEMENT, UNLESS OTHERWISE PROVIDED TO THE CONTRARY, (A) ALL REFERENCES TO DAYS, MONTHS OR YEARS SHALL BE DEEMED REFERENCES TO CALENDAR DAYS, MONTHS OR YEARS AND (B) ANY REFERENCE TO A “SECTION,” “ARTICLE,” OR “SCHEDULE” SHALL BE DEEMED TO REFER TO A SECTION OR ARTICLE OF THIS AGREEMENT OR AN EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT.  THE WORDS “HEREOF”, “HEREIN”, AND “HEREUNDER” AND WORDS OF SIMILAR IMPORT REFERRING TO THIS AGREEMENT REFER TO THIS AGREEMENT AS A WHOLE AND NOT TO ANY PARTICULAR PROVISION OF THIS AGREEMENT.  UNLESS OTHERWISE SPECIFICALLY PROVIDED FOR HEREIN, THE TERM “OR” SHALL NOT BE DEEMED TO BE EXCLUSIVE. 14.13       COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED (INCLUDING BY FACSIMILE TRANSMISSION) IN MULTIPLE COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL AND ALL OF WHICH TAKEN TOGETHER SHALL CONSTITUTE ONE INSTRUMENT BINDING ON ALL THE PARTIES, NOTWITHSTANDING THAT ALL THE PARTIES ARE NOT SIGNATORIES TO THE ORIGINAL OR THE SAME COUNTERPART. 39 *              *              * above written.     BUYER:               PACIFIC ENERGY RESOURCES LTD.               By: /s/ DARREN KATIC         Name: Darren Katic         Title: President             COMPANY:               FOREST ALASKA OPERATING LLC               By: /s/ GLEN J. MIZENKO         Name: Glen J. Mizenko         Title:                   SELLER:               FOREST ALASKA HOLDING LLC                   By:         Name:         Title: Vice President & Secretary                   FOC (for purposes of Sections 7.6, 7.14, 10.1 and Article XII only):               FOREST OIL CORPORATION               By: /s/ DAVID H. KEYTE         Name: David H. Keyte         Title:         40

Exhibit 3.1 Articles of Incorporation Articles of Incorporation of Ultimate Products Corporation First.The name of the corporation is Ultimate Products Corporation. Second.The registered office of the corporation in the State of Nevada is located at 1500 Cliff Branch, Henderson, Nevada 89014. The corporation may maintain an office, or offices, in such other places within or without the State of Nevada as may be from time to time designated by the Board of Directors or the Bylaws of the corporation. The corporation may conduct all corporation business of every kind and nature outside the State of Nevada as well as well as within the State of Nevada. Third.The objects for which this corporation is formed are to engage in any lawful activity, including, but not limited to the following: a) Shall have such rights, privileges and powers as may be conferred upon corporations by any existing law. b) May at any time exercise such rights, privileges and powers, when not inconsistent with the purposes and objects for which this corporation is organized. c) Shall have power to have succession by its corporate name for the period limited in its certificate or articles of incorporation, and when no period is limited, perpetually, or until dissolved and its affairs wound up according to law. d) Shall have power to sue or be sued in any court of law or equity. e) Shall have power to make contracts. f) Shall have power to hold, purchase and convey real and personal estate and to mortgage or lease any such real and personal estate with its franchises. The power to hold real and personal estate shall include the power to take the same by devise or bequest in the State of Nevada, or in any other state, territory or country. g) Shall have the power to appoint such officers and agents as the affairs of the corporation shall require, and to allow them suitable compensation. h) Shall have to make Bylaws not inconsistent withthe constitutions or laws of the United States, or of the State of Nevada, for the management, regulation and government of its affairs and property, the transfer of its stock, the transaction of its business, and the calling and holding of meetings of its stockholders. i) Shall have power to wind up and dissolve itself, or be wound up or dissolved. j) Shall have power to adopt and use a common seal or stamp, and alter the same at pleasure. The use of a seal or stamp by the corporation on any corporation documents is not necessary. The corporation may use a seal or stamp, if it desires, but such use or nonuse shall not in any way affect the legality of the document. k) Shall have the power to borrow money and contract debts when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or franchises, or for any other lawful purpose of its incorporation; to issue bonds, promissory notes, bills of exchange, debentures, and other obligations and evidences of indebtedness, payable at a specified time or times, or payable upon the happening of a specified event or events, whether secured by mortgage, pledged or otherwise, or unsecured, for money borrowed, or in payment for property purchased, or acquired, or for any other lawful object. l) Shall have power to guarantee, purchase, hold, sell, assign. transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities or evidences of the indebtedness created by, any other corporation or corporations of the State of Nevada, or any other state or government, and, while owners of such stock, bonds, securities or evidence of indebtedness, to exercise all rights, powers of such stock, bonds, securities or evidences of indebtedness, to exercise all rights, powers and privileges of ownership, including the right to vote, if any. m) Shall have power to purchase, hold, sell, and transfer shares of its own capital stock, and use therefore its capital, capital surplus, surplus, or other property to fund. n) Shall have power to conduct business, have one or more officers, and conduct any legal activity in the State of Nevada, any in any of the several states, territories, possessions and dependencies of the United States, the District of Columbia, and any foreign countries. o) Shall have power to do all and everything necessary and proper for the accomplishment of the objects enumerated in its certificate or articles of incorporation, or any amendment thereof, or necessary or incidental to the protection and benefit of the corporation, and, in general, to carry on any lawful business necessary or incidental to the attainment of the objects of the corporation, whether or not such business is similar in nature to the objects set forth in the certificate or articles of incorporation, of the corporation, or any amendments thereof. p) Shall have power to make donations for the public welfare or for charitable, scientific or educational purposes. q) Shall have power to enter into partnerships, general or limited, or joint ventures, in connection with any lawful activities, as may be allowed by law. Fourth.That the total number of stock authorized that may be issued by the corporation is seventy million (70,000,000) shares of common stock with a par value of one tenth of one percent ($0.001) per share and no other class of stock shall be authorized. Said shares may be issued by the corporation from time to time for such considerations as may be fixed by the Board of Directors. Fifth.The governing board of the corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner ass shall be provided by the Bylaws of this corporation, providing that the number of directors shall not be reduced to fewer than one (1). The first Board of Directors shall be one (1) in number and the name and post office address of the Director shall be listed as follows: George Vogelei 130 Del Oro Lagoon, Novato, California 94949 Sixth.The capital stock, after the amount of the subscription price, or par value, has been paid in, shall not be subject to assessment to pay the debts of the corporation. Seventh.The name and post office address of the Incorporator signing the Articles of Incorporation is as follows: Ronald A.

Exhibit 10.5   SUBSCRIPTION AGREEMENT   SUBSCRIPTION AGREEMENT, dated as of June 1, 2015 (this “Agreement”), by and among Concentra Group Holdings, LLC, a Delaware limited liability company (“Parent”), and each of the several other individuals and entities named on     WHEREAS, on March 22, 2015, MJ Acquisition Corporation (“Buyer”), Concentra Inc. (the “Company”) and Humana Inc. (“Seller”) entered into a Stock Purchase Agreement (as amended, the “Purchase Agreement”) pursuant to which, upon the terms and subject to the conditions set forth therein, Buyer, as an indirect wholly owned subsidiary of Parent, will purchase all of the outstanding shares of capital stock of the Company from Seller; and   WHEREAS, each of the Investors, acting severally and not jointly, wishes to acquire from Parent, and Parent wishes to issue to the Investors, upon the terms and subject to the conditions hereinafter set forth, newly issued Class A Interests (as defined in the LLC Agreement (as defined below)) in consideration of each such Investor’s payment to Parent of cash in the amount of $1.00 per Class A Interest.   herein contained and incorporating the recitals set forth above, the parties   ARTICLE I.   ISSUANCE, SALE AND DELIVERY OF INTERESTS; CLOSING   SECTION 1.01.                           Issuance, Sale and Delivery of Interests.  Upon the terms and subject to the conditions of this Agreement, at the Closing, Parent shall issue, sell and deliver to each Investor, and each Investor, acting severally and not jointly, shall purchase from Parent at a purchase price of $1.00 per Class A Interest, that number of Class A Interests (the “Interests”) set forth opposite the name of such Investor under the heading “Class A Interests” on Schedule I hereto for the cash purchase price (to be paid by wire transfer of immediately available funds to a bank account specified in writing by Parent) set forth opposite the name of such Investor under the heading “Purchase Price” on Schedule I hereto (the “Subscription”).  Parent shall use the aggregate proceeds from the sale of the Interests solely as follows: (a) to pay the consideration for the transactions contemplated by the (b) to pay fees, costs and expenses incurred in connection with the transactions contemplated by the Purchase Agreement and the financings related thereto.   SECTION 1.02.                           Closing.  Upon the terms and subject to the conditions of this Agreement, the issuance, sale and delivery of the Interests contemplated by Section 1.01 (the “Closing”) will take place on the date of the closing of the transactions contemplated by the     Purchase Agreement (the “Purchase Agreement Contemplated Transactions”), but prior to such consummation of the Purchase Agreement Contemplated Transactions, York 10036 (such date being herein called the “Closing Date”).   SECTION 1.03.                           Failure to Consummate the Purchase Agreement Contemplated Transactions.  In the event that after the Closing, the Purchase Agreement Contemplated Transactions fail to be consummated for any reason whatsoever, or the Purchase Agreement is otherwise terminated, the parties hereto agree that the Subscription shall be void ab initio and concurrently with the termination of the Purchase Agreement, Parent shall return to each Investor the amount of cash set forth opposite the name of such Investor under the heading “Purchase Price” on Schedule I hereto.   SECTION 1.04.                           Conditions to Closing. The Closing shall be subject only to the condition that all of the conditions set forth in the Purchase Agreement have been satisfied or waived (other than those conditions which can be satisfied only at the closing of the Purchase Agreement Contemplated Transactions, but subject to the satisfaction or waiver of such conditions at the closing of the Purchase Agreement Contemplated Transactions).   SECTION 1.05.                           LLC Agreement.  Contemporaneous with the execution and delivery of this Agreement on the date hereof, Parent and each Investor is entering into the Amended and Restated Limited Liability Company Agreement of Parent in the form attached hereto as Exhibit A (the “LLC Agreement”).   SECTION 1.06.                           Existing LLC Interests.  At the Closing, without any action on the part of any person being required, (a) the 501 units of limited liability company interest of Parent issued to Select Medical Corporation (“SEM”) on May 8, 2015 shall automatically be cancelled without payment of any consideration therefor and (b) the 499 units of limited liability company interest of Parent issued to Welsh, Carson, Anderson & Stowe XII, L.P. (“WCAS”) on May 8, 2015 shall automatically be cancelled without payment of any consideration therefor.   ARTICLE II.     Parent represents and warrants to the Investors that:   SECTION 2.01.                           Existence and Power.  Parent is a under the laws of the State of Delaware.  Parent has the power and authority necessary to (i) own its properties and assets, (ii) carry on its business as now being conducted and as proposed to be conducted immediately after consummation of the Purchase Agreement Contemplated Transactions and (iii) execute and deliver this Agreement and the LLC Agreement and perform its obligations hereunder and thereunder, including the issuance, sale and delivery of the Interests.   SECTION 2.02.                           Authorization; Validity.  The execution and delivery by Parent of this Agreement and the LLC Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Interests) and thereby have   2   part of Parent.  Each of this Agreement and the LLC Agreement has been duly executed and delivered by Parent.  Each of this Agreement and the LLC Agreement constitutes a valid and binding agreement of Parent, enforceable against Parent other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.   SECTION 2.03.                           Governmental Authorization.  Assuming the accuracy of the Investors’ representations and warranties set forth in Article III hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to Parent in connection with the execution, delivery and performance by Parent of this Agreement or the LLC Agreement except (i)  for such filings and approvals as have been made or obtained, or (ii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not   SECTION 2.04.                           Noncontravention.  The execution, delivery and performance by Parent of this Agreement and the LLC Agreement does not and will not (i) violate the certificate of formation or limited liability company agreement of Parent, (ii) violate any law, rule, regulation, judgment, injunction, order or decree applicable to or binding upon Parent, (iii) violate any contract, agreement, license, lease or other instrument, arrangement, commitment, obligation, understanding or restriction of any kind to which Parent is a party or (iv) require any consent or other action by any person under, obligation of Parent or to a loss of any benefit to which Parent is entitled under any provision of any agreement or other instrument binding upon Parent or   SECTION 2.05.                           Capitalization.  Except for (a) the Interests to be issued hereunder and (b) awards in respect of up to 22,894,737 Class B Interests (as defined in the LLC Agreement) (which may be in the form of grants of Class B Interests or options exercisable for Class B Interests) which may be issued, there are, and immediately after the Closing there will be, no outstanding (i) limited liability company interests of Parent, (ii) securities of Parent convertible into or exchangeable for limited liability company interests of Parent or (iii) options or other rights to acquire from Parent, or other obligation of Parent to issue any limited liability company interests, or securities convertible into or exchangeable for limited liability company interests of Parent.   SECTION 2.06.                           Valid Issuance of Class A Interests.  At Closing, the Interests will have been duly and validly authorized and when consideration expressed herein, will be validly issued and fully paid Class A Interests of Parent.   3   ARTICLE III.     Each Investor, severally and not jointly, and solely with respect to such Investor, represents and warrants to Parent that:   SECTION 3.01.                           Existence.  Such Investor (if not a natural person) is a corporation, limited partnership, limited liability company or other entity, as the case may be, duly organized, validly existing and in   SECTION 3.02.                           Authorization; Power; Validity.  The execution and delivery by such Investor (if not a natural person) of this Agreement and the LLC Agreement and the consummation of the transactions contemplated hereby and thereby are within such Investor’s powers and have been duly authorized by all necessary action on the part of such Investor.  Each of this Agreement and the LLC Agreement has been duly executed and delivered by such Investor.  Each of this Agreement and the LLC Agreement constitutes a valid and binding agreement of such Investor, enforceable against such Investor in   SECTION 3.03.                           Governmental Authorization.  No order, body, agency or official is required by or with respect to such Investor in connection with the execution, delivery and performance by such Investor of this Agreement or the LLC Agreement except (i) for such filings and approvals as have been made or obtained or (ii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of such Investor to perform such Investor’s obligations hereunder or thereunder.   SECTION 3.04.                           Noncontravention.  The execution, delivery and performance by such Investor of this Agreement and the LLC Agreement does not and will not (i) violate, if such Investor is not a natural person, the certificate of incorporation, bylaws, certificate of limited partnership, agreement of limited partnership, certificate of formation, limited liability company agreement or other organizational documents of such Investor, applicable to or binding upon such Investor, (iii) violate any material commitment, obligation, understanding or restriction of any kind to which such Investor is a party or is bound, (iv) require any consent or other action by any person under, constitute a default under (with due notice or lapse of time or both), or give rise to any right of termination, cancellation or acceleration of any right or obligation of such Investor under any provision of any material agreement or other material instrument binding upon such Investor or any of its assets or properties or (v) result in the   4   creation or imposition of any material lien, claim, charge, pledge, security interest or other encumbrance with respect to any of the Interests acquired by such Investor hereunder.   SECTION 3.05.                           Acquisition for Investment.  Such Investor is acquiring the Interests being purchased by such Investor hereunder for investment for such Investor’s own account and not with a view to, or for sale in connection with, any distribution thereof.   SECTION 3.06.                           Private Placement(a)                 .  (a) Such Investor’s financial situation is such that such Investor can afford to bear the economic risk of holding the Interests being purchased by such Investor hereunder for an indefinite period of time, and such Investor can afford to suffer the complete loss of such Investor’s investment in the Interests.   (b)                                 Such Investor’s knowledge and experience in financial and business matters are such that such Investor is capable of evaluating the merits and risks of such Investor’s investment in the Interests.   (c)                                  Such Investor understands that the Interests acquired hereunder are a speculative investment which involves a high degree of risk of loss of the entire investment therein, that there will be substantial restrictions on the transferability of the Interests and that following the date hereof there will be no public market for the Interests and that, accordingly, it may not be possible for such Investor to sell or pledge the Interests, or any interest in the Interests, in case of emergency or otherwise.   (d)                                 Such Investor and such Investor’s representatives, including, to the extent such Investor deems appropriate, such Investor’s legal, professional, financial, tax and other advisors, have reviewed all documents provided to them in connection with such Investor’s investment in the Interests, and such Investor understands and is aware of the risks related to such investment.   (e)                                  Such Investor and such Investor’s representatives have been given the opportunity to examine all documents and to ask questions of, and to receive answers from, Parent and its representatives concerning Parent and its subsidiaries, the terms and conditions of such Investor’s acquisition of the Interests and related matters and to obtain all additional information which such Investor or such Investor’s representatives deem necessary.   (f)                                   Such Investor is an “accredited investor”   (g)                                  Such Investor does not have any plan or intention to sell, exchange, transfer or otherwise dispose of (including by way of gift) any of its Interests immediately after the acquisition of any such Interests.   SECTION 3.07.                           No Other Representations and Warranties.  Each such Investor hereby acknowledges and agrees that the representations and warranties set forth in Article II hereof are the only representations, warranties and statements being relied on by such Investor in connection with such Investor’s acquisition of the Interests.   5   ARTICLE IV.   MISCELLANEOUS   SECTION 4.01.                           Survival.  All of the covenants, agreements, representations and warranties contained herein shall survive the transactions contemplated hereby.   SECTION 4.02.                           Notices.  Any notice or communication to electronic confirmation of such facsimile transmission).  Any such notice or personally delivered, (ii) one business day after it is deposited with a nationally recognized overnight courier service, if sent by nationally recognized overnight courier service, (iii) the day of sending, if sent by facsimile prior to 5:00 p.m. (EST) on any business day or the next succeeding business day if sent by facsimile after 5:00 p.m. (EST) on any business day or on any day other than a business day or (iv) five business days after the date of mailing, if mailed by certified or registered mail, postage prepaid, in each case, to the following address or facsimile number, or to such other address or addresses or facsimile number or numbers as such party may subsequently designate to the other parties by notice given hereunder:     c/o Select Medical Corporation 4717 Gettysburg Road Mechanicsburg, PA 17088   if to any Investor, to such Investor at the address set forth for such Investor on Schedule I hereto   SECTION 4.03.                           Amendments and Waivers.  (a) Any amendment or waiver is in writing and, in the case of an amendment, signed by (i) Parent, (ii) SEM and (iii) WCAS; provided, that (x) no provision of this Agreement may be modified or amended in a manner materially adverse to an Investor if such modification or amendment affects such Investor disproportionately relative to the other Investors, except with the written consent of such Investor and (y) without the prior written consent of Cressey & Company IV LP (“Cressey”), this Agreement may not be amended or modified to change the number of Interests to be acquired by Cressey hereunder or the purchase price therefor.     SECTION 4.04.                           Expenses.  All costs and expenses   6   SECTION 4.05.                           Successors and Assigns.  The provisions hereto and their respective successors and permitted assigns.  No party hereto shall assign this Agreement or any of its rights, interests or obligations hereunder without the prior written consent of Parent, SEM and WCAS.   SECTION 4.06.                           Governing Law.  This Agreement shall be State.   SECTION 4.07.                           Jurisdiction.  Each of the parties to its assets and properties, to the exclusive jurisdiction of the Delaware Court of Chancery, and any appellate court from such court, in any action or proceeding arising out of or relating to this Agreement, the agreements delivered in connection with this Agreement, or the transactions contemplated hereby or thereby, or for recognition or enforcement of any judgment relating thereto, and each of the parties to this Agreement hereby irrevocably and proceeding may be heard and determined in the Delaware Court of Chancery; action or proceeding in the Delaware Court of Chancery; and (iv) waives, to the to the maintenance of such action or proceeding in the Delaware Court of Chancery.  Each of the parties to this Agreement hereby agrees that a final provided by law.  Each of the parties to this Agreement hereby irrevocably Section 4.02.  Nothing in this Agreement shall affect the right of any party to   SECTION 4.08.                           Waiver Of Jury Trial.  EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER OR IN CONNECTION WITH THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE, IT HEREBY IRREVOCABLY AND UNCONDITIONALLY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND ANY OF THE OTHER AGREEMENTS DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE SECTION 4.08.   7   SECTION 4.09.                           Counterparts; Third Party Beneficiaries.  This Agreement may be executed in any number of counterparts (including via email with scan attachment or facsimile transmission), each of and hereto were upon the same instrument.  No provision of this Agreement shall hereunder.   SECTION 4.10.                           Entire Agreement.  This Agreement and written, among the parties with respect to the subject matter hereof.   SECTION 4.11.                           Severability.  If one or more provisions of this Agreement are finally held to be unenforceable under applicable law,     8   this Subscription Agreement as of the day and year first above written.       CONCENTRA GROUP HOLDINGS, LLC           By:     Name: Michael E. Tarvin     Title: Vice President       Investors:       SELECT MEDICAL CORPORATION           By:     Name: Martin F. Jackson     Title:           BY: WCAS XII Associates LLC, its general partner           By:     Name: Jonathan M. Rather     Title: Managing Member       WELSH, CARSON, ANDERSON & STOWE XII DELAWARE, L.P.   BY: WCAS XII Associates Cayman, L.P., its general partner             By:     Name: Jonathan M. Rather     Title: Managing Member         WELSH, CARSON, ANDERSON & STOWE XII DELAWARE II, L.P.             By:     Name: Jonathan M. Rather     Title: Managing Member       WELSH, CARSON, ANDERSON & STOWE XII CAYMAN, L.P.               By:     Name: Jonathan M. Rather     Title: Managing Member       WCAS XII CO-INVESTORS LLC           By:     Name: Jonathan M. Rather     Title: Managing Member         WCAS MANAGEMENT CORPORATION           By:     Name: Jonathan M. Rather     Title: Treasurer         CRESSEY & COMPANY FUND IV LP   By: Cressey & Company GP LP, its general partner   By: Cressey & Company LLC, its general partner           By: /s/ Bryan Cressey     Name: Bryan Cressey     Title: Member  

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 16, 2012 Commission File Number:000-53519 GMS Capital Corp. (Exact name of registrant as specified in its charter) Florida (State or other jurisdiction of incorporation or organization) 26-1094541 (I.R.S. Employer Identification No.) 3055 L’Assomption Blvd., Montreal, Quebec H1N 2H1 Canada (Address of principal executive offices) Registrant’s telephone number, including area code: (514) 254-9473 5925 Monkland Ave., Suite 202, Montreal, Quebec H4A 1G7 (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: |_| 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)) 1 Cautionary Note Regarding Forward-Looking Statements This Current Report on Form 8-K includes forward-looking statements that reflect our expectations and projections about our future results, performance, prospects and opportunities. These statements can be identified by the fact that they do not relate strictly to historical or current facts. We have tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “potential,” “should,” “will,” “will be,” “would” and similar expressions, but this is not an exclusive way of identifying such statements. Our actual results, performance and achievements may differ materially from those expressed in, or implied by, the forward-looking statements contained in this Form 8-K as a result of various risks, uncertainties and other factors, including those described below under the heading “Risk Factors” and elsewhere in this Form 8-K. Forward-looking statements speak only as of the date of this Form 8-K. Except as expressly required under federal securities laws and the rules and regulations of the SEC, we do not undertake any obligation to update any forward-looking statements to reflect events or circumstances arising after the date of this prospectus, whether as a result of new information or future events or otherwise. You should not place undue reliance on the forward-looking statements included in this report or that may be made elsewhere from time to time by us, or on our behalf. All forward-looking statements attributable to us are expressly qualified by these cautionary statements. Item 1.01 Entry into a Material Definitive Agreement. License Agreement On March 16, 2012, GMS Capital Corp. (the “Registrant”) entered into and closed a License and Distribution Agreement (the “License Agreement”) with 8012415 Canada Inc. (“Canada”) pursuant to which Canada granted the Registrant an exclusive worldwide license to distribute, market and sell the Nacara brand cosmetic products (the “Products”), excluding the territories of Finland, Russia and Sweden, in exchange for a royalty of five percent (5%) of the gross revenues of the Products sold by the Registrant. The Products include a full line of cosmetic products aimed at women with darker complexions and is currently available in Canada at drugstores including Pharmacie Jean-Coutu and Shoppers Drug Mart and in France at retailers including Galeries Lafayette, Marionnaud, Nocibé and Beauty Success. The License Agreement has a term of five years and will automatically renew for an additional five years provided that the Registrant has Product sales of at least US$6 million in the first year, US$15 million in the second year and US$25 million in the third year following the date of the License Agreement. This brief description of the License Agreement isonly a summary of the material terms and is qualified in its entirety by reference to the full text of the License Agreement as attached to this Current Report on Form 8-K as Exhibit10.1. Stock Purchase Agreement On March 16, 2012, the Registrant entered into and closed a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Nacara Montreal Inc., a Canadian corporation (the “Seller”), pursuant to which the Registrant purchased an aggregate of 100 shares of Class A common stock of 8012415 Canada Inc. (the “Class A Shares”) from the Seller in exchange for $100 and an option (the “Option”) to purchase 10,000,000 shares of Class D common stock of 8012415 Canada Inc. (the “Class D Shares”) from the Seller in exchange for the issuance of 729,929 shares of the Registrant’s common stock (the “Option Price Shares”) upon exercise of the Option by the Registrant.The Option expires on March 16, 2017 and the Registrant must exercise the Option by written notice to the Seller.The Option Price Shares to be issued to the Seller upon exercise of the Option will be subject to a Lock-Up Agreement as further disclosed below.In the event the Registrant effectuates any stock splits, the number of Option Price Shares to be issued to the Seller will be proportionately increased or reduced so as to prevent the enlargement or dilution of the Option Price Shares.This brief description of the Stock Purchase Agreement isonly a summary of the material terms and is qualified in its entirety by reference to the full text of the Stock Purchase Agreement as attached to this Current Report on Form 8-K as Exhibit10.2. 2 Lock-Up Agreement In connection with the Stock Purchase Agreement, the Registrant entered into and closed a Lock-Up Agreement (the “Lock-Up Agreement”) with the Seller, pursuant to which the Seller has agreed the issuance of Option Price Shares to be issued to the Seller upon the Registrant’s exercise of the Option will be subject to lock up provisions such that the Option Price Shares will be held in escrow andremitted to the Seller on occurrence of the following events: (i) 50% of the Option Price Shares will be remitted to the Seller following a period of three months when the average market price of the traded shares of the Registrant is at least $3.50 per share based on a 12 to 1 forward split to be effectuated by the Registrant within ninety days of the closing of the Stock Purchase Agreement, subject to shareholder approval (the “Forward Split”), (ii) 100% of the Option Price Shares will be remitted to the Seller following a period of three months when the average market price of the traded shares of the Registrant is at least $5.00 upon giving effect to the Forward Split, (iii) on termination of the Lock-Up Agreement, 100% of the Option Price Shares will be remitted to the Seller, or (iv) on the day the Registrant’s stock gets registered on NASDAQ or any major exchange, 100% of the Option Price Shares will be remitted to the Seller. This brief description of the Lock-Up Agreement isonly a summary of the material terms and is qualified in its entirety by reference to the full text of the Lock-Up Agreement as attached to this Current Report on Form 8-K as Exhibit10.3. Cancellation Agreement In consideration of Nacara’s and Canada’s willingness to enter into the transactions contemplated by the Stock Purchase Agreement, the Lock-Up Agreement and the License Agreement and in order to provide an appropriate capital structure of the Company after the effectiveness of the Forward Split and the change of the Registrant’s name to Nacara Corp. (the “Name Change”), the Registrant entered into a Stock Cancellation Agreement (the “Stock Cancellation Agreement”) with 7776446 Canada Inc. doing business as Cosmera Inc. (“Cosmera”) pursuant to which Cosmera agreed to cancel all of its shares of the Registrant within 30 days of the effectiveness of the Forward Split and the Name Change (the “Cancellation”).This brief description of the Stock Cancellation Agreement isonly a summary of the material terms and is qualified in its entirety by reference to the full text of the Stock Cancellation Agreement as attached to this Current Report on Form 8-K as Exhibit10.4. As of March 20, 2012, 5,365,400 shares of the Registrant’scommon stock are issued and outstanding. Upon the exercise of the Option to acquire all Class D Shares of 8012415 Canada Inc., the effectiveness of the Cancellation and the Forward Split, the Registrant will have a total of 30,244,908 share of common stock issued and outstanding on a fully diluted basis. Caroline Coulombe, our chief executive officer, is the president, director and controlling shareholder of 7776446 Canada Inc. doing business as Cosmera Inc., which is the controlling shareholder of the Registrant, and Ms. Coulombe is also the president, director and a principal shareholder of Nacara Montreal Inc. Therefore, the transactions contemplated by the Stock Purchase Agreement, the Lock-Up Agreement and the License Agreement are related party transactions. Item 2.01 Completion of Acquisition or Disposition of Assets. The Registrant acquired an exclusive, worldwide license to distribute, market and sell Nacara products, excluding the territories of Finland, Russia and Sweden, as described in the License Agreement and in Item 1.01 of this Current Report on Form 8-K, which is hereby incorporated by reference. The Registrant also acquired the Option to purchase 10,000,000 shares of Class D common stock of 8012415 Canada Inc. from the Seller in exchange for the issuance of the Option Price Shares upon exercise of the Option by the Registrant, as described in the Stock Purchase Agreement and in Item 1.01 of this Current Report on Form 8-K, which is hereby incorporated by reference. 3 Following the consummation of the transactions contemplated by the License Agreement and the Stock Purchase Agreement, the Registrant discontinued the operations related to its software business and entered into the cosmetics business. The following is a brief description of our new business, risk factors associated with our new business, a description of our securities, securities ownership of certain beneficial owners of our common stock and our management, and a description of our executive officers and directors: Our Business. Our new business is the distribution, marketing and sale of cosmetics and cosmetics-related products primarily in Canada, France and the French Caribbean.The License Agreement grants us an exclusive, worldwide license to distribute, market and sell the Nacara brand cosmetic products, excluding the territories of Finland, Russia and Sweden, in exchange for a royalty of five percent (5%) of the gross revenues of the products sold by us. Our Products. Our products are sold under the brand name “Nacara” and are primarily for women with darker complexions. The product line includes lipsticks, lip gloss, corrector sticks, pencils, cream powders, foundations, correcting powders, pressed powders, blushes, custom correctors and eye shadow.Our website, which is located at www.nacara.com provides information about our products as well as locations where our products are available for purchase. Strategy. We plan to utilize the contacts and expertise of Caroline Coulombe, our chief executive officer, to identify business opportunities to increase the distribution of our products worldwide and increase the number of products offered. We currently have a distribution network of retail outlets in Canada, France and the French Caribbean. We hope to expand the distribution of our products into the United States.We also intend to increase revenues by launching more products and to increase marketing activities for these products. Competition. The markets for the products offered by us are highly fragmented and are characterized by many of small businesses as well as large multi-national companies. With no significant barriers to enter this market, we believe that competition in the industry will intensify. We believe that we compete on the basis of our formulas adapted to dark skin complexion, premium ingredients, quality and price of our products, and brand name, logo, and packaging recognition. Many of our competitors market products that are well known and trusted by the consumer marketplace. Many of our competitors have significantly greater financial and other resources than we do and have the ability to spend more aggressively on advertising and marketing, spend more on product development and testing, and have more flexibility than we do to respond to changing business and economic conditions and changes in preferences for cosmetic products. Intellectual Property. The License Agreement provides us with the exclusive right and license to utilize and exploit the trademarks, domain name and know-how of Nacara in connection with the distribution, marketing and sale of the Nacara Brand products. We have the exclusive right to use www.nacara.com in the distribution, marketing and sale of the Nacara products. Under current domain name registration practices, no one else can obtain an identical domain name, but someone might obtain a similar name, or the identical name with a different suffix, such as “.org”, or with a country designation. The regulation of domain names in the United States and in foreign countries is subject to change, and we could be unable to prevent third parties from acquiring domain names that infringe or otherwise decrease the value of our domain names. Government Regulation. We are subject to federal, state and local laws and regulations generally applied to businesses. We believe that we are in conformity with all applicable laws in Florida, Quebec, Canada and the United States. Our Research and Development. We are not currently conducting any research and development activities, although we anticipate we may need to conduct product development activities in the near future. Employees. As of March 20, 2012, we have no employees other than our officer, Caroline Coulombe. We are not a party to any employment agreements. Facilities. Our executive, administrative and operating offices are located at 3055 L’Assomption Blvd., Montreal, Quebec H1N 2H1 Canada. 4 Risk Factors. Investing in our common stock involves a high degree of risk. Any potential investor should carefully consider the risks and uncertainties described below before purchasing any shares of the Registrant’s common stock. Our limited operating history may not serve as an adequate basis to judge our future prospects and results of operations. We have a relatively limited operating history. Such limited operating history makes it difficult for investors to evaluate our business and future operating results. An investor in our securities must consider the risks, uncertainties, and difficulties frequently encountered by companies in our industry. The risks and difficulties we face include challenges in accurate financial planning as a result of limited historical data and the uncertainties resulting from having had a relatively limited time period in which to implement and evaluate our business strategies as compared to older companies with longer operating histories. We will need additional capital to implement our current business strategy, which may not be available to us. In order to grow our business, we will need to raise capital. Obtaining financing will be subject to a number of factors, including market conditions, our operating performance and investor sentiment. These factors may make the timing, amount, terms and conditions of financing unattractive to us. We cannot assure you that we will be able to obtain any financing. If we are unable to obtain the financing needed to implement our business strategy, we may have to delay, modify or abandon some of our expansion plans. This could slow our growth, negatively affect our ability to compete in the marketplace and adversely affect our financial condition. Raising additional capital will cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights. We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt, making capital expenditures or declaring dividends. We rely heavily on Caroline Coulombe, our current President and Chief Executive Officer. The loss of her services would have a material adverse effect upon the Company and its business and prospects. Our success depends, to a significant extent, upon the continued services of Caroline Coulombe, who is the founder of Nacara and our current President and Chief Executive Officer. Ms. Coulombe is not subject to any agreement that prevents her from soliciting our existing customers or disclosing information deemed confidential to us. If Ms. Coulombe resigns to join a competitor or form a competing company, the loss of such personnel, together with the loss of any customers or potential customers due to such executive’s departure, could materially and adversely affect our business and results of operations. Developing and increasing awareness of our brand is crucial to increasing our customer base and our revenues. We believe that increasing awareness of our brand will be critical to expanding our customer base and our revenues, especially as we expand our line of product offerings. If we fail to advertise and market our products effectively, we may not succeed in maintaining or increasing awareness of our brands and we may lose customers and our revenues will decline. The delivery of quality products to our customers is also of importance to maintaining and enhancing the reputation of our brand. If our customers do not perceive our products to be of high quality, demand for our products will decline, which could lead to a decline in revenues and an adverse effect on our financial condition. We may be subject to product liability claims from our products, which could result in costly litigation and a material adverse effect on our business and results of operations. The development and sale of our cosmetic products exposes us to the risk of damages from product liability or other consumer claims. Such claims may arise despite our quality controls, proper testing and instruction for use of our products. We may still incur substantial costs related to a product liability claim, which could adversely affect our business and results of operations. 5 We cannot guarantee the protection of our intellectual property rights and if infringement of our intellectual property rights occurs, including counterfeiting of our products, our reputation and business may be adversely affected. Should any such infringement and/or counterfeiting occur, our reputation and business may be adversely affected. We may also incur significant expenses and substantial amounts of time and effort to enforce our trademark rights in the future. Such diversion of our resources may adversely affect our existing business and future expansion plans. The costs to meet our reporting requirements as a public company subject to the Exchange Act of ’34 will be substantial and may result in us having insufficient funds to operate our business. We will incur ongoing expenses associated with professional fees for accounting and legal expenses associated with being a public company. We estimate that these costs will range up to $100,000 per year for the next few years. Those fees will be higher if our business volume and activity increases. Those obligations will reduce and possibly eliminate our ability and resources to fund our operations and may prevent us from meeting our normal business obligations. Risks Related to our Common Stock Our stock price may be volatile, which may result in losses to our stockholders. The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies quoted on the Over-The-Counter Bulletin Board and OTCQB, where our shares of common stock are quoted, generally have been very volatile and have experienced sharp share price and trading volume changes. The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many of the following factors, some of which are beyond our control: · variations in our operating results; · changes in expectations of our future financial performance, including financial estimates by securities analysts and investors; · changes in operating and stock price performance of other companies in our industry; · additions or departures of key personnel; and · future sales of our common stock. Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock. In particular, the market prices for stocks of companies often reach levels that bear no established relationship to the operating performance of these companies. These market prices are generally not sustainable and could vary widely. Our common shares may be thinly-traded, and our stockholders may be unable to sell at or near ask prices or at all if they need to sell their shares to raise money or otherwise desire to liquidate such shares. We cannot predict the extent to which an active public market for our common stock will develop or be sustained due to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors, and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained. 6 The market for our common shares may be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will be more volatile than a seasoned issuer for the indefinite future. The potential volatility in our share price is attributable to a number of factors. First, as noted above, our common shares may be sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price. Secondly, an investment in us is a speculative or “risky” investment due to our lack of significant revenues or profits to date and uncertainty of future market acceptance for current and potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Investors should not look to dividends as a source of income. In the interest of reinvesting initial profits back into our business, we do not intend to pay cash dividends in the foreseeable future. Consequently, any economic return will initially be derived, if at all, from appreciation in the fair market value of our stock, and not as a result of dividend payments. Because we may be subject to the “penny stock” rules, the level of trading activity in our stock may be reduced, which may make it difficult for investors to sell their shares. Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks, like shares of our common stock, generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on NASDAQ. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares. We lack a public market for shares of our common stock, which may make it difficult for investors to sell their shares. There is no public market for shares of our common stock. We cannot guaranty that an active public market will develop or be sustained. Therefore, investors may not be able to find purchasers for their shares of our common stock. Should there develop a significant market for our shares, the market price for those shares may be significantly affected by such factors as our financial results and introduction of new products and services. Factors such as announcements of new services by us or our competitors and quarter-to-quarter variations in our results of operations, as well as market conditions in our sector may have a significant impact on the market price of our shares. Further, the stock market has experienced extreme volatility that has particularly affected the market prices of stock of many companies and that often has been unrelated or disproportionate to the operating performance of those companies. Description of Securities. Common Stock. We are authorized to issue 125,000,000 shares of common stock, $0.001 par value per share. There are currently 5,365,400 shares of common stock issued and outstanding. Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the stockholders. As of March 20, 2012, Cosmera owned 3,574,920 shares of our common stock, or approximately 66.63% of the outstanding shares of our common stock. Accordingly, as of March 20, 2012, Caroline Coulombe, through her controlling ownership of Cosmera, is in a position to control all of our affairs. 7 Preferred Stock. We have no authorized shares of our preferred stock. Options. We have no options to purchase shares of common stock outstanding. Warrants. We have no warrants outstanding to purchase shares of our common stock. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 20, 2012, by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group. Unless otherwise indicated, the persons named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable. Title of Class Name of Beneficial Owner Amount and Nature Of Beneficial Owner Percentage of Class (1) Common Stock Caroline Coulombe 3055 L’Assomption Blvd. Montreal, Quebec H1N 2H1 Canada 3,574,920 Shares(2) Chief Executive Officer, President, Chief Financial Officer, Secretary, Treasurer and a director 66.63% Common Stock 7776446 Canada Inc. doing business as Cosmera Inc. 5670 Sherbrooke Street East Montreal, Quebec H1N 1A1 Canada 3,574,920 Shares(2) 66.63% Common Stock George Metrakos 5925 Monkland Avenue, Suite 202 Montreal, Quebec H4A 1G7 Canada No Shares Director(3) 0% Common Stock All Executive Officers and Directors as a Group 3,574,920 Shares(2) 66.63% Percentage of beneficial ownership of our common stock is based on 5,365,400 shares of common stock outstanding as of the date of the table. Caroline Coulombe, our officer and director, has sole and dispositive power over the shares held by 7776446 Canada Inc. doing business as Cosmera Inc. Resigned as a director effective as of the date that is ten days after the date on which we file with the SEC and mail to our shareholders our information statement in accordance with Rule 14f-1 of the Exchange Act (the “Information Statement Date”). Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. In accordance with Securities and Exchange Commission rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees. Subject to community property laws, where applicable, the persons or entities named in the table above have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them. 8 Executive Officers and Directors. Our directors and principal executive officers are as specified on the following table: Name Age Position Caroline Coulombe 44 Chief Executive Officer, President, Chief Financial Officer, Secretary, Treasurer and a director George Metrakos 40 Director(1) Resigned as a director effective as of the Information Statement Date. The following is a brief summary of the background of the executive officer and director of the Company: Caroline Coulombe, is the President, Chief Executive Officer Chief Financial Officer, Secretary, Treasurer and a Director of GMS Capital Corp. From March 2012 to August 2007, Mrs. Coulombe was founder and CEO of Nacara Montreal Inc. and from August 2007 to December 1999, Mrs. Coulombe was founder and CEO of Nacara Cosmetics Inc. Mrs. Coulombe has over 19 years in the cosmetics industry, having served in managerial and executive capacities for a number of cosmetics companies. Over the years, Mrs. Coulombe has concluded several partnerships with cosmetic companies including many of France's most prestigious companies such as Galeries Lafayette, Marionnaud, Nocibé, Beauty Success. Since 1995, Mrs. Coulombe has served as a Director of Caisse De Mercier Rosemont, a Montreal-based financial institution. From April 2006 to February 2007, Mrs. Coulombe was also a member of a working group on the participation of Black communities in Quebec established by the Minister of Immigration and Cultural Communities of the Quebec Government. Mrs. Coulombe has also been a founder and member of the Entrepreneurship Committee of the Young Chamber of Commerce of Montreal. Mrs. Coulombe has a diploma in business administration from L'Université du Québec à Montréal. The Registrant anticipates entering into an employment agreement with Mrs. Coulombe, the terms of which will be disclosed when available, pursuant to which Mrs. Coulombe is expected to receive a salary and/or stock based compensation. Mrs. Coulombe does not currently own any shares of the Registrant’s common stock. Family Relationships. There are no family relationships among any of the officers and directors. Board Committees. Our Board of Directors has no committees. Because our Board of Directors will consist of only one member as of the Information Statement Date, we do not have a standing nominating, compensation or audit committee. Rather, our full Board of Directors performs the functions of these committees. Also, we do not have an audit committee financial expert on our board of directors as that term is defined by Item 407(d)(5) of Regulation S-K promulgated by the SEC. Caroline Coulombe, our current director, is also an executive officer of the Company and is therefore not independent. Certain Relationships and Related Transactions. Caroline Coulombe, our chief executive officer , is the president, director and controlling shareholder of 7776446 Canada Inc. doing business as Cosmera Inc., which is the controlling shareholder of the Registrant, and Ms. Coulombe is also the president, director and a principal shareholder of Nacara Montreal Inc. Therefore, the transactions contemplated by the Stock Purchase Agreement, the Lock-Up Agreement and the License Agreement are related party transactions. Item 7.01 Regulation FD Disclosure. On March 20, 2012, the Registrant issued a press release to announce that it has acquired an exclusive worldwide license for commercialization rights to current and future Nacara brand cosmetics.A copy of the release is attached to this Current Report on Form 8-K as Exhibit 99.1. This information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act and is not incorporated by reference into any filing of the Registrant, whether made before or after the date of this report, regardless of any general incorporation language in the filing, except to the extent expressly set forth by specific reference in such a filing. 9 Item 8.01. Other Events. On March 20, 2012, the Registrant’s Board approved the Forward Split and Name Change subject to approval of the shareholders of the Registrant. On March 20, 2012, the Registrant changed the address of its executive offices to 3055 L’Assomption Blvd., Montreal, Quebec H1N 2H1 Canada and its telephone number to (514) 254-9473. On March 20, 2012, the Registrant assigned its two remaining software client accounts to Metratech Business Solutions, Inc. in exchange for $5,245.86, effective as of April 1, 2012. Item 9.01 Exhibits. (d) Exhibits. The following exhibit is filed with this Current Report on Form 8-K. Exhibit Number Description of Exhibit License and Distribution Agreement between the Registrant and 8012415 Canada Inc. dated March 16, 2012. Stock Purchase Agreement between the Registrant and Nacara Montreal Inc. dated March 16, 2012. Lock-Up Agreement between the Registrant and Nacara Montreal Inc. dated March 16, 2012. Stock Cancellation Agreement between the Registrant and 7776446 Canada Inc. doing business as Cosmera Inc. dated March 20, 2012. Press Release dated March 20, 2012. 10 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. March 21, 2012 GMS Capital Corp. By: /s/Caroline Coulombe Caroline Coulombe President, Chief Executive Officer, ChiefFinancial Officer 11

UNITED STATES OMB APPROVAL SECURITIES AND EXCHANGE COMMISSION OMB Number: 3235-0456 Washington, D.C. 20549 Expires: March 31, 2012 Estimated average burden hours per response.2 FORM 24F-2 Annual Notice of Securities Sold Pursuant to Rule 24f-2 Read instructions at end of Form before preparing Form. 1.Name and address of issuer:
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Exhibit 32.1 CERTIFICATION PURSUANT TO SECTION -OXLEY ACT OF 2002 The undersigned, Josh Kimmel, hereby certifies, pursuant to Section 906 of theSarbanes-OxleyAct of 2002, that: (a) the quarterly report on Form 10-Q of Breathe Ecig Corp. for the period ended September 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of theSecurities Exchange Act of 1934; and (b) information contained in the quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Breathe Ecig Corp. Date: November 23,2015 By: /s/ JoshKimmel Josh Kimmel Chief Executive Officer and Chief Financial Officer

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Date of Report: April 30, 2009 (Date of earliest event reported) Rosetta Resources Inc. (Exact name of registrant as specified in its charter) DE 000-51801 43-2083519 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification Number) 717 Texas, Suite 2800 Houston, TX 77002 (Address of principal executive offices) (Zip Code) 713-335-4000 (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: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-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)) Item 7.01. Regulation FD Disclosure On April 30, 2009, Rosetta Resources Inc. ("Rosetta") announced that it will release its first quarter 2009 financial results and operational update on Monday, May 11, 2009 at 10:00 a.m. Central Time. The conference call will be hosted by Randy L. Limbacher, Rosetta’s President and Chief Executive Officer.

Title: Can apartment leasing office force us to move to a first-floor because our toddler makes noise? Question:Florida I have a two year old with sensory and neurological speech and communication disorders and is undergoing therapy for both. She runs some, spins around, but for the most part behaves and plays like any normal toddler. Due to her disability, she is incapable of jumping, and only weighs 33 pounds. She is sensory-seeking and sometimes runs to try to get more sensory input, but through her therapy we have implemented other ways to help her find the input she is looking for. We had a downstairs neighbor when we first moved-in (early June), and never had a single noise complaint. Then in mid-August, an existing resident of the community moved into the unit below us. She made a noise complaint within the first week that she lived in the unit. Her adult daughter works late in the evening and our daughter, who is 2 years old, was waking her up when playing in her room in the mornings. When the community director called us about the complaint, I informed her that our daughter has special needs, is in therapy and that the noise she is making is not outside normal two-year-old behavior. She immediately assumed we would take no action to try to appease the other resident, escalated the issue to her "legal team" and called back to inform us the only course of action was to have us move to a first-floor apartment. I asked her if they would pay the moving expenses, and she said, "That's not my problem." We told her we thought she was being unfairly biased toward the complainant and she told us she had no reason to believe the other resident would lie. This resident has had dogs and children above her before and "never made a single complaint." (Upon speaking to the resident herself at a future date, the resident informed us that she made multiple complaints to the office regarding the noise a child above unit her was making at her last apartment on the other side of the community.) When we expressed resistance to moving to a new unit at our own expense, she said that if the problem continued, she would place a "letter" on our door-implying she would evict us. We then tried to de-escalate the issue by speaking to the neighbor ourselves and have since, laid out extra floor rugs in our daughter's bedroom, and we take her out of the house from 6:30 AM until after her speech and occupational therapy sessions, and are not back home until the afternoon most days. To further accommodate our neighbor's adult daughter, if we are home on weekends we keep our daughter with us in our own bedroom until at least 11 am. We have had cordial conversations with the neighbor making the complaints to assess what else we can do to help, and besides all of our effort, the office called again this afternoon to inform us of a new noise complaint and threaten a forced move to a first-floor unit. In the last few weeks, we had maintenance out for a couple of work-orders. We also had them look at the flooring because we believe part of the issue to be caused by the crumbling padding and weak points underneath the carpet. They initially came when we were not at home, and deemed the flooring to be in good order. The next day, they came again to fix a ceiling fan, and I showed the maintenance team member the problems with the floor. He told us they would send the carpet company out to re-pad the bedroom and fix a weak point in the hallway. Yesterday, I initiated a conversation in passing to the downstairs resident, as we had not heard of any issues in months. The neighbor said, "Nothing has gotten better. All day, every day, it is loud." I was very friendly and informed her of the maintenance team's plan to re-pad the bedroom. The neighbor said that her own daughter no longer stayed with her because she couldn't sleep. At some point after this conversation, the neighbor talked to the office and asked about the carpet. The community director then called us this afternoon to report another noise complaint, and tell us we were mistaken if we believed they were doing repairs to the flooring. She implied we were lying about what maintenance told us, and she again threatened to make us move to a first-floor unit and escalated into raising her voice. When I asked that she not interrupt me, talk over me or raise her voice, she (in a raised tone) claimed that she had not been loud with me and had witnesses in the office to prove it. The community director is rude and gets verbally aggressive whenever we challenge her opinion or disagree with her version of the facts. Is this issue covered under the Fair Housing Act? Can they legally force us to move? Can they legally evict us if we refuse to transfer? Is there any way to stop the community director from treating us with such aggression? This whole situation has us stressed to the max. We have made massive changes to our schedule and way of life to try to decrease the sound, but at this point, we are stressing every time we drop something in the kitchen or our child sprints across the room. I can't live like this anymore. I need to know what actions to take. Answer #1: Does your lease say anything about noise, quiet hours, or rugs/carpeting?Answer #2: What kind of lease do you have? If you are month to month, then the landlord can terminate it for any reason with the proper notice. If it's an annual lease, then you have more leverage. The Fair Housing Act of 1968 says that it it illegal for landlords to discriminate against tenants with children. However, it is not illegal to discriminate against tenants who make noise. If the noise complaints are legitimate, and if your lease says you cannot make excessive noise (which it most likely does), then that may be grounds for finding you in breach of the lease. I do not know whether Florida requires you to be given a certain amount of time to correct the breach, but most states do.

Exhibit 10.15 First Amendment to the APACHE CORPORATION 2011 Omnibus Equity Compensation Plan and maintains the 2011 Omnibus Equity Compensation Plan, as amended and restated May 12, 2016 (the “Plan”); and WHEREAS, the Company, pursuant to Section 16 of the Plan, has the right to amend definitions of “Change of Control” and “Involuntary Termination” as defined in its various compensation plans. 1. Section 2.1(e) is hereby amended in its entirety as follows: Company’s Income Continuance Plan. 2. Section 2.1(o) is hereby amended in its entirety as follows: (o)    “Involuntary Termination” means the termination of employment of the Attest:         APACHE CORPORATION                               By: Rajesh Sharma         Dominic J. Ricotta Corporate Secretary         Senior Vice President,           Human Resources

Exhibit 10.3   COMMERCIAL PLEDGE AGREEMENT   Principal $675,000.00 Loan Date 04-21-2008 Maturity 04-21-2009 Loan No. 503003088 Call / Coll Account Office LL Initials   Grantor:   Lender: Grand Bank, N.A.         One Edinburg Road     Matawan, NJ  07747     Hamilton, NJ  08619         Borrower. The word "Borrower" means PacificHealth Laboratories, Inc. and and assigns.         Grantor. The word "Grantor” means PacificHealth Laboratories, Inc..   guaranty of all or part of the Note*   Income and Proceeds. The words Income and Proceeds" mean all present and future Collateral, including accounts, documents, instruments, chattel paper, and general intangibles.     Lender. The word "Lender" means Grand Bank, N.A., its successors and assigns.   Note. The word "Note" means the Note executed by PacificHealth Laboratories, Inc. in the principal amount of $675,000.00 dated April 21, 2008, together with   Obligor. The word "Obligor' means without limitation any and all persons   Property. The word 'Property' means all of Grantor's right, title and interest of this Agreement.     THIS COMMERCIAL PLEDGE AGREEMENT dated April 21, 2008, is made and executed between PacificHealth Laboratories, Inc, ("Grantor") and Grand Bank, N.A.     all of Grantor's property (however owned if more than one), in the possession of Lender (or in the possession of a third party subject to the control of Lender), whether existing now or later and whether tangible or intangible in character, including without limitation each, and, all of the following:   Pledged Collateral Account Agreement with Oppenheimer Account #A81-0740868 which will be funded by a minimum $1,350,000 of assets maintained by Oppenheimer   In addition, the word "Collateral" includes all of Grantor's property (however owned), in the possession of Lender (or in the possession of a third party subject to the control of Lender), whether now or hereafter existing and whether tangible or intangible in character, including without limitation each of the following:       (C) All promissory notes, bills of exchange, stock certificates, bonds, savings passbooks, time certificates of deposit, insurance policies, and all other instruments and evidences of an obligation.   (D) All records relating to, any of the property described in this Collateral section, whether in the form of a writing, microfilm, microfiche, or electronic media.       COMMERCIAL PLEDGE AGREEMENT Loan No: 50300088 (Continued) Page 2   right of setoff in all Grantor's accounts with Lender (whether checking;                 unless Lender is required by law to pay such fees and costs. if Grantor changes     Lender's security interest in the Collateral, Grantor also agrees to execute any   the Collateral.   matured.       directs the Obligors, if Lender decides to collect the income and Proceeds, to   to file any claim or claims onto take any action or institute or take part in   Lender's security interest. If any of the     COMMERCIAL PLEDGE AGREEMENT Loan No: 503003088 (Continued) Page 3   Collateral consists of securities for which no certificate has been issued, of time Grantor may not be Indebted to Lender.   shall be in addition to all other rights and remedies to which Lender may are entitled upon Default     Agreement:   Indebtedness.         ceases to be in full force and effect (including failure of any Related Documents to create a valid and perfected security interest or lien) at any time       Insufficient Market Value of Securities. Stock: The Loan to value shall not exceed 70%; and as a result of the deterioration of the market value of the Collateral, Grantor does not, by the close of business on the next business day after Grantor has received notice from Lender of the deterioration, either (1) reduce the amount of the Indebtedness in this loan as required by Lender or (2) pledge or grant an additional security interest to increase the value of the Collateral as required by Lender.     Adverse Change. A material adverse change occurs n Grantor's financial Indebtedness is impaired.     Cure Provisions. If any default, other than a default in payment or failure to satisfy Lender's requirement in the Insufficient Market Value of Securities section is curable and if Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Grantor, after receiving written notice from Lender demanding cure         COMMERCIAL PLEDGE AGREEMENT Loan No: 503003088 (Continued) Page 4       will have no obligation to delay sale until the securities can be registered,   investment properly, on such terms as Lender may deem appropriate, in its sole control agreement or power of attorney: (6) exercise any voting, conversion, any investment Property, or to pay the cash surrender or account termination   Collateral.   reasonable.         this Agreement:     court.     COMMERCIAL PLEDGE AGREEMENT Loan No 503003088 (Continued) Page 5   Caption Headings. Caption headings in this Agreement are o convenience purposes Agreement.   Lender and to the extent not preempted by federal law, the laws of the State of New Jersey without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of New Jersey.   Choice of Venue. If there is a lawsuit Grantor agrees upon Lenders request to submit to the jurisdiction of the courts of Mercer County, State of New Jersey.   this Agreement shall not prejudice or constitute a waiver of Lenders right   Non-Liability of Lender. The relationship between Grantor and Lender created by or joint venture between Lender and Grantor.   Any party may chance its address for notices under this Agreement by giving formal written notice to the other patties, specifying that the purpose of the   Agreement.   to the benefit of the parties, their successors and assigns, If ownership of the to Grantor, may deal with Grantors successors with reference to this Agreement Indebtedness.   Agreement.   any other party.   AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED APRIL 21, 2008.   GRANTOR:                             By:   By: /s/ Stephen P. Kuchen       Robert Portman, CEO of PacificHealth   Stephen P. Kuchen, CFO of PacificHealth     Laboratories, Inc.     Laboratories, Inc.                   LENDER:                                                 Authorized Signer                         /s/Angela Kiel             Acknowledgment State of New Jersey County of Monmouth Be it remembered that on this 21st day of April 2008, before me, the undersigned authority, personally appeared Robert Portman, who, I am satisfied is the person named in the foregoing instrument, and I having first made known to them the contents thereof, they acknowledged that they signed, sealed and delivered the same as their voluntary act and deed.  All of which is hereby certified. /s/ Patrice Genco Nichas Patrice Genco Nichas, Esq., an attorney duly admitted to practice law in New Jersey Acknowledgment State of New Jersey County of Monmouth authority, personally appeared Stephen P. Kuchen, who, I am an attorney duly admitted

Name: nan Type: Decision Subject Matter: nan Date Published: 1968-07-30 nan

EXHIBIT 10.1     SECURITIES PURCHASE AGREEMENT dated as of September 18, 2012 between SUFFOLK BANCORP and THE INVESTOR PARTY HERETO                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           TABLE OF CONTENTS   ARTICLE I   Purchase; Closing         1.1     Purchase Page   1 1.2 Closing 1   ARTICLE II Representations and Warranties     2.1 Disclosure 3 2.2 4 2.3 11   ARTICLE III Covenants     3.1 Efforts 13 3.2 Confidentiality 13       ARTICLE IV Additional Agreements     4.1 Registration Rights 13 4.2 Legend 23 4.3 NASDAQ Listing 24 4.4 Certain Transactions 24 4.5 Witholding 24 4.6 Notice of Control 24 ARTICLE V Termination     5.1 Termination 25 5.2 Effects of Termination 25           -i-     ARTICLE VI Miscellaneous       6.1     Survival Page   25 6.2 Amendment 25 6.3 Waiver 25 6.4 Counterparts 25 6.5 Governing Law; Jurisdiction 26 6.6 WAIVER OF JURY TRIAL 26 6.7 Notices 26 6.8 Entire Agreement; Assignment 27 6.9 Other Definitions 27 6.10 Captions 28 6.11 Severability 28 6.12 28 6.13 Specific Performance 28 6.14 Public Announcements 29 6.15 Other Investors   29           -ii-     INDEX OF DEFINED TERMS Term Location of Definition   Affiliate 6.9(b) Agreement Preamble Bank 1.2(b)(1)(B) Beneficial Owner 6.9(h) BHC Act 2.2(a) BHC Act Control 2.2(t) Board of Directors business day 6.9(f) Cash Proceeds 1.1 Closing 1.2(a) Closing Date 1.2(a) Common Stock Recitals Company Preamble Company 10-K 2.2(e) Company Reports 2.2(f) Company Stock Option 2.2(c) Company Subsidiaries 2.2(b) Company Subsidiary 2.2(b) control 6.9(b) Disclosure Schedule 2.1(a) Escrow Agent Recitals Escrow Agreement Recitals FDIC 2.2(a) GAAP 2.1(b)(2)(A) Governmental Entities 2.2(d)(3) Indemnitee 4.1(g)(1) Information 3.2 Investor Preamble IRS 4.5 knowledge of the Company 6.9(i) Liens 2.2(b) Losses Material Adverse Effect 2.1(b) OFAC 2.2(w) Other Investors 1.2(b)(1)(A) Pending Underwritten Offering 4.1(l)   Permitted Liens 2.2(g) person 6.9(g) Piggyback Registration 4.1(a)(4) Press Release 6.14 Previously Disclosed 2.1(c)   -iii-   Term Location of Definition   Purchase 1.1 Purchase Agreements Recitals register 4.1(k)(1) registered Registrable Securities 4.1(k)(2) registration Registration Deadline Registration Expenses 4.1(k)(3) Rule 144 4.1(k)(4) Rule 144A Rule 158 Rule 159A Rule 405 Rule 415 SARs 2.2(c) 4.1(k)(5) SEC 2.1(c)(2) Securities Act 2.3(c) Selling Expenses 4.1(k)(6) Shares Recitals Shelf Registration Statement Special Registration subsidiary 6.9(a) U.S. Sanctions Laws 2.3(f) Underwritten Offering   -iv-     SECURITIES PURCHASE AGREEMENT, dated as of September 18, 2012 (this “Agreement”), between SUFFOLK BANCORP, a New York corporation (the “Company”), and the investor listed on Schedule A (the “Investor”).  RECITALS: A.  The Company intends to sell to the Investor, and the Investor intends to purchase from the Company, as an investment in the Company, the number of shares set forth on Schedule A (the “Shares”) of common stock, par value $2.50 per share, of the Company (the “Common Stock”), at a price of $13.50 per Share, B.  Concurrently with the execution of this Agreement, the Company is entering into an Escrow Agreement (the “Escrow Agreement”) with American Stock Transfer & Trust Company, LLC (the “Escrow Agent”).   C.  Substantially concurrently with the execution of this Agreement, the Company is entering into purchase agreements with certain other investors pursuant to which the investors named therein will purchase shares of Common Stock subject to the terms and conditions set forth therein (such purchase agreements, together with this Agreement, the “Purchase Agreements”).  follows: ARTICLE I PURCHASE; CLOSING to the Investor, the Shares (the “Purchase”) for the aggregate purchase price set forth on Schedule A (the “Cash Proceeds”).       1.2          Closing. (a)  The closing of the Purchase (the “Closing”) will Street, New York, New York 10019 at 10:00 a.m., New York time, on September 19, 2012 (the “Closing Date”), or at such later time as the last of the conditions specified in Section 1.2(b) is satisfied or waived (other than those conditions satisfaction as of the Closing).  Prior to the Closing, the Investor shall deliver to the Escrow Agent the Cash Proceeds, except as may otherwise be agreed by the Investor and the Company.  At the Closing, (1) the Company shall deliver to the Investor (A) physical certificates evidencing the Shares and (B) all other documents to be delivered to the Investor pursuant to Section 1.2(b)(2); and (2) except as may otherwise be agreed by the Investor and the Company, the Company shall instruct the Escrow Agent to deliver the Cash Proceeds by wire the Company.       (B)               CLOSING CONDITIONS.   (1)               THE OBLIGATION OF THE COMPANY TO CONSUMMATE THE CLOSING IS (A)             THE COMPANY SHALL HAVE ENTERED INTO PURCHASE AGREEMENTS PROVIDING FOR THE SALE OF SHARES OF COMMON STOCK BY THE COMPANY TO THE INVESTORS PARTY THERETO (SUCH INVESTORS, OTHER THAN THE INVESTOR, THE “OTHER INVESTORS”) IN EXCHANGE FOR AGGREGATE PROCEEDS OF $12,500,000, AND THE CLOSINGS UNDER THE OTHER PURCHASE AGREEMENTS SHALL OCCUR AND BECOME EFFECTIVE SIMULTANEOUSLY WITH THE CLOSING; (B)              THE TRANSACTIONS CONTEMPLATED BY EACH OF THE LOAN PURCHASE AGREEMENTS ENTERED INTO BY THE SUFFOLK COUNTY NATIONAL BANK OF RIVERHEAD (THE “BANK”) ON THE CLOSING DATE SHALL HAVE CLOSED; (C)              THE REPRESENTATIONS AND WARRANTIES OF THE INVESTOR CONTAINED IN THIS AGREEMENT SHALL BE TRUE AND CORRECT ON AND AS OF THE DATE HEREOF AND ON AND AS OF THE CLOSING DATE AS IF MADE ON AND AS OF THE CLOSING DATE (EXCEPT FOR ANY SUCH REPRESENTATIONS OR WARRANTIES EXPRESSLY MADE AS OF THE DATE HEREOF OR AS OF ANOTHER DATE, WHICH SHALL BE TRUE AND CORRECT AS OF SUCH DATE); AND (D)             THE INVESTOR SHALL HAVE PERFORMED IN ALL MATERIAL RESPECTS ALL OF ITS COVENANTS AND OBLIGATIONS IN THIS AGREEMENT THAT ARE TO BE PERFORMED AT OR PRIOR TO THE CLOSING. (2)               THE OBLIGATION OF THE INVESTOR TO CONSUMMATE THE CLOSING IS (A)             THE INVESTOR SHALL HAVE RECEIVED AN OPINION, DATED THE CLOSING DATE, FROM WACHTELL, LIPTON, ROSEN & KATZ, AND/OR ANOTHER NATIONALLY RECOGNIZED LAW FIRM, AS COUNSEL TO THE COMPANY, AS TO THE VALIDITY OF THE SHARES BEING SOLD IN THE PURCHASE, THE COMPLIANCE OF THE PURCHASE WITH FEDERAL SECURITIES LAWS AND OTHER MATTERS AS ARE CUSTOMARY IN COMPARABLE SECURITIES PURCHASES; (B)              THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY CONTAINED IN ANOTHER DATE, WHICH SHALL BE TRUE AND CORRECT AS OF SUCH DATE), AND THE INVESTOR SHALL HAVE RECEIVED A CERTIFICATE OF AN AUTHORIZED OFFICER OF THE COMPANY, DATED AS OF THE CLOSING DATE, CERTIFYING TO THAT FACT; AND   -2-     (C)              THE COMPANY SHALL HAVE PERFORMED IN ALL MATERIAL RESPECTS ALL OR PRIOR TO THE CLOSING, AND THE INVESTOR SHALL HAVE RECEIVED A CERTIFICATE OF AN AUTHORIZED OFFICER OF THE COMPANY, DATED AS OF THE CLOSING DATE, CERTIFYING TO THAT FACT. (3)               THE OBLIGATION OF EACH OF THE COMPANY AND THE INVESTOR TO CONSUMMATE THE CLOSING IS FURTHER SUBJECT TO THE FOLLOWING CONDITIONS: (A)             THIS AGREEMENT SHALL NOT HAVE BEEN TERMINATED IN ACCORDANCE WITH SECTION 5.1 HEREIN; (B)              NO PROVISION OF ANY APPLICABLE LAW OR REGULATION AND NO JUDGMENT, INJUNCTION, ORDER OR DECREE SHALL PROHIBIT THE PURCHASE OR SHALL PROHIBIT OR RESTRICT INVESTOR OR ITS AFFILIATES FROM OWNING OR VOTING ANY OF THE SHARES; (C)              THE PURCHASE BY THE INVESTOR OF THE SHARES WILL NOT RESULT IN THE INVESTOR (INDIVIDUALLY OR TOGETHER WITH ANY OTHER PERSON WITH WHOM THE INVESTOR HAS IDENTIFIED, OR WILL HAVE IDENTIFIED, ITSELF AS PART OF A “GROUP” IN A PUBLIC FILING MADE WITH THE SEC INVOLVING THE COMPANY’S SECURITIES) ACQUIRING, OR OBTAINING THE RIGHT TO ACQUIRE, IN EXCESS OF 9.99% OF THE OUTSTANDING SHARES OF COMMON STOCK OR THE VOTING POWER OF THE COMPANY ON THE CLOSING DATE (AFTER GIVING EFFECT TO THE CLOSING AND THE CLOSINGS OF THE TRANSACTIONS CONTEMPLATED BY THE OTHER PURCHASE AGREEMENTS); AND (D)             THE PURCHASE OF SHARES BY THE INVESTOR SHALL NOT (I) REQUIRE THE INVESTOR OR ANY OF ITS AFFILIATES TO FILE A PRIOR NOTICE UNDER THE CHANGE IN BANK CONTROL ACT, OR OTHERWISE SEEK PRIOR APPROVAL OF ANY BANKING REGULATOR; (II) REQUIRE THE INVESTOR OR ANY OF ITS AFFILIATES TO BECOME A BANK HOLDING COMPANY OR OTHERWISE SERVE AS A SOURCE OF STRENGTH FOR THE COMPANY OR ANY COMPANY SUBSIDIARY; OR (III) CAUSE THE INVESTOR, TOGETHER WITH ANY OTHER PERSON WHOSE SECURITIES OF THE COMPANY WOULD BE AGGREGATED WITH THE INVESTOR’S SECURITIES OF THE COMPANY FOR PURPOSES OF ANY BANK REGULATION OR LAW, TO COLLECTIVELY BE DEEMED TO OWN, CONTROL OR HAVE THE POWER TO VOTE SECURITIES WHICH (ASSUMING, FOR THIS PURPOSE ONLY, FULL CONVERSION AND/OR EXERCISE OF SUCH SECURITIES BY THE INVESTOR AND SUCH OTHER PERSONS) WOULD REPRESENT MORE THAN 9.9% OF ANY CLASS OF VOTING SECURITIES OF THE COMPANY OUTSTANDING ON THE CLOSING DATE (AFTER GIVING EFFECT TO THE CLOSING AND THE CLOSINGS OF THE TRANSACTIONS CONTEMPLATED BY THE OTHER PURCHASE AGREEMENTS). ARTICLE II REPRESENTATIONS AND WARRANTIES delivered to the Investor a schedule (a “Disclosure Schedule”) setting forth, either in response to an express disclosure requirement contained in a provision in this Agreement; provided that the mere inclusion of an item in a Disclosure Schedule as an exception to a representation or warranty will not be deemed an ad mission by the Company that such item represents a material exception or -3-     (B)               “MATERIAL ADVERSE EFFECT” MEANS, WITH RESPECT TO THE INVESTOR, ONLY CLAUSE (2) THAT FOLLOWS, OR, WITH RESPECT TO THE COMPANY, BOTH CLAUSES (1) AND (2) THAT FOLLOW, ANY CIRCUMSTANCE, EVENT, CHANGE, DEVELOPMENT OR EFFECT THAT, INDIVIDUALLY OR IN THE AGGREGATE (1) IS MATERIAL AND ADVERSE TO THE FINANCIAL POSITION, RESULTS OF OPERATIONS, BUSINESS OR CONDITION (FINANCIAL OR OTHERWISE) OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE, OR (2) WOULD MATERIALLY IMPAIR THE ABILITY OF EITHER THE INVESTOR OR THE COMPANY, RESPECTIVELY, TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE MATERIALLY THREATEN OR MATERIALLY IMPEDE THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; PROVIDED, HOWEVER, THAT MATERIAL ADVERSE EFFECT, UNDER CLAUSE (1), SHALL NOT BE DEEMED TO INCLUDE THE IMPACT OF (A) CHANGES IN U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“GAAP”), (B) CHANGES IN APPLICABLE LAWS, RULES AND REGULATIONS OR INTERPRETATIONS THEREOF BY GOVERNMENTAL ENTITIES, (C) ACTIONS OR OMISSIONS OF THE COMPANY EXPRESSLY REQUIRED BY THE TERMS OF THIS AGREEMENT OR TAKEN WITH THE PRIOR WRITTEN CONSENT OF THE INVESTOR, (D) GENERAL CHANGES IN THE ECONOMY OR THE INDUSTRIES IN WHICH THE COMPANY AND ITS SUBSIDIARIES OPERATE, (E) HURRICANES, TORNADOES, EARTHQUAKES, FLOODS OR OTHER NATURAL DISASTERS OR ACTS OF TERRORISM OR WAR (WHETHER OR NOT DECLARED), (F) CHANGES IN THE MARKET PRICE OR TRADING VOLUMES OF THE COMMON STOCK (BUT NOT THE UNDERLYING CAUSES OF SUCH CHANGES), (G) THE FAILURE OF THE COMPANY TO MEET ANY INTERNAL OR PUBLIC PROJECTIONS, FORECASTS, ESTIMATES OR GUIDANCE (BUT NOT THE UNDERLYING CAUSES OF SUCH FAILURE), (H) COMPLIANCE BY A PARTY WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT, AND (I) THE PUBLIC DISCLOSURE OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  (C)                “PREVIOUSLY DISCLOSED” WITH REGARD TO (1) ANY PARTY MEANS INFORMATION SET FORTH ON ITS DISCLOSURE SCHEDULE CORRESPONDING TO THE PROVISION OF THIS AGREEMENT TO WHICH SUCH INFORMATION RELATES; PROVIDED  THAT INFORMATION WHICH, ON ITS FACE, REASONABLY SHOULD INDICATE TO THE READER THAT IT RELATES TO ANOTHER PROVISION OF THIS AGREEMENT SHALL ALSO BE DEEMED TO BE PREVIOUSLY DISCLOSED WITH RESPECT TO SUCH OTHER PROVISION AND (2) THE COMPANY, INCLUDES INFORMATION PUBLICLY DISCLOSED BY THE COMPANY IN THE COMPANY REPORTS FILED BY IT WITH OR FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) AND PUBLICLY AVAILABLE PRIOR TO THE DATE OF THIS AGREEMENT (EXCLUDING ANY RISK FACTOR DISCLOSURES CONTAINED IN SUCH DOCUMENTS UNDER THE HEADING “RISK FACTORS” AND ANY DISCLOSURE OF RISKS INCLUDED IN ANY “FORWARD-LOOKING STATEMENTS” DISCLAIMER OR OTHER STATEMENTS THAT ARE SIMILARLY NONSPECIFIC AND ARE PREDICTIVE OR FORWARD-LOOKING IN NATURE). (D)               EACH PARTY ACKNOWLEDGES THAT IT IS NOT RELYING UPON ANY REPRESENTATION OR WARRANTY NOT SET FORTH IN THIS AGREEMENT.  THE INVESTOR ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO CONDUCT SUCH REVIEW AND ANALYSIS OF THE BUSINESS, ASSETS, CONDITION, OPERATIONS AND PROSPECTS OF THE COMPANY AND THE COMPANY SUBSIDIARIES, INCLUDING AN OPPORTUNITY TO ASK SUCH QUESTIONS OF MANAGEMENT (FOR WHICH IT HAS RECEIVED SUCH ANSWERS) AND TO REVIEW SUCH INFORMATION MAINTAINED BY THE COMPANY, IN EACH CASE AS THE INVESTOR CONSIDERS SUFFICIENT FOR THE PURPOSE OF MAKING THE PURCHASE.  THE INVESTOR FURTHER ACKNOWLEDGES THAT IT HAS HAD SUCH AN OPPORTUNITY TO CONSULT WITH ITS OWN COUNSEL, FINANCIAL AND TAX ADVISERS AND OTHER PROFESSIONAL ADVISERS AS IT BELIEVES IS SUFFICIENT FOR PURPOSES OF THE PURCHASE. -4-     2.2        REPRESENTATIONS AND WARRANTIES OF THE COMPANY. EXCEPT AS PREVIOUSLY DISCLOSED, THE COMPANY REPRESENTS AND WARRANTS TO THE INVESTOR AS OF THE DATE OF THIS AGREEMENT THAT: (A)                ORGANIZATION AND AUTHORITY; BANK REGULATIONS.  THE COMPANY IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF NEW YORK, IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING IN ALL JURISDICTIONS WHERE ITS OWNERSHIP OR LEASING OF PROPERTY OR THE CONDUCT OF ITS BUSINESS REQUIRES IT TO BE SO QUALIFIED AND FAILURE TO BE SO QUALIFIED WOULD HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY, AND HAS CORPORATE BUSINESS AS IT IS NOW BEING CONDUCTED.  THE COMPANY HAS PREVIOUSLY DISCLOSED TO THE INVESTOR TRUE AND CORRECT COPIES OF ITS CERTIFICATE OF INCORPORATION AND BY-LAWS AS AMENDED THROUGH THE DATE OF THIS AGREEMENT.  THE COMPANY IS DULY REGISTERED AS A BANK HOLDING COMPANY UNDER THE BANK HOLDING COMPANY ACT OF 1956, AS AMENDED (THE “BHC ACT”).  THE BANK IS DULY ORGANIZED AND VALIDLY EXISTING AS A NATIONAL BANKING ASSOCIATION AND ITS DEPOSIT ACCOUNTS ARE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (“FDIC”) TO THE FULLEST EXTENT PERMITTED BY THE FEDERAL DEPOSIT INSURANCE ACT AND THE RULES AND REGULATIONS OF THE FDIC THEREUNDER, AND ALL PREMIUMS AND ASSESSMENTS REQUIRED TO BE PAID IN CONNECTION THEREWITH HAVE BEEN PAID WHEN DUE.  THE COMPANY IS NOT, AND HAS NEVER BEEN, AN ISSUER IDENTIFIED IN RULE 144(I)(1) PROMULGATED UNDER THE SECURITIES ACT. (B)               COMPANY’S SUBSIDIARIES.  THE COMPANY HAS PREVIOUSLY DISCLOSED A COMPLETE AND CORRECT LIST OF ALL OF ITS SUBSIDIARIES AS OF THE DATE HEREOF, ALL SHARES OF THE OUTSTANDING CAPITAL STOCK OF EACH OF WHICH ARE OWNED DIRECTLY OR INDIRECTLY BY THE COMPANY.  THE MATERIAL SUBSIDIARIES OF THE COMPANY ARE REFERRED TO HEREIN INDIVIDUALLY AS A “COMPANY SUBSIDIARY” AND COLLECTIVELY AS THE “COMPANY SUBSIDIARIES.”  NO EQUITY SECURITY OF ANY COMPANY SUBSIDIARY IS OR MAY BE REQUIRED TO BE ISSUED BY REASON OF ANY OPTION, WARRANT, SCRIP, PREEMPTIVE RIGHT, RIGHT TO SUBSCRIBE TO, CALL OR COMMITMENT OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITY OR RIGHT CONVERTIBLE INTO, SHARES OF ANY CAPITAL STOCK OF SUCH COMPANY SUBSIDIARY, AND THERE ARE NO CONTRACTS, COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH ANY COMPANY SUBSIDIARY IS BOUND TO ISSUE ADDITIONAL SHARES OF ITS CAPITAL STOCK, OR ANY OPTION, WARRANT OR RIGHT TO PURCHASE OR ACQUIRE ANY ADDITIONAL SHARES OF ITS CAPITAL STOCK.  ALL OF SUCH SHARES SO OWNED BY THE COMPANY ARE DULY AUTHORIZED AND VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND ARE OWNED BY IT FREE AND CLEAR OF ANY LIEN, CLAIM, CHARGE, OPTION, ENCUMBRANCE OR AGREEMENT (“LIENS”) WITH RESPECT THERETO.  EACH COMPANY SUBSIDIARY IS AN ENTITY DULY ORGANIZED, VALIDLY EXISTING, DULY QUALIFIED TO DO BUSINESS AND IN GOOD STANDING UNDER THE LAWS OF ITS JURISDICTION OF INCORPORATION, AND HAS CORPORATE OR OTHER APPROPRIATE ORGANIZATIONAL POWER AND AUTHORITY TO OWN OR LEASE ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS IT IS NOW BEING CONDUCTED, IN EACH CASE EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY.  EXCEPT IN RESPECT OF THE COMPANY SUBSIDIARIES, THE COMPANY DOES NOT BENEFICIALLY OWN, DIRECTLY OR INDIRECTLY, MORE THAN 5% OF ANY CLASS OF EQUITY SECURITIES OR SIMILAR INTERESTS OF ANY CORPORATION, BANK, BUSINESS TRUST, ASSOCIATION OR SIMILAR ORGANIZATION, AND IS NOT, DIRECTLY OR INDIRECTLY, A PARTNER IN ANY PARTNERSHIP OR PARTY TO ANY JOINT VENTURE.  CONSISTS OF 15 MILLION SHARES OF COMMON STOCK, OF WHICH 9,726,814 SHARES WERE OUTSTANDING AS OF JUNE 30, -5-   2012.  As of June 30, 2012, there were outstanding options (each, a “Company Stock Option”) to purchase an aggregate of not more than 185,500 shares of Common Stock and 10,000 stock appreciation rights (the “SARs”).  All of the authorized and issued and are fully paid and nonassessable.  Once issued to the Investor against receipt of the consideration contemplated by this Agreement, the Shares will have been duly authorized and validly issued and will be fully paid and nonassessable.  Except (1)  for the rights granted pursuant to the other Purchase Agreements and (2) the Company Stock Options and the SARs, as of the date hereof there are no outstanding subscriptions, contracts, conversion privileges, options, warrants, calls, preemptive rights or other rights obligating the Company or any Company Subsidiary to issue, sell or otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of capital stock of the Company or any Company Subsidiary. There are no bonds, debentures, securities having the right to vote) on any matters on which holders of Common Stock may vote.   (D)                 AUTHORIZATION; NO DEFAULT.    (1)               THE COMPANY HAS THE CORPORATE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO CARRY OUT ITS OBLIGATIONS HEREUNDER.  THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT BY THE COMPANY AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY HAVE BEEN DULY AUTHORIZED BY THE BOARD OF DIRECTORS OF THE COMPANY (THE “BOARD OF DIRECTORS”).  THIS AGREEMENT HAS BEEN DULY AND VALIDLY EXECUTED AND DELIVERED BY THE COMPANY AND, ASSUMING DUE AUTHORIZATION, EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE INVESTOR, IS A LIMITED BY BANKRUPTCY, INSOLVENCY, MORATORIUM, REORGANIZATIONS, FRAUDULENT TRANSFER OR SIMILAR LAWS RELATING TO OR AFFECTING CREDITORS GENERALLY OR BY GENERAL EQUITABLE PRINCIPLES (WHETHER APPLIED IN EQUITY OR AT LAW).  NO OTHER CORPORATE PROCEEDINGS ARE NECESSARY FOR THE EXECUTION AND DELIVERY BY THE COMPANY OF THIS AGREEMENT, THE PERFORMANCE BY IT OF ITS OBLIGATIONS HEREUNDER OR THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED HEREBY.  (2)               SUBJECT TO COMPLIANCE WITH THE STATUTES, REGULATIONS AND FILINGS REFERRED TO IN SECTION 2.2(D)(3), NEITHER THE EXECUTION, DELIVERY AND PERFORMANCE BY THE COMPANY OF THIS AGREEMENT, NOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, WILL (A) VIOLATE, CONFLICT WITH, OR RESULT IN NOTICE OR LAPSE OF TIME OR BOTH, WOULD CONSTITUTE A DEFAULT) UNDER, OR RESULT IN THE TERMINATION OF, OR ACCELERATE THE PERFORMANCE REQUIRED BY, OR RESULT IN A RIGHT OF TERMINATION OR ACCELERATION OF, OR RESULT IN THE CREATION OF, ANY LIEN UPON ANY OF THE PROPERTIES OR ASSETS OF THE COMPANY OR ANY COMPANY SUBSIDIARY UNDER ANY OF THE MATERIAL TERMS, CONDITIONS OR PROVISIONS OF (I) ITS CERTIFICATE OF INCORPORATION OR BY-LAWS (OR SIMILAR GOVERNING DOCUMENTS) OR (II) ANY NOTE, BOND, MORTGAGE, INDENTURE, DEED OF TRUST, LICENSE, LEASE, AGREEMENT OR OTHER INSTRUMENT OR OBLIGATION TO WHICH THE COMPANY OR ANY COMPANY SUBSIDIARY IS A PARTY OR BY WHICH IT MAY BE BOUND, OR TO WHICH THE COMPANY OR ANY COMPANY SUBSIDIARY MAY BE SUBJECT; OR (B) VIOLATE ANY STATUTE, RULE OR REGULATION OR, TO THE KNOWLEDGE OF THE COMPANY, ANY JUDGMENT, RULING, ORDER, WRIT, INJUNCTION OR DECREE APPLICABLE TO THE COMPANY OR ANY COMPANY SUBSIDIARY OR ANY OF THEIR RESPECTIVE PROPERTIES OR -6-   assets; except, in the case of clauses (A)(ii) and (B), as would not reasonably   (3)               OTHER THAN FILINGS UNDER THE FEDERAL SECURITIES LAWS OR THE SECURITIES OR BLUE SKY LAWS OF THE VARIOUS STATES, THE APPROVAL OF THE SHARES FOR LISTING ON THE NASDAQ STOCK MARKET AND AS OTHERWISE PROVIDED IN THIS AGREEMENT, NO MATERIAL NOTICE TO, FILING WITH, EXEMPTION OR REVIEW BY, OR AUTHORIZATION, CONSENT OR APPROVAL OF, ANY GOVERNMENTAL OR REGULATORY AUTHORITIES, AGENCIES, COURTS, COMMISSIONS OR OTHER ENTITIES (COLLECTIVELY, “GOVERNMENTAL ENTITIES”) OR ANY OTHER PERSON IS NECESSARY FOR THE CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. (E)                COMPANY FINANCIAL STATEMENTS.  EXCEPT AS PREVIOUSLY DISCLOSED, THE CONSOLIDATED STATEMENTS OF CONDITION OF THE COMPANY AND THE COMPANY SUBSIDIARIES AS OF DECEMBER 31, 2011 AND 2010 AND RELATED CONSOLIDATED STATEMENTS OF INCOME, CHANGES IN STOCKHOLDERS’ EQUITY AND CASH FLOWS FOR THE THREE YEARS ENDED DECEMBER 31, 2011, TOGETHER WITH THE NOTES THERETO, INCLUDED IN THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011 (THE “COMPANY 10-K”), AND THE UNAUDITED CONSOLIDATED STATEMENTS OF CONDITION OF THE COMPANY AND THE COMPANY SUBSIDIARIES AS OF JUNE 30, 2012 AND RELATED CONSOLIDATED STATEMENTS OF INCOME, CHANGES IN STOCKHOLDERS’ EQUITY AND CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2012 INCLUDED IN THE COMPANY’S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2012 HAVE BEEN PREPARED IN ACCORDANCE WITH GAAP APPLIED ON A CONSISTENT BASIS AND PRESENT FAIRLY IN ALL MATERIAL RESPECTS THE CONSOLIDATED FINANCIAL POSITION OF THE COMPANY AND THE COMPANY SUBSIDIARIES AT THE DATES SET FORTH THEREIN AND THE CONSOLIDATED RESULTS OF OPERATIONS, CHANGES IN STOCKHOLDERS’ EQUITY AND CASH FLOWS OF THE COMPANY AND THE COMPANY SUBSIDIARIES FOR THE PERIODS STATED THEREIN (SUBJECT TO THE ABSENCE OF NOTES AND YEAR-END AUDIT ADJUSTMENTS IN THE CASE OF INTERIM UNAUDITED STATEMENTS). (F)                 REPORTS.  EXCEPT AS PREVIOUSLY DISCLOSED, SINCE DECEMBER 31, 2010, THE COMPANY AND EACH COMPANY SUBSIDIARY HAVE FILED ALL MATERIAL REPORTS, REGISTRATIONS AND STATEMENTS, TOGETHER WITH ANY REQUIRED AMENDMENTS THERETO, THAT IT WAS REQUIRED TO FILE WITH ANY GOVERNMENTAL ENTITY (COLLECTIVELY, THE “COMPANY REPORTS”).  EXCEPT AS PREVIOUSLY DISCLOSED, AS OF THEIR RESPECTIVE FILING DATES, THE COMPANY REPORTS (1) COMPLIED IN ALL MATERIAL RESPECTS WITH ALL STATUTES AND APPLICABLE RULES AND REGULATIONS OF THE APPLICABLE GOVERNMENTAL ENTITIES, AS THE CASE MAY BE, AND (2) DID NOT CONTAIN ANY UNTRUE STATEMENT OF A UNDER WHICH THEY WERE MADE, NOT MISLEADING.  (G)               PROPERTIES AND LEASES.  EXCEPT AS PREVIOUSLY DISCLOSED, THE COMPANY OR COMPANY SUBSIDIARIES HAVE GOOD TITLE, FREE AND CLEAR OF ANY MATERIAL LIENS OTHER THAN PERMITTED LIENS, TO THE OWNED REAL AND PERSONAL PROPERTY REFLECTED IN THE COMPANY’S CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2011 INCLUDED IN THE COMPANY 10-K, AND ALL REAL AND PERSONAL PROPERTY ACQUIRED SINCE SUCH DATE, EXCEPT SUCH REAL AND PERSONAL PROPERTY AS HAS BEEN DISPOSED OF IN THE ORDINARY COURSE OF BUSINESS.  FOR PURPOSES OF THIS AGREEMENT, “PERMITTED LIENS” MEANS (1) LIENS FOR TAXES AND OTHER GOVERNMENTAL CHARGES AND ASSESSMENTS THAT ARE NOT YET DUE AND PAYABLE, (2) LIENS OF LANDLORDS AND LIENS OF CARRIERS, WAREHOUSEMEN, MECHANICS AND MATERIALMEN AND OTHER LIKE LIENS ARISING IN THE ORDINARY COURSE OF BUSINESS FOR SUMS -7-   not yet due and payable and (3) other Liens or imperfections on property that imperfection.  Except as would not reasonably be expected to have a Material Adverse Effect on the Company, (A) all leases of real property and all other are valid and effective in accordance with their respective terms, and (B) there is not, under any such lease, any existing material default by the Company or both, would constitute such a material default.   (H)               TAXES.  EACH OF THE COMPANY AND THE COMPANY SUBSIDIARIES HAS FILED ALL MATERIAL FEDERAL, STATE, COUNTY, LOCAL AND FOREIGN TAX RETURNS, INCLUDING INFORMATION RETURNS, REQUIRED TO BE FILED BY IT, AND PAID ALL MATERIAL TAXES OWED BY IT, INCLUDING THOSE WITH RESPECT TO INCOME, WITHHOLDING, SOCIAL SECURITY, UNEMPLOYMENT, WORKERS COMPENSATION, FRANCHISE, AD VALOREM, PREMIUM, EXCISE AND SALES TAXES, AND NO TAXES SHOWN ON SUCH RETURNS TO BE OWED BY IT OR ASSESSMENTS RECEIVED BY IT ARE DELINQUENT.  NEITHER THE COMPANY NOR ANY COMPANY SUBSIDIARY IS A PARTY TO ANY PENDING ACTION OR PROCEEDING, NOR TO THE KNOWLEDGE OF THE COMPANY HAS ANY SUCH ACTION OR PROCEEDING BEEN THREATENED BY ANY GOVERNMENTAL ENTITY, FOR THE ASSESSMENT OR COLLECTION OF TAXES, INTEREST, PENALTIES, ASSESSMENTS OR DEFICIENCIES THAT WOULD REASONABLY BE LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY AND, TO THE KNOWLEDGE OF THE COMPANY, NO ISSUE HAS BEEN RAISED BY ANY FEDERAL, STATE, LOCAL OR FOREIGN TAXING AUTHORITY IN CONNECTION WITH AN AUDIT OR EXAMINATION OF THE TAX RETURNS, BUSINESS OR PROPERTIES OF THE COMPANY OR ANY COMPANY SUBSIDIARY WHICH HAS NOT BEEN SETTLED, RESOLVED AND FULLY SATISFIED, OR ADEQUATELY RESERVED FOR (OTHER THAN THOSE ISSUES THAT ARE NOT REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY).  EACH OF THE COMPANY AND THE COMPANY SUBSIDIARIES HAS WITHHELD ALL MATERIAL TAXES THAT IT IS REQUIRED TO WITHHOLD FROM AMOUNTS OWING TO EMPLOYEES, CREDITORS OR OTHER THIRD PARTIES.  (I)                 NO MATERIAL ADVERSE EFFECT.  SINCE DECEMBER 31, 2011, NO CHANGE HAS OCCURRED AND NO CIRCUMSTANCES EXIST THAT HAVE HAD OR ARE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY. (J)                 INSURANCE.  THE COMPANY AND EACH COMPANY SUBSIDIARY IS PRESENTLY INSURED, AND DURING EACH OF THE PAST FIVE CALENDAR YEARS (OR DURING SUCH LESSER PERIOD OF TIME AS THE COMPANY HAS OWNED SUCH COMPANY SUBSIDIARY) HAS BEEN INSURED, FOR REASONABLE AMOUNTS WITH FINANCIALLY SOUND AND REPUTABLE INSURANCE COMPANIES AGAINST SUCH RISKS AS COMPANIES ENGAGED IN A SIMILAR BUSINESS WOULD, IN ACCORDANCE WITH GOOD BUSINESS PRACTICE, CUSTOMARILY BE INSURED. (K)               PERMITS; COMPLIANCE WITH LAWS.  EXCEPT AS PREVIOUSLY DISCLOSED, THE COMPANY AND EACH COMPANY SUBSIDIARY HAS ALL PERMITS, LICENSES, AUTHORIZATIONS, ORDERS AND APPROVALS OF, AND HAS MADE ALL FILINGS, APPLICATIONS AND REGISTRATIONS WITH, GOVERNMENTAL ENTITIES THAT ARE REQUIRED IN ORDER TO PERMIT THEM TO OWN OR LEASE THEIR PROPERTIES AND ASSETS AND TO CARRY ON THEIR BUSINESS AS PRESENTLY CONDUCTED AND THAT ARE MATERIAL TO THE BUSINESS OF THE COMPANY AND THE COMPANY SUBSIDIARIES, TAKEN AS A WHOLE, AND ALL SUCH PERMITS, LICENSES, AUTHORIZATIONS, ORDERS AND APPROVALS ARE IN FULL FORCE AND EFFECT AND, TO THE KNOWLEDGE OF THE COMPANY, (1) NO SUSPENSION OR CANCELLATION OF ANY OF THEM IS THREATENED, AND ALL SUCH FILINGS, APPLICATIONS AND REGISTRATIONS ARE CURRENT, AND (2) THERE ARE NO FACTS OR CIRCUMSTANCES THAT WOULD GIVE RISE TO THE REVOCATION OR MATERIAL ADVERSE MODIFICATION OF ANY SUCH PERMITS, LICENSES, AUTHORIZATIONS, ORDERS AND -8-   approvals.  Except as Previously Disclosed or as is not reasonably expected to have a Material Adverse Effect on the Company, (A) the conduct by the Company and each Company Subsidiary of their business and the condition and use of their properties does not violate or infringe any applicable domestic (federal, state or local) or foreign law, statute, ordinance, license or regulation or have the effect of revoking or limiting FDIC deposit insurance, and (B) neither the Company nor any Company Subsidiary is in default under any order, license,   (L)                 LITIGATION.  EXCEPT AS PREVIOUSLY DISCLOSED, THERE ARE NO LITIGATION, REGULATORY, GOVERNMENTAL OR SIMILAR PROCEEDINGS PENDING OR, TO THE COMPANY’S KNOWLEDGE, THREATENED, TO WHICH THE COMPANY OR ANY COMPANY SUBSIDIARY IS A PARTY OR OF WHICH ANY PROPERTY OF THE COMPANY OR ANY OF ITS SUBSIDIARIES IS THE SUBJECT WHICH, INDIVIDUALLY OR IN THE AGGREGATE, COULD BE REASONABLY EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY. (M)             BROKERS AND FINDERS.  EXCEPT FOR KEEFE, BRUYETTE & WOODS, INC., NEITHER THE COMPANY NOR ANY COMPANY SUBSIDIARY NOR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS OR EMPLOYEES HAS EMPLOYED ANY BROKER OR FINDER OR INCURRED ANY LIABILITY FOR ANY FINANCIAL ADVISORY FEES, BROKERAGE FEES, COMMISSIONS OR FINDER’S FEES, AND NO BROKER OR FINDER HAS ACTED DIRECTLY OR INDIRECTLY FOR THE COMPANY OR ANY COMPANY SUBSIDIARY, IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. (N)               ISSUANCE OF THE SHARES.  THE ISSUANCE OF THE SHARES HAS BEEN DULY AUTHORIZED, AND WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, THE SHARES WILL BE DULY AND VALIDLY ISSUED, FULLY PAID AND NON-ASSESSABLE AND FREE AND CLEAR OF ALL LIENS, OTHER THAN RESTRICTIONS ON TRANSFER IMPOSED BY APPLICABLE SECURITIES LAWS, AND SHALL NOT BE SUBJECT TO PREEMPTIVE RIGHTS.  (O)               EMPLOYMENT MATTERS.  EXCEPT AS PREVIOUSLY DISCLOSED, NO LABOR DISPUTE EXISTS OR, TO THE COMPANY’S KNOWLEDGE, IS IMMINENT WITH RESPECT TO ANY OF THE EMPLOYEES OF THE COMPANY OR ANY COMPANY SUBSIDIARY WHICH WOULD HAVE OR REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT. NONE OF THE COMPANY’S OR COMPANY’S SUBSIDIARIES’ EMPLOYEES IS A MEMBER OF A UNION THAT RELATES TO SUCH EMPLOYEE’S RELATIONSHIP WITH THE COMPANY OR COMPANY SUBSIDIARY, AND NEITHER THE COMPANY NOR ANY OF THE COMPANY SUBSIDIARIES IS A PARTY TO A COLLECTIVE BARGAINING AGREEMENT.  TO THE COMPANY’S KNOWLEDGE, NO EXECUTIVE OFFICER IS, OR IS NOW EXPECTED TO BE, IN MATERIAL VIOLATION OF ANY MATERIAL TERM OF ANY AGREEMENT OR NON-COMPETITION AGREEMENT, OR ANY OTHER CONTRACT OR AGREEMENT OR ANY RESTRICTIVE COVENANT IN FAVOR OF A THIRD PARTY, AND TO THE COMPANY’S KNOWLEDGE, THE CONTINUED EMPLOYMENT OF EACH SUCH EXECUTIVE OFFICER DOES NOT SUBJECT THE COMPANY OR ANY COMPANY SUBSIDIARY TO ANY MATERIAL LIABILITY WITH RESPECT TO ANY OF THE FOREGOING MATTERS. (P)               NO INVESTMENT COMPANY.  THE COMPANY IS NOT, AND IMMEDIATELY AFTER RECEIPT OF PAYMENT FOR THE SHARES WILL NOT BE, AN “INVESTMENT COMPANY,” AN “AFFILIATED PERSON” OF, “PROMOTER” FOR OR “PRINCIPAL UNDERWRITER” FOR, AN ENTITY   -9-     (Q)               S-3 ELIGIBILITY.  THE COMPANY IS ELIGIBLE TO REGISTER THE RESALE OF THE SHARES BY THE INVESTOR USING FORM S-3 PROMULGATED UNDER THE SECURITIES ACT. (R)                 BANK REGULATORY CAPITALIZATION.  AS OF THE DATE HEREOF, THE BANK IS “WELL CAPITALIZED” (AS THAT TERM IS DEFINED IN THE RELEVANT REGULATION OF THE BANK’S PRIMARY FEDERAL REGULATOR). (S)                AGREEMENTS WITH REGULATORY AGENCIES; FIDUCIARY OBLIGATIONS.  EXCEPT AS PREVIOUSLY DISCLOSED, NEITHER THE COMPANY NOR ANY COMPANY SUBSIDIARY IS SUBJECT TO ANY CEASE-AND-DESIST OR OTHER SIMILAR ORDER OR ENFORCEMENT ACTION ISSUED BY, OR IS A PARTY TO ANY WRITTEN AGREEMENT, CONSENT AGREEMENT OR MEMORANDUM OF UNDERSTANDING WITH, ANY GOVERNMENTAL ENTITY THAT RESTRICTS IN ANY MATERIAL RESPECT THE CONDUCT OF ITS BUSINESS.  TO THE COMPANY’S KNOWLEDGE, EACH OF THE COMPANY AND EACH COMPANY SUBSIDIARY HAS ADMINISTERED ALL ACCOUNTS FOR WHICH IT ACTS AS A FIDUCIARY, INCLUDING ACCOUNTS FOR WHICH IT SERVES AS A TRUSTEE, AGENT, CUSTODIAN, PERSONAL REPRESENTATIVE, GUARDIAN, CONSERVATOR OR INVESTMENT ADVISOR, IN ACCORDANCE WITH THE TERMS OF THE GOVERNING DOCUMENTS, AND APPLICABLE LAW.  TO THE COMPANY’S KNOWLEDGE, NONE OF THE COMPANY, ANY COMPANY SUBSIDIARY OR ANY DIRECTOR, OFFICER OR EMPLOYEE OF THE COMPANY OR ANY COMPANY SUBSIDIARY HAS COMMITTED ANY BREACH OF TRUST OR FIDUCIARY DUTY WITH RESPECT TO ANY SUCH FIDUCIARY ACCOUNT. (T)                 COMMON CONTROL.  THE COMPANY IS NOT AND, AFTER GIVING EFFECT TO THE OFFERING AND SALE OF THE SHARES, WILL NOT BE UNDER THE CONTROL (AS DEFINED IN THE BHC ACT AND THE FEDERAL RESERVE’S REGULATION Y (12 CFR PART 225)) (“BHC ACT CONTROL”) OF ANY COMPANY.  THE COMPANY IS NOT IN BHC ACT CONTROL OF ANY FEDERALLY INSURED DEPOSITORY INSTITUTION OTHER THAN THE BANK.  THE BANK IS NOT UNDER THE BHC ACT CONTROL OF ANY COMPANY OTHER THAN THE COMPANY.  NEITHER THE COMPANY NOR THE BANK CONTROLS, IN THE AGGREGATE, MORE THAN FIVE PERCENT OF THE OUTSTANDING VOTING CLASS, DIRECTLY OR INDIRECTLY, OF ANY FEDERALLY INSURED DEPOSITORY INSTITUTION (OTHER THAN, IN THE CASE OF THE COMPANY, THE BANK).  (U)               MATERIAL NON-PUBLIC INFORMATION.  NEITHER THE COMPANY NOR ANY OF ITS OFFICERS OR DIRECTORS NOR ANY OTHER PERSON ACTING ON ITS OR THEIR BEHALF HAS PROVIDED, AND IT HAS NOT AUTHORIZED KEEFE, BRUYETTE & WOODS, INC. TO PROVIDE, THE INVESTOR OR ITS AGENTS OR COUNSEL WITH ANY INFORMATION THAT THE COMPANY BELIEVES CONSTITUTES OR COULD REASONABLY BE EXPECTED TO CONSTITUTE MATERIAL, NON-PUBLIC INFORMATION, EXCEPT FOR SUCH INFORMATION THAT WILL BE DISCLOSED BY THE COMPANY IN THE PRESS RELEASE.  THE COMPANY ACKNOWLEDGES THAT THE INVESTOR WILL RELY ON THE FOREGOING REPRESENTATIONS IN EFFECTING (V)               PRIVATE PLACEMENT.  NO REGISTRATION UNDER THE SECURITIES ACT IS REQUIRED FOR THE OFFER AND SALE OF THE SHARES BY THE COMPANY TO THE INVESTOR PURSUANT TO AND SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.  THE ISSUANCE AND SALE OF THE SHARES HEREUNDER DOES NOT CONTRAVENE THE RULES AND REGULATIONS OF THE NASDAQ STOCK MARKET AS OF THE DATE HEREOF. (W)             OFAC.  NEITHER THE COMPANY NOR ANY COMPANY SUBSIDIARY NOR, TO THE COMPANY’S KNOWLEDGE, ANY DIRECTOR, OFFICER, AGENT, EMPLOYEE, AFFILIATE OR PERSON ACTING ON BEHALF OF THE COMPANY OR ANY COMPANY SUBSIDIARY IS CURRENTLY SUBJECT TO ANY ANY SANCTION, REGULATION, OR LAW PROMULGATED BY THE OFFICE OF FOREIGN ASSETS CONTROL (“OFAC”), THE FINANCIAL CRIMES ENFORCEMENT NETWORK OR ANY OTHER SIMILAR GOVERNMENTAL -10-   Entity (collectively, “U.S. Sanctions Laws”); and the Company will not knowingly   (X)               OTHER PURCHASE AGREEMENTS.  NO PURCHASE AGREEMENT EXECUTED BY AN INSITUTIONAL INVESTOR ON THE DATE HEREOF CONTAINS RIGHTS, OR OTHERWISE BENEFITS THE INVESTOR PARTY THERETO IN A MANNER, MORE FAVORABLE IN ANY MATERIAL RESPECT TO SUCH INVESTOR THAN THE RIGHTS AND BENEFITS ESTABLISHED IN FAVOR OF THE INVESTOR BY THIS AGREEMENT.  Previously Disclosed, the Investor hereby represents and warrants to the Company as of the date of this Agreement that: (A)                ORGANIZATION AND AUTHORITY.  THE INVESTOR IS DULY ORGANIZED, ORGANIZATION, IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING IN ALL JURISDICTIONS WHERE ITS OWNERSHIP OR LEASING OF PROPERTY OR THE CONDUCT OF ITS BUSINESS REQUIRES IT TO BE SO QUALIFIED AND FAILURE TO BE SO QUALIFIED WOULD HAVE A MATERIAL ADVERSE EFFECT ON THE INVESTOR AND HAS THE REQUISITE POWER AND AUTHORITY TO OWN ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS IT IS NOW BEING CONDUCTED.  (B)               AUTHORIZATION; NO DEFAULT.    (1)               THE INVESTOR HAS THE REQUISITE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO CARRY OUT ITS OBLIGATIONS HEREUNDER AND THEREUNDER.  THIS AGREEMENT HAS BEEN DULY AND VALIDLY AUTHORIZED, EXECUTED AND DELIVERED BY THE INVESTOR AND, ASSUMING DUE AUTHORIZATION, EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE COMPANY, IS A VALID AND BINDING OBLIGATION OF THE INVESTOR ENFORCEABLE AGAINST THE INVESTOR IN ACCORDANCE WITH ITS TERMS, EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, MORATORIUM, REORGANIZATIONS, FRAUDULENT TRANSFER OR SIMILAR LAWS RELATING TO OR AFFECTING CREDITORS GENERALLY OR BY GENERAL EQUITABLE PRINCIPLES (WHETHER APPLIED IN EQUITY OR AT LAW).  NO OTHER CORPORATE PROCEEDINGS ARE NECESSARY FOR THE EXECUTION AND DELIVERY BY THE INVESTOR OF THIS AGREEMENT, THE PERFORMANCE BY IT OF ITS OBLIGATIONS HEREUNDER OR THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED HEREBY.  (2)               NEITHER THE EXECUTION, DELIVERY AND PERFORMANCE BY THE INVESTOR OF THIS AGREEMENT, NOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, WILL (A) VIOLATE, CONFLICT WITH, OR RESULT IN A BREACH OF ANY PROVISION OF, OR CONSTITUTE A DEFAULT (OR AN EVENT WHICH, WITH NOTICE OR LAPSE OF TIME OR BOTH, WOULD CONSTITUTE A DEFAULT) UNDER, OR RESULT IN THE TERMINATION OF, OR ACCELERATE THE PERFORMANCE REQUIRED BY, OR RESULT IN A RIGHT OF TERMINATION OR ACCELERATION OF, OR RESULT IN THE CREATION OF, ANY LIEN UPON ANY OF THE PROPERTIES OR ASSETS OF THE INVESTOR UNDER ANY OF THE MATERIAL TERMS, CONDITIONS OR PROVISIONS OF (I) ITS CERTIFICATE OF INCORPORATION OR BY-LAWS (OR SIMILAR GOVERNING DOCUMENTS) OR (II) ANY NOTE, BOND, MORTGAGE, INDENTURE, DEED OF TRUST, LICENSE, LEASE, AGREEMENT OR OTHER INSTRUMENT OR OBLIGATION TO WHICH THE INVESTOR IS A PARTY OR BY WHICH IT MAY BE BOUND, OR TO WHICH THE INVESTOR OR ANY OF THE PROPERTIES OR ASSETS OF THE INVESTOR MAY BE SUBJECT; OR (B) SUBJECT TO COMPLIANCE WITH THE STATUTES AND REGULATIONS REFERRED TO IN THE -11-   next paragraph, materially violate any statute, rule or regulation or, to the knowledge of the Investor, any judgment, ruling, order, writ, injunction or decree applicable to the Investor or any of its properties or assets; except, in the case of clauses (A)(ii) and (B), as would not reasonably be expected to have a Material Adverse Effect on the Investor.   (3)               NO NOTICE TO, FILING WITH, EXEMPTION OR REVIEW BY, OR AUTHORIZATION, CONSENT OR APPROVAL OF, ANY GOVERNMENTAL ENTITY OR ANY OTHER PERSON IS NECESSARY FOR THE CONSUMMATION BY THE INVESTOR OF THE TRANSACTIONS (C)                PURCHASE FOR INVESTMENT.  THE INVESTOR ACKNOWLEDGES THAT THE AND THE RULES AND REGULATIONS THEREUNDER (THE “SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS, AND IS AWARE THAT THE SALE OF THE SHARES TO IT IS BEING MADE IN RELIANCE ON A PRIVATE PLACEMENT EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.  THE INVESTOR (I) IS ACQUIRING THE SHARES FOR ITS OWN ACCOUNT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT FOR INVESTMENT ONLY AND WITH NO PRESENT INTENTION OF DISTRIBUTING ANY OF THE SHARES TO ANY PERSON OR ANY ARRANGEMENT OR UNDERSTANDING WITH ANY OTHER PERSONS REGARDING THE DISTRIBUTION OF SUCH SHARES (THE FOREGOING REPRESENTATION AND WARRANTY NOT LIMITING THE INVESTOR’S RIGHT TO SELL SUCH SHARES PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR OTHERWISE IN COMPLIANCE WITH THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS), (II) WILL NOT SELL OR OTHERWISE DISPOSE OF ANY OF THE SHARES, EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OR EXEMPTION PROVISIONS OF THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, (III) HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS AS TO BE CAPABLE OF EVALUATING THE MERITS AND RISKS OF ITS PROSPECTIVE INVESTMENT IN THE SHARES, (IV) HAS THE ABILITY TO BEAR THE ECONOMIC RISKS OF ITS PROSPECTIVE INVESTMENT AND CAN AFFORD THE COMPLETE LOSS OF SUCH INVESTMENT AND (V) IS AN “ACCREDITED INVESTOR” (AS THAT TERM IS DEFINED BY RULE 501 OF THE SECURITIES ACT).  THE INVESTOR UNDERSTANDS THAT THE COMPANY WILL RELY UPON THE TRUTH AND ACCURACY OF THE FOREGOING REPRESENTATIONS, ACKNOWLEDGEMENTS AND AGREEMENTS AND AGREES THAT IF ANY OF THE REPRESENTATIONS AND ACKNOWLEDGEMENTS DEEMED TO HAVE BEEN MADE BY IT BY ITS PURCHASE OF THE SHARES IS NO LONGER ACCURATE, IT SHALL PROMPTLY NOTIFY THE COMPANY.  IF THE INVESTOR IS ACQUIRING SHARES AS A FIDUCIARY OR AGENT FOR ONE OR MORE ACCOUNTS, THE INVESTOR REPRESENTS THAT IT HAS SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT AND IT HAS FULL POWER TO MAKE THE FOREGOING REPRESENTATIONS, ACKNOWLEDGEMENTS AND AGREEMENTS ON BEHALF OF SUCH ACCOUNT. (D)               OWNERSHIP.  AS OF THE DATE OF THIS AGREEMENT, THE INVESTOR IS THE OWNER OF RECORD OR THE BENEFICIAL OWNER OF ONLY THE NUMBER OF SHARES OF COMMON STOCK, SECURITIES CONVERTIBLE INTO OR EXCHANGEABLE FOR COMMON STOCK OR ANY OTHER EQUITY OR EQUITY-LINKED SECURITY OF THE COMPANY, IF ANY, SET FORTH ON SCHEDULE A.  THE INVESTOR IS ACTING INDEPENDENTLY WITH RESPECT TO THE PURCHASE, THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND THE INVESTOR IS NOT ACTING AS PART OF A GROUP OR IN CONCERT WITH ANY OTHER PERSON OR ENTITY, INCLUDING THE OTHER INVESTORS.  THE DECISION OF THE INVESTOR TO PURCHASE THE SHARES HAS BEEN MADE INDEPENDENTLY OF ANY OTHER INVESTOR AND INDEPENDENTLY OF ANY INFORMATION, MATERIALS, STATEMENTS OR OPINIONS AS TO THE BUSINESS, AFFAIRS, (FINANCIAL OR OTHERWISE) OR PROSPECTS OF THE COMPANY OR ANY COMPANY SUBSIDIARY WHICH MAY HAVE BEEN MADE OR GIVEN BY ANY OTHER INVESTOR OR BY ANY AGENT OR EMPLOYEE OF ANY OTHER INVESTOR.  THE INVESTOR IS NOT PARTY TO ANY AGREEMENT, ARRANGEMENT OR UNDERSTANDING FOR THE PURPOSE OF -12-        (E)                FINANCIAL CAPABILITY.  THE INVESTOR HAS AVAILABLE FUNDS TO MAKE THE PURCHASE ON THE TERMS AND CONDITIONS CONTEMPLATED BY THIS AGREEMENT. (F)                 OFAC; ANTI-MONEY LAUNDERING.  (I) NEITHER THE INVESTOR NOR, TO THE INVESTOR’S KNOWLEDGE, ANY DIRECTOR, OFFICER, AGENT, PARTNER, MEMBER, EMPLOYEE, AFFILIATE OR PERSON ACTING ON BEHALF OF THE INVESTOR IS CURRENTLY SUBJECT TO ANY U.S. SANCTIONS LAWS; (II) THE INVESTOR IS NOT A “FOREIGN SHELL BANK” AND IS NOT ACTING ON BEHALF OF A “FOREIGN SHELL BANK” UNDER APPLICABLE ANTI-MONEY LAUNDERING LAWS AND REGULATIONS; (III) THE INVESTOR’S ENTRY INTO THIS AGREEMENT OR CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL NOT CONTRAVENE U.S. SANCTIONS LAWS OR APPLICABLE ANTI-MONEY LAUNDERING LAWS OR REGULATIONS; (IV) THE INVESTOR WILL PROMPTLY PROVIDE TO THE COMPANY OR ANY GOVERNMENTAL ENTITY SUCH INFORMATION OR DOCUMENTATION AS MAY BE REQUIRED TO COMPLY WITH U.S. SANCTIONS LAWS OR APPLICABLE ANTI-MONEY LAUNDERING LAWS OR REGULATIONS; AND (V) THE COMPANY MAY PROVIDE TO ANY GOVERNMENTAL ENTITY INFORMATION OR DOCUMENTATION REGARDING, OR PROVIDED BY, THE INVESTOR FOR THE PURPOSES OF COMPLYING WITH U.S. SANCTIONS LAWS OR APPLICABLE ANTI-MONEY LAUNDERING LAWS OR REGULATIONS. (G)               BROKERS AND FINDERS.  NEITHER THE INVESTOR NOR ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS OR EMPLOYEES HAS EMPLOYED ANY BROKER OR FINDER OR INCURRED ANY LIABILITY FOR ANY FINANCIAL ADVISORY FEES, BROKERAGE FEES, COMMISSIONS OR FINDER’S FEES, AND NO BROKER OR FINDER HAS ACTED DIRECTLY OR INDIRECTLY FOR THE INVESTOR, IN CONNECTION WITH THIS AGREEMENT OR ARTICLE III COVENANTS                             3.1       Efforts.  Subject to the terms and contemplated hereby and shall use reasonable best efforts to cooperate with the other party to that end.                                3.2       Confidentiality.  Prior to the issuance by the Company of the Press Release, the Investor will hold, and will cause its -13-       ARTICLE IV ADDITIONAL AGREEMENTS 4.1        Registration Rights. (1)               SHELF REGISTRATION.  SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THE COMPANY COVENANTS AND AGREES THAT AS PROMPTLY AS REASONABLY PRACTICABLE AFTER THE CLOSING DATE (AND IN ANY EVENT NO LATER THAN THE DATE THAT IS 60 DAYS AFTER THE CLOSING DATE (THE “REGISTRATION DEADLINE”)), THE COMPANY SHALL HAVE PREPARED AND FILED WITH THE SEC A SHELF REGISTRATION STATEMENT COVERING ALL REGISTRABLE SECURITIES (OR OTHERWISE DESIGNATE AN EXISTING SHELF REGISTRATION STATEMENT FILED WITH THE SEC TO COVER THE REGISTRABLE SECURITIES), AND, TO THE EXTENT THE SHELF REGISTRATION STATEMENT HAS NOT THERETOFORE BEEN DECLARED EFFECTIVE OR IS NOT AUTOMATICALLY EFFECTIVE UPON SUCH FILING, THE COMPANY SHALL USE REASONABLE BEST EFFORTS TO CAUSE SUCH SHELF REGISTRATION STATEMENT TO BE DECLARED OR BECOME EFFECTIVE NOT LATER THAN THE REGISTRATION DEADLINE AND TO KEEP SUCH SHELF REGISTRATION STATEMENT CONTINUOUSLY EFFECTIVE AND IN COMPLIANCE WITH THE SECURITIES ACT AND USABLE FOR RESALE OF SUCH REGISTRABLE SECURITIES FOR A PERIOD FROM THE DATE OF ITS INITIAL EFFECTIVENESS UNTIL SUCH TIME AS THERE ARE NO REGISTRABLE SECURITIES REMAINING (INCLUDING BY REFILING SUCH SHELF REGISTRATION STATEMENT (OR A NEW SHELF REGISTRATION STATEMENT) IF THE INITIAL SHELF REGISTRATION STATEMENT EXPIRES).    (2)               UNDERWRITTEN OFFERINGS.  ANY REGISTRATION PURSUANT TO THIS SECTION 4.1(A) SHALL BE EFFECTED BY MEANS OF A SHELF REGISTRATION UNDER THE SECURITIES ACT (A “SHELF REGISTRATION STATEMENT”) IN ACCORDANCE WITH THE METHODS AND DISTRIBUTION SET FORTH IN THE SHELF REGISTRATION STATEMENT AND RULE 415.  IF THE INVESTOR INTENDS TO DISTRIBUTE ANY REGISTRABLE SECURITIES BY MEANS OF AN UNDERWRITTEN OFFERING (AN “UNDERWRITTEN OFFERING”), IT SHALL PROMPTLY SO ADVISE THE COMPANY IN WRITING, AND THE COMPANY SHALL INCLUDE SUCH INFORMATION IN A WRITTEN NOTICE TO THE OTHER INVESTORS THAT HAVE REGISTRATION RIGHTS UNDER THE APPLICABLE PURCHASE AGREEMENTS WITHIN TEN DAYS OF THE COMPANY’S RECEIPT OF SUCH NOTICE FROM THE INVESTOR.  IF THE OTHER INVESTORS, TO THE EXTENT THEY HAVE REGISTRATION RIGHTS UNDER THE APPLICABLE PURCHASE AGREEMENTS, REQUEST INCLUSION OF THEIR REGISTRABLE SECURITIES IN THE UNDERWRITTEN OFFERING, OR THE COMPANY NOTIFIES THE INVESTOR OF A REQUEST BY THE COMPANY TO INCLUDE ANY SECURITIES IN THE UNDERWRITTEN OFFERING, THE INVESTOR SHALL OFFER TO INCLUDE SUCH SECURITIES OF SUCH OTHER INVESTORS AND THE COMPANY IN THE UNDERWRITTEN OFFERING BUT MAY CONDITION SUCH OFFER ON THEIR ACCEPTANCE OF THE FURTHER APPLICABLE PROVISIONS OF THIS SECTION 4.1(A).  THE MANAGING UNDERWRITERS IN ANY UNDERWRITTEN OFFERING PURSUANT TO THIS SECTION 4.1(A)(2) SHALL BE SELECTED BY THE COMPANY AND SHALL BE REASONABLY ACCEPTABLE TO HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES PARTICIPATING IN THE UNDERWRITTEN OFFERING.  ALL HOLDERS PROPOSING TO DISTRIBUTE THEIR SECURITIES THROUGH SUCH UNDERWRITTEN OFFERING SHALL ENTER INTO AN UNDERWRITING AGREEMENT IN CUSTOMARY FORM WITH THE UNDERWRITERS SO -14-     selected for such Underwritten Offering.  Notwithstanding any other provision of this Section 4.1(a)(2), if the managing underwriters advise the Company that in such Underwritten Offering exceeds the number that can be sold without adversely per share offering price), the Company shall so advise the Investor and the Other Investors holding Registrable Securities that would otherwise be included in such Underwritten Offering, and the number of securities that may be included in such Underwritten Offering shall be allocated as follows:  (A) first, among the Investor and the Other Investors that have elected to participate in the Underwritten Offering, pro rata based on the Registrable Securities requested to be included in the Underwritten Offering by such holders, until such holders have included in the Underwritten Offering all Registrable Securities requested by such holders to be included, (B) second, to the Company, until the Company has included in the Underwritten Offering all securities requested by it to be included, and (C) third, among any other holders of securities of the Company requesting to be included in such Underwritten Offering, pro rata based on the number of securities requested to be included in such Underwritten Offering by each such holder.  The Investor may request a maximum of two Underwritten Offerings (excluding any offering that is not completed, provided  that the Investor has reimbursed the Company for all reasonable and documented out of pocket fees and expenses incurred by the Company in connection with any such offering which is not completed due to actions or elections of the Investor); provided  that the Company shall not be required to facilitate an Underwritten Offering unless the expected gross proceeds from such offering exceed $10,000,000; provided, further, that the Company shall not be required to facilitate an Underwritten Offering if there has been one or more Underwritten Offerings pursuant to this Agreement or any of the other Purchase Agreements during the six-month period prior to the date on which the Investor makes such request for an Underwritten Offering.   (3)               THE COMPANY SHALL NOT BE REQUIRED TO EFFECT A REGISTRATION (INCLUDING A RESALE OF REGISTRABLE SECURITIES FROM AN EFFECTIVE SHELF REGISTRATION STATEMENT) OR AN UNDERWRITTEN OFFERING PURSUANT TO THIS SECTION 4.1(A):  (A) WITH RESPECT TO SECURITIES THAT ARE NOT REGISTRABLE SECURITIES; (B) DURING ANY SCHEDULED BLACK-OUT PERIOD; OR (C) IF THE COMPANY HAS NOTIFIED THE INVESTOR THAT IN THE GOOD FAITH JUDGMENT OF THE BOARD OF DIRECTORS, IT WOULD BE MATERIALLY DETRIMENTAL TO THE COMPANY OR ITS SECURITYHOLDERS FOR SUCH REGISTRATION OR UNDERWRITTEN OFFERING TO BE EFFECTED AT SUCH TIME, IN WHICH EVENT THE COMPANY SHALL HAVE THE RIGHT TO DEFER SUCH REGISTRATION OR UNDERWRITTEN OFFERING FOR A PERIOD OF NOT MORE THAN 60 DAYS AFTER RECEIPT OF THE REQUEST OF THE INVESTOR; PROVIDED  THAT SUCH RIGHT TO DELAY A REGISTRATION OR UNDERWRITTEN OFFERING SHALL BE EXERCISED BY THE COMPANY (I) ONLY IF THE COMPANY HAS GENERALLY EXERCISED (OR IS CONCURRENTLY EXERCISING) SIMILAR BLACK-OUT RIGHTS AGAINST HOLDERS OF SIMILAR SECURITIES THAT HAVE REGISTRATION RIGHTS, TO THE EXTENT PERMITTED BY THE TERMS OF SUCH REGISTRATION RIGHTS, (II) NOT MORE THAN TWO TIMES IN ANY 12-MONTH PERIOD AND (III) NOT MORE THAN 90 DAYS IN THE (4)               PIGGYBACK REGISTRATION.  WHENEVER THE COMPANY PROPOSES TO REGISTER ANY OF ITS EQUITY SECURITIES, OTHER THAN A REGISTRATION PURSUANT TO SECTION 4.1(A)(1) OR A SPECIAL REGISTRATION, AND THE REGISTRATION FORM TO BE INVESTOR AND THE OTHER INVESTORS, TO THE EXTENT THEY HAVE REGISTRATION RIGHTS UNDER THE APPLICABLE PURCHASE AGREEMENTS, OF ITS INTENTION TO EFFECT SUCH A REGISTRATION (BUT IN NO EVENT LESS THAN -15-     10 days prior to the anticipated filing date) and, subject to clause (6) below, will include in such registration all Registrable Securities with respect to five business days after the date of the Company’s notice (a “Piggyback Registration”).  The Investor may withdraw its Registrable Securities from such withdraw any registration under this Section 4.1(a)(4) prior to the effectiveness of such registration, whether or not the Investor has elected to include Registrable Securities in such registration.  “Special Registration”    (5)               IF THE REGISTRATION REFERRED TO IN SECTION 4.1(A)(4) IS PROPOSED TO BE UNDERWRITTEN, THE COMPANY WILL SO ADVISE THE INVESTOR AND SUCH OTHER INVESTORS AS PART OF THE WRITTEN NOTICE GIVEN PURSUANT TO SECTION 4.1(A)(4).  IN SUCH EVENT, THE RIGHT OF THE INVESTOR TO REGISTRATION PURSUANT TO THIS SECTION 4.1(A) WILL BE CONDITIONED UPON THE INVESTOR’S PARTICIPATION IN SUCH UNDERWRITING AND THE INCLUSION OF THE INVESTOR’S REGISTRABLE SECURITIES IN THE UNDERWRITING, AND THE INVESTOR WILL (TOGETHER WITH THE COMPANY AND THE OTHER SELECTED FOR SUCH UNDERWRITING BY THE COMPANY.  IF THE INVESTOR DISAPPROVES OF WRITTEN NOTICE TO THE COMPANY AND THE MANAGING UNDERWRITER. (6)               IF A PIGGYBACK REGISTRATION UNDER SECTION 4.1(A)(4) RELATES TO AN UNDERWRITTEN OFFERING ON BEHALF OF THE COMPANY, AND THE MANAGING UNDERWRITERS ADVISE THE COMPANY THAT IN THEIR REASONABLE OPINION THE NUMBER OF SECURITIES REQUESTED TO BE INCLUDED IN SUCH OFFERING EXCEEDS THE NUMBER THAT CAN BE SOLD WITHOUT ADVERSELY AFFECTING THE MARKETABILITY OF SUCH OFFERING (INCLUDING AN ADVERSE EFFECT ON THE PER SHARE OFFERING PRICE), THE COMPANY WILL INCLUDE IN SUCH REGISTRATION OR PROSPECTUS ONLY SUCH NUMBER OF SECURITIES THAT IN THE PRIORITY:  (I) FIRST, THE SECURITIES THAT THE COMPANY PROPOSES TO SELL, UNTIL THE COMPANY HAS INCLUDED IN THE UNDERWRITING ALL SECURITIES REQUESTED BY IT TO BE INCLUDED,  (II) SECOND, THE REGISTRABLE SECURITIES OF THE INVESTOR AND THE OTHER INVESTORS THAT HAVE REQUESTED REGISTRATION PURSUANT TO SECTION 4.1(A)(4), PRO RATA BASED ON THE REGISTRABLE SECURITIES REQUESTED TO BE INCLUDED IN SUCH UNDERWRITING BY SUCH HOLDERS, UNTIL SUCH HOLDERS HAVE INCLUDED IN THE UNDERWRITING ALL REGISTRABLE SECURITIES REQUESTED BY SUCH HOLDERS TO BE INCLUDED, AND (III) THIRD, AMONG ANY OTHER HOLDERS OF SECURITIES OF THE COMPANY REQUESTED TO BE INCLUDED IN SUCH UNDERWRITING, PRO RATA BASED ON THE NUMBER OF SECURITIES REQUESTED TO BE INCLUDED IN SUCH UNDERWRITING BY EACH SUCH HOLDER. (B)        EXPENSES OF REGISTRATION.  ALL SELLING EXPENSES INCURRED IN CONNECTION WITH ANY REGISTRATIONS HEREUNDER SHALL BE BORNE BY THE HOLDERS OF THE SECURITIES SO REGISTERED PRO RATA ON THE BASIS OF THE AGGREGATE OFFERING OR SALE PRICE OF THE SECURITIES SO REGISTERED. -16-   (C)                OBLIGATIONS OF THE COMPANY.  WHENEVER REQUIRED TO EFFECT THE REGISTRATION OF ANY REGISTRABLE SECURITIES OR FACILITATE THE DISTRIBUTION OF REGISTRABLE SECURITIES PURSUANT TO AN EFFECTIVE SHELF REGISTRATION STATEMENT, THE COMPANY SHALL, AS EXPEDITIOUSLY AS REASONABLY PRACTICABLE: (1)               PREPARE AND FILE WITH THE SEC A PROSPECTUS SUPPLEMENT WITH RESPECT TO A PROPOSED OFFERING OF REGISTRABLE SECURITIES PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, SUBJECT TO THIS SECTION 4.1(C), AND KEEP SUCH REGISTRATION STATEMENT EFFECTIVE OR SUCH PROSPECTUS SUPPLEMENT CURRENT UNTIL THE SECURITIES DESCRIBED THEREIN ARE NO LONGER REGISTRABLE SECURITIES; (2)               PREPARE AND FILE WITH THE SEC SUCH AMENDMENTS AND SUPPLEMENTS TO THE APPLICABLE REGISTRATION STATEMENT AND THE PROSPECTUS OR PROSPECTUS SUPPLEMENT USED IN CONNECTION WITH SUCH REGISTRATION STATEMENT AS MAY BE (3)               FURNISH TO THE INVESTOR AND ANY UNDERWRITERS SUCH NUMBER OF COPIES OF THE APPLICABLE REGISTRATION STATEMENT AND EACH SUCH AMENDMENT AND SUPPLEMENT THERETO (INCLUDING IN EACH CASE ALL EXHIBITS, INCLUDING THOSE INCORPORATED BY REFERENCE) AND OF A PROSPECTUS, INCLUDING A PRELIMINARY PROSPECTUS, IN CONFORMITY WITH THE REQUIREMENTS OF THE SECURITIES ACT, AND SUCH OTHER DOCUMENTS AS THEY MAY REASONABLY REQUEST IN ORDER TO FACILITATE THE DISPOSITION OF REGISTRABLE SECURITIES OWNED OR TO BE DISTRIBUTED BY THEM; (4)               USE ITS REASONABLE BEST EFFORTS TO REGISTER AND QUALIFY THE BLUE SKY LAWS OF SUCH JURISDICTIONS AS SHALL BE REASONABLY REQUESTED BY THE INVESTOR OR ANY MANAGING UNDERWRITER(S), TO KEEP SUCH REGISTRATION OR EFFECT AND TO TAKE ANY OTHER ACTION WHICH MAY BE REASONABLY NECESSARY TO ENABLE SECURITIES OWNED BY THE INVESTOR; PROVIDED  THAT THE COMPANY SHALL NOT BE BUSINESS OR TO FILE A GENERAL CONSENT TO SERVICE OF PROCESS IN ANY SUCH STATES OR JURISDICTIONS; (5)               NOTIFY EACH HOLDER OF REGISTRABLE SECURITIES AT ANY TIME WHEN EXISTING; (6)               GIVE WRITTEN NOTICE TO THE INVESTOR: (A)             WHEN ANY REGISTRATION STATEMENT FILED PURSUANT TO SECTION 4.1(A) OR ANY AMENDMENT THERETO HAS BEEN FILED WITH THE SEC (EXCEPT FOR ANY AMENDMENT -17-   become effective;   (B)              OF ANY REQUEST BY THE SEC FOR AMENDMENTS OR SUPPLEMENTS TO ANY REGISTRATION STATEMENT OR THE PROSPECTUS INCLUDED THEREIN OR FOR ADDITIONAL INFORMATION; (C)              OF THE ISSUANCE BY THE SEC OF ANY STOP ORDER SUSPENDING THE EFFECTIVENESS OF ANY REGISTRATION STATEMENT OR THE INITIATION OF ANY PROCEEDINGS FOR THAT PURPOSE; (D)             OF THE RECEIPT BY THE COMPANY OR ITS LEGAL COUNSEL OF ANY STOCK FOR SALE IN ANY JURISDICTION OR THE INITIATION OR THREATENING OF ANY PROCEEDING FOR SUCH PURPOSE; (E)              OF THE HAPPENING OF ANY EVENT THAT REQUIRES THE COMPANY TO MAKE CHANGES IN ANY EFFECTIVE REGISTRATION STATEMENT OR THE PROSPECTUS RELATED TO THE REGISTRATION STATEMENT IN ORDER TO MAKE THE STATEMENTS THEREIN NOT MISLEADING (WHICH NOTICE SHALL BE ACCOMPANIED BY AN INSTRUCTION TO SUSPEND THE USE OF THE PROSPECTUS UNTIL THE REQUISITE CHANGES HAVE BEEN MADE); AND (F)               IF AT ANY TIME THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY CONTAINED IN ANY UNDERWRITING AGREEMENT CONTEMPLATED BY SECTION 4.1(C)(10) CEASE TO BE TRUE AND CORRECT; (7)               USE ITS REASONABLE BEST EFFORTS TO PREVENT THE ISSUANCE OR OBTAIN THE WITHDRAWAL OF ANY ORDER SUSPENDING THE EFFECTIVENESS OF ANY REGISTRATION STATEMENT REFERRED TO IN SECTION 4.1(C)(6)(C) AT THE EARLIEST PRACTICABLE TIME; (8)               UPON THE OCCURRENCE OF ANY EVENT CONTEMPLATED BY SECTION 4.1(C)(5) OR 4.1(C)(6)(E), PROMPTLY PREPARE A POST-EFFECTIVE AMENDMENT ANY OTHER REQUIRED DOCUMENT SO THAT, AS THEREAFTER DELIVERED TO THE INVESTOR AND NOT MISLEADING.  IF THE COMPANY NOTIFIES THE INVESTOR IN ACCORDANCE WITH SECTION 4.1(C)(6)(E) TO SUSPEND THE USE OF THE PROSPECTUS UNTIL THE REQUISITE CHANGES TO THE PROSPECTUS HAVE BEEN MADE, THEN THE INVESTOR AND ANY UNDERWRITERS SHALL SUSPEND USE OF SUCH PROSPECTUS AND USE THEIR REASONABLE BEST EFFORTS TO RETURN TO THE COMPANY ALL COPIES OF SUCH PROSPECTUS (AT THE COMPANY’S EXPENSE) OTHER THAN PERMANENT FILE COPIES THEN IN INVESTOR’S OR UNDERWRITER’S POSSESSION.  THE TOTAL NUMBER OF DAYS THAT ANY SUCH SUSPENSION MAY BE IN EFFECT IN ANY 180-DAY PERIOD SHALL NOT EXCEED 90 DAYS; (9)               USE REASONABLE BEST EFFORTS TO PROCURE THE COOPERATION OF THE COMPANY’S TRANSFER AGENT IN SETTLING ANY OFFERING OR SALE OF REGISTRABLE SECURITIES, INCLUDING WITH RESPECT TO THE TRANSFER OF PHYSICAL STOCK REQUESTED BY THE INVESTOR OR ANY MANAGING UNDERWRITER(S);   -18-     (10)           IF AN UNDERWRITTEN OFFERING IS REQUESTED PURSUANT TO SECTION 4.1(A)(2), ENTER INTO AN UNDERWRITING AGREEMENT IN CUSTOMARY FORM, SCOPE AND SUBSTANCE AND TAKE ALL SUCH OTHER ACTIONS REASONABLY REQUESTED BY THE HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES BEING SOLD IN CONNECTION THEREWITH OR BY THE MANAGING UNDERWRITER(S), IF ANY, TO EXPEDITE OR FACILITATE THE UNDERWRITTEN DISPOSITION OF SUCH REGISTRABLE SECURITIES, AND IN CONNECTION THEREWITH IN ANY UNDERWRITTEN OFFERING (INCLUDING MAKING MEMBERS OF MANAGEMENT AND EXECUTIVES OF THE COMPANY AVAILABLE TO PARTICIPATE IN “ROAD SHOWS,” SIMILAR SALES EVENTS AND OTHER MARKETING ACTIVITIES), (A) MAKE SUCH REPRESENTATIONS AND WARRANTIES TO THE SELLING STOCKHOLDERS AND THE MANAGING UNDERWRITER(S), IF ANY, WITH RESPECT TO THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES, AND THE SHELF REGISTRATION STATEMENT, PROSPECTUS AND DOCUMENTS, IF ANY, INCORPORATED OR DEEMED TO BE INCORPORATED BY REFERENCE THEREIN, IN EACH CASE, IN CUSTOMARY FORM, SUBSTANCE AND SCOPE, AND, IF TRUE, CONFIRM THE SAME IF AND WHEN REQUESTED, (B) USE ITS REASONABLE BEST EFFORTS TO FURNISH THE UNDERWRITERS WITH OPINIONS OF COUNSEL TO THE COMPANY, ADDRESSED TO THE MANAGING UNDERWRITER(S), IF ANY, COVERING THE MATTERS CUSTOMARILY COVERED IN SUCH OPINIONS REQUESTED IN UNDERWRITTEN OFFERINGS, (C) USE ITS REASONABLE BEST EFFORTS TO OBTAIN “COLD COMFORT” LETTERS FROM THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF THE COMPANY (AND, IF NECESSARY, ANY OTHER INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF ANY BUSINESS ACQUIRED BY THE COMPANY FOR WHICH FINANCIAL STATEMENTS AND FINANCIAL DATA ARE INCLUDED IN THE SHELF REGISTRATION STATEMENT) WHO HAVE CERTIFIED THE FINANCIAL STATEMENTS INCLUDED IN SUCH SHELF REGISTRATION IN UNDERWRITTEN OFFERINGS, AND (E) DELIVER SUCH DOCUMENTS AND CERTIFICATES AS MAY BE REASONABLY REQUESTED BY THE HOLDERS OF A MAJORITY OF THE REGISTRABLE REPRESENTATIONS AND WARRANTIES MADE PURSUANT TO CLAUSE (A) ABOVE AND TO EVIDENCE OR OTHER AGREEMENT ENTERED INTO BY THE COMPANY.  NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE COMPANY SHALL NOT BE REQUIRED TO ENTER INTO ANY UNDERWRITING AGREEMENT OR PERMIT ANY UNDERWRITTEN OFFERING ABSENT AN AGREEMENT BY THE APPLICABLE UNDERWRITER(S) TO INDEMNIFY THE COMPANY IN FORM, SCOPE AND SUBSTANCE AS IS CUSTOMARY IN UNDERWRITTEN OFFERINGS BY THE COMPANY; (11)           MAKE AVAILABLE FOR INSPECTION BY A REPRESENTATIVE OF THE INVESTOR, THE MANAGING UNDERWRITER(S), IF ANY, AND ANY ATTORNEYS OR ACCOUNTANTS RETAINED BY THE INVESTOR OR MANAGING UNDERWRITER(S), AT THE OFFICES WHERE NORMALLY KEPT, DURING REASONABLE BUSINESS HOURS, FINANCIAL AND OTHER RECORDS, PERTINENT CORPORATE DOCUMENTS AND PROPERTIES OF THE COMPANY, AND CAUSE THE OFFICERS, DIRECTORS AND EMPLOYEES OF THE COMPANY TO SUPPLY ALL INFORMATION IN EACH CASE REASONABLY REQUESTED (AND OF THE TYPE CUSTOMARILY PROVIDED IN CONNECTION WITH DUE DILIGENCE CONDUCTED IN CONNECTION WITH A REGISTERED PUBLIC OFFERING OF SECURITIES) BY ANY SUCH REPRESENTATIVE, MANAGING UNDERWRITER(S), ATTORNEY OR ACCOUNTANT IN CONNECTION WITH SUCH SHELF REGISTRATION STATEMENT; (12)           CAUSE ALL SUCH REGISTRABLE SECURITIES TO BE LISTED ON EACH LISTED OR, IF NO SIMILAR SECURITIES ISSUED BY THE COMPANY ARE THEN LISTED ON ANY SECURITIES EXCHANGE, USE ITS REASONABLE BEST EFFORTS TO CAUSE ALL SUCH REGISTRABLE SECURITIES TO BE LISTED ON THE NEW YORK STOCK EXCHANGE OR THE NASDAQ STOCK MARKET, AS DETERMINED BY THE COMPANY;   -19-     (13)           IF REQUESTED BY HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES BEING REGISTERED AND/OR SOLD IN CONNECTION THEREWITH, OR THE MANAGING UNDERWRITER(S), IF ANY, PROMPTLY INCLUDE IN A PROSPECTUS SUPPLEMENT OR AMENDMENT SUCH INFORMATION AS THE HOLDERS OF A MAJORITY OF THE REGISTRABLE SECURITIES BEING REGISTERED AND/OR SOLD IN CONNECTION THEREWITH OR MANAGING UNDERWRITER(S), IF ANY, MAY REASONABLY REQUEST IN ORDER TO PERMIT THE INTENDED METHOD OF DISTRIBUTION OF SUCH SECURITIES AND MAKE ALL REQUIRED FILINGS OF SUCH PROSPECTUS SUPPLEMENT OR SUCH AMENDMENT AS SOON AS PRACTICABLE AFTER THE COMPANY HAS RECEIVED SUCH REQUEST; (14)           TIMELY PROVIDE TO ITS SECURITY HOLDERS EARNING STATEMENTS THEREUNDER; (15)           REASONABLY COOPERATE WITH THE INVESTOR AND EACH UNDERWRITER, IF ANY, PARTICIPATING IN THE DISPOSITION OF SUCH REGISTRABLE SECURITIES AND THEIR RESPECTIVE COUNSEL IN CONNECTION WITH ANY FILINGS REQUIRED TO BE MADE WITH THE FINRA; (16)           NOT LATER THAN THE EFFECTIVE DATE OF THE APPLICABLE REGISTRATION STATEMENT, PROVIDE A CUSIP NUMBER FOR ALL REGISTRABLE SECURITIES; AND (17)           COOPERATE WITH THE INVESTOR AND EACH UNDERWRITER, IF ANY, TO FACILITATE THE TIMELY PREPARATION AND DELIVERY OF CERTIFICATES REPRESENTING THE REGISTRABLE SECURITIES TO BE SOLD UNDER THE REGISTRATION STATEMENT IN A FORM ELIGIBLE FOR DEPOSIT WITH THE DEPOSITORY TRUST COMPANY. (D)               SUSPENSION OF SALES.  DURING ANY SCHEDULED BLACK-OUT PERIOD OR UPON RECEIPT OF WRITTEN NOTICE FROM THE COMPANY THAT A REGISTRATION STATEMENT, PROSPECTUS OR PROSPECTUS SUPPLEMENT CONTAINS OR MAY CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMITS OR MAY OMIT TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING, OR THAT CIRCUMSTANCES EXIST THAT MAKE INADVISABLE USE OF SUCH REGISTRATION STATEMENT, PROSPECTUS OR PROSPECTUS SUPPLEMENT, THE INVESTOR SHALL FORTHWITH DISCONTINUE DISPOSITION OF REGISTRABLE SECURITIES UNTIL TERMINATION OF SUCH SCHEDULED BLACK-OUT PERIOD OR UNTIL THE INVESTOR HAS RECEIVED COPIES OF A SUPPLEMENTED OR AMENDED PROSPECTUS OR PROSPECTUS SUPPLEMENT, OR UNTIL THE INVESTOR IS ADVISED IN WRITING BY THE COMPANY THAT THE USE OF THE PROSPECTUS AND, IF APPLICABLE, PROSPECTUS SUPPLEMENT MAY BE RESUMED, AND, IF SO DIRECTED BY THE COMPANY, THE INVESTOR SHALL DELIVER TO THE COMPANY (AT THE COMPANY’S EXPENSE) ALL COPIES, OTHER THAN PERMANENT FILE COPIES THEN IN THE INVESTOR’S POSSESSION, OF THE PROSPECTUS AND, IF APPLICABLE, PROSPECTUS SUPPLEMENT COVERING SUCH REGISTRABLE SECURITIES CURRENT AT THE TIME OF RECEIPT OF SUCH NOTICE.  THE PERIOD SHALL NOT EXCEED 60 DAYS. (E)                TERMINATION OF REGISTRATION RIGHTS.  THE INVESTOR’S REGISTRATION RIGHTS AS TO ANY SECURITIES HELD BY THE INVESTOR SHALL NOT BE AVAILABLE UPON THE EARLIER OF (A) THE FIRST TIME THE INVESTOR CEASES TO HOLD ANY REGISTRABLE SECURITIES AND (B) THE TIME WHEN THE INVESTOR IS PERMITTED TO SELL ITS REGISTRABLE SECURITIES PURSUANT TO RULE 144 WITHOUT VOLUME LIMITATIONS.   -20-     (1)               THE INVESTOR SHALL NOT USE ANY FREE WRITING PROSPECTUS (AS DEFINED IN RULE 405) IN CONNECTION WITH THE SALE OF REGISTRABLE SECURITIES (2)               IT SHALL BE A CONDITION PRECEDENT TO THE OBLIGATIONS OF THE COMPANY TO TAKE ANY ACTION PURSUANT TO SECTION 4.1(C) THAT THE INVESTOR AND THE THEMSELVES, THE REGISTRABLE SECURITIES HELD BY THE INVESTOR AND THE INTENDED METHOD OF DISPOSITION OF SUCH SECURITIES AS SHALL BE REQUIRED TO EFFECT THE REGISTERED OFFERING OF SUCH REGISTRABLE SECURITIES. (1)               THE COMPANY AGREES TO INDEMNIFY THE INVESTOR AND, IF THE INVESTOR IS A PERSON OTHER THAN AN INDIVIDUAL, THE INVESTOR’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES AND AFFILIATES, AND EACH PERSON, IF ANY, THAT CONTROLS THE INVESTOR WITHIN THE MEANING OF THE SECURITIES ACT (EACH, AN “INDEMNITEE”), AGAINST ANY AND ALL ACTIONS, SUITS, CLAIMS, PROCEEDINGS, COSTS, LOSSES, LIABILITIES, DAMAGES, EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES AND DISBURSEMENTS), AMOUNTS PAID IN SETTLEMENT AND OTHER COSTS (COLLECTIVELY, “LOSSES”) ARISING OUT OF OR BASED UPON ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF MATERIAL FACT CONTAINED IN ANY REGISTRATION STATEMENT, INCLUDING ANY PRELIMINARY PROSPECTUS OR FINAL PROSPECTUS CONTAINED THEREIN OR ANY AMENDMENTS OR SUPPLEMENTS THERETO OR ANY DOCUMENTS INCORPORATED THEREIN BY REFERENCE OR CONTAINED IN ANY FREE WRITING PROSPECTUS (AS SUCH TERM IS DEFINED IN RULE 405) PREPARED BY THE COMPANY OR AUTHORIZED BY IT IN WRITING FOR USE BY THE INVESTOR (OR ANY AMENDMENT OR SUPPLEMENT THERETO); OR ANY WHICH THEY WERE MADE, NOT MISLEADING; PROVIDED  THAT THE COMPANY SHALL NOT BE LIABLE TO SUCH INDEMNITEE IN ANY SUCH CASE TO THE EXTENT THAT ANY SUCH LOSSES ARISE OUT OF OR ARE BASED UPON (A) AN UNTRUE STATEMENT OR OMISSION MADE IN SUCH REGISTRATION STATEMENT, INCLUDING ANY SUCH PRELIMINARY PROSPECTUS OR FINAL PROSPECTUS CONTAINED THEREIN OR ANY SUCH AMENDMENTS OR SUPPLEMENTS THERETO OR PREPARED BY THE COMPANY OR AUTHORIZED BY IT IN WRITING FOR USE BY THE INVESTOR (OR ANY AMENDMENT OR SUPPLEMENT THERETO) IN RELIANCE UPON AND IN CONFORMITY WITH INFORMATION REGARDING THE INVESTOR OR ITS PLAN OF DISTRIBUTION OR OWNERSHIP INTERESTS THAT WAS FURNISHED IN WRITING TO THE COMPANY BY THE INVESTOR FOR USE IN CONNECTION WITH SUCH REGISTRATION STATEMENT, INCLUDING ANY SUCH PRELIMINARY (2)               IF THE INDEMNIFICATION PROVIDED FOR IN SECTION 4.1(G)(1) IS UNAVAILABLE TO AN INDEMNITEE WITH RESPECT TO ANY LOSSES OR IS INSUFFICIENT TO HOLD THE INDEMNITEE HARMLESS AS CONTEMPLATED THEREIN, THEN THE COMPANY, IN LIEU OF INDEMNIFYING SUCH INDEMNITEE, SHALL CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH INDEMNITEE AS A RESULT OF SUCH LOSSES IN SUCH PROPORTION AS IS OMISSIONS THAT RESULTED IN SUCH LOSSES, AS WELL AS ANY OTHER RELEVANT EQUITABLE CONSIDERATIONS.  THE RELATIVE FAULT OF THE COMPANY, ON THE ONE HAND, AND OF THE INDEMNITEE, ON THE OTHER HAND, SHALL BE DETERMINED BY REF- -21-   erence to, among other factors, whether the untrue statement of a material fact the Company and the Investor agree that it would not be just and equitable if contribution pursuant to this Section 4.1(g)(2) were determined by pro rata the equitable considerations referred to in this Section 4.1(g).  No Indemnitee Company is not guilty of such fraudulent misrepresentation.   (H)               RESERVED.    (I)                 HOLDBACK.  WITH RESPECT TO ANY UNDERWRITTEN OFFERING OF REGISTRABLE SECURITIES BY THE INVESTOR PURSUANT TO THIS SECTION 4.1, THE COMPANY AGREES NOT TO EFFECT (OTHER THAN PURSUANT TO SUCH REGISTRATION OR PURSUANT TO A SPECIAL REGISTRATION) ANY PUBLIC SALE OR DISTRIBUTION, OR TO FILE ANY SHELF REGISTRATION STATEMENT (OTHER THAN SUCH REGISTRATION OR A SPECIAL REGISTRATION) COVERING ANY OF ITS EQUITY SECURITIES, OR ANY SECURITIES CONVERTIBLE INTO OR 10 DAYS PRIOR AND 60 DAYS FOLLOWING THE EFFECTIVE DATE OF SUCH OFFERING.  THE COMPANY ALSO AGREES TO CAUSE EACH OF ITS DIRECTORS AND SENIOR EXECUTIVE OFFICERS TO EXECUTE AND DELIVER CUSTOMARY LOCKUP AGREEMENTS IN SUCH FORM AND FOR SUCH TIME PERIOD UP TO 90 DAYS AS MAY BE REQUESTED BY THE MANAGING UNDERWRITER.    (J)                 RULE 144; RULE 144A REPORTING.  WITH A VIEW TO MAKING AVAILABLE TO THE INVESTOR THE BENEFITS OF CERTAIN RULES AND REGULATIONS OF THE SEC WHICH MAY PERMIT THE SALE OF THE REGISTRABLE SECURITIES TO THE PUBLIC WITHOUT REGISTRATION, SO LONG AS THE INVESTOR OWNS ANY REGISTRABLE SECURITIES, THE COMPANY AGREES TO USE ITS REASONABLE BEST EFFORTS TO: (1)               MAKE AND KEEP PUBLIC INFORMATION AVAILABLE, AS THOSE TERMS ARE UNDERSTOOD AND DEFINED IN RULE 144(C)(1) OR ANY SIMILAR OR ANALOGOUS RULE PROMULGATED UNDER THE SECURITIES ACT; (2)               FILE WITH THE SEC, IN A TIMELY MANNER, ALL REPORTS AND OTHER DOCUMENTS REQUIRED OF THE COMPANY UNDER THE EXCHANGE ACT, AND IF AT ANY TIME THE COMPANY IS NOT REQUIRED TO FILE SUCH REPORTS, MAKE AVAILABLE, UPON THE REQUEST OF THE INVESTOR, SUCH INFORMATION NECESSARY TO PERMIT SALES PURSUANT TO RULE 144A (INCLUDING THE INFORMATION REQUIRED BY RULE 144A(D)(4) AND THE SECURITIES ACT); (3)               FURNISH TO THE INVESTOR FORTHWITH UPON REQUEST:  A WRITTEN RULE 144 UNDER THE SECURITIES ACT, AND OF THE EXCHANGE ACT; A COPY OF THE MOST RECENT ANNUAL OR QUARTERLY REPORT OF THE COMPANY; AND SUCH OTHER REPORTS AND DOCUMENTS AS THE INVESTOR MAY REASONABLY REQUEST IN AVAILING ITSELF OF ANY RULE OR REGULATION OF THE SEC ALLOWING IT TO SELL REGISTRABLE SECURITIES WITHOUT REGISTRATION UNDER THE SECURITIES ACT; AND (4)               TAKE SUCH FURTHER ACTION AS THE INVESTOR MAY REASONABLY REQUEST, ALL TO THE EXTENT REQUIRED FROM TIME TO TIME TO ENABLE THE INVESTOR TO SELL REGISTRABLE SECURITIES WITHOUT REGISTRATION UNDER THE SECURITIES ACT.   -22-     (K)               CERTAIN DEFINITIONS.  AS USED IN THIS SECTION 4.1, THE (1)               “REGISTER,” “REGISTERED,” AND “REGISTRATION” SHALL REFER TO A REGISTRATION EFFECTED BY PREPARING AND (A) FILING A REGISTRATION STATEMENT IN EFFECTIVENESS OF SUCH REGISTRATION STATEMENT, OR (B) FILING A PROSPECTUS AND/OR STATEMENT ON FORM S-3; (2)               “REGISTRABLE SECURITIES” MEANS (A) THE SHARES AND THE SHARES OF COMMON STOCK ISSUED BY THE COMPANY PURSUANT TO THE OTHER PURCHASE AGREEMENTS AND (B) ANY EQUITY SECURITIES ISSUED OR ISSUABLE DIRECTLY OR INDIRECTLY WITH RESPECT TO SUCH SHARES OF COMMON STOCK BY WAY OF STOCK DIVIDEND OR STOCK SPLIT OR IN CONNECTION WITH A COMBINATION OF SHARES, RECAPITALIZATION, RECLASSIFICATION, MERGER, AMALGAMATION, ARRANGEMENT, CONSOLIDATION OR OTHER REORGANIZATION, PROVIDED  THAT, ONCE ISSUED, SUCH SECURITIES WILL NOT BE REGISTRABLE SECURITIES WHEN (I) THEY ARE SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (II) THEY SHALL HAVE CEASED TO BE OUTSTANDING OR (III) THEY HAVE BEEN SOLD IN A PRIVATE TRANSACTION IN WHICH THE TRANSFEROR’S RIGHTS UNDER THIS AGREEMENT ARE NOT ASSIGNED TO THE TRANSFEREE OF THE SECURITIES.  NO REGISTRABLE SECURITIES MAY BE REGISTERED UNDER MORE THAN ONE REGISTRATION STATEMENT AT ONE TIME; (3)               “REGISTRATION EXPENSES” MEANS ALL EXPENSES INCURRED BY THE COMPANY IN EFFECTING ANY REGISTRATION PURSUANT TO THIS AGREEMENT (WHETHER OR NOT ANY REGISTRATION OR PROSPECTUS BECOMES EFFECTIVE OR FINAL) OR OTHERWISE COMPLYING WITH ITS OBLIGATIONS UNDER THIS SECTION 4.1, INCLUDING ALL OF COUNSEL FOR THE COMPANY, BLUE SKY FEES AND EXPENSES, EXPENSES INCURRED BY THE COMPANY IN CONNECTION WITH ANY “ROAD SHOW”  AND EXPENSES OF THE COMPANY’S INDEPENDENT ACCOUNTANTS IN CONNECTION WITH ANY REGULAR OR SPECIAL REVIEWS OR AUDITS INCIDENT TO OR REQUIRED BY ANY SUCH REGISTRATION; PROVIDED  THAT REGISTRATION EXPENSES SHALL NOT INCLUDE SELLING EXPENSES AND THE COMPENSATION OF REGULAR EMPLOYEES OF THE COMPANY, WHICH SHALL BE PAID IN ANY EVENT BY THE COMPANY; (4)               “RULE 144,” “RULE 144A,” “RULE 158,” “RULE 159A,” “RULE 405” AND “RULE 415” MEAN, IN EACH CASE, SUCH RULE PROMULGATED UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), AS THE SAME SHALL BE AMENDED FROM TIME TO TIME; (5)               “SCHEDULED BLACK-OUT PERIOD” MEANS THE PERIOD FROM AND INCLUDING THE LAST DAY OF A FISCAL QUARTER OF THE COMPANY TO AND INCLUDING THE FIRST BUSINESS DAY AFTER THE DAY ON WHICH THE COMPANY PUBLICLY RELEASES ITS EARNINGS FOR SUCH FISCAL QUARTER; AND  (6)               “SELLING EXPENSES” MEANS ALL DISCOUNTS, SELLING COMMISSIONS AND STOCK TRANSFER TAXES APPLICABLE TO THE SALE OF REGISTRABLE SECURITIES AND FEES AND DISBURSEMENTS OF COUNSEL FOR THE INVESTOR.   -23-     (L)                 FORFEITURE.  AT ANY TIME, THE INVESTOR MAY ELECT TO FORFEIT ITS RIGHTS SET FORTH IN THIS SECTION 4.1 FROM THAT DATE FORWARD; PROVIDED  THAT THE INVESTOR SHALL NONETHELESS BE ENTITLED TO PARTICIPATE UNDER SECTIONS 4.1(A)(4)-(6) IN ANY PENDING UNDERWRITTEN OFFERING TO THE SAME EXTENT THAT THE INVESTOR WOULD HAVE BEEN ENTITLED TO IF THE INVESTOR HAD NOT WITHDRAWN; PROVIDED, FURTHER, THAT NO SUCH FORFEITURE SHALL TERMINATE THE INVESTOR’S RIGHTS OR OBLIGATIONS UNDER SECTION 4.1(G) WITH RESPECT TO ANY PRIOR REGISTRATION OR RESPECT TO THE FORFEITURE OF RIGHTS PURSUANT TO THIS SECTION 4.1(L), ANY UNDERWRITTEN OFFERING OF REGISTRABLE SECURITIES IN WHICH THE INVESTOR HAS ADVISED THE COMPANY OF ITS INTENT TO REGISTER ITS REGISTRABLE SECURITIES EITHER PURSUANT TO SECTION 4.1(A)(2) OR 4.1(A)(4) PRIOR TO THE DATE OF THE INVESTOR’S FORFEITURE.     4.2.       Legend. (a)  The Investor agrees that all certificates (or book-entry recordation) or other instruments representing the Shares subject to this Agreement will bear a legend (or restrictive code) substantially to the following effect: SUCH LAWS.” (B)               THE INVESTOR ACKNOWLEDGES THAT THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR UNDER ANY STATE SECURITIES LAWS AND AGREES THAT IT WILL NOT SELL OR OTHERWISE DISPOSE OF ANY OF THE SHARES, EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OR EXEMPTION PROVISIONS OF THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS.  UPON THE REQUEST OF THE INVESTOR AND THE RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THE RESTRICTION REFERENCED IN THE FOREGOING LEGEND (OR RESTRICTIVE CODE) IS NO LONGER REQUIRED IN ORDER TO ENSURE COMPLIANCE WITH THE SECURITIES ACT OR APPLICABLE STATE LAWS, AS THE CASE MAY BE, THE COMPANY SHALL PROMPTLY CAUSE THE LEGEND TO BE REMOVED FROM ANY CERTIFICATE (OR RESTRICTIVE CODE FROM ANY BOOK ENTRY RECORDATION).      4.3.       NASDAQ Listing.  The Company shall use its reasonable best efforts to cause the Shares to be approved for listing on the NASDAQ Stock      4.4       Certain Transactions.  The Company will not merge or consolidate     4.5        Witholding.  The Company shall be entitled to deduct and withhold from amounts payable to the Investor or any of its Affiliates in respect of the amounts shall be treated for all purposes as having been paid to the Investor or any such Affiliates in respect of which such deduction and withholding was made by the Company.  Prior to the Investor or any of its Affiliates receiving any Shares, the Investor shall, and cause such Affiliates to, deliver to the Company by the Company from time to time.  The Investor shall, and cause such Affiliates to, update all such IRS forms, as appropriate, from time to time. -24-         4.6        Notice of Control. The Company shall use commercially reasonable efforts to notify the Investor prior to taking any action that would, to the Company’s knowledge, cause (a) the Investor’s equity of the Company (together with equity owned by such Investor’s Affiliates (as such term is used under the BHC Act)) to exceed 33.3% of the Company’s total equity or (b) the Investor’s ownership of any class of voting securities of the Company (together with the ownership by such Investor’s Affiliates (as such term is used under the BHC Act) of voting securities of the Company) to exceed 9.9% or otherwise cause the Change in Bank Control Act or any rules or regulations promulgated thereunder (or any successor provisions).  Notwithstanding anything to the contrary in this Agreement, the Investor (together with its Affiliates (as such term is used under the BHC Act)) shall not have the ability to purchase more than 33.3% of the Company’s total equity or to own, control or have power to vote in excess of 9.9% of the total outstanding voting securities of the Company. ARTICLE V TERMINATION      5.1        Termination.  This Agreement may be terminated (a) by mutual agreement of the parties hereto or (b) by either party upon written notice to the other if the Closing has not been consummated on or prior to 5:00 p.m., New York City time, on the fifteenth (15th) day following the date hereof, provided  that the right to terminate this Agreement under Section 5.1(b) shall not be available to a party whose failure to comply with its obligations under this                              5.2       Effects of Termination.  In the event of (other than Section 3.2, this Section 5.2 and Article VI and all applicable become wholly void and of no further force and effect and, if the Closing has not yet occurred, any funds held by the Escrow Agent on behalf of the Investor shall promptly be returned to the Investor; provided that nothing herein shall relieve any party from liability for willful breach of this Agreement or breach of this Agreement prior to any termination hereof. -25-     ARTICLE VI MISCELLANEOUS     6.1        Survival.  None of the representations and warranties set forth in this Agreement shall survive the Closing.  Except as otherwise provided herein, all covenants and agreements contained herein, other than those which by their terms are to be performed in whole or in part after the Closing Date, shall terminate as of the Closing Date.      6.2       Amendment.  No amendment of this Agreement will be effective      6.3        Waiver.  No failure or delay by any party in exercising any thereof or the exercise of any other right, power or privilege.  No waiver will the waiving party that makes express reference to the provision or provisions      6.4       Counterparts.  For the convenience of the parties hereto, this Agreement may be delivered by facsimile or other electronic means and will be      6.5       Governing Law; Jurisdiction.  This Agreement shall be construed, and the rights and obligations of the parties hereunder determined, in its conflict-of-laws principles.  For the purposes of any suit, action or proceeding based upon, arising out of or relating to this Agreement or the negotiation, execution or performance hereof, the parties hereby expressly submit to the jurisdiction of all federal and state courts sitting within the confines of the federal Eastern District of New York (the “Venue Area”) and consent that any order, process, notice of motion or other application to or by jurisdiction by registered mail or by personal service in accordance with Section 6.7.  The parties agree that such courts shall have the exclusive jurisdiction over any such suit, action or proceeding commenced by either or both of said parties.  Each party hereby irrevocably waives any objection that negotiation, execution or performance hereof, brought in any federal or state court sitting within the confines of the Venue Area and hereby further HEREBY.  EACH OF the Parties HERETO hereby (a) certifies that no representative, agent or attorney of -26-     things, the mutual waivers and certifications contained in thiS SECTION 6.6.    personally or by facsimile, upon confirmation of receipt, (b) on the first next-day courier service or (c) on the third business day following the date of Suffolk Bancorp 4 West Second Street, P.O. Box 9000 Riverhead, NY  11901 Facsimile:  (631) 727-2638 Attention:  General Counsel 51 West 52nd Street Attn:   David E. Shapiro, Esq.   (B)               IF TO THE INVESTOR, TO THE ADDRESS FOR NOTICE SET FORTH ON SCHEDULE A.       6.8       Entire Agreement; Assignment.  (a)  This Agreement (including the Disclosure Schedules hereto) constitutes the entire agreement, and supersede all hereof; (b) the terms and conditions of this Agreement shall inure to the successors and permitted assigns; and (c) this Agreement will not be assignable by a party, by operation of law or otherwise, without the prior written consent and void).      6.9.       Other Definitions.  Wherever required by the context of this -27-     (A)                THE TERM “SUBSIDIARY” MEANS THOSE CORPORATIONS AND OTHER PERSONS OF WHICH SUCH PERSON OWNS OR CONTROLS MORE THAN 50% OF THE OUTSTANDING EQUITY SECURITIES EITHER DIRECTLY OR INDIRECTLY THROUGH AN UNBROKEN CHAIN OF ENTITIES AS TO EACH OF WHICH MORE THAN 50% OF THE OUTSTANDING EQUITY SECURITIES IS OWNED DIRECTLY OR INDIRECTLY BY ITS PARENT; PROVIDED, HOWEVER, THAT THERE SHALL NOT BE INCLUDED ANY SUCH ENTITY TO THE EXTENT THAT THE EQUITY SECURITIES OF SUCH ENTITY WERE ACQUIRED IN SATISFACTION OF A DEBT PREVIOUSLY CONTRACTED IN GOOD FAITH OR ARE OWNED OR CONTROLLED IN A BONA FIDE FIDUCIARY CAPACITY; (B)               THE TERM “AFFILIATE” MEANS, WITH RESPECT TO ANY PERSON, ANY WITH, SUCH OTHER PERSON.  FOR PURPOSES OF THIS DEFINITION, “CONTROL” (INCLUDING, WITH CORRELATIVE MEANINGS, THE TERMS “CONTROLLED BY” AND “UNDER COMMON CONTROL WITH”) WHEN USED WITH RESPECT TO ANY PERSON, MEANS THE POSSESSION, DIRECTLY OR INDIRECTLY, OF THE POWER TO CAUSE THE DIRECTION OF MANAGEMENT AND/OR POLICIES OF SUCH PERSON, WHETHER THROUGH THE OWNERSHIP OF VOTING SECURITIES BY CONTRACT OR OTHERWISE; (C)                THE WORD “OR” IS NOT EXCLUSIVE; (D)               THE WORDS “INCLUDING,” “INCLUDES,” “INCLUDED” AND “INCLUDE” ARE DEEMED TO BE FOLLOWED BY THE WORDS “WITHOUT LIMITATION”;   (E)                THE TERMS “HEREIN,” “HEREOF” AND “HEREUNDER” AND OTHER WORDS SECTION, PARAGRAPH OR SUBDIVISION; (F)                 “BUSINESS DAY” MEANS ANY DAY EXCEPT SATURDAY, SUNDAY AND ANY DAY WHICH SHALL BE A LEGAL HOLIDAY OR A DAY ON WHICH BANKING INSTITUTIONS IN THE STATE OF NEW YORK GENERALLY ARE AUTHORIZED OR REQUIRED BY LAW OR OTHER GOVERNMENTAL ACTIONS TO CLOSE; (G)               “PERSON” HAS THE MEANING GIVEN TO IT IN SECTION 3(A)(9) OF THE (H)               “BENEFICIAL OWNER” (AND THE CORRELATIVE TERM “BENEFICIALLY OWNED”) HAS THE MEANING GIVEN TO IT IN RULES 13D-3 AND 13D-5 OF THE EXCHANGE ACT; AND (I)                 THE TERM “KNOWLEDGE OF THE COMPANY” OR ANY SIMILAR FORMULATION OF KNOWLEDGE SHALL MEAN THE ACTUAL KNOWLEDGE OF THE OFFICERS OF THE COMPANY LISTED ON SECTION 6.9(I) OF THE DISCLOSURE SCHEDULE OF THE COMPANY. -28-     provisions hereof. parties hereto any benefit right or remedies, except that the provisions of Section 4.1 shall inure to the benefit of the persons referred to in such Section.     6.13       Specific Performance.  The parties agree that irreparable damage      6.14.     Public Announcements.   The Company shall, by 9:30 a.m., New York City time, on the first (1st) Business Day following the Closing Date, issue one or more press releases or file one or more reports with the SEC (collectively, the “Press Release”) disclosing all material, nonpublic information that the Company may have provided the Investor at any time prior to the filing of the Press Release in connection with the transactions contemplated by this Agreement.  The Company and Investor agree that the Press Release shall be a press release of the Company, provided  that the Company shall not publicly disclose the name of the Investor or any Affiliate or investment adviser of the Investor in the Press Release without the prior written consent of the Investor, except to the extent such disclosure is required by applicable law or regulation, at the request of the staff of the SEC or any other Governmental Entity or under trading market regulations (in which case the Company shall, to the extent permitted by applicable law, regulation or such request, provide the Investor with prior notice of such disclosure).  Until the issuance of the Press Release, neither party shall issue any press release or make any public statement or announcement with respect to this Agreement or the transactions contemplated hereby, except as required by law. -29-     6.15     Other Investors.  The Company agrees and acknowledges that the Investor shall not be responsible for the performance of the obligations of the investors party to the other Purchase Agreements.   -30-     written. SUFFOLK BANCORP By:                                                                  Name: Title:        ____________________________________   By:                                                                  Name:  Title:          Schedule A Investor:                                                                      ___________________________ Shares:                                                                         ___________________________ Cash Proceeds (aggregate purchase price):                 ___________________________   Shares of Common Stock Beneficially Owned as of the date hereof (Section 2.3(d)):           ___________________________   Address for notice (Section 6.7):                                ___________________________                                                                                     ___________________________                                                                                     Facsimile: __________________                                                                                     Attn: ______________________   Address for delivery of stock certificates:                 ___________________________                                                                                     ___________________________                                                                                     ___________________________   EIN:                                                                            ___________________________

Title: [new jersey] Brother hasnt seen his daughter in almost four years. No reason other than ex is pure evil. Please help!!! Question:So this might become a long story but I'll try to keep it short. My older brother married one of the worst human beings alive about 12 years ago, they had a daughter and pretty much after she was born he was beaten down and eventually booted out. So they divorce and he gets taken to the cleaners because of shitty representation. But custody was set up and he had every other weekend and one week night, that was four years ago. His daughter thrived in our company, she had a loving family and my son and her got along wonderfully and she was coming out of her shell, this is where she starts to get less and less time with her father. October will be four years since we saw her, hes gone to court and had a custody decree written up, but to my knowledge nothing states that she has to give her over to him, it only says make an attempt to. This girl knows the court system very well and knows what she can and cant get away with, so she continues to abuse her right as a mother. We just recently found out she has missed 94 days of school this year, yet she still has full custody, keeping her home and saying she has issue, when teachers at the school never see them and now wants to sue the school for not providing a proper learning environment. My brothers second lawyer seems to as useless as his first as this girl and her lawyer have made him look foolish and all he can say is that shes crazy and this and that, basically making excuses for his failure. We as a family have pretty much given up on ever seeing her again. Theres no reason for his lack of visitation either, never been arrested, never charged with any sort of sex crime, steady job and home. I came here today to seek help for my brother and friend as hes just so frustrated and feeling like he'll never see his daughter again as it seems every avenue hes taken is a dead end, he met with the school today and they basically can only put together a learning program and if she doesnt stick to it, the state can then step in. Any advice will be greatly appreciatted, thank you. Answer #1: In all fairness your brother's lawyer knows more objective facts than we ever will. Get that information first, not just what you are observing or hearing from your brother. If you, him more importantly, and your family feel the lawyer isn't very effective, then find other representation who can better explain the facts of this and what CAN be done. Just because it seems like there isn't anything being done, doesn't always mean something can be done. These things are messy and difficult for a reason and the simplest solution is often never the case.

Exhibit 99.1 VELATEL SIGNS AGREEMENT TO PROVIDE A 4G NETWORK IN CHINA VelaTel will act as both a service provider to and a joint venture partner with NGSN for NGSN and its affiliates to act as anchor tenants of a 4G network SAN DIEGO, CA – OCTOBER 25, 2011 – US-based VelaTel Global Communications (OTCQB: VELA) (VelaTel), a leader in deploying and operating wireless broadband and telecommunication networks worldwide, today announced it has entered into a Business Agreement with Next Generation Special Network Communication Technology Co., Ltd. (NGSN) in the People’s Republic of China (PRC).NGSN already holds a PRC-issued value added services license to provide location based tracking services and other information service nationwide.VelaTel will form a PRC operating company to be jointly owned with NGSN but subject to VelaTel’s control.The operating company will enter into an exclusive services contract with NGSN to deliver the information services and a 4G Network in China.The parties will work on the deployment of a 4G network that will employ TD-LTE technology using equipment already commercially available and manufactured by VelaTel’s strategic partner ZTE Corporation.VelaTel will finance and the joint venture will own the infrastructure equipment.VelaTel will also provide all engineering and network management services, including engineering VelaTel has already completed for 29 major PRC cities in connection with a different WBA project.VelaTel and NGSN expect to finalize the services contract and form the joint venture company before the end of 2011. NGSN was founded from a group of other technology institutes to support other state owned companies and central government agencies in advancing private network telecommunications technologies.NGSN’s current activities include projects related to transportation, including GPS tracking technologies, remotely delivered education services, and agriculture technologies.For further information about NGSN, please visit www.ngsn-china.com.The first phase of the network VelaTel will deploy and operate for NGSN will cover the Heilongjiang Province in northeast China, with a population of approximately 39 million, and will utilize NGSN’s existing value added services license to deliver personalized navigation and location based services (LBS) including GPS, mobile resource management solutions that allow enterprises to monitor and manage mobile workforces and assets.The operating company will distribute its services to consumers, wireless carriers, enterprises and automobile manufacturers, and original equipment manufacturers.The network will be expanded to other regions as well as by offering 4G Network services in China. NGSN’s WBA Division GM Mr. Lu Bin noted:“China is seeing unprecedented demand for vertical M2M (machine to machine) solutions.In addition to location based services, applications include home automation, energy saving/environmental protection, industrial automation, health care, precision agriculture, public security and video surveillance.” VelaTel’s CEO, George Alvarez, commented: “The NGSN project represents an expansion and diversification of the services VelaTel delivers, particularly in China.Instead of a retail consumer model, and the attendant challenges of marketing budgets and competition with other carriers for subscribers, this transaction reflects a business to business model, with NGSN acting as both the “anchor tenant” and the broker with a financial incentive to expand the network’s paid users by recruiting other affiliated businesses.”VelaTel’s President, Colin Tay, also pointed out:“We are pleased and honored to be working with a prestigious company like NGSN.We look forward to assisting them to deliver location based services to their diverse customers in addition to deployment of a 4G network.” About VelaTel Global Communications, Inc. VelaTel acquires spectrum assets through acquisition or joint venture relationships, and provides capital, engineering, architectural and construction services related to the build-out of wireless broadband telecommunications networks, which it then operates by offering services attractive to residential, enterprise and government subscribers. VelaTel currently focuses on emerging markets where internet penetration rate is low relative to the capacity of incumbent operators to provide comparable cutting edge services, and/or where the entry cost to acquire spectrum is low relative to projected subscribers. VelaTel currently has project operations in People’s Republic of China and Peru. Additional target markets include countries in Latin America, the Caribbean, Southeast Asia and Eastern Europe. VelaTel’s administrative headquarters are in San Diego, California. For more information, please visit www.velatel.com. Safe Harbor Statement This press release contains forward-looking statements that involve risks and uncertainties. Actual results, events and performances could vary materially from those contemplated by these forward-looking statements. These statements involve known and unknown risks and uncertainties, which may cause the Company's actual results, expressed or implied, to differ materially from expected results. These risks and uncertainties include, among other things, product demand and market competition. You should independently investigate and fully understand all risks before making an investment decision. VelaTel Contacts: Media/Analyst Relations Retail Investors Kimberley Brown Tim Matula Core Insights 360 PR VelaTel Global Communications, Inc. Public Relations Investor Relations 1-404-314-2900 (Toll Free) 1-877-260-9170 kbrown@coreinsights360.com investors@velatel.com ### 2

Exhibit 10.53     THIS LOAN AGREEMENT is made on 17/01/2011 PARTIES: Koklanovskoe OOO, a limited liability company incorporated under the laws of the Russian Federation, main state registration number (OGRN) 1104501004850, whose legal address is at 106 Karl Marx Street, office 101, Kurgan city, Russia, 640022 (hereinafter “Koklanovskoe” or the “Borrower”); and Nafanailov Odissei, the citizen of Canada, passport No. BA362125, issued on January 9, 2008 in North York, having residence at 67 Grosvenor st., W1K 3JN, London, UK (hereinafter the “Lender”). WHEREAS: The Lender is willing to make available to Koklanovskoe a loan facility of GBP 245,000 (two hundred and forty-five thousand British Pounds) upon and subject to the terms and conditions set out in this Agreement. 1.           Definitions   For the purposes of this Agreement the following definitions will apply:   "Advance" means any amount advanced or to be advanced by the Lender under the Loan;   "Agreement" means this agreement;   "Available Facility" means the Commitment from time to time less the aggregate of each Advance then drawn down and outstanding;   "Commitment" means the amount of GBP 245,000 (two hundred and forty-five thousand British Pounds);   "Drawdown Notice" means a notice complying with clause 5 (Drawdown Notices) below;   "Event of Default" has the meaning given in clause 11 (Events of Default) below;   "Loan" means the loan made available to Koklanovskoe under clause 2; and   "Outstanding Advances" means amounts drawn down under the Loan but not repaid.   2.           The Loan   The Lender hereby agrees to lend to Koklanovskoe, upon and subject to the terms of this Agreement, a loan in principal amount equal to the Commitment.   3.           Drawdown   3.1 Subject to clauses 4 (Term) below, the Lender shall make an Advance to Koklanovskoe subject to:       (a) a Drawdown Notice in respect of such Advance having been received by the Lender   (b) the amount of the Advance does not exceed the Available Facility;     3.2   The Advance shall be paid by the Lender direct to the following denominated account:   Beneficiary: Koklanovskoe OOO Beneficiary’s account: 40702826932001055845 Receiving Bank: SBERBANK (Uralsky head office) Yekaterinburg, Kurgan Branch 8599 Receiving Bank Address: 98 Gogolya st., Kurgan City, 640022, Russian Federation Swift at Receiving Bank : SABRRUMMEA1 Account at Intermediary Bank: 890 0057 610 Intermediary Bank: Swift at Intermediary Bank: IRVTUS3N   3.3 Koklanovskoe  shall be responsible for satisfying all requirements of Russian Federation law and regulation in respect of the Loan, each Advance and any matter contemplated by this Agreement and shall indemnify the Lender for any loss or damage (including legal fees) it may suffer as a result of the Loan, any Advance or this Agreement being in contravention of such law or regulation.   4.           Term   4.1 The Loan shall be available until 31 January 2015, upon which date all Outstanding Advances together with accrued interest, shall be repaid in full.   5.           Drawdown Notices   5.1   Each Drawdown Notice must be in the form set out in the Schedule 1 to this Agreement or in such other form as may be acceptable to the Lender, shall specify one or more of the purposes as detailed in clause 8 for which the Advance will be utilized, the date upon which such Advance is to be made and the amount of the Advance (which shall relate to the amounts stated in respect of the purpose(s) applicable for which the Advance will be utilized, as set out in clause 8).   5.2   Drawdown Notice shall be received by the Lender at least ten (10) days prior to the expected Drawdown Date.         6.      Interest and Default Interest   6.1 Interest will be charged on the Outstanding Advances at a rate per annum equivalent to 12% per annum. Interest will be calculated and accrue on a daily basis (calculated on a year of 365 days and the actual number of days elapsed) and will be payable on repayment of the Outstanding Advances.   6.2 In the event that any monies from time to time payable to the Lender hereunder are not paid on the due date, additional interest shall be payable on the amount due, from the date payment was due to the date payment is made, at a rate equivalent to 6% per annum. Any such interest will be calculated and accrue on a daily basis.   7. Security   The Loan shall initially be unsecured, but the Lender reserves the right (at its sole discretion) to request security (in the form of fixed or floating charges (or the equivalent under the law of any applicable jurisdiction) over all or some of the assets and/or undertaking of Koklanovskoe subject to such assets and undertaking being capable in accordance with applicable law of being charged) at any time prior to any drawdown or whilst any monies remain outstanding under the Loan. The Lender agrees and acknowledges that any such security will or may rank after any security interests existing at such time and that the ability of Koklanovskoe to give such security may be subject to appropriate inter-creditor agreements or priority agreements being entered into with other lenders and/creditors of Koklanovskoe. If security is required by the Lender, Koklanovskoe shall grant the same as soon as shall reasonably be practicable following the request of the Lender. Koklanovskoe will pay the Lender 's reasonable costs of putting such security in place, including the cost of negotiating and documenting such security as well as the costs of perfecting the security as required under applicable laws.   8. Purpose     The Loan shall be used by Koklanovskoe as follows:   (a)   Up to GBP 242,000 towards participation in the auction and the auction price, payable to the Ural Agency for Subsurface.   (b)   Any unused amount remaining from item (a) plus up to GBP 3000 to pay for commencement of geological exploration, stipulated by the License agreement and other operating costs of Koklanovskoe.   PROVIDED THAT the Lender shall not be bound to investigate to ensure that the Loan is being properly utilized for such purposes, but will have the right to do this at the time it considers necessary.   9. Further funding   In the event Koklanovskoe is awarded the license, the Lender and Koklanovskoe shall conjointly develop a comprehensive Work Programme and discuss whether further amounts should be advanced to Koklanovskoe under this Agreement.         10.    Repayment Koklanovskoe may repay in GBP all or any part (provided, in the case of part only, it is of an amount of not less than GBP 50,000) of the Outstanding Advances, together with accrued interest thereon, at any time upon giving not less than 10 days written notice to the Lender. Any amounts repaid may not be re-borrowed.   11.1  Each of the events set out in clause 11.2 below is an "Event of Default". On or at any time after the occurrence of an Event of Default, the Lender may by notice to Koklanovskoe (i) cancel the Loan and/or (ii) declare that all or part of the Outstanding Advances, together with accrued interest and all other amounts accrued, be immediately due and payable or declare that all or part of the Outstanding Advances be payable on demand.   11.2 The events referred to in clause 11.1 above are: (a)   receiver, administrative receiver, administrator or the like is appointed in respect of Koklanovskoe or any part of their respective assets;   (b)   an order is made or an effective resolution passed for the winding up of Koklanovskoe;   (c)   Koklanovskoe stops payment of all or any class of its debts or  announces on indebtedness or ceases to carry on its business or substantially the whole of its business or threatens to cease to carry on the same or substantially changes the nature of its business;   (d)   an encumbrancer takes possession or a receiver or administrator is appointed in respect of any property of Koklanovskoe;   (e)   Koklanovskoe makes default in the payment under the Agreement;   (f)   any distress, execution, sequestration or other processes are levied or enforced upon or sued out against the property of Koklanovskoe and is not discharged within seven days of being levied;   (g)   Koklanovskoe applies any Advance (or part thereof) other than for the applicable purpose set out in clause 8.     12.1     As a condition of the Loan being available, Koklanovskoe hereby undertakes with and represent and warrants to the Lender as follows:   (a)   Koklanovskoe is a limited liability company duly incorporated and validly existing under the laws of the Russian Federation and has the power and now being conducted and to enter into this Agreement and any other documents contemplated hereby and to borrow money and perform its obligations hereunder and has Koklanovskoe taken all necessary action to authorise the execution, delivery and performance of this Agreement and each such other document;         (b)   this Agreement and each other document contemplated hereby (including any documents which may be required in connection with any security requested under clause 7 above) constitutes or will, when executed, constitute the legally valid and binding obligation of Koklanovskoe and is or will be, when executed,   (c)   the execution, delivery and performance by Koklanovskoe of this Agreement does not and will not exceed any power granted to Koklanovskoe by or violate any provision of:   (i) any law or regulation or any order or decree of any governmental authority, agency or court, to which Koklanovskoe is subject;       (ii) the Charter of Koklanovskoe;   (d)   there is no provision of any instrument or agreement and no other obligation by which Koklanovskoe or any of its assets is bound and no judgment, injunction or other order or award of any judicial, administrative, governmental or other authority or of any arbitrator which is contravened by the execution and delivery of this Agreement or which would be contravened by the performance or observance of any of the obligations of Koklanovskoe in or pursuant to this Agreement;   (e)   repayment of the Loan and payment of other amounts due hereunder by Koklanovskoe to the Lender will be an unconditional obligation of Koklanovskoe which shall rank at least pari passu with all of the other liabilities of Koklanovskoe.   13.           Notification of Events of Default   Immediately upon becoming aware of the same, Koklanovskoe undertakes to notify the Lender by fax and by notice in writing sent by first class post of the occurrence of any event or matter which constitutes or might constitute an Event of Default pursuant to clause 11 (Events of Default) and Koklanovskoe shall at the same time inform the Lender of any action taken or proposed to be taken in connection therewith.   14.           Costs and Charges   Koklanovskoe will reimburse the Lender on demand for all costs or expenses (including but not limited to legal fees) incurred by the Lender in the enforcement (or in seeking to enforce) of this Agreement or in protecting or preserving (or attempting to protect or preserve) any of its rights hereunder.         15.        Notices   Any notice to be given pursuant to the terms of this Agreement shall be given in writing to the party due to receive such notice at the address stated below or such other address as may have been notified to the other parties in accordance with this clause. Notice shall be delivered personally or sent by first class pre-paid recorded delivery or registered post (air mail if overseas) or by facsimile transmission to the numbers and parties detailed below and shall be deemed to be given in the case of delivery personally on delivery and in the case of posting (in the absence of evidence of earlier receipt) 48 hours after posting (six days if sent by air mail) and in the case of facsimile transmission on completion of the transmission provided that the sender shall have received printed confirmation of transmission.   Lender: 67 Grosvenor st., 67, W1K 3JN, London, UK Attention: Nafanailov Odissei Fax: + …………………..   Koklanovskoe: 106 Karl Marx Street, office 101, Kurgan city, Russia, 640022 Attention: Glushkov I.Ye. Fax: +7 (3522) 24 78 24   16.           Assignment   Koklanovskoe may not assign or transfer all or any part of its rights or obligations hereunder, save with the prior written consent of the Lender. The Lender may at any time assign or otherwise transfer all or any part of its   17.           Law and Disputes   the Russian Federation.   18.           Language   This Agreement will be executed in English and in Russian. In case of any conflict between the English and Russian versions, the terms of the English version should prevail.         first above written.   Borrower: Koklanovskoe OOO Legal address:  106 Karl Marx Street, office 101, Kurgan city, Russia, 640022 Director:  Glushkov Igor Yevgenyevich Signed:  /s/ Glushkov Igor Yevgenyevich Lender: Nafanailov Odissei Address: 67 Grosvenor st., W1K 3JN, London, UK Signed: /s/ Nafanailov Odissei                                  

Exhibit 10.01 SECOND AMENDMENT TO THE TAX ALLOCATION AGREEMENT thereof).   Title:   and Secretary and Secretary   Title:   and Secretary   Title: President

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM SD SPECIALIZED DISCLOSURE REPORT Stepan Company (Exact name of the registrant as specified in its charter) Delaware 1-4462 36-1823834 (State or other jurisdiction of incorporation or organization) (Commission File Number) (IRS Employer Identification No.) 22 W. Frontage Road, Northfield, IL (Address of principle executive offices) (Zip code) Scott D. Beamer, (847)446-7500 (Name and telephone number, including area code, of the person to contact in connection with this report.) Check the appropriate box to indicate the rule pursuant to which this form is being filed and provide the period to which the information in this form applies: x Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January1 to December31, 2015. Under the final rule, a company that uses any of the designated minerals is required to conduct a reasonable ‘country of origin’ inquiry that must be performed in good faith and be reasonably designed to determine whether any of its minerals originated in the covered countries or are from scrap or recycled sources. Section1 – Conflict Minerals Disclosure Item1.01 Conflict Minerals Disclosure and Report Stepan Company (the“Company,” “we” or “our”) is filing this Form SD pursuant to Rule 13p-1 under the Securities Exchange Act of 1934 for the reporting period January1, 2015 to December31, 2015 (the“Reporting Period”). Rule 13p-1, through Form SD, requires the disclosure of certain information if a company manufactures or contracts to manufacture products for which certain “conflict minerals” (as defined below) are necessary to the functionality or production of such products. Form SD defines “conflict minerals” as: (i)(a)columbite-tantalite (or coltan, the metal ore from which tantalum is extracted), (b)cassiterite (the metal ore from which tin is extracted), (c)gold and (d)wolframite (the metal ore from which tungsten is extracted), or their derivatives, which are currently limited to tantalum, tin and tungsten; or (ii)any other mineral or its derivatives determined by the U.S. Secretary of State to be financing conflict in the Democratic Republic of the Congo or an adjoining country (collectively, the“Covered Countries”). Our operations, including the operations of our consolidated subsidiaries, may at times manufacture, or contract to manufacture, products for which conflict minerals are necessary to the functionality or production of those products (collectively, our “products”). As required by Form SD, we have conducted a good faith reasonable country of origin inquiry (“RCOI”) regarding the conflict minerals included in our products during the Reporting Period, which we refer to as the “Subject Minerals,” to determine whether any of such Subject Minerals originated in the Covered Countries and/or whether any of the Subject Minerals may be from recycled or scrap sources. As part of our RCOI, we conducted a thorough review of our product lines to identify whether any of our products contain any conflict minerals that are necessary to the functionality or production of those products. We determined that one conflict mineral, tin, is used as a catalyst during the manufacturing process of some of our products. Although we have not determined whether any tin remains in such products once it has been used as a catalyst, for the Reporting Period, we conducted our RCOI as if the tin used as a catalyst remained in such products. We conducted a thorough review of our procurement records and identified four suppliers of the tin used as a catalyst for these products (collectively, the “Covered Suppliers”). During the Reporting Period, we sent letters to each of the Covered Suppliers that: (i)described the reporting obligations imposed by Form SD and the Securities and Exchange Commission regarding conflict minerals;and (ii)requested information regarding the presence and sourcing of conflict minerals, including tin, used in the products supplied to the Company during the Reporting Period. For the Reporting Period, we obtained representations from all four of the Covered Suppliers indicating the facilities at which the Subject Minerals were processed. Because the Company does not purchase conflict minerals directly from mines, smelters or refiners, there are many third parties in the supply chain between the Company and the original sources of conflict minerals. Accordingly, the Company is relying on the information provided by the Covered Suppliers regarding the origin of any Subject Minerals. All four of the Covered Suppliers certified to the Company that the Subject Minerals provided to the Company were not sourced from the Covered Countries. Based on this information, the Company has reasonably determined that the conflict minerals, if any, contained in our products during the Reporting Period did not originate in the Covered Countries. As required by Form SD, the disclosure contained in this Form SD regarding the Company’s RCOI is available on the Company’s website located at www.stepan.com, under “Investor Relations - SEC Filings.” The content on, or accessible through, any website referred to in this Form SD is not incorporated by reference into this Form SD unless expressly noted. 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 duly authorized undersigned. Stepan Company (Registrant) /s/ Scott D. Beamer May 31, 2016 By Scott D. Beamer, Vice President and Chief Financial Officer (Date)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM 12b-25 NOTIFICATION OF LATE FILING (Check one): XForm 10-K Form 20-F Form 11-K Form 10-Q Form N-SAR Form N-CSR\ FOR THE PERIOD ENDED: June 30, 2010 [ ] Transition Report on Form 10-K [ ] Transition Report on Form 20-F [ ] Transition Report on Form 11-K [ ] Transition Report on Form 10-Q [ ] Transition Report on Form N-SAR For the Transition Period Ended: Nothing in this form shall be construed to imply that the Commission has verified any information contained herein. If the notification relates to a portion of the filing checked above, identify the Item(s) to which the notification relates: PART I - REGISTRANT INFORMATION ASPEN EXPLORATION CORPORATION Full Name of Registrant Former Name if Applicable 830 Tenderfoot Hill Road, Suite 310 Address of Principal Executive Office (Street and Number) Colorado Springs, CO 80906 City, State and Zip Code PART II - RULES 12b-25(b) and (c) If the subject report could not be filed without unreasonable effort or expense and the registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed.(Check box if appropriate) [X] (a) The reasons described in reasonable detail in Part III of this form could not be eliminated without unreasonable effort or expense; and [X] (b) The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K or Form N-SAR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report of transition report on Form 10-Q, or portion thereof will be filed on or before the fifth calendar day following the prescribed due date; and [] (c) The accountant's statement or other exhibit required by Rule 12b-25(c) has been attached if applicable. PART III - NARRATIVE State below in reasonable detail the reasons why the Form 10-K, Form 20-F, Form 11-K, Form 10-Q, Form N-SAR, or the transition report or portion thereof, could not be filed within the prescribed time period.(Attach extra sheets if needed.) Subsequent to Aspen’s fiscal year end (June 30, 2010), Aspen closed a merger transaction whereby Dillco Fluid Service, Inc. (“Dillco”) became a wholly owned subsidiary of Aspen.The closing of that transaction required a significant amount of management’s attention both during the quarter ended June 30, 2010, and subsequently.Further, immediately after closing the merger transaction new persons were appointed to serve as Aspen’s executive officers and Aspen also engaged a new auditing firm.The closing of the merger transaction shortly after Aspen’s fiscal year end resulted in Aspen being required to prepare a significant amount of financial information regarding both Dillco, and Aspen on a combined basis with Dillco for inclusion in its annual report on Form 10-K.The preparation and review of the disclosure and information to be included in the annual report not only required a significant amount of management’s time and attention, but also resulted in the need to work with a greater than normal number of third party professionals with respect to the Form 10-K.These factors prevented Aspen from completing the financial information and corresponding disclosure contained in its annual report by the original filing deadline. PART IV - OTHER INFORMATION (1)Name and telephone number of person to contact in regard to this notification: Herrick K. Lidstone, Jr., Esq. 796-2626 (Name) (Area Code) (Telephone Number) (2)Have all other periodic reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12 months (or for such shorter) period that the registrant was required to file such report(s) been filed?If the answer is no, identify report(s).[ X ] Yes[] No (3)Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof?[X] Yes [] NoIf so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made. ASPEN EXPLORATION CORPORATION (Name of Registrant as specified in charter) has caused this notification to be signed on its behalf by the undersigned hereunto duly authorized. Date September 29, 2010 By: /s/ /s/ Rick Kasch Rick Kasch, Chief Financial Officer ATTENTION Intentional misstatements or omissions of fact constitute Federal Criminal Violations (See 18 U.S.C. 1001). -2- ATTACHMENT 1 TO FORM 12b-25 NOTIFICATION OF LATE FILING Aspen recognized a net loss of $(555,224) for the fiscal year ended June 30, 2010, as compared to a $(2,092,888) net loss recognized for the fiscal year ended June 30, 2009.Aspen’s loss in fiscal 2010 was significantly less than its loss in fiscal 2009 primarily because Aspen incurred a significant loss from discontinued operations during its 2009 fiscal year whereas in fiscal 2010 it did not incur such a loss.During its 2009 fiscal year Aspen engaged in oil and gas operations but sold its remaining oil and gas assets during the fiscal year, which resulted in Aspen reclassifying its oil and gas operating results to discontinued operations.In fiscal 2010 Aspen did not engage in any oil and gas operations. -3-

Name: Commission Regulation (EC) No 1524/98 of 16 July 1998 laying down detailed rules for the application of the specific measures adopted in respect of fruit and vegetables, plants and flowers for the benefit of the French overseas departments Type: Regulation Subject Matter: plant product; trade; economic policy; agricultural activity; overseas countries and territories Date Published: nan Avis juridique important|31998R1524Commission Regulation (EC) No 1524/98 of 16 July 1998 laying down detailed rules for the application of the specific measures adopted in respect of fruit and vegetables, plants and flowers for the benefit of the French overseas departments Official Journal L 201 , 17/07/1998 P. 0029 - 0042COMMISSION REGULATION (EC) No 1524/98 of 16 July 1998 laying down detailed rules for the application of the specific measures adopted in respect of fruit and vegetables, plants and flowers for the benefit of the French overseas departmentsTHE COMMISSION OF THE EUROPEAN COMMUNITIES,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EEC) No 3763/91 of 16 December 1991 introducing specific measures in respect of certain agricultural products for the benefit of the French overseas departments (1), as last amended by Regulation (EC) No 2598/95 (2), and in particular Articles 2(6), 14(4) and Article 16 thereof,Whereas detailed rules for the application of Regulation (EEC) No 3763/91, as amended by Regulation (EC) No 2598/95, should be adopted as regards Article 2 thereof which provides for the extension to certain processed fruit of the measures to promote the supply of the French overseas departments (hereinafter referred to as 'the FOD`), and Article 14 thereof introducing aid for the production of processed fruit and vegetables;Whereas common detailed rules for implementation of the specific measures for the supply of certain agricultural products to the FOD are laid down in Commission Regulation (EEC) No 131/92 (3), as last amended by Regulation (EC) No 1736/96 (4), and whereas detailed rules for the application of the system of import licences for products processed from fruit and vegetables are laid down in Commission Regulation (EC) No 1921/95 (5), as amended by Regulation (EC) No 2427/95 (6);Whereas, pursuant to Article 2 of Regulation (EEC) No 3763/91, additional detailed rules should be laid down which are adapted to commercial practices as regards in particular the period of validity of licences and certificates and the amount of the security; whereas, in addition, the forecast supply balance for processed fruit for the FOD should be established, and the amount of aid should be set, taking account of the advantage resulting from customs duty exemption for products imported from third countries;Whereas, in order to simplify the legislation, the body of this Regulation should include the provisions adopted in Commission Regulation (EC) No 489/97 of 17 March 1997 laying down detailed rules for the application of the specific measures adopted in respect of fresh fruit and vegetables, plants and flowers for the benefit of the French overseas departments (FOD) (7) for implementing the marketing and production aid schemes referred to in Articles 13 and 15 of Regulation (EEC) No 3763/91, and Regulation (EC) No 489/97 should be repealed;Whereas, pursuant to the aforementioned Article 13, the marketing aid is to be set on a flat rate basis for each of the product categories to be determined, based on the average value of the products, and within the limits of annual quantities for each product category; whereas firstly a list of products eligible for the aid should be drawn up based on the supply needs of the regional markets, and secondly the categories should be established on the basis of the average value of the products so covered, and finally a maximum quantity for all the FOD should be set, providing for distribution of the quantities to be performed by the national authorities to enable the quantities available to be more closely matched to regional needs; whereas this requirement will allow products to be supplied to an FOD other than the one in which the product was harvested;Whereas specific detailed rules should be laid down to ensure that the quantities set are monitored and the conditions for the grant of the aid are met; whereas, to that end, a system of approval of operators in the distribution and catering sectors and mass caterers, who undertake to meet certain requirements, will ensure satisfactory administration of the supply system;Whereas, as regards the aid for the production of green vanilla and the aid for the production of essential geranium and vetiver oils, an approval mechanism, firstly for preparers of dried vanilla or vanilla extracts, and secondly for local collecting and marketing bodies, which undertake in particular to pay the aid in full to the recipient producers and meet the control requirements, will make it possible, within the framework of existing marketing structures, to apply these measures satisfactorily; whereas the quantities laid down in Article 13(3) of Regulation (EC) No 3763/91 are ceilings which, according to the most recent estimates communicated by the French authorities, will not be reached in the medium term; whereas for the sake of sound administration, and taking account of the needs of the most remote regions in question, the corresponding quantities available should be used for implementing the marketing scheme referred to above;Whereas, pursuant to Article 14 of Regulation (EEC) No 3763/91, firstly a list of products eligible for the aid should be drawn up, within the limits of annual quantities established for each category and in line with the scope for the development of local production and processing, and the amounts of the aid should be set on the basis of the prices of local or imported raw materials, and secondly special detailed rules should be adopted to ensure that the system is monitored and the conditions for granting the aid are met, in particular as regards contracts and the minimum price guaranteed to producers, and whereas to that end it is appropriate to incorporate certain provisions of Commission Regulation (EC) No 504/97 (8), as amended by Regulation (EC) No 1491/97 (9), laying down detailed rules for the application of Council Regulation (EC) No 2201/96 (10), as amended by Regulation (EC) No 2199/97 (11), as regards the system of production aid for products processed from fruit and vegetables;Whereas, as regards the marketing aid under the annual contracts referred to in Article 15 of Regulation (EEC) No 3763/91, it is necessary to define the concept of annual contract and specify the basis to be used for calculating the amount of aid, fixed at 10 % of the value of the production marketed, free at destination, and 13 % where Article 15(4) is applied; whereas, finally, the mechanism for distributing the quantities benefiting from the aid should be laid down for cases in which the ceilings fixed in that Article are exceeded;Whereas general provisions applicable to these measures as a whole, especially those concerning control and notification, should be set out in a final chapter;Whereas, in order to ensure optimum implementation of the new measures, the date of application of this Regulation should be 1 July 1998;Whereas the measures provided for in this Regulation are in accordance with the joint opinion of the Management Committee for Fruit and Vegetables, the Management Committee for Products Processed from Fruit and Vegetables and the Management Committee for Live Plants,HAS ADOPTED THIS REGULATION:CHAPTER I Aid for supply Article 1 1. For the purposes of Article 2(1) of Regulation (EEC) No 3763/91, the fruit and vegetable products exempt from duty on import from third countires or receiving Community aid shall be as set out in the forecast supply balance given in Part A of Annex I to this Regulation.2. The aid provided for in Article 2(4) of Regulation (EEC) No 3763/91 for products for which a forecast supply balance is established shall be as set out in Part B of Annex I to this Regulation.Article 2 Subject to the specific provisions of this Regulation, Regulation (EEC) No 131/92 shall apply.Article 3 1. France shall designate the competent authorities responsible for issuing the import licences, exemption certificates and aid certificates provided for in Articles 2, 2a and 3 respectively of Regulation (EEC) No 131/92 and for payment of the aid and administration of securities.2. Licence and certificate applications shall be submitted to the competent authority during the first five working days of any month. Applications shall be admissible only where they do not exceed the quantity available under the forecast balance and where the operator has lodged a security of ECU 3 per 100 kg.3. Licences and certificates shall be issued on the 10th working day of the month at the latest.4. Licences and certificates shall expire on the last day of the second month following the month in which they were issued.5. Where, pursuant to Article 4(1) of Regulation (EEC) No 131/92, a licence or certificate is issued for a quantity which is less than the quantity applied for, the operator may withdraw his application within three working days of the date on which the licence or certificate is issued. The security relating to the licence or certificate shall then be released.CHAPTER II Aid for marketing on the regional market Article 4 The aid provided for in Article 13 of Regulation (EEC) No 3763/91 shall be granted in respect of fresh fruit and vegetables with the exception of bananas other than plantains falling within CN code 0803 00 11, flowers and live plants listed in Chapters 6, 7 and 8 of the Combined Nomenclature, pepper and fruits of the genera Capiscum and Pimenta falling within CN code 0904 and the spices falling within CN code 0910, for supply to the FOD market, under the conditions laid down in this Chapter.Article 5 1. The aid shall be granted to the producers referred to in Article 6 in respect of the products listed in column II of Part A of Annex II under three categories A, B and C:(a) which comply with the standards established pursuant to Title I of Commission Regulation (EC) No 2200/96 (12) as regards fruit and vegetables or, where such standards have not been established for the products concerned, with the quality specifications in the supply contracts referred to below; however, products presenting special characteristics linked to tropical production conditions shall not be excluded; and(b) which are covered by supply contracts between the types of operator referred to in Article 6 for one or more marketing periods, concluded before the commencement of the relevant period, or before a date fixed by the competent authorities.2. The amounts of aid applicable to each category of product shall be those set out in column IV of Part A of Annex II.3. The aid shall be granted up to the annual quantities for each category of product set out in column III of Part A of Annex II.The competent authorities shall determine for each FOD the products and quantities thereof in respect of which aid may be granted. They shall adjust the apportionment in the light of specific needs and available quantities.4. Where justified by the supply needs for one or more products, the competent authorities may grant the aid for supply to a FOD other than the one in which the product concerned was harvested.Article 6 1. Supply contracts shall be concluded between individual producers or producer groups on the one hand and, on the other, operators in the distribution sector, enterprises in the catering sector or mass caterers established in the production region and approved by the national authorities, without prejudice to Article 5(4).The increase in aid provided for in the sixth subparagraph of Article 13(1) of Regulation (EEC) No 3763/91 and shown in column V of Part A of Annex II shall apply to contracts concluded by producer organisations recognised in accordance with Article 11 of Council Regulation (EC) No 2200/96 or producer groups recognised under Council Regulation (EEC) No 1360/78 (13) with operators in the distribution sector, enterprises in the catering sector or mass caterers.2. The national authorities shall grant approval, upon application, to the distributors, enterprises and mass caterers referred to in paragraph 1 which undertake in writing to:(a) supply the regional market with the products covered by the supply contracts;(b) keep separate accounts for the supply contracts;(c) provide the competent authorities, when the latter so request, with all supporting documentation concerning the implementation of the contracts and fulfilment of the undertakings made pursuant to this Regulation.Article 7 1. Producers wishing to benefit from the aid arrangements shall send to the administration designated by the competent authorities, not later than the deadline set by those authorities, a declaration accompanied by a copy of a supply contract or a preliminary supply contract as referred to in Article 6(1), giving at least the following information:- the business names of the parties to the contract,- a precise description of the product(s) covered by the contract,- an indication of the quantities to be supplied during the marketing period(s) and the forecast supply schedule.2. The competent authorities may set a minimum quantity for each aid application.Article 8 1. Where the information referred to in Article 7(1) indicates that there is a likelihood of the quantity set for a category of products shown in column III of Part A of Annex II being exceeded, the competent authorities shall set a provisional reduction coefficient to be applied to all aid applications in respect of that category of products.The coefficient, which shall be equivalent to the ratio between the quantities referred to in column III of Part A of Annex II and those set by contract plus any additional quantities agreed, shall be calculated before any decision is taken to grant the aid and not later than one month after the date referred to in Article 7(1).2. Where paragraph 1 is applied, the competent authorities shall establish at the end of the marketing year the definitive reduction coefficient to be applied to all aid applications in respect of the category of products concerned submitted during the marketing year.CHAPTER III Aid for the production of green vanilla and essential oils of geranium and vetiver Article 9 1. Production aid for green vanilla falling within CN code ex 0905 intended for the production of dried (black) vanilla or vanilla extracts as provided for in Article 13(2) of Regulation (EEC) No 3763/91 shall be paid to the green vanilla producer via the processors approved by the competent authorities.Where necessary for the proper application of the measure, the authorities shall specify the technical characteristics of the green vanilla which is eligible for production aid.2. The competent authorities shall grant approval to processors established in the production region:(a) whose plant and equipment is suitable for the preparation of dried (black) vanilla or vanilla extracts;and(b) who undertake in writing:- to transfer the full amount of ECU 6,04 per kg to the green vanilla producer pursuant to one or more supply contracts not later than one month from the date of payment of the aid by the competent authorities,- to keep separate accounts for transactions connected with the application of this Article,- to allow any checks or inspections required by the competent administrations and to notify all information relating to the application of this Article.Article 10 1. Production aid for essential oils of geranium and vetiver falling within CN codes 3301 21 and 3301 26 as provided for in Article 13(3) of Regulation (EEC) No 3763/91 shall be paid to producers through local collection and marketing bodies approved by the competent authorities.The aid shall be paid for finished products obtained in accordance with recognised manufacturing procedures and having the technical characteristics published by the competent authorities.2. The competent authorities shall grant approval to the bodies referred to in paragraph 1 established in the production region which undertake in writing:(a) to transfer to the producers the full amount of ECU 44,68 per kg of essential oils of geranium and vetiver pursuant to one or more supply contracts not later than one month from the date of payment of the aid by the competent administration;(b) to keep separate accounts for transactions connected with the application of this Article;(c) to allow any checks or inspections required by the competent administration and to notify all information relating to the application of this Article.Article 11 1. Where the quantities for which aid applications are made under Article 9 or 10 exceed the annual quantities laid down in Part B of Annex II, the competent authorities shall set a percentage reduction to be applied to all applications.2. The competent authorities shall adopt the necessary additional administrative provisions for the application of Articles 9 and 10, in particular as regards the submission of aid applications, and shall carry out the necessary checks on green vanilla producers, dried vanilla and vanilla extract processors, producers of geranium and vetiver oils and the collection and marketing bodies for these products.They may make payment of the aid conditional upon the presentation of delivery notes jointly signed by the producer and, as the case may be, the processors or the approved collection and marketing bodies.CHAPTER IV Aid for the processing of fruit and vegetables Article 12 The production aid provided for in Article 14 of Regulation (EEC) No 3763/91 shall be paid to the processors approved by France under the conditions laid down in this Chapter.Article 13 1. The aid shall be paid for the processing of fruit and vegetables harvested in the FOD for which processors have paid a price at least equal to the minimum price under processing contracts covering the manufacture of products listed in Part B of Annex III.2. The aid shall be paid up to the annual quantities for each of the three categories A, B and C set out in column II of Part A of Annex III.The amounts of aid applicable to each category of products shall be as set out in column IV of Part A of Annex III. However, the aid shall not be payable for pineapples falling within CN code 0804 30 used in the manufacture of preserved products qualifying for the aid scheme provided for in Council Regulation (EEC) No 525/77 (14).3. The marketing year shall run from 1 January to 31 December.Article 14 1. Processors wishing to qualify for the aid arrangements shall submit an application for approval to the administration designated by the competent authorities, not later than the deadline set by those authorities, giving all information required by France with a view to the administration and monitoring of the system of aid.2. The French authorities shall grant approval, upon application, to processors or legally constituted processor associations or groups which:(a) have equipment suitable for processing fruit and vegetables; and(b) undertake in writing to:- keep separate accounts for implementation of the contracts referred to in Article 15,- provide the competent administration, when the latter so requests, with all supporting documentation concerning the implementation of the contracts and fulfilment of the undertakings made pursuant to this Regulation.Article 15 1. Contracts as referred to in Article 14(1) of Regulation (EEC) No 3763/91, hereinafter referred to as 'processing contracts`, shall be concluded in writing before the beginning of each marketing year. They shall take one of the following forms:(a) a contract between a producer or a producer organisation recognised pursuant to Article 11 of Regulation (EC) No 2200/96, on the one hand, and a processor or an association or group of processors approved by the national authorities, on the other;(b) an undertaking covering supplies, where the producer organisation referred to in (a) above acts as processor.2. Processing contracts must specify:(a) the business names of the parties to the contract;(b) a precise description of the product(s) covered by the contract;(c) the quantities of raw materials to be supplied;(d) the timetable for deliveries to the processor;(e) the price to be paid for the raw materials, excluding in particular costs connected with packing, transport, and the payment of taxes, which shall, where applicable, be indicated separately. The price shall not be lower than the minimum price referred to in Article 13(1);(f) the finished products to be produced.3. On terms laid down for each product by the French authorities, the parties may decide, by written amendments to processing contracts, to increase the quantities originally stipulated therein.Such amendments shall relate overall to no more than 30 % of the quantities originally stipulated in the contracts.4. Where producer organisations act also as processors, the processing contracts covering their own production shall be deemed to have been concluded after the following particulars are forwarded to the competent authority within the time limit laid down in paragraph 5:(a) the total area on which the raw material is grown, together with cadastral reference numbers or a reference recognised as equivalent by the inspection agency,(b) an estimate of the total harvest,(c) the quantity intended to be processed,(d) the forecast processing schedule.5. The processor or association of processors shall forward a copy of each processing contract and of any amendments thereto to the body designated by France. Such copies must be forwarded to the competent authorities within 10 working days following the conclusion of the contract or of any amendment thereto and reach them five working days before the start of deliveries.6. For the 1998 marketing year, the final date for signing the contracts referred to in paragraph 1 shall be deferred to 30 September 1998.Article 16 1. Without prejudice to cases covered by Article 15(1)(b), processors shall pay the price of the raw materials to the producer organisation or individual producer exclusively by bank or post-office transfer order or by crossed cheque.Producer organisations shall pay producers the amount referred to in the first subparagraph in full within 15 working days of receipt, by bank or post-office transfer order or by crossed cheque. In cases as referred to in Article 15(1)(b), payment may be made by opening a credit. France shall adopt the measures necessary to check compliance with the provisions of this paragraph and shall provide in particular for penalties to be imposed on the administrators of the producer organisation in relation to the seriousness of the failure to comply.2. France may adopt additional provisions relating to processing contracts, covering in particular time limits, terms and methods of payment of the minimum price and damages payable by processors, producer organisations or producers where they do not fulfil their obligations under contracts.Article 17 Without prejudice to minimum quality criteria laid down or to be laid down in accordance with the procedure provided for in Article 46 of Regulation (EC) No 2200/96, raw materials delivered to processors under processing contracts shall be of sound and fair merchantable quality and suitable for processing.Article 18 1. Processors shall submit two aid applications in respect of each marketing year to the agency designated by France:(a) the first relating to products processed from 1 January to 31 May;(b) the second relating to products processed from 1 June to 31 December.2. Aid applications shall indicate in particular the net weight of the raw materials used and of the finished products obtained, described in accordance with Parts A and B of Annex II respectively. They shall be accompanied by copies of the transfer orders or crossed cheques provided for in the first subparagraph of Article 16(1). In the case of undertakings covering supplies, such copies may be replaced by a declaration by the producer to the effect that the processor has credited him with a price at least equal to the minimum price. Such copies or declarations shall quote the references of the relevant contracts.Article 19 1. Where the information referred to in Article 15(5) indicates that there is a likelihood of the quantity set for a category of products shown in column III of Part A of Annex III being exceeded, the competent authorities shall set a provisional reduction coefficient to be applied to all aid applications in respect of that category submitted under Article 18(1)(a) above.The coefficient, which shall be equivalent to the ratio between the quantities referred to in Column III of Part A of Annex III and those set by contract plus any additional quantities agreed, shall be calculated not later than 31 March.2. Where paragraph 1 is applied, the competent authorities shall establish at the end of the marketing year the definitive reduction coefficient to be applied to all aid applications in respect of the category of products concerned submitted under Article 18(1)(a) and (b).Article 20 1. Processors shall keep records showing at least the following:(a) consignments of raw materials purchased and entering their premises each day and covered by processing contracts or amendments thereto, together with the numbers of any receipts in respect of such consignments;(b) the weight of each consignment brought into their premises and the name and address of the other party to the contract;(c) the quantities of finished products obtained each day from processing of the raw materials on which the aid is payable;(d) the quantities and prices of products leaving the processor's premises, consignment by consignment, with details of the consignee. Such data may be recorded by reference to supporting documents, provided the latter contain the abovementioned particulars.2. Processors shall retain proof of payment in respect of all raw materials purchased under processing contracts or amendments thereto.3. Processors shall undergo any inspections or checks deemed necessary and shall keep such additional records as the French authorities require to conduct any checks they deem necessary. Where an inspection or checks cannot be conducted for reasons attributable to the processor, despite the latter having been formally notified thereof, no aid shall be paid in respect of the marketing years in question.CHAPTER V Aid for marketing under annual contracts Article 21 1. For the purposes of Article 15 of Regulation (EEC) No 3763/91, 'annual contract` means a contract by which an operator, either a natural or a legal person established elsewhere in the Community, outside the FOD, undertakes, before the beginning of the marketing period for the product or products in question, to purchase all or part of the production of an individual producer, producers' association or group in the FOD, with a view to marketing it elsewhere.2. Operators who intend to submit an application for aid shall send the annual contract to the competent French administration before the start of the marketing period for the product or products in question.The contract shall at the very least include the following information:(a) the business names of the contracting parties and their places of establishment;(b) the description of the product or products;(c) the quantities concerned;(d) the duration of the commitment;(e) the marketing schedule;(f) the packaging and presentation method and information relating to transport (conditions and costs);(g) the exact delivery stage.3. The competent administration shall assess the contracts for conformity with Article 15 of Regulation (EEC) No 3763/91 and with this Regulation. It shall verify that the contracts contain all the information specified in paragraph 2 above.It shall inform the operator whether paragraph 6 is likely to be applied.4. For the purpose of calculating the aid, the value of marketed production, delivered to destination zone, shall be evaluated on the basis of the annual contract, the particular transport documents and any other supporting documents submitted to justify the application for payment.The value of the marketed production to be taken into account shall be equivalent to that of a delivery at the first port or airport of unloading.The competent administration may request any information or additional supporting documentation required to calculate the aid.5. Applications for aid shall be submitted by the buyer who entered into the commitment to market the product.Where the management of the aid scheme so requires, the competent administration may specify marketing periods or years for each product.6. Where, for a given product and for a given overseas department, the quantities for which aid is requested exceed the volume of 3 000 tonnes laid down in Article 15 of Regulation (EEC) No 3763/91 or, in the case of melons falling within CN code ex 0807 10 90, the limit laid down in paragraph 5 of that Article, the national authorities shall determine a uniform percentage reduction to be applied to all aid applications.7. The increase in aid provided for in Article 15(4) of Regulation (EEC) No 3763/91 shall be paid on presentation of the commitments entered into by the partners to pool, for a period of not less than three years, the knowledge and know-how required to achieve the objective of the joint venture. These commitments shall include a clause prohibiting cancellation before the end of the aforementioned three-year period.Where the aforementioned commitments are broken, the buyer may not submit an application for aid for the marketing year concerned.CHAPTER VI General provisions Article 22 1. Applications for aid shall be submitted to the administration designated by the French authorities in accordance with the models established by the latter and, for the aids under Chapters II, III, IV and V, within the periods prescribed by them.2. The applications shall be accompanied by invoices and all other supporting documents relating to the measures undertaken, in particular the reference of the supply contracts, delivery contracts, processing contracts or annual contracts for the aid referred to in, respectively, Chapters II, III, IV and V.3. The competent administration, having verified the applications for aid and the relative supporting documents, shall pay out, in the two months following the end of the period for lodging applications, the aid determined in accordance with this Regulation.Article 23 1. France shall communicate to the Commission:(a) before the beginning of each marketing year, the minimum prices referred to in Chapter IV, set in accordance with Article 14 of Regulation (EEC) No 3763/91 in respect of each category of products set out in Annex III;(b) no later than 31 May, broken down by category or product, the quantities covered by contract for the current marketing year pursuant to Chapters II, IV and V;(c) no later than 31 May, a report on the implementation of the measures referred to in this Regulation in the preceding marketing year showing in particular:- broken down by group of products set out in Part A of Annex I, the quantities in the forecast supply balance referred to in Chapter I for which exemption from import duty was granted or for which Community aid was paid,- broken down by groups of products set out in Part A of Annex I, the quantities exported to third countries or to the rest of the Community,- broken down by product set out in Part A of Annex II, the quantities which qualified for the aid and the increased aid referred to in Chapter II,- the quantities of green vanilla and oil of geranium and vetiver which qualified for the aid referred to in Chapter III,- the quantities of raw material which qualified for the aid referred to in Chapter IV, broken down by product set out in Part A of Annex III, and the quantities, expressed in net weight, of finished products broken down in accordance with Part B of Annex III,- the quantities which qualified for the aid and the increased aid referred to in Chapter V, broken down by product, and their average value within the meaning of Article 21(4);(d) no more than a month following their publication, the additional detailed rules adopted for the application of this Regulation.2. For the 1998 marketing year the deadline referred to in paragraph 1(a) shall be 31 August 1998.Article 24 1. The national authorities shall take all the necessary measures to guarantee compliance with the conditions to which the grant of the aid provided for in Articles 2, 13, 14 and 15 of Regulation (EEC) No 3763/91 is subject.To that end, they shall carry out random on-the-spot checks on aid applications representing at least 20 % of the quantities and 10 % of the beneficiaries.They shall withdraw the approvals referred to in Articles 6(2), 9(2), 10(2) and Article 14 where the commitments to which they are subject are not fulfilled.They may suspend the payment of aid according to the seriousness of the irregularities discovered.2. Where aid has been paid out unduly, the competent administration shall recover the sums paid out, with interest from the date on which the aid was paid out to the date on which it was repaid by the beneficiary.Where the undue payment has been made because of a false declaration, false documents or serious negligence on the part of the recipient, a penalty equal to the amount paid out unduly, with interest calculated in accordance with the above subparagraph, shall be imposed.The interest rate shall be that applied by the European Monetary Cooperation Fund to its transactions in ecus as published in the C series of the Official Journal of the European Communities, in force on the date of the undue payment and increased by three percentage points.3. The aid recovered shall be paid to the paying authorities or agencies and deducted by them from the expenditure financed by the European Agricultural Guidance and Guarantee Fund.Article 25 Regulation (EEC) No 489/97 is hereby repealed.References to the Regulation repealed shall be construed as references to this Regulation in accordance with the table of equivalence in Annex IV.Article 26 This Regulation shall enter into force on the day of its publication in the Official Journal of the European Communities.It shall apply from 1 July 1998.This Regulation shall be binding in its entirety and directly applicable in all Member States.Done at Brussels, 16 July 1998.For the CommissionFranz FISCHLERMember of the Commission(1) OJ L 356, 24. 12. 1991, p. 1.(2) OJ L 267, 9. 11. 1995, p. 5.(3) OJ L 15, 22. 1. 1992, p. 13.(4) OJ L 225, 6. 9. 1996, p. 3.(5) OJ L 185, 4. 8. 1995, p. 10.(6) OJ L 249, 17. 10. 1995, p. 12.(7) OJ L 76, 18. 3. 1997, p. 6.(8) OJ L 78, 20. 3. 1997, p. 4.(9) OJ L 202, 30. 7. 1997, p. 27.(10) OJ L 297, 21. 11. 1996, p. 29.(11) OJ L 303, 6. 11. 1997, p. 1.(12) OJ L 297, 21. 11. 1996, p. 1.(13) OJ L 166, 23. 6. 1978, p. 1.(14) OJ L 73, 21. 3. 1977, p. 43.ANNEX I >TABLE>>TABLE>ANNEX II >TABLE>>TABLE>ANNEX III >TABLE>>TABLE>ANNEX IV >TABLE>

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): May 2, 2017 PARK ELECTROCHEMICAL CORP. (Exact Name of Registrant as Specified in Charter) New York 1-4415 11-1734643 (State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.) 48 South Service Road, Melville, New York (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (631) 465-3600 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: [ ] 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)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Item 2.02 Results of Operations and Financial Condition . Park Electrochemical Corp. (the "Company") issued a news release on May 2, 2017 reporting its results of operations for its 2017 fiscal year fourth quarter and for its full fiscal year ended February 26, 2017 . The Company is furnishing the news release to the Securities and Exchange Commission pursuant to Item 2.02 of Form 8-K as Exhibit 99.1 hereto. Item 9.01 Financial Statements and Exhibits . (d ) Exhibits . 99.1 News Release dated May 2, 2017 2 SIGNATURE 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. PARK ELECTROCHEMICAL CORP. Date: May 2, 2017 By: s/ P. Matthew Farabaugh Name: P. Matthew Farabaugh Title: Senior Vice President and Chief Financial Officer 3 EXHIBIT INDEX Number Exhibit Description Page News Release dated May 2, 2017 5 4

Exhibit UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK WESTERN INVESTMENT LLC,, Plaintiff, v. DWS GLOBAL COMMODITIES STOCK FUND, INC., Defendant. Civil Action No. ECF Case COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF Plaintiff Western Investment LLC (“Western” or “Plaintiff”), by its attorneys, alleges the following upon information and belief, except as to the allegations which pertain to Plaintiff, which allegations are based upon personal knowledge: PARTIES The Defendant 1.Defendant DWS Global Commodities Stock Fund, Inc. (f/k/a Scudder Commodities Stock Fund, Inc.) (“GCS,” the “Defendant,” or the “Fund”) is organized as a Maryland corporation, with its executive offices and principal place of business at 345 Park Avenue, New York, New York 10154. 2.GCS is a closed-end, non-diversified investment management company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). 3.GCS invests in commodities-related securities, including commodity futures, commodity-linked equities, commodity-linked structured notes and other instruments that provide GCS with market exposure to commodities. 4.Defendant’s shares of common stock are publicly traded on the New York Stock Exchange (“NYSE”) under the symbol “GCS.” The Plaintiff 5.Plaintiff Western Investment LLC (“Western” or “Plaintiff”) is a limited liability company formed under the laws of Delaware with its principal place of business at 7050 S. Union Park Center, Suite 590, Midvale, Utah 84047. 6.Western’s sole member is Art Lipson, who is a citizen of Utah. 7.Western serves as (a) managing member of Western Investment Activism Partners LLC; (b) investment manager of Western Investment Total Return Fund Ltd.; and (c) general partner of both Western Investment Hedged Partners L.P. and Western Investment Total Return Partners L.P. (collectively, the “Western Entities”). 8.Western has sole discretionary authority to buy, sell and vote securities on behalf of the Western Entities. 9.Western is, and has been at all times relevant to this Complaint, a stockholder of GCS, both on its own behalf and as “beneficial owner” of the Western Entities’ shares of GCS common stock. 10.As of February 16, 2010, Western owned 1,337.24 shares of GCS common stock. 11.As of February 16, 2010, the Western Entities owned 2,121,839 shares of GCS common stock. 12.Western’s beneficial ownership, as of February 16, 2010, of 2,123,176.24 shares of GCS common stock, constituted approximately 12.8% of the GCS common shares outstanding, with a current market value of more than $16,751,860. JURISDICTION AND VENUE 13.The Court has jurisdiction over the claims in this action pursuant to 28 U.S.C. §1331 (federal question) and 28 U.S.C. §1367 (supplemental jurisdiction).This case arises under the 1940 Act, as amended, 15 U.S.C. §80a-1, et seq. and, in particular, Section 18 thereof (15 U.S.C. §§80a-18).The Court has supplemental jurisdiction over Western’s supplemental state law claims pursuant to 28 U.S.C. §1367. 14.The Court also has diversity jurisdiction over this action pursuant to 28 U.S.C. §1332(a) as this action is between citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs. 2 15.Venue is proper in this District pursuant to §44 of the 1940 Act (15 U.S.C. §80a-43), and 28 U.S.C. §§1391(b)(2) and 1391(b)(3), because the Fund’s principal place of business is in this District and the conduct complained of occurred in this District. FIRST CLAIM FOR RELIEF (VIOLATION OF SECTION 18(i) OF THE INVESTMENT COMPANY ACT OF 1940) 16.Plaintiff incorporates each and every allegation set forth above as if fully set forth herein. GCS’s Investment Manager 17.Deutsche Investment Management Americas Inc. (“Deutsche”), an investment adviser registered under the Investment Advisers Act of 1940, as amended, is GCS’s investment manager. 18.GCS paid Deutsche investment management fees of more than $4 million in the fiscal year ended June 30, 2008 and $1.8 million in the fiscal year ended June 30, 19.Deutsche’s fees from GCS in 2009 declined in part due to massive losses in 2009 in the value of GCS’s assets that Deutsche managed. GCS’s Classified Board of Directors 20.GCS is managed by a classified board of 13 directors consisting of three (3) classes: Class I (4 directors), Class II (4 directors) and Class III (5 directors). 21.All 13 of GCS’s directors also serve in similar capacities (as overseers, such as directors or trustees) for approximately 125 other publicly-traded registered investment companies advised by Deutsche (the “Deutsche Family Funds”), for which they were paid directors’ fees of between $200,000 and $265,000 in 2008 and between $225,000 and $292,500 in 2009 (including directors fees from GCS). 3 22.Article

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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) December 21, 2010 DARLING INTERNATIONAL INC. (Exact Name of Registrant as Specified in Charter) Delaware 001-13323 36-2495346 (State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.) 251 O’CONNOR RIDGE BLVD., SUITE 300, IRVING, TEXAS 75038 (Address of Principal Executive Offices)(Zip Code) Registrant’s telephone number, including area code: (972) 717-0300 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) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-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)) Item 5.07.Submission of Matters to a Vote of Security Holders. A special meeting of stockholders of Darling International Inc. (“Darling”) was held at 10:00 a.m. local time on December 21, 2010 at the Omni Mandalay Hotel, 221 E. Las Colinas Boulevard, Irving,Texas75039. The issued and outstanding shares of stock of Darling entitled to vote at the special meeting consisted of 82,462,519 shares of common stock. The stockholders of Darling voted on one proposal at the special meeting, which was approved pursuant to the following final voting results from the special meeting: A proposal to approve an amendment to Darling’s restated certificate of incorporation, as amended, to increase the total number of authorized shares of common stock, par value $0.01, from 100,000,000 to 150,000,000. FOR AGAINST ABSTAIN BROKER NON-VOTES 0 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. DARLING INTERNATIONAL INC. Date:December 21, 2010 By: /s/John F. Sterling Name: John F. Sterling Title: Executive Vice President and General Counsel

Exhibit 10.32   JOINT VENTURE CONTRACT CELEBRATING ON ONE PART "INMOBILIARIA CONTEL" VARIABLE CAPITAL LIMITED LIABILITY COMPANY, REPRESENTED IN THIS ACT BY JAN GUNNAR GUNNARSSON TELANDER AND FLAVIO FRANCISCO CONTRERAS ESPINOZA, HEREINAFTER BE REFERRED TO AS "THE MANAGING PARTNER" AND ON THE OTHER HAND, PROGREEN PROPERTIES, INC, A DELAWARE CORPORATION, REPRESENTED BY JAN GUNNAR GUNNARSSON TELANDER, HEREINAFTER BE REFERRED AS "THE ASSOCIATED" BOTH PARTIES WITH LEGALLY BOUND AND CAPACITY TO CONTRACT IN THIS ACT, SUBJECT TO THE FOLLOWING STATEMENTS AND CLAUSES   STATEMENTS   I. - Declares THE MANAGING PARTNER, through its representative:   a) That it is a legal entity, incorporated in accordance to the Mexican legislation under the designation of "INMOBILIARIA CONTEL", S.R.L. DE C.V. by policy record 1169 dated February 11, 2016, granted before Atty. SIRAK EMMANUEL PEREZ SOLTERO, Public Broker Number 9 located in Baja California.   b) That his client is the owner of the parcel 127 Z-1 P1/1 Ejido Reforma Agraria Integral of the municipality of Ensenada, Baja California, with a surface of 131-81-49.67 HA (One hundred thirty-one hectares eighty-one areas, forty-nine point sixty seven centiares), with the following measurements and boundaries:   NORTH broken line, 1234.63 meters with the Transpeninsular Highway Tijuana-La Paz; NORTHWEST 976.18 meters with the parcel 135; SOUTHEAST 1197.33 meters with the parcel 135; and WEST 1255.28 with the parcel 101.   c) That his Legal Representative Mr. JAN GUNNAR GUNNARSSON TELANDER and FLAVIO FRANCSICO CONTRERAS ESPINOZA have the sufficient powers to compel his client under the terms of this present contract, previous powers were granted to him in the articles of incorporation that relates to the Statement I, section a) and at the date they have not been modified or revoked in some way.   1     II. - Declares THE ASSOCIATE, through its representative:   a) That is a legal entity, incorporated in accordance to the legislation of the United States of America under the designation of PROGREEN PROPERTIES, INC, A DELAWARE CORPORATION.   b) That his Legal Representative, Mr. JAN GUNNAR GUNNARSSON TELANDER, has the sufficient powers to compel his client in the terms of this present contract.   c) Manifests that it wishes to enter into this contract.   III. - Declares "THE MANAGING PARTNER" and "THE ASSOCIATE" together:   a) The MANAGING PARTNER and THE ASSOCIATED agree to join their resources, services and contribute to this joint venture the rights they are entitled to each one and were allied in these present statements and in the obligations that are agreed on the Clauses of this present Contract with the purpose that the property described in the Statement I) section b) to be conditioned by the end of planting and in due course sold to a third party.   b) It was previously explained to them that the Joint Venture Contract does not create an entity with legal personality and therefore relations with third parties are between the MANAGING PARTNER and third parties, in accordance with Articles 253 and 256 of the General Law of Commercial Companies.   2     Stated the above, the MANAGING PARTNER and the ASSOCIATED grant the following:   CLAUSES:   FIRST.- OBJECT.- The MANAGING PARTNER and THE ASSOCIATE, in which "INMOBILIARIO CONTEL", S.R.L. DE CV, will be the "MANAGING PARTNER" and PROGREEN PROPERTIES, INC, A DELAWARE CORPORATION, will be "THE PARTNER", have agreed to combine their resources, services, experience and efforts to form a Joint Venture on agreed terms in this contract, in object that the property described in the Statement I) section b) is conditioned for seeding purposes and in due course sold to a third party.   SECOND.- CONTRIBUTIONS OF "THE MANAGING PARTNER".- The MANAGING PARTNER for the proper fulfillment of the purpose of this contract is committed to the following:   a) He shall handle all practical details to the effect that the property described in the Statement I) section b) is prepared for cultivation or fat using.   b) Shall regulate the water system, including obtaining the necessary permits for the exploitation of water well, the installation of pumping systems including pipes, to take water from the well.   c) Shall build a water tank and pipes for the access to irrigation of land for farming purposes.   d) Shall be responsible for the administration of property described in Statement I) section b), being under their responsibility the daily management of the business, promotion, and other activities related to the successful guidance of business.   d) Once it has been adequate in it's entirely the property described in Statement I) section b) and thereby can carry out agriculture, he must find a buyer of land at a price that guarantees the return on investment of this business.   THIRD.- CONTRIBUTIONS OF "THE ASSOCIATE".- "THE ASSOCIATE" for the proper fulfillment of the purpose of this contract is committed to the following:   a) .- Contribute up to the amount of $ 350,000.00 Dollars (Three Hundred Fifty Thousand Dollars 00/100) of the United States of America, which will be delivered in bias, against the receipt.   3     FOURTH.- PROFIT SHARING.- "THE MANAGING PARTNER" grants and "THE ASSOCIATE" accepts a share of the profits or losses, resulting from the realization of the object that is mentioned in the first clause of this contract.   FIFTH.- DETERMINATION AND DISTRIBUTION OF PROFITS.- The parties will participate in the profits and losses as follows:   a)The MANAGING PARTNER with 50% (fifty percent) only of profits.     b)The ASSOCIATE contribution will refund in money that he has made and shall be entitled also 50% (fifty percent) resulting in profits.   It shall be understood that utility means the economic benefit from the revenue generated, less the expenses incurred in generating of the referred revenue, including without limitation expenses of storage, cost of merchandise, transportation and taxes.   The profits generated will be distributed following the agreement of both ASSOCIATED and MANAGING PARTNER.   SIXTH.- MANAGING PARTNER RIGHTS.- Both parties agree that the MANAGING PARTNER   a)Participate in the profits obtained according to the percentages established in the THIRD clause of this present contract;   b)Exercise the control and supervision over the adaptation of the land for and, in general, the activities of the managing partner in the performance of their duties.   c)Execute the supervision that he considers necessary for the proper functioning of the business.   d)To realize the economic budget.   e)Purchase of materials resources and services through whom he chooses.   4     SEVENTH.- ASSOCIATED RIGHTS:  It's understood by both parties that the ASSOCIATE will have the following rights:   in the third clause of this contract;     b)To be consulted at the time of completion of the sale of the property described in Statement I) section b) once it has been for the purpose of planting     c)To recover the money contribution that he had made.   EIGHTH ADMINISTRATION.- The administration of this present joint venture will be in charge of the "THE MANAGING PARTNER" and will be responsible for performing the administrative steps necessary to achieve the purpose of this present business.   Both sides agree that "THE MANAGING PARTNER" will be directly responsible for any irregularities, theft, fraud, or any similar, in his tenure as administrator.   NINTH.- RELATION WITH THIRD PARTIES.- The parties agree that the MANAGING PARTNER cannot contract on behalf and own representation or of the Association.   The MANAGING PARTNER and ASSOCIATE agree that regardless of the provisions of the General Law of Commercial Companies, the relationship with third parties will be solely and exclusively through the MANAGING PARTNER, who held the contracts, agreements and other necessary operations in order to achieve the negotiated partnership.   TENTH.- PROHIBITION TO RETAIN THE PAYMENT.- It is understood that neither party may withhold payment of the amounts that due to motive of the participation in this present contract entitle under any circumstance, under either in court or out of court proceedings title, but are obliged to pay it entirely.   ELEVENTH.- FISCAL RESPONSIBILITY: The MANAGING PARTNER under the Joint Venture in this event held, will be solely responsible for paying taxes of the profits they perceive on the occasion of this Joint Venture, under the terms of the applicable tax laws.   5     TWELFTH.- PROHIBITION OF TRANSFER RIGHTS AND OBLIGATIONS OF THE CONTRACT.- The parties agree that this instrument is prohibited transfer, assign, transfer, lease or limit in any way the rights and obligations of the parties contained in this instrument, unless otherwise agreed in writing by both parties.   THIRTEEN.- PROHIBITION OF TRANSFER RIGHTS AND OBLIGATIONS OF THE CONTRACT The   FOURTEENTH.- NO ADMISSION OF ASSOCIATES.- New partners will not be accepted without the express consent of the other partner. The income or separation of the members must be in writing.   FIFTEENTH.- PROFESIONAL SECRET.- Both parties are obligated to maintain confidentiality about the present business and undertake not to develop any other same or similar business or partner with a third party to develop a similar, responsible the party in breach of the damages to be caused to the other party or third parties to the referred act.   SIXTEENTH.- WARRANTY: The MANAGING PARTNER will ensure the proper management of the resources contributed by THE ASSOCIATE, so the signing of this present contract, will sign a recognition of debt secured by a mortgage in the amount of $ 300,000.00 Dollars (THREE HUNDRED THOUSAND DOLLARS 00/100 UNITED STATES OF AMERICA), this amount will be released once it has been fulfilled the purpose of this contract.   SEVENTEEN.- VALIDITY.- This contract will be valid indefinitely, so either party may indicate to the other of its desire to terminate it. This contract will terminate once the property described in Statement I) section b) is sold.   6     EIGHTEENTH.- DISSOLUTION OF THE ASSOCIATION.- It will be causes for dissolution of the present contract as follows:   A).- For the termination or removal of any of the partners.   B).- Due to the impossibility of continuing to make the main object of the association.   C).- By agreement of the members taken in accordance with this present instrument and the law.   NINETEEN.- ANTICIPATED TERMINATION:  This Contract shall terminate in advance, in the following cases:   1.- Taken by agreement between the MANAGING PARTNER and the PARTNER.   2.- The inability to continue to make the object of the Joint Venture.   3.- For the loss, revocation and/or cancellation of contracts that he holds the MANAGING PARTNER.   4.- By MANAGING PARTNER decides at any time not provide contracts to the Association matter of this Contract.   TWENTY.- REACH OF TITLES OF CLAUSES.- The parties state that the provisions of this contract expresses all agreed by the parties and that the titles of each clause only were established to facilitate the reading of the contract, so it must be expressly agreed by the parties to the respective clauses.   TWENTY.- MODIFICATION TO THE CONTRACT.- Any modifications which the parties wish to make to the contents of this Contract, shall be effected by contract made in   TWENTY SECOND.- ELECTED DOMICILIE.- The parties point as domiciles for all types of documents, reports, payments, notices and other communications those mentioned in the chapter on statements of this instrument.   7     TWENTY-THREE.- JURISDICTION.- For the interpretation, compliance and execution of this contract, the parties expressly agree to submit to the jurisdiction of the Courts in Ensenada, Baja California, with express waiver of any other jurisdiction that may correspond by reason of their present or future domicile or for any other reason that may be applicable.   TWENTY FOURTH .- APPLICABLE LAW.- For the interpretation, implementation and execution of this contract, the parties submit to the laws of the United Mexican States, renouncing any other applicable laws on grounds of nationality.   TWENTY FIVE.- LENGUAGE OF THE CONTRACT.- The present instrument is translated to English, the same is considerate original as the Spanish contract.   Read that this was the Joint Venture Contract by the parties and aware of its scope, responsibilities and legal purposes and stating that there is no fraud, violence or bad faith, ratify and sign of conformity in the city of Ensenada, Baja California on the 12th of February 2016.   “THE MANAGING PARTNER”   “THE ASSOCIATED”        [image_002.jpg]   [image_002.jpg]  [image_001.jpg]       8    

File Nos. 33-14294 811-5160 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N‑1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre‑Effective Amendment No.[_] Post‑Effective Amendment No. 30 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] Amendment No. 30[X] (Check appropriate box or boxes.) DREYFUS NEW YORK AMT-FREE MUNICIPAL MONEY MARKET FUND (Exact Name of Registrant as Specified in Charter) c/o The Dreyfus Corporation 200 Park Avenue, New York, New York 10166 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code: (212) 922-6000 Michael A. Rosenberg, Esq. 200 Park Avenue New York, New York 10166 (Name and Address of Agent for Service) It is proposed that this filing will become effective (check appropriate box) immediately upon filing pursuant to paragraph (b) X on October 1, 2010 pursuant to paragraph (b) 60 days after filing pursuant to paragraph (a)(i) on(date)pursuant to paragraph (a)(i) 75 days after filing pursuant to paragraph (a)(ii) on(date)pursuant to paragraph (a)(ii) of Rule 485 If appropriate, check the following box: this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Dreyfus New York Tax Exempt Funds Dreyfus New York AMT-Free Municipal Money Market Fund DNYXX Dreyfus New York Tax Exempt Bond Fund, Inc. DRNYX PROSPECTUS October 1, 2010 Contents Fund Summary Dreyfus New York AMT-Free Municipal Money Market Fund 1 Fund Summary Dreyfus New York Tax-Exempt Bond Fund 4 Fund Details Goal and Approach 8 Investment Risks 10 Management 14 Shareholder Guide Buying and Selling Shares 16 General Policies 18 Distributions and Taxes 21 Services for Fund Investors 21 Financial Highlights 23 For More Information See back cover. Fund Summary DREYFUS NEW YORK AMT-FREE MUNICIPAL MONEY MARKET FUND INVESTMENT OBJECTIVE The fund seeks as high a level of current income exempt from federal, New York state and New York city income taxes as is consistent with the preservation of capital and the maintenance of liquidity. FEES AND EXPENSES This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.50 Other expenses (including shareholder services fees) * 0.15 Total annual fund operating expenses* 0.65 *Amounts do not reflect the fee paid by the fund to the U.S. Treasury Department in connection with the fund’s participation under the Treasury Department’s Temporary Guarantee Program for Money Market Funds (the Program). If the Program fee had been reflected, “Other expenses” would have been 0.16% and “Total annual fund operating expenses” would have been 0.66%. These fees would have reflected the fund’s participation in the Program for the period from June 1, 2009 through September 18, 2009 (the termination date of the fund’s participation in the Program). EXAMPLE The Example below is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 Year 3 Years 5 Years 10 Years $66 $208 $362 $810 PRINCIPAL INVESTMENT STRATEGY As a money market fund, the fund is subject to maturity, quality, liquidity and diversification requirements designed to help it maintain a stable share price of $1.00. To pursue its goal, the fund normally invests substantially all of its assets in short-term, high quality municipal obligations that provide income exempt from federal and New York state and New York city personal income taxes. The fund also seeks to provide income exempt from the federal alternative minimum tax. The fund also may invest in high quality short-term structured notes, which are derivative instruments whose value is tied to underlying municipal obligations. 1 PRINCIPAL RISKS An investment in the fund is not a bank deposit. It is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. The fund’s yield will fluctuate as the short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates. Additionally, while the fund has maintained a constant share price since inception, and will continue to try to do so, neither Dreyfus nor its affiliates are required to make a capital infusion, enter into a capital support agreement or take other actions to prevent the fund’s share price from falling below $1.00. The following are the principal risks that could reduce the fund’s income level and/or share price: Interest rate risk. This risk refers to the decline in the prices of fixed-income securities that may accompany a rise in the overall level of interest rates. A sharp and unexpected rise in interest rates could cause a money market fund’s share price to drop below a dollar. Credit risk. Failure of an issuer to make timely interest or principal payments, or a decline or perception of a decline in the credit quality of a security, can cause the security’s price to fall, potentially lowering the fund’s share price. The credit quality of the securities held by the fund can change rapidly in certain market environments, and the default of a single holding could have the potential to cause significant deterioration of the fund’s net asset value. Liquidity risk. When there is little or no active trading market for specific types of securities, it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities may fall dramatically, potentially lowering the fund’s share price, even during periods of declining interest rates. Also, during such periods, redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s net asset value and remaining fund shareholders. State-specific risk. The fund is subject to the risk that New York's economy, and the revenues underlying its municipal bonds, may decline. Investing primarily in a single state makes the fund more sensitive to risks specific to the state and may magnify other risks. Non-diversification risk. The fund is non-diversified, meaning that a relatively high percentage of the fund’s assets may be invested in a limited number of issuers. Therefore, the fund’s performance may be more vulnerable to changes in the market value of a single issuer or group of issuers and more susceptible to risks associated with a single economic, political or regulatory occurrence than a diversified fund. Tax risk. To be tax-exempt, municipal obligations generally must meet certain regulatory requirements. If any such municipal obligation fails to meet these regulatory requirements, the interest received by the fund from its investment in such obligations and distributed to fund shareholders will be taxable. Derivatives risk. Derivative securities, such as structured notes, can be volatile, and the possibility of default by the financial institution or counterparty may be greater for these securities than for other types of money market instruments. Structured notes typically are purchased in privately negotiated transactions from financial institutions and, thus, an active trading market for such instruments may not exist. 2 PERFORMANCE The following bar chart and table provide some indication of the risks of investing in the fund. The bar chart shows changes in the performance of the fund’s shares from year to year. The table shows the fund’s average annual total return over time. The fund’s past performance is no guarantee of future results. More recent performance information may be available at www.dreyfus.com . Year-by-year total returns as of 12/31 each year (%) Best Quarter (Q4, 2000): 0.90% Worst Quarter (Q4, 2009): 0.00% The fund’s year-to-date total return as of June 30, 2010 was 0.00%. Average annual total returns as of 12/31/09 1 Year 5 Years 10 Years 0.24% 1.94% 1.73% For the fund’s current 7-day yield, please call toll free: 1-800-645-6561 PORTFOLIO MANAGEMENT The fund's investment adviser is The Dreyfus Corporation. PURCHASE AND SALE OF FUND SHARES In general, the fund’s minimum initial investment is $2,500 and the minimum subsequent investment is $100. You may sell your shares on any business day by calling 1-800-645-6561 or by visiting www.dreyfus.com . You may also mail your request to sell shares to The Dreyfus Family of Funds, P.O. Box 55263, Boston MA 02205-5263. TAX INFORMATION The fund anticipates that virtually all dividends paid will be exempt from federal and New York state and New York city personal income taxes. However, for federal tax purposes, certain distributions, such as distributions of short-term capital gains, are taxable as ordinary income, while long-term capital gains are taxable as capital gains. PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES If you purchase shares through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information. 3 Fund Summary Dreyfus New York Tax-Exempt Bond Fund, Inc. Investment Objective The fund seeks as high a level of current income exempt from federal, New York state and New York city income taxes as is consistent with the preservation of capital. Fees and Expenses This table describes the fees and expenses that you may pay if you buy and hold shares of the fund. Annual fund operating expenses (expenses that you pay each year as a percentage of the value of your investment) Management fees 0.60 Other expenses (including shareholder services fees) * 0.13 Total annual fund operating expenses 0.73 *Other expense includes interest expense associated with the fund’s investment in inverse floaters. Not shown in the table is the additional income generated by these investments which was approximately the same as the interest expense. Example The Example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: 1 Year 3 Years 5 Years 10 Years $75 $233 $406 $906 Portfolio Turnover The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 11.35% of the average value of its portfolio. Principal Investment Strategy To pursue its goal, the fund normally invests substantially all of its assets in municipal bonds that provide income exempt from federal, New York state and New York city personal income taxes. The fund invests at least 80% of its assets in municipal bonds rated investment grade (Baa/BBB or higher) or the unrated equivalent as determined by Dreyfus. For additional yield, the fund may invest up to 20% of its assets in municipal bonds rated below investment grade (“high yield” or “junk” bonds) or the unrated equivalent as determined by Dreyfus. 4 The dollar-weighted average maturity of the fund’s portfolio normally exceeds ten years, but the fund may invest without regard to maturity. The portfolio managers focus on identifying undervalued sectors and securities and select municipal bonds using fundamental credit analysis to estimate the relative value and attractiveness of various sectors and securities and actively trade among various sectors, based on their apparent values. Although the fund seeks to provide income exempt from federal, New York state and New York city personal income taxes, interest from some of the fund’s holdings may be subject to the federal alternative minimum tax. Principal Risks An investment in the fund is not a bank deposit. It is not insured or guaranteed by the FDIC or any other government agency. It is not a complete investment program. The fund's share price fluctuates, sometimes dramatically, which means you could lose money. Municipal bond market risk . The amount of public information available about municipal bonds is generally less than that for corporate equities or bonds. Special factors, such as legislative changes, and state and local economic and business developments, may adversely affect the yield and/or value of the fund’s investments in municipal bonds. Other factors include the general conditions of the municipal bond market, the size of the particular offering, the maturity of the obligation and the rating of the issue. Interest rate risk. Prices of municipal bonds tend to move inversely with changes in interest rates. The longer the effective maturity and duration of the fund's portfolio, the more the fund's share price is likely to react to interest rates. Credit risk . Failure of an issuer to make timely interest or principal payments, or a decline or perception of a decline in the credit quality of a municipal bond, can cause the bond's price to fall, potentially lowering the fund's share price. To the extent the fund invests in high yield (“junk”) bonds, its portfolio is subject to heightened credit risk. Liquidity risk. When there is little or no active trading market for specific types of securities, it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities and the fund’s share price may fall dramatically, even during periods of declining interest rates. State-specific risk. The fund is subject to the risk that New York’s economy, and the revenues underlying its municipal obligations, may decline. Investing primarily in a single state makes the fund more sensitive to risks specific to the state and may magnify other risks. Non-diversification risk. The fund is non-diversified, meaning that a relatively high percentage of the fund’s assets may be invested in a limited number of issuers. Therefore, the fund’s performance may be more vulnerable to changes in the market value of a single issuer or group of issuers and more susceptible to risks associated with a single economic, political or regulatory occurrence than a diversified fund. Performance The following bar chart and table provide some indication of the risks of investing in the fund. The bar chart shows changes in the performance of the fund’s shares from year to year. The table compares the average annual total returns of the fund’s shares to those of a broad measure of market performance. The fund’s past performance (before and after taxes) is no guarantee of future results. More recent performance information may be available at www.dreyfus.com . 5 Year-by-year total returns as of 12/31 each year (%) Best Quarter (Q3, 2009): 7.48% Worst Quarter (Q3, 2008): -3.72% The fund’s year-to-date total return as of June 30, 2010 was 3.15%. After-tax returns are calculated using the historical highest individual federal marginal tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown, and the after tax returns shown are not relevant to investors who hold their shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. Average annual total returns as of 12/31/09 Share Class 1 Year 5 Years 10 Years Fund returns before taxes 13.54% 3.74% 5.01% Fund returns after taxes on distributions 13.54% 3.71% 4.95% Fund returns after taxes on distributions and sale of fund shares 10.33% 3.77% 4.92% Barclays Capital Municipal Bond Index 12.91% 4.32% 5.75% reflects no deduction for fees, expenses or taxes Portfolio Management The fund’s investment adviser is The Dreyfus Corporation (Dreyfus). Thomas Casey and David Belton have served as the fund's co-primary portfolio managers since December 2009. Mr. Casey is a senior portfolio manager for tax sensitive strategies at Standish Mellon Asset Management Company LLC (Standish), an affiliate of Dreyfus, and Mr. Belton is the Head of Municipal Bond Research at Standish. Messrs. Casey and Belton are also employees of Dreyfus. Purchase and Sale of Fund Shares In general, the fund’s minimum initial investment is $2,500 and the minimum subsequent investment is $100. You may sell your shares on any business day by calling 1-800-645-6561 or by visiting www.dreyfus.com . You may also send your request to sell shares to The Dreyfus Family of Funds, P.O. Box 55263, Boston MA 02205-5263. Your shares will be sold at the next net asset value calculated after your order is received in proper form. 6 Tax Information The fund anticipates that virtually all dividends paid will be exempt from federal and New York state and New York city income taxes. However, for federal tax purposes, certain distributions, such as distributions of short-term capital gains, are taxable as ordinary income, while long-term capital gains are taxable as capital gains. Although the fund seeks to provide income exempt from federal, New York state and New York city income taxes, interest from some of its holdings may be subject to the federal alternative mimimum tax. Payments to Broker-Dealers and Other Financial Intermediaries If you purchase shares through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information. 7 Fund Details GOAL AND APPROACH Dreyfus New York AMT-Free Municipal Money Market Fund The fund seeks to provide as high level a level of current income exempt from federal, New York state and New York city income taxes as is consistent with the preservation of capital and the maintenance of liquidity. As a money market fund, the fund is subject to maturity, quality, liquidity and diversification requirements of Rule 2a-7 under the Investment Company Act of 1940, as amended, which are designed to help money market funds maintain a stable share price. To pursue its goal, the fund normally invests substantially all of its assets in short-term, high quality municipal obligations that provide income exempt from federal, New York state and New York city income taxes. The fund also seeks to provide income exempt from the federal alternative minimum tax. The fund also may invest in high quality short-term structured notes, which are derivative instruments whose value is tied to underlying municipal obligations. The fund is required to hold at least 30% of its total assets in “weekly liquid assets.” Weekly liquid assets include cash (including demand deposits), direct obligations of the U.S. government, and securities (including repurchase agreements) that will mature or are subject to a demand feature that is exercisable and payable within five business days. The fund is prohibited from (i) investing more than 3% of total assets in second-tier securities, (ii) investing more that ½ of 1% of total assets in second-tier securities issued by any single issuer, and (iii) acquiring second-tier securities with a remaining maturity of more than 45 days. The maximum weighted average maturity of the fund’s portfolio is 60 days and the maximum weighted average life to maturity of the fund’s portfolio is 120 days. Although the fund seeks to provide income exempt from federal, New York state and New York city income taxes, the fund temporarily may invest in high quality, taxable money market instruments and/or municipal obligations that pay income exempt only from federal income tax, including when the portfolio manager believes acceptable New York municipal obligations are not available for investment. Dreyfus New York Tax Exempt Bond Fund, Inc. The fund seeks as high a level of current income exempt from federal, New York state and New York city income taxes as is consistent with the preservation of capital. To pursue its goal, the fund normally invests substantially all of its assets in municipal bonds that provide income exempt from federal, New York state and New York city personal income taxes. The fund invests at least 80% of its assets in municipal bonds rated investment grade (Baa/BBB or higher), or the unrated equivalent as determined by Dreyfus. The fund may invest up to 20% of its assets in municipal bonds rated below investment grade (“high yield” or “junk” bonds) or the unrated equivalent as determined by Dreyfus. The dollar-weighted average maturity of the fund’s portfolio normally exceeds ten years, but the fund may invest without regard to maturity. Dollar-weighted average maturity is an average of the stated maturities of the securities held by the fund, based on their dollar-weighted proportions in the fund. 8 The portfolio managers focus on identifying undervalued sectors and securities and minimize the use of interest rate forecasting. The portfolio managers select municipal bonds for the fund’s portfolio by: • Using fundamental credit analysis to estimate the relative value and attractiveness of various sectors and securities and to exploit pricing inefficiencies in the municipal bond market; and • Actively trading among various sectors, such as pre-refunded, general obligation, and revenue, based on their apparent relative values. The fund seeks to invest in several of these sectors. Although the fund seeks to provide income exempt from federal, New York state and New York city personal income taxes, interest from some of the fund's holdings may be subject to the federal alternative minimum tax. In addition, the fund temporarily may invest in taxable bonds and municipal bonds that pay income exempt only from federal income tax, including when the portfolio managers believe acceptable New York municipal bonds are not available for investment. The fund may, but is not required to, use derivatives, such as options, futures, options on futures (including those relating to securities, indexes and interest rates), swaps and inverse floaters, as a substitute for investing directly in an underlying asset, to increase returns, to manage credit or interest rate risk, or as part of a hedging strategy. The fund may buy securities that pay interest at rates that float inversely with changes in prevailing interest rates (inverse floaters) and may make forward commitments in which the fund agrees to buy or sell a security in the future at a price agreed upon today. Inverse floaters are created by depositing municipal bonds in a trust which divides the bond's income stream into two parts: a short term variable rate demand note and a residual interest bond (the inverse floater) which receives interest based on the remaining cash flow of the trust after payment of interest on the note and various trust expenses. Interest on the inverse floater usually moves in the opposite direction as the interest on the variable rate demand note. The fund also may make forward commitments in which the fund agrees to buy and sell a security in the future at a price agreed upon today. 9 INVESTMENT RISKS Dreyfus New York AMT-Free Municipal Money Market Fund An investment in the fund is not a bank deposit. It is not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. The fund’s yield will fluctuate as the short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates. Additionally, while the fund has maintained a constant share price since inception, and will continue to try to do so, neither Dreyfus nor its affiliates are required to make a capital infusion, enter into a capital support agreement or take other actions to prevent the fund’s share price from falling below $1.00. The following are the principal risks that could reduce the fund’s income level and/or share price: Interest rate risk. This risk refers to the decline in the prices of fixed-income securities that may accompany a rise in the overall level of interest rates. The fund’s yield will vary; it is not fixed for a specific period like the yield on a bank certificate of deposit. A sharp and unexpected rise in interest rates could cause a money market fund’s share price to drop below a dollar. However, the extremely short maturities of the securities held in money market portfolios - a means of achieving an overall fund objective of principal safety - reduces their potential for price fluctuation. A low interest rate environment may prevent the fund from providing a positive yield or paying fund expenses out of fund assets and could impair the fund’s ability to maintain a stable net asset value. Credit risk . Failure of an issuer to make timely interest or principal payments, or a decline or perception of a decline in the credit quality of a municipal obligation, can cause the obligation’s price to fall, potentially lowering the fund's share price. Although the fund invests only in high quality debt securities, any of the fund’s holdings could have its credit rating downgraded or could default. The credit quality of the securities held by the fund can change rapidly in certain market environments, and the default of a single holding could have the potential to cause significant deterioration of the fund’s net asset value. Liquidity risk. When there is little or no active trading market for specific types of securities it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities may fall dramatically, potentially lowering the fund’s share price, even during periods of declining interest rates. Also, during such periods, redemptions by a few large investors in the fund may have a significant adverse effect on the fund’s net asset value and remaining fund shareholders. Tax risk. To be tax-exempt, municipal obligations generally must meet certain regulatory requirements. If any such municipal obligation fails to meet these regulatory requirements, the interest received by the fund from its investment in such obligations and distributed to fund shareholders will be taxable. Derivatives risk. Derivative securities, such as structured notes, can be volatile, and the possibility of default by the financial institution or counterparty may be greater for these securities than for other types of money market instruments. Structured notes typically are purchased in privately negotiated transactions from financial institutions and, thus, an active trading market for such instruments may not exist. State-specific risk . The fund is subject to the risk that New York’s economy, and the revenues underlying its municipal obligations, may decline. Investing primarily in a single state makes the fund more sensitive to risks specific to the state and may magnify other risks. 10 Non-diversification risk . The fund is non-diversified, which means that a relatively high percentage of the fund’s assets may be invested in a limited number of issuers. Therefore, the fund’s performance may be more vulnerable to changes in the market value of a single issuer or group of issuers and more susceptible to risks associated with a single economic, political or regulatory occurrence than a diversified fund. 11 Dreyfus New York Tax Exempt Bond Fund, Inc. The fund’s principal risks are discussed below. An investment in the fund is not a bank deposit. It is not insured or guaranteed by the FDIC or any other government agency. It is not a complete investment program. The value of your investment in the fund will fluctuate, sometimes dramatically, which means you could lose money. Municipal bond market risk. The amount of public information available about municipal bonds is generally less than that for corporate equities or bonds. Special factors, such as legislative changes, and state and local economic and business developments, may adversely affect the yield and/or value of the fund’s investments in municipal bonds. Other factors include the general conditions of the municipal bond market, the size of the particular offering, the maturity of the obligation and the rating of the issue. Interest rate risk. Prices of bonds tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect bond prices and, accordingly, the fund’s share price. The longer the effective maturity and duration of the fund’s portfolio, the more the fund’s share price is likely to react to interest rates. Credit risk . Failure of an issuer to make timely interest or principal payments, or a decline or perception of a decline in the credit quality of a bond, can cause a bond’s price to fall, potentially lowering the fund’s share price. Although the fund invests primarily in investment grade bonds, the fund may invest to a limited extent in high yield bonds. High yield (“junk”) bonds involve greater credit risk, including the risk of default, than investment grade bonds, and are considered predominantly speculative with respect to the issuer’s ability to make principal and interest payments. The prices of high yield bonds can fall dramatically in response to bad news about the issuer or its industry, or the economy in general. Liquidity risk. When there is little or no active trading market for specific types of securities, it can become more difficult to sell the securities at or near their perceived value. In such a market, the value of such securities and the fund’s share price may fall dramatically, even during periods of declining interest rates. The secondary market for certain municipal bonds tends to be less developed and less liquid than many other securities markets, which may adversely affect the fund’s ability to sell such municipal bonds at attractive prices. State-specific risk . The fund is subject to the risk that New York's’s economy, and the revenues underlying its municipal bonds, may decline. Investing primarily in a single state makes the fund more sensitive to risks specific to the state and may magnify other risks. Non-diversification risk . The fund is non-diversified, which means that the fund may invest a relatively high percentage of its assets in a limited number of issuers. Therefore, the fund’s performance may be more vulnerable to changes in the market value of a single issuer or group of issuers and more susceptible to risks associated with a single economic, political or regulatory occurrence than a diversified fund. In addition to the principal risks described above, the fund is subject to the following additional risks. Market sector risk. The fund may significantly overweight or underweight certain companies, industries or market sectors, which may cause the fund’s performance to be more or less sensitive to developments affecting those companies, industries or sectors. 12 Tax risk. To be tax-exempt, municipal bonds generally must meet certain regulatory requirements. If any such municipal bond fails to meet these regulatory requirements, the interest received by the fund from its investment in such bonds and distributed to fund shareholders will be taxable. Call risk . Some bonds give the issuer the option to call, or redeem, the bonds before their maturity date. If an issuer “calls” its bond during a time of declining interest rates, the fund might have to reinvest the proceeds in an investment offering a lower yield, and therefore might not benefit from any increase in value as a result of declining interest rates. During periods of market illiquidity or rising interest rates, prices of “callable” issues are subject to increased price fluctuation. Derivatives risk. A small investment in derivatives could have a potentially large impact on the fund’s performance. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. Derivatives can be highly volatile, illiquid and difficult to value, and there is the risk that changes in the value of a derivative held by the fund will not correlate with the underlying instruments or the fund’s other investments. Derivative instruments also involve the risk that a loss may be sustained as a result of the failure of the counterparty to the derivative instruments to make required payments or otherwise comply with the derivative instruments’ terms. Certain types of derivatives involve greater risks than the underlying obligations because, in addition to general market risks, they are subject to illiquidity risk, counterparty risk and credit risk. Additionally, some derivatives involve economic leverage, which could increase the volatility of these investments as they may fluctuate in value more than the underlying instrument. Certain derivatives may cause taxable income. Leveraging risk. The use of leverage, such as lending portfolio securities, entering into futures contracts, investing in inverse floaters, and engaging in forward commitment transactions, may cause taxable income and may magnify the fund’s gains or losses. Other potential risks . The fund may lend its portfolio securities to brokers, dealers and other financial institutions. In connection with such loans, the fund will receive collateral from the borrower equal to at least 100% of the value of loaned securities. If the borrower of the securities fails financially, there could be delays in recovering the loaned securities or exercising rights to the collateral. Under adverse market conditions, the fund could invest some or all of its assets in U.S. Treasury securities or money market securities. Although the fund would do this for temporary defensive purposes, it could reduce the benefit from any upswing in the market. During such periods, the fund may not achieve its investment objective. 13 MANAGEMENT The investment adviser for the fund is The Dreyfus Corporation (Dreyfus), 200 Park Avenue, New York, New York 10166. Founded in 1947, Dreyfus manages approximately $286 billion in 195 mutual fund portfolios. For the past fiscal year, Dreyfus New York AMT-Free Municipal Money Market Fund and Dreyfus New York Tax Exempt Bond Fund, Inc. each paid Dreyfus a management fee at an annual rate of 0.50% and 0.60%, respectively, of the fund’s average daily net assets. A discussion regarding the basis for the board’s approving each fund’s management agreement with Dreyfus is available in the fund’s semi-annual report for the six months ended November 30, 2009. Dreyfus is the primary mutual fund business of The Bank of New York Mellon Corporation (BNY Mellon), a global financial services company focused on helping clients move and manage their financial assets, operating in 34 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing asset and wealth management, asset servicing, issuer services, and treasury services through a worldwide client-focused team. BNY Mellon has more than $21.8 trillion in assets under custody and administration and $1.0 trillion in assets under management, and it services more than $11.6 trillion in outstanding debt. Additional information is available at www.bnymellon.com . The Dreyfus asset management philosophy is based on the belief that discipline and consistency are important to investment success. For each fund, Dreyfus seeks to establish clear guidelines for portfolio management and to be systematic in making decisions. This approach is designed to provide each fund with a distinct, stable identity. Thomas Casey and David Belton have been co-primary portfolio managers of the Dreyfus New York Tax Exempt Bond Fund, Inc. since December 2009. Mr. Casey and Mr. Belton manage a number of other state-specific municipal bond funds for Dreyfus, where Mr. Casey has been employed since April 2009 and Mr. Belton has been employed since December 2009. Mr. Casey also is a senior portfolio manager for tax sensitive strategies at Standish Mellon Asset Management Company LLC (Standish), an affiliate of Dreyfus, where he has been employed since July 1993. Mr. Belton is the Head of Municipal Bond Research at Standish, where he has been employed since November 1997. The fund’s Statement of Additional Information (SAI) provides additional portfolio manager information, including compensation, other accounts managed and ownership of fund shares. MBSC Securities Corporation (MBSC), a wholly owned subsidiary of Dreyfus, serves as distributor of the fund and for the other funds in the Dreyfus Family of Funds. Dreyfus or MBSC may provide cash payments out of its own resources to financial intermediaries that sell shares of funds in the Dreyfus Family of Funds or provide other services. Such payments are separate from any sales charges, 12b-1 fees and/or shareholder services fees or other expenses that may be paid by a fund to those intermediaries. Because those payments are not made by fund shareholders or the fund, the fund’s total expense ratio will not be affected by any such payments. These payments may be made to intermediaries, including affiliates, that provide shareholder servicing, sub-administration, recordkeeping and/or sub-transfer agency services, marketing support and/or access to sales meetings, sales representatives and management representatives of the financial intermediary. Cash compensation also may be paid from Dreyfus’ or MBSC’s own resources to intermediaries for inclusion of a fund on a sales list, including a preferred or select sales list or in other sales programs. These payments sometimes are referred to as “revenue sharing.” From time to time, Dreyfus or MBSC also may provide cash or non-cash compensation to financial intermediaries or their representatives in the form of occasional gifts; occasional meals, tickets or other entertainment; support for due diligence trips; educational conference sponsorships; support for recognition programs; and other forms of cash or non-cash compensation permissible under broker-dealer regulations. In some cases, these payments or compensation may create an incentive for a financial intermediary or its employees to recommend or sell shares of the fund to you. Please contact your 14 financial representative for details about any payments they or their firm may receive in connection with the sale of fund shares or the provision of services to the fund. The fund, Dreyfus and MBSC have each adopted a code of ethics that permits its personnel, subject to such code, to invest in securities, including securities that may be purchased or held by the fund. Each code of ethics restricts the personal securities transactions of employees, and requires portfolio managers and other investment personnel to comply with the code’s preclearance and disclosure procedures. The primary purpose of the respective codes is to ensure that personal trading by employees does not disadvantage any fund managed by Dreyfus or its affiliates. 15 Shareholder Guide BUYING AND SELLING SHARES Valuing Shares You pay no sales charges to invest in shares of the fund. Your price for shares is the net asset value per share (NAV), which is generally calculated as of the close of trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time) on days the exchange is open for regular business. Your order will be priced at the next NAV calculated after your order is received in proper form by the fund’s transfer agent or other authorized entity. Dreyfus generally values fixed income investments based on values supplied by an independent pricing service approved by the fund’s board. The pricing service’s procedures are reviewed under the general supervision of the board. If market quotations or prices from a pricing service are not readily available, or are determined not to reflect accurately fair value, the fund may value those investments at fair value as determined in accordance with procedures approved by the fund’s board. Fair value of investments may be determined by the fund’s board, its pricing committee or its valuation committee in good faith using such information as it deems appropriate under the circumstances. Using fair value to price investments may result in a value that is different from a security’s most recent closing price and from the prices used by other mutual funds to calculate their net asset values. Funds that seek tax-exempt income are not recommended for purchase in IRAs or other qualified retirement plans. Money market fund investments are valued based on amortized cost, which does not take into account unrealized gains or losses. As a result, portfolio securities are valued at their acquisition cost, adjusted over time based on the discounts of premiums reflected in their purchase price. Money market funds use the amortized cost method of valuation pursuant to Rule 2a-7 under the Investment Company Act of 1940 in order to be able to maintain a price of $1.00 per share. When calculating NAV, money market funds compare the NAV using amortized cost to their NAV using available market quotations or market equivalents, which generally are provided by independent pricing service approved by the fund's board. The pricing service's procedures are reviewed under the general supervision of the board. Investments in certain types of thinly traded securities may provide short-term traders arbitrage opportunities. For example, arbitrage opportunities may exist when trading in a portfolio security or securities is halted and does not resume, or the market on which such securities are traded closes before the fund calculates its NAV. If short-term investors of the fund were able to take advantage of these arbitrage opportunities, they could dilute the NAV of fund shares held by long-term investors. Portfolio valuation policies can serve to reduce arbitrage opportunities available to short-term traders, but there is no assurance that such valuation policies will prevent dilution of the fund’s NAV by short-term traders. While the fund has a policy regarding frequent trading, it too may not be completely effective to prevent short-term NAV arbitrage trading, particularly in regard to omnibus accounts. Please see “Shareholder Guide —General Policies” for further information about the fund’s frequent trading policy. How to Buy Shares By Mail – Regular Accounts. To open a regular account, complete an application and mail it, together with a check payable to The Dreyfus Family of Funds, to: The Dreyfus Family of Funds P.O. Box 55299 Boston, MA 02205-5299 To purchase additional shares in a regular account, mail a check payable to The Dreyfus Family of Funds (with your account number on your check), together with an investment slip, to: 16 The Dreyfus Family of Funds P.O. Box 105 Newark, NJ 07101-0105 Electronic Check or Wire. To purchase shares in a regular account by wire or electronic check, please call 1-800-645-6561 (outside the U.S. 516-794-5452) for more information. Dreyfus TeleTransfer. To purchase additional shares in a regular account by Dreyfus TeleTransfer, which will transfer money from a pre-designated bank account, request the account service on your application. Call us at 1-800-645-6561 (outside the U.S. 516-794-5452) or visit www.dreyfus.com to request your transaction. Automatically. You may purchase additional shares in a regular account by selecting one of Dreyfus’ automatic investment services made available to the fund on your account application or service application. See “Services for Fund Investors.” In Person. Visit a Dreyfus Financial Center. Please call us for locations. The minimum initial and subsequent investment for regular accounts is $2,500 and $100, respectively. Investments made through Dreyfus TeleTransfer are subject to a $100 minimum and a $150,000 maximum. All investments must be in U.S. dollars. Third-party checks, cash, travelers’ checks or money orders will not be accepted. You may be charged a fee for any check that does not clear. How to Sell Shares You may sell (redeem) shares at any time. Your shares will be sold at the next NAV calculated after your order is received in proper form by the fund’s transfer agent or other authorized entity. Any certificates representing fund shares being sold must be returned with your redemption request. Your order will be processed promptly and you will generally receive the proceeds within a week. Before selling or writing a check against shares recently purchased by check, Dreyfus TeleTransfer or Automatic Asset Builder, please note that: if you send a written request to sell such shares, the fund may delay sending the proceeds(or selling the shares in the case of a money market fund) for up to eight business days following the purchase of those shares the fund will not honor redemption checks, or process wire, telephone, online or Dreyfus TeleTransfer redemption requests, for up to eight business days following the purchase of those shares. By Mail — Regular Account. To redeem shares of a regular account by mail, send a letter of instruction that includes your name, your account number, the name of the fund, the dollar amount to be redeemed and how and where to send the proceeds. Mail your request to: The Dreyfus Family of Funds P.O. Box 55263 Boston, MA 02205-5263 A signature guarantee is required for some written sell orders. These include: amounts of $10,000 or more on accounts whose address has been changed within the last 30 days requests to send the proceeds to a different payee or address amounts of $100,000 or more A signature guarantee helps protect against fraud. You can obtain one from most banks or securities dealers, but not from a notary public. For joint accounts, each signature must be guaranteed. Please call to ensure that your signature guarantee will be processed correctly. 17 Telephone or Online. To sell shares in a regular account, call Dreyfus at 1-800-645-6561 (outside the U.S. 516-794-5452) or visit www.dreyfus.com to request your transaction. A check will be mailed to your address of record or you may request a wire or electronic check (Dreyfus TeleTransfer). For wires or Dreyfus TeleTransfer, be sure that the fund has your bank account information on file. Proceeds will be wired or sent by electronic check to your bank account. You may request that redemption proceeds be paid by check and mailed to your address (maximum $250,000 per day). You may request that redemption proceeds be sent to your bank by wire (minimum $1,000/maximum $20,000 per day) or by Dreyfus TeleTransfer (minimum $500/maximum $20,000 per day). Holders of jointly registered fund or bank accounts may redeem by wire or through Dreyfus TeleTransfer up to $500,000 within any 30-day period. Automatically. You may sell shares in a regular account by calling 1-800-645-6561 (outside the U.S. 516-794-5452) for instructions to establish the Dreyfus Automatic Withdrawal Plan. In Person. Visit a Dreyfus Financial Center. Please call us for locations. GENERAL POLICIES Unless you decline teleservice privileges on your application, the fund’s transfer agent is authorized to act on telephone or online instructions from any person representing himself or herself to be you and reasonably believed by the transfer agent to be genuine. You may be responsible for any fraudulent telephone or online order as long as the fund’s transfer agent takes reasonable measures to confirm that instructions are genuine. If you invest through a financial intermediary (rather than directly with the distributor), the policies and fees may be different than those described herein. Banks, brokers, financial advisers and financial supermarkets may charge transaction fees and may set different minimum investments or limitations on buying or selling shares. Please consult your financial representative or the SAI. The fund reserves the right to: change or discontinue its exchange privilege, or temporarily suspend the privilege during unusual market conditions change its minimum or maximum investment amounts delay sending out redemption proceeds for up to seven days (generally applies only during unusual market conditions or in cases of very large redemptions or excessive trading) “redeem in kind,” or make payments in securities rather than cash, if the amount redeemed is large enough to affect fund operations (for example, if it exceeds 1% of the fund’s assets) refuse any purchase or exchange request, including those from any individual or group who, in Dreyfus’ view, is likely to engage in frequent trading Money market funds generally are used by investors for short-term investments, often in place of bank checking or savings accounts, or for cash management purposes. Investors value the ability to add and withdraw their funds quickly, without restriction. For this reason, although Dreyfus discourages excessive trading and other abusive trading practices, the fund has not adopted policies and procedures, or imposed redemption fees or other restrictions such as minimum holding periods, to deter frequent purchases and redemptions of fund shares. Dreyfus also believes that money market funds, such as the fund, are not targets of abusive trading practices, because money market funds seek to maintain a $1.00 per share price and typically do not fluctuate in value based on market prices. However, frequent purchases and redemptions of the fund’s shares could increase the fund’s transaction costs, such as market spreads and custodial fees, and may interfere with the efficient management of the fund’s portfolio, which could detract from the fund’s performance. Accordingly, the fund reserves the right to refuse any purchase or 18 exchange request. Funds in the Dreyfus Family of Funds that are not money market mutual funds have approved polices and procedures that are intended to discourage and prevent abusive trading practices in those mutual funds, which may apply to exchanges from or into a fund. If you plan to exchange your fund shares for shares of another Dreyfus fund, please read the prospectus of that other Dreyfus fund for more information. The fund also may process purchase and sale orders and calculate its NAV on days the fund’s primary trading markets are open and the fund’s management determines to do so. The bond fund is designed for long-term investors. Frequent purchases, redemptions and exchanges may disrupt portfolio management strategies and harm fund performance by diluting the value of fund shares and increasing brokerage and administrative costs. As a result, Dreyfus and the fund’s board have adopted a policy of discouraging excessive trading, short-term market timing and other abusive trading practices (frequent trading) that could adversely affect the fund or its operations. Dreyfus and the fund will not enter into arrangements with any person or group to permit frequent trading. More than four roundtrips within a rolling 12-month period generally is considered to be frequent trading. A roundtrip consists of an investment that is substantially liquidated within 60 days. Based on the facts and circumstances of the trades, the fund may also view as frequent trading a pattern of investments that are partially liquidated within 60 days. Transactions made through Automatic Investment Plans, Automatic Withdrawal Plans, Dreyfus Auto-Exchange Privileges and automatic non-discretionary rebalancing programs, approved in writing by Dreyfus, generally are not considered to be frequent trading. Dreyfus monitors selected transactions to identify frequent trading. When its surveillance systems identify multiple roundtrips, Dreyfus evaluates trading activity in the account for evidence of frequent trading. Dreyfus considers the investor’s trading history in other accounts under common ownership or control, in other Dreyfus Funds and BNY Mellon Funds, and if known, in nonaffiliated mutual funds and accounts under common control. These evaluations involve judgments that are inherently subjective, and while Dreyfus seeks to apply the policy and procedures uniformly, it is possible that similar transactions may be treated differently. In all instances, Dreyfus seeks to make these judgments to the best of its abilities in a manner that it believes is consistent with shareholder interests. If Dreyfus concludes the account is likely to engage in frequent trading, Dreyfus may cancel or revoke the purchase or exchange on the following business day. Dreyfus may also temporarily or permanently bar such investor’s future purchases into the fund in lieu of, or in addition to, canceling or revoking the trade. At its discretion, Dreyfus may apply these restrictions across all accounts under common ownership, control or perceived affiliation. Fund shares often are held through omnibus accounts maintained by financial intermediaries, such as brokers and retirement plan administrators, where the holdings of multiple shareholders, such as all the clients of a particular broker, are aggregated. Dreyfus’ ability to monitor the trading activity of investors whose shares are held in omnibus accounts is limited. However, the agreements between the distributor and financial intermediaries include obligations to comply with the terms of this prospectus and to provide Dreyfus, upon request, with information concerning the trading activity of investors whose shares are held in omnibus accounts. If Dreyfus determines that any such investor has engaged in frequent trading of fund shares, Dreyfus may require the intermediary to restrict or prohibit future purchases or exchanges of fund shares by that investor. Certain financial intermediaries that maintain omnibus accounts with the fund may have developed policies designed to control frequent trading that may differ from the fund’s policy. At its sole discretion, the fund may permit such intermediaries to apply their own frequent trading policy. If you are investing in fund shares through an intermediary, please contact the intermediary for information on the frequent trading policies applicable to your account. 19 To the extent that the fund significantly invests in thinly traded securities, certain investors may seek to trade fund shares in an effort to benefit from their understanding of the value of these securities (referred to as price arbitrage). Any such frequent trading strategies may interfere with efficient management of the fund’s portfolio to a greater degree than funds that invest in highly liquid securities, in part because the fund may have difficulty selling these portfolio securities at advantageous times or prices to satisfy large and/or frequent redemption requests. Any successful price arbitrage may also cause dilution in the value of fund shares held by other shareholders. Although the fund’s frequent trading and fair valuation policies and procedures are designed to discourage market timing and excessive trading, none of these tools alone, nor all of them together, completely eliminates the potential for frequent trading. Small Account Policy To offset the relatively higher costs of servicing smaller accounts, the Money Market Fund charges regular accounts with balances below $2,000 annual fee of $12. The fee will be imposed during the fourth quarter of each calendar year. The fee will be waived for: any investor whose aggregate Dreyfus mutual fund investments total at least $25,000; IRA accounts; Education Savings Accounts; accounts participating in automatic investment programs; and accounts opened through a financial institution. If your account falls below $500, the fund may ask you to increase your balance. If it is still below $500 after 45 days, the fund may close your account and send you the proceeds. 20 DISTRIBUTIONS AND TAXES The fund earns dividends, interest and other income from its investments, and distributes this income (less expenses) to shareholders as dividends. The fund also realizes capital gains from its investments, and distributes these gains (less any losses) to shareholders as capital gain distributions. The fund normally pays dividends once a month and capital gain distributions annually. Fund dividends and distributions will be reinvested in the fund unless you instruct the fund otherwise. There are no fees or sales charges on reinvestments. The fund anticipates that virtually all dividends paid to you will be exempt from federal and New York state and New York city personal income taxes. However, for federal tax purposes, certain distributions, such as distributions of short-term capital gains, are taxable to you as ordinary income, while long-term capital gains are taxable to you as capital gains. For New York state personal income tax purposes, distributions derived from interest on municipal securities of New York issuers and from interest on qualifying securities issued by U.S. territories and possessions are generally exempt from New York state and New York city income taxes. Distributions that are federally taxable as ordinary income or capital gains are generally subject to state personal income taxes. High portfolio turnover (Dreyfus New York Tax Exempt Bond Fund only) and more volatile markets can result in significant taxable distributions to shareholders, regardless of whether their shares have increased in value. The tax status of any distribution generally is the same regardless of how long you have been in the fund and whether you reinvest your distributions or take them in cash. If you buy shares of a fund when the fund has realized but not yet distributed income or capital gains, you will be “buying a dividend” by paying the full price for the shares and then receiving a portion back in the form of a taxable distribution. Your sale of shares, including exchanges into other funds, may result in a capital gain or loss for tax purposes. A capital gain or loss on your investment in the fund generally is the difference between the cost of your shares and the amount you receive when you sell them. The tax status of your distributions will be detailed in your annual tax statement from the fund. Because everyone’s tax situation is unique, please consult your tax adviser before investing. SERVICES FOR FUND INVESTORS Automatic services Buying or selling shares automatically is easy with the services described below. With each service, you select a schedule and amount, subject to certain restrictions. If you purchase shares through a third party, the third party may impose different restrictions on these services and privileges, or may not make them available at all. For information, call your financial representative or 1-800-645-6561. Dreyfus Automatic Asset Builder® permits you to purchase fund shares (minimum of $100 and maximum of $150,000 per transaction) at regular intervals selected by you. Fund shares are purchased by transferring funds from the bank account designated by you. Dreyfus Payroll Savings Plan permits you to purchase fund shares (minimum of $100 per transaction) automatically through a payroll deduction. Dreyfus Government Direct Deposit permits you to purchase fund shares (minimum of $100 and maximum of $50,000 per transaction) automatically from your federal employment, Social Security or other regular federal government check. 21 Dreyfus Dividend Sweep permits you to automatically reinvest dividends and distributions from the fund into another Dreyfus Fund (not available for IRAs). Dreyfus Auto-Exchange Privilege permits you to exchange at regular intervals your fund shares for shares of other Dreyfus Funds. Dreyfus Automatic Withdrawal Plan permits you to make withdrawals (minimum of $50) on a monthly or quarterly basis, provided your account balance is at least $5,000. Exchange privilege Generally, you can exchange shares worth $500 or more (no minimum for retirement accounts) into other Dreyfus Funds. You can request your exchange by contacting your financial representative. Be sure to read the current prospectus for any fund into which you are exchanging before investing. Any new account established through an exchange generally will have the same privileges as your original account (as long as they are available). There is currently no fee for exchanges, although you may be charged a sales load when exchanging into any fund that has one. See the SAI for more information regarding exchanges. Dreyfus TeleTransfer privilege To move money between your bank account and your Dreyfus Fund account with a phone call or online, use the Dreyfus TeleTransfer privilege. You can set up Dreyfus TeleTransfer on your account by providing bank account information and following the instructions on your application, or contacting your financial representative. Account Statements Every Dreyfus Fund investor automatically receives regular account statements. You will also be sent a yearly statement detailing the tax characteristics of any dividends and distributions you have received. Checkwriting privilege You may write redemption checks against your account in amounts of $500 or more. These checks are free; however, a fee will be charged if you request a stop payment or if the transfer agent cannot honor a redemption check due to insufficient funds or another valid reason. Please do not postdate your checks or use them to close your account. Dreyfus Express® voice-activated account access You can easily manage your Dreyfus accounts , check your account balances, purchase fund shares, transfer money between your Dreyfus Funds, get price and yield information, and much more, by calling 1-800-645-6561 . Certain requests require the services of a representative. 22 FINANCIAL HIGHLIGHTS Dreyfus New York AMT-Free Municipal Money Market Fund These financial highlights describe the performance of the fund’s shares for the fiscal periods indicated. “Total return” shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These financial highlights have been audited by Ernst & Young LLP, an independent registered public accounting firm, whose report, along with the fund’s financial statements, is included in the annual report, which is available upon request. Year Ended May 31, Per Share Data ($): Net asset value, beginning of period 1.00 1.00 1.00 1.00 1.00 Investment Operations: Investment incomenet .001 .011 .026 .030 .022 Distributions: Dividends from investment incomenet (.001) (.011) (.026) (.030) (.022) Net asset value, end of period 1.00 1.00 1.00 1.00 1.00 Total Return (%) .05 1.15 2.62 3.03 2.26 Ratios/Supplemental Data (%): Ratio of total expenses to average net .66 .68 .65 .68 .66 assets Ratio of net expenses to average net .47 .67 .65 a .68 .65 assets Ratio of net investment income to average net assets .06 1.11 2.57 2.99 2.24 Net Assets, end of period ($ x 1,000) 263,226 341,319 272,327 231,195 286,778 a Expense waivers and/or reimbursements amounted to less than .01%. 23 FINANCIAL HIGHLIGHTS Dreyfus New York Tax Exempt Bond Fund, Inc. These financial highlights describe the performance of the fund’s shares for the fiscal periods indicated. “Total return” shows how much your investment in the fund would have increased (or decreased) during each period, assuming you had reinvested all dividends and distributions. These financial highlights have been audited by Ernst & Young LLP, an independent registered public accounting firm, whose report, along with the fund’s financial statements, is included in the annual report, which is available upon request. Year Ended May 31, Per Share Data ($): Net asset value, beginning of period 14.18 14.44 14.64 14.58 15.02 Investment Operations: Investment incomenet a .58 .58 .57 .58 .59 Net realized and unrealized gain (loss) on .65 (.25) (.17) .07 (.40) investments Total from Investment Operations 1.23 .33 .40 .65 .19 Distributions: Dividends from investment incomenet (.57) (.57) (.57) (.58) (.59) Dividends from net realized gain on investments - (.02) (.03) (.01) (.04) Total Distributions (.57) (.59) (.60) (.59) (.63) Net asset value, end of period 14.84 14.18 14.44 14.64 14.58 Total Return (%) 8.86 2.48 2.82 4.47 1.32 Ratios/Supplemental Data (%): Ratio of total expenses to average net assets .73 .76 .78 .81 .81 Ratio of net expenses to average net assets .73 b .75 .78 b .80 .74 Ratio of interest and expense related to floating rate notes issued to average net assets .01 .02 .06 .09 .09 Ratio of net investment income to average net assets 3.97 4.15 3.97 3.92 4.02 Portfolio Turnover Rate 11.35 16.88 42.55 30.27 46.18 Net Assets, end of period ($ x 1,000) 1,430,008 1,371,586 1,465,596 1,241,717 1,234,243 a Based on average shares outstanding at each month end. b Expense waivers and/or reimbursements amounted to less than .01%. 24 NOTES 25 NOTES 26 NOTES 27 For More Information Dreyfus New York AMT-Free Municipal Money Market Fund SEC file number: 811-5160 Dreyfus New York Tax Exempt Bond Fund, Inc. SEC file number: 811-3726 More information on each fund is available free upon request, including the following: Annual/Semiannual Report Describes each fund’s performance, lists portfolio holdings and contains a letter from the fund’s manager discussing recent market conditions, economic trends and fund strategies that significantly affected the fund’s performance during the last fiscal year.The fund’s most recent annual and semiannual reports are available at www.dreyfus.com . Statement of Additional Information (SAI) Provides more details about a fund and its policies. A current SAI is available at www.dreyfus.com and is on file with the Securities and Exchange Commission (SEC). The SAI is incorporated by reference (is legally considered part of this prospectus). Portfolio Holdings Dreyfus funds generally disclose their complete schedule of portfolio holdings monthly with a 30-day lag at www.dreyfus.com under Mutual Fund Center – Dreyfus Mutual Funds – Mutual Fund Total Holdings. Complete holdings as of the end of the calendar quarter are disclosed 15 days after the end of such quarter. Dreyfus money market funds generally disclose their complete schedule of holdings daily. The schedule of holdings for a fund will remain on the website until the fund files its Form N-Q or Form N-CSR for the period that includes the dates of the posted holdings. A complete description of the funds’ policies and procedures with respect to the disclosure of the funds’ portfolio securities is available in the funds’ SAI. To obtain information: By telephone Call 1-800-645-6561 By mail Write to: The Dreyfus Family of Funds 144 Glenn Curtiss Boulevard Uniondale, NY 11556-0144 By E-mail Send your request to info@dreyfus.com On the Internet Certain fund documents can be viewed online or downloaded from: SEC http://www.sec.gov Dreyfus http://www.dreyfus.com You can also obtain copies, after paying a duplicating fee, by visiting the SEC’s Public Reference Room in Washington, DC (for information, call 1-202-551-8090) or by E-mail request to publicinfo@sec.gov, or by writing to the SEC’s Public Reference Section, Washington, DC 20549-0102. © 2ecurities Corporation NYTEFP1010 DREYFUS NEW YORK TAX EXEMPT FUNDS STATEMENT OF ADDITIONAL INFORMATION FOR DREYFUS NEW YORK AMT-FREE MUNICIPAL MONEY MARKET FUND DREYFUS NEW YORK TAX EXEMPT BOND FUND, INC. OCTOBER 1, 2010 This Statement of Additional Information, which is not a prospectus, supplements and should be read in conjunction with the current combined Prospectus of Dreyfus New York AMT-Free Municipal Money Market Fund (the " Money Market Fund ") and Dreyfus New York Tax Exempt Bond Fund, Inc. (the " Bond Fund ") (each, a "Fund" and, collectively, the "Funds"), dated October 1, 2010, as the Prospectus may be revised from time to time. To obtain a copy of the Funds' Prospectus, please call your financial adviser, write to the Funds at 144 Glenn Curtiss Boulevard, Uniondale, New York 11556‑0144, visit www.dreyfus.com, or call one of the following numbers: Call Toll Free 1‑800‑645‑6561 In New York City Call 1-718-895-1206 Outside the U.S. Call 516-794-5452 Each Fund's most recent Annual Report and Semi-Annual Report to Shareholders are separate documents supplied with this Statement of Additional Information, and the financial statements, accompanying notes and report of the independent registered public accounting firm appearing in the Annual Report are incorporated by reference into this Statement of Additional Information. Each Fund is a separate entity with a separate portfolio. The operations and investment results of one Fund are unrelated to those of the other Fund. This combined Statement of Additional Information has been prepared for your convenience to provide you the opportunity to consider two investment choices in one document. TABLE OF CONTENTS Page Description of the Funds Management of the Funds Management Arrangements How to Buy Shares Service Plan and Shareholder Services Plans How to Redeem Shares Shareholder Services Determination of Net Asset Value Portfolio Transactions Dividends, Distributions and Taxes Information About the Funds Counsel and Independent Auditors Appendix B 3 25 36 43 46 46 49 52 54 58 60 62 80 DESCRIPTION OF THE FUNDS The Money Market Fund is a Massachusetts business trust that commenced operations on June 9, 1987. The Bond Fund is a Maryland corporation that commenced operations on July 26, 1983. Each Fund is an open-end, management investment company, known as a mutual fund. The Money Market Fund is known as a municipal money market fund and must maintain an average dollar-weighted portfolio maturity of 90 days or less and buy individual securities that have remaining maturities of 13 months or less. The Bond Fund is known as a municipal bond fund and invests in debt obligations issued by states, territories and possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities, or multistate agencies or authorities, and certain other specified securities, the interest from which is, in the opinion of bond counsel to the issuer, exempt from Federal income tax ("Municipal Bonds"). The Dreyfus Corporation (the "Manager" or "Dreyfus") serves as each Fund's investment adviser. MBSC Securities Corporation (the "Distributor") is the distributor of each Fund's shares. Certain Portfolio Securities The following information supplements (except as noted) and should be read in conjunction with the Funds' Prospectus. New York Municipal Bonds . (Both Funds) As a fundamental policy, each Fund normally invests at least 80% of the value of its net assets (plus any borrowings for investment purposes) in Municipal Bonds of the State of New York, its political subdivisions, authorities and corporations, and certain other specified securities, that provide income exempt from Federal, New York State and New York City personal income taxes (collectively, "New York Municipal Bonds"). To the extent acceptable New York Municipal Bonds are at any time unavailable for investment by a Fund, the Fund will invest temporarily in other Municipal Bonds the interest from which is, in the opinion of bond counsel to the issuer, exempt from Federal, but not New York State and New York City, personal income tax. Municipal Bonds generally include debt obligations issued to obtain funds for various public purposes as well as certain industrial development bonds issued by or on behalf of public authorities. Municipal Bonds are classified as general obligation bonds, revenue bonds and notes. General obligation bonds are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue bonds are payable from the revenue derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source, but not from the general taxing power. Tax exempt industrial development bonds, in most cases, are revenue bonds that do not carry the pledge of the credit of the issuing municipality, but generally are guaranteed by the corporate entity on whose behalf they are issued. Notes are short-term instruments which are obligations of the issuing municipalities or agencies and are sold in anticipation of a bond sale, collection of taxes or receipt of other revenues. Municipal Bonds include municipal lease/purchase agreements, which are similar to installment purchase contracts for property or equipment issued by municipalities. Municipal Bonds bear fixed, floating or variable rates of interest. The Bond Fund may purchase securities with interest rates that are determined by formulas under which the rate will change directly or inversely to changes in interest rates or an index, or multiples thereof, in many cases subject to a maximum and minimum. Certain Municipal Bonds purchased by the Bond Fund are subject to redemption at a date earlier than their stated maturity pursuant to call options, which may be separated from the related Municipal Bond and purchased and sold separately. The yields on Municipal Bonds are dependent on a variety of factors, including general economic and monetary conditions, money market factors, conditions in the Municipal Bond market, size of a particular offering, maturity of the obligation and rating of the issue. Municipal Bonds include certain private activity bonds (a type of revenue bond), the income from which is subject to the Federal alternative minimum tax (AMT). The Bond Fund may invest up to 20% of the value of its net assets in such Municipal Bonds and, except for temporary defensive purposes, in other investments subject to Federal income tax. The Money Market Fund currently will not purchase Municipal Bonds, including certain industrial development bonds and bonds issued after August 7, 1986 to finance "private activities," the interest on which may constitute a "tax preference item" for purposes of the AMT even though the interest will continue to be fully tax-exempt for Federal income tax purposes. Certain Tax Exempt Obligations . (Both Funds) Each Fund may purchase floating and variable rate demand notes and bonds, which are tax exempt obligations ordinarily having stated maturities in excess of one year, but which permit the holder to demand payment of principal at any time or at specified intervals, which for the Money Market Fund will not exceed 13 months, and in each case will be upon not more than 30 days' notice. Variable rate demand notes include master demand notes which are obligations that permit the Fund to invest fluctuating amounts, at varying rates of interest, pursuant to direct arrangements between the Fund, as lender, and the borrower. These obligations permit daily changes in the amount borrowed. Because these obligations are direct lending arrangements between the lender and borrower, it is not contemplated that such instruments generally will be traded, and there generally is no established secondary market for these obligations, although they are redeemable at face value, plus accrued interest. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, the Fund's right to redeem is dependent on the ability of the borrower to pay principal and interest on demand. Each obligation purchased by the Fund will meet the quality criteria established for the purchase of Municipal Bonds. Tax Exempt Participation Interests . (Both Funds) Each Fund may purchase from financial institutions participation interests in Municipal Bonds (such as industrial development bonds and municipal lease/purchase agreements). A participation interest gives the Fund an undivided interest in the Municipal Bond in the proportion that the Fund's participation interest bears to the total principal amount of the Municipal Bond. These instruments may have fixed, floating or variable rates of interest and, in the case of the Money Market Fund , will have remaining maturities of 13 months or less. If the participation interest is unrated, it will be backed by an irrevocable letter of credit or guarantee of a bank that the Fund's Board has determined meets prescribed quality standards for banks, or the payment obligation otherwise will be collateralized by U.S. Government securities. For certain participation interests, the Fund will have the right to demand payment, on not more than seven days' notice, for all or any part of the Fund's participation interest in the Municipal Bond, plus accrued interest. As to these instruments, each Fund intends to exercise its right to demand payment only upon a default under the terms of the Municipal Bond, as needed to provide liquidity to meet redemptions, or to maintain or improve the quality of its investment portfolio. Municipal lease obligations or installment purchase contract obligations (collectively, "lease obligations") have special risks not ordinarily associated with Municipal Bonds. Although lease obligations do not constitute general obligations of the municipality for which the municipality's taxing power is pledged, a lease obligation ordinarily is backed by the municipality's covenant to budget for, appropriate and make the payments due under the lease obligation. However, certain lease obligations in which a Fund may invest may contain "non-appropriation" clauses which provide that the municipality has no obligation to make lease or installment purchase payments in future years unless money is appropriated for such purpose on a yearly basis. Although "non-appropriation" lease obligations are secured by the leased property, disposition of the property in the event of foreclosure might prove difficult. The Money Market Fund will invest only in those lease obligations that: (1) are rated in one of the two highest rating categories for debt obligations by at least two nationally recognized statistical rating organizations (or one rating organization if the lease obligation was rated only by one such organization); or (2) if unrated, are purchased principally from the issuer or domestic banks or other responsible third parties, in each case only if the seller shall have entered into an agreement with the Money Market Fund providing that the seller or other responsible third party will either remarket or repurchase the lease obligation within a short period after demand by the Fund. Certain lease obligations may be considered illiquid. With regard to the Bond Fund , determination as to the liquidity of such securities is made in accordance with guidelines established by the Fund's Board. Pursuant to such guidelines, the Board has directed the Manager to monitor carefully the Fund's investment in such securities with particular regard to: (1) the frequency of trades and quotes for the lease obligation; (2) the number of dealers willing to purchase or sell the lease obligation and the number of other potential buyers; (3) the willingness of dealers to undertake to make a market in the lease obligation; (4) the nature of the marketplace trades, including the time needed to dispose of the lease obligation, the method of soliciting offers and the mechanics of transfer; and (5) such other factors concerning the trading market for the lease obligation as the Manager may deem relevant. In addition, in evaluating the liquidity and credit quality of a lease obligation that is unrated, the Fund's Board has directed the Manager to consider: (a) whether the lease can be canceled; (b) what assurance there is that the assets represented by the lease can be sold; (c) the strength of the lessee's general credit (e.g., its debt, administrative, economic, and financial characteristics); (d) the likelihood that the municipality will discontinue appropriating funding for the leased property because the property is no longer deemed essential to the operations of the municipality (e.g., the potential for an "event of nonappropriation"); (e) the legal recourse in the event of failure to appropriate; and (f) such other factors concerning credit quality as the Manager may deem relevant. Tender Option Bonds . (Both Funds) Each Fund may purchase tender option bonds. A tender option bond is a Municipal Bond (generally held pursuant to a custodial arrangement) having a relatively long maturity and bearing interest at a fixed rate substantially higher than prevailing short-term tax exempt rates, that has been coupled with the agreement of a third party, such as a bank, broker-dealer or other financial institution, pursuant to which such institution grants the security holders the option, at periodic intervals, to tender their securities to the institution and receive the face value thereof. As consideration for providing the option, the financial institution receives periodic fees equal to the difference between the Municipal Bond's fixed coupon rate and the rate, as determined by a remarketing or similar agent at or near the commencement of such period, that would cause the securities, coupled with the tender option, to trade at par on the date of such determination. Thus, after payment of this fee, the security holder effectively holds a demand obligation that bears interest at the prevailing short-term tax exempt rate. The Manager, on behalf of the Fund, will consider on an ongoing basis the creditworthiness of the issuer of the underlying Municipal Bonds, of any custodian and of the third party provider of the tender option. In certain instances and for certain tender option bonds, the option may be terminable in the event of a default in payment of principal or interest on the underlying Municipal Bonds and for other reasons. The Money Market Fund will not purchase tender option bonds unless (a) the demand feature applicable thereto is exercisable by the Fund within 13 months of the date of such purchase upon no more than 30 days' notice and thereafter is exercisable by the Fund no less frequently than annually upon no more than 30 days' notice and (b) at the time of such purchase, the Manager reasonably expects (i) based upon its assessment of current and historical interest rate trends, that prevailing short-term tax exempt rates will not exceed the stated interest rate on the underlying Municipal Bonds at the time of the next tender fee adjustment and (ii) that the circumstances which might entitle the grantor of a tender option to terminate the tender option would not occur prior to the time of the next tender opportunity. At the time of each tender opportunity, the Fund will exercise the tender option with respect to any tender option bonds unless the Manager reasonably expects, (x) based upon its assessment of current and historical interest rate trends, that prevailing short-term tax exempt rates will not exceed the stated interest rate on the underlying Municipal Bonds at the time of the next tender fee adjustment, and (y) that the circumstances which entitle the grantor of a tender option to terminate the tender option would not occur prior to the time of the next tender opportunity. The Fund will exercise the tender feature with respect to tender option bonds, or otherwise dispose of its tender option bonds, prior to the time the tender option is scheduled to expire pursuant to the terms of the agreement under which the tender option is granted. The Money Market Fund otherwise will comply with the provisions of Rule 2a‑7 under the Investment Company Act of 1940, as amended (the "1940 Act"), in connection with the purchase of tender option bonds, including, without limitation, the requisite determination by the Money Market Fund's Board that the tender option bonds in question meet the quality standards described in Rule 2a‑7, which, in the case of a tender option bond subject to a conditional demand feature, would include a determination that the security has received both the required short-term and long-term quality rating or is determined to be of comparable quality. In the event of a default of the Municipal Bond underlying a tender option bond, or the termination of the tender option agreement, the Money Market Fund would look to the maturity date of the underlying security for purposes of compliance with Rule 2a‑7 and, if its remaining maturity was greater than 13 months, the Fund would sell the security as soon as would be practicable. Each Fund will purchase tender option bonds only when the Manager is satisfied that the custodial and tender option arrangements, including the fee payment arrangements, will not adversely affect the tax exempt status of the underlying Municipal Bonds and that payment of any tender fees will not have the effect of creating taxable income for such Fund. Based on the tender option bond agreement, the Fund expects to be able to value the tender option bond at par; however, the value of the instrument will be monitored to assure that it is valued at fair value. Custodial Receipts . ( Bond Fund only) The Bond Fund may purchase custodial receipts representing the right to receive certain future principal and interest payments on Municipal Bonds which underlie the custodial receipts. A number of different arrangements are possible. In a typical custodial receipt arrangement, an issuer or a third party owner of Municipal Bonds deposits such obligations with a custodian in exchange for two classes of custodial receipts. The two classes have different characteristics, but, in each case, payments on the two classes are based on payments received on the underlying Municipal Bonds. One class has the characteristics of a typical auction rate security, where at specified intervals its interest rate is adjusted, and ownership changes, based on an auction mechanism. The interest rate on this class generally is expected to be below the coupon rate of the underlying Municipal Bonds and generally is at a level comparable to that of a Municipal Bond of similar quality and having a maturity equal to the period between interest rate adjustments. The second class bears interest at a rate that exceeds the interest rate typically borne by a security of comparable quality and maturity; this rate also is adjusted, but in this case inversely to changes in the rate of interest of the first class. The aggregate interest paid with respect to the two classes will not exceed the interest paid by the underlying Municipal Bonds. The value of the second class and similar securities should be expected to fluctuate more than the value of a Municipal Bond of comparable quality and maturity, which would increase the volatility of the Fund's net asset value. These custodial receipts are sold in private placements. The Fund also may purchase directly from issuers, and not in a private placement, Municipal Bonds having characteristics similar to custodial receipts. These securities may be issued as part of a multi-class offering and the interest rate on certain classes may be subject to a cap or floor. Inverse Floaters . ( Bond Fund only) The Bond Fund may invest in residual interest Municipal Bonds whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index ("inverse floaters"). An investment in inverse floaters may involve greater risk than an investment in a fixed-rate Municipal Bond. Because changes in the interest rate on the other security or index inversely affect the residual interest paid on the inverse floater, the value of an inverse floater is generally more volatile than that of a fixed-rate Municipal Bond. Inverse floaters have interest rate adjustment formulas which generally reduce or, in the extreme, eliminate the interest paid to the Fund when short-term interest rates rise, and increase the interest paid to the Fund when short-term interest rates fall. Investing in inverse floaters involves leveraging which may magnify the Fund's gains or losses. Although volatile, inverse floaters typically offer the potential for yields exceeding the yields available on fixed-rate Municipal Bonds with comparable credit quality, coupon, call provisions and maturity. These securities usually permit the investor to convert the floating rate to a fixed rate (normally adjusted downward), and this optional conversion feature may provide a partial hedge against rising rates if exercised at an opportune time. Inverse floaters typically are derivative instruments created by depositing municipal bonds in a trust which divides the bond's income stream into two parts: a short-term variable rate demand note and a residual interest bond (the inverse floater) which receives interest based on the remaining cash flow of the trust after payment of interest on the note and various trust expenses. Interest on the inverse floater usually moves in the opposite direction as the interest on the variable rate demand note. The Fund may either participate in structuring an inverse floater or purchase an inverse floater in the secondary market. When structuring an inverse floater, the Fund will transfer to a trust fixed rate Municipal Bonds held in the Fund's portfolio. The trust then typically issues the inverse floaters and the variable rate demand notes that are collateralized by the cash flows of the fixed rate Municipal Bonds. In return for the transfer of the Municipal Bonds to the trust, the Fund receives the inverse floaters and cash associated with the sale of the notes from the trust. Historically, to the effect that the Bond Fund invested in inverse floaters, for accounting purposes the Fund has treated these transfers as sales of the Municipal Bonds (which yielded a gain or loss) and a purchase of the inverse floaters. However, as a result of recent changes in the Bond Fund's accounting treatment of these transactions, the Bond Fund now treats these transfers as part of a secured borrowing or financing transaction (not a sale), and the interest payments and related expenses due on the notes issued by the trusts and sold to third parties as liabilities of the Fund. The financial statements of the Bond Fund have been restated for certain periods to reflect these changes. These changes did not impact the net asset value, total return or net investment income of the Bond Fund . Inverse floaters purchased in the secondary market are treated as the purchase of a security and not as a secured borrowing or financing transaction. Zero Coupon, Pay-In-Kind and Step-Up Municipal Bonds . ( Bond Fund only) The Bond Fund may invest in zero coupon securities, which are Municipal Bonds issued or sold at a discount from their face value that do not entitle the holder to any periodic payment of interest prior to maturity or a specified redemption date or cash payment date; pay-in-kind bonds, which are Municipal Bonds that generally pay interest through the issuance of additional bonds; and step-up coupon bonds, which are Municipal Bonds that typically do not pay interest for a specified period of time and then pay interest at a series of different rates. For zero-coupon securities, the amount of any discount varies depending on the time remaining until maturity or cash payment date, prevailing interest rates, liquidity of the security and perceived credit quality of the issuer. Zero coupon securities also may take the form of Municipal Bonds that have been stripped of their unmatured interest coupons, the coupons themselves and receipts or certificates representing interest in such stripped debt obligations and coupons. The market prices of these securities generally are more volatile and are likely to respond to a greater degree to changes in interest rates than the market prices of Municipal Bonds that pay cash interest periodically having similar maturities and credit qualities. In addition, unlike Municipal Bonds which pay cash interest throughout the period to maturity, the Fund will realize no cash until the cash payment or maturity date unless a portion of such securities are sold and, if the issuer defaults, the Fund may obtain no return at all on its investment. Ratings of Municipal Bonds . (Both Funds) The Bond Fund will invest at least 80% of the value of its net assets in securities which, in the case of Municipal Bonds, are rated no lower than Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings Services ("S&P") or Fitch Ratings ("Fitch" and, together with Moody's and S&P, the "Rating Agencies"). The Bond Fund may invest up to 20% of the value of its net assets in securities which, in the case of Municipal Bonds, are rated lower than Baa by Moody's and BBB by S&P and Fitch and as low as the lowest rating assigned by the Rating Agencies, but it currently is the intention of the Bond Fund that this portion of the Fund's portfolio be invested primarily in Municipal Bonds rated no lower than Baa by Moody's or BBB by S&P or Fitch. Municipal Bonds rated BBB by S&P and Fitch are regarded as having adequate capacity to pay principal and interest, while those rated Baa by Moody's are considered medium grade obligations which lack outstanding investment characteristics and have speculative characteristics. The Bond Fund may invest in short-term Municipal Bonds which are rated in the two highest rating categories by a Rating Agency. The Bond Fund also may invest in securities which, while not rated, are determined by the Manager to be of comparable quality to the rated securities in which the Fund may invest; for purposes of the 80% requirement described in this paragraph, such unrated securities will be considered to have the rating so determined. The Money Market Fund may invest only in those Municipal Bonds which are rated in one of the two highest rating categories for debt obligations by at least two rating organizations (or one rating organization if the instrument was rated by only one such organization) or, if unrated, are of comparable quality as determined in accordance with procedures established by the Fund's Board. The average distribution of investments (at value) in Municipal Bonds (including notes) by ratings for the fiscal year ended May 31, 2010, computed on a monthly basis, for each Fund was as follows: Percentage of Value Fitch or Moody's or S&P Money Market Fund Bond Fund AAA Aaa AAA 1.4% 41.0% AA Aa AA N/A 28.0% A A A N/A 18.4% BBB Baa BBB N/A 8.5% BB Ba BB N/A 1.0% B B B - 0.8% F-1 VMIG1/MIG1,P-1 SP‑1,A-1 83.6% 0.4% Not Rated Not Rated Not Rated 15.0% ** 1.4% *** 100.0% 100.0% * Includes notes rated within the highest grades by Moody's, S&P or Fitch, which, together with Municipal Bonds rated Baa/BBB, are taken into account at the time of purchase to ensure that the portfolio of each Longer Term Fund meets the 80% minimum quality standard discussed above. ** Those securities which are not rated have been determined by the Manager to be of comparable quality to securities rated MIG1. *** Those securities which are not rated have been determined by the Manager to be of comparable quality to securities in the following rating categories: Aaa/AAA (0.2%), Aa/AA (0.1%) and Baa/BBB (1.1%). If, subsequent to being purchased by the Money Market Fund , (a) an issue of rated Municipal Bonds ceases to be rated in the highest rating category by at least two rating organizations (or one rating organization if the instrument was rated by only one such organization), or the Money Market Fund's Board determines that it is no longer of comparable quality; or (b) the Manager becomes aware that any portfolio security not so highly rated or any unrated security has been given a rating by any rating organization below the rating organization's second highest rating category, the Money Market Fund's Board will reassess promptly whether such security presents minimal credit risk and will cause the Fund to take such action as it determines is in the best interest of the Fund and its shareholders, provided that the reassessment required by clause (b) is not required if the portfolio security is disposed of or matures within five business days of the Manager becoming aware of the new rating and the Fund's Board is subsequently notified of the Manager's actions. Subsequent to its purchase by the Bond Fund , an issue of rated Municipal Bonds may cease to be rated or its rating may be reduced below the minimum required for purchase by the Fund. Neither event will require the sale of such Municipal Bonds by the Bond Fund , but the Manager will consider such event in determining whether the Fund should continue to hold the Municipal Bonds. To the extent the ratings given by a Rating Agency may change as a result of changes in such organization or its rating system, the Funds will attempt to use comparable ratings as standards for its investments in accordance with the investment policies described in the Prospectus and this Statement of Additional Information. The ratings of the Rating Agencies represent their opinions as to the quality of the Municipal Bonds which they undertake to rate. It should be emphasized, however, that ratings are relative and subjective and are not absolute standards of quality. Although these ratings may be an initial criterion for selection of portfolio investments, the Manager also will evaluate these securities and the creditworthiness of the issuers of such securities. Investment Companies . ( Bond Fund only) The Bond Fund may invest in securities issued by other investment companies. Under the 1940 Act, the Fund's investment in such securities, subject to certain exceptions, currently is limited to (i) 3% of the total voting stock of any one investment company, (ii) 5% of the Fund's total assets with respect to any one investment company and (iii) 10% of the Fund's total assets in the aggregate. As a shareholder of another investment company, the Fund would bear, along with other shareholders, its pro rata portion of the other investment company's expenses, including advisory fees. These expenses would be in addition to the advisory fees and other expenses that the Fund bears directly in connection with its own operations. The Bond Fund also may invest its uninvested cash reserves, or cash it receives as collateral from borrowers of its portfolio securities in connection with the Fund's securities lending program, in shares of one or more money market funds advised by the Manager. Such investments will not be subject to the limitations described above. See "Lending Portfolio Securities." Illiquid Securities . (Both Funds) The Bond Fund may invest up to 15% and the Money Market Fund may invest up to 10% of the value of its net assets in securities as to which a liquid trading market does not exist, provided such investments are consistent with the Fund's investment objective. Such securities may include securities that are not readily marketable, such as securities subject to legal or contractual restrictions on resale, and repurchase agreements providing for settlement in more than seven days after notice. As to these securities, the Fund is subject to a risk that should the Fund desire to sell them when a ready buyer is not available at a price the Fund deems representative of their value, the value of the Fund's net assets could be adversely affected. Taxable Investments . (Both Funds) From time to time, on a temporary basis other than for temporary defensive purposes (but not to exceed 20% of the value of the Fund's net assets) or for temporary defensive purposes, a Fund may invest in taxable short-term investments ("Taxable Investments") consisting of: notes of issuers having, at the time of purchase, a quality rating within the two highest grades of a Rating Agency; obligations of the U.S. Government, its agencies or instrumentalities; commercial paper rated not lower than P-2 by Moody's, A-2 by S&P or F-2 by Fitch; certificates of deposit of U.S. domestic banks, including foreign branches of domestic banks, with assets of $1 billion or more; time deposits; bankers' acceptances and other short-term bank obligations; and repurchase agreements in respect of any of the foregoing. Dividends paid by a Fund that are attributable to income earned by the Fund from Taxable Investments will be taxable to investors. See "Dividends, Distributions and Taxes." Except for temporary defensive purposes, at no time will more than 20% of the value of a Fund's net assets be invested in Taxable Investments and, with respect to the Bond Fund, Municipal Bonds the interest from which gives rise to a preference item for the purpose of the alternative minimum tax. If the Money Market Fund purchases Taxable Investments, it will value them using the amortized cost method and comply with Rule 2a-7 under the 1940 Act relating to purchases of taxable instruments. When a Fund has adopted a temporary defensive position, including when acceptable New York Municipal Bonds are unavailable for investment by the Fund, in excess of 20% of its net assets may be invested in securities that are not exempt from New York State and New York City income taxes. Under normal market conditions, each Fund anticipates that not more than 5% of the value of its total assets will be invested in any one category of Taxable Investments. Investment Techniques The following information supplements (except as noted) and should be read in conjunction with the Prospectus. A Fund's use of certain of the investment techniques described below may give rise to taxable income. Borrowing Money . (Both Funds) The Bond Fund is permitted to borrow to the extent permitted under the 1940 Act, which permits an investment company to borrow in an amount up to 33-1/3% of the value of its total assets. The Bond Fund currently intends to, and the Money Market Fund may, borrow money only for temporary or emergency (not leveraging) purposes in an amount up to 15% of the value of its total assets (including the amount borrowed) valued at the lesser of cost or market, less liabilities (not including the amount borrowed) at the time the borrowing is made. While such borrowings exceed 5% of the value of a Fund's total assets, the Fund will not make any additional investments. Lending Portfolio Securities . ( Bond Fund only) The Bond Fund may lend securities from its portfolio to brokers, dealers and other financial institutions needing to borrow securities to complete certain transactions. In connection with such loans, the Fund remains the owner of the loaned securities and continues to be entitled to payments in amounts equal to the interest or other distributions payable on the loaned securities. The Fund also has the right to terminate a loan at any time. The Fund may call the loan to vote proxies if a material issue affecting the Fund's investment is to be voted upon. Loans of portfolio securities may not exceed 33-1/3% of the value of the Fund's total assets (including the value of assets received as collateral for the loan). The Fund will receive collateral consisting of cash, U.S. Government securities or irrevocable letters of credit which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. If the collateral consists of a letter of credit or securities, the borrower will pay the Fund a loan premium fee. If the collateral consists of cash, the Fund will reinvest the cash and pay the borrower a pre-negotiated fee or "rebate" from any return earned on the investment. The Fund may participate in a securities lending program operated by The Bank of New York Mellon, as lending agent (the "Lending Agent"). The Lending Agent will receive a percentage of the total earnings of the Fund derived from lending its portfolio securities. Should the borrower of the securities fail financially, the Fund may experience delays in recovering the loaned securities or exercising its rights in the collateral. Loans are made only to borrowers that are deemed by the Manager to be of good financial standing. In a loan transaction, the Fund will also bear the risk of any decline in value of securities acquired with cash collateral. The Fund will minimize this risk by limiting the investment of cash collateral to money market funds advised by the Manager, repurchase agreements or other high quality instruments with short maturities. Derivative Products . (Money Market Fund only ) The Money Market Fund may purchase various derivative products whose value is tied to underlying Municipal Bonds. The Money Market Fund will purchase only those derivative products that are consistent with its investment objective and policies and comply with the quality, maturity and diversification standards of Rule 2a-7 under the 1940 Act. The principal types of derivative products are described below. Tax Exempt Participation Interests . Tax exempt participation interests (such as industrial development bonds and municipal lease/purchase agreements) give the Fund an undivided interest in a Municipal Bond in the proportion that the Fund's participation interest bears to the total principal amount of the Municipal Bond. Participation interests may have fixed, floating or variable rates of interest, and are frequently backed by an irrevocable letter of credit or guarantee of a bank. Tender Option Bonds . Tender option bonds grant the holder an option to tender an underlying Municipal Bond at par plus accrued interest at specified intervals to a financial institution that acts as a liquidity provider. The holder of a tender option bond effectively holds a demand obligation that bears interest at the prevailing short-term tax exempt rate. Custodial Receipts . In a typical custodial receipt arrangement, an issuer of a Municipal Bond deposits it with a custodian in exchange for two classes of custodial receipts. One class has the characteristics of a typical auction rate security, where at specified intervals its interest rate is adjusted and ownership changes. The other class's interest rate also is adjusted, but inversely to changes in the interest rate of the first class. Structured Notes . Structured notes typically are purchased in privately negotiated transactions from financial institutions and, therefore, may not have an active trading market. When the Money Market Fund purchases a structured note, it will make a payment of principal to the counterparty. Some structured notes have a guaranteed repayment of principal while others place a portion (or all) of the principal at risk. The possibility of default by the counterparty or its credit provider may be greater for structured notes than for other types of money market instruments. Derivatives . ( Bond Fund only) The Bond Fund may invest in, or enter into, derivatives for a variety of reasons, including to hedge certain market and interest rate risks, to provide a substitute for purchasing or selling particular securities or to increase potential returns. Generally, a derivative is a financial contract whose value depends upon, or is derived from, the value of an underlying asset, reference rate or index, and may relate to stocks, bonds, interest rates, currencies or currency exchange rates, commodities, and related indexes. Derivatives may provide a cheaper, quicker or more specifically focused way for the Fund to invest than "traditional" securities would. Examples of derivative instruments the Bond Fund may use include options contracts, futures contracts, options on futures contracts and swap transactions. The Bond Fund's portfolio manager may decide not to employ any of these strategies and there is no assurance that any derivatives strategy used by the Fund will succeed. Derivatives can be volatile and involve various types and degrees of risk, depending upon the characteristics of the particular derivative and the portfolio as a whole. Derivatives permit the Fund to increase or decrease the level of risk, or change the character of the risk, to which its portfolio is exposed in much the same way as the Fund can increase or decrease the level of risk, or change the character of the risk, of its portfolio by making investments in specific securities. However, derivatives may entail investment exposures that are greater than their cost would suggest, meaning that a small investment in derivatives could have a large potential impact on the Fund's performance. If the Fund invests in derivatives at inopportune times or judges market conditions incorrectly, such investments may lower the Fund's return or result in a loss. The Fund also could experience losses if its derivatives were poorly correlated with the underlying instruments or the Fund's other investments, or if the Fund were unable to liquidate its position because of an illiquid secondary market. The market for many derivatives is, or suddenly can become, illiquid. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for derivatives. Derivatives may be purchased on established exchanges or through privately negotiated transactions referred to as over-the-counter derivatives. Exchange-traded derivatives generally are guaranteed by the clearing agency which is the issuer or counterparty to such derivatives. This guarantee usually is supported by a variation margin payment system operated by the clearing agency in order to reduce overall credit risk. As a result, unless the clearing agency defaults, there is relatively little counterparty credit risk associated with derivatives purchased on an exchange. By contrast, no clearing agency guarantees over-the-counter derivatives. Therefore, each party to an over-the-counter derivative bears the risk that the counterparty will default. Accordingly, the Manager will consider the creditworthiness of counterparties to over-the-counter derivatives in the same manner as it would review the credit quality of a security to be purchased by the Fund. Over-the-counter derivatives are less liquid than exchange-traded derivatives since the other party to the transaction may be the only investor with sufficient understanding of the derivative to be interested in bidding for it. Some derivatives the Bond Fund may use may involve leverage (e.g., an instrument linked to the value of a securities index may return income calculated as a multiple of the price movement of the underlying index). This economic leverage will increase the volatility of these instruments as they may increase or decrease in value more quickly than the underlying security, index, futures contract, currency or other economic variable. Pursuant to regulations and/or published positions of the Securities and Exchange Commission ("SEC"), the Fund may be required to segregate permissible liquid assets, or engage in other measures approved by the SEC or its staff, to "cover" the Fund's obligations relating to its transactions in derivatives. For example, in the case of futures contracts that are not contractually required to cash settle, the Fund must set aside liquid assets equal to such contracts' full notional value (generally, the total numerical value of the asset underlying a futures contract at the time of valuation) while the positions are open. With respect to futures contracts that are contractually required to cash settle, however, the Fund is permitted to set aside liquid assets in an amount equal to the Fund's daily marked-to-market net obligation (i.e., the Fund's daily net liability) under the contracts, if any, rather than such contracts' full notional value. By setting aside assets equal to only its net obligations under cash-settled futures contracts, the Fund may employ leverage to a greater extent than if the Fund were required to segregate assets equal to the full notional value of such contracts. The Bond Fund will not be a commodity pool. The Fund has filed notice with the Commodity Futures Trading Commission and National Futures Association of its eligibility, as a registered investment company, for an exclusion from the definition of commodity pool operator and that the Fund is not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act. Futures TransactionsIn General . ( Bond Fund only) A futures contract is an agreement between two parties to buy and sell a security for a set price on a future date. These contracts are traded on exchanges, so that, in most cases, either party can close out its position on the exchange for cash, without delivering the security. An option on a futures contract gives the holder of the option the right to buy from or sell to the writer of the option a position in a futures contract at a specified price on or before a specified expiration date. The Fund may invest in futures contracts and options on futures contracts, including those with respect to interest rates, securities, and security indexes. Although some futures contracts call for making or taking delivery of the underlying securities, generally these obligations are closed out before delivery by offsetting purchases or sales of matching futures contracts (same exchange, underlying security or index, and delivery month). Closing out a futures contract sale is effected by purchasing a futures contract for the same aggregate amount of the specific type of financial instrument with the same delivery date. If an offsetting purchase price is less than the original sale price, the Fund realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an offsetting sale price is more than the original purchase price, the Fund realizes a capital gain, or if it is less, the Fund realizes a capital loss. Transaction costs also are included in these calculations. The Bond Fund may enter into futures contracts in U.S. domestic markets. Engaging in these transactions involves risk of loss to the Fund which could adversely affect the value of the Fund's net assets. Although the Fund intends to purchase or sell futures contracts only if there is an active market for such contracts, no assurance can be given that a liquid market will exist for any particular contract at any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit or trading may be suspended for specified periods during the trading day. Futures contract prices could move to the limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and potentially subjecting the Fund to substantial losses. Successful use of futures and options with respect thereto by the Fund also is subject to the Manager's ability to predict correctly movements in the direction of the relevant market and, to the extent the transaction is entered into for hedging purposes, to ascertain the appropriate correlation between the securities being hedged and the price movements of the futures contract. For example, if the Fund uses futures to hedge against the possibility of a decline in the market value of securities held in its portfolio and the prices of such securities instead increase, the Fund will lose part or all of the benefit of the increased value of securities which it has hedged because it will have offsetting losses in its futures positions. Furthermore, if in such circumstances the Fund has insufficient cash, it may have to sell securities to meet variation margin requirements. The Fund may have to sell such securities at a time when it may be disadvantageous to do so. Specific Futures Transactions . The Bond Fund may purchase and sell interest rate futures contracts. An interest rate future obligates the Fund to purchase or sell an amount of a specific debt security at a future date at a specific price. The Bond Fund may purchase and sell municipal bond fund index futures contracts. Municipal bond index futures contracts are based on an index of Municipal Bonds. The index assigns relative values to the Municipal Bonds included in the index and fluctuates with changes in the market value of such Municipal Bonds. The contract is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash based upon the difference between the value of the index at close of the last trading day of the contract and price at which the index contract was originally written. OptionsIn General . ( Bond Fund only) The Bond Fund may invest up to 5% of its assets, represented by the premium paid, in the purchase of call and put options. The Fund may write (i.e., sell) covered call and put option contracts to the extent of 20% of the value of its net assets at the time such option contracts are written. A call option gives the purchaser of the option the right to buy, and obligates the writer to sell, the underlying security or securities at the exercise price at any time during the option period, or at a specific date. Conversely, a put option gives the purchaser of the option the right to sell, and obligates the writer to buy, the underlying security or securities at the exercise price at any time during the option period, or at a specific date. A covered call option written by the Fund is a call option with respect to which the Fund owns the underlying security or otherwise covers the transaction such as by segregating permissible liquid assets. A put option written by the Fund is covered when, among other things, the Fund segregates permissible liquid assets having a value equal to or greater than the exercise price of the option to fulfill the obligation undertaken or otherwise covers the transaction. The principal reason for writing covered call and put options is to realize, through the receipt of premiums, a greater return than would be realized on the underlying securities alone. The Fund receives a premium from writing covered call or put options which it retains whether or not the option is exercised. There is no assurance that sufficient trading interest to create a liquid secondary market on a securities exchange will exist for any particular option or at any particular time, and for some options no such secondary market may exist. A liquid secondary market in an option may cease to exist for a variety of reasons. In the past, for example, higher than anticipated trading activity or order flow, or other unforeseen events, at times have rendered certain of the clearing facilities inadequate and resulted in the institution of special procedures, such as trading rotations, restrictions on certain types of orders or trading halts or suspensions in one or more options. There can be no assurance that similar events, or events that may otherwise interfere with the timely execution of customers' orders, will not recur. In such event, it might not be possible to effect closing transactions in particular options. If, as a covered call option writer, the Fund is unable to effect a closing purchase transaction in a secondary market, it will not be able to sell the underlying security until the option expires or it delivers the underlying security upon exercise or it otherwise covers its position. Specific Options Transactions . The Bond Fund may purchase and sell call and put options in respect of specific securities (or groups or "baskets" of specific securities) or indices listed on national securities exchanges or traded in the over-the-counter market. An option on an index is similar to an option in respect of specific securities, except that settlement does not occur by delivery of the securities comprising the index. Instead, the option holder receives an amount of cash if the closing level of the index upon which the option is based is greater than in the case of a call, or less than in the case of a put, the exercise price of the option. Thus, the effectiveness of purchasing or writing stock index options will depend upon price movements in the level of the index rather than the price of a particular security. The Bond Fund may purchase cash-settled options on interest rate swaps, described below, in pursuit of its investment objective. Interest rate swaps involve the exchange by a Fund with another party of their respective commitments to pay or receive interest (for example, an exchange floating-rate payments for fixed-rate payments) denominated in U.S. dollars. A cash-settled option on a swap gives the purchaser the right, but not the obligation, in return for the premium paid, to receive an amount of cash equal to the value of the underlying swap as of the exercise date. Successful use of options by the Fund will be subject to the Manager's ability to predict correctly movements in interest rates. To the extent the Manager's predictions are incorrect, the Fund may incur losses. Swap Transactions . The Bond Fund may engage in swap transactions, including interest rate swaps, interest rate locks, caps, collars and floors to mitigate risk, manage duration and reduce portfolio turnover. Swap transactions, including interest rate swaps, interest rate locks, caps, collars and floors, may be individually negotiated and include exposure to a variety of different interest rates. Swaps involve two parties exchanging a series of cash flows at specified intervals. In the case of an interest rate swap, the parties exchange interest payments based upon an agreed upon principal amount (referred to as the "notional principal amount"). Under the most basic scenario, Party A would pay a fixed rate on the notional principal amount to Party B, which would pay a floating rate on the same notional principal amount to Party A. Swap agreements can take many forms and are known by a variety of names. In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the other party. For example, the buyer of an interest rate cap obtains the right to receive payments to the extent that a specified interest rate exceeds an agreed-upon level, while the seller of an interest rate floor is obligated to make payments to the extent that a specified interest rate falls below an agreed-upon level. An interest rate collar combines elements of buying a cap and selling a floor. In a typical interest rate lock transaction, if Party A desires to lock in a particular interest rate on a given date it may enter into an agreement to pay, or receive a payment from, Party B based on the yield of a reference index or security, such as a Municipal Bond or U.S. Treasury security. At the maturity of the term of the agreement, one party makes a payment to the other party as determined by the relative change in the yield of the reference security or index. An interest rate lock transaction may be terminated prior to its stated maturity date by calculating the payment due as of the termination date, which generally differs from the make-whole provisions for an early termination of an interest rate swap transaction in which the party terminating the swap early is required to give its counterparty the economic benefit of the transaction. The Fund will set aside cash or permissible liquid assets to cover its current obligations under swap transactions. If the Fund enters into a swap agreement on a net basis (that is, the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments), the Fund will maintain cash or permissible liquid assets with a daily value at least equal to the excess, if any, of the Fund's accrued obligations under the swap agreement over the accrued amount the Fund is entitled to receive under the agreement. The most important factor in the performance of a swap agreement is the change in the specific interest rate or other factor(s) that determine the amounts of payments due to and from the Fund. If a swap agreement called for payments by the Fund, the Fund must be prepared to make such payments when due. In addition, if the counterparty's creditworthiness declines, the value of a swap agreement would likely decline, potentially resulting in losses. The Fund will enter into swaps, interest rate locks, caps, collars and floors only with banks and recognized securities dealers believed by the Manager to present minimal credit risks. If there were a default by the other party to such transaction, the Fund would have to rely on its contractual remedies (which may be limited by bankruptcy, insolvency or similar laws) pursuant to the agreement relating to the transaction. The use of interest rate swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio security transactions. If the Manager is incorrect in its forecasts of market values, interest rates and other applicable factors, the investment performance of the Fund would diminish compared with what it would have been if these investment techniques were not used. Moreover, even if the Manager is correct in its forecasts, there is a risk that the swap position may correlate imperfectly with the price of the asset or liability being hedged. The Bond Fund will enter into swap transactions only when the Manager believes it would be in the best interests of the Fund's shareholders to do so. Depending on the circumstances, gains from a swap transaction can be treated either as taxable ordinary income or as short- or long-term capital gains. Future Developments . ( Bond Fund only) The Bond Fund may take advantage of opportunities in options and futures contracts and options on futures contracts and any other derivatives which are not presently contemplated for use by the Fund or which are not currently available but which may be developed, to the extent such opportunities are both consistent with the Fund's investment objective and legally permissible for the Fund. Before the Bond Fund enters into such transactions or makes any such investment, appropriate disclosure will be provided in the Fund's Prospectus or this Statement of Additional Information. Stand-By Commitments . (Both Funds) Each Fund may acquire "stand-by commitments" with respect to Municipal Bonds held in its portfolio. Under a stand-by commitment, the Fund obligates a broker, dealer or bank to repurchase, at the Fund's option, specified securities at a specified price and, in this respect, stand-by commitments are comparable to put options. The exercise of a stand-by commitment, therefore, is subject to the ability of the seller to make payment on demand. Each Fund will acquire stand-by commitments solely to facilitate its portfolio liquidity and does not intend to exercise its rights thereunder for trading purposes. Each Fund may pay for stand-by commitments if such action is deemed necessary, thus increasing to a degree the cost of the underlying Municipal Bond and similarly decreasing such security's yield to investors. Gains realized in connection with stand-by commitments will be taxable. The Bond Fund also may acquire call options on specific Municipal Bonds. The Bond Fund generally would purchase these call options to protect the Fund from the issuer of the related Municipal Bond redeeming, or other holder of the call option from calling away, the Municipal Bond before maturity. The sale by the Bond Fund of a call option that it owns on a specific Municipal Bond could result in the receipt of taxable income by the Fund. Forward Commitments . (Both Funds) Each Fund may purchase or sell Municipal Bonds and other securities on a forward commitment, when-issued or delayed-delivery basis, which means that delivery and payment take place in the future after the date of the commitment to purchase. The payment obligation and the interest rate receivable on a forward commitment, when-issued or delayed-delivery security are fixed when the Fund enters into the commitment, but the Fund does not make payment until it receives delivery from the counterparty. A Fund will commit to purchase such securities only with the intention of actually acquiring the securities, but the Fund may sell these securities before the settlement date if it is deemed advisable. The Fund will segregate permissible liquid assets at least equal at all times to the amount of the Fund's purchase commitments. Municipal Bonds and other securities purchased on a forward commitment, when-issued or delayed-delivery basis are subject to changes in value (generally changing in the same way, i.e., appreciating when interest rates decline and depreciating when interest rates rise) based upon the public's perception of the creditworthiness of the issuer and changes, real or anticipated, in the level of interest rates. Securities purchased on a forward commitment, when-issued or delayed-delivery basis may expose the Fund to risks because they may experience such fluctuations prior to their actual delivery. Purchasing securities on a forward commitment, when-issued or delayed-delivery basis can involve the additional risk that the yield available in the market when the delivery takes place actually may be higher than that obtained in the transaction itself. Purchasing securities on a forward commitment, when-issued or delayed-delivery basis when the Fund is fully or almost fully invested may result in greater potential fluctuation in the value of the Fund's net assets and its net asset value per share. Certain Investment Considerations and Risks General . ( Money Market Fund only) The Fund attempts to increase yields by trading to take advantage of short-term market variations. This policy is expected to result in high portfolio turnover but should not adversely affect the Fund since the Fund usually does not pay brokerage commissions when purchasing short-term obligations. The value of the portfolio securities held by a Fund will vary inversely to changes in prevailing interest rates. Thus, if interest rates have increased from the time a security was purchased, such security, if sold, might be sold at a price less than its purchase cost. Similarly, if interest rates have declined from the time a security was purchased, such security, if sold, might be sold at a price greater than its purchase cost. In either instance, if the security was purchased at face value and held to maturity, no gain or loss would be realized. (Both Funds) Even though interest-bearing securities are investments which promise a stable stream of income, the prices of such securities are inversely affected by changes in interest rates and, therefore, are subject to the risk of market price fluctuations. Certain securities that may be purchased by the Bond Fund, such as those with interest rates that fluctuate directly or indirectly based on multiples of a stated index, are designed to be highly sensitive to changes in interest rates and can subject the holders thereof to extreme reductions of yield and possibly loss of principal. The values of fixed-income securities also may be affected by changes in the credit rating or financial condition of the issuing entities. Once the rating of the Bond Fund portfolio security has been changed, the Fund will consider all circumstances deemed relevant in determining whether to continue to hold the security. The Money Market Fund seeks to maintain a stable $1.00 share price, while the net asset value of the Bond Fund generally will not be stable and should fluctuate based upon changes in the value of its respective portfolio securities. Securities in which the Bond Fund invests may earn a higher level of current income than certain shorter-term or higher quality securities which generally have greater liquidity, less market risk and less fluctuation in market value. Investing in Municipal Bonds . (Both Funds) Each Fund may invest more than 25% of the value of its total assets in Municipal Bonds which are related in such a way that an economic, business or political development or change affecting one such security also would affect the other securities; for example, securities the interest upon which is paid from revenues of similar types of projects. As a result, each Fund may be subject to greater risk as compared to a comparable fund that does not follow this practice. Certain provisions in the Internal Revenue Code of 1986, as amended (the "Code"), relating to the issuance of Municipal Bonds may reduce the volume of Municipal Bonds qualifying for Federal tax exemption. One effect of these provisions could be to increase the cost of the Municipal Bonds available for purchase by the Fund and thus reduce available yield. Shareholders should consult their tax advisers concerning the effect of these provisions on an investment in a Fund. Proposals that may restrict or eliminate the income tax exemption for interest on Municipal Bonds may be introduced in the future. If any such proposal were enacted that would reduce the availability of Municipal Bonds for investment by a Fund so as to adversely affect Fund shareholders, the Fund would reevaluate its investment objective and policies and submit possible changes in the Fund's structure to shareholders for their consideration. If legislation were enacted that would treat a type of Municipal Bond as taxable, the Funds would treat such security as a permissible Taxable Investment within the applicable limits set forth herein. Investing in New York Municipal Bonds . (Both Funds) Since each Fund is concentrated in securities issued by New York or entities within New York, an investment in a Fund may involve greater risk than investments in certain other types of municipal funds. You should consider carefully the special risks inherent in the Funds' investment in New York Municipal Bonds. You should review the information in "Appendix A," which provides a brief summary of special investment considerations and risk factors relating to investing in New York Municipal Bonds. Lower Rated Bonds . ( Bond Fund only) The Bond Fund may invest up to 20% of the value of its net assets in higher yielding (and, therefore, higher risk) debt securities rated below investment grade by the Rating Agencies (commonly known as "high yield" or "junk" bonds). They may be subject to greater risks with respect to the issuing entity and to greater market fluctuations than certain lower yielding, higher rated municipal securities. See "Appendix B" for a general description of the Rating Agencies' ratings of municipal securities. Although ratings may be useful in evaluating the safety of interest and principal payments, they do not evaluate the market value risk of these bonds. The Fund will rely on the Manager's judgment, analysis and experience in evaluating the creditworthiness of an issuer. The market values of many of these bonds tend to be more sensitive to economic conditions than are higher rated securities. These bonds generally are considered by the Rating Agencies to be, on balance, predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation and generally will involve more credit risk than securities in the higher rating categories. Because there is no established retail secondary market for many of these securities, the Fund anticipates that such securities could be sold only to a limited number of dealers or institutional investors. To the extent a secondary trading market for these bonds does exist, it generally is not as liquid as the secondary market for higher rated securities. The lack of a liquid secondary market may have an adverse impact on market price and yield and a Fund's ability to dispose of particular issues when necessary to meet its liquidity needs or in response to a specific economic event such as a deterioration in the creditworthiness of the issuer. The lack of a liquid secondary market for certain securities also may make it more difficult for a Fund to obtain accurate market quotations for purposes of valuing its portfolio and calculating its net asset value. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of these securities. In such cases, the manager’s judgment may play a greater role in valuation because less reliable objective data may be available. These bonds may be particularly susceptible to economic downturns. An economic recession could adversely affect the ability of the issuers of lower rated bonds to repay principal and pay interest thereon which would increase the incidence of default of such securities. It is likely that any economic recession also would disrupt severely the market for such securities and have an adverse impact on their value. The Fund may acquire these bonds during an initial offering. Such securities may involve special risks because they are new issues. The Fund does not have any arrangements with any person concerning the acquisition of such securities, and the Manager will review carefully the credit and other characteristics pertinent to such new issues. The credit risk factors pertaining to lower rated securities also apply to lower rated zero coupon, pay-in-kind and step-up securities. In addition to the risks associated with the credit rating of the issuers, the market price of these securities may be very volatile during the period no interest is paid. Investment Restrictions Money Market Fund . The Fund's investment objective and its policy to invest normally at least 80% of its net assets (plus any borrowings for investment purposes) in New York Municipal Bonds (or other instruments with similar economic characteristics) are fundamental policies, which cannot be changed without approval by the holders of a majority (as defined in the 1940 Act) of the Fund's outstanding voting securities. In addition, the Fund has adopted investment restrictions numbered 1 through 9 as fundamental policies. Investment restrictions numbered 10 and 11 are not fundamental policies and may be changed by vote of a majority of the Fund's Board members at any time. The Money Market Fund may not: 1. Purchase securities other than Municipal Bonds and Taxable Investments as those terms are defined above and in the Prospectus. 2. Borrow money, except to the extent permitted under the 1940 Act (which currently limits borrowing to no more than 33-1/3% of the value of the Fund’s total assets). 3. Sell securities short or purchase securities on margin. 4. Underwrite the securities of other issuers, except that the Money Market Fund may bid separately or as part of a group for the purchase of Municipal Bonds directly from an issuer for its own portfolio to take advantage of the lower purchase price available. 5. Purchase or sell real estate, real estate investment trust securities, commodities or commodity contracts, or oil and gas interests, but this shall not prevent the Fund from investing in Municipal Bonds secured by real estate or interests therein. 6. lend any securities or make loans to others, except to the extent permitted under the 1940 Act (which currently limits such loans to no more than 33-1/3% of the value of the Fund’s total assets). For purposes of this Investment Restriction, the purchase of debt obligations (including acquisitions of loans, loan participations or other forms of debt instruments) and the entry into repurchase agreements shall not constitute loans by the Fund. Any loans of portfolio securities will be made according to guidelines established by the SEC and the Fund’s Board. 7. Invest more than 25% of its total assets in the securities of issuers in any single industry; provided that there shall be no such limitation on the purchase of Municipal Bonds and, for temporary defensive purposes, securities issued by domestic banks and obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. 8. Purchase more than 10% of the voting securities of any issuer or invest in companies for the purpose of exercising control. 9. purchase securities of other investment companies, except to the extent permitted under the 1940 Act. 10. Pledge, hypothecate, mortgage or otherwise encumber its assets, except to the extent necessary to secure permitted borrowings. 11. Enter into repurchase agreements providing for settlement in more than seven days after notice or purchase securities which are illiquid, if, in the aggregate, more than 10% of the value of the Fund's net assets would be so invested. Bond Fund . The Bond Fund's investment objective and its policy to invest normally at least 80% of its net assets (plus any borrowings for investment purposes) in New York Municipal Bonds (or other instruments with similar economic characteristics) are fundamental policies, which cannot be changed without approval by the holders of a majority (as defined in the 1940 Act) of the Fund's outstanding voting securities. In addition, the Fund has adopted investment restrictions numbered 1 through 7 as fundamental policies. Investment restrictions numbered 8 through 12 are not fundamental policies and may be changed, by vote of a majority of the Fund's Board members at any time. The Bond Fund may not: 1. Invest more than 25% of its total assets in the securities of issuers in any single industry; provided that there shall be no such limitation on the purchase of Municipal Bonds and, for temporary defensive purposes, securities issued by domestic banks and obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. 2. Borrow money, except to the extent permitted under the 1940 Act (which currently limits borrowing to no more than 33-1/3% of the value of the Fund's total assets). For purposes of this investment restriction, the entry into options, forward contracts, futures contracts, including those relating to indices, and options on futures contracts or indices shall not constitute borrowing. 3. Purchase or sell real estate, commodities or commodity contracts, or oil and gas interests, but this shall not prevent the Fund from investing in Municipal Bonds secured by real estate or interests therein, or prevent the Fund from purchasing and selling options, forward contracts, futures contracts, including those relating to indices, and options on futures contracts or indices. 4. Underwrite the securities of other issuers, except that the Fund may bid separately or as part of a group for the purchase of Municipal Bonds directly from an issuer for its own portfolio to take advantage of the lower purchase price available, and except to the extent the Fund may be deemed an underwriter under the Securities Act of 1933, as amended, by virtue of disposing of portfolio securities. 5. Make loans to others, except through the purchase of debt obligations and the entry into repurchase agreements; however, the Fund may lend its portfolio securities in an amount not to exceed 33-1/3% of the value of its total assets. Any loans of portfolio securities will be made according to guidelines established by the SEC and the Fund's Board. 6. Issue any senior security (as such term is defined in Section 18(f) of the 1940 Act), except to the extent that the activities permitted in Investment Restrictions numbered 2, 3 and 10 may be deemed to give rise to a senior security. 7. Sell securities short or purchase securities on margin, but the Fund may make margin deposits in connection with transactions in options, forward contracts, futures contracts, including those relating to indices, and options on futures contracts or indices. 8. Purchase securities other than Municipal Bonds and Taxable Investments and those arising out of transactions in futures and options or as otherwise provided in the Prospectus. 9. Invest in securities of other investment companies, except to the extent permitted under the 1940 Act. 10. Pledge, hypothecate, mortgage or otherwise encumber its assets, except to the extent necessary to secure permitted borrowings and to the extent related to the deposit of assets in escrow in connection with the purchase of securities on a when-issued or delayed-delivery basis and collateral and initial or variation margin arrangements with respect to options, futures contracts, including those related to indices, and options on futures contracts or indices. 11. Enter into repurchase agreements providing for settlement in more than seven days after notice or purchase securities which are illiquid (which securities could include participation interests (including municipal lease/purchase agreements) that are not subject to the demand feature described in the Prospectus, and floating and variable rate demand obligations as to which the Fund cannot exercise the demand feature as described in the Prospectus on less than seven days' notice and as to which there is no secondary market), if, in the aggregate, more than 15% of its net assets would be so invested. 12. Invest in companies for the purpose of exercising control. Both Funds . For purposes of Investment Restriction No. 7 with respect to the Money Market Fund , and Investment Restriction No. 1 with respect to the Bond Fund , industrial development bonds, where the payment of principal and interest is the ultimate responsibility of companies within the same industry, are grouped together as an "industry." If a percentage restriction is adhered to at the time of investment, a later change in percentage resulting from a change in values or assets will not constitute a violation of such restriction. With respect to Investment Restriction No. 2, however, if borrowings exceed 33-1/3% of the value of the Fund's total assets as a result of a change in values or assets, the Fund must take steps to reduce such borrowings at least to the extent of such excess. MANAGEMENT OF THE FUNDS Board of the Company Board's Oversight Role in Management . The Board's role in management of each Fund is oversight. As is the case with virtually all investment companies (as distinguished from operating companies), service providers to the Fund, primarily the Manager and its affiliates, have responsibility for the day-to-day management of the Fund, which includes responsibility for risk management (including management of investment performance and investment risk, valuation risk, issuer and counterparty credit risk, compliance risk and operational risk). As part of its oversight, the Board, acting at its scheduled meetings, or the Chairman, acting between Board meetings, regularly interacts with and receives reports from senior personnel of service providers, including the Manager's Chief Investment Officer (or a senior representative of his office), the Fund's and the Manager's Chief Compliance Officer and portfolio management personnel. The Board's audit committee (which consists of all Board members) meets during its scheduled meetings, and between meetings the audit committee chair maintains contact, with the Fund's independent registered public accounting firm and the Manager's Chief Financial Officer. The Board also receives periodic presentations from senior personnel of the Manager or its affiliates regarding risk management generally, as well as periodic presentations regarding specific operational, compliance or investment areas, such as business continuity, anti-money laundering, personal trading, valuation, credit, investment research and securities lending. The Board has adopted policies and procedures designed to address certain risks to the Fund. In addition, the Manager and other service providers to the Fund have adopted a variety of policies, procedures and controls designed to address particular risks to the Fund. Different processes, procedures and controls are employed with respect to different types of risks. However, it is not possible to eliminate all of the risks applicable to the Fund. The Board also receives reports from counsel to the Manager and the Board's own independent legal counsel regarding regulatory compliance and governance matters. The Board's oversight role does not make the Board a guarantor of the Fund's investments or activities. Board Composition and Leadership Structure . The 1940 Act requires that at least 40% of the Fund's Board members not be "interested persons" (as defined in the 1940 Act) of the Fund and as such are not affiliated with the Manager ("Independent Board members"). To rely on certain exemptive rules under the 1940 Act, a majority of the Fund's Board members must be Independent Board members, and for certain important matters, such as the approval of investment advisory agreements or transactions with affiliates, the 1940 Act or the rules thereunder require the approval of a majority of the Independent Board members. Currently, all of the Fund's Board members, including the Chairman of the Board, are Independent Board members, although the Board could in the future determine to add Board members who are not Independent Board members. The Board has determined that its leadership structure, in which the Chairman of the Board is not affiliated with the Manager, is appropriate in light of the services that the Manager and its affiliates provide to the Fund and potential conflicts of interest that could arise from these relationships. Information About Each Board Member's Experience, Qualifications, Attributes or Skills . Board members of the Fund, together with information as to their positions with the Fund, principal occupations and other board memberships for the past five years, are shown below. Name (Age) Position with Fund (Since) Principal Occupation During Past 5 Years Other Public Company Board Memberships During Past 5 Years Joseph S. DiMartino (66) Chairman of the Board (1995) Corporate Director and Trustee CBIZ (formerly, Century Business Services, Inc.), a provider of outsourcing functions for small and medium size companies, Director (1997 - present) The Newark Group, a provider of a national market of paper recovery facilities, paperboard mills and paperboard converting plants, Director (2000 - present) Sunair Services Corporation, a provider of certain outdoor-related services to homes and business, Director (2005 - 2009) David W. Burke (74) Board Member (1994) Corporate Director and Trustee N/A William Hodding Carter III (75) Board Member (2006) Professor of Leadership & Public Policy, University of North Carolina, Chapel Hill (2006-present) President and Chief Executive Officer of the John S. and James L. Knight Foundation (1998 - 2006) N/A Gordon J. Davis (69) Board Member (1995) Partner in the law firm of Dewey & LeBoeuf, LLP Consolidated Edison, Inc., a utility company, Director (1997 - present) The Phoenix Companies, Inc., a life insurance company, Director (2000 - present) Joni Evans (68) Board Member (1985) Chief Executive Officer, www.wowOwow.com, an online community dedicated to women's conversations and publications Principal, Joni Evans Ltd. (publishing) Senior Vice President of the William Morris Agency (1994-2006) N/A Ehud Houminer (70) Board Member (2006) Executive-in-Residence at the Columbia Business School, Columbia University Avnet, Inc., an electronics distributor, Director (1993 - present) Richard C. Leone (70) Board Member (2006) President of The Century Foundation (formerly, The Twentieth Century Fund, Inc.), a tax exempt research foundation engaged in the study of economic, foreign policy and domestic issues Partnership for a Secure America, Director Hans C. Mautner (72) Board Member (2006) President – International Division and an Advisory Director of Simon Property Group, a real estate investment company Chairman and Chief Executive Officer of Simon Global Limited N/A Robin A. Melvin (46) Board Member (2006) Director, Boisi Family Foundation, a private family foundation that supports youth-serving organizations that promote the self sufficiency of youth from disadvantaged circumstances (1995 - present) Senior Vice President, Mentor, a national non-profit youth mentoring organization (1992 - 2005) N/A Burton N. Wallack (59) Board Member (1991) President and Co-owner of Wallack Management Company, a real estate management company N/A John E. Zuccotti (73) Board Member (2006) Chairman of Brookfield Financial Properties, Inc. Senior Counsel of Weil, Gotshal & Manges, LLP Emeritus Chairman of the Real Estate Board of New York Wellpoint, Inc., a health benefits company, Director (2005 - present) Each Board member has been a Board member of other Dreyfus mutual funds for over 10 years. Additional information about each Board member follows (supplementing the information provided in the table above) that describes some of the specific experiences, qualifications, attributes or skills that each Board member possesses which the Board believes has prepared them to be effective Board members. The Board believes that the significance of each Board member's experience, qualifications, attributes or skills is an individual matter (meaning that experience that is important for one Board member may not have the same value for another) and that these factors are best evaluated at the board level, with no single Board member, or particular factor, being indicative of board effectiveness. However, the Board believes that Board members need to have the ability to critically review, evaluate, question and discuss information provided to them, and to interact effectively with Fund management, service providers and counsel, in order to exercise effective business judgment in the performance of their duties; the Board believes that its members satisfy this standard. Experience relevant to having this ability may be achieved through a Board member's educational background; business, professional training or practice ( e.g. , medicine, accounting or law), public service or academic positions; experience from service as a board member (including the Board of the Fund) or as an executive of investment funds, public companies or significant private or not-for-profit entities or other organizations; and/or other life experiences. The charter for the Board's nominating committee contains certain other factors considered by the committee in identifying and evaluating potential Board member nominees. To assist them in evaluating matters under federal and state law, the Board members are counseled by their own independent legal counsel, who participates in Board meetings and interacts with the Fund, and also may benefit from information provided by the Manager's counsel; counsel to the Fund and to the Board have significant experience advising funds and fund board members. The Board and its committees have the ability to engage other experts as appropriate. The Board evaluates its performance on an annual basis. · Joseph S. DiMartino - Mr. DiMartino has been the Chairman of the Board of the funds in the Dreyfus Family of Funds for over 15 years. From 1971 through 1994, Mr. DiMartino served in various roles as an employee of Dreyfus (prior to its acquisition by a predecessor of The Bank of New York Mellon Corporation ("BNY Mellon") in August 1994 and related management changes), including portfolio manager, President, Chief Operating Officer and a Director. He ceased being an employee or Director of Dreyfus by the end of 1994. From July 1995 to November 1997, Mr. DiMartino served as Chairman of the Board of The Noel Group, a public buyout firm; in that capacity, he helped manage, acquire, take public and liquidate a number of operating companies. · David W. Burke – Mr. Burke was previously a member of the Labor-Management Committee for the U.S. Department of Commerce, Executive Secretary to the President's Advisory Committee on Labor-Management Policy, Secretary to the Governor of the State of New York and Chief of Staff for Senator Edward M. Kennedy. In addition, Mr. Burke previously served as the President of CBS News and as the Chairman of the federal government's Broadcasting Board of Governors, which oversees the Voice of America, Radio Free Europe, Radio Free Asia and other U.S. government-sponsored international broadcasts. Mr. Burke also was a Vice President and Chief Operating Officer of Dreyfus (prior to its acquisition by a predecessor of BNY Mellon in August 1994 and related management changes). · William Hodding Carter III – Mr. Carter served as spokesman of the Department of State and as Assistant Secretary of State for Public Affairs in the Carter administration. Mr. Carter held the Knight Chair in Journalism at the University of Maryland College of Journalism from 1995 to 1998, and is now the University Professor of Leadership and Public Policy at the University of North Carolina at Chapel Hill. Mr. Carter's work as a journalist includes serving as Chief Correspondent on "Frontline," public television's flagship public affairs series. · Gordon J. Davis – Mr. Davis is a partner in the law firm of Dewey & LeBoeuf LLP, where his practice involves complex real estate, land use development and related environmental matters. Prior to joining the firm, Mr. Davis served as a Commissioner and member of the New York City Planning Commission, and as Commissioner of Parks and Recreation for the City of New York. Mr. Davis was a co-founder of the Central Park Conservancy and the founding Chairman of Jazz at the Lincoln Center for the Performing Arts in New York City. He has also served as President of Lincoln Center. Mr. Davis also served on the board of Dreyfus (prior to its acquisition by a predecessor of BNY Mellon in August 1994 and related management changes). · Joni Evans – Ms. Evans has more than 35 years experience in the publishing industry, serving as Publisher of Random House, Inc., President and Publisher of Simon & Schuster, Inc. and, most recently, Senior Vice President of the William Morris Agency, Inc.'s literary department until 2006. Ms. Evans is a member of the Young Presidents' Organization and the Women's Forum, and is a founding member of The Committee of 200 and Women's Media Group. · Ehud Houminer – Mr. Houminer currently serves on Columbia Business School's Board of Overseers. Prior to his association with Columbia Business School beginning in 1991, Mr. Houminer held various senior financial, strategic and management positions at Philip Morris Companies Inc., including serving as Senior Corporate Vice President for Corporate Planning, and as President and Chief Executive Officer of Philip Morris USA, Inc. (now part of Altria Group, Inc.). Mr. Houminer is Chairman of the Business School Board and a Trustee of Ben Gurion University. · Richard C. Leone – Mr. Leone currently serves as President of the Century Foundation (formerly named the Twentieth Century Fund), a non-profit public policy research foundation. Prior to that, Mr. Leone served as Chairman of the Port Authority of New York and New Jersey and as State Treasurer of New Jersey. Mr. Leone also has served as President of the New York Mercantile Exchange and was a Managing Director at Dillon Read and Co., an investment banking firm. He is a member of the Council on Foreign Relations and the National Academy of Social Insurance. · Hans C. Mautner – Mr. Mautner is President of the International Division of Simon Property Group, Inc. and Chairman of Simon Global Limited. Mr. Mautner previously served as Vice Chairman of the Board of Directors of Simon Property Group, Inc., Chairman of the Board of Directors and Chief Executive Officer of Corporate Property Investors and as a General Partner of Lazard Frères. In addition, Mr. Mautner is currently Chairman of Simon Ivanhoe BV/SARL and Chairman of Gallerie Commerciali Italia S.p.A. · Robin A. Melvin – Ms. Melvin is currently a Director of the Boisi Family Foundation, a private family foundation that supports organizations serving the needs of youth from disadvantaged circumstances. In that role she also manages the Boisi Family Office, providing the primary interface with all investment managers, legal advisors and other service providers to the family. She has also served in various roles with MENTOR, a national non-profit youth mentoring advocacy organization, including Executive Director of the New York City affiliate, Vice President of the national affiliate network, Vice President of Development, and, immediately prior to her departure, Senior Vice President in charge of strategy. Prior to that, Ms. Melvin served as an investment banker with Goldman Sachs Group, Inc. · Burton N. Wallack – Mr. Wallack is President and co-owner of Wallack Management Company, a real estate management company that provides financial reporting and management services. · John E. Zuccotti – Mr. Zuccotti is senior counsel to the law firm of Weil, Gotshal & Manges LLP, focusing his legal practice on real estate, land use and development. Prior to that, Mr. Zuccotti served as First Deputy Mayor of the City of New York and as Chairman of the New York City Planning Commission. In addition, Mr. Zuccotti has served as a member of the boards of Empire BlueCross BlueShield, Applied Graphics Technologies, Inc. and Olympia & York Companies (U.S.A.), and as Chairman of the board of directors of Brookfield Financial Properties, Inc. since 1996. Additional Information About the Board and its Committees. Board members are elected to serve for an indefinite term. Each Fund has standing audit, nominating and compensation committees, each comprised of its Board members who are not "interested persons" of the Fund, as defined in the 1940 Act. The function of the audit committee is (i) to oversee the Fund's accounting and financial reporting processes and the audits of the Fund's financial statements and (ii) to assist in the Board's oversight of the integrity of the Fund's financial statements, the Fund's compliance with legal and regulatory requirements and the independent registered public accounting firm's qualifications, independence and performance. Each Fund's nominating committee, among other things, is responsible for selecting and nominating persons as members of the Board for elections or appointment by the Board and for election by shareholders. The nominating committee will consider recommendations for nominees from shareholders submitted to the Secretary of the Fund, c/o The Dreyfus Corporation Legal Department, 200 Park Avenue, 8 th Floor East, New York, New York 10166, which includes information regarding the recommended nominee as specified in the nominating committee charter. The function of the compensation committee is to establish the appropriate compensation for serving on the Board. The Bond Fund also has a standing pricing committee comprised of any one Board member. The Money Market Fund has a standing evaluation committee comprised of any one Board member. The function of the pricing committee and evaluation committee is to assist in valuing the Fund's investments. The Fund's audit committee met four times during the fiscal year ended May 31, 2010. The Fund's compensation committee met once during the fiscal year ended May 31, 2010. The Fund's pricing and nominating committees did not meet during the fiscal year ended May 31, 2010. The table below indicates the dollar range of each Board member's ownership of Fund shares and shares of other funds in the Dreyfus Family of Funds for which he or she is a Board member, in each case as of December 31, 2009. Name of Board Member Money Market Fund Bond Fund Aggregate Holdings of Funds in the Dreyfus Family of Funds for which Responsible as a Board Member Joseph S. DiMartino None None Over $100,000 David W. Burke None None None William Hodding Carter III None None $10,001 - $50,000 Gordon J. Davis None None Over $100,000 Joni Evans None None None Ehud Houminer None None Over $100,000 Richard C. Leone None None Over $100,000 Hans C. Mautner None None Over $100,000 Robin A. Melvin None None $50,001-$100,000 Burton N. Wallack None None None John E. Zuccotti None None Over $100,000 Effective January 1, 2010, each Fund pays its Board members its allocated portion of an annual retainer of $65,000 and a fee of $7,500 per meeting (with a minimum of $500 per meeting and per telephone meeting) attended for the Fund and 15 other funds (comprising 28 portfolios) in the Dreyfus Family of Funds, and reimburses them for their expenses. Prior to January 1, 2010, each Fund paid its Board members its allocated portion of an annual retainer of $50,000 and a fee of $6,500 per meeting (with a minimum $500 per telephone meeting) attended. The Chairman of the Board receives an additional 25% of such compensation. Emeritus Board members are entitled to receive an annual retainer of one-half the amount paid as a retainer at the time the Board member became Emeritus and a per meeting attended fee of one-half the amount paid to Board members. The aggregate amount of compensation paid to each Board member, for each Fund for the fiscal year ended May 31, 2010, and the amount paid by all funds in the Dreyfus Family of Funds for which such person was a Board member (the number of portfolios of such funds is set forth in parenthesis next to each Board member's total compensation) during the year ended December31,2009, were as follows: Aggregate Estimated Compensation From the Fund * Name of Board Member Money Market Fund Bond Fund Total Compensation From the Funds and Fund Complex Paid To Board Member (**) Joseph S. DiMartino $873,427 (192) David W. Burke $395,190 (95) William Hodding Carter III $85,000 (31) Gordon J. Davis $139,192 (48) Joni Evans $88,100 (31) Arnold S. Hiatt + $31,750 (31) Ehud Houminer $221,500 (67) Richard C. Leone $88,600 (31) Hans C. Mautner $82,600 (31) Robin A. Melvin $88,600 (31) Burton N. Wallack $89,100 (31) John E. Zuccotti $88,100 (31) * Amount does not include the cost of office space, secretarial services and health benefits for the Chairman and expenses reimbursed to Board members for attending Board meetings, which in the aggregate amounted to $2,188 and $4,973 for the Money Market Fund and Bond Fund, respectively. ** Represents the number of separate portfolios comprising the investment companies in the Fund Complex, including the Fund, for which the Board member serves. † Emeritus Board member since May 26, 2007. Officers of the Company J BRADLEY J. SKAPYAK, President since January 2010 . Chief Operating Officer and a director of the Manager since June 2009. From April 2003 to June 2009, Mr. Skapyak was the head of the Investment Accounting and Support Department of Dreyfus. He is an officer of 76 investment companies (comprised of 170 portfolios) managed by the Manager. He is 51 years old and has been an employee of the Manager since February 1988. PHILLIP N. MAISANO, Executive Vice President since July 2007 . Chief Investment Officer, Vice Chair and a director of the Manager, and an officer of 76 investment companies (comprised of 170 portfolios) managed by the Manager. Mr. Maisano also is an officer and/or board member of certain other investment management subsidiaries of BNY Mellon, each of which is an affiliate of the Manager. He is 63 years old and has been an employee of the Manager since November 2006. Prior to joining the Manager, Mr. Maisano served as Chairman and Chief Executive Officer of EACM Advisors, an affiliate of the Manager, since August 2004. JAMES WINDELS, Treasurer since November 2001 . Director-Mutual Fund Accounting of the Manager, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 51 years old and has been an employee of the Manager since April 1985. MICHAEL A. ROSENBERG, Vice President and Secretary since August 2005 . Assistant General Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 50 years old and has been an employee of the Manager since October 1991. KIESHA ASTWOOD, Vice President and Assistant Secretary since January 2010 . Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. She is 37 years old and has been an employee of the Manager since July 1995. JAMES BITETTO, Vice President and Assistant Secretary since August 2005 . Senior Counsel of BNY Mellon and Secretary of the Manager, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 44 years old and has been an employee of the Manager since December 1996. JONI LACKS CHARATAN, Vice President and Assistant Secretary since August 2005 . Senior Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. She is 54 years old and has been an employee of the Manager since October 1988. JOSEPH M. CHIOFFI, Vice President and Assistant Secretary since August 2005 . Senior Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 48 years old and has been an employee of the Manager since June 2000. KATHLEEN DENICHOLAS, Vice President and Assistant Secretary since January 2010 . Senior Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. She is 35 years old and has been an employee of the Manager since February 2001. JANETTE E. FARRAGHER, Vice President and Assistant Secretary since August 2005 . Assistant General Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. She is 47 years old and has been an employee of the Manager since February 1984. JOHN B. HAMMALIAN, Vice President and Assistant Secretary since August 2005 . Managing Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 47 years old and has been an employee of the Manager since February 1991. M. CRISTINA MEISER, Vice President and Assistant Secretary since January 2010 . Senior Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by The Manager. She is 40 years old and has been an employee of The Manager since August 2001. ROBERT R. MULLERY, Vice President and Assistant Secretary since August 2005 . Managing Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 58 years old and has been an employee of the Manager since May 1986. JEFF PRUSNOFSKY, Vice President and Assistant Secretary since August 2005 . Managing Counsel of BNY Mellon, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 45 years old and has been an employee of the Manager since October 1990. RICHARD S. CASSARO, Assistant Treasurer since January 2008 . Senior Accounting Manager – Money Market and Municipal Bond Funds of the Manager, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 51 years old and has been an employee of the Manager since October 1982. GAVIN C. REILLY, Assistant Treasurer since December 2005 . Tax Manager of the Investment Accounting and Support Department of the Manager, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 42 years old and has been an employee of the Manager since April 1991. ROBERT S. ROBOL, Assistant Treasurer since August 2003 . Senior Accounting Manager – Fixed Income Funds of the Manager, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 46 years old and has been an employee of the Manager since October 1988. ROBERT SALVIOLO , Assistant Treasurer since July 2007 . Senior Accounting Manager – Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since June 1989. ROBERT SVAGNA , Assistant Treasurer since August 2005 . Senior Accounting Manager – Equity Funds of the Manager, and an officer of 77 investment companies (comprised of 195 portfolios) managed by the Manager. He is 43 years old and has been an employee of the Manager since November 1990. NATALIA GRIBAS, Anti-Money Laundering Compliance Officer since July 2010 . Anti-Money Laundering Compliance Officer of the Distributor, and the Anti-Money Laundering Compliance Officer of 73 investment companies (comprised of 191 portfolios) managed by the Manager. She is 40 years old and has been an employee of the Distributor since September 2008. JOSEPH W. CONNOLLY, Chief Compliance Officer since September 2004 . Chief Compliance Officer of the Manager and The Dreyfus Family of Funds 77 investment companies, comprised of 195 portfolios). From November 2001 through March 2004, Mr. Connolly was first Vice-President, Mutual Fund Servicing for Mellon Global Securities Services. In that capacity, Mr. Connolly was responsible for managing Mellon's Custody, Fund Accounting and Fund Administration services to third-party mutual fund clients. He is 53 years old and has served in various capacities with the Manager since 1980, including manager of the firm's Fund Accounting Department from 1997 through October 2001. The address of each Board member and officer of the Company is 200 Park Avenue, New York, New York 10166. Each Fund's Board members and officers, as a group, owned less than1% of the Fund's outstanding voting securities on September 14, 2010. As of September 14, 2010, no known shareholders of the Bond Fund owned 5% or more shares of beneficial interest. The following shareholders are known by the Money Market Fund to own of record 5% or more of the Money Market Fund’s shares of beneficial interest outstanding on September 10, 2010: Pershing LLC, P.O. Box 2052, Jersey City, NJ 07303-2052 (16.38%), and Larry A. Wohl, 860 Park Avenue, New York, NY 10075-1831 (6.30%). MANAGEMENT ARRANGEMENTS Investment Adviser . The Manager is a wholly-owned subsidiary of BNY Mellon, a global financial services company focused on helping clients move and manage their financial assets, operating in 34 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing asset and wealth management, asset servicing, issuer and treasury services through a worldwide client-focused team. The Manager provides management services pursuant to separate Management Agreements (respectively, the "Agreement") between each Fund and the Manager. As to each Fund, the Agreement is subject to annual approval by (i) the Fund's Board, or (ii) vote of a majority (as defined in the 1940 Act) of the Fund's outstanding voting securities, provided that in either event the continuance of the Agreement also is approved by a majority of such Fund's Board members who are not "interested persons" (as defined in the 1940 Act) of the Fund or of the Manager, by vote cast in person at a meeting called for the purpose of voting on such approval. As to each Fund, the Agreement is terminable without penalty, on 60 days' notice, by the Fund's Board or by vote of the holders of a majority of its outstanding voting securities, or, upon not less than 90 days' notice, by the Manager. Each Agreement will terminate automatically, as to the relevant Fund, in the event of its assignment (as defined in the 1940 Act). The following persons are officers and/or directors of the Manager: Jonathan Baum, Chair of the Board and Chief Executive Officer; J. Charles Cardona, President and a director; Diane P. Durnin, Vice Chair and a director; Phillip N. Maisano, Chief Investment Officer, Vice Chair and a director; Bradley J. Skapyak, Chief Operating Officer and a director; Dwight Jacobsen, Executive Vice President and a director; Patrice M. Kozlowski, Senior Vice President-Corporate Communications; Gary E. Abbs, Vice President-Tax; Jill Gill, Vice President-Human Resources; Joanne S. Huber, Vice President-Tax; Anthony Mayo, Vice President-Information Systems; John E. Lane, Vice President; Jeanne M. Login, Vice President; Gary Pierce, Controller; Joseph W. Connolly, Chief Compliance Officer; James Bitetto, Secretary; and Mitchell E. Harris, Jeffrey D. Landau, Cyrus Taraporevala and Scott E. Wennerholm, directors. The Funds, the Manager and the Distributor each have adopted a Code of Ethics, that permits its personnel, subject to such Code of Ethics, to invest in securities that may be purchased or held by a Fund. The Code of Ethics subjects the personal securities transactions of the Manager's employees to various restrictions to ensure that such trading does not disadvantage any fund advised by the Manager. In that regard, portfolio managers and other investment personnel of the Manager must preclear and report their personal securities transactions and holdings, which are reviewed for compliance with the Code of Ethics and are also subject to the oversight of BNY Mellon's Investment Ethics Committee (the "Committee"). Portfolio managers and other investment personnel of the Manager who comply with the preclearance and disclosure procedures of the Code of Ethics and the requirements of the Committee may be permitted to purchase, sell or hold securities which also may be or are held in fund(s) they manage or for which they otherwise provide investment advice. The Manager maintains office facilities on behalf of each Fund, and furnishes statistical and research data, clerical help, accounting, data processing, bookkeeping and internal auditing and certain other required services to the Fund. The Manager may pay the Distributor for shareholder services from the Manager's own assets, including past profits but not including the management fee paid by the Fund. The Distributor may use part or all of such payments to pay certain financial institutions (which may include banks), securities dealers ("Selected Dealers") and other industry professionals (collectively, "Service Agents") in respect of these services. The Manager also may make such advertising and promotional expenditures, using its own resources, as it from time to time deems appropriate. Portfolio Managers . The Manager manages each Fund's portfolio of investments in accordance with the stated policies of the Fund, subject to the approval of the Fund's Board. The Manager is responsible for investment decisions and provides each Fund with portfolio managers who are authorized by its Board to execute purchases and sales of securities. The M oney Market Fund's portfolio managers are Joseph Irace, Colleen Meehan and Bill Vasiliou. The Bond Fund ' s portfolio managers are Thomas Casey and David Belton, each of whom is employed by Dreyfus and Standish Mellon Asset Management Company LLC ("Standish"), a subsidiary of BNY Mellon and an affiliate of Dreyfus. The Manager also maintains a research department with a professional staff of portfolio managers and securities analysts who provide research services for each Fund and for other funds advised by the Manager. ( Money Market Fund only) In managing the Fund, Dreyfus will draw upon BNY Mellon Cash Investment Strategies ("CIS"). CIS is a division of Dreyfus that provides investment and credit risk management services and approves all money market fund eligible securities for the Fund and for other investment companies and accounts managed by Dreyfus or its affiliates that invest primarily in money market instruments. CIS, through a team of professionals who contribute a combination of industry analysis and fund-specific expertise, monitors all issuers approved for investment by such investment companies and other accounts by analyzing third party inputs, such as financial statements and media sources, ratings releases and company meetings, as well as internal research. CIS investment and credit professionals also utilize inputs and guidance from BNY Mellon's central Risk Management Department (the "Risk Department") as part of the investment process. These inputs and guidance focus primarily on concentration levels and market and credit risks and are based upon independent analysis done by the Risk Department relating to fundamental characteristics such as the sector, sovereign, tenor and rating of investments or potential investment. The Risk Department also may perform stress and scenario testing on various money market type portfolios advised by CIS or BNY Mellon and its other affiliates, and provides various periodic and ad-hoc reporting to the investment and credit professionals at CIS. In the event a security is removed from the "approved" credit list after being purchased by the Fund, the Fund is not required to sell that security. Portfolio Manager Compensation . ( Bond Fund only) The portfolio managers are compensated by Standish and not by the Fund. Portfolio manager compensation is comprised of a market-based salary, an annual incentive plan and a long-term incentive plan. Portfolio managers are eligible to join the BNY Mellon deferred compensation program, and the BNY Mellon defined contribution pension plan, pursuant to which employer contributions are invested in BNY Mellon common stock. Under the annual incentive plan, portfolio managers may receive a bonus of up to two times their annual salary, at the discretion of management. In determining the amount of the bonus, significant consideration is given to the portfolio manager's one-year (weighted 50%) and three-year (weighted 50%) pre-tax performance compared to that of appropriate peer groups. Other factors considered are individual qualitative performance, asset size and revenue growth of the product managed by the portfolio manager. Under the long-term incentive plan, restricted BNY Mellon stock and phantom Standish stock is awarded based on the discretion of management based on individual performance and contributions to the BNY Mellon organization. Additional Information About Portfolio Managers . The following table lists the number and types of other accounts advised by the Fund's primary portfolio manager and assets under management in those accounts as of the end of the Fund's fiscal year: Portfolio Manager Registered Investment Company Accounts Assets Managed Pooled Accounts Assets Managed Other Accounts Assets Managed Thomas Casey $0 $0 2 David Belton 3 $670 million None $0 None $0 None of the accounts are subject to a performance-based advisory fee. The dollar range of the Fund shares beneficially owned by the primary portfolio manager are as follows as of the end of the Fund's fiscal year: Portfolio Manager Fund Name Dollar Range of Fund Shares Beneficially Owned Thomas Casey Dreyfus New York Tax Exempt Bond Fund, Inc. None David Belton None Portfolio managers may manage multiple accounts for a diverse client base, including mutual funds, separate accounts (assets managed on behalf of institutions such as pension funds, insurance companies and foundations), bank common trust accounts and wrap fee programs ("Other Accounts"). Potential conflicts of interest may arise because of Dreyfus' management of the Fund and Other Accounts. For example, conflicts of interest may arise with both the aggregation and allocation of securities transactions and allocation of limited investment opportunities, as Dreyfus may be perceived as causing accounts it manages to participate in an offering to increase Dreyfus' overall allocation of securities in that offering, or to increase Dreyfus' ability to participate in future offerings by the same underwriter or issuer. Allocations of bunched trades, particularly trade orders that were only partially filled due to limited availability, and allocation of investment opportunities generally, could raise a potential conflict of interest, as Dreyfus may have an incentive to allocate securities that are expected to increase in value to preferred accounts. Initial public offerings, in particular, are frequently of very limited availability. Additionally, portfolio managers may be perceived to have a conflict of interest if there are a large number of Other Accounts, in addition to the Fund, that they are managing on behalf of Dreyfus. Dreyfus periodically reviews each portfolio manager's overall responsibilities to ensure that he or she is able to allocate the necessary time and resources to effectively manage the Fund. In addition, Dreyfus could be viewed as having a conflict of interest to the extent that Dreyfus or its affiliates and/or portfolio managers have a materially larger investment in Other Accounts than their investment in the Fund. Other Accounts may have investment objectives, strategies and risks that differ from those of the Fund. For these or other reasons, the portfolio manager may purchase different securities for the Fund and the Other Accounts, and the performance of securities purchased for the Fund may vary from the performance of securities purchased for Other Accounts. The portfolio manager may place transactions on behalf of Other Accounts that are directly or indirectly contrary to investment decisions made for the Fund, which could have the potential to adversely impact the Fund, depending on market conditions. Conflicts of interest similar to those described above arise when portfolio managers are employed by a sub-investment adviser or are dual employees of the Manager and an affiliated entity and such portfolio managers also manage other accounts. A potential conflict of interest may be perceived to arise if transactions in one account closely follow related transactions in another account, such as when a purchase increases the value of securities previously purchase by the other account, or when a sale in one account lowers the sale price received in a sale by a second account. Dreyfus' goal is to provide high quality investment services to all of its clients, while meeting Dreyfus' fiduciary obligation to treat all clients fairly. Dreyfus has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, that it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, Dreyfus monitors a variety of areas, including compliance with Fund guidelines, the allocation of IPOs, and compliance with the Dreyfus Code of Ethics. Furthermore, senior investment and business personnel at Dreyfus periodically review the performance of the portfolio managers for Dreyfus-managed funds. BNY Mellon and its affiliates, including Dreyfus and others involved in the management, sales, investment activities, business operations or distribution of the Fund, are engaged in businesses and have interests other than that of managing the Fund. These activities and interests include potential multiple advisory, transactional, financial and other interests in securities, instruments and companies that may be directly or indirectly purchased or sold by the Fund and the Fund's service providers, which may cause conflicts that could disadvantage the Fund. BNY Mellon and its affiliates may have deposit, loan and commercial banking or other relationships with the issuers of securities purchased by the Fund. BNY Mellon has no obligation to provide to Dreyfus or the Fund, or effect transactions on behalf of the Fund in accordance with, any market or other information, analysis, or research in its possession. Consequently, BNY Mellon (including, but not limited to, BNY Mellon's central Risk Management Department) may have information that could be material to the management of the Fund and may not share that information with relevant personnel of Dreyfus. Accordingly, Dreyfus has informed management of the Fund that in making investment decisions it does not obtain or use material inside information that BNY Mellon or its affiliates may possess with respect to such issuers. Dreyfus will make investment decisions for the Fund as it believes is in the best interests of the Fund. Investment decisions made for the Fund may differ from, and may conflict with, investment decisions made for other investment companies and accounts advised by Dreyfus or BNY Mellon and its other affiliates. Actions taken with respect to such other investment companies or accounts may adversely impact the Fund, and actions taken by the Fund may benefit BNY Mellon or other investment companies or accounts (including the Fund) advised by Dreyfus or BNY Mellon and its other affiliates. Regulatory restrictions (including, but not limited to, those related to the aggregation of positions among different other investment companies and accounts) and internal BNY Mellon policies, guidance or limitations (including, but not limited to, those related to the aggregation of positions among all fiduciary accounts managed or advised by BNY Mellon and all its affiliates (including Dreyfus) and the aggregated exposure of such accounts) may restrict investment activities of the Fund. While the allocation of investment opportunities among the Fund and other investment companies and accounts advised by Dreyfus or BNY Mellon and its other affiliates may raise potential conflicts because of financial, investment or other interests of BNY Mellon or its personnel, Dreyfus will make allocation decisions consistent with the interests of the Fund and the other investment companies and accounts and not solely based on such other interests. Expenses . All expenses incurred in the operation of a Fund are borne by that Fund, except to the extent specifically assumed by the Manager. The expenses borne by each Fund include without limitation, the following: taxes, interest, loan commitment fees, interest and distributions paid on securities sold short, brokerage fees and commissions, if any, fees of Board members who are not officers, directors, employees or holders of 5% or more of the outstanding voting securities of the Manager or its affiliates, SEC fees, state Blue Sky qualification fees, advisory fees, charges of custodians, transfer and dividend disbursing agents' fees, certain insurance premiums, industry association fees, outside auditing and legal expenses, costs of maintaining the Fund's existence, costs of independent pricing services, costs attributable to investor services (including, without limitation, telephone and personnel expenses), costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and distribution to existing shareholders, costs of shareholders' reports and meetings, and any extraordinary expenses. Pursuant to separate Shareholder Services Plans, the Money Market Fund and Bond Fund each bear certain allocated expenses for shareholder servicing. See "Service Plan and Shareholder Services Plans." All fees and expenses are accrued daily and deducted before the declaration of dividends to shareholders. As compensation for the Manager's services, the Money Market Fund has agreed to pay the Manager a monthly management fee at the annual rate of 0.50% of the value of the Fund's average daily net assets. As compensation for the Manager's services, the Bond Fund has agreed to pay the Manager a monthly management fee at the annual rate of 0.60% of the value of its average daily net assets. For the last three fiscal years of the Funds, the management fees paid by each Fund were as follows: Management Fee Paid Money Market Fund Bond Fund The Manager has agreed that if in any fiscal year the aggregate expenses of a Fund, exclusive of taxes, brokerage, interest on borrowings and (with the prior written consent of the necessary state securities commissions) extraordinary expenses, but including the management fee, exceed 1½% of the value of such Fund's average net assets for the fiscal year, the Fund may deduct from the payment to be made to the Manager under the Agreement, or the Manager will bear, the excess expense. Such deduction or payment, if any, will be estimated daily, and reconciled and effected or paid, as the case may be, on a monthly basis. The aggregate of the fees payable to the Manager by a Fund is not subject to reduction as the value of the Fund's net assets increase. Distributor . The Distributor, a wholly-owned subsidiary of the Manager located at 200 Park Avenue, New York, New York 10166, serves as each Fund's distributor on a best efforts basis pursuant to an agreement with the Fund which is renewable annually. The Distributor also serves as distributor for the other funds in the Dreyfus Family of Funds and BNY Mellon Funds Trust. Before June 30, 2007, the Distributor was known as "Dreyfus Service Corporation." The Manager or the Distributor may provide cash payments out of its own resources to financial intermediaries that sell shares of the Funds or provide other services. Such payments are separate from any shareholder services fees or other expenses paid by a Fund to those intermediaries. Because those payments are not made by you or the Funds, a Fund's total expense ratio will not be affected by any such payments. These additional payments may be made to Service Agents, including affiliates, that provide shareholder servicing, sub-administration, record-keeping and/or sub-transfer agency services, marketing support and/or access to sales meetings, sales representatives and management representatives of the Service Agent. Cash compensation also may be paid from Manager's or the Distributor's own resources to Service Agents for inclusion of the Fund on a sales list, including a preferred or select sales list or in other sales programs. These payments sometimes are referred to as "revenue sharing." From time to time, the Manager or the Distributor also may provide cash or non-cash compensation to Service Agents in the form of: occasional gifts; occasional meals, tickets, or other entertainment; support for due diligence trips; educational conference sponsorship; support for recognition programs; and other forms of cash or non-cash compensation permissible under broker-dealer regulations. In some cases, these payments or compensation may create an incentive for a Service Agent to recommend or sell shares of the Funds to you. Please contact your Service Agent for details about any payments it may receive in connection with the sale of Fund shares or the provision of services to the Funds. Transfer and Dividend Disbursing Agent and Custodian. Dreyfus Transfer, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of the Manager, located at 200 Park Avenue, New York, New York 10166, is each Fund's transfer and dividend disbursing agent. Under a separate transfer agency agreement with each Fund, the Transfer Agent arranges for the maintenance of shareholder account records for the Fund, the handling of certain communications between shareholders and the Fund and the payment of dividends and distributions payable by the Fund. For these services, the Transfer Agent receives a monthly fee computed on the basis of the number of shareholder accounts it maintains for the Fund during the month, and is reimbursed for certain out-of-pocket expenses. Each Fund also makes payments to certain financial intermediaries, including affiliates, who provide sub-administration, recordkeeping and/or sub-transfer agency services to beneficial owners of Fund shares. The Bank of New York Mellon (the "Custodian"), an affiliate of the Manager's, located at One Wall Street, New York, New York 10286, is each Fund's custodian. The Custodian has no part in determining the investment policies of the Funds or which securities are to be purchased or sold by the Funds. Under a separate custody agreement with each Fund, the Custodian holds the Fund's securities and keeps all necessary accounts and records. For its custody services, the Custodian receives a monthly fee from the Fund based on the market value of the Fund's assets held in custody and receives certain securities transaction charges. HOW TO BUY SHARES General . Fund shares may be purchased through the Distributor or Service Agents that have entered into service agreements with the Distributor. Fund shares are sold without a sales charge. You may be charged a fee if you elect transactions in Fund shares through a Service Agent. You will be charged a fee if an investment check is returned unpayable. Share certificates are issued only upon your written request. No certificates are issued for fractional shares. It is not recommended that either Fund be used as a vehicle for Keogh, IRA or other qualified retirement plans. Each Fund reserves the right to reject any purchase order. Neither Fund will establish an account for a "foreign financial institution," as that term is defined in Department of the Treasury rules implementing section 312 of the USA PATRIOT Act of 2001. Foreign financial institutions include: foreign banks (including foreign branches of U.S. depository institutions); foreign offices of U.S. securities broker-dealers, futures commission merchants, and mutual funds; non-U.S. entities that, if they were located in the United States, would be securities broker-dealers, futures commission merchants or mutual funds; and non-U.S. entities engaged in the business of currency dealer or exchanger or money transmitter. Neither Fund will accept cash, travelers' checks, or money orders as payment for shares. The minimum initial investment in each Fund is $2,500, or $1,000 if you are a client of a Service Agent which maintains an omnibus account in the Fund and has made an aggregate minimum initial purchase for its customers of $2,500. Subsequent investments must be at least $100. The initial investment must be accompanied by the Account Application. For full-time or part-time employees of the Manager or any of its affiliates or subsidiaries, directors of the Manager, Board members of a fund advised by the Manager, including members of a Fund's Board, or the spouse or minor child of any of the foregoing, the minimum initial investment is $1,000. For full-time or part-time employees of the Manager or any of its affiliates or subsidiaries who elect to have a portion of their pay directly deposited into their Fund accounts, the minimum initial investment is $50. Shares of each Fund are offered without regard to the minimum initial investment requirements to Board members of a fund advised by the Manager, including members of a Fund's Board, who elect to have all or a portion of their compensation for serving in that capacity automatically invested in the Fund. Each Fund reserves the right to vary the initial and subsequent investment minimum requirements at any time. Fund shares also are offered without regard to the minimum initial investment requirements through Dreyfus- Automatic Asset Builder ® , Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan pursuant to the Dreyfus Step Program described under "Shareholder Services." These services enable you to make regularly scheduled investments and may provide you with a convenient way to invest for long-term financial goals. You should be aware, however, that periodic investment plans do not guarantee a profit and will not protect an investor against loss in a declining market. Management understands that some Service Agents may impose certain conditions on their clients which are different from those described in the Funds' Prospectus and this Statement of Additional Information, and, to the extent permitted by applicable regulatory authority, may charge their clients direct fees. You should consult your Service Agent in this regard. As discussed under "Management Arrangements – Distributor," Service Agents may receive revenue sharing payments from the Manager or the Distributor. The receipt of such payments could create an incentive for a Service Agent to recommend or sell shares of the Funds instead of other mutual funds where such payments are not received. Please contact your Service Agent for details about any payments it may receive in connection with the sale of Fund shares or the provision of services to the Funds. Shares of the Money Market Fund are sold on a continuous basis at the net asset value per share next determined after an order in proper form and Federal Funds (monies of member banks within the Federal Reserve System which are held on deposit at a Federal Reserve Bank) are received by the Transfer Agent or other entity authorized to receive orders on behalf of the Fund. If you do not remit Federal Funds, your payment must be converted into Federal Funds. This usually occurs within one business day of receipt of a bank wire or within two business days of receipt of a check drawn on a member bank of the Federal Reserve System. Checks drawn on banks which are not members of the Federal Reserve System may take considerably longer to convert into Federal Funds. Prior to receipt of Federal Funds, your money will not be invested. The Money Market Fund's net asset value per share is determined as of 12:00 Noon, Eastern time, on each day that the New York Stock Exchange is open for regular business. Net asset value per share is computed by dividing the value of the Money Market Fund's net assets (i.e., the value of its assets less liabilities) by the total number of shares outstanding. See "Determination of Net Asset Value." If your payments into the Money Market Fund are received in or converted into Federal Funds by 12:00 Noon, Eastern time, by the Transfer Agent, you will receive the dividend declared that day. If your payments are received in or converted into Federal Funds after 12:00 Noon, Eastern time, by the Transfer Agent, you will begin to accrue dividends on the following business day. Qualified institutions may place telephone orders for the purchase of Money Market Fund shares. These orders will become effective at the price determined at 12:00 Noon, Eastern time, and the shares purchased will receive the dividend on Fund shares declared on that day if the telephone order is placed by 12:00 Noon, Eastern time, and Federal Funds are received by 4:00 p.m., Eastern time, on that day. Shares of the Bond Fund are sold on a continuous basis at the net asset value per share next determined after an order in proper form is received by the Transfer Agent or other entity authorized to receive orders on behalf of the Fund. The Bond Fund's net asset value per share is determined as of the close of trading on the floor of the New York Stock Exchange (usually 4:00 p.m., Eastern time) on each day the New York Stock Exchange is open for regular business. For purposes of computing net asset value per share of the Bond Fund , certain options and futures contracts may be valued 15 minutes after the close of trading on the floor of the New York Stock Exchange. Net asset value per share is computed by dividing the value of the Fund's net assets (i.e., the value of its assets less liabilities) by the total number of shares outstanding. For information regarding the methods employed in valuing Fund investments, see "Determination of Net Asset Value." Using Federal Funds . ( Money Market Fund only) The Transfer Agent or the Fund may attempt to notify you upon receipt of checks drawn on banks that are not members of the Federal Reserve System as to the possible delay in conversion into Federal Funds and may attempt to arrange for a better means of transmitting the money. If you are a customer of a Selected Dealer and your order to purchase Fund shares is paid for other than in Federal Funds, the Selected Dealer, acting on your behalf, will complete the conversion into, or itself advance, Federal Funds generally on the business day following receipt of your order. The order is effective only when so converted and received by the Transfer Agent. An order for the purchase of Fund shares placed by you with sufficient Federal Funds or cash balance in your brokerage account with a Selected Dealer will become effective on the day that the order, including Federal Funds, is received by the Transfer Agent. Dreyfus TeleTransfer Privilege . (Both Funds) You may purchase shares by telephone or online if you have checked the appropriate box and supplied the necessary information on the Account Application or have filed a Shareholder Services Form with the Transfer Agent. The proceeds will be transferred between the bank account designated in one of these documents and your Fund account. Only a bank account maintained in a domestic financial institution which is an Automated Clearing House ("ACH") member may be so designated. Dreyfus TeleTransfer purchase orders may be made at any time. If purchase orders are received by 4:00 p.m., Eastern time, on any day the Transfer Agent and the New York Stock Exchange are open for regular business, Fund shares will be purchased at the share price determined on that day. If purchase orders are made after 4:00 p.m., Eastern time, on any day the Transfer Agent and the New York Stock Exchange are open for regular business or made on Saturday, Sunday or any Fund holiday (e.g., when the New York Stock Exchange is not open for regular business), Fund shares will be purchased at the share price determined on the next business day following such purchase order. To qualify to use the Dreyfus TeleTransfer Privilege, the initial payment for the purchase of Fund shares must be drawn on, and redemption proceeds paid to, the same bank and account as are designated on the Account Application or Shareholder Services Form on file. If the proceeds of a particular redemption are to be sent to an account at any other bank, the request must be in writing and signature‑guaranteed. See "How to Redeem Shares‑‑Dreyfus TeleTransfer Privilege." Reopening an Account . You may reopen an account with a minimum investment of $100 without filing a new Account Application during the calendar year the account is closed or during the following calendar year, provided the information on the old Account Application is still applicable. SHAREHOLDER SERVICES PLANS The Money Market Fund and Bond Fund have adopted separate Shareholder Services Plans. Shareholder Services Plans . (Both Funds) Each Fund has adopted a separate Shareholder Services Plan, pursuant to which the Fund reimburses the Distributor an amount not to exceed an annual rate of 0.25% of the value of the Fund's average daily net assets for certain allocated expenses for the provision of certain services to such Fund's shareholders. The services provided may include personal services relating to shareholder accounts, such as answering shareholder inquiries regarding the Fund and providing reports and other information, and services related to the maintenance of shareholder accounts. A quarterly report of the amounts expended under the Shareholder Services Plan, and the purposes for which such expenditures were incurred, must be made to the respective Fund's Board for its review. In addition, the Shareholder Services Plan provides that material amendments of the Plan must be approved by the Board, and by the Board members who are not "interested persons" (as defined in the 1940 Act) of the Fund and have no direct or indirect financial interest in the operation of the Shareholder Services Plan, by vote cast in person at a meeting called for the purpose of considering such amendments. The Shareholder Services Plan is subject to annual approval by such vote of the Board members cast in person at a meeting called for the purpose of voting on the Shareholder Services Plan. The Shareholder Services Plan is terminable at any time by vote of a majority of the Board members who are not "interested persons" and who have no direct or indirect financial interest in the operation of the Shareholder Services Plan. For the fiscal year ended May 31, 2010, the Money Market Fund paid the Distributor $169,251, and the Bond Fund paid the Distributor $670,715, pursuant to the Fund's Shareholder Services Plan. HOW TO REDEEM SHARES General . Each Fund ordinarily will make payment for all shares redeemed within seven days after receipt by the Transfer Agent of a redemption request in proper form, except as provided by the rules of the SEC. However, if you have purchased Fund shares by check, by Dreyfus TeleTransfer Privilege or through Dreyfus- Automatic Asset Builder Ò and subsequently submit a written redemption request to the Transfer Agent, the Fund may delay sending the redemption proceeds (or delay the redemption of such shares in the case of the Money Market Fund ) for up to eight business days after the purchase of such shares. In addition, the Fund will not honor redemption checks under the Checkwriting Privilege, and will reject requests to redeem shares by wire or telephone, online or pursuant to the Dreyfus TeleTransfer Privilege, for a period of up to eight business days after receipt by the Transfer Agent of the purchase check, the Dreyfus TeleTransfer purchase or the Dreyfus- Automatic Asset Builder Ò order against which such redemption is requested. These procedures will not apply if your shares were purchased by wire payment, or if you otherwise have a sufficient collected balance in your account to cover the redemption request. Fund shares may not be redeemed until the Transfer Agent has received your Account Application. Checkwriting Privilege . (Both Funds) Each Fund provides redemption checks ("Checks") to investors automatically upon opening an account, unless you specifically refuse the Checkwriting Privilege by checking the applicable "No" box on the Account Application. The Checkwriting Privilege may be established for an existing account by a separate signed Shareholder Services Form. The Account Application or Shareholder Services Form must be manually signed by the registered owner(s). Checks are drawn on your Fund account and may be made payable to the order of any person in an amount of $500 or more. Potential fluctuations in the net asset value of the Bond Fund's shares should be considered in determining the amount of any Check drawn on an account in the Bond Fund . When a Check is presented to the Transfer Agent for payment, the Transfer Agent, as your agent, will cause the Fund to redeem a sufficient number of full or fractional shares in the investor's account to cover the amount of the Check. Dividends are earned until the Check clears. After clearance, a copy of the Check will be returned to you. You generally will be subject to the same rules and regulations that apply to checking accounts, although election of this Privilege creates only a shareholder‑transfer agent relationship with the Transfer Agent. You should date your Checks with the current date when you write them. Please do not postdate your Checks. If you do, the Transfer Agent will honor, upon presentment, even if presented before the date of the check, all postdated Checks which are dated within six months of presentment for payment, if they are otherwise in good order. Checks are free, but the Transfer Agent will impose a fee for stopping payment of a Check upon your request or if the Transfer Agent cannot honor a Check due to insufficient funds or other valid reason. If the amount of the Check is greater than the value of the shares in your account, the Check will be returned marked insufficient funds. Checks should not be used to close an account. Dreyfus TeleTransfer Privilege . (Both Funds) You may request by telephone or online that redemption proceeds be transferred between your Fund account and your bank account. Only a bank account maintained in a domestic financial institution which is an ACH member may be designated. You should be aware that if you have selected the Dreyfus TeleTransfer Privilege, any request for a Dreyfus TeleTransfer transaction will be effected through the ACH system unless more prompt transmittal specifically is requested. Redemption proceeds will be on deposit in your account at an ACH member bank ordinarily two business days after receipt of the redemption request. See "How to Buy SharesDreyfus TeleTransfer Privilege." Wire Redemption Privilege . (Both Funds) By using this Privilege, you authorize the Transfer Agent to act on telephone, letter or online redemption instructions from any person representing himself or herself to be you or a representative of your Service Agent, and reasonably believed by the Transfer Agent to be genuine. Ordinarily, the Money Market Fund will initiate payment for shares redeemed pursuant to this Privilege on the same business day if the Transfer Agent receives the redemption request in proper form prior to Noon on such day; otherwise the Money Market Fund will initiate payment on the next business day. The Bond Fund ordinarily will initiate payment for shares redeemed pursuant to this privilege on the next business day after receipt by the Transfer Agent of a redemption request in proper form. Redemption proceeds ($1,000 minimum) will be transferred by Federal Reserve wire only to the commercial bank account specified by you on the Account Application or the Shareholder Services Form, or to a correspondent bank if your bank is not a member of the Federal Reserve System. Fees ordinarily are imposed by such bank and borne by the investor. Immediate notification by the correspondent bank to your bank is necessary to avoid a delay in crediting the funds to your bank account. To change the commercial bank or account designated to receive redemption proceeds, a written request must be sent to the Transfer Agent. This request must be signed by each shareholder, with each signature guaranteed as described below under "Share Certificates; Signatures." Share Certificates; Signatures . (Both Funds) Any certificates representing Fund shares to be redeemed must be submitted with the redemption request. A fee may be imposed to replace lost or stolen certificates, or certificates that were never received. Written redemption requests must be signed by each shareholder, including each holder of a joint account, and each signature must be guaranteed. Signatures on endorsed certificates submitted for redemption also must be guaranteed. The Transfer Agent has adopted standards and procedures pursuant to which signature-guarantees in proper form generally will be accepted from domestic banks, brokers, dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations, as well as from participants in the New York Stock Exchange Medallion Signature Program, the Securities Transfer Agents Medallion Program ("STAMP"), and the Stock Exchanges Medallion Program. Guarantees must be signed by an authorized signatory of the guarantor, and "Signature-Guaranteed" must appear with the signature. The Transfer Agent may request additional documentation from corporations, executors, administrators, trustees or guardians, and may accept other suitable verification arrangements from foreign investors, such as consular verification. For more information with respect to signature-guarantees, please call one of the telephone numbers listed on the cover. Redemption Commitment . (Both Funds) Each Fund has committed itself to pay in cash all redemption requests by any shareholder of record of the Fund, limited in amount during any 90-day period to the lesser of $250,000 or 1% of the value of the Fund's net assets at the beginning of such period. Such commitment is irrevocable without the prior approval of the SEC. In the case of requests for redemption from the Fund in excess of such amount, each Fund's Board reserves the right to make payments in whole or in part in securities or other assets of the Fund in case of an emergency or any time a cash distribution would impair the liquidity of the Fund to the detriment of the existing shareholders. In such event, the securities would be valued in the same manner as the Fund's portfolio is valued. If the recipient sells such securities, brokerage charges might be incurred. Suspension of Redemptions . (Both Funds) The right of redemption may be suspended or the date of payment postponed (a) during any period when the New York Stock Exchange is closed (other than customary weekend and holiday closings), (b) when trading in the markets the Fund ordinarily utilizes is restricted, or when an emergency exists as determined by the SEC so that disposal of a Fund's investments or determination of its net asset value is not reasonably practicable, or (c) for such other periods as the SEC by order may permit to protect a Fund's shareholders. SHAREHOLDER SERVICES Fund Exchanges . (Both Funds) You may purchase, in exchange for shares of a Fund, shares of another fund in the Dreyfus Family of Funds, to the extent such shares are offered for sale in your state of residence. Shares of other funds purchased by exchange will be purchased on the basis of relative net asset value per share as follows: A. Exchanges for shares of funds offered without a sales load will be made without a sales load. B. Shares of funds purchased without a sales load may be exchanged for shares of other funds sold with a sales load, and the applicable sales load will be deducted. C. Shares of funds purchased with a sales load may be exchanged without a sales load for shares of other funds sold without a sales load. D. Shares of funds purchased with a sales load, shares of funds acquired by a previous exchange from shares purchased with a sales load, and additional shares acquired through reinvestment of dividends or distributions of any such funds (collectively referred to herein as "Purchased Shares") may be exchanged for shares of other funds sold with a sales load (referred to herein as "Offered Shares"), but if the sales load applicable to the Offered Shares exceeds the maximum sales load that could have been imposed in connection with the Purchased Shares (at the time the Purchased Shares were acquired), without giving effect to any reduced loads, the difference may be deducted. To accomplish an exchange under item D above, you must notify the Transfer Agent of your prior ownership of fund shares and your account number. To request an exchange, you or your Service Agent acting on your behalf must give exchange instructions to the Transfer Agent in writing, by telephone or online. The ability to issue exchange instructions by telephone and online is given to all Fund shareholders automatically, unless you check the applicable "No" box on the Account Application, indicating that you specifically refuse this privilege. By using this privilege, you authorize the Transfer Agent to act on telephonic and online instructions (including over the Dreyfus Express ® voice response telephone system) from any person representing himself or herself to be you and reasonably believed by the Transfer Agent to be genuine. Exchanges may be subject to limitations as to the amount involved or the number of exchanges permitted. Shares issued in certificate form are not eligible for telephone or online exchange. No fees currently are charged shareholders directly in connection with exchanges, although the Fund reserves the right, upon not less than 60 days' written notice, to charge shareholders a nominal administrative fee in accordance with rules promulgated by the SEC. To establish a personal retirement plan by exchange, shares of the fund being exchanged must have a value of at least the minimum initial investment required for the fund into which the exchange is being made. During times of drastic economic or market conditions, the Bond Fund may suspend Fund Exchanges temporarily without notice and treat exchange requests based on their separate components redemption orders with a simultaneous request to purchase the other fund's shares. In such a case, the redemption request would be processed at the Fund's next determined net asset value but the purchase order would be effective only at the net asset value next determined after the fund being purchased receives the proceeds of the redemption, which may result in the purchase being delayed. Dreyfus Auto-Exchange Privilege . (Both Funds) Dreyfus Auto-Exchange Privilege permits you to purchase (on a semi-monthly, monthly, quarterly, or annual basis), in exchange for shares of a Fund, shares of another fund in the Dreyfus Family of Funds, of which you are a shareholder. This Privilege is available only for existing accounts. Shares will be exchanged on the basis of relative net asset value as described above under "Fund Exchanges." Enrollment in or modification or cancellation of this Privilege is effective three business days following notification by you. You will be notified if your account falls below the amount designated to be exchanged under this Privilege. In this case, your account will fall to zero unless additional investments are made in excess of the designated amount prior to the next Auto-Exchange transaction. Shares held under IRA and other retirement plans are eligible for this Privilege. Exchanges of IRA shares may be made between IRA accounts and from regular accounts to IRA accounts, but not from IRA accounts to regular accounts. With respect to all other retirement accounts, exchanges may be made only among those accounts. Shareholder Services Forms and prospectuses for other funds in the Dreyfus Family of Funds may be obtained by calling 1-800-645-6561, or visiting www.dreyfus.com. Each Fund reserves the right to reject any exchange request in whole or in part. Shares may be exchanged only between accounts having certain identical identifying designations. The Fund Exchanges service or the Dreyfus Auto-Exchange Privilege may be modified or terminated at any time by a Fund upon notice to its shareholders. Dreyfus-Automatic Asset Builder ® . (Both Funds) Dreyfus- Automatic Asset Builder ® permits you to purchase Fund shares (minimum of $100 and maximum of $150,000 per transaction) at regular intervals selected by you. Fund shares are purchased by transferring funds from the bank account designated by you. Dreyfus Government Direct Deposit Privilege . (Both Funds) Dreyfus Government Direct Deposit Privilege enables you to purchase Fund shares (minimum of $100 and maximum of $50,000 per transaction) by having Federal salary, Social Security, or certain veterans', military or other payments from the U.S. Government automatically deposited into your Fund account. Dreyfus Payroll Savings Plan . (Both Funds) Dreyfus Payroll Savings Plan permits you to purchase Fund shares (minimum of $100 per transaction) automatically on a regular basis. Depending upon your employer's direct deposit program, you may have part or all of your paycheck transferred to your existing Dreyfus account electronically through the ACH system at each pay period. To establish a Dreyfus Payroll Savings Plan account, you must file an authorization form with your employer's payroll department. It is the sole responsibility of your employer to arrange for transactions under the Dreyfus Payroll Savings Plan. Dreyfus Step Program. (Both Funds) Dreyfus Step Program enables you to purchase Fund shares without regard to the Fund's minimum initial investment requirements through Dreyfus- Automatic Asset Builder ® , Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan. To establish a Dreyfus Step Program account, you must supply the necessary information on the Account Application and file the required authorization form(s) with the Transfer Agent. For more information concerning this Program, or to request the necessary authorization form(s), please call toll free 1-800-782-6620. You may terminate your participation in this Program at any time by discontinuing your participation in Dreyfus- Automatic Asset Builder, Dreyfus Government Direct Deposit Privilege or Dreyfus Payroll Savings Plan, as the case may be, as provided under the terms of such Privilege(s). Each Fund may modify or terminate this Program at any time. Dreyfus Dividend Options . (Both Funds) Dreyfus Dividend Sweep allows you to invest automatically your dividends or dividends and capital gain distributions, if any, from a Fund in shares of another fund in the Dreyfus Family of Funds, of which you are a shareholder. Shares of other funds purchased pursuant to this privilege will be purchased on the basis of relative net asset value per share as follows: A. Dividends and distributions paid by a fund may be invested without a sales load in shares of other funds offered without a sales load. B. Dividends and distributions paid by a fund that does not charge a sales load may be invested in shares of other funds sold with a sales load, and the applicable sales load will be deducted. C. Dividends and distributions paid by a fund that charges a sales load may be invested in shares of other funds sold with a sales load (referred to herein as "Offered Shares"), but if the sales load applicable to the Offered Shares exceeds the maximum sales load charged by the fund from which dividends or distributions are being swept (without giving effect to any reduced loads), the difference may be deducted. D. Dividends and distributions paid by a fund may be invested in shares of other funds that impose a contingent deferred sales charge ("CDSC") and the applicable CDSC, if any, will be imposed upon redemption of such shares. Dreyfus Dividend ACH permits you to transfer electronically dividends or dividends and capital gain distributions, if any, from a Fund to a designated bank account. Only an account maintained at a domestic financial institution which is an ACH member may be so designated. Banks may charge a fee for this service. Automatic Withdrawal Plan . (Both Funds) The Automatic Withdrawal Plan permits you to request withdrawal of a specified dollar amount (minimum of $50) on either a monthly or quarterly basis if you have a $5,000 minimum account. Withdrawal payments are the proceeds from sales of Fund shares, not the yield on the shares. If withdrawal payments exceed reinvested dividends and distributions, your shares will be reduced and eventually may be depleted. The Automatic Withdrawal Plan may be established by filing an Automatic Withdrawal Plan application with the Transfer Agent or by oral request from any of the authorized signatories on the account by calling 1-800-645-6561. The Automatic Withdrawal Plan may be terminated at any time by you, the Fund or the Transfer Agent. Shares for which certificates have been issued may not be redeemed through the Automatic Withdrawal Plan. DETERMINATION OF NET ASSET VALUE Amortized Cost Pricing . ( Money Market Fund only) The valuation of the Money Market Fund's portfolio securities is based upon their amortized cost, which does not take into account unrealized capital gains or losses. This involves valuing an instrument at its cost, and thereafter assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Fund would receive if it sold the instrument. The Fund's Board has established, as a particular responsibility within the overall duty of care owed to the Fund's investors, procedures reasonably designed to stabilize the Fund's price per share as computed for the purpose of purchases and redemptions at $1.00. Such procedures include review of the Fund's portfolio holdings by the Board, at such intervals as it deems appropriate, to determine whether the Fund's net asset value calculated by using available market quotations or market equivalents deviates from $1.00 per share based on amortized cost. Market quotations and market equivalents used in such review are obtained from an independent pricing service (the "Service") approved by the Board. The Service values the Fund's investments based on methods which include consideration of: yields or prices of municipal bonds of comparable quality, coupon, maturity and type; indications of values from dealers; and general market conditions. The Service also may employ electronic data processing techniques and/or a matrix system to determine valuations. The extent of any deviation between the Fund's net asset value based upon available market quotations or market equivalents and $1.00 per share based on amortized cost will be examined by the Board. If such deviation exceeds 1/2 of 1%, the Board promptly will consider what action, if any, will be initiated. In the event the Board determines that a deviation exists which may result in material dilution or other unfair results to investors or existing shareholders, it has agreed to take such corrective action as it regards as necessary and appropriate, including: selling portfolio instruments prior to maturity to realize capital gains or losses or to shorten average portfolio maturity; withholding dividends or paying distributions from capital or capital gains; redeeming shares in kind; or establishing a net asset value per share by using available market quotations or market equivalents. Valuation of Portfolio Securities . ( Bond Fund only) The investments of the Bond Fund are valued each business day by the Service approved by such Fund's Board. When, in the judgment of the Service, quoted bid prices for investments are readily available and are representative of the bid side of the market, these investments are valued at the mean between the quoted bid prices (as obtained by the Service from dealers in such securities) and asked prices (as calculated by the Service based upon its evaluation of the market for such securities). The value of other investments is determined by the Service based on methods which include consideration of: yields or prices of municipal bonds of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions. The Service may employ electronic data processing techniques and/or a matrix system to determine valuations. The Service's procedures are reviewed under the general supervision of the Fund's Board. If valuations for investments (received from the Service or otherwise) are not readily available, or are determined not to reflect accurately fair value, the Fund may value those investments at fair value as determined in accordance with the procedures approved by the Fund's Board. Fair value of investments may be done by the Fund's Board, its pricing committee or its valuation committee in good faith using such information deemed appropriate under the circumstances. The factors that may be considered in fair valuing a security include fundamental analytical data, the nature and duration of restrictions on disposition, an evaluation of the forces that influence the market in which the securities are purchased or sold, and public trading of similar securities of the issuers or comparable issuers. Using fair value to price investments may result in a value that is different from a security's most recent price and from prices used by other mutual funds to calculate their net asset values. The Fund's expenses and fees, including the management fees (reduced by the expense limitation, if any) and fees pursuant to the Shareholder Services Plan, as the case may be, are accrued daily and are taken into account for the purpose of determining the net asset value of such Fund's shares. New York Stock Exchange Closings . The holidays (as observed) on which the New York Stock Exchange is closed currently are: New Year's Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. PORTFOLIO TRANSACTIONS General . The Manager assumes general supervision over the placement of securities purchase and sale orders on behalf of the funds it manages. In cases where the Manager or fund employs a sub-adviser, the sub-adviser, under the supervision of the Manager, places orders on behalf of the applicable fund(s) for the purchase and sale of portfolio securities. Certain funds are managed by dual employees of the Manager and an affiliated entity in the Mellon organization. Funds managed by dual employees use the research and trading facilities, and are subject to the internal policies and procedures, of the affiliated entity. In this regard, the Manager places orders on behalf of those funds for the purchase and sale of securities through the trading desk of the affiliated entity, applying the written trade allocation procedures of such affiliate. The Manager (and where applicable, a sub-adviser or Dreyfus affiliate) generally has the authority to select brokers (for equity securities) or dealers (for fixed income securities) and the commission rates or spreads to be paid. Allocation of brokerage transactions, including their frequency, is made in the best judgment of the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) and in a manner deemed fair and reasonable to shareholders. The primary consideration in placing portfolio transactions is prompt execution of orders at the most favorable net price. In choosing brokers or dealers, the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) evaluates the ability of the broker or dealer to execute the particular transaction (taking into account the market for the security and the size of the order) at the best combination of price and quality of execution. In general, brokers or dealers involved in the execution of portfolio transactions on behalf of a fund are selected on the basis of their professional capability and the value and quality of their services. The Manager (and where applicable, a sub-adviser or Dreyfus affiliate) attempts to obtain best execution for the funds by choosing brokers or dealers to execute transactions based on a variety of factors, which may include, but are not limited to, the following: (i) price; (ii) liquidity; (iii) the nature and character of the relevant market for the security to be purchased or sold; (iv) the measured quality and efficiency of the broker's or dealer's execution; (v) the broker's or dealer's willingness to commit capital; (vi) the reliability of the broker or dealer in trade settlement and clearance; (vii) the level of counter-party risk (i.e., the broker's or dealer's financial condition); (viii) the commission rate or the spread; (ix) the value of research provided; (x) the availability of electronic trade entry and reporting links; and (xi) the size and type of order (e.g., foreign or domestic security, large block, illiquid security). In selecting brokers or dealers no factor is necessarily determinative; however, at various times and for various reasons, certain factors will be more important than others in determining which broker or dealer to use. Seeking to obtain best execution for all trades takes precedence over all other considerations. With respect to the receipt of research, the brokers or dealers selected may include those that supplement the Manager's (and where applicable, a sub-adviser's or Dreyfus affiliate's) research facilities with statistical data, investment information, economic facts and opinions. Such information may be useful to the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) in serving funds or accounts that it advises and, conversely, supplemental information obtained by the placement of business of other clients may be useful to the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) in carrying out its obligations to the funds. Information so received is in addition to, and not in lieu of, services required to be performed by the Manager (and where applicable, a sub-adviser or Dreyfus affiliate), and the Manager's (and where applicable, a sub-adviser's or Dreyfus affiliate's) fees are not reduced as a consequence of the receipt of such supplemental information. Although the receipt of such research services does not reduce the Manager's (and where applicable, a sub-adviser's or Dreyfus affiliate's) normal independent research activities, it enables it to avoid the additional expenses that might otherwise be incurred if it were to attempt to develop comparable information through its own staff. Investment decisions for the Fund are made independently from those of the other investment companies and accounts advised by Dreyfus and its affiliates. If, however, such other investment companies or accounts desire to invest in, or dispose of, the same securities as the Fund, Dreyfus or its affiliates may, but are not required to, aggregate (or "bunch") orders that are placed or received concurrently for more than one investment company or account and available investments or opportunities for sales will be allocated equitably to each. In some cases, this procedure may adversely affect the size of the position obtained for or disposed of by the Fund or the price paid or received by the Fund. When transactions are aggregated, but it is not possible to receive the same price or execution on the entire volume of securities purchased or sold, the various prices may be averaged, and the Fund will be charged or credited with the average price. Dreyfus may buy for the Fund securities of issuers in which other investment companies or accounts advised by Dreyfus or BNY Mellon and its other affiliates have made, or are making, an investment in securities that are subordinate or senior to the securities purchased for the Fund. For example, the Fund may invest in debt securities of an issuer at the same time that other investment companies or accounts are investing, or currently have an investment, in equity securities of the same issuer. To the extent that the issuer experiences financial or operational challenges which may impact the price of its securities and its ability to meet its obligations, decisions by BNY Mellon or its affiliates (including Dreyfus) relating to what actions are to be taken may raise conflicts of interests and Dreyfus or BNY Mellon and its other affiliates may take actions for certain accounts that have negative impacts on other advisory accounts, including the Fund. Portfolio turnover may vary from year to year as well as within a year. In periods in which extraordinary market conditions prevail, the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) will not be deterred from changing a Fund's investment strategy as rapidly as needed, in which case higher turnover rates can be anticipated which would result in greater brokerage expenses. The overall reasonableness of brokerage commissions paid is evaluated by the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) based upon its knowledge of available information as to the general level of commissions paid by other institutional investors for comparable services. Higher portfolio turnover rates usually generate additional brokerage commissions and transaction costs and any short-term gains realized from these transactions are taxable to shareholders as ordinary income. To the extent that a fund invests in foreign securities, certain of a fund's transactions in those securities may not benefit from the negotiated commission rates available to a fund for transactions in securities of domestic issuers. For funds that permit foreign exchange transactions, such transactions are made with banks or institutions in the interbank market at prices reflecting a mark-up or mark-down and/or commission. The Manager (and where applicable, a sub-adviser or Dreyfus affiliate) may deem it appropriate for one of its accounts to sell a security while another of its accounts is purchasing the same security. Under such circumstances, the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) may arrange to have the purchase and sale transactions effected directly between its accounts ("cross transactions"). Cross transactions will be effected in accordance with procedures adopted pursuant to Rule 17a-7 under the 1940 Act. ( Bond Fund only) Portfolio securities ordinarily are purchased from and sold to parties acting either as principal or agent. Newly-issued securities ordinarily are purchased directly from the issuer or from an underwriter; other purchases and sales usually are placed with those dealers from which it appears that the best price or execution will be obtained. Usually no brokerage commissions, as such, are paid by the fund for such purchases and sales, although the price paid usually includes an undisclosed compensation to the dealer acting as agent. The prices paid to underwriters of newly-issued securities usually include a concession paid by the issuer to the underwriter, and purchases of after-market securities from dealers ordinarily are executed at a price between the bid and asked price. When transactions are executed in the over-the-counter market (i.e., with dealers), the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) will typically deal with the primary market makers unless a more favorable price or execution otherwise is obtainable. ( Money Market Fund only) All portfolio transactions of each money market fund are placed on behalf of the fund by the Manager. Debt securities purchased and sold by a fund generally are traded on a net basis (i.e., without a commission) through dealers acting for their own account and not as brokers, or otherwise involve transactions directly with the issuer of the instrument. This means that a dealer makes a market for securities by offering to buy at one price and sell at a slightly higher price. The difference between the prices is known as a "spread." Other portfolio transactions may be executed through brokers acting as agent. A fund will pay a spread or commission in connection with such transactions. The Manager uses its best efforts to obtain execution of portfolio transactions at prices that are advantageous to a fund and at spreads and commission rates (if any) that are reasonable in relation to the benefits received. The Manager also places transactions for other accounts that it provides with investment advice. When more than one fund or account is simultaneously engaged in the purchase or sale of the same investment instrument, the prices and amounts are allocated in accordance with a formula considered by the Manager (and where applicable, a sub-adviser or Dreyfus affiliate) to be equitable to each fund or account. In some cases this system could have a detrimental effect on the price or volume of the investment instrument as far as a fund or account is concerned. In other cases, however, the ability of a fund or account to participate in volume transactions will produce better executions for the fund or account. When transactions are executed in the over-the-counter market (i.e., with dealers), the Manager will typically deal with the primary market makers unless a more favorable price or execution otherwise is obtainable. (Both Funds) For the fiscal years ended May 31, 2008, 2009 and 2010, neither Fund paid any brokerage commissions. Disclosure of Portfolio Holdings . (Both Funds) It is the policy of Dreyfus to protect the confidentiality of fund portfolio holdings and prevent the selective disclosure of non-public information about such holdings. Each fund, or its duly authorized service providers, publicly discloses its portfolio holdings in accordance with regulatory requirements, such as periodic portfolio disclosure in filings with the SEC. Each non-money market fund, or its duly authorized service providers, may publicly disclose its complete schedule of portfolio holdings at month- end, with a one-month lag, on the Dreyfus website at www.dreyfus.com. In addition, fifteen days following the end of each calendar quarter, each non-money market fund, or its duly authorized service providers, may publicly disclose on the website its complete schedule of portfolio holdings as of the end of such quarter. Each money market fund will disclose daily, on www.dreyfus.com, the fund's complete schedule of holdings as of the end of the previous business day. The schedule of holdings will remain on the website until the fund files its Form N-Q or Form N-CSR for the period that includes the date of the posted holdings. If a fund's portfolio holdings are released pursuant to an ongoing arrangement with any party, such fund must have a legitimate business purpose for doing so, and neither the fund, nor Dreyfus or its affiliates, may receive any compensation in connection with an arrangement to make available information about the fund's portfolio holdings. Funds may distribute portfolio holdings to mutual fund evaluation services such as Standard & Poor's, Morningstar or Lipper Analytical Services; due diligence departments of broker-dealers and wirehouses that regularly analyze the portfolio holdings of mutual funds before their public disclosure; and broker-dealers that may be used by the fund, for the purpose of efficient trading and receipt of relevant research, provided that: (a) the recipient does not distribute the portfolio holdings to persons who are likely to use the information for purposes of purchasing or selling fund shares or fund portfolio holdings before the portfolio holdings become public information; and (b) the recipient signs a written confidentiality agreement. Funds may also disclose any and all portfolio information to their service providers and others who generally need access to such information in the performance of their contractual duties and responsibilities and are subject to duties of confidentiality, including a duty not to trade on nonpublic information, imposed by law and/or contract. These service providers include the fund's custodians, independent registered public accounting firm, investment adviser, administrator, and each of their respective affiliates and advisers. Disclosure of a Fund's portfolio holdings may be authorized only by the Fund's Chief Compliance Officer, and any exceptions to this policy are reported quarterly to the Fund's Board. DIVIDENDS, DISTRIBUTIONS AND TAXES Both Funds . Management believes that each Fund has qualified for treatment as a "regulated investment company" under the Code for the fiscal year ended May 31, 2010. Each Fund intends to continue to so qualify if such qualification is in the best interests of its shareholders. As a regulated investment company, the Fund will pay no Federal income tax on net investment income and net realized capital gains to the extent that such income and gains are distributed to shareholders in accordance with applicable provisions of the Code. To qualify as a regulated investment company, the Fund must distribute to its shareholders at least 90% of its net income (consisting of net investment income from tax exempt obligations and taxable obligations, if any, and net short-term capital gains), and must meet certain asset diversification and other requirements. If the Fund does not qualify as a regulated investment company, it will be treated for tax purposes as an ordinary corporation subject to Federal income tax. The term "regulated investment company" does not imply the supervision of management or investment practices or policies by any government agency. Each Fund ordinarily declares dividends from its net investment income on each day the New York Stock Exchange is open for regular business. Earnings for Saturdays, Sundays and holidays are declared as dividends on the preceding business day for the Money Market Fund and on the next business day for the Bond Fund . With respect to the Bond Fund , Fund shares begin earning income dividends on the day following the date of purchase. Dividends usually are paid on the last business day (calendar day in the case of the Money Market Fund ) of each month, and automatically are reinvested in additional shares at net asset value or, at your option, paid in cash. If you redeem all shares in your account at any time during the month, all dividends to which you are entitled will be paid to you along with the proceeds of the redemption. If you are an omnibus accountholder and indicate in a partial redemption request that a portion of any accrued dividends to which such account is entitled belongs to an underlying accountholder who has redeemed all shares in his or her account, such portion of the accrued dividends will be paid to you along with the proceeds of the redemption. For the Bond Fund , distributions from net realized securities gains, if any, generally are declared and paid once a year, but the Fund may make distributions on a more frequent basis to comply with the distribution requirements of the Code, in all events in a manner consistent with the provisions of the 1940 Act. If you elect to receive dividends and distributions in cash, and your dividend or distribution check is returned to the Fund as undeliverable or remains uncashed for six months, the Fund reserves the right to reinvest such dividends or distributions and all future dividends and distributions payable to you in additional Fund shares at net asset value. No interest will accrue on amounts represented by uncashed distribution or redemption checks. If, at the close of each quarter of its taxable year, at least 50% of the value of a Fund's total assets consists of Federal tax exempt obligations, the Fund may designate and pay Federal exempt-interest dividends from interest earned on all such tax exempt obligations. Such exempt-interest dividends may be excluded by shareholders of the Fund from their gross income for Federal income tax purposes. Dividends derived from Taxable Investments, together with distributions from any net realized short-term securities gains, generally are taxable as ordinary income for Federal income tax purposes whether or not reinvested. Distributions from net realized long-term securities gains generally are taxable as long-term capital gains to a shareholder who is a citizen or resident of the United States, whether or not reinvested and regardless of the length of time the shareholder has held his or her shares. Tax-exempt interest attributable to certain private activity bonds is an item of tax preferences for purposes of the federal alternative minimum tax. The Money Market Fund currently does not invest in such securities. Federal regulations require that you provide a certified taxpayer identification number ("TIN") upon opening or reopening an account. See the Account Application for further information concerning this requirement. Failure to furnish a certified TIN to the Fund could subject you to a $50 penalty imposed by the Internal Revenue Service. Bond Fund Only . Any dividend or distribution paid shortly after an investor's purchase of Fund shares may have the effect of reducing the aggregate net asset value of the shares below the cost of investment. Such a dividend or distribution would be a return of capital in an economic sense, although taxable as described in the Prospectus. In addition, the Code provides that if a shareholder holds Fund shares for six months or less and has received an exempt-interest dividend with respect to such shares, any loss incurred on the sale of such shares will be disallowed to the extent of the exempt-interest dividend received. Ordinarily, gains and losses realized from portfolio transactions will be treated as capital gain or loss. However, all or a portion of any gain realized from the sale or other disposition of certain market discount bonds will be treated as ordinary income. In addition, all or a portion of any gain realized from engaging in "conversion transactions" (generally including certain transactions designed to convert ordinary income into capital gain) may be treated as ordinary income. Gain or loss, if any, realized by the Fund from certain financial futures and options transactions ("Section 1256 contracts") will be treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss. Gain or loss will arise upon exercise or lapse of Section 1256 contracts as well as from closing transactions. In addition, any Section 1256 contracts remaining unexercised at the end of the Fund's taxable year will be treated as sold for their then fair market value, resulting in additional gain or loss to the Fund characterized as described above. Offsetting positions held by the Fund involving certain futures or forward contracts or options transactions with respect to actively traded personal property may constitute "straddles." To the extent the straddle rules apply to positions established by the Fund, losses realized by the Fund may be deferred to the extent of unrealized gain in the offsetting position. In addition, short-term capital loss on straddle positions may be recharacterized as long-term capital loss, and long-term capital gains on straddle positions may be treated as short-term capital gains or ordinary income. Certain of the straddle positions held by the Fund may constitute "mixed straddles." The Fund may make one or more elections with respect to the treatment of "mixed straddles," resulting in different tax consequences. In certain circumstances, the provisions governing the tax treatment of straddles override or modify certain of the provisions discussed above. If the Bond Fund either (1) holds an appreciated financial position with respect to stock, certain debt obligations, or partnership interests ("appreciated financial position") and then enters into a short sale, futures, forward, or offsetting notional principal contract (collectively, a "Contract") with respect to the same or substantially identical property or (2) holds an appreciated financial position that is a Contract and then acquires property that is the same as, or substantially identical to, the underlying property, the Fund generally will be taxed as if the appreciated financial position were sold at its fair market value on the date the Fund enters into the financial position or acquires the property, respectively. Investment by the Fund in securities issued or acquired at a discount, or providing for deferred interest or for payment of interest in the form of additional obligations, such as zero coupon, pay-in-kind or step-up securities, could, under special tax rules, affect the amount, timing and character of distributions to shareholders by causing the Fund to recognize income prior to the receipt of cash payment. For example, the Fund could be required to take into account annually a portion of the discount (or deemed discount) at which the securities were issued and to distribute such portion in order to maintain its qualification as a regulated investment company. In such case, the Fund may have to dispose of securities which it might otherwise have continued to hold in order to generate cash to satisfy these distribution requirements. INFORMATION ABOUT THE FUNDS Each Fund share has one vote and, when issued and paid for in accordance with the terms of the offering, is fully paid and non‑assessable. Each Fund share is of one class and has equal rights as to dividends and in liquidation. Shares have no preemptive, subscription or conversion rights and are freely transferable. Unless otherwise required by the 1940 Act, ordinarily it will not be necessary for a Fund to hold annual meetings of shareholders. As a result, Fund shareholders may not consider each year the election of Board members or the appointment of auditors. However, the holders of at least 10% of the shares outstanding and entitled to vote may require the Fund to hold a special meeting of shareholders for purposes of removing a Board member from office. Fund shareholders may remove a Board member by the affirmative vote of a majority , in the case of the Bond Fund , or two-thirds, in the case of the Money Market Fund, of the Fund's outstanding voting shares. In addition, the Board will call a meeting of shareholders for the purpose of electing Board members if, at any time, less than a majority of the Board members then holding office have been elected by shareholders. The Money Market Fund is organized as unincorporated business trusts under the laws of the Commonwealth of Massachusetts. Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund in which they are shareholders. However, the Fund's Agreement and Declaration of Trust ("Trust Agreement") disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation or instruments entered into or executed by the Fund or a Trustee. The Trust Agreement provides for indemnification from the Fund's property for all losses and expenses of any shareholder held personally liable for the obligations of the Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations, a possibility which management believes is remote. Upon payment of any liability incurred by a Fund, the shareholder paying such liability will be entitled to reimbursement from the general assets of the Fund. The Fund intends to conduct its operations in such a way so as to avoid, as far as possible, ultimate liability of the shareholders for liabilities of the Fund. ( Bond Fund only) The Bond Fund is intended to be a long-term investment vehicle and is not designed to provide investors with a means of speculating on short-term market movements. A pattern of frequent purchases and exchanges can be disruptive to efficient portfolio management and, consequently, can be detrimental to the Fund's performance and its shareholders. If Fund management determines that an investor is following an abusive investment strategy, it may reject any purchase request, or terminate the investor's exchange privilege, with or without prior notice. Such investors also may be barred from purchasing shares of other funds in the Dreyfus Family of Funds. Accounts under common ownership or control may be considered as one account for purposes of determining a pattern of excessive or abusive trading. In addition, the Fund may refuse or restrict purchase or exchange requests for Fund shares by any person or group if, in the judgment of the Fund's management, the Fund would be unable to invest the money effectively in accordance with its investment objective and policies or could otherwise be adversely affected or if the Fund receives or anticipates receiving simultaneous orders that may significantly affect the Fund. If an exchange request is refused, the Fund will take no other action with respect to the Fund shares until it receives further instructions from the investor. While the Fund will take reasonable steps to prevent excessive short-term trading deemed to be harmful to the fund, it may not be able to identify excessive trading conducted through certain financial intermediaries or omnibus accounts. Although each Fund is offering only its own shares, it is possible that a Fund might become liable for any misstatement in the combined Prospectus or this Statement of Additional Information about the other Fund. The Board members with respect to each Fund have considered this factor in approving the use of the combined Prospectus and this Statement of Additional Information. Each Fund sends annual and semi‑annual financial statements to all its respective shareholders. COUNSEL AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038‑4982, as counsel for each Fund, has rendered its opinion as to certain legal matters regarding the due authorization and valid issuance of Fund shares being sold pursuant to the Prospectus. Ernst & Young LLP, 5 Times Square, New York, New York 10036, an independent registered public accounting firm, has been selected to serve as the independent registered public accounting firm for each Fund APPENDIX A RISK FACTORS—INVESTING IN NEW YORK MUNICIPAL BONDS The following information constitutes only a brief summary, does not purport to be a complete description, and is based primarily on information drawn from the Annual Information Statement of the State of New York (the "State") and any updates available as of the date of this Statement of Additional Information. While the Fund has not independently verified this information, it has no reason to believe that such information is not correct in all material respects. Economic Trends U.S. Economy . With the nation's recovery from the longest and most severe recession since the 1930s losing momentum, the Division of the Budget ("DOB") outlook for the national economy reflects uncertainty. Although the national labor market has added private sector jobs in each month in 2010 through July, through July 2010, the 153,000 jobs added in May-July were well below the 461,000 jobs added during the prior three months. Increased risk aversion and heightened market volatility add a significant degree of uncertainty to an environment already dominated by a historically weak labor market, tight credit, and ongoing deleveraging. The national economy, as measured by real U.S. Gross Domestic Product ("GDP"), is now projected to grow 2.9% in 2010, followed by growth of 3.1% in 2011. Despite fiscal and monetary policy actions of historic proportion, the nation's housing market remains weak. Although home prices are stabilizing and the rate at which homes are entering foreclosure appears to have peaked, the level of foreclosure activity continues to depress new home construction. The extension of the Federal home buyer's credit through April 2010 resulted in a brief spike in real estate activity during the second quarter, but appeared to do little more than spin up future sales, despite record low mortgage interest rates. After two consecutive months of growth, the first since January 2007, construction employment fell again in May, June and July 2010. The DOB estimates growth in private residential fixed investment at 1.6% for 2010, followed by growth of 9.9% for 2011. The housing market represents a critical economic sector due not only to the direct demand for labor and other building supplies, but also to the indirect demand it generates for autos and other consumer durables. A weakening labor market implies a weaker outlook for income growth as well. The DOB projects U.S. personal income growth of 3.4% for 2010, followed by growth of 4.1% for 2011. This forecast reflects wage growth of 2.3% projected for 2010 and 4.0% for 2011. Consistent with slow job and income growth, as well as depressed equity and real estate markets, consumer demand appears weakened. Correspondingly, the Consumer Price Index fell during all three months of the second quarter of 2010, with some components below their year-ago levels in June. The DOB projects inflation for both this year and next to be 1.5%. The disinflation that is currently being witnessed, combined with a weaker outlook for the second half of 2010, is likely to induce the Federal Reserve to further delay a shift in its policy stance. The central bank's interest rate policy target is likely to remain between zero and 0.25% until the first quarter of 2011. While the current outlook calls for a further loss of momentum during the second half of 2010, the DOB does not foresee the economy falling back into recession. However, there are significant risks to this forecast. Although credit markets have improved substantially since a year ago, households and small businesses continue to have difficulty borrowing and credit continues to contract. Revelations related to the international volume of sovereign debt continues to feed the uncertainty surrounding the global financial system. If the labor market recovery should come to a halt, household spending growth could be even lower. If Federal stimulus spending should proceed more slowly than expected or be reduced or eliminated, already struggling state and local governments would be adversely affected. On the positive side, global growth could be stronger than anticipated, resulting in greater export and earnings growth than anticipated. State Economy . The DOB estimates State wages to have fallen 7.2% in 2009. However, there are indications that the State economy picked up substantial momentum during the first quarter of 2010. The State labor market added private sector jobs month-over-month on a seasonally adjusted basis during the first four months of the year. The DOB now projects an employment decline of 0.3% on an annual average basis for 2010, followed by growth of 1.0% for 2011. Private sector jobs are projected to fall 0.5% for 2010 and grow 1.2% in 2011. Wage growth of 5.1% is projected for 2010. The loss of momentum witnessed nationally, appears to be affecting New York as well. Due to the importance of financial markets to the State economy, the 15% equity market correction recently observed is likely to disproportionately affect New York. The most recent data indicate that the State lost over 30,000 private sector jobs in May and June combined. The State's private sector added jobs in July, but did not fully recover the jobs lost during the prior two months. All of the risks to the U.S. forecast apply to the State forecast as well, although as the nation's financial capital, credit and equity market volatility pose a particularly large degree of uncertainty for New York. The impact of the Federal government's long-awaited financial reform package on the profitability of the State's finance industry is as yet unknown and consequently represents a major risk to the DOB's forecast for bonuses and income going forward. Lower bonuses than projected reduce the level of economic activity generated by the spending of those wages. Similarly, should equity markets fail to recover as anticipated, both financial sector income and taxable capital gains realizations could be negatively affected. These effects would ripple through the State economy, depressing both employment and wage growth. An even weaker labor market than projected could also result in lower wages, which in turn could result in weaker household consumption. In contrast, stronger national and world economic growth, or a stronger upturn in stock prices, along with even stronger activity in mergers and acquisitions and other Wall Street activities, could result in higher wage and bonuses growth than projected. The City of New York . The fiscal demands on the State may be affected by the fiscal health of New York City, which relies in part on State aid to balance its budget and meet its cash requirements. The State's finances also may be affected by the ability of the City, and certain entities issuing debt for the benefit of the City, to market their securities successfully in the public credit markets. Other Localities . Certain localities outside the City have experienced financial problems and have requested and received additional State assistance during the last several State fiscal years. While a relatively infrequent practice, deficit financing has become more common in recent years. Between 2004 and 2010, the State Legislature authorized 21 bond issuances to finance local government operating deficits. There were four new or additional deficit financing authorizations during Fiscal Year 2009-2010. In addition, the State has periodically enacted legislation to create oversight boards in order to address deteriorating fiscal conditions within a locality. The potential impact on the State of any future requests by localities for additional oversight or financial assistance is not included in the projections of the State's receipts and disbursements for Fiscal Year 2010-11 or thereafter. Like the State, local governments must respond to changing political, economic and financial influences over which they have little or no control. Such changes may adversely affect the financial condition of certain local governments. It is also possible that the City, other localities or any of their respective public authorities may suffer serious financial difficulties that could jeopardize local access to the public credit markets, which may adverse affect the marketability of notes and bonds issued by localities within the State. Localities may also face unanticipated problems resulting from pending litigation, judicial decisions and long-range economic trends. Other large-scale potential problems, such as declining urban populations, increasing expenditures, and the loss of skilled manufacturing jobs, may also adversely affect localities and necessitate State assistance. Special Considerations . Complex political, social, environmental and economic forces influence the State's economy and finances, many of which are outside the ability of the State to control. These include, but are not limited to: (i) performance of the national and State economies; (ii) impact of continuing write-downs and other costs affecting the profitability of the financial services sector and the concomitant effect on bonus income and capital gains realizations; (iii) access to the capital markets in light of the disruption in the municipal bond market; (iv) litigation against the State, including challenges to certain tax actions and other actions authorized in the current budget; and (v) actions taken by the Federal government, including audits, disallowances, and changes in aid levels. Labor Settlements. An additional risk is the cost of potential collective bargaining agreements and salary increases for judges (and possibly other elected officials) that may occur in Fiscal Year 2010-11 and beyond for the period covering Fiscal Year 2007-08 through Fiscal Year 2010-11. The Fiscal Year 2010-2011 budget includes settlement costs for all unsettled unions. There can be no assurance that actual settlements will not exceed the amounts included in the enacted budget. Furthermore, the current round of collective bargaining agreements expires at the end of Fiscal Year 2010-11. The Fiscal Year 2010-2011 budget does not include any costs for potential wage increases beyond that point. State Finances The State accounts for all budgeted receipts and disbursements that support programs and other administrative costs of running State government within the All Governmental Funds type. The All Governmental Funds, comprised of funding supported by State Funds and Federal Funds, provides the most comprehensive view of the financial operations of the State. State Funds includes the General Fund and other State-supported funds including State Special Reserve Funds, Capital Projects Funds and Debt Service Funds. The General Fund is the principal operating fund of the State and is used to account for all financial transactions except those required to be accounted for in another fund. It is the State's largest fund and receives almost all State taxes and other resources not dedicated to particular purposes. The economic downturn has had a severe impact on State finances. Actual receipts have fallen consistently below projected levels, fixed costs for debt service and fringe benefits have risen steadily, and demand for State services has grown. Over the last two years, the State has been required to take extraordinary actions to maintain balanced operations and sufficient liquidity, including enacting mid-year reductions to programs, instituting several rounds of agency spending reductions and deferring payments to local aid recipients and taxpayers. To avoid using its rainy day reserves, which are relied on during a fiscal year to provide liquidity, the State has managed the timing of payments across fiscal years, including deferring payments not yet legally due from one fiscal year to the next fiscal year. Prior Fiscal Year Results . Fiscal Year 2007-08 Results . State revenues were $578 million lower than initial projections, while spending for the fiscal year finished at $299 million lower than expectations. The result was a $279 million decrease in cash reserves. The General Fund ended Fiscal Year 2007-08 with a balance of $2.8 billion, which included dedicated balances of $1.2 billion in rainy day reserves. General Fund receipts, including transfers from other funds and the impact of the tax refund reserve transaction, totaled $53.1 billion in Fiscal Year 2007-08, an increase of $1.7 billion from Fiscal Year 2006-07 results. While tax receipts decreased by $273 million, transfers increased by $1.9 billion and miscellaneous receipts increased by $191 million. General Fund spending totaled $53.4 billion in Fiscal Year 2007-08, an increase of $1.8 billion from Fiscal Year 2006-07. Fiscal Year 2008-09 Results General Fund receipts, including transfers from other funds, were $1.84 billion lower than the State's initial projections for 2008-09 , while spending for the year finished at $1.75 billion lower than expectations. The result was $83 million less in cash reserves than expected in the Fiscal Year 2008-09 enacted budget. The General Fund ended Fiscal Year 2008-09 with a balance of $1.9 billion, which included dedicated balances of $1.2 billion in rainy day reserves, $21 million in the contingency reserve fund to guard against litigation risks, $145 million in the Community Projects Fund and $577 million in general reserves, part of which DOB expects to use for payments initially planned for Fiscal Year 2008-09 that were delayed until Fiscal Year 2009-10. The year-end balance was substantially improved by the receipt of $1.3 billion in unplanned General Fund relief from the temporary increase in the Federal matching rate for certain Medicaid expenditures. General Fund receipts, including transfers from other funds and the impact of the tax refund reserve transaction, totaled $53.8 billion in Fiscal Year 2008-09, an increase of $705 million from Fiscal Year 2007-08 results. While tax receipts decreased by $93 million, miscellaneous receipts increased by $621 million and transfers increased by $178 million. General Fund spending totaled $54.6 billion in Fiscal Year 2008-09, an increase of $1.2 billion from Fiscal Year 2007-08. Fiscal Year 2009-10 Results (Unaudited). General Fund receipts, including transfers from other funds were $1.2 billion below Fiscal Year 2008-09 results, while spending for the fiscal year ended $1.2 billion lower than Fiscal Year 2008-09 results. Tax receipts decreased by $1.2 billion and transfers decreased by $750 million, partly offset by increased miscellaneous receipts of $744 million. The General Fund ended Fiscal Year 2009-10 with a balance of $1.2 billion in the State's rainy day reserves, $21 million in the contingency reserve fund (to guard against litigation risks), $96 million in the Community Projects Fund, and $978 million in general reserves. General Fund receipts, including transfers from other funds, totaled $52.6 billion, or $1.78 billion lower than the State's initial projections for Fiscal Year 2009-10, while spending, including transfers to other funds, totaled $52.2 billion, a decrease of $2.71 billion from initial projections. However, actual disbursements were affected by $2.1 billion in payment deferrals taken by the State to end the fiscal year without the use of its rainy day reserves and other designated balances. Without the deferrals, disbursements for the fiscal year would have been approximately $665 million below initial projections. In the final quarter of the fiscal year, in order to avoid depleting its reserves, the State deferred a planned payment to school districts ($2.1 billion), which reduced spending from planned levels, and certain tax refunds, which increased available receipts from planned levels ($500 million). Both the school aid payment and the tax refunds were scheduled to be paid in Fiscal Year 2009-10 but, by statute, were not due until June 1, 2010. The combined value of the deferrals had the effect of increasing the closing balance in the General Fund for Fiscal Year 2009-10 to $2.3 billion. The higher closing balance was due exclusively to the cash management actions described above and did not represent an improvement in the State's financial operations. In early April 2010, the State paid the $500 million in tax refunds that had been deferred from Fiscal Year 2009-10 to Fiscal Year 2010-11. On June 1, 2010, the State paid the $2.1 billion in school aid deferred from Fiscal Year 2009-10. The DOB estimates that the deficit reduction plan approved on December 2, 2009 will generate recurring savings in the range of $700 million to $875 million in Fiscal Year 2010-11 through Fiscal Year 2013-14. Fiscal Year 2010-11 Enacted Budget Financial Plan During the Fiscal Year 2010-11 budget process, the Governor introduced an Executive Budget Financial Plan to eliminate a budget gap for Fiscal Year 2010-11 estimated at $7.4 billion, and in February 2010, revised the estimated budget gap upward to $8.2 billion. In March 2010, the estimated budget gap for 2010-11 had increased to $9.2 billion (requiring additional gap-closing actions) due to further downward revisions to tax receipts, combined with an expected budget shortfall from Fiscal Year 2009-10 that would be carried into Fiscal Year 2010-11. As the new fiscal year started on April 1, 2010, the State began enacting a series of interim appropriation bills to fund government operations on a short-term basis. While the State Legislature enacted the annual debt service appropriation bill for Fiscal Year 2010-11 in March 2010, the Legislature did not complete action on all annual appropriation bills until late June 2010, and did not pass a revenue bill to complete the budget until August 3, 2010. The Fiscal Year 2010-11 Financial Plan reduces spending from the current-services forecast by over $6.4 billion in Fiscal Year 2010-11, holds annual spending below the rate of inflation, mandates uniform reductions to remaining local assistance payments, with certain limited exceptions, to cover the estimated $280 million shortfall from the $1.1 billion in savings assumed in the gap-closing plan from enhanced Federal Medicaid Assistance Percentage ("FMAP"), and maintains the State's rainy day reserves at $1.2 billion. The projections for annual spending growth in Fiscal Year 2010-11 are affected by both the management of payments at the end of Fiscal Year 2009-10 and by the uncertainties concerning the timing of Federal aid. The latter consists of American Recovery and Reinvestment Act ("ARRA") stimulus money for a wide range of purposes that provides no gap-closing benefit, but by law must pass through the State's budget before it reaches its beneficiaries. To avoid the distorting effect of these factors, the DOB has adjusted spending to (i) exclude the effect of the deferral of the $2.06 billion end-of-year school aid payment from Fiscal Year 2009-10 into Fiscal Year 2010-11 and (ii) include $2.0 billion in ARRA funding that was initially expected in Fiscal Year 2009-10, but is now expected to occur in future years. The DOB estimates that the Fiscal Year 2010-11 Financial Plan is balanced on a cash basis of accounting. The projected budget gaps for future years total $13.5 billion and $15.6 billion in Fiscal Years 2011-12 and 2013-14. The total four-year gap has been reduced by $29 billion, reflecting recurring savings approved in the Fiscal Year 2010-11 budget. Under the Fiscal Year 2010-11 Financial Plan, the combined four-year budget gap (Fiscal Year 2010-11 through Fiscal Year 2013-14) is cut almost in half, declining from $66 billion to $37 billion. Reductions to current-services spending total over $6.4 billion in State Operating Funds and $6.6 billion in the General Fund, constituting nearly 70% of the gap-closing plan. The proposed reductions in spending affect nearly every activity financed by State government, ranging from aid to public schools to agency operations to capital expenditures. Explanation of Fiscal Year 2010-11 Gap-Closing Plan The gap-closing plan consists of two parts, the actions under the Fiscal Year 2010-11 Financial Plan and the recurring impact of the Deficit Reduction Plan ("DRP"). The Fiscal Year 2010-11 gap-closing actions are organized into three general categories: (i) spending control, or actions that reduce current-services spending in the General Fund on a recurring basis; (ii) revenue actions, or actions that increase revenues on a recurring basis; and (iii) non-recurring resources, or transactions that increase revenues or lower spending in Fiscal Year 2010-11, but that cannot be relied on in the future. The Fiscal Year 2010-11 gap-closing plan focuses foremost on actions that reduce the growth in State spending on a recurring basis. Actions to control spending account for nearly 70% of the gap-closing plan and will affect most activities funded by the State. Fiscal Year 2010-11 spending has been reduced by roughly $4.8 billion from current services levels. The Governor's vetoes further reduced General Fund spending in Fiscal Year 2010-11 by $533 million. In addition, the FMAP contingency bill is expected to reduce local assistance spending by approximately $280 million. The gap-closing plan includes $1.0 billion in new revenue, including $925 million from tax and fee increases. These tax and fee increases include: (i) the temporary suspension of the State sales tax exemption on clothing and footwear priced at less than $110; (ii) a $1.60 per pack increase in the cigarette tax; (iii) a temporary cap on the aggregate tax credit claims for business-related tax credits at $2.0 million per taxpayer annually; and (iv) a decrease in the percentage of allowable remaining itemized deductions from 50% to 25% for taxpayers with New York adjusted gross income above $10 million. In addition, audit, compliance, and enforcement activities are expected to increase the tax base by approximately $371 million annually. Non-recurring resources, which comprise 7% of the gap-closing actions total $660 million. Fiscal Year 2010-11 Receipts Forecast . To preserve essential services while closing the budget gap for the 2010-11 fiscal year, the Fiscal Year 2010-11 Financial Plan and separately enacted legislation authorize a number of revenue actions that, together, will increase tax or other revenue in the General Fund by a total of $937 million ($1.4 billion All Funds) in Fiscal Year 2010-11. The Fiscal Year 2010-11 Financial Plan contains seven tax actions that will produce $747 million in Fiscal Year 2010-11 All Funds revenue. It also contains five actions that close loopholes and ensure that tax burdens are fairly distributed. These actions are expected to produce $44 million in additional revenue on an All Funds basis in the current fiscal year. Finally, the current budget contains new and increased legal fees as well as waste fees, which are expected to produce $44.1 million in revenue on an All Funds basis in the current fiscal year. All Funds receipts are projected to total $134.3 billion, an increase of $7.5 billion over Fiscal Year 2009-10 results. All Funds personal income tax receipts, which reflect gross payments minus refunds, are estimated at $36.9 billion for Fiscal Year 2010-11, a $2.1 billion increase from the prior year. This is primarily attributable to increases in withholding of $1.9 billion and current estimated payments of $1.3 billion. These increases are due to the gradual improvement in the economy and full-year compliance with the temporary rate increase enacted in 2009. All Funds user taxes and fees receipts for Fiscal Year 2010-11 are estimated to be approximately $14.3 billion, an increase of $1.4 billion from Fiscal Year 2009-10. Sales tax receipts are expected to increase by $946 million from the prior year due to a base growth increase of 6.7%. Non-sales tax user taxes and fees are estimated to increase by $487 million from Fiscal Year 2009-10, mainly due to an increase in the cigarette tax by $1.60 and the full enactment of the taxicab surcharge. All Funds business tax receipts for Fiscal Year 2010-11 are estimated at $7.7 billion, an increase of $233 million from the prior year. All Funds other tax receipts for Fiscal Year 2010-11 are estimated to be approximately $1.6 billion, up $176 million from Fiscal Year 2009-10 receipts, reflecting growth of 5.5% in the real estate transfer tax receipts and 17.5% in the estate tax as a result of improved conditions in the equities, real estate and credit markets, combined with strong year-to-date payments from the settlement of large estates. Through July 2010, General Fund receipts, including transfers from other funds, were $362 million (2.3%) higher than the same period in 2009. Net tax collections are higher by $460 million. Fiscal Year 2010-11 Disbursements Forecast . For Fiscal Year 2010-11, All Funds spending for local assistance is proposed to total $95.6 billion, a 2.7% increase over Fiscal Year 2010-11 results. Total spending is comprised of State aid to medical assistance providers and public health programs ($42.4 billion); State aid for education, including school districts, universities, and tuition assistance ($33.2 billion); temporary and disability assistance ($4.7 billion); mental hygiene programs ($4.0 billion); transportation ($5.1 billion); children and family services ($3.0 billion); and local government assistance ($791 million). All Funds spending for State operations is projected to total $19.4 billion in Fiscal Year 2010-11, a 1.3% decrease from prior year spending, finances the costs of Executive agencies ($17.2 billion) and the Legislature and Judiciary ($2.1 billion). All Funds spending on general State charges ("fringe benefits") is projected to total $6.3 billion in Fiscal Year 2010-11, a increase of 10.5% over Fiscal Year 2009-10 results. Growth in fringe benefits is due principally to increases in the State's annual contribution to the New York State and Local Retirement System and the cost of providing health insurance for active and retired State employees. Pension costs are expected to increase by $312 million (27%) in Fiscal Year 2010-11. This increase is net of $242 million in amortization savings scheduled for Fiscal Year 2010-11. All Funds debt service is projected at $5.5 billion in Fiscal Year 2010-11, of which $1.6 billion is paid from the General Fund. Debt service on State-supported debt is projected to increase by $555 million (11.2%) in Fiscal Year 2010-11, with approximately 35% of the growth due to the restructuring of certain transportation-related debt in 2005 that deferred substantial debt service costs until Fiscal Year 2010-11. Overall spending from debt service funds, which includes certain non-personal service spending appropriated in the debt service budget is projected by the DOB to increase by nearly $600 million. All Funds capital spending for Fiscal Year 2010-11 is projected at $8.4 billion, an increase of 18.4% over Fiscal Year 2009-10 spending. Transportation spending, primarily for improvements and maintenance to the State's highways and bridges, continues to account for the largest share (52%) of this total. The balance of projected spending will support capital investments in the areas of education (14%), economic development (11%), parks and environment (8%), and mental hygiene and public protection (6%). The remainder of projected capital projects spending is spread across health and social welfare, general government and other areas (8%). Through July 2010, disbursements, including transfers to other funds, were $1.1 billion (6.7%) higher than the 2009 period. The payment in June 2010 of $2.1 billion in deferred school aid accounted for this increase. Cash Position . The General Fund is authorized to borrow resources temporarily from other available funds in the State's Short Term Investment Pool ("STIP") for a period not to exceed four months or to the end of the fiscal year, whichever occurs first. The amount of resources that can be borrowed by the General Fund is limited to the available balances in STIP, as determined by the State Comptroller. Through the first four months of Fiscal Year 2010-11, the General Fund used this authorization to meet payment obligations in May, June and July. It is expected that the General Fund will rely on this borrowing authority at times during the remainder of the fiscal year. To date, the State has taken actions to maintain adequate operating margins, and expects to continue to do so as events warrant. The State continues to reserve money to make the debt service payments scheduled for each upcoming quarter that are financed with General Fund resources. Money to pay debt service on bonds secured by dedicated receipts, including Personal Income Tax ("PIT") bonds, continues to be set aside as required by law and bond covenants. With cash management actions, the General Fund ended June 2010 with a negative balance of $87 million. The funds on hand in All Governmental Funds at the end of the month totaled $3.6 billion. The cash-flow projections for receipts and disbursements take into account statutory payment dates, historical receipts and disbursement patterns, and other information. The DOB believes the projections are based on reasonable and prudent assumptions, and the State's current cash position is sufficient to meet current liquidity needs. Cash balances are expected to continue to be relatively low, especially in September, November and December 2010. It is expected that the General Fund on certain days will continue to borrow from STIP. The DOB will continue to closely monitor and manage the General Fund cash flow during the fiscal year in an effort to maintain adequate operating balances. General Fund Out-Year Projections. DOB projects outyear budget gaps will total approximately $8.2 billion in Fiscal Year 2011-12, $13.5 billion in Fiscal Year 2012-13, and $15.6 billion in Fiscal Year 2013-14. The net operating deficits in State Operating Funds are projected at $8.2 billion in Fiscal Year 2011-12, $13.1 billion in Fiscal Year 2012-13, and $15.1 billion in Fiscal Year 2013-14. The imbalances projected for the General Fund and State Operating Funds in future years tend to be very similar because the General Fund is typically the financing source of last resort for many State programs, and any imbalance in other funds that cannot be rectified by the use of existing balances is typically paid for by the General Fund. The growth in the gaps between Fiscal Year 2010-11 and Fiscal Year 2011-12 is caused in large part by the expiration of Federal stimulus funding for Medicaid and education, which is expected to result in approximately $5.1 billion in costs reverting to the General Fund, starting in Fiscal Year 2011-12. The annual growth in the gap is also affected by the sunset, at the end of calendar year 2011, of the temporary PIT increase enacted in Fiscal Year 2009-10, which is expected to reduce Fiscal Year 2011-12 receipts by approximately $1 billion from Fiscal Year 2010-11 levels. Outyear Receipts Projections . General Fund receipts are projected to grow at an average annual rate of 3.8% from Fiscal Year 2009-10 through Fiscal Year 2013-14. Overall, State tax receipts growth in the three fiscal years following Fiscal Year 2010-11 is expected to range from 1.7% to 6.2%. This is consistent with a projected return to modest economic growth in the New York economy in the second half of 2010. Receipts growth is affected by the tax changes approved in the Fiscal Year 2010-11 Financial Plan, as well as, in prior fiscal years, and tax compliance and anti-fraud efforts. These factors are expected to continue to enhance expected receipt growth through Fiscal Year 2013-14. Outyear Disbursement Projections. General Fund spending is projected to grow at an average annual rate of 9.0% from Fiscal Year 2009-10 through Fiscal Year 2013-14 (as adjusted). Spending growth in the General Fund is projected to increase sharply in Fiscal Year 2011-12, reflecting an expected return to a lower FMAP rate after June 30, 2011 which will increase the share of Medicaid costs that must be financed by State resources, and the expected loss of temporary Federal aid for education. Excluding these stimulus-related effects, which temporarily suppress General Fund costs in Fiscal Year 2010-11 and the first quarter of Fiscal Year 2011-12, General Fund spending grows at approximately 6.8% on a compound annual basis State Indebtedness General . The State is one of the largest issuers of municipal debt, ranking second among the states, behind California, in the amount of debt outstanding. The State ranks fifth in the U.S. in debt per capita, behind Connecticut, Massachusetts, Hawaii, and New Jersey. At the end of Fiscal Year 2009-10, total State-related debt outstanding was $55 billion. Debt measures continue to remain stable with debt outstanding as a percentage of personal income at about 6.0%. Financing activities of the State include general obligation debt and State-guaranteed debt, to which the full faith and credit of the State has been pledged, as well as lease-purchase and contractual-obligation financing, moral obligation and other financing through public authorities and municipalities, where the State's legal obligation to make payments to those public authorities and municipalities for their debt service is subject to annual appropriation by the Legislature. The State has never defaulted on any of its general obligation indebtedness or its obligations under lease-purchase or contractual-obligation financing arrangements and has never been called upon to make any direct payments pursuant to its guarantees. Limitations on State-Supported Debt . The Debt Reform Act of 2000 (the "Act") is intended to improve the State's borrowing practices, and it applies to all new State-supported debt issued on and after April 1, 2000. It also imposes phased-in caps on new debt outstanding and new debt service costs. The Act also limited the use of debt to capital projects and established a maximum term of 30 years on such debt. The cap on new State-supported debt outstanding began at 0.75% of personal income in Fiscal Year 2000-01, and will gradually increase until it is fully phased-in at 4.0% in Fiscal Year 2010-11. Similarly, the cap on covered debt service costs began at 0.75% of total State funds receipts in Fiscal Year 2000-01, and will gradually increase to 5.0% in Fiscal Year 2013-14. The most recent annual calculation of the limitations imposed by the Act was reported in the Financial Plan update most proximate to October 31, 2009. The State reported that it was in compliance with both debt caps, with debt issued after March 31, 2000 and outstanding at March 31, 2009 at 2.67% of personal income and debt service on such debt at 1.58% of total governmental receipts, compared to the caps of 3.65% for each. Current projections estimate that debt outstanding and debt service costs will continue to remain below the limits imposed by the Act throughout the next several years. However, the State has entered into a period of significantly declining debt capacity. Available room under the cap, in regards to debt outstanding is expected to decline from 0.47% ($4.5 billion) in Fiscal Year 2010-11 to 0.22% ($2.3 billion) in Fiscal Year 2012-13, a decrease of $2.2 billion. Variable Rate Obligations and Related Agreements. State statutory law authorizes issuers of State-supported debt to issue a limited amount of variable rate obligations and, subject to various statutory restrictions, enter into a limited amount of interest rate exchange agreements. State law limits the use of debt instruments which result in a variable rate exposure to no more than 20% of total outstanding State-supported debt, and limits the use of interest rate exchange agreements to a total notional amount of no more than 20% of total State-supported outstanding debt. As of March 31, 2010, State-supported debt in the amount of $50.3 billion was outstanding, resulting in a variable rate exposure cap and interest rate exchange agreement cap of approximately $10 billion each. As of March 31, 2010, both amounts are less than the statutorily cap of 20%, and are projected to be below the caps for the entire forecast period through Fiscal Year 2012-13. As of March 31, 2010, the State's authorized issuers had entered into a notional amount of $2.77 billion of interest rate exchange agreements that are subject to the interest rate exchange agreement cap, or 5.3% of total debt outstanding. The State has significantly reduced its swap exposure from $5.9 billion as of March 31, 2008 to $2.7 billion as of March 31, 2010, a 54% reduction. Over this two-year period, the State has terminated $3.2 billion of swaps, including $565 million that was terminated automatically due to the bankruptcy of Lehman Brothers Holdings, Inc. The State currently has no plans to increase its swap exposure, and may take further actions to reduce swap exposures commensurate with variable rate restructuring efforts. As of March 31, 2010, the State had about $1.3 billion of outstanding variable rate debt instruments, or 2.5% of total debt outstanding, that are subject to the net variable rate exposure cap. That amount includes $1.2 billion of unhedged variable rate obligations and $82 million of synthetic variable rate obligations. In addition to these variable rate obligations, as of March 31, 2010, the State had outstanding $2.4 billion of fixed-rate obligations that may convert to variable rate obligations in the future. This amount included $1.75 billion in State-supported convertible rate bonds outstanding. State-Supported Debt . The State's debt affordability measures compare favorably to the forecasts contained in the State's Capital Program and Financing Plan. Issuances of State-supported debt obligations have been generally consistent with the expected sale schedule for the current year, with marginal revisions reflecting certain economic development bonding that occurred earlier in the year than originally anticipated. General Obligation Bond Programs . General obligation debt is currently authorized by the State for transportation, environment and housing purposes. Transportation-related bonds are issued for State highway and bridge improvements, aviation, highway and mass transportation projects and purposes, and rapid transport, rail, canal, port and waterway programs and projects. Environmental bonds are issued to fund environmentally sensitive land acquisitions, air and water quality improvements, municipal non-hazardous waste landfill closures and hazardous waste site cleanup projects. As of March 31, 2010, the total amount of general obligation debt outstanding was $3.4 billion. Lease-Purchase and Contractual-Obligation Financing Programs. Lease-purchase and contractual-obligation financing arrangements with public authorities and municipalities has been used primarily by the State to finance the State's bridge and highway programs, SUNY and CUNY buildings, health and mental hygiene facilities, prison construction and rehabilitation and various other State capital projects. As of March 31, 2010, approximately $18 billion of PIT Bonds were outstanding. Fiscal Year 2010-11 State Supported Borrowing Plan . The State's Fiscal Year 2010-11 borrowing plan projects new issuance of $606 billion in general obligation bonds; $495 million in Dedicated Highway and Bridge Trust Fund Bonds issued to finance capital projects for transportation; $232 million in Mental Health Facilities Improvement Revenue Bonds issued to finance capital projects at mental health facilities; $78 million in SUNY Dormitory Facilities Revenue Bonds to finance capital projects related to student dormitories; and $3.9 billion in PIT Bonds to finance various capital programs. Litigation General . The legal proceedings listed below involve State finances and programs and miscellaneous civil rights, real property, contract and other tort claims in which the State is a defendant and the potential monetary claims against the State are deemed to be material, generally in excess of $100 million. These proceedings could adversely affect the State's finances in the current fiscal year or thereafter. Adverse developments in the proceedings could affect the ability of the State to maintain a balanced budget. The State believes that any budget will include sufficient reserves to offset the costs associated with the payment of judgments that may be required during the current fiscal year. There can be no assurance, however, that adverse decisions in legal proceedings against the State would not exceed the amount of all potential budget resources available for the payment of judgments. Real Property Claims . In Oneida Indian Nation of New York, et al. v. State of New York , the alleged successors-in-interest to the historic Oneida Indian Nation seek a declaration that they hold a current possessory interest in approximately 250,000 acres of land that the tribe sold to the State in a series of transactions between 1795 and 1846, and ejectment of the State and surrounding counties from all publicly-held lands in the claim area. This case was dormant while the plaintiffs pursuant an earlier action which ended in an unsuccessful effort at a settlement. In 1998, the U.S. intervened in the case, and in December 1998 both the U.S. and the tribal plaintiffs moved for leave to amend their complaints to assert claims for 250,000 acres, including both monetary damages and ejectment, to add the State as a defendant and to seek class certification for all individuals who currently purport to hold title within the disputed land area. On September 25, 2000, the court granted the motions to amend the complaints to add the State as a defendant and to assert monetary damages, but denied the motions to seek class certification and the remedy of ejectment. On March 29, 2002, the court granted, in part, plaintiffs' motion to strike the State's defenses and counterclaims as to liability, but such defenses may still be asserted with respect to monetary damages. The court also denied the State's motion to dismiss for failure to join indispensable parties. Further efforts at settlement of this action failed to reach a successful outcome. While such discussions were underway, two significant decisions were rendered by the Supreme Court and the Second Circuit Court of Appeals which changed the legal landscape pertaining to ancient land claims: City of Sherrill v. Oneida Indian Nation of New York and Cayuga Indian Nation of New York v. Pataki . Taken together, these cases have made clear that the equitable doctrines of laches, acquiescence, and impossibility can bar ancient land claims. These decisions prompted the court to reassess its 2002 decision, which in part had struck such defenses, and to permit the filing of a motion for summary judgment predicated on the Sherrill and Cayuga holdings. On August 11, 2006, the defendants moved for summary judgment dismissing the action, based on the defenses of laches, acquiescence, and impossibility. By order dated May 21, 2007, the court dismissed plaintiffs' claims to the extent that they asserted a possessory interest, but permitted plaintiffs to pursue a claim seeking the difference between the amount paid and the fair market value of the lands at the time of the transaction. The court certified the May 21, 2007 order for interlocutory appeal and, on July 13, 2007, the Second Circuit granted motions by both sides seeking leave to pursue interlocutory appeals of that order. On August 9, 2010, the Circuit Court rendered a decision which affirmed the summary judgment order insofar as it dismissed the Oneida land claim and reversed it insofar as it would have allowed plaintiffs to pursue a fair compensation claim against the State. Other Indian land claims include Canadian St. Regis Band of Mohawk Indians, et al., v. State of New York, et al., and The Onondaga Nation v. The State of New York, et al. both in United States District Court. In the Canadian St. Regis Band of Mohawk Indians case, plaintiffs seek ejectment and monetary damages with respect to their claim that approximately 15,000 acres in Franklin and St. Lawrence counties were illegally transferred from their predecessors-in-interest. On July 28, 2003, the court granted, in most respects, the plaintiffs' motion to strike defenses and dismiss counterclaims. On October 20, 2003, the court denied the State's motion for a reconsideration of the July 28 th decision regarding the State's counterclaims for contribution. On February 10, 2006, after renewed efforts at settlement failed to resolve this action, and recognizing the potential significance of the Sherrill and Cayuga appeals, the District Court stayed all further proceedings in this case until 45 days after the United States Supreme Court issued a final decision in Cayuga . On November 6, 2006, after certiorari was denied in Cayuga , the defendants moved for judgment on the pleadings. Although the motion is fully briefed and awaiting decision, on April 16, 2008, the District Court issued an order staying the case until a decision is rendered with respect to the appeal in the Oneida case. In light of the recent decision in Oneida , the stay will be lifted, and it is anticipated that further briefing as to the impact of Oneida will soon be scheduled. In The Onondaga Nation v. The State of New York, et al. , plaintiff seeks a judgment declaring that certain lands within the State are the property of the Onondaga Nation and the Haudenosaunee, and that conveyances of that land pursuant to treaties during the period from 1788-1822 are null and void. On August 15, 2006, based on Sherrill and Cayuga , the defendants moved for an order dismissing this action, based on the issue of laches. The motion is now fully briefed and awaiting decision. Cayuga Indian Nation of New York , et al. v. Pataki, et al. , involved approximately 64,000 acres in Seneca and Cayuga Counties that the historic Cayuga Nation sold to the State in 1795 and 1807 in alleged violation of the Nonintercourse Act of 1790 because the transactions were not held under Federal supervision, and were not formally ratified by the U.S. Senate and proclaimed by the President. In 2001, the court denied ejectment as a remedy and rendered a judgment against the State for in the net amount of $250 million. The State appealed the judgment. The tribal plaintiffs (but not the U.S. Government) cross-appealed, seeking ejectment of all of the present day occupants of the claimed land and approximately $1.5 billion in additional prejudgment interest. On June 28, 2005, the Second Circuit reversed and entered judgment dismissing the action, based upon the intervening Sherrill decision. The Second Circuit concluded that the same equitable considerations that the Supreme Court relied on in Sherrill applied to the Cayugas' possessory claim and required dismissal of the entire lawsuit, including plaintiffs' claims for money damages and ejectment. The Court also held that the United States' complaint-in-intervention was barred by laches. The Supreme Court denied certiorari in Cayuga on May 15, 2006. This case was closed but recently became active when the Cayuga plaintiffs filed a motion to have the judgment vacated and the case stayed until after the Second Circuit decides the appeal in Oneida . The motion is premised on the ruling in Oneida that, in spite of the decision in Cayuga, the tribal plaintiffs may proceed to prove a non-possessory claim for unjust compensation against the State. Further briefing on the plaintiffs' motion from relief from judgment had been suspended, pending the outcome of the Oneida appeal. That stay was recently lifted in light of the Oneida decision and further briefing on the case is due in September 2010. Tobacco Master Settlement Agreement . In Freedom Holdings Inc. et al. v. Spitzer et ano. , two cigarette importers brought an action in 2002 challenging portions of laws enacted by the State under the 1998 Tobacco Master Settlement Agreement ("MSA") that New York and many other states entered into with major tobacco manufacturers. The initial complaint alleged: (i) violations of the U.S. Constitution; (ii) the establishment of an "output cartel" in conflict with the Sherman Act; and (iii) selective nonenforcement of laws on Native American reservations in violation of the Equal Protection Clause of the U.S. Constitution. The District Court granted defendants' motion to dismiss the complaint for failure to state a cause of action. Plaintiffs appealed from this dismissal. In an opinion dated January 6, 2004, the United States Court of Appeals for the Second Circuit (i) affirmed the dismissal of the Commerce Clause claim; (ii) reversed the dismissal of the Sherman Act claim; and (iii) remanded the selective enforcement claim to the District Court for further proceedings. Plaintiffs have filed an amended complaint that also challenges the MSA itself (as well as other related State statutes) primarily on preemption grounds. On September 14, 2004, the District Court denied all aspects of plaintiffs' motion for a preliminary injunction, except that portion of the motion relating to the ability of tobacco manufacturers to obtain the release of certain funds from escrow. Plaintiffs appealed the denial of the remainder of the motion. In May 2005, the Second Circuit affirmed the denial of the preliminary injunction. In December 2006, the summary judgment motions and cross-motions were fully submitted to the District Court. By order dated July 7, 2008, the District Court requested updated statistical information and other information needed to resolve certain material questions. Following an evidentiary hearing, by order dated December 15, 2008 summarizing a preliminary decision, the District Court dismissed all of plaintiff's claims. On January 12, 2009, the Court issued its opinion and order granting judgment dismissing the complaint. Plaintiff has appealed; and the appeal is pending before the Second Circuit. In Grand River Ent. v. King , a cigarette importer raises the same claims as those brought by the plaintiffs in Freedom Holdings , in a suit against the attorneys general of thirty states, including New York. The parties cross-moved for summary judgment and oral argument was held on April 27, 2010. The parties are awaiting decision. Arbitration Related to Tobacco Master Settlement Agreement . Under the MSA, tobacco manufacturers who are party to the MSA ("PMs") pay 46 settling states, plus some territories and the District of Columbia, (collectively, the "Settling States"), an annual base payment to compensate for financial harm to the Settling States for smoking-related illness. New York's allocable share of the total payment is approximately 12.8%, or approximately $800 million, annually. In order to keep the base payment under the MSA, each Settling State must pass and diligently enforce a statute that requires tobacco manufacturers who are not party to the MSA to deposit in escrow an amount roughly equal to the amount that the PMs pay per pack sold. The PMs have brought a nationwide arbitration against the Settling States (minus Montana) asserting that those Settling States failed to diligently enforce their respective escrow statutes in 2003. Any such claim for the years prior to 2003 were settled in 2003. The PMs are making the same claim for years 2004-2006, but none of those years are yet in arbitration. The full panel of arbitrators has been selected. An administrative conference was held on July 20, 2010 and the initial conference is scheduled to take place on October 5, 2010. West Valley Litigation . In State of New York et al v. The United States of America et al. , the State and the New York State Energy Research and Development Authority have filed suit seeking declarations that defendants are (i) liable under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") for the State's response costs and for damages to the State's natural resources resulting from pollution releases from the West Valley site and a judgment reimbursing the State for these costs and damages, (ii) responsible to decontaminate and decommission the site and for future site monitoring and maintenance, and (iii) responsible for paying the fees for disposal of solidified high level radioactive waste at the site. The parties have agreed to stay the litigation and submit the issues to non-binding arbitration and early neutral evaluation. As a result of mediation, the parties filed a proposed consent decree on October 27, 2009, resolving part of the litigation. The order will propose to settle the claims for CERCLA allocation of costs and the obligations of the United States under the West Valley Demonstration Project by allocating among the parties specific percentages of the cost of each potential remedy for the various structures and contaminated areas on the site. The claim for natural resource damages would be dismissed pursuant to a tolling agreement that would give the plaintiffs three years in which to file a new action or seek another tolling period. The claim regarding the Federal government's obligation to pay fees for disposal of high level radioactive waste from the West Valley Demonstration Project is neither settled nor dismissed and will remain in litigation. On July 1, 2010, the State filed a motion for court approval of the consent decree. Also on July 1, 2010, the United States filed a motion joining with the State's request for approval of the consent decree. On August 17, 2010, the Court granted the motions of the State and the United States for approval of the consent decree and entered the decree. The court will advise the parties as to the date of a scheduling conference for the purpose of preparing a scheduling order for adjudicating the remaining cause of action, which will decide which party pays the fees for disposal of the high level waste at the site pursuant to the Nuclear Waste Policy Act. Representative Payees . In Weaver et ano. v. State of New York , two claimants allege that the executive directors of the Office of Mental Health facilities in which the claimants were hospitalized, acting as representative payees under the Federal Social Security Act, improperly received benefits due them and improperly applied those benefits to the cost of their in-patient care and maintenance and, in the case of one of the claimants, also to the cost of her care and maintenance in a state-operated community residence. The first named claimant initially sought benefits on her own behalf as well as certification of a class of claimants. However, the class claims were dismissed on February 10, 2010 for failure to comply with legislation. On March 18, 2010, claimants filed a notice of appeal. On June 4, 2010, the State moved for summary judgment against the individual claims on various grounds. The State's summary judgment motion is sub judice . Bottle Bill Litigation . In International Bottled Water Association, et al. v. Paterson, et al ., plaintiffs seek declaratory and injunctive relief declaring that certain amendments to the State's Bottle Bill enacted on April 7, 2009 as part of the Fiscal Year 2009-2010 budget violate the due process clause, the equal protection clause and the commerce clause of the United States Constitution. By order entered May 29, 2009, the district court granted a preliminary injunction that (i) enjoined the State from implementing or enforcing the New-York exclusive universal product code provision of the Bottle Bill and (ii) enjoined the State from implementing or enforcing any and all other amendments to the Bottle Bill signed into law on April 7, 2009, until April 1, 2010, to allow persons subject to the amendments sufficient time to comply with the law's requirements. The State defendants moved to modify the preliminary injunction. On August 13, 2009 the court modified the injunction so that its provisions applied only to water bottles, stating that the injunction would dissolve by October 22, 2009 unless the bottlers showed cause that due process required that the injunction should continue. On October 23, 2009, after reviewing the parties' submissions, the court lifted the injunction, allowing most parts of the State law requiring a five cent deposit on water bottles to take effect October 31, 2009. The court's decision, however, permanently enjoined the State from implementing a provision that required water bottles to bear a New York-exclusive universal product code on each bottle. On March 22, 2010, the Court endorsed stipulated final judgments making final the permanent injunction on the New York-exclusive UPC provisions and lifting the preliminary injunctions in the August 13, 2009 and October 23, 2009 orders. On March 23, 2010, the Court endorsed plaintiffs' voluntary dismissal of all remaining claims, including their challenge to the Sugar Water Exemption. An interlocutory appeal by a non-party to the Second Circuit challenging a September 14, 2009 clarification order that the August 13, 2009 order lifting the preliminary injunction as to all non-bottled water products was not intended to be retroactive remains pending. Negotiations over plaintiffs' attorney fees are ongoing. Civil Service Litigation . In Simpson v. New York State Department of Civil Service et ano ., plaintiffs have brought a class action claiming that a civil service test administered between 1996 and 2006 resulted in a disparate impact upon the class. Cross motions for summary judgment are currently pending. Public Finance . In Bordeleau et al. v. State of New York, et al ., a group of 50 individuals filed a complaint asking the trial court to enjoin certain expenditures of State funds and declare them to be illegal under the State Constitution. In particular, the plaintiffs claim that the State budget appropriates funds for grants to private corporations in violation of the Constitution, and also claim that certain enabling language in the State budget constitutes improper delegation of legislative power to the executive branch in violation. In addition to the State defendants, the complaint names as defendants certain public authorities and private corporations that are claimed to be recipients of the allegedly illegal appropriations. The State defendants and several other defendants moved to dismiss the complaint for failure to state a cause of action, for failure to join certain necessary parties, and for lack of a justiciable controversy. In a decision and order dated February 27, 2009 the trial granted the motion to dismiss the complaint, finding no Constitutional violation. The court concluded that the challenged appropriations were valid expenditures for public purposes and not "gifts" prohibited under the Constitution. The court also rejected the appellant's challenge to the reference in the budget to a memorandum of understanding, relying on that Court's holding in Saxton v. Carey, that the degree of itemization required under the Constitution is to be determined by the Legislature, not the courts. Plaintiffs appealed from the dismissal of their complaint. On June 24, 2010, the appellate court reversed the dismissal of the case and remanded the matter back to the lower court. The defendants have moved for reargument of the court's decision or, in the alternative, leave to appeal and have asked for an extension for time to answer the complaint until 30 days after the court rules on the motion. A decision on the motion is pending. Metropolitan Transportation Authority . In various cases, including Hampton Transportation Ventures, Inc. et al. v. Silver et al., plaintiffs challenge the constitutionality of a 2009 State law that imposed certain taxes and fees, including a regional payroll tax, the revenue from which is directed to the Metropolitan Transportation Authority. Plaintiffs seek a judgment declaring that enactment of the law violated various provisions of the State Constitution. School Aid . In Becker et al. v. Paterson et al ., plaintiffs seek a judgment declaring that the Governor's determination to delay payment of school aid due by statute on December 15, 2009, violated various provisions of the State Constitution. Since the commencement of the suit, the moneys at issue have been released. Pursuant to a court-direct schedule, plaintiffs moved for summary judgment on March 5, 2010. Defendants cross-moved for summary judgment on April 15, 2010. The plaintiffs replied on May 7, 2010 and defendants filed their reply on May 21, 2010. The motions were argued on June 24, 2010 and the parties await decision. In Hussein v. State of New York , plaintiffs seek a judgment declaring that the State's system of financing public education violates the Constitution on the ground that it fails to provide a sound basic education. In a decision and order dated July 21, 2009 the Supreme Court denied the State's motion to dismiss the action. The State has appealed this denial to the Appellate Division. The appeal will be argued in November, 2010. Sales Tax . In Seneca Nation of Indians v. Paterson et al. and St. Regis Mohawk Tribe v. Paterson, et al., plaintiffs seek judgments declaring that their rights are violated under Federal law. On August 26, 2010, in Seneca , the District Court granted a motion to intervene brought by the Cayuga Indian Nation of New York. In Seneca , in an order dated August 31, 2010, the District Court ordered that defendants are temporarily restrained from implementing, administering and enforcing the challenged provisions of the Tax Law and the implementing regulations as applied to the Seneca Nation of Indians and the Cayuga Indian Nation of New York pending further order of the Court. A hearing on a preliminary injunction is tentatively scheduled for September 13, 2010. In Day Wholesale Inc., et al. v. State, et al., plaintiffs also seek to enjoin the collection of taxes on cigarettes sold to or by reservation retailers. On August 31, 2010, the trial court issued an order vacating two earlier preliminary injunctions of that court barring the collection of such taxes until defendants had taken certain steps to comply with prior law. The court also denied plaintiffs' motion for a preliminary injunction . The plaintiffs in Day Wholesale appealed. On September 1, 2010, a judge stayed the order. Plaintiffs' preliminary injunction motion will be submitted to the court on September 9, 2010. Personal Injury Claims . In Watson v. State , claimants seek damages arising out of a motor vehicle accident in which four members of a family were injured. On February 2, 2010, the Court of Claims granted summary judgment on the issue of liability to claimants. Following a status conference with the parties on September 1, 2010, the court scheduled the trial on the issue of damages to begin January 24, 2011. Eminent Domain . In Gyrodine v. State of New York , claimant seeks compensation under the Eminent Domain Procedures Law . By decision dated June 21, 2010, the Court of Claims awarded claimant $125 million as compensation for the appropriation. The time in which the State may appeal the decision has not yet expired. Insurance Department Assessments . In New York Insurance Association, Inc. v. State , several insurance companies and an association of insurance companies seek a declaration that certain assessments issued against the plaintiff insurance companies by the Insurance Department violate the Federal Constitution to the extent that the assessments include amounts for items that are not direct expenses of the Insurance Department. The State filed its answer on May 4, 2010. On June 9, 2010, the State filed a motion for summary judgment. The court has not yet set a briefing schedule. APPENDIX B Rating Categories Description of certain ratings assigned by S&P, Moody's and Fitch: S&P Long-term AAA An obligation rated 'AAA' has the highest rating assigned by S&P. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. AA An obligation rated 'AA' differs from the highest rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. A An obligation rated 'A' is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong. BBB An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. BB, B, CCC, CC, and C Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics. 'BB' indicates the least degree of speculation and 'C' the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. BB An obligation rated 'BB' is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. B An obligation rated 'B' is more vulnerable to nonpayment than obligations rated 'BB', but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. CCC An obligation rated 'CCC' is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. CC An obligation rated 'CC' is currently highly vulnerable to nonpayment. C A subordinated debt or preferred stock obligation rated 'C' is currently highly vulnerable to nonpayment. The 'C' rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued. A 'C' also will be assigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that is currently paying. D An obligation rated 'D' is in payment default. The 'D' rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The 'D' rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. r The symbol 'r' is attached to the ratings of instruments with significant noncredit risks. It highlights risks to principal or volatility of expected returns which are not addressed in the credit rating. Examples include: obligations linked or indexed to equities, currencies, or commodities; obligations exposed to severe prepayment risk—such as interest-only or principal-only mortgage securities; and obligations with unusually risky interest terms, such as inverse floaters. N.R. The designation 'N.R.' indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that S&P does not rate a particular obligation as a matter of policy. Note: The ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign designation to show relative standing within the major rating categories. Short-term SP-1 Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus sign (+) designation. SP-2 Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes. SP-3 Speculative capacity to pay principal and interest. Commercial paper A-1 This designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. Moody's Long-term Aaa Bonds rated 'Aaa' are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa Bonds rated 'Aa' are judged to be of high quality by all standards. Together with the 'Aaa' group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in 'Aaa' securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the 'Aaa' securities. A Bonds rated 'A' possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future. Baa Bonds rated 'Baa' are considered as medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba Bonds rated 'Ba' are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B Bonds rated 'B' generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa Bonds rated 'Caa' are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca Bonds rated 'Ca' represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C Bonds rated 'C' are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from 'Aa' through 'Caa'. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. Prime rating system (short-term) Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: Leading market positions in well-established industries. High rates of return on funds employed. Conservative capitalization structure with moderate reliance on debt and ample asset protection. Broad margins in earnings coverage of fixed financial charges and high internal cash generation. Well-established access to a range of financial markets and assured sources of alternate liquidity. MIG/VMIG―U.S. short-term Municipal debt issuance ratings are designated as Moody's Investment Grade (MIG) and are divided into three levels―MIG 1 through MIG 3. The short-term rating assigned to the demand feature of variable rate demand obligations (VRDOs) is designated as VMIG. When either the long- or short-term aspect of a VRDO is not rated, that piece is designated NR, e.g., Aaa/NR or NR/VMIG 1. MIG 1/VMIG1 This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing. MIG 2/VMIG 2 This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group. MIG 3/VMIG 3 This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established. SG This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection. Fitch Long-term investment grade AAA Highest credit quality. 'AAA' ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for timely payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. AA Very high credit quality. 'AA' ratings denote a very low expectation of credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. A High credit quality. 'A' ratings denote a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. BBB Good credit quality. 'BBB' ratings indicate that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. This is the lowest investment-grade category. Long-term speculative grade BB Speculative. 'BB' ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade. B Highly speculative. 'B' ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment. CCC, CC, C High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. 'CC' ratings indicate that default of some kind appears probable. 'C' ratings signal imminent default. DDD, DD, D Default. The ratings of obligations in this category are based on their prospects for achieving partial or full recovery in a reorganization or liquidation of the obligor. While expected recovery values are highly speculative and cannot be estimated with any precision, the following serve as general guidelines. 'DDD' obligations have the highest potential for recovery, around 90% - 100% of outstanding amounts and accrued interest. 'DD' ratings indicate potential recoveries in the range of 50% - 90% and 'D' the lowest recovery potential, i.e., below 50%. Entities rated in this category have defaulted on some or all of their obligations. Entities rated 'DDD' have the highest prospect for resumption of performance or continued operation with or without a formal reorganization process. Entities rated 'DD' and 'D' are generally undergoing a formal reorganization or liquidation process; those rated 'DD' are likely to satisfy a higher portion of their outstanding obligations, while entities rated 'D' have a poor prospect of repaying all obligations. Short-term A short-term rating has a time horizon of less than 12 months for most obligations, or up to three years for U.S. public finance securities, and thus places greater emphasis on the liquidity necessary to meet financial commitments in a timely manner. F1 Highest credit quality . Indicates the strongest capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature. 'NR' indicates that Fitch does not rate the issuer or issue in question. Notes to long-term and short-term ratings: A plus (+) or minus (-) sign designation may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the 'AAA' long-term rating category, to categories below 'CCC', or to short-term ratings other than 'F1.' DREYFUS NEW YORK AMT-FREE MUNICIPAL MONEY MARKET FUND PART C. OTHER INFORMATION Item 23. Exhibits. (a) Registrant's Agreement and Declaration of Trust is incorporated by reference to Exhibit (1)(a) of Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A, filed on September 27, 1996. Articles of Amendment are incorporated by reference to Exhibit (1)(b) of Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A, filed on September 27, 1996. (a)(i) Articles of Amendment are incorporated by referenced to Exhibit (a)(i) of Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A filed on September 26, 2008 (b) Registrant's By-Laws are incorporated by reference to Exhibit (b) of Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A, filed on September 27, 2006. (d) Management Agreement is incorporated by reference to Exhibit (d) of Post-Effective Amendment No. 26 to the Registration Statement on Form N-1A, filed on September 27, 2007. (e)(i) Distribution Agreement is incorporated by reference to Exhibit (e)(i) of Post-Effective Amendment No. 26 to the Registration Statement on Form N-1A, filed on September 27, 2007. (e)(ii) Forms of Service Agreements are incorporated by reference to Exhibit (e)(ii) of Post-Effective Amendment No. 26 to the Registration Statement on Form N-1A, filed on September 27, 2007. (e)(iii) Forms of Supplement to Service Agreements are incorporated by reference to Exhibit (e)(iii) of Post-Effective Amendment No. 26 to the Registration Statement on Form N-1A, filed on September 27, 2007. (e)(iv) Form of Amended Distribution Agreement* (g)(i) Registrant's Amended and Restated Custody Agreement are incorporated by referenced to Exhibit (g)(i) of Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A filed on September 26, 2008 (g)(iii) Foreign Custody Manager Agreement is incorporated by reference to Exhibit (g)(iii) of Post-Effective Amendment No. 19 to the Registration Statement on Form N-1A, filed on September 28, 2001. (h)(i) Amended and Restated Transfer Agency Agreements are incorporated by referenced to Exhibit (h)(i) of Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A filed on September 26, 2008 (i) Registrant's Opinion of Counsel of Stroock & Stroock & Lavan is incorporated by reference to Exhibit (10) of Post-Effective Amendment No. 14 to the Registration Statement on Form N-1A, filed on September 27, 1996. C‑ 3 (j) Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. * (m) Shareholder Services Plan is incorporated by reference to Exhibit (9) of Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A, filed on August 31, 1995. (p) Code of Ethics is incorporated by referenced to Exhibit (p) of Post-Effective Amendment No. 27 to the Registration Statement on Form N-1A filed on September 26, 2008 (p)(i) Code of Ethics for the Non-management Board Members of the Dreyfus Family of Funds* Other Exhibits (a) Power of Attorney* (b) Certificate of Assistant Secretary* * Filed herewith. Item 24 . Persons Controlled by or under Common Control with Registrants Not Applicable. Item 25. Indemnification The Statement as to the general effect of any contract, arrangements or statue under which a Board member, officer, underwriter or affiliated person of the Registrant is insured or indemnified in any manner against any liability which may be incurred in such capacity, other than insurance provided by any Board member, officer, affiliated person or underwriter for their own protection, is incorporated by reference to Item (b) of Part C of Post-Effective Amendment No. 24 to the Registration Statement on Form N-1A, filed on September 27, 2006. Reference is also made to the Distribution Agreement which is attached as Exhibit (e)(i) to Post-Effective Amendment No. 26 to the Registration Statement on Form N-1A, filed on September 27, 2007. Item 26. Business and Other Connections of Investment Adviser. The Dreyfus Corporation ("Dreyfus") and subsidiary companies comprise a financial service organization whose business consists primarily of providing investment management services as the investment adviser, manager and distributor for sponsored investment companies registered under the Investment Company Act of 1940 and as an investment adviser to institutional and individual accounts. Dreyfus also serves as sub-investment adviser to and/or administrator of other investment companies. MBSC Securities Corporation, a wholly-owned subsidiary of Dreyfus, serves primarily as a registered broker-dealer of shares of investment companies sponsored by Dreyfus and of other investment companies for which Dreyfus acts as investment adviser, sub-investment adviser or administrator. C‑ 1 C‑ 2 ITEM 26. Business and Other Connections of Investment Adviser (continued) Officers and Directors of Investment Adviser Name and Position With Dreyfus Other Businesses Position Held Dates Jonathan Baum MBSC Securities Corporation ++ Chief Executive Officer 3/08 - Present Chief Executive Officer Chairman of the Board 3/08 - Present and Chair of the Board Director 6/07 - 3/08 Executive Vice President 6/07 - 3/08 J. Charles Cardona MBSC Securities Corporation ++ Director 6/07 - Present President and Director Executive Vice President 6/07 - Present Universal Liquidity Funds plc+ Director 4/06 - Present Diane P. Durnin None Vice Chair and Director Phillip N. Maisano The Bank of New York Mellon ***** Senior Vice President 7/08 - Present Director, Vice Chair and Chief Investment Officer BNY Mellon, National Association + Senior Vice President 7/08 - Present Mellon Bank, N.A. + Senior Vice President 4/06 - 6/08 BNY Alcentra Group Holdings, Inc. ++ Director 10/07 - Present BNY Mellon Investment Office GP LLC* Manager 4/07 - Present Mellon Global Alternative Investments Limited Director 8/06 - Present London, England Pareto Investment Management Limited Director 4/08 - Present London, England The Boston Company Asset Management NY, Manager 10/07 - Present LLC * The Boston Company Asset Management, LLC * Manager 12/06 - Present Urdang Capital Management, Inc. Director 10/07 - Present 630 West Germantown Pike, Suite 300 Plymouth Meeting, PA 19462 Urdang Securities Management, Inc. Director 10/07 - Present 630 West Germantown Pike, Suite 300 Plymouth Meeting, PA 19462 EACM Advisors LLC Chairman of Board 8/04 - Present 200 Connecticut Avenue Norwalk, CT 06854-1940 C-3 Name and Position With Dreyfus Other Businesses Position Held Dates Founders Asset Management LLC**** Member, Board of 11/06 - 12/09 Managers Standish Mellon Asset Management Company, Board Member 12/06 - Present LLC Mellon Financial Center 201 Wa shington Street Boston, MA 02108-4408 Mellon Capital Management Corporation*** Director 12/06 - Present Mellon Equity Associates, LLP + Board Member 12/06 - 12/07 Newton Management Limited Board Member 12/06 - Present London, England Franklin Portfolio Associates, LLC * Board Member 12/06 - Present Mitchell E. Harris Standish Mellon Asset Management Company Chairman 2/05 - Present Director LLC Chief Executive Officer 8/04 - Present Mellon Financial Center Member, Board of 10/04 - Present 201 Washington Street Managers Boston, MA 0210 8-4408 Alcentra NY, LLC ++ Manager 1/08 - Present Alcentra US, Inc. ++ Director 1/08 - Present Alcentra, Inc. ++ Director 1/08 - Present BNY Alcentra Group Holdings, Inc. ++ Director 10/07 - Present Pareto New York LLC ++ Manager 11/07 - Present Standish Ventures LLC President 12/05 - Present Mellon Financial Center Manager 12/05 - Present 201 Washington Street Boston, MA 02108-4408 Palomar Management Director 12/97 - Present London, England Palomar Management Holdings Limited Director 12/97 - Present London, England Pareto Investment Management Limited Director 9/04 - Present London, England Jeffrey D. Landau The Bank of New York Mellon + Executive Vice President 4/07 - Present Director Allomon Corporation + Treasurer 12/07 - Present APT Holdings Corporation + Treasurer 12/07 - Present BNY Mellon, N.A. + Treasurer 7/07 - 0/10 C-4 Name and Position With Dreyfus Other Businesses Position Held Dates Mellon Funding Corporation + Treasurer 12/07 - 12/09 The Bank of New York Mellon Corporation + Treasurer 7/07 - 01/10 Cyrus Taraporevala Urdang Capital Management, Inc. Director 10/07 - Present Director 630 West Germantown Pike, Suite 300 Plymouth Meeting, PA 19462 Urdang Securities Management, Inc. Director 10/07 - Present 630 West Germantown Pike, Suite 300 Plymouth Meeting, PA 19462 The Boston Company Asset Management NY, Manager 08/06 – Present LLC * The Boston Company Asset Management LLC * Manager 01/08 – Present BNY Mellon, National Association + Senior Vice President 07/06 - Present The Bank of New York Mellon ***** Senior Vice President 07/06 - Present Scott E. Wennerholm Mellon Capital Management Corporation *** Director 10/05 - Present Director Newton Management Limited Director 1/06 - Present London, England Gannett Welsh & Kotler LLC Manager 11/07 - Present 222 Berkley Street Administrator 11/07 - Present Boston, MA 02116 BNY Alcentra Group Holdings, Inc. ++ Director 10/07 - Present Ivy Asset Management Corp. Director 12/07 - Present One Jericho Plaza Jericho, NY 11753 Urdang Capital Management, Inc. Director 10/07 - Present 630 West Germantown Pike, Suite 300 Plymouth Meeting, PA 19462 Urdang Securities Management, Inc. Director 10/07 - Present 630 West Germantown Pike, Suite 300 Plymouth Meeting, PA 19462 EACM Advisors LLC Manager 6/04 - Present 200 Connecticut Avenue Norwalk, CT 06854-1940 Franklin Portfolio Associates LLC * Manager 1/06 - Present The Boston Company Asset Management NY, Manager 10/07 - Present LLC* The Boston Company Asset Management LLC* Manager 10/05 - Present Pareto Investment Management Limited Director 3/06 - Present London, England C-5 Name and Position With Dreyfus Other Businesses Position Held Dates Mellon Equity Associates, LLP + Executive Committee 10/05 - 12/07 Member Standish Mellon Asset Management Company, Member, Board of 10/05 - Present LLC Managers Mellon Financial Center 201 Washington Street Boston, MA 02108-4408 The Boston Company Holding, LLC * Member, Board of 4/06 - Present Managers The Bank of New York Mellon ***** Senior Vice President 7/08 - Present BNY Mellon, National Association + Senior Vice President 7/08 - Present Mellon Bank, N.A. + Senior Vice President 10/05 - 6/08 Mellon Trust of New England, N. A. * Director 4/06 - 6/08 Senior Vice President 10/05 - 6/08 MAM (DE) Trust +++++ Member of Board of 1/07 - Present Trustees MAM (MA) Holding Trust +++++ Member of Board of 1/07 - Present Trustees Bradley J. Skapyak MBSC Securities Corporation ++ Executive Vice President 6/07 - Present Chief Operating Officer and Director The Bank of New York Mellon **** Senior Vice President 4/07 - Present The Dreyfus Family of Funds ++ President 1/10 - Present Dreyfus Transfer, Inc. ++ Senior Vice President 5/10 - Present Director 5/10 - Present Dwight Jacobsen Pioneer Investments Senior Vice President 4/06 - 12/07 Executive Vice President 60 State Street and Director Boston, Massachusetts Patrice M. Kozlowski None Senior Vice President – Corporate Communications Gary Pierce The Bank of New York Mellon ***** Vice President 7/08 - Present Controller BNY Mellon, National Association + Vice President 7/08 - Present The Dreyfus Trust Company +++ Chief Financial Officer 7/05 - 6/08 Treasurer 7/05 - 6/08 Laurel Capital Advisors, LLP + Chief Financial Officer 5/07 - Present C-6 Name and Position With Dreyfus Other Businesses Position Held Dates MBSC Securities Corporation ++ Director 6/07 - Present Chief Financial Officer 6/07 - Present Founders Asset Management, LLC**** Assistant Treasurer 7/06 - 12/09 Dreyfus Consumer Credit Treasurer 7/05 - Present Corporation ++ Dreyfus Transfer, Inc. ++ Chief Financial Officer 7/05 - Present Dreyfus Service Treasurer 7/05 - Present Organization, Inc. ++ Seven Six Seven Agency, Inc. ++ Treasurer 4/99 - Present Joseph W. Connolly The Dreyfus Family of Funds ++ Chief Compliance 10/04 - Present Chief Compliance Officer Officer Laurel Capital Advisors, LLP + Chief Compliance 4/05 - Present Officer BNY Mellon Funds Trust ++ Chief Compliance 10/04 - Present Officer MBSC Securities Corporation ++ Chief Compliance 6/07 – Present Officer Gary E. Abbs The Bank of New York Mellon + First Vice President and 12/96 – Present Vice President – Tax Manager of Tax Compliance Dreyfus Service Organization ++ Vice President – Tax 01/09 – Present Dreyfus Consumer Credit Corporation ++ Chairman 01/09 – Present President 01/09 – Present MBSC Securities Corporation ++ Vice President – Tax 01/09 – Present Jill Gill MBSC Securities Corporation ++ Vice President 6/07 – Present Vice President – Human Resources The Bank of New York Mellon ***** Vice President 7/08 – Present BNY Mellon, National Association + Vice President 7/08 - Present Mellon Bank N.A. + Vice President 10/06 – 6/08 Joanne S. Huber The Bank of New York Mellon + State & Local 07/1/07 – Vice President – Tax Compliance Manager Present Dreyfus Service Organization ++ Vice President – Tax 01/09 – Present Dreyfus Consumer Credit Corporation ++ Vice President – Tax 01/09 – Present MBSC Securities Corporation ++ Vice President – Tax 01/09 – Present Anthony Mayo None Vice President – Information Systems C-7 Name and Position With Dreyfus Other Businesses Position Held Dates John E. Lane A P Colorado, Inc. + Vice President – Real 8/07 - Present Vice President Estate and Leases A P East, Inc. + Vice President– Real 8/07 - Present Estate and Leases A P Management, Inc. + Vice President– Real 8/07 - Present Estate and Leases A P Properties, Inc. + Vice President – Real 8/07 - Present Estate and Leases A P Rural Land, Inc. + Vice President– Real 8/07 - 9/07 Estate and Leases Allomon Corporation + Vice President– Real 8/07 - Present Estate and Leases AP Residential Realty, Inc. + Vice President– Real 8/07 - Present Estate and Leases AP Wheels, Inc. + Vice President– Real 8/07 - Present Estate and Leases BNY Mellon, National Association + Vice President – Real 7/08 - Present Estate and Leases Citmelex Corporation + Vice President– Real 8/07 - Present Estate and Leases Eagle Investment Systems LLC Vice President– Real 8/07 - Present 65 LaSalle Road Estate and Leases West Hartford, CT 06107 East Properties Inc. + Vice President– Real 8/07 - Present Estate and Leases FSFC, Inc. + Vice President– Real 8/07 - Present Estate and Leases Holiday Properties, Inc. + Vice President– Real 8/07 - Present Estate and Leases MBC Investments Corporation + Vice President– Real 8/07 - Present Estate and Leases MBSC Securities Corporation ++ Vice President– Real 8/07 - Present Estate and Leases MELDEL Leasing Corporation Number 2, Inc. + Vice President– Real 7/07 - Present Estate and Leases Mellon Bank Community Development Vice President– Real 11/07 - Present Corporation + Estate and Leases Mellon Capital Management Corporation + Vice President– Real 8/07 - Present Estate and Leases Mellon Financial Services Corporation #1 + Vice President– Real 8/07 - Present Estate and Leases Mellon Financial Services Corporation #4 + Vice President – Real 7/07 - Present Estate and Leases Mellon Funding Corporation + Vice President– Real 12/07 - Present Estate and Leases Mellon Holdings, LLC + Vice President– Real 12/07 - Present Estate and Leases Mellon International Leasing Company + Vice President– Real 7/07 - Present Estate and Leases Mellon Leasing Corporation + Vice President– Real 7/07 - Present Estate and Leases Mellon Private Trust Company, National Vice President– Real 8/07 - 1/08 Association + Estate and Leases Mellon Securities Trust Company + Vice President– Real 8/07 - 7/08 Estate and Leases Mellon Trust Company of Illinois + Vice President– Real 8/07 - 07/08 Estate and Leases C-8 Name and Position With Dreyfus Other Businesses Position Held Dates Mellon Trust Company of New England, N.A. + Vice President– Real 8/07 - 6/08 Estate and Leases Mellon Trust Company of New York LLC ++ Vice President– Real 8/07 - 6/08 Estate and Leases Mellon Ventures, Inc. + Vice President– Real 8/07 - Present Estate and Leases Melnamor Corporation + Vice President– Real 8/07 - Present Estate and Leases MFS Leasing Corp. + Vice President– Real 7/07 - Present Estate and Leases MMIP, LLC + Vice President– Real 8/07 - Present Estate and Leases Pareto New York LLC ++ Vice President– Real 10/07 - Present Estate and Leases Pontus, Inc. + Vice President– Real 7/07 - Present Estate and Leases Promenade, Inc. + Vice President– Real 8/07 - Present Estate and Leases RECR, Inc. + Vice President– Real 8/07 - Present Estate and Leases SKAP #7 + Vice President– Real 8/07 - 11/07 Estate and Leases Technology Services Group, Inc.***** Senior Vice President 6/06 - Present Tennesee Processing Center LLC***** Managing Director 5/08 - Present Senior Vice President 4/04 - 5/08 Texas AP, Inc. + Vice President– Real 8/07 - Present Estate and Leases The Bank of New York Mellon***** Vice President – Real 7/08 - Present Estate and Leases The Bank of New York Mellon Corporation***** Executive Vice President 8/07 - Present Trilem, Inc. + Vice President– Real 8/07 - Present Estate and Leases Jeanne M. Login A P Colorado, Inc. + Vice President– Real 8/07 - Present Vice President Estate and Leases A P East, Inc. + Vice President– Real 8/07 - Present Estate and Leases A P Management, Inc. + Vice President– Real 8/07 - Present Estate and Leases A P Properties, Inc. + Vice President – Real 8/07 - Present Estate and Leases A P Rural Land, Inc. + Vice President– Real 8/07 - 9/07 Estate and Leases Allomon Corporation + Vice President– Real 8/07 - Present Estate and Leases AP Residential Realty, Inc. + Vice President– Real 8/07 - Present Estate and Leases AP Wheels, Inc. + Vice President– Real 8/07 - Present Estate and Leases APT Holdings Corporation + Vice President– Real 8/07 - Present Estate and Leases BNY Investment Management Services LLC ++++ Vice President– Real 1/01 - Present Estate and Leases BNY Mellon, National Association + Vice President – Real 7/08 - Present Estate and Leases C-9 Name and Position With Dreyfus Other Businesses Position Held Dates Citmelex Corporation + Vice President– Real 8/07 - Present Estate and Leases Eagle Investment Systems LLC + Vice President– Real 8/07 - Present Estate and Leases East Properties Inc. + Vice President– Real 8/07 - Present Estate and Leases FSFC, Inc. + Vice President– Real 8/07 - Present Estate and Leases Holiday Properties, Inc. + Vice President– Real 8/07 - Present Estate and Leases MBC Investments Corporation + Vice President– Real 8/07 - Present Estate and Leases MBSC Securities Corporation ++ Vice President– Real 8/07 - Present Estate and Leases MELDEL Leasing Corporation Number 2, Inc. + Vice President– Real 7/07 - Present Estate and Leases Mellon Bank Community Development Vice President – Real 11/07 - Present Corporation + Estate and Leases Mellon Capital Management Corporation + Vice President– Real 8/07 - Present Estate and Leases Mellon Financial Services Corporation #1 + Vice President– Real 8/07 - Present Estate and Leases Mellon Financial Services Corporation #4 + Vice President – Real 7/07 - Present Estate and Leases Mellon Funding Corporation + Vice President – Real 12/07 - Present Estate and Leases Mellon Holdings LLC + Vice President – Real 12/07 - Present Estate and Leases Mellon International Leasing Company + Vice President– Real 7/07 - Present Estate and Leases Mellon Leasing Corporation + Vice President– Real 7/07 - Present Estate and Leases Mellon Private Trust Company, National Vice President – Real 8/07 - 1/08 Association + Estate and Leases Mellon Securities Trust Company + Vice President – Real 8/07 - 7/08 Estate and Leases Mellon Trust of New England, N.A. * Vice President – Real 8/07 - 6/08 Estate and Leases Mellon Trust Company of Illinois + Vice President– Real 8/07 - 7/08 Estate and Leases MFS Leasing Corp. + Vice President– Real 7/07 - Present Estate and Leases MMIP, LLC + Vice President– Real 8/07 - Present Estate and Leases Pontus, Inc. + Vice President– Real 7/07 - Present Estate and Leases Promenade, Inc. + Vice President – Real 8/07 - Present Estate and Leases RECR, Inc. + Vice President – Real 8/07 - Present Estate and Leases SKAP #7 + Vice President – Real 8/07 - 11/07 Estate and Leases Tennesee Processing Center LLC***** Managing Director 5/08 - Present Senior Vice President 4/04 - 5/08 C-10 Name and Position With Dreyfus Other Businesses Position Held Dates Texas AP, Inc. + Vice President – Real 8/07 - Present Estate and Leases The Bank of New York Mellon***** Vice President – Real 7/08 - Present Estate and Leases Trilem, Inc. + Vice President – Real 8/07 - Present Estate and Leases James Bitetto The Dreyfus Family of Funds ++ Vice President and 8/05 - Present Secretary Assistant Secretary MBSC Securities Corporation ++ Assistant Secretary 6/07 - Present Dreyfus Service Organization, Inc. ++ Secretary 8/05 - Present The Dreyfus Consumer Credit Corporation ++ Vice President 2/02 - Present Founders Asset Management LLC**** Assistant Secretary 3/09 - 12/09 * The address of the business so indicated is One Boston Place, Boston, Massachusetts, 02108. ** The address of the business so indicated is One Bush Street, Suite 450, San Francisco, California 94104. *** The address of the business so indicated is 50 Fremont Street, Suite 3900, San Francisco, California 94104. **** The address of the business so indicated is 210 University Blvd., Suite 800, Denver, Colorado 80206. ***** The address of the business so indicated is One Wall Street, New York, New York 10286. + The address of the business so indicated is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258. ++ The address of the business so indicated is 200 Park Avenue, New York, New York 10166. +++ The address of the business so indicated is 144 Glenn Curtiss Boulevard, Uniondale, New York 11556-0144. ++++ The address of the business so indicated is White Clay Center, Route 273, Newark, Delaware 19711. +++++ The address of the business so indicated is 4005 Kennett Pike, Greenville, DE 19804. C-11 Item 27. Principal Underwriters (a) Other investment companies for which Registrant's principal underwriter (exclusive distributor) acts as principal underwriter or exclusive distributor: 1. Advantage Funds, Inc. 2. BNY Mellon Funds Trust 3. CitizensSelect Funds 4. Dreyfus Appreciation Fund, Inc. 5. Dreyfus BASIC Money Market Fund, Inc. 6. Dreyfus BASIC U.S. Government Money Market Fund 7. Dreyfus BASIC U.S. Mortgage Securities Fund 8. Dreyfus Bond Funds, Inc. 9. Dreyfus Cash Management 10. Dreyfus Cash Management Plus, Inc. 11. Dreyfus Connecticut Municipal Money Market Fund, Inc. 12. Dreyfus Dynamic Alternatives Fund, Inc. 13. Dreyfus Funds, Inc. 14. The Dreyfus Fund Incorporated 15. Dreyfus Government Cash Management Funds 16. Dreyfus Growth and Income Fund, Inc. 17. Dreyfus Index Funds, Inc. 18. Dreyfus Institutional Cash Advantage Funds 19. Dreyfus Institutional Preferred Money Market Funds 20. Dreyfus Institutional Reserves Funds 21. Dreyfus Intermediate Municipal Bond Fund, Inc. 22. Dreyfus International Funds, Inc. 23. Dreyfus Investment Funds 24. Dreyfus Investment Grade Funds, Inc. 25. Dreyfus Investment Portfolios 26. The Dreyfus/Laurel Funds, Inc. 27. The Dreyfus/Laurel Funds Trust 28. The Dreyfus/Laurel Tax-Free Municipal Funds 29. Dreyfus LifeTime Portfolios, Inc. 30. Dreyfus Liquid Assets, Inc. 31. Dreyfus Manager Funds I 32. Dreyfus Manager Funds II 33. Dreyfus Massachusetts Municipal Money Market Fund 34. Dreyfus Midcap Index Fund, Inc. 35. Dreyfus Money Market Instruments, Inc. 36. Dreyfus Municipal Bond Opportunity Fund 37. Dreyfus Municipal Cash Management Plus 38. Dreyfus Municipal Funds, Inc. 39. Dreyfus Municipal Money Market Fund, Inc. 40. Dreyfus New Jersey Municipal Bond Fund, Inc. 41. Dreyfus New Jersey Municipal Money Market Fund, Inc. 42. Dreyfus New York AMT-Free Municipal Bond Fund 43. Dreyfus New York Municipal Cash Management 44. Dreyfus New York Tax Exempt Bond Fund, Inc. 45. Dreyfus Opportunity Funds C-12 46. Dreyfus Pennsylvania Municipal Money Market Fund 47. Dreyfus Premier California AMT-Free Municipal Bond Fund, Inc. 48. Dreyfus Premier GNMA Fund, Inc. 49. Dreyfus Premier Investment Funds, Inc. 50. Dreyfus Premier Short-Intermediate Municipal Bond Fund 51. Dreyfus Premier Worldwide Growth Fund, Inc. 52. Dreyfus Research Growth Fund, Inc. 53. Dreyfus State Municipal Bond Funds 54. Dreyfus Stock Funds 55. Dreyfus Short-Intermediate Government Fund 56. The Dreyfus Socially Responsible Growth Fund, Inc. 57. Dreyfus Stock Index Fund, Inc. 58. Dreyfus Tax Exempt Cash Management Funds 59. The Dreyfus Third Century Fund, Inc. 60. Dreyfus Treasury & Agency Cash Management 61. Dreyfus Treasury Prime Cash Management 62. Dreyfus U.S. Treasury Intermediate Term Fund 63. Dreyfus U.S. Treasury Long Term Fund 64. Dreyfus 100% U.S. Treasury Money Market Fund 65. Dreyfus Variable Investment Fund 66. Dreyfus Worldwide Dollar Money Market Fund, Inc. 67. General California Municipal Money Market Fund 68. General Government Securities Money Market Funds, Inc. 69. General Money Market Fund, Inc. 70. General Municipal Money Market Funds, Inc. 71. General New York Municipal Money Market Fund 72. Strategic Funds, Inc. C-13 (b) Name and principal Positions and Offices Business address Positions and offices with the Distributor with Registrant Jon R. Baum* Chief Executive Officer and Chairman of the Board None Ken Bradle** President and Director None Robert G. Capone**** Executive Vice President and Director None J. Charles Cardona* Executive Vice President and Director None Sue Ann Cormack** Executive Vice President None John M. Donaghey*** Executive Vice President and Director None Dwight D. Jacobsen* Executive Vice President and Director None Mark A. Keleher***** Executive Vice President None James D. Kohley*** Executive Vice President None Jeffrey D. Landau* Executive Vice President and Director None William H. Maresca* Executive Vice President and Director None Timothy M. McCormick* Executive Vice President None David K. Mossman*** Executive Vice President None Irene Papadoulis** Executive Vice President None Matthew Perrone** Executive Vice President None Noreen Ross* Executive Vice President None Bradley J. Skapyak* Executive Vice President President Gary Pierce* Chief Financial Officer and Director None Tracy Hopkins* Senior Vice President None Denise B. Kneeland**** Senior Vice President None Mary T. Lomasney**** Senior Vice President None Barbara A. McCann**** Senior Vice President None Kevin L. O’Shea*** Senior Vice President None Christine Carr Smith***** Senior Vice President None Ronald Jamison* Chief Legal Officer and Secretary None Joseph W. Connolly* Chief Compliance Officer (Investment Advisory Business) Chief Compliance Officer Stephen Storen* Chief Compliance Officer None Maria Georgopoulos* Vice President – Facilities Management None Stewart Rosen* Vice President – Facilities Management None Natalia Gribas* Vice President – Compliance and Anti-Money Laundering Anti-Money Laundering Officer Compliance Officer Karin L. Waldmann* Privacy Officer None Gary E. Abbs*** Vice President - Tax None Timothy I. Barrett** Vice President None Gina DiChiara* Vice President None Jill Gill* Vice President None Joanne S. Huber*** Vice President - Tax None John E. Lane***** Vice President – Real Estate and Leases None Jeanne M. Login***** Vice President – Real Estate and Leases None Donna M. Impagliazzo** Vice President – Compliance None Edward A. Markward* Vice President – Compliance None Anthony Nunez* Vice President – Finance None William Schalda* Vice President None John Shea* Vice President – Finance None Christopher A. Stallone** Vice President None Susan Verbil* Vice President – Finance None William Verity* Vice President – Finance None James Windels* Vice President Treasurer C-14 (b) Name and principal Positions and Offices Business address Positions and offices with the Distributor with Registrant James Bitetto* Assistant Secretary Vice President and Assistant Secretary James D. Muir* Assistant Secretary None Barbara J. Parrish*** Assistant Secretary None Cristina Rice*** Assistant Secretary None * Principal business address is 200 Park Avenue, New York, NY 10166. ** Principal business address is 144 Glenn Curtiss Blvd., Uniondale, NY 11556-0144. *** Principal business address is One Mellon Bank Center, Pittsburgh, PA 15258. **** Principal business address is One Boston Place, Boston, MA 02108. ***** Principal business address is 50 Fremont Street, Suite 3900, San Francisco, CA 94104. ***** Principal business address is 101 Barclay Street, New York 10286. C-15 Item 28. Location of Accounts and Records 1. The Bank of New York Mellon One Wall Street New York, New York 10286 2. DST Systems, Inc. 1055 Broadway Kansas City, MO 64105 3. The Dreyfus Corporation 200 Park Avenue New York, New York 10166 Item 29. Management Services Not Applicable Item 30. Undertakings None C-16 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, and State of New York on the28 th day of September, 2010. Dreyfus New York AMT-Free Municipal Money Market Fund BY: /s/Bradley J. Skapyak* Bradley J. Skapyak, PRESIDENT Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the date indicated. Signatures Title Date /s/Bradley J. Skapyak* President 09/28/10 (Principal Executive Bradley J. Skapyak Officer) /s/James Windels* Treasurer (Principal Financial 09/28/10 James Windels and Accounting Officer) /s/Joseph S. DiMartino* Chairman of the Board 09/28/10 Joseph S. DiMartino /s/David W. Burke* Board Member 09/28/10 David W. Burke /s/William Hodding Carter III* Board Member 09/28/10 William Hodding Carter III /s/Gordon J. Davis* Board Member 09/28/10 Gordon J. Davis /s/Joni Evans* Board Member 09/28/10 Joni Evans /s/Ehud Houminer* Board Member 09/28/10 Ehud Houminer C-14 /s/Richard C. Leone* Board Member 09/28/10 Richard C. Leone /s/Hans C. Mautner* Board Member 09/28/10 Hans C. Mautner /s/Robin A. Melvin* Board Member 09/28/10 Robin A. Melvin /s/Burton N. Wallack* Board Member 09/28/10 Burton N. Wallack /s/John E. Zuccotti* Board Member 09/28/10 John E. Zuccotti *BY: /s/John B. Hammalian John B. Hammalian, Attorney-in-Fact C-13 Dreyfus New York AMT-Free Municipal Money Market Fund INDEX OF EXHIBITS Item 23. (e)(iv) Registrant’s Amended Distribution Agreement (p)(i) Code of Ethics for the Non-management Board Members of the Dreyfus Family of Funds Otber Exhibits (a) Power of Attorney (b) Certificate of Assistant Secretary

Exhibit 10.1 P E R F O R M A N C ES H A R EU N I T A W A R DA G R E E M E N T Non-transferable G R A N TT O (“Grantee”) by Lowe’s Companies, Inc. (the “Company”) of Performance Share Units (the “Performance Share Units”) pursuant to and subject to the provisions of the Lowe’s Companies, Inc. 2006 Long Term Incentive Plan (the “Plan”) and to the terms and conditions set forth on the following pages (the “Terms and Conditions”). Unless terminated or paid earlier in accordance with the Plan or Section 3 of the Terms and Conditions, the Performance Share Units will be earned and become vested and payable to the Grantee in the form of shares of the Company’s common stock, $0.50 par value after the third anniversary of the Date of Grant based on achievement of the Performance Objectives applicable to the Performance Share Units. IN WITNESS WHEREOF, Lowe’s Companies, Inc., acting by and through its duly authorized officer, has caused this Agreement to be executed as of the Date of Grant. LOWE’S COMPANIES, INC. By: Its:Authorized Officer Date of Grant: Accepted by Grantee: TERMS AND CONDITIONS 1. Grant of Performance Share Units.The Company hereby grants the Performance Share Units, subject to the terms and conditions set forth in the Lowe’s Companies, Inc. 2006 Long Term Incentive Plan (the “Plan”) and in this Agreement.The actual number of Performance Share Units earned by the Grantee shall be based on the Company’s achievement of the Performance Objectives described in Section 2 for the period beginning , and ending , (the “Performance Period”).Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan. 2. Performance Objective.The Performance Objective for the Performance Share Units shall be . The number of Performance Share Units earned shall be determined from the following table: Percentage of Performance Share Units Earned % or higher _% Less than % % The percentage of Performance Share Units earned for performance between % and % or between % and % shall be determined by linear interpolation. 3. Distribution of Common Shares for Performance Share Units Earned. (a) Distribution Following Expiration of Performance Period.Unless otherwise sooner forfeited in accordance with Section 3(b) or distributed in accordance with Section 3(d), on or within 30 days after , (the "Distribution Date"), the Company shall distribute to the Grantee one share of Common Stock for each whole Performance Share Unit earned by the Grantee in accordance with Section 2. (b) Termination of Employment Prior to Distribution Date.The Grantee shall forfeit all of Grantee’s right, title and interest in and to the Performance Share Units in the event Grantee’s employment with the Company terminates before the Distribution Date for any reason other than death, Disability or Retirement. (c) Termination Due to Death, Disability or Retirement.In the event the Grantee’s employment with the Company terminates prior to the Distribution Date due to death, Disability or Retirement, the Performance Share Units shall remain outstanding and shall be earned in accordance with Section 2 and shares of Common Stock for each whole Performance Share earned shall be distributed on or within 30 days after the Distribution Date in accordance with Section 3(a).The definition of “Retirement” for purposes of this Agreement shall have the following meaning and not the meaning assigned to such term in the Plan:The voluntary termination of employment with the approval of the Board at least six (6) months after the Date of Grant and on or after the date Grantee has attained age fifty-five (55) and Grantee’s age plus years of service equal or exceed seventy (70); provided that, Grantee has given the Board at least ten (10) days advance notice of such Retirement. (d) Change in Control Prior to Distribution Date.In the event a change in control of the Company (as defined in Section 409A of the Internal Revenue Code) occurs before the Distribution Date, the Performance Share Units shall be earned in accordance with Section 2 based on the achievement of the Performance Objectives through the end of the fiscal year quarter ending immediately prior to such change in control.Shares of Common Stock for each whole Performance Share Unit earned shall be distributed to the Grantee as soon as administratively practicable, but in no event later than thirty (30) days following such change in control. 4. No Stockholder Rights.The Performance Share Units shall not entitle the Grantee to any voting, dividend or other rights as a stockholder of the Company until shares of Common Stock are distributed to Grantee in accordance with Section 3. 5. Competing Activity.If Grantee engages in any Competing Activity during Grantee’s employment with the Company or an Affiliate or within one year after the termination of Grantee’s employment with the Company and its Affiliates for any reason, (a) Grantee shall forfeit all of Grantee’s right, title and interest in and to any Performance Share Units as of the time of the Grantee’s engaging in such Competing Activity and such Performance Share Units shall revert to the Company immediately following such event of forfeiture, and (b) Grantee shall remit, upon demand by the Company, the Repayment Amount with respect to any shares of Common Stock that were delivered to Grantee as payment of Performance Share Units during the six (6) month period prior to the date Grantee engaged in the Competing Activity.The “Repayment Amount” is the aggregate Fair Market Value of the Common Stock underlying the Performance Share Units at the time of delivery to Grantee.The Repayment Amount shall be payable in cash (which shall include a certified check or bank check), by the tender of shares of Common Stock or by a combination of cash and Common Stock; provided that, regardless of the Fair Market Value of such shares at the time of tender, the tender of the shares shall satisfy the obligation to pay the Repayment Amount for the same number of shares of Common Stock delivered to the Company.For purposes of this Agreement, Participant will be deemed to be engaged in a Competing Activity if Participant, directly or indirectly, owns, manages, operates, controls, is employed by, or participates in as a 5% or greater shareholder, partner, member or joint venturer, any company which engages in the business activities of the Company or its Affiliates (the “Business Activities”), or engages in, as an independent contractor or otherwise, the Business Activities for himself or on behalf of another person or entity. Nothing contained in this Section 5 shall be interpreted as or deemed to constitute a waiver of, or diminish or be in lieu of, any other rights that the Company or an Affiliate may possess as a result of Grantee’s misconduct or direct or indirect involvement with a business competing with the business of the Company or an Affiliate. 6. No Right of Continued Employment.Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any Affiliate to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in the employ of the Company or any Affiliate. 7. Payment of Taxes. (a) The Company will automatically withhold a number of shares of Common Stock having a fair market value equal to the statutory amount of any federal, state and local taxes of any kind (including Grantee’s FICA obligation) required by law to be withheld, unless Grantee notifies the Company thirty (30) days prior to the issuance of the Common Shares that he or she will satisfy his or her tax withholding obligations in cash. (b) If Grantee chooses to satisfy his or her tax withholding obligations in cash and complies with the above notification requirement, Grantee will, no later than the date as of which any amount related to the Performance Share Units first becomes includable in Grantee’s gross income for federal income tax purposes, pay to the Company, or make other arrangements satisfactory to the Committee regarding payment of, any federal, state and local taxes of any kind (including Grantee’s FICA obligation) required by law to be withheld with respect to such amount. The obligations of the Company under this Agreement will be conditional on such payment or arrangements, and the Company, and, where applicable, its Affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Grantee. 8. Amendment.The Committee may amend or terminate this Agreement without the consent of Grantee; provided, however, that such amendment or termination shall not, without Grantee’s consent, reduce or diminish the value of this award. 9. Plan Controls.The terms contained in the Plan, including without limitation the antidilution adjustment provisions, are incorporated into and made a part of this Agreement, and this Agreement shall be governed by and construed in accordance with the Plan.In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall be controlling and determinative. Successors.This Agreement shall be binding upon any successor of the Company, in accordance with the terms of this Agreement and the Plan. Severability.If any one or more of the provisions contained in this Agreement are invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included. Notice.Notices and communications under this Agreement must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid.Notices to the Company must be addressed to: Lowe’s Companies, Inc. 1000 Lowe’s Boulevard Mooresville, NC 28117 Attn: Senior Vice President of Employee Rewards and Services or any other address designated by the Company in a written notice to Grantee. Notices to Grantee will be directed to the address of Grantee then currently on file with the Company, or at any other address given by Grantee in a written notice to the Company.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number: (811- 02675 ) Exact name of registrant as specified in charter: Putnam Tax Exempt Income Fund Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109 Name and address of agent for service: Beth S. Mazor, Vice President One Post Office Square Boston, Massachusetts 02109 Copy to: John W. Gerstmayr, Esq. Ropes & Gray LLP One International Place Boston, Massachusetts 02110 Registrant’s telephone number, including area code: (617) 292-1000 Date of fiscal year end: September 30, 2006 Date of reporting period: June 30, 2006 Item 1. Schedule of Investments: Putnam Tax Exempt Income Fund The fund's portfolio 6/30/06 (Unaudited) Key to abbreviations AMBAC AMBAC Indemnity Corporation COP Certificate of Participation FGIC Financial Guaranty Insurance Company FHLMC Coll. Federal Home Loan Mortgage Corporation Collateralized FNMA Coll. Federal National Mortgage Association Collateralized FSA Financial Security Assurance GNMA Coll. Government National Mortgage Association Collateralized G.O. Bonds General Obligation Bonds MBIA MBIA Insurance Company PSFG Permanent School Fund Guaranteed U.S. Govt. Coll. U.S. Government Collateralized VRDN Variable Rate Demand Notes XLCA XL Capital Assurance MUNICIPAL BONDS AND NOTES (97.2%)(a) Rating (RAT) Principal amount Value Alabama (0.2%) AL Hsg. Fin. Auth. Rev. Bonds (Single Fam. Mtge.), Ser. A-1, GNMA Coll., FNMA Coll., 6.05s, 4/1/17 Aaa $1,750,000 $1,802,063 U. of AL Rev. Bonds (Hosp. Birmingham), Ser. A, AMBAC, 5s, 9/1/14 Aaa 500,000 520,605 Alaska (0.2%) AK State Hsg. Fin. Corp. Rev. Bonds, Ser. A, 4.4s, 12/1/31 Aaa 2,705,000 Arizona (2.1%) Casa Grande, Indl. Dev. Auth. Rev. Bonds (Casa Grande Regl. Med. Ctr.), Ser. A, 7 5/8s, 12/1/29 B+/P 3,250,000 3,574,870 Cochise Cnty., Indl. Dev. Auth. Rev. Bonds (Sierra Vista Regl. Hlth. Ctr.), Ser. A, 6.2s, 12/1/21 BB+/P 6,060,000 6,326,216 Mesa, Util. Syst. Rev. Bonds, FGIC, 7 1/4s, 7/1/12 Aaa 10,000,000 11,668,600 Phoenix, Indl. Dev. Auth. VRDN (Valley of the Sun YMCA), 4.04s, 1/1/31 A-1+ 2,200,000 2,200,000 Scottsdale, Indl. Dev. Auth. Hosp. Rev. Bonds (Scottsdale Hlth. Care), 5.8s, 12/1/31 (Prerefunded) A3 1,500,000 1,642,065 Arkansas (0.5%) AR Dev. Fin. Auth. Rev. Bonds, Ser. B, GNMA Coll., FNMA Coll., 3 3/4s, 1/1/26 AAA 1,460,000 1,453,430 AR State Hosp. Dev. Fin. Auth. Rev. Bonds (Washington Regl. Med. Ctr.), 7 3/8s, 2/1/29 (Prerefunded) Baa2 3,900,000 4,332,276 California (10.9%) CA State G.O. Bonds MBIA, 5 3/4s, 12/1/11 Aaa 225,000 242,530 MBIA, 5 1/4s, 10/1/13 AAA 1,125,000 1,207,418 5 1/8s, 4/1/23 A+ 3,000,000 3,101,340 5.1s, 2/1/34 A+ 3,000,000 3,024,300 CA State Dept. of Wtr. Resources Rev. Bonds, Ser. A 6s, 5/1/15 (Prerefunded) AAA 14,500,000 16,202,590 AMBAC, 5 1/2s, 5/1/16 (Prerefunded) Aaa 20,000,000 21,832,000 AMBAC, 5 1/2s, 5/1/15 Aaa 33,000,000 35,557,830 AMBAC, 5 1/2s, 5/1/13 Aaa 31,500,000 34,128,675 5 1/2s, 5/1/11 A2 500,000 531,200 CA State Econ. Recvy. G.O. Bonds, Ser. A, 5s, 7/1/16 Aa3 6,000,000 6,211,140 CA Statewide Cmnty. Dev. Auth. Multi-Fam. Rev. Bonds (Hsg. Equity Res.), Ser. B, 5.2s, 12/1/29 A- 150,000 152,652 Chula Vista, Indl. Dev. Rev. Bonds (San Diego Gas), Ser. B, 5s, 12/1/27 A1 200,000 200,680 Golden State Tobacco Securitization Corp. Rev. Bonds (Tobacco Settlement), Ser. B, AMBAC, FHLMC Coll., FNMA Coll., 5s, 6/1/38 (Prerefunded) Aaa 530,000 559,712 Ser. 03 A-1, 5s, 6/1/21 BBB 2,270,000 2,281,237 Rancho Mirage, JT Powers Fin. Auth. Rev. Bonds (Eisenhower Med. Ctr.), 5 7/8s, 7/1/26 A3 1,200,000 1,288,848 Rancho Santiago, Cmnty. Coll. Dist. G.O. Bonds, FSA 5s, 9/1/15 Aaa 665,000 708,165 5s, 9/1/14 Aaa 1,000,000 1,064,640 San Bernardino, City U. School Dist. G.O. Bonds, Ser. A, FSA, 5s, 8/1/28 Aaa 5,005,000 5,130,375 Colorado (0.3%) CO Springs, Hosp. Rev. Bonds 6 3/8s, 12/15/30 (Prerefunded) A3 6 3/8s, 12/15/30 A3 Connecticut (1.5%) CT State Dev. Auth. Poll. Control Rev. Bonds (Western MA), Ser. A, 5.85s, 9/1/28 Baa2 Mashantucket, Western Pequot Tribe 144A Rev. Bonds, Ser. A 6.4s, 9/1/11 Baa2 6.4s, 9/1/11 (Prerefunded) Aaa Delaware (%) GMAC Muni. Mtge. Trust 144A sub. notes, Ser. A1-2, 4.9s, 10/31/39 AAA District of Columbia (3.8%) DC G.O. Bonds, Ser. A 6s, 6/1/26 (Prerefunded) A+ FSA, 5s, 6/1/26 Aaa DC Tobacco Settlement Fin. Corp. Rev. Bonds, 6 1/4s, 5/15/24 BBB DC Wtr. & Swr. Auth. Pub. Util. Rev. Bonds, FGIC, 5s, 10/1/33 Aaa District of Columbia G.O. Bonds, Ser. A, MBIA 5s, 6/1/15 AAA 5s, 6/1/15 (Prerefunded) AAA Florida (3.5%) Flagler Cnty., School Board COP, Ser. A, FSA, 5s, 8/1/19 Aaa Halifax, Hosp. Med. Ctr. Rev. Bonds, Ser. A, U.S. Govt. Coll., 7 1/4s, 10/1/29 (Prerefunded) AAA Hernando Cnty., Rev. Bonds (Criminal Justice Complex Fin.), FGIC, 7.65s, 7/1/16 Aaa Highlands Cnty., Hlth. Fac. Auth. VRDN (Hosp. Adventist Hlth.), Ser. A, 5s, 11/15/20 A+ Lee Cnty., Indl. Dev. Auth. Hlth. Care Fac. Rev. Bonds (Shell Point Village), Ser. A, 5 1/2s, 11/15/29 BBB- Miami Beach, Hlth. Fac. Auth. Hosp. Rev. Bonds (Mount Sinai Med. Ctr.), Ser. A, 6.7s, 11/15/19 Ba1 North Broward, Hosp. Dist. Rev. Bonds 6s, 1/15/31 (Prerefunded) A3 6s, 1/15/31 A3 Oakstead, Cmnty. Dev. Dist. Cap. Impt. Rev. Bonds, Ser. A, 7.2s, 5/1/32 BB+/P Tampa, Util. Tax & Special Rev. Bonds, AMBAC, 6s, 10/1/07 Aaa U. Central FL Assn., Inc. COP, Ser. A, FGIC, 5 1/4s, 10/1/34 Aaa Georgia (3.7%) Atlanta, Arpt. Rev. Bonds, Ser. A, FGIC, 5.6s, 1/1/30 (Prerefunded) Aaa Atlanta, Wtr. & Waste Wtr. VRDN, Ser. C, FSA, 3.99s, 11/1/41 VMIG1 Burke Cnty., Poll. Control Dev. Auth. Mandatory Put Bonds (GA Power Co.), 4.45s, 12/1/08 A2 GA Muni. Elec. Pwr. Auth. Rev. Bonds Ser. B, FGIC, 8 1/4s, 1/1/11 Aaa Ser. 05-Y, AMBAC, 6.4s, 1/1/13 Aaa Ser. 05-Y, AMBAC, 6.4s, 1/1/13 (Prerefunded) Aaa Ser. Y, AMBAC, U.S. Govt. Coll., 6.4s, 1/1/13 (Prerefunded) Aaa Richmond Cnty., Dev. Auth. Rev. Bonds (Amt.-Intl. Paper Co.), Ser. A, 6 1/4s, 2/1/25 BBB Hawaii (0.3%) HI State Hsg. & Cmnty. Dev. Corp. Rev. Bonds (Single Fam. Mtge.), Ser. B 3.7s, 1/1/22 Aaa 3 1/2s, 7/1/11 Aaa 3.3s, 1/1/10 Aaa Idaho (%) Madison Cnty., Hosp. COP, 5 1/8s, 9/1/13 BBB- Illinois (2.3%) Cook Cnty., G.O. Bonds, Ser. B, MBIA, 5s, 11/15/29 Aaa IL Edl. Fac. Auth. Rev. Bonds (Northwestern U.), 5s, 12/1/33 Aa1 IL Fin. Auth. VRDN (Northwestern U.), Ser. A, 3.95s, 12/1/34 VMIG1 IL Hsg. Dev. Auth. Rev. Bonds (Home Owner Mtge.), Ser. C-1, 3 1/2s, 8/1/11 Aa2 IL State G.O. Bonds, FSA, 5 3/8s, 10/1/12 Aaa IL State VRDN, Ser. B, 4.01s, 10/1/33 VMIG1 IL State Toll Hwy. Auth. Rev. Bonds, Ser. A-1, 5s, 1/1/22 Aaa Indiana (0.7%) Brownsburg, 1999 School Bldg. Corp. Rev. Bonds (First Mtge.), Ser. B, FSA, 5s, 7/15/21 AAA IN State Dev. Fin. Auth. Env. Impt. Rev. Bonds (USX Corp.), 5.6s, 12/1/32 Baa1 IN State Hsg. Fin. Auth. Single Fam. Mtge. Rev. Bonds, Ser. A-1, GNMA Coll., FNMA Coll. 4 3/8s, 1/1/20 Aaa 4.2s, 1/1/17 Aaa IN U. Rev. Bonds (IN U. Fac.), AMBAC, 5 1/4s, 11/15/23 Aaa Indianapolis, Local Pub. Impt. Board Rev. Bonds, Ser. D, FGIC, 5s, 1/1/13 Aaa Iowa (1.3%) IA Fin. Auth. Rev. Bonds (Single Fam. Mtge.), Ser. D, GNMA Coll., FNMA Coll., 5s, 1/1/36 Aaa IA Fin. Auth. Hlth. Care Fac. Rev. Bonds (Care Initiatives) 9 1/4s, 7/1/25 BBB-/P 9.15s, 7/1/09 BBB-/P Tobacco Settlement Auth. of IA Rev. Bonds Ser. C, 5 3/8s, 6/1/38 BBB Ser. B, zero %, 6/1/34 BBB Kansas (0.2%) Salina, Hosp. Rev. Bonds (Salina Regl. Hlth.) 5s, 10/1/23 A1 5s, 10/1/19 A1 5s, 10/1/16 A1 Kentucky (%) KY Econ. Dev. Fin. Auth. Hosp. Fac. VRDN (Baptist Hlth. Care), Ser. C, 4.00s, 8/15/31 VMIG1 Louisiana (0.4%) Ernest N. Morial-New Orleans, Exhibit Hall Auth. Special Tax, Ser. A, AMBAC, 5 1/4s, 7/15/20 Aaa Ernest N. Morial-New Orleans, Exhibit Hall Auth. Special Tax Bonds, Ser. A, AMBAC, 5 1/4s, 7/15/21 Aaa LA Local Govt. Env. Fac. Cmnty. Dev. Auth. Rev. Bonds (Cypress Apts.), Ser. A, GNMA Coll., 5 1/2s, 4/20/38 Aaa Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. 01-B, 5 1/2s, 5/15/30 BBB Maryland (0.6%) Howard Cnty., Rev. Bonds, Ser. A, U.S. Govt. Coll., 8s, 5/15/29 (Prerefunded) AAA MD State Hlth. & Higher Edl. Fac. Auth. Rev. Bonds (Medstar Hlth.), 5 3/4s, 8/15/14 Baa1 Massachusetts (3.4%) MA Dev. Fin. Agcy. Rev. Bonds, Ser. A, MBIA, 5 1/2s, 1/1/11 Aaa MA State Dev. Fin. Agcy. VRDN (Boston U.), Ser. R-3, XLCA, 3.95s, 10/1/42 VMIG1 MA State Hlth. & Edl. Fac. Auth. Rev. Bonds (Jordan Hosp.), Ser. E, 6 3/4s, 10/1/33 BBB- (UMass Memorial), Ser. C, 6 5/8s, 7/1/32 Baa2 (Med. Ctr. of Central MA), AMBAC, 6.55s, 6/23/22 Aaa (Partners Hlth. Care Syst.), Ser. C, 5 3/4s, 7/1/21 Aa2 (Caritas Christian Oblig. Group), Ser. A, 5 5/8s, 7/1/20 BBB (Milton Hosp.), Ser. C, 5 1/2s, 7/1/16 BBB- (New England Med. Ctr. Hosp.), Ser. H, FGIC, 5s, 5/15/11 Aaa MA State Port Auth. Rev. Bonds, 13s, 7/1/13 (Prerefunded) AAA/P MA State Special Oblig. Dedicated Tax Rev. Bonds, FGIC, FHLMC Coll., FNMA Coll., 5 1/4s, 1/1/24 (Prerefunded) Aaa Michigan (1.5%) Detroit, G.O. Bonds, Ser. A-1, AMBAC, 5 1/4s, 4/1/24 Aaa Detroit, Swr. Disp. VRDN, Ser. B, FSA, 3.99s, 7/1/33 VMIG1 Flint, Hosp. Bldg. Auth. Rev. Bonds (Hurley Med. Ctr.), 6s, 7/1/20 Baa3 MI State Hosp. Fin. Auth. Rev. Bonds (Oakwood Hosp.), Ser. A, 5 3/4s, 4/1/32 A2 MI State Hsg. Dev. Auth. Rev. Bonds, Ser. A, 3.9s, 6/1/30 Aaa MI State Hsg. Dev. Auth. Ltd. Oblig. Rev. Bonds (Parkway Meadows), FSA, 4s, 10/15/10 Aaa MI State Strategic Fund Solid Waste Disp. Rev. Bonds (SD Warren Co.), Ser. C, 7 3/8s, 1/15/22 BB/P Minnesota (1.1%) Cohasset, Poll. Control Rev. Bonds (Allete, Inc.), 4.95s, 7/1/22 A Martin Cnty., Hosp. Rev. Bonds (Fairmont Cmnty. Hosp. Assn.), 6 5/8s, 9/1/22 BBB-/P MN State Higher Ed. Fac. Auth. VRDN (St. Olaf College) Ser. 5-M1, 4.04s, 10/1/32 VMIG1 Ser. 5-M2, 4.04s, 10/1/20 VMIG1 MN State Hsg. Fin. Agcy. Rev. Bonds (Res. Hsg.), Ser. H, 4.3s, 1/1/13 Aa1 Mississippi (0.4%) MS Home Corp. Rev. Bonds (Single Fam. Mtge.) Ser. G, GNMA Coll., FNMA Coll., 6.7s, 11/1/29 Aaa Ser. B-2, GNMA Coll., FNMA Coll., 6.45s, 12/1/33 Aaa Ser. B, GNMA Coll., FNMA Coll., 5 1/2s, 6/1/36 Aaa Missouri (2.2%) Cape Girardeau Cnty., Indl. Dev. Auth. Hlth. Care Fac. Rev. Bonds (St. Francis Med. Ctr.), Ser. A 5 1/2s, 6/1/32 A+ 5 1/2s, 6/1/27 A+ MO Hsg. Dev. Comm. Rev. Bonds (Home Ownership), Ser. B, GNMA Coll., FNMA Coll., 5.8s, 9/1/35 AAA MO State Hlth. & Edl. Fac. Auth. Rev. Bonds (Washington U.), Ser. A, 5s, 2/15/33 AAA (BJC Hlth. Syst.), 5 1/4s, 5/15/32 Aa2 MO State Hlth. & Edl. Fac. Auth. VRDN (St. Francis Med. Ctr.), Ser. A, 4.04s, 6/1/26 VMIG1 MO State Hsg. Dev. Comm. Mtge. Rev. Bonds (Single Fam. Mtge.), Ser. D-2, GNMA Coll., FNMA Coll., 6 1/2s, 9/1/29 AAA (Single Fam. Mtge.), Ser. B-2, GNMA Coll., FNMA Coll., 6.4s, 9/1/29 AAA (Single Fam. Homeowner Loan), Ser. C, GNMA Coll., FNMA Coll., 5.6s, 9/1/35 AAA MO State Hsg. Dev. Comm. Single Fam. Mtge. Rev. Bonds (Home Ownership Loan), Ser. B, GNMA Coll., FNMA Coll. 3.85s, 9/1/10 AAA 3.6s, 9/1/09 AAA Montana (1.0%) Forsyth, Poll. Control VRDN (Pacific Corp.), 4.05s, 1/1/18 P-1 Nevada (0.3%) Clark Cnty., Local Impt. Dist. Special Assmt. Bonds (No. 142), 6.1s, 8/1/18 BB-/P Clark Cnty., Passenger Fac. Rev. Bonds (Las Vegas-McCarran Intl. Arpt.), Ser. A, AMBAC, 6.15s, 7/1/07 Aaa Washoe Cnty., Arpt. Auth. Rev. Bonds, FSA, 5s, 7/1/11 Aaa New Hampshire (2.8%) NH Higher Ed. & Hlth. Fac. Auth. Rev. Bonds (Lakes Region Hosp. Assn.) 6 1/4s, 1/1/18 (Prerefunded) BBB-/P 5 3/4s, 1/1/08 (Prerefunded) BBB-/P NH Hlth. & Ed. Fac. Auth. Rev. Bonds (Hlth. Care Syst.-Covenant Hlth.), 6 1/8s, 7/1/31 A NH State Bus. Fin. Auth. Poll. Control Rev. Bonds, 3 1/2s, 7/1/27 Baa2 NH State Hsg. Fin. Auth. Single Family Rev. Bonds (Mtge. Acquisition), Ser. C, 5.85s, 1/1/35 Aa2 NH State Tpk. Syst. Rev. Bonds, FGIC, 6.806s, 11/1/17 Aaa New Jersey (4.3%) Middlesex Cnty., Impt. Auth. Lease Rev. Bonds (Perth Amboy Muni. Complex), FGIC, 5s, 3/15/31 Aaa NJ Econ. Dev. Auth. Rev. Bonds (Cedar Crest Vlg., Inc.), Ser. A, 7 1/4s, 11/15/31 BB-/P (Cigarette Tax), 5 1/2s, 6/15/24 Baa2 (Motor Vehicle), Ser. A, MBIA, 5s, 7/1/27 Aaa NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds (Trinitas Hosp. Oblig. Group), 7 1/2s, 7/1/30 Baa3 (South Jersey Hosp.), 6s, 7/1/12 Baa1 (Atlantic City Med. Ctr.), 5 3/4s, 7/1/25 A2 NJ State Rev. Bonds (Trans. Syst.), Ser. C, AMBAC, zero %, 12/15/24 Aaa NJ State Trans. Trust Fund Auth. Rev. Bonds (Trans. Syst.) Ser. B, MBIA, 6 1/2s, 6/15/10 Aaa Ser. A, 5 5/8s, 6/15/14 (Prerefunded) AAA Tobacco Settlement Fin. Corp. Rev. Bonds 6 3/4s, 6/1/39 BBB 6 3/8s, 6/1/32 BBB 6 1/8s, 6/1/42 BBB New Mexico (1.1%) Farmington, Poll. Control VRDN (AZ Pub. Service Co.), Ser. B, 3.99s, 9/1/24 P-1 NM Mtge. Fin. Auth. Rev. Bonds (Single Fam. Mtge.) Ser. B-2, GNMA Coll., FNMA Coll., FHLMC Coll., 6.1s, 7/1/29 AAA Ser. D-2, GNMA Coll., FNMA Coll., FHLMC Coll., 5.64s, 9/1/33 AAA New York (15.7%) Metro. Trans. Auth. Rev. Bonds, Ser. B, MBIA, 5s, 11/15/28 Aaa Nassau Cnty., Hlth. Care Syst. Rev. Bonds, FSA 6s, 8/1/15 (Prerefunded) Aaa 6s, 8/1/14 (Prerefunded) Aaa NY City, G.O. Bonds Ser. B, MBIA, 6 1/2s, 8/15/10 Aaa Ser. B, 5 1/2s, 12/1/12 AA- Ser. G, 5 1/4s, 8/1/16 AA- Ser. M, 5s, 4/1/24 AA- Ser. J/J-1, 5s, 6/1/21 AA- Ser. I-1, 5s, 4/1/19 AA- NY City, Indl. Dev. Agcy. Civic Fac. Rev. Bonds (Polytechnic U.), 6s, 11/1/20 BB+ NY City, Indl. Dev. Agcy. Special Arpt. Fac. Rev. Bonds (Airis JFK I LLC), Ser. A, 6s, 7/1/27 Baa3 NY City, Indl. Dev. Agcy. Special Fac. Rev. Bonds (British Airways PLC), 5 1/4s, 12/1/32 Ba2 NY City, Muni. Wtr. & Swr. Fin. Auth. Rev. Bonds Ser. D, 5s, 6/15/37 AA+ Ser. B, AMBAC, 5s, 6/15/28 Aaa NY City, State Dorm. Auth. Lease Rev. Bonds (Court Fac.), 6s, 5/15/39 (Prerefunded) A+ NY State Dorm. Auth. Rev. Bonds (Construction City U. Syst.), Ser. A, 6s, 7/1/20 AA- (State U. Edl. Fac.), MBIA, 6s, 5/15/16 Aaa (State U. Edl. Fac.), MBIA, 6s, 5/15/15 Aaa (U. Syst. Construction), Ser. A, 5 3/4s, 7/1/18 AA- (State U. Edl. Fac.), Ser. A, 5 1/2s, 5/15/19 AA- (North Shore Long Island Jewish Group), 5 3/8s, 5/1/23 A3 (Brooklyn Law School), Ser. B, XLCA, 5 3/8s, 7/1/22 Aaa (Rochester Inst. of Tech.), Ser. A, AMBAC, 5 1/4s, 7/1/19 Aaa (Columbia U.), Ser. A, 5s, 7/1/18 Aaa NY State Dorm. Auth. Cap. Appn. Rev. Bonds (State U.), Ser. B, MBIA, zero %, 5/15/09 Aaa NY State Hwy. & Bridge Auth. Rev. Bonds, Ser. B, FGIC, 5 1/2s, 4/1/10 (Prerefunded) Aaa NY State Hwy. Auth. Rev. Bonds (Hwy. & Bridge Trust Fund), Ser. B, FGIC, 5s, 4/1/17 AAA Port Auth. NY & NJ Rev. Bonds (Kennedy Intl. Arpt. - 5th Installment), 6 3/4s, 10/1/19 BB+/P (Kennedy Intl. Arpt. - 4th Installment), 6 3/4s, 10/1/11 BB+/P Syracuse, G.O. Bonds (Pub. Impt.), Ser. A, FSA 6s, 4/15/13 (Prerefunded) Aaa 6s, 4/15/12 (Prerefunded) Aaa 6s, 4/15/11 (Prerefunded) Aaa 6s, 4/15/10 (Prerefunded) Aaa North Carolina (6.4%) NC Eastern Muni. Pwr. Agcy. Syst. Rev. Bonds Ser. C, MBIA, 7s, 1/1/13 Aaa Ser. D, 6 3/4s, 1/1/26 Baa2 Ser. B, FGIC, 6s, 1/1/22 Aaa AMBAC, 6s, 1/1/18 Aaa Ser. A, 5 3/4s, 1/1/26 Baa2 NC Med. Care Comm. Retirement Fac. Rev. Bonds (United Methodist Home), 7 1/8s, 10/1/23 (Prerefunded) BB+/P (First Mtge.-Forest at Duke), 6 3/8s, 9/1/32 BB+/P NC State Muni. Pwr. Agcy. Rev. Bonds (No. 1, Catawba Elec.) Ser. B, 6 1/2s, 1/1/20 A3 Ser. A, 5 1/2s, 1/1/13 A3 Ohio (2.0%) Cuyahoga Cnty., Rev. Bonds, Ser. A, 6s, 1/1/32 Aa3 Cuyahoga Cnty., Hosp. VRDN (U. Hosp.), 3.98s, 1/1/16 VMIG1 Franklin Cnty., Rev. Bonds (Online Computer Library Ctr.), 5s, 4/15/11 A Miami Cnty., Hosp. Fac. Rev. Bonds (Upper Valley Med. Ctr.) 5 1/4s, 5/15/21 A- 5 1/4s, 5/15/18 A- Middletown, City School Dist. G.O. Bonds (School Impt.), FGIC, 5s, 12/1/24 Aaa Midview, Local School Dist. COP (Elementary School Bldg. Fac.), 5 1/4s, 11/1/30 A OH State Higher Edl. Fac. Mandatory Put Bonds (Kenyon College) 5.05s, 7/1/16 A+ 4.95s, 7/1/15 A+ OH State Higher Edl. Fac. Rev. Bonds (Case Western Reserve U.), 5 1/2s, 10/1/22 AA- OH State Wtr. Dev. Auth. Poll. Control Fac. Rev. Bonds, 6.1s, 8/1/20 Baa2 U. of Cincinnati Rev. Bonds, Ser. D, AMBAC, 5s, 6/1/23 Aaa Oklahoma (0.8%) OK Hsg. Fin. Agcy. Single Fam. Rev. Bonds (Homeowner Loan), Ser. D-2, GNMA Coll., FNMA Coll., 7.1s, 9/1/26 Aaa (Homeownership Loan), Ser. C-2, GNMA Coll., FNMA Coll., 5.7s, 9/1/35 Aaa (Homeownership Loan), Ser. B, 4.2s, 9/1/25 Aaa OK State Indl. Dev. Auth. Rev. Bonds (Hlth. Syst.), Ser. A, MBIA 5 3/4s, 8/15/29 AAA 5 3/4s, 8/15/29 (Prerefunded) AAA Oregon (0.2%) OR State Hsg. & Cmnty. Svcs. Dept. Rev. Bonds (Single Fam. Mtge.), Ser. J, 4.7s, 7/1/30 Aa2 Pennsylvania (4.4%) Allegheny Cnty., Sanitation Auth. Swr. Rev. Bonds, MBIA 5 1/2s, 12/1/30 (Prerefunded) Aaa 5 1/2s, 12/1/30 Aaa Beaver Cnty., Indl. Dev. Auth. Poll. Control Mandatory Put Bonds (Cleveland Elec.), 3 3/4s, 10/1/08 Baa2 Carbon Cnty., Indl. Dev. Auth. Rev. Bonds (Panther Creek Partners), 6.65s, 5/1/10 BBB- Lancaster Cnty., Hosp. Auth. Rev. Bonds (Gen. Hosp.), 5 1/2s, 3/15/26 A+ Lehigh Cnty., Gen. Purpose Auth. Rev. Bonds (Lehigh Valley Hosp. Hlth. Network), Ser. A, 5 1/4s, 7/1/32 A1 Monroe Cnty., Hosp. Auth. Rev. Bonds (Pocono Med. Ctr.), 6s, 1/1/43 BBB+ PA Econ. Dev. Fin. Auth. Rev. Bonds (Amtrak), Ser. A , 6 1/4s, 11/1/31 A3 PA Econ. Dev. Fin. Auth. Resource Recvy. Rev. Bonds, Ser. A, 6.4s, 1/1/09 B+ PA State Pub. School Bldg. Auth. Rev. Bonds (Philadelphia School Dist.), FSA, 5 1/4s, 6/1/25 Aaa Philadelphia Auth. for Indl. Dev. Rev. Bonds, Ser. B, FSA, 5 1/4s, 10/1/10 Aaa Philadelphia, Hosp. & Higher Ed. Fac. Auth. Rev. Bonds (Graduate Hlth. Syst.), 7 1/4s, 7/1/10 (In default) (NON) Ca Philadelphia, Indl. Dev. Auth. VRDN (Fox Chase Cancer Ctr.), 4.03s, 7/1/10 P-1 Philadelphia, School Dist. G.O. Bonds, Ser. A, AMBAC, 5s, 8/1/22 Aaa Philadelphia, Wtr. & Waste Wtr. Rev. Bonds Ser. B, 5 1/4s, 11/1/14 AAA Ser. A, FSA, 5s, 7/1/24 Aaa York Cnty., G.O. Bonds, AMBAC, 5s, 6/1/21 Aaa Puerto Rico (1.1%) Cmnwlth. of PR, Govt. Dev. Bank Rev. Bonds Ser. AA, 5s, 12/1/16 BBB Ser. B, 5s, 12/1/13 BBB Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds Ser. B, MBIA, 5 7/8s, 7/1/35 (Prerefunded) Aaa Ser. K, 5s, 7/1/17 BBB+ Ser. K, 5s, 7/1/13 BBB+ PR Indl. Tourist Edl. Med. & Env. Control Fac. Rev. Bonds (Cogen. Fac.-AES), 6 5/8s, 6/1/26 Baa3 PR Muni. Fin. Agcy. G.O. Bonds, Ser. A, 5s, 8/1/10 BBB South Carolina (1.2%) Florence Cnty., Hosp. Rev. Bonds (McLeod Regl. Med. Ctr.), Ser. A, FSA, 5 1/4s, 11/1/23 Aaa Florence Cnty., Indl. Dev. Auth. Rev. Bonds (Stone Container Corp.), 7 3/8s, 2/1/07 B/P Greenwood Cnty., Hosp. Rev. Bonds (Memorial Hosp.), 5 1/2s, 10/1/26 A2 Lexington Cnty. Hlth. Svcs. Dist. Inc. Hosp. Rev. Bonds, 5 1/2s, 5/1/37 A2 SC Hsg. Fin. & Dev. Auth. Mtge. Rev. Bonds, Ser. A-2, AMBAC, 5s, 7/1/35 Aaa SC Tobacco Settlement Rev. Mgt. Rev. Bonds, Ser. B, 6 3/8s, 5/15/30 BBB South Dakota (0.2%) SD Hsg. Dev. Auth. Rev. Bonds (Home Ownership Mtge.), Ser. J, 4.55s, 5/1/18 AAA SD State Hlth. & Edl. Fac. Auth. Rev. Bonds (Sioux Valley Hosp. & Hlth. Syst.), Ser. A, 5 1/2s, 11/1/31 A1 Tennessee (1.4%) Elizabethton, Hlth. & Edl. Fac. Board Rev. Bonds (Hosp. Ref. & Impt.), Ser. B, 8s, 7/1/33 Baa2 Johnson City, Hlth. & Edl. Fac. Board Hosp. Rev. Bonds (Mountain States Hlth.), Ser. A, 7 1/2s, 7/1/25 BBB+ Memphis-Shelby Cnty., Arpt. Auth. Rev. Bonds (Federal Express Corp.) 5.05s, 9/1/12 Baa2 5s, 9/1/09 Baa2 Shelby Cnty., Hlth. Edl. & Hsg. Fac. Hosp. Board Rev. Bonds (Methodist Hlth. Care) 6 1/2s, 9/1/26 (Prerefunded) A3 6 1/2s, 9/1/26 (Prerefunded) A3 TN Hsg. Dev. Agcy. Rev. Bonds (Home Ownership), Ser. 1B, 3.85s, 7/1/14 Aa2 Texas (5.0%) Abilene, Hlth. Fac. Dev. Corp. Rev. Bonds (Sears Methodist Retirement), Ser. A, 5 7/8s, 11/15/18 BB/P Edgewood, Indpt. School Dist. Bexar Cnty. G.O. Bonds, Ser. A, PSFG, 5s, 2/15/29 Aaa Gateway, Pub. Fac. Corp. Rev. Bonds (Stonegate Villas Apt.), FNMA Coll., 4.55s, 7/1/34 Aaa Harris Cnty., Mandatory Put Bonds (Toll Road), FGIC, 5s, 8/15/09 Aaa Harris Cnty., Hlth. Fac. Dev. Corp. Hosp. Rev. Bonds (Memorial Hermann Hlth. Care Syst.), Ser. A, 5 1/4s, 12/1/18 A+ Houston, Wtr. & Swr. Rev. Bonds (Jr. Lien), FSA, 5s, 12/1/30 (Prerefunded) Aaa Laredo, Intl., Toll Bridge Rev. Bonds, Ser. B, FSA, 5s, 10/1/16 Aaa North Central TX Hlth. Fac. Dev. Corp. VRDN (Hosp. Presbyterian Med. Ctr.), Ser. D, MBIA, 3.98s, 12/1/15 VMIG1 Northside Indpt. School Dist. G.O. Bonds, PSFG, 5s, 2/15/24 Aaa Pflugerville, Indpt. School Dist. G.O. Bonds, PSFG, 5s, 2/15/29 Aaa 5,000,000 5,088,350 Plano, Indpt. School Dist. G.O. Bonds, PSFG, 5s, 2/15/29 Aaa 1,705,000 1,735,127 Sam Rayburn Muni. Pwr. Agcy. Rev. Bonds, 6s, 10/1/21 Baa2 2,500,000 2,603,775 Spring, Indpt. School Dist. G.O. Bonds, PSFG, 5s, 2/15/24 Aaa 500,000 512,370 TX State Rev. Bonds, 6.2s, 9/30/11 Aa1 20,800,000 22,541,584 TX State Dept. of Hsg. & Cmnty. Affairs Rev. Bonds (Single Fam.), Ser. B, FSA, 4 1/4s, 9/1/26 Aaa 985,000 974,431 TX State Indl. Dev. Corp. Rev. Bonds (Arco Pipelines Co.), 7 3/8s, 10/1/20 Aa1 6,500,000 8,226,855 TX State Tpk. Auth. Rev. Bonds (Central Texas Tpk. Syst.), Ser. A, AMBAC, 5 1/2s, 8/15/39 Aaa 1,000,000 1,052,290 TX Technical University Revenues Rev. Bonds (Fin. Syst.), Ser. 7th, MBIA 5s, 8/15/08 Aaa 1,000,000 1,022,830 5s, 8/15/07 Aaa 1,000,000 1,012,650 Utah (2.1%) Intermountain Power Agency Rev. Bonds (UT State Pwr. Supply), Ser. B, MBIA, 6 1/2s, 7/1/09 Aaa 19,065,000 20,471,616 Salt Lake City, Hosp. Rev. Bonds (IHC Hosp. Inc.), Ser. A, 8 1/8s, 5/15/15 (Prerefunded) AAA 5,000,000 5,861,600 Vermont (0.2%) VT Hsg. Fin. Agcy. Rev. Bonds Ser. 22, FSA, 5s, 11/1/34 Aaa 995,000 1,016,641 (Single Fam.), Ser. 23, FSA, 5s, 5/1/34 Aaa 1,175,000 1,197,560 Virginia (2.3%) Henrico Cnty., Econ. Dev. Auth. Rev. Bonds (United Methodist), Ser. A, 6 1/2s, 6/1/22 BB+/P 4,000,000 4,225,800 Henrico Cnty., Indl. Dev. Auth. Rev. Bonds, FSA, 5.929s, 8/23/27 Aaa 21,000,000 23,575,020 Washington (1.8%) Cowlitz Cnty., Pub. Util. Rev. Bonds (Dist. No. 1 Production Syst.), FGIC 5s, 9/1/25 Aaa 695,000 709,414 5s, 9/1/24 Aaa 615,000 628,592 Tobacco Settlement Auth. of WA Rev. Bonds 6 5/8s, 6/1/32 BBB 905,000 989,355 6 1/2s, 6/1/26 BBB 2,225,000 2,421,735 WA State G.O. Bonds (Motor Vehicle Fuel), Ser. B, MBIA, 5s, 7/1/24 Aaa 5,270,000 5,423,726 Ser. A, FSA, 5s, 7/1/23 Aaa 10,035,000 10,341,254 WA State Hsg. Fin. Comm. Rev. Bonds (Single Family Program), Ser. 2A, GNMA Coll., FNMA Coll., 5s, 12/1/25 Aaa 1,215,000 1,246,857 West Virginia (0.5%) Econ. Dev. Auth. Lease Rev. Bonds (Correctional Juvenile Safety), Ser. A, MBIA, 5s, 6/1/29 Aaa 6,200,000 Wisconsin (1.3%) Badger Tobacco Settlement Asset Securitization Corp. Rev. Bonds 6 3/8s, 6/1/32 BBB 10,615,000 11,380,448 6 1/8s, 6/1/27 BBB 240,000 254,647 WI Hsg. & Econ. Dev. Auth. Rev. Bonds (Home Ownership), Ser. D, 4 7/8s, 3/1/36 Aa2 2,000,000 2,042,020 Wilmot, Unified High School Dist. G.O. Bonds, Ser. B, FSA, 5s, 3/1/24 Aaa 2,000,000 2,063,260 Total municipal bonds and notes (cost $1,140,342,136) PREFERRED STOCKS (1.0%)(a) Shares Value Charter Mac. Equity Trust 144A Ser. A, 6.625% cum. pfd. 4,000,000 $4,229,080 MuniMae Tax Exempt Bond Subsidiary, LLC 144A Ser. A, 6.875% cum. pfd. 6,000,000 6,385,020 MuniMae Tax Exempt Bond Subsidiary, LLC 144A Ser. B, 7 3/4s cum. pfd. 2,000,000 2,207,820 Total preferred stocks (cost $12,000,000) CORPORATE BONDS AND NOTES (0.3%)(a) (cost $3,500,000) Principal amount Value GMAC Muni. Mtge. Trust 144A sub. notes Ser. A1-1, 4.15s, 2039 $3,500,000 TOTAL INVESTMENTS Total investments (cost $1,155,842,136) (b) INTEREST RATE SWAP CONTRACTS OUTSTANDING at 6/30/06 (Unaudited) Payments Payments Unrealized Swap counterparty / Termination made by received by appreciation/ Notional amount date fund per annum fund per annum (depreciation) Merrill Lynch Capital Services, Inc. 3 month U.S. Bond Market Association Municipal Swap $32,085,000 11/22/16 4.1735% Index 17,345 22,224,000 11/22/16 3 month USD-LIBOR-BBA 5.711% (50,004) Total NOTES (a) Percentages indicated are based on net assets of $1,225,426,807. (RAT) The Moody's, Standard & Poor's or Fitch's ratings indicated are believed to be the most recent ratings available at June 30, 2006 for the securities listed. Ratings are generally ascribed to securities at the time of issuance. While the agencies may from time to time revise such ratings, they undertake no obligation to do so, and the ratings do not necessarily represent what the agencies would ascribe to these securities at June 30, 2006. Securities rated by Putnam are indicated by "/P". Security ratings are defined in the Statement of Additional Information. (b) The aggregate identified cost on a tax basis is $1,155,328,849, resulting in gross unrealized appreciation and depreciation of $62,219,472 and $10,079,108, respectively, or net unrealized appreciation of $52,140,364. (NON) Non-income-producing security. 144A after the name of an issuer represents securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The rates shown on VRDN and Mandatory Put Bonds are the current interest rates at June 30, 2006. The dates shown on Mandatory Put Bonds are the next mandatory put dates. The fund had the following industry group concentrations greater than 10% at June 30, 2006 (as a percentage of net assets): Utilities 26.4% Health care The fund had the following insurance concentrations greater than 10% at June 30, 2006 (as a percentage of net assets): AMBAC 13.4% FGIC MBIA Security valuation Tax-exempt bonds and notes are valued at fair value on the basis of valuations provided by an independent pricing service, approved by the Trustees. Such services use information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. Other investments are valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security at a given point in time and does not reflect an actual market price. Interest rate swap contracts The fund may enter into interest rate swap contracts, which are arrangements between two parties to exchange cash flows based on a notional principal amount, to manage the fund’s exposure to interest rates. Interest rate swap contracts are marked-to-market daily based upon quotations from an independent pricing service or market makers and the change, if any, is recorded as unrealized gain or loss. Payments received or made are recorded as realized gains or loss. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or if the counterparty defaults on its obligation to perform. Risk of loss may exceed amounts recognized on the statement of assets and liabilities. Interest rate swap contracts outstanding at period end, if any, are listed after the fund’s portfolio. For additional information regarding the fund please see the fund's most recent annual or semiannual shareholder report filed on the Securities and Exchange Commission's Web site, www.sec.gov, or visit Putnam's Individual Investor Web site at www.putnaminvestments.com Item 2. Controls and Procedures: (a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. (b) Changes in internal control over financial reporting: Not applicable Item 3.

Exhibit 10.30 INDEMNIFICATION AGREEMENT         This Indemnification Agreement is made as of this 7th day of February, 2003, by and between OAKLEY, INC., a Washington corporation (the "Company"), and Tom George.         WHEREAS, as of the date hereof, the Company has provisions for indemnification of its directors and officers in Article V of its Amended and Restated Articles of Incorporation (the "Articles of Incorporation") and Article VII of its Bylaws (the "Bylaws") which provide for indemnification of the Company's directors and officers to the fullest extent permitted by law;         WHEREAS, the indemnification provisions in the Bylaws provide that the right of indemnification is a contract right of the covered parties;         WHEREAS, the Bylaws provide that the Company may maintain, at its expense, insurance to protect itself and any of its directors and officers against liability asserted against such persons incurred in such capacity whether or not the Company has the power to indemnify such persons against the same liability under Section 23B.08.510 or .520 of the Act (as defined below) or a successor statute;         WHEREAS, the Company and the Indemnified Party recognize that the officers and directors of publicly owned companies are frequently joined as parties to Proceedings (as defined below) against their respective companies as a result of their serving in such capacity; and         WHEREAS, in order to induce Indemnified Party to serve or continue to serve the Company, the Company wishes to confirm the contract indemnification rights provided in the Bylaws and agrees to provide Indemnified Party with the benefits contemplated by this Agreement and to supplement the provisions of this Agreement with directors' and officers' liability insurance maintained by the Company.         NOW, THEREFORE, in consideration of the promises, conditions, representations and warranties set forth herein, and other good and valuable Company and Indemnified Party hereby agree as follows: the following respective meanings; other capitalized terms used and not specifically defined in this Section 1 shall have the meanings provided elsewhere in the Agreement and in the Bylaws:         (a)  "Act" means the Washington Business Corporation Act RCW Title 23B,         (b)  "Adjudication" shall refer to a final, non-appealable decision by a court of competent jurisdiction. "Adjudged" shall have a correlative meaning.         (c)  "Covered Amount" means any Loss, Fine and Expense, to the extent such Loss, Fine or Expense, in type or amount, is not insured under the D&O Insurance maintained by the Company from time to time.         (d)  "Covered Act" means any act or omission of the Indemnified Party in his or her capacity as a director, officer, employee, agent, fiduciary or consultant of the Company alleged by any claimant or any claim against Indemnified Party by reason of him or her serving in such a capacity, or by reason of Indemnified Party serving, at the request of the Company, in such capacity with another corporation, partnership, employee benefit plan, trust or other enterprise, in all cases, whether such alleged act or omission occurred         (e)  "D&O Insurance" means the liability insurance which the Company may purchase on behalf of Indemnified Party against liability asserted against or incurred by Indemnified Party in connection with claims arising from Covered Acts, whether or not the Company would have the power to indemnify the individual against the same liability under Section 23B.08.510 or 23B.08.520 of the Act.         (f)    "Determination" means a determination, based on the facts known at the time, made:           (i)  by the Board of Directors by majority vote of a quorum consisting of directors not at the time parties to the Proceeding;         (ii)  if a quorum cannot be obtained under clause (i), by majority vote of a duly designated committee of the Board of Directors, in the manner provided by Section 23B.08.550(2)(b) of the Act;         (iii)  by special legal counsel, selected in the manner provided by Section 23B.08.550(2)(c) of the Act, in a written opinion; or         (iv)  by a majority of the shareholders of the Company, excluding shares owned or voted under the control of directors who are at the time parties to the Proceeding.         (g)  "Excluded Claim" means any payment for Losses, Fines or Expenses in connection with any claim relating to or arising out of:           (i)  acts or omissions of the Indemnified Party Adjudged to be         (ii)  conduct of the Indemnified Party Adjudged to be in violation of Section 23B.08.310 of the Act; or         (iii)  any transaction with respect to which it was Adjudged that such Indemnified Party personally received a benefit in money, property, or services to which the Indemnified Party was not legally entitled.         (h)  "Expenses" means any reasonable expenses incurred by Indemnified Party as a result of a claim or claims made against Indemnified Party from Covered Acts, including, without limitation, reasonable counsel fees and costs of investigative, judicial or administrative proceedings or appeals.         (i)    "Fines" means any fine or penalty including, with respect to an employee benefit plan, any excise tax assessed with respect thereto.         (j)    "Losses" means amounts, as determined by an Adjudication, which the Indemnified Party is legally obligated to pay as a result of a claim or claims arising from Covered Acts, including, without limitation, Fines, damages and judgments and sums paid in settlement of such claim or claims.         (k)  "Proceeding" means any threatened, pending or completed action, suit, proceeding or investigation, whether civil, criminal or administrative         2.    Maintenance of D&O Insurance.     Indemnified Party shall continue to serve as a director or executive officer of the Company and thereafter, for so long as Indemnified Party shall be subject to any possible Proceeding arising from any Covered Act, the Company, subject to Section 2(c), shall maintain in full force and effect D&O Insurance.         (b)  In all policies of D&O Insurance, Indemnified Party shall be named as an insured in such a manner as to provide Indemnified Party the same rights and benefits, and the same limitations, as are accorded to the Company's directors or executive officers most favorably insured by such policy.         (c)  The Company shall have no obligation to maintain D&O Insurance if the Company, by majority vote of the Board of Directors, determines in good such insurance are disproportionate to the amount of coverage provided, or the insufficient benefit; provided, however, that such decision shall not adversely affect coverage of D&O Insurance for periods prior to such decision without the unanimous vote of all directors.         3.    Indemnification.    The Company shall indemnify Indemnified Party up to the Covered Amount and shall advance any and all Expenses to Indemnified Party in connection with any Proceeding or any Covered Act, subject, in each case, to the further provisions of this Agreement. This Agreement is made pursuant to and to effectuate the indemnification provisions set forth in Article V of the Articles of Incorporation and Article VII of the Bylaws. indemnify Indemnified Party to the extent Indemnified Party is successful, on the merits or otherwise, in the defense of any Proceeding to which Indemnified Party was a party because of being a director, officer, employee, agent, fiduciary or consultant of the Company, against reasonable Expenses incurred by Indemnified Party in connection with the Proceeding.         4.    Excluded Coverage.    The Company shall have no obligation to indemnify Indemnified Party for any Losses or Expenses which arise from an Excluded Claim.         (a)  Promptly after receipt by Indemnified Party of notice of the commencement of or the threat of commencement of any Proceeding, Indemnified Party shall, if indemnification or advancement of Expenses with respect thereto commencement or the threat of commencement thereof. Insurance in effect, the Company shall give prompt notice of the commencement or the threat of commencement of such Proceeding to the appropriate insurers in accordance with the procedures set forth in the respective policies in favor of Indemnified Party. The Company shall thereafter take all necessary or desirable action to cause such insurers to, in accordance with the terms of such policies: (i) advance, to the extent permitted by law, any and all Expenses to Indemnified Party, (ii) pay, on behalf of Indemnified Party, all amounts (including, without limitation, Losses and Expenses) payable as a result of, or in connection with, such Proceeding and (iii) reimburse Indemnified Party for all amounts (including, without limitation, Losses and Expenses) paid by Indemnified Party as a result of, or in connection with, such Proceeding. of or the threat of commencement of such Proceeding, have applicable D&O Insurance, or if a Determination is made that any Loss, Fine or Expense of the Indemnified Party arising out of such Proceeding will not be payable under the D&O Insurance then in effect, the Company shall be obligated to pay the Covered Amount with respect to any Proceeding and to provide counsel satisfactory to Indemnified Party upon the delivery to Indemnified Party of written notice of the Company's election to do so. After delivery of such notice, the Company will not be liable to Indemnified Party under this Agreement for any legal or other Expenses subsequently incurred by the Indemnified Party in connection with such defense other than the reasonable Expenses of investigation of Indemnified Party; provided, that Indemnified Party shall have the right to employ his or her own counsel in connection with the defense of any such Proceeding, the fees of its assumption of such defense to be at the Indemnified Party's sole expense. Notwithstanding the foregoing, if (i) the employment of counsel by Indemnified Party has been previously authorized by the Company, (ii) Indemnified Party shall have been advised by counsel that there may be a conflict of interest between the Company and Indemnified Party in the conduct of any such defense or defense of such Proceeding, in each such case, the fees and expenses of such counsel retained by Indemnified Party shall be at the expense of the Company. In the event Indemnified Party is entitled to employ counsel at the Company's expense pursuant to the terms of this Paragraph 5(c), and if so requested in writing by Indemnified Party, the Company shall advance any and all Expenses to Indemnified Party to the extent permitted by law.         (d)  All payments on account of the Company's indemnification or advancement obligations under Paragraph 5(b) of this Agreement shall be made within sixty (60) days of Indemnified Party's written request therefor unless a Determination is made that the claims giving rise to Indemnified Party's request are Excluded Claims or otherwise not payable under this Agreement. All payments on account of the Company's obligations under Paragraph 5(c) of this Agreement shall be made within 20 days of Indemnified Party's written request therefor, subject to Paragraph 5(e) of this Agreement.         (e)  In the event that (i) a Determination is made that the claims giving rise to Indemnified Party's request are Excluded Claims or otherwise not payable under this Agreement or (ii) it is Adjudged that the Indemnified Party is not entitled to be indemnified by the Company for Losses or Expenses under this Agreement, the Articles of Incorporation, the Bylaws or the Act, the Company shall have no obligation to indemnify, or advance any Expenses to Indemnified Party. Further, in either case, Indemnified Party agrees that he or she will reimburse the Company for all Losses and Expenses paid by the Company and all Expenses advanced by the Company in connection with such Proceeding against Indemnified Party.         6.    Settlement.    The Company shall have no obligation to indemnify Proceeding effected without the Company's prior written consent. The Company shall not settle any claim in any manner which would impose any loss or expense on Indemnified Party without Indemnified Party's prior written consent, unless the Company provides a written undertaking to the Indemnified Party to pay for such loss or expense on behalf of the Indemnified Party. Neither the Company nor Indemnified Party shall unreasonably withhold their consent to any proposed settlement.         7.    Rights Not Exclusive.    The rights provided hereunder shall be in addition to any other rights to which Indemnified Party may be entitled under the Articles of Incorporation, the Bylaws, the Act, any agreement or vote of shareholders or directors or otherwise, both as to action in Indemnified Party's official capacity and as to action in any other capacity, and such rights shall continue after Indemnified Party ceases to serve the Company as a director or officer.         8.    Enforcement.             (a)  Indemnified Party's rights to indemnification or advancement of Expenses hereunder shall be enforceable by Indemnified Party notwithstanding any adverse Determination. In any such action, if a prior adverse Determination has been made, the burden of proving that indemnification or advancement of Expenses is required under this Agreement, the Articles of Incorporation, the Bylaws or the Act shall be on the Indemnified Party. The Company shall have the burden of proving that indemnification or advancement of Expenses is not required under this Agreement if no prior adverse Determination shall have been made.         (b)  In the event that any action is instituted by Indemnified Party under this Agreement, or to enforce or interpret any of the terms of this Agreement, Indemnified Party shall be entitled to be paid all court costs and expenses, including reasonable counsel fees, incurred by Indemnified Party with respect to such action, unless the court determines that each of the material assertions made by Indemnified Party as a basis for such action were not made in         9.    No Presumptions.    For purposes of this Agreement, the without court approval) or conviction, or upon a plea of nolo contendre, or its equivalent, shall not create a presumption that the Indemnified Party did not court has determined that indemnification or advancement of Expenses by the Company is not permitted hereunder or by applicable law. In addition, neither the absence of a Determination as to whether Indemnified Party has met any particular standard of conduct or had any particular belief or the existence of a Determination that Indemnified Party has not met such standard of conduct or Indemnified Party to secure an Adjudication that Indemnified Party should be indemnified or advanced or reimbursed Expenses hereunder or under applicable law, shall be a defense to Indemnified Party's claim or create a presumption that Indemnified Party has not met any particular of recovery of Indemnified Party, who shall execute all papers required and under this Agreement to make any payment in connection with any Proceeding against Indemnified Party to the extent Indemnified Party has otherwise actually received payment (under any D&O Insurance, the Articles of Incorporation, the Bylaws, the Act or otherwise) of the amounts which may be paid hereunder.         12.    Severability; Supersedes Prior Agreement.    In the event that any provision of this Agreement is determined by a court of competent jurisdiction to require the Company to do or to fail to do an act which is in violation of the Articles of Incorporation, the Bylaws or the Act or other applicable law, such provision shall be limited or modified in its application to the minimum extent necessary to avoid such violation, and, as so limited or modified, such provision and the remainder of this Agreement shall be enforceable in accordance with the respective terms. This Agreement shall supersede the Indemnification Agreement between the parties hereto, dated October 6, 1997, which is hereby terminated. reference to conflicts of law principles therein.         14.    Successors and Assigns.    This Agreement shall be (i) binding or substantially all of the Company's assets and any successor by merger or otherwise by operation of law) and (ii) binding on and inure to the benefit of the heirs, personal representatives and estate of Indemnified Party. Indemnified Party may not assign this Agreement or any of Indemnified Party's rights         15.    Amendment.    No amendment, modification, termination or xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx         IN WITNESS WHEREOF, the Company and Indemnified Party have executed this     OAKLEY, INC.     By: /s/  LINK NEWCOMB           Name: Link Newcomb     Title: Chief Operating Officer                  /s/  TOM GEORGE       Tom George, Indemnified Party QuickLinks INDEMNIFICATION AGREEMENT

Exhibit 10.2E   AMENDMENT NUMBER ONE TO 2016 SPLIT-DOLLAR AGREEMENT   This Amendment Number One to the 2016 Split-Dollar Agreement (this “Amendment”) is entered into as of the 13th day of December, 2018, by and between Michael D. Goodson, Jr., an individual (“Insured”) and National Bank of Commerce, a   RECITALS   A.     Pursuant to that certain Agreement and Plan of Merger dated as of November 23, 2018 (the “Merger Agreement”) by and between CenterState Bank Corporation, a Florida corporation (“CenterState”) and National Commerce Corporation, a Delaware corporation (the “Corporation”), the Corporation will merge with and into CenterState, and thereafter the Bank will merge with and into CenterState Bank, N.A., a national banking association and wholly-owned subsidiary of CenterState.   B.     The Insured and the Bank previously entered into that certain 2016 Split-Dollar Agreement (the “Agreement”), effective as of January 1, 2016.   C.     Section 15(l) of the Agreement provides that, subject to the Bank’s ability to terminate the Agreement in accordance with Section 8, no amendment or additions to the Agreement shall be binding unless in writing and signed by the Bank and the Insured.   D.     The Bank desires to amend the Agreement in order to provide that the Agreement will terminate in the event of the Insured’s voluntary resignation, other than a voluntary resignation for Good Reason (as defined herein).     1.     Sections 8(b) and 8(c) of the Agreement shall be deleted with the   “(b)     This Agreement shall terminate immediately upon the first to occur of the following:     (i) above;     (ii) the termination of the Insured’s employment prior to age 65 for any reason other than death, a voluntary resignation for Good Reason, an involuntary termination of the Insured’s employment by the Bank without Cause, or due to the insured becoming Substantially Disabled;           (iii) Bank shall not surrender or otherwise terminate the Policy unless such surrender order; or         (iv)  the Insured attaining age 80.     For purposes of this Agreement, ‘Cause’ shall mean any of the following events: (A) incompetence or dishonesty in Insured’ s job performance, gross negligence, deliberate neglect of duties, willful malfeasance or misconduct in performance or failure to substantially perform the duties assigned to the Insured by the Bank; (B) conviction of a felony or of any offense involving moral turpitude, dishonesty, breach of trust, organized crime or racketeering; (C) fraud, disloyalty, dishonesty, or willful violation of any law or significant Bank policy committed in connection with the Insured’ s employment; or (D) the Insured’ s unreasonable and/or abusive use of addictive substances, which in the Bank’ s reasonable judgment, interferes with the Insured’ s ability to perform his duties.   For purposes of this Agreement, the term ‘Good Reason’ shall mean any of the following which occurs, without the Insured’s advance written consent, after the Insured shall have given written notice to the Bank of the existence of one or more of the conditions described below within ninety (90) days after the initial existence of the condition, and after the Bank shall have defaulted in its obligation within 30 days thereafter to remedy the condition:     (X) A reduction in the Insured’s Base Salary (as defined in the Insured’s employment agreement, dated November 23, 2018) or material reduction in Insured’s incentive compensation opportunity or structure;     (Y) A material diminution of the Insured’s authority, duties, or responsibilities; or   2       (Z) A material change in the principal office location at which the Insured must perform services for the Bank, which, for purposes of this provision, shall be a location outside the 25 mile radius from the Insured’ s existing office location.   For purposes of this Agreement, the term ‘Substantially Disabled’ shall mean the Insured has been determined to be eligible for long-term disability benefits under the long-term disability benefit plan of the Bank covering Insured or for disability benefits under the federal Social Security Acts.   (c)     In the event of a termination of the Insured’s employment by the Bank without Cause, a voluntary resignation by the Insured for Good Reason or termination of employment due to the Insured becoming Substantially Disabled or, in the event of a Change in Control that occurs while the Insured is employed by the Bank or any of its affiliates, other than a Change in Control resulting from the consummation of the transactions contemplated by that certain Agreement and Plan of Merger by and among National Commerce Corporation, a Delaware corporation, and CenterState Bank Corporation, a Florida corporation, dated as of November 23, 2018, this Agreement shall remain in effect until the earlier of (i) the distribution of the death benefit proceeds in accordance with Section 6 above or (ii) the Insured attaining age 80, unless the Insured consents in writing to an earlier termination of the Agreement.”   2.     This Amendment shall become effective upon the closing of the transactions contemplated by the Merger Agreement. If the closing of the transactions contemplated in the Merger Agreement does not occur or in the event the Merger Agreement is terminated prior to the consummation of the transactions contemplated therein, this Amendment shall be null and void in ab initio and   3.     By signing this Amendment below, the Insured hereby consents to this Amendment and acknowledges and agrees that any voluntary resignation, other than a voluntary resignation for Good Reason following the occurrence of a Change in Control that is the result of the consummation of the transactions contemplated by the Merger Agreement, will result in the immediate termination of the Agreement; provided however, the Agreement shall continue until the earlier of the distribution of the death benefit proceeds or the Insured’s 80th birthday, in the event of a Change in Control (other than a Change in Control resulting from the consummation of the transactions contemplated by the Merger Agreement) that occurs while the Insured is employed by the Bank or any affiliate (unless the Insured consents in writing to an earlier termination of the Agreement).   3     4.     All other terms and conditions of the Agreement not herein amended shall remain in full force and effect and any capitalized terms not defined in this           BANK:       National Bank of Commerce       By /s/ William E. Matthews, V     William E. Matthews, V         Its President and CFO           INSURED:           /s/ Michael D. Goodson, Jr.   Michael D. Goodson, Jr.   4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1, 2012 Commission File No. 333-152017 Business Marketing Services, Inc. (Exact name of registrant as specified in its charter) DELAWARE 80-0154787 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 350 Madison Avenue, 8 th Floor New York, NY (Address of principal executive offices) (Zip Code) (646) 416-6802 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001 per share Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YesoNox Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YesoNox 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. YesxNoo Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K /A or any amendment to this Form 10-K/A .x Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filed, a non-accelerated filer or a smaller reporting company as defined in Rule 12b-2 of the Exchange Act. Large accelerated file o Accelerated filer o Non-accelerated filer o Smaller reporting company x Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesxNoo As of December 31, 2012 the number of outstanding shares of common stock, $0.0001 par value per share, of the registrant was 19,500,000 shares. No documents are incorporated by reference. Table of Contents Part I Item 1 Business 3 Item 1a Risk Factors 3 Item 1b Unresolved Staff Comments 7 Item 2 Properties 7 Item 3 Legal Proceedings 7 Item 4. Submission Of Matters To A Vote Of Security Holders 7 Part II Item 5 Market For Registrant’s Common Equity 8 Item 6. Selected Financial Data 8 Item 7. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations 8 Item 8. Financial Statements And Supplementary Data F-1 Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure 11 Item 9A(T). Controls And Procedures 11 Item 9B. Other Information 11 Part III Item 10. Directors, Executive Officers And Corporate Governance 11 Item 11. Executive Compensation 12 Item 12. Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters 13 Item 13. Certain Relationships And Related Transactions And Director Independence 13 Item 14. Principal Accounting Fees And Services 13 Part IV Item 15. Exhibits And Financial Statement Schedules 13 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer 13 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer 13 Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350) 13 PART I Forward Looking Statements Certain statements in this Annual Report on Form 10-K (the “Report”) are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Report, words such as “may,” “should,” “seek,” “believe,” “expect,” ”anticipate,” “estimate,” “project,” “intend,” “strategy” and similar expressions are intended to identify forward- looking statements regarding events, conditions and financial trends that may affect the Company’s future plans, operations, business strategies, operating results and financial position. Forward-looking statements are subject to a number of known and unknown risks and uncertainties that may cause actual results, trends, performance or achievements of the Company, or industry trends and results, to differ materially from the future results, trends, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, among others: general economic and business conditions in the United States and other countries in which the Company’s customers, suppliers, and service providers are located; industry conditions and trends; technology changes; competition and other factors which may affect prices which the Company may charge for its products and its profit margins; the availability and cost of the inventory purchased by the Company; relative value of the United States dollar to currencies in the countries in which the Company’s customers, suppliers and competitors are located; changes in, or the failure to comply with, government regulation, principally environmental regulations; the Company’s ability to implement changes in its business strategies and development plans; and the availability, terms and deployment of debt and equity capital if needed for expansion. These and certain other factors are discussed in this Report and from time to time in other Company reports filed with the Securities and Exchange Commission. The Company does not assume an obligation to update the factors discussed in this Report or such other reports. ITEM 1 Business Business Marketing Services, Inc.’s (“BMSV” or the “Company”) is a development stage company. We focus on early-stage business activities.We own 60% of the shares in Adcore ApS, a software publisher we founded on February 3, 2011 with our partners Rainmaking Holding 1 ApS (“RM”) and Perfect Best International Ltd (“PBI”). We believe that we can create value for businesses in the entertainment industry and value for end users by making enforcement of copyright more efficient and by lowering costs of delivery of digital content to a minimum with new technology. We are planning to obtain license agreements for digital content. We are planning partnerships to access state-of-the-art technology for storage and delivery of digital content to consumers. We are planning to make strategic acquisitions to realize our plans. We might alter our plans if we do not succeed in raising funds to start the projects or if we do not succeed in obtaining license agreements that are essential for the business we envisage. Recent Developments and Changes to Business Plan On January 19, 2010, Hans Pandeya, our current CEO and director, acquired the majority of the issued and outstanding common stock of the Company, from Doug Black, in accordance with a common stock purchase agreement (the “Stock Purchase Agreement”) between Hans Pandeya, Doug Black and the Company. On the Closing Date, pursuant to the terms of the Stock Purchase Agreement, Hans Pandeya acquired fifteen million (15,000,000) shares of the Company’s issued and outstanding common stock representing approximately 78% of the Company’s issued and outstanding common stock, for a total purchase price of Three Hundred Twenty-Five Thousand dollars ($325,000). On January 7, 2013, Mrs Majken Hummel-Gumaelius was appointed as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director of the Company. Mrs. Hummel-Gumaelius has not been appointed to any committees of the Board, as the Board does not presently have any committees. Employees As of December 31, 2012, the Company’s sole employee was Hans Pandeya, its President and Chief Executive Officer. ITEM 1A Risk Factors An investment in the Company’s common stock is speculative and involves a high degree of risk. You should carefully consider the risks described below and the other information in this report before purchasing any shares of the Company’s common stock. The risks and uncertainties described below are not the only ones facing the Company. Additional risks and uncertainties may also adversely impair the Company’s business operations. Such factors may have a significant impact on its business, operating results, liquidity and financial condition. As a result of the identified risk factors, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to the Company, or that are currently considered to be immaterial, may also impact the Company’s business, operating results, liquidity and financial condition. If any such risks occur, the Company’s business, operating results, liquidity and financial condition could be materially affected in an adverse manner. In addition, the trading price of the Company’s stock, when and if a market develops for the Company’s stock, could decline. 3 Risks Related to the Company We Have A Limited Operating History That You Can Use To Evaluate Us, And The Likelihood Of Our Success Must Be Considered In Light Of The Problems, Expenses, Difficulties, Complications And Delays Frequently Encountered By A Small Developing Company. There Is No Assurance Our Future Operations Will Result In Profitable Revenues. If We Cannot Generate Sufficient Revenues To Operate Profitably, We Will Cease Operations. We have no significant financial resources. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to meet our expenses and support our anticipated activities. Our ability to achieve and maintain profitability and positive cash flow is dependent upon: ● our ability to identify and pursue mediums through which we will be able to market our services; ● our ability to attract and retain customers; ● our ability to generate revenues through sales of our products; and ● our ability to manage growth by managing administrative overhead. Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses and generating limited revenues. We cannot guarantee that we will be successful in generating revenues in the future. Our failure to generate revenues in a timely manner would have a material adverse effect on our business, operating results and financial condition. We Will Require Financing To Achieve Our Current Business Strategy And Our Inability To Obtain Such Financing Could Prohibit Us From Executing Our Business Plan And Cause Us To Slow Down Our Expansion or Cease Our Operations. We will need to raise a minimum of $ 1 million over the next twelve months through public or private debt or sale of equity to execute our business and marketing plan and to get our operations to profitability. Such financing may not be available as needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. If we are unable to obtain this financing on reasonable terms, we would be unable to hire the additional employees needed to execute our business plan and we would be forced to delay or scale back our plans for expansion. This would delay our ability to get our operations to profitability and could force us to cease operations. In addition, such inability to obtain financing on reasonable terms could have a material adverse effect on our business, financial condition and results of operation. Moreover, in addition to monies needed to continue operations over the next twelve months, we anticipate requiring additional funds in order to execute any future plans for growth. No assurance can be given that such funds will be available or, if available, will be on commercially reasonable terms satisfactory to us. There can be no assurance that we will be able to obtain financing if or when it is needed on terms we deem acceptable. We face Intense Competition And Our Inability To Successfully Compete With Our Competitors Will Have A Material Adverse Effect On Our Results Of Operation. The social networking software industry is highly competitive. Many of our competitors have longer operating histories, greater brand recognition, broader service lines and greater financial resources and advertising budgets than we do. Many of our competitors offer similar services or alternatives to our services. We intend to rely solely on concepts developed by Hans Pandeya, our CEO and a director. There can be no assurance that we will procure a market that will be available to support the services we will offer or allow us to seek expansion. There can be no assurance that we will be able to compete effectively in this marketplace. If We Do Not Attract Customers On Cost-Effective Terms, We Will Not Make A Profit, Which Ultimately Will Result In A Cessation Of Operations. Our success depends on our ability to attract customers on cost-effective terms. If we are unsuccessful at attracting a sufficient number of clients, our ability to get repeat customers and our financial condition will be harmed. 4 We are controlled by current officers, directors and principal stockholders. Our insiders beneficially own approximately 78% of the outstanding shares of our common stock. Accordingly, our insiders will have the ability to control the election of our Board of Directors and the outcome of issues submitted to our common stockholders for a vote. Our insiders could also delay or prevent a change in our corporate control even if our other stockholders wanted it to occur. Accordingly, these insiders may be able to control all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could delay or prevent an outside party from acquiring or merging with the Company even if its other stockholders wanted it to occur. We may be unable to manage our growth or implement our expansion strategy. We may not be able to expand our product and service offerings, our client base and markets, or implement the other features of our business strategy at the rate or to the extent presently planned. Our projected growth will place a significant strain on our administrative, operational and financial resources. If we are unable to successfully manage our future growth, establish and continue to upgrade our operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, our financial condition and results of operations could be materially and adversely affected. Any Inability to adequately protect our intellectual property could harm our ability to compete. Our future success and ability to compete depends in part upon our intellectual property, which we attempt to protect with a combination of copyright and trademark laws, as well as with contractual provisions. These legal protections afford only limited protection and are time-consuming and expensive to obtain and/or maintain. Further, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property. Our involvement in intellectual property litigation could adversely affect our business. If we are alleged to infringe the intellectual property rights of a third party, any litigation to defend the claim could be costly and would divert the time and resources of management, regardless of the merits of the claim. There can be no assurance that we would prevail in any such litigation. If we were to lose a litigation relating to intellectual property, we could, among other things, be forced to pay monetary damages and/or to cease the sale or use of certain products. Any of the foregoing may adversely affect our business. Compliance with Sarbanes-Oxley Section 404 The SEC extended the deadline for compliance with Section 404 of the Sarbanes-Oxley Act of 2002 to smaller reporting companies to annual filings after June 30, 2010 therefore the Company‘s first year of required compliance is as of December 31, 2010. Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could prevent the Company from producing reliable financial reports or identifying fraud. In addition, shareholders could lose confidence in the Company’s financial reporting, which could have an adverse effect on its stock price. Effective internal controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud, and a lack of effective controls could preclude the Company from accomplishing these critical functions. The Company will be required to document and test its internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of the Company’s internal controls over financial reporting and a report by its independent registered public accounting firm addressing these assessments. During the course of the Company’s testing, it may identify deficiencies that the Company may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if the Company fails to maintain the adequacy of its internal accounting controls, as such standards are modified, supplemented or amended from time to time, the Company may not be able to ensure that it can conclude on an ongoing basis that it has effective internal controls over financial reporting in accordance with Section 404. Failure to achieve and maintain an effective internal control environment could cause the Company to face regulatory action and also cause investors to lose confidence in its reported financial information, either of which could have an adverse effect on the Company’s stock price. Risks Relating to the Company’s Securities There is not now, and there may not ever be, an active market for our shares of common stock. There can be no assurance that an active market for our common stock will develop. If an active public market for our common stock does not develop, shareholders may not be able to re-sell the shares of our common stock that they own and may lose all of their investment. 5 Sales of a substantial number of shares of our common stock may cause the price of our common stock to decline. Should an active public market develop and our stockholders sell substantial amounts of our common stock in the public market, shares sold at a price below the current market price at which the common stock is trading will cause that market price to decline. Moreover, the offer or sale of a large number of shares at any price may cause the market price to fall. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. The market price of the Company’s common stock may be volatile. The market price of the Company’s common stock will likely be highly volatile, as is the stock market in general, and the market for OTC Bulletin Board quoted stocks in particular. Some of the factors that may materially affect the market price of the Company’s common stock are beyond the Company’s control, such as changes in financial estimates by industry and securities analysts, announcements made by the Company’s competitors or sales of the Company’s common stock. These factors may have a material adverse effect on the market price of the Company’s common stock, regardless of the Company’s performance. In addition, the public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of the Company’s common stock. Issuance of Additional Shares of our Common Stock for financing or debt conversion could cause significant dilution for our current stockholders. The Company needs to raise additional funds in the future. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of the current stockholders of the Company will be reduced, stockholders may experience additional dilution and such securities may have rights, preferences and privileges senior to those of the common stock and may have covenants that impose restrictions on the Company’s operations. We may not be able to remain current in our SEC reporting requirements. If the Company fails to remain current on its reporting requirements, it could be removed from the OTC Bulletin Board which would limit the ability of broker dealers to sell its securities and the ability of stockholders to sell their securities in the secondary market. Companies trading on the OTC Bulletin Board must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If the Company fails to remain current on its reporting requirements, it could be removed from the OTC Bulletin Board. As a result, the market liquidity for the Company’s securities could be severely affected and limit the ability of broker-dealers to sell the Company’s securities and the ability of stockholders to sell their securities in the secondary market. In addition, the Company may be unable to get re-listed on the OTC Bulletin Board, which may have an adverse material effect on the Company. We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends on its common stock in the foreseeable future, so any return on investment may be limited to the value of the Company’s stock. The Company plans to retain any future earnings to finance growth. Our Common Stock will be subject to the "Penny Stock" rules of the SEC. Any market that develops in shares of the Company’s common stock will be subject to the penny stock regulations and restrictions, which could impair liquidity and make trading difficult. SEC Rule 15g-9, as amended, establishes the definition of a “penny stock” as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions. It is likely that the Company’s shares will be considered to be penny stock for the immediately foreseeable future. This classification severely and adversely affects the market liquidity for its common stock. For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person’s account for transactions in penny stock and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. To approve a person’s account for transactions in penny stock, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stock are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stock. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule required by the SEC relating to the penny stock market, which, in highlight form, sets forth: · the basis on which the broker or dealer made the suitability determination, and · that the broker or dealer received a signed, written agreement from the investor prior to the transaction. 6 Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock. Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of the Company’s common stock, which may affect the ability of selling stockholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of the Company’s securities, if and when its securities become publicly traded. In addition, the liquidity for the Company’s securities may decrease, with a corresponding decrease in the price of the Company’s securities. The Company’s shares, in all probability, will be subject to such penny stock rules for the foreseeable future and its stockholders will, in all likelihood, find it difficult to sell their securities. The market for penny stock has experienced numerous frauds and abuses that could adversely impact investors in the Company’s stock. OTC Bulletin Board securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTC Bulletin Board reporting requirements are less stringent than those of the stock exchanges or NASDAQ. Patterns of fraud and abuse include: · Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; · Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; · “Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; · Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and · Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses. FINRA Sales Practice Requirements May Limit A Stockholder's Ability To Buy And Sell Our Stock. FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder's ability to resell shares of our common stock. ITEM 1B Unresolved Staff Comments None. ITEM 2 Properties As of February 1, 2011, our business office was located at 350 Madison Avenue, 8 th Floor, New York, NY 10017. Management believes that existing facilities are adequate to meet current requirements, and that suitable additional space will be available as needed to accommodate any further physical expansion of operations. ITEM 3 Legal Proceedings The Company is not party to any other legal proceeding. The Company may become a party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, there were no matters that would have a material adverse effect on the financial condition of the Company as of December 31, 2012 and 2011. ITEM 4. Submission of Matters to a Vote of Security Holders None. 7 ITEM 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities Our common stock is quoted on the OTC Bulletin Board, a service provided by the Nasdaq Stock Market Inc., under the symbol “BMSV.OB”. The following table sets forth the high and low bid prices for our common stock as reported each quarterly period within the last two fiscal years on the OTC Bulletin Board, as reported by the National Quotation Bureau. The high and low prices reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions (1). Period High Bid Low Bid 1st Quarter 2011 $ $ 2nd Quarter 2011 3rd Quarter 2011 4th Quarter 2011 1st Quarter 2012 2 nd Quarter 2012 3 rd Quarter 2012 4 th Quarter 2012 1st Quarter 2013 $ $ On April 10, 2012, the National Quotation Bureau, Inc. reported that the closing ask price on our common stock was $0.16 per share. Record Holders As of December 31, 2011, there were approximately 45 holders of record of our common stock. The Board of Directors believe that the number of beneficial owners is greater than the number of record holders because a portion of our outstanding common stock is held of record in broker "street names" for the benefit of individual investors. The beneficial owners of such shares are not known to us. As of December 31, 2011, the shareholders list from our transfer agent shows that there were 19,500,000 shares of common stock outstanding. Of those shares, 15,000,000 shares, or 77% percent of our outstanding common stock, were owned by our officers and directors. Dividend Policy We have not paid dividends on our common stock and do not plan to pay such dividends in the foreseeable future. Our Board of Directors will determine our future dividend policy on the basis of many factors, including results of operations, capital requirements, and general business conditions. Recent Sales of Unregistered Securities None. Securities Authorized For Issuance Under Equity Compensation Plan The Company does not have any Equity Compensation Plans, nor has the Company issued any securities pursuant to any Equity Compensation Plan. ITEM 6. SELECTED FINANCIAL DATA Not applicable to smaller reporting companies. ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction You should read the following discussion in conjunction with our audited financial statements, which are included elsewhere in this Form 10-K, and the special note on Forward Looking Statements appearing before Item 1. Business. Management’s Discussion and Analysis and its plans of operation contain statements that are forward-looking. These statements are based on current expectations and assumptions, which are subject to risk, uncertainties and other factors. Actual results may differ materially because of the factors discussed in the subsection titled “Risk Factors,” which are located in Item 1A. 8 Company Overview Business Marketing Services, Inc.’s (“BMSV” or the “Company”) is a development stage company. We focus on early-stage business activities.We own 60% of the shares in Adcore ApS, a software publisher we founded on February 3, 2011 with our partners Rainmaking Holding 1 ApS (“RM”) and Perfect Best International Ltd (“PBI”). We believe that we can create value for businesses in the entertainment industry and value for end users by making enforcement of copyright more efficient and by lowering costs of delivery of digital content to a minimum with new technology. We are planning to obtain license agreements for digital content. We are planning partnerships to access state-of-the-art technology for storage and delivery of digital content to consumers. We are planning to make strategic acquisitions to realize our plans. We might alter our plans if we do not succeed in raising funds to start the projects or if we do not succeed in obtaining license agreements that are essential for the business we envisage. Recent Developments and Changes to Business Plan On January 19, 2010, Hans Pandeya, our current CEO and director, acquired the majority of the issued and outstanding common stock of the Company, from Doug Black, in accordance with a common stock purchase agreement (the “Stock Purchase Agreement”) between Hans Pandeya, Doug Black and the Company. On the Closing Date, pursuant to the terms of the Stock Purchase Agreement, Hans Pandeya acquired fifteen million (15,000,000) shares of the Company’s issued and outstanding common stock representing approximately 78% of the Company’s issued and outstanding common stock, for a total purchase price of Three Hundred Twenty-Five Thousand dollars ($325,000). On January 7, 2013, Mrs Majken Hummel-Gumaelius was appointed as President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director of the Company. Mrs. Hummel-Gumaelius has not been appointed to any committees of the Board, as the Board does not presently have any committees. Critical Accounting Policies Our discussion and analysis of our financial condition and results of operation is based upon our audited financial statements, which have been prepared in accordance with Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are 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. An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the condensed consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumption used in the preparation of the condensed consolidated financial statements. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board. In addition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these other items could have a material impact on our financial statements. Loss Per Share Basic loss per share is presented on the face of the statements of operations. Basic loss per share is calculated as the loss attributable to common stockholders divided by the weighted average number of shares outstanding during each period. Basic (loss) per share is computed using the weighted average number of shares outstanding during the period. Due to the Company’s losses from continuing operations, dilutive potential common shares in the form of warrants and unvested common stock awards were excluded from the computation of diluted loss per share, as inclusion would be anti-dilutive for the periods presented. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: the amount of uncollectible accounts receivable, the amount to be paid for the settlement of liabilities related to cost of sales, the estimated useful lives for property and equipment, value assigned to the warrants granted in connection with the various financing arrangements and calculation for stock compensation expense. Actual results could differ from those estimates. 9 Results of Operations The following table sets forth, for the periods indicated, the Statements of Operations that is used in the following discussions of our results of operations. Revenue The Company generated revenue of $317,508 for the year ended December 31, 2012, compared to $143,294 for the year ended December 31, 2011. Operating Expenses The Company operating expenses for 2012 was $257,575 as compared to $235,431 in 2011. Our operating increase in revenues was due to spending more to build our business and generate revenues. Other Expenses The Companyhad other (income) expenses of $9,893 for the year ended December 31, 2012, compared to $1,728 for the year ended December 31, 2011. Liquidity As of December 31, 2012 we had $110,876 in cash. The following table summarizes the Company’s Statement of Cash Flows: Twelve Months Ended December 31, Net cash provided (used) by operating activities Operating Activities Investing Activities - - Financing Activities We believe that with our current cashflow for our operation and cash on hand we have sufficient capital to operate for the next 12 months. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable to smaller reporting companies. However, risk factors relating to the Company and Company’s securities are described under “Item 1A Risk Factors.” 10 ITEM 8. Financial Statements and Supplementary Data Business Marketing Services, Inc. December 31, 2012 and 2011 Index to Consolidated Financial Statements Contents Page(s) Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets at December 31, 2012 and 2011 F-3 Consolidated Statements of Operations for the Year Ended December 31, 2012 and 2011 F-4 Consolidated Statement of Equity (Deficit) for the Year Ended December 31, 2012 and 2011 F-5 Consolidated Statements of Cash Flows for the Year Ended December 31, 2012 and 2011 F-6 Notes to the Consolidated Financial Statements F-7 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Business Marketing Services, Inc. New York, New York We have audited the accompanying consolidated balance sheets of Business Marketing Services, Inc. (the “Company”) as of December 31, 2012 and 2011 and the related consolidated statements of operations, equity (deficit) and cash flows for the years then ended.These consolidated financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.Accordingly, we express no such opinion.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.We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/Li and Company, PC Li and Company, PC Skillman, New Jersey April 15, 2013 F-2 Business Marketing Services, Inc. Consolidated Balance Sheets December 31, 2012 December 31, 2011 ASSETS CURRENT ASSETS Cash $ $ Accounts receivable - Prepayments and other current assets Total Current Assets WEB-BASED SOFTWARE PLATFORM Web-based software platform Accumulated amortization ) ) Web-based Software Platform, net TOTAL ASSETS $ $ LIABILITIES AND DEFICIT CURRENT LIABILITIES Accounts payable $ $ Accrued expenses - Accrued interest - related party - Advances from stockholder - Corporate income tax payable - Notes payable - stockholder Note payable - related party - Total Current Liabilities TOTAL LIABILITIES DEFICIT Business Marketing Services Inc. Stockholders' Deficit Preferred stock: par value $0.0001; 50,000,000 shares authorized; none issued or outstanding - - Common stock: par value $0.0001; 200,000,000 shares authorized; 19,500,000 shares issued and outstanding Additional paid-In capital Accumulated deficit ) ) Accumulated other comprehensive income (loss) Foreign currency translation loss ) ) Total Business Marketing Services Stockholders' Deficit ) ) Non-controlling Interest in Subsidiary Total Deficit ) ) TOTAL LIABILITIES AND DEFICIT $ $ See accompanying notes to the consolidated financial statements F-3 Business Marketing Services, Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) For the Year For the Year Ended Ended December 31, 2012 December 31, 2011 Revenue $ $ Operating Expenses: Compensation - officer - Professional fees Selling expenses General and administrative expenses Total Operating Expenses Income (Loss) from Operations ) Other (Income) Expenses Foreign currency transaction (gain) loss ) Other income - ) Interest expense - related party Other (Income) Expenses, net Income (Loss) before income taxes and non-controlling interest ) Income tax provision - Net income (loss) before non-controlling interest ) Net income (loss) attributable to non-controlling interest Net income (loss) attributable to BMSV's stockholders $ $ ) Net Income (Loss) Per Common Share - basic and diluted $ $ ) Weighted Average Common Shares Outstanding: - basic and diluted Comprehensive Income (Loss): Net Income (Loss) $ $ ) Foreign currency translation income (loss) ) Foreign currency translation (income) loss attributable to non-controlling interest ) Comprehensive Income (Loss) Attributable to BMSV $ $ ) See accompanying notes to the consolidated financial statements F-4 Business Marketing Services, Inc. Consolidated Statement of Equity (Deficit) For the Year ended December 31, 2012 and 2011 Accumulated Other Comprehensive loss Common Stock Par Value $0.0001 Additional Foreign Currency Total BMSV Stockholders' Non- Total Number of Shares Amount Paid-in Capital Accumulated Deficit Translation loss Equity (Deficit) controlling Interest Equity (Deficit) Balance, December 31, 2010 ) - ) - ) Noncontrolling interest - capital contribution Comprehensive income Net loss ) ) ) Foreign currency translational loss ) Total comprehensive loss ) ) Balance, December 31, 2011 ) Discharged debt from related party Comprehensive income Net Income Foreign currency translational loss ) Total comprehensive income Balance, December 31, 2012 $ $ $ ) $ ) $ ) $ $ ) See accompanying notes to the consolidated financial statements F-5 BUSINESS MARKETING SERVICES, INC. Consolidated Statements of Cash Flows For the Year For the Year Ended Ended December 31, 2012 December 31, 2011 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) before non-controlling interest $ $ ) Adjustments to reconcile net income (loss) before non-controlling interest to net cash provided by operating activities: Amortization expense Notes issued to a related party as compensation - Foreign currency transaction gain on note payable-related party - ) Changes in operating assets and liabilities: Accounts receivable ) Prepayments and other current assets ) ) Accounts payable Accrued expenses ) Accrued interest - related party Corporate income tax payable ) Net cash provided by operating activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (repayments to) notes payable - stockholder ) Proceeds from (repayments to) notes payable - related party - Advances from (repayments to) stockholder ) ) Contribution of non-controlling interest - Net cash flows provided by (used in) financing activities ) EFFECT OF EXCHANGE RATE CHANGES ON CASH ) NET CHANGE IN CASH CASH BALANCE AT BEGINNING OF YEAR 48 CASH BALANCE AT END OF YEAR $ $ SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: Interest paid $

Exhibit 10.37     CONFIDENTIAL   EXECUTION VERSION   AMENDMENT TO TECHNOLOGY LICENSE AGREEMENT   This AMENDMENT (“Amendment”) amends the TECHNOLOGY LICENSE AGREEMENT entered into by and between EXACT Sciences Corporation (“ESC”), with its principal place of business at 441 Charmany Drive, Madison, Wisconsin  53719 (“ESC”) and Hologic, Inc., with its principal place of business at 35 Crosby Drive, Bedford, MA 01730, and Third Wave Technologies, Inc., a wholly-owned subsidiary of Hologic with its principal place of business at Madison, Wisconsin, effective as of September 15, 2009 (the “Agreement”).  Hologic, Inc. and Third Wave Technologies, Inc. are referred to collectively (or separately as the context requires) as “Hologic”).   ESC and Hologic may separately be referred to as a “Party” or collectively referred to as the “Parties” and other capitalized terms have the meaning provided in the Agreement.   Effective, December 7, 2012, the Agreement is hereby amended as follows:   1.                                      Article 1 of the Agreement is amended by   1.29                        “GI Field” means identifying, detecting or treating any disease or condition within, related to or affecting the gastrointestinal tract and/or appended mucosal surfaces (including the oral cavity, sino-nasal cavity, larynx, pharynx and large airways), other than with respect to matters included within the scope of the definition of “Field” under this Agreement, including without limitation the guiding of chemotherapy and staging and/or monitoring any such disease or condition.   2.                                      Article 2 of the Agreement is amended by adding the following new Section 2.1A following Section 2.1:   2.1A                      Subject to the terms and conditions of this Agreement, including the limitations set forth in Section 2.3 and the payment provisions set forth in Section 5.2, Hologic hereby grants to ESC and its Affiliates a non-exclusive, royalty-bearing license in the GI Field, under the Hologic Patent Rights and Hologic Improvements in the Territory:   (a)                                 To manufacture, have manufactured, import, have imported, use, Sell, offer for Sale and have Sold, Licensed Products, and to convey to End Users the right to use the Licensed Products in accordance with the Label License provided with the purchase of such Licensed Products as set forth in Article 7 below;   (b)                                 To practice internally for research, development, improvement and quality control and quality assurance of Licensed Products;   (c)                                  To provide Diagnostic Services, including operating a Clinical Laboratory Improvement Amendments (CLIA) compliant lab that provides test results to physicians.     3.                                      Section 5.2 of the Agreement is amended by adding the following at the end of that section immediately prior to the period ending the sentence:   ; except that, in consideration of the non-exclusive license with respect to the GI Field granted in Section 2.1A above, ESC shall account to and pay to Hologic for each Royalty Payment Period during the term of this Agreement a royalty equal to [***] of the Net Sales of Licensed Products Sold in the Territory pursuant to such non-exclusive license.   by their duly authorized officers effective as of the effective date stated above.     HOLOGIC, INC.   EXACT SCIENCES CORPORATION                     By: Rohan Hastie   By:           Title: VP & GM Molecular   Title:           Date: December 8th   Date: December 7, 2012                                     By: Rohan Hastie                 Title: VP & GM Molecular               Date: December 8th       2

Exhibit 10.1       FORBEARANCE AGREEMENT AND GENERAL RELEASE     THIS FORBEARANCE AGREEMENT AND GENERAL RELEASE (“Agreement”), dated as of July 6th, 2009, is entered by and among FIDEsprit AG, a Swiss corporation (“Borrower”), Axel J. Kutscher (“Guarantor”) and Proteo, Inc., a Nevada corporation (“Proteo” and together with Borrower and Guarantor, the “Parties”), with reference to the facts as set forth in the Recitals:   RECITALS   A.           WHEREAS, pursuant to that certain Preferred Stock Purchase Agreement dated June 9, 2008 (the “Stock Purchase Agreement”), Borrower purchased 600,000 shares of Proteo’s Series A Preferred Stock in consideration of Borrower’s delivering to Proteo a promissory note of even date therewith in the original principal amount of $3,600,000 (as amended and modified from time to time, the “Note”, the original of which is attached hereto as Exhibit A).  Capitalized terms used but not defined herein shall have the meanings given to such terms in the Stock Purchase Agreement.   B.           WHEREAS, Borrowers obligations under the Note have been guaranteed (the “Guaranty”) by the Guarantor, the original of which is attached hereto as Exhibit B.   C.           WHEREAS, Borrower is currently in default under the Note for failing to make all of the scheduled principal and interest payments under the Note and for not paying the Note in full by its due date of March 31, 2009 (collectively, the “Events of Default”).   D.           WHEREAS, Proteo, Borrower and Guarantor desire to enter into this Forbearance Agreement to set forth the terms and conditions upon which Proteo agrees to forbear from enforcing its rights under the Note as a result of the Events of Default.   AGREEMENT   1.           RECITALS.  The Recitals are incorporated herein by and through this reference, and the Parties agree that the facts recited above are true and correct.   2.           ACKNOWLEDGMENT OF DEBT.  Borrower and Guarantor hereby acknowledge and agree that, as of July 6th, 2009, Borrower is obligated to Proteo under the Note for the aggregate sum of $1,940,208 (representing the unpaid principal balance plus all other amounts due under the Note as of July 6th, 2009) (the   3.           CONFIRMATIONS OF NOTE AND GUARANTEE.  Borrower and Guarantor hereby confirm the validity and effectiveness of the Note and Guaranty, as modified hereby. This acknowledgment and confirmation shall in no way be deemed to constitute a requirement or admission by Proteo that any such acknowledgment or confirmation is required to maintain the effectiveness of the Note and Guaranty, no such acknowledgment and confirmation being so required. Except as may be expressly modified herein, each of the Note and Guaranty shall remain in full force and effect.     1     4.           ACKNOWLEDGMENT OF DEFAULTS AND WAIVERS.  Borrower and Guarantor hereby acknowledge and agree that Borrower is currently in default under the Note, among other reasons, by reason of those Events of Default described in Paragraph C of the Recitals (all of such Events of Default shall collectively be referred to as "Defaults”) hereinabove. Borrower and Guarantor hereby knowingly and voluntarily waive any and all rights they may have, if any, to contest or dispute the validity of, or to cure, the Defaults or the exercise of any rights of Proteo. Borrower and Guarantor hereby further acknowledge and agree that in entering into this Agreement, Proteo is relying upon the acknowledgment by Borrower and Guarantor of the existence of the Defaults and their waiver of any right to dispute the existence thereof or to contest any enforcement of Proteo’s rights based thereon.   5.           LIMITED SUFFERANCE OF DEFAULTS; FORBEARANCE.  Borrower has requested that Proteo enter into this Agreement and forbear from exercising its rights under the Note and Guaranty as to afford Borrower limited additional time to pay the outstanding Indebtedness. Subject to Borrower’s prompt and continual compliance with the payment requirements set forth in Paragraph 6 below, Proteo hereby agrees to allow the Defaults under the Note existing as of the date hereof to continue to exist and further agrees to forebear from relying thereon to enforce any of its rights and remedies under the Note and Guaranty, all subject to the terms and conditions of this Agreement, until the Indebtedness is paid in full (“Forbearance Period”), at which time the Forbearance Period shall automatically terminate. As long as Borrower does not breach any term or condition of this Agreement or no additional default occurs or exists under the Note or Guaranty during the Forbearance Period, Lender agrees to forbear from exercising any and all of its remedies under the Note and Guaranty and this Agreement; provided however, if a breach of this Agreement occurs or an event of default (other than the Defaults) occurs or exists under the Note or Guaranty, then, without notice by Proteo to Borrower or Guarantors and at Proteo’s option, the Forbearance Period shall terminate and Proteo shall have the right to enforce its remedies under the Note and Guaranty, this Agreement, any agreement executed concurrently herewith, or at law or equity; and provided, further, that upon the failure of Borrower to satisfy any of the terms and conditions of this Agreement, or upon the occurrence of any subsequent event of default hereunder, under any agreement executed concurrently herewith, or, under the Note or Guaranty, the foregoing agreement to forbear by Proteo shall be of no further force and effect, shall be deemed rescinded, revoked and terminated and the Defaults shall be revived and reinstated, and shall be deemed to have occurred and to exist as if such forbearance had not been granted, with all rights and remedies of Proteo under the Note and Guaranty, as hereinafter modified, based upon the Defaults, revived as if Proteo had never forborne from enforcement. Proteo may thereafter enforce its rights pursuant to the terms of the Note, Guaranty, and pursuant to applicable law, and exercise such other rights and remedies as may be available to Proteo at law, in equity, or otherwise.   6.           TERMS AND CONDITIONS.  In consideration of Proteo’s forbearance pursuant to Paragraph 5 above, Borrower agrees to and shall pay the Indebtedness to Proteo by making monthly payments in the amount of $140,000 commencing on the first business day of September 2009 and continuing on the first business day of each succeeding month thereafter until the entire Indebtedness is paid in full.     2     All payments must be in lawful money of the United States of America, free from any offset, deduction or counterclaim.  Checks constitute payment only when collected, deposited and credited to Proteo’s bank account.   Nothing contained herein is intended to, nor shall it be deemed to, relieve Borrower or Guarantor of any of their respective obligations under the Note or Guaranty, nor shall it modify the legal relationship of Borrower and Guarantor with respect to Proteo.   7.           NO NOVATION.  The Parties further agree that in no event shall the effect of this Agreement be deemed to be a novation of the Note or Guaranty, the intent of the Parties hereunder being to amend the Note and Guaranty and to confirm the obligations (including the Indebtedness) of Borrower and Guarantor under the Note and Guaranty, as amended hereby, with all of the terms and provisions of the Note and Guaranty in full force and effect save and except those modified by this Agreement.   8.           CROSS DEFAULTS.  Borrower and Guarantor hereby agree and confirm that, at Proteo’s option, the occurrence of an event of default under and set forth in this Agreement shall be a default under each of the Note and Guaranty and, to the extent necessary, the Note and Guaranty are hereby irrevocably amended to effect such cross defaults. Borrower and Guarantor additionally agree and confirm that, at Proteo’s option, the occurrence of an event of default (other than the Defaults) under the Note and Guaranty shall be a default under this Agreement.   9.           EVENTS OF DEFAULT.  Any failure by Borrower or Guarantors or Pledgors to comply with any terms and conditions of this Agreement, together with each of the events of default contained within the Note and Guaranty (other than the Defaults), shall constitute an event of default hereunder.   10.        REMEDIES.  Upon the occurrence of an event of default (as set forth in Paragraph 9, above), or the termination of the Forbearance Period Proteo shall have the right to enforce its remedies under the Note, Guaranty, this Agreement, or under any of the documents executed concurrently herewith, at law or in equity, and, at its election, exercise any and all rights and remedies provided for under the Note, Guaranty or herein, and terminate its obligations under this Agreement.   11.        GOVERNING LAW.  This Agreement and the Note and Guaranty shall be deemed to have been made in the State of California and the validity, enforceability, construction, interpretation and enforcement of this Agreement and the Note and Guaranty and the rights of the Parties thereto shall be State of California, without regard to the principles of conflicts of law. If any provision of this Agreement or its exhibits shall be determined to be affect, impair or invalidate any other provision hereof. In the event that any interest rate set forth in the Note shall be in excess of the maximum rate allowed by law, the Note Documents shall be deemed to be modified to provide for the maximum interest rate allowed by law.     3     12.        COMPLETE AGREEMENT; INTEGRATION; MERGER.  This Agreement and the Note, Guaranty and Stock Purchase Agreement are intended by the Parties as the complete, integrated and final expression of their agreement. All prior understandings, whether oral or written, other than the Note, Guaranty and Stock Purchase Agreement, are hereby merged into this Agreement. This Agreement may only be amended by a writing executed by the Parties. No oral amendment, waiver or other understanding with respect to the subject matter of this Agreement shall be enforceable.   13.        GENERAL RELEASE IN FAVOR OF LENDER.  In consideration of the consideration, Borrower and Guarantor agree as follows:   Borrower and Guarantor, and each of them, together with all of their affiliates, including without limitation their affiliates, trusts, corporations, partnerships, agents, attorneys, heirs, executors, administrators, successors, assigns, representatives, employees, trustees, beneficiaries, officers, directors, partners, owners, members and shareholders (collectively the “Releasors”) hereby release and discharge Proteo and its affiliated corporations, agents, attorneys, heirs, executors, administrators, successors, directors, owners, partners, members and shareholders, with respect to any rights, claims, charges, demands, obligations, damages, liabilities, costs, attorneys’ fees, expenses, or causes of action of any nature, character and description, whatsoever, whether arising from or in any way related to, the loan evidenced by the Note, the Guaranty and Stock Purchase Agreement, the business of Releasors, and any and all transactions or other matters in any way related to any of the foregoing, or otherwise arising prior to the date hereof, whether known or unknown, anticipated or unanticipated, sounding in tort, contract or any other theory, law or equity, suspected or unsuspected, past or present.   14.        WAIVER OF CALIFORNIA CIVIL CODE, SECTION 1542.  The foregoing release extends to all claims whether or not claimed or suspected and constitute a waiver of each and all the provisions of the California Civil Code, Section 1542 (to the extent it would be applicable), which reads as follows:   A GENERAL RELEASE DOES NOT EXTEND TO CLAIMSWHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXISTIN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.   RELEASORS HAVE READ AND UNDERSTOOD THE FOREGOING AND INDICATE THAT FACT BY PLACING THEIR INITIALS, OR THE INITIALS OF AN AUTHORIZED AGENT, BELOW:       /s/ JAM                      /s/ AJK                     (Borrower)                                  (Guarantor)     4     RELEASORS, AND EACH OF THEM, UNDERSTAND AND ACKNOWLEDGE THAT THE SIGNIFICANCE AND CONSEQUENCE OF THIS WAIVER OF CALIFORNIA CIVIL CODE, SECTION 1542, IS THAT EVEN IF THEY SHOULD EVENTUALLY SUFFER ADDITIONAL DAMAGES ARISING OUT OF THE FACTS REFERRED TO ABOVE, THEY WILL NOT BE ABLE TO MAKE ANY CLAIM FOR THOSE DAMAGES. FURTHERMORE, RELEASORS, AND EACH OF THEM, ACKNOWLEDGE THAT THEY WILL NOT BE ABLE TO MAKE ANY CLAIM FOR DAMAGES EVEN AS TO CLAIMS FOR DAMAGES THAT MAY EXIST AS OF THE DATE OF THIS RELEASE BUT WHICH THEY DO NOT KNOW EXIST, AND WHICH, IF KNOWN, WOULD MATERIALLY AFFECT THEIR DECISIONS TO EXECUTE THIS AGREEMENT, REGARDLESS OF WHETHER THEIR LACK OF KNOWLEDGE IS THE RESULT OF IGNORANCE, OVERSIGHT, ERROR, NEGLIGENCE, OR ANY OTHER CAUSE. RELEASORS COVENANT AND AGREE THAT THEY WILL FOREVER REFRAIN AND FOREBEAR FROM BRINGING, COMMENCING OR PROSECUTING ANY AND ALL ACTIONS, LAWSUITS, CLAIMS OR PROCEEDINGS WITH RESPECT TO ANY MATTER THAT HAS BEEN RELEASED HEREIN. FURTHER, IT IS EXPRESSLY UNDERSTOOD AND AGREED BY RELEASORS, THAT THE FACTS WITH RESPECT TO WHICH THIS AGREEMENT IS GIVEN MAY HEREINAFTER TURN OUT TO BE OTHER THAN OR DIFFERENT FROM THE FACTS IN THAT CONNECTION NOW KNOWN OR BELIEVED BY SAID PARTY TO BE TRUE, AND SAID PARTY EXPRESSLY ASSUMES A RISK OF THE FACTS TURNING OUT TO BE SO DIFFERENT, AND AGREES THAT THIS AGREEMENT SHALL BE IN ALL RESPECTS EFFECTIVE AND NOT SUBJECT TO TERMINATION OR RESCISSION BY REASON OF ANY DIFFERENCE IN THE FACTS.   15.         TOLLING OF STATUTE OF LIMITATIONS.  Any and all statutes of limitations applicable to any and all rights, causes of action, claims and remedies, or equitable claim of laches, which Proteo has or might have against Borrower and/or Guarantor arising out of or relating to the circumstances and events described in the Recitals shall be and hereby are tolled and suspended effective at all times on and after the date of this Agreement.   15.1           Except for the tolling of the statute of limitations applicable to Proteo’s rights, causes of action, claims and remedies against each party set forth above, nothing in this paragraph is intended to modify or amend the obligations of Borrower and Guarantor to Proteo, including but not limited to, any other agreement existing by, between or amongst the Borrower and Guarantor and Proteo, or to be any waiver, estoppel or election as any right claim, defense or objection of Proteo. Any and all substantive rights of Proteo are hereby expressly preserved.   15.2.          It is expressly understood and agreed that nothing in this paragraph shall operate or be construed to defeat or diminish Proteo’s right to file actions or prosecute actions or any other claims against Borrower and Guarantor (in conformance with the terms of this Agreement), without prior verbal or written notice, on any issue, including but not limited to the matters discussed hereinabove.   5     16.        ADVICE OF COUNSEL.  Each Party hereto represents that it/he has been advised of the effect of the Agreement by its/his own attorneys, has investigated the facts and is not relying upon any representation or acknowledgment, whether oral or in writing, of any other Party hereto except as contained herein.   17.        RESCISSION. Except as provided herein, each of the Parties hereto expressly waives any right to rescind the Agreement.   18         REIMBURSEMENT OF PROTEO’S LEGAL FEES.  Borrower and Guarantor jointly and severally agree to reimburse Proteo for the legal fees and expenses it has incurred in preparation of this Agreement and related documents required as a result thereof in an amount not to exceed $2,500.     19.1.     Time is of the Essence.  In all dealings hereunder or under the Note or Guaranty, time is of the essence,   19.2.     Counterparts.  This Agreement may be executed in counterparts and by delivered shall be deemed to be an original. All such counterparts, taken together, shall constitute but one and the same Agreement. Signatures to this Agreement may be transmitted by facsimile, each of which shall have the same effect as and be deemed an original signature for purposes of this Agreement. This Agreement shall become effective upon the execution of a counterpart of this Agreement by each of the Parties hereto ("Effective Date”).   19.3.     Successors and Third Parties.  Each covenant set forth in this Agreement shall inure to the benefit of and be binding upon the Parties to this Agreement together with all of the affiliates, and each of them, and their successors and assigns.     6     19.4.     Meaning of Pronouns and Effect of Captions.  As used in this Agreement and the attached exhibits, the masculine, feminine and/or neuter gender, in the singular or plural, shall be deemed to include the others whenever the text so requires. Captions and paragraph headings are inserted solely for convenience and shall not be deemed to restrict or limit the meaning of text.   19.5.     Construction.  Neither this Agreement nor any uncertainty or ambiguity of construction or otherwise. On the contrary, this Agreement is the product of extensive negotiation among the Parties hereto, has been reviewed by all Parties and their counsel, and shall be construed and interpreted according to the intentions of all Parties.   19.6.     Attorneys Fees and Costs.  If any legal action or other proceeding is brought for the enforcement of this Agreement, the Note or the Guaranty, or because of an alleged dispute in connection with any of the provisions of this proceeding, in addition to any other relief to which it/he/she may be entitled.   19.7.      Notice.  Any notices which may be required hereunder may be served personally, by overnight delivery service which routinely obtains a signed receipt (e.g., DHL, Federal Express or UPS), or by United States mail, postage pre-paid, to the addresses set forth below. Notice shall be deemed effective on the date actually received by the Parties, or three days after the same were deposited in the United States mail.   If to Proteo:  PROTEO, INC. Birge Bargmann Proteo Biotech AG Am Kiel-Kanal 44 D-24106 Kiel Germany     If to Borrower:  FID Esprit AG ATT: Juergen Muetzlitz Rosengartenstr. 4 CH-8608 Bubikon Switzerland     If to Guarantor:  Axel Kutscher Oetwilerstrasse 29 CH-8634 Hombrechtikon Switzerland     7   IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be entered into as of the date first set forth hereinabove.   "PROTEO"   PROTEO, INC. A Nevada corporation      /s/ BIRGE BARGMANN                            Birge Bargmann President "BORROWER"   FIDESPRIT AG       /s/ JURGEN AUGUST MUTZLITZ                        Jürgen August Mützlitz President     "GUARANTOR"    /s/ AXEL J. KUTSCHER                                             Axel J. Kutscher an Individual           8  

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 14A (RULE 14a-101) SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrantx Filed by a Party other than the Registrant¨ Check the appropriate box: x Preliminary Proxy Statement ¨ Confidential, for Use of the Commission ¨ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)) ¨ Definitive Additional Materials ¨ Soliciting Material Pursuant to §240 14a-12 MIPS TECHNOLOGIES, INC. (Name of Registrant as Specified in its Charter) Not applicable. (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of Filing Fee (Check the appropriate box): ¨ No fee required. x Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11. 1) Title of each class of securities to which transaction applies: Common Stock, par value $0.001 per share (the "Common Stock") of MIPS Technologies, Inc. 2) Aggregate number of securities to which transaction applies: 8,011,452 shares of Common Stock and restricted stock units with respect to 211,010 shares of Common Stock. 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): The maximum aggregate value was determined solely for purposes of calculating the filing fee (which, consistent with fee calculation rules, excludes MIPS Technologies, Inc. cash on hand to be distributed to shareholders in connection with the recapitalization) based upon the sum of (A) 54,168,031 shares of Common Stock multiplied by $7.15 per share, (B) 4,720,742 shares of Common Stock underlying options to purchase Common Stock with an exercise price of less than $7.31, as of November 12, 2012, multiplied by $2.67 (which is the excess of $7.15 over the weighted average exercise price per share of $4.48) and (C) restricted stock units with respect to 1,426,707 shares of Common Stock multiplied by $7.15. In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying 0.00013640 by the sum calculated in the preceding sentence. 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: ¨ Fee paid previously with preliminary materials. ¨ 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: Table of Contents PRELMIINARY PROXY STATEMENT - SUBJECT TO COMPLETION DATED NOVEMBER 20, 2012 MIPS TECHNOLOGIES, INC. SUNNYVALE, CALIFORNIA94085 , 2012 Dear Stockholder: You are cordially invited to attend the 2012 Annual Meeting of Stockholders of MIPS Technologies, Inc. to be held on January 23, 2013 at our corporate headquarters, located at 955 East Arques Avenue, Sunnyvale, California94085 commencing at 2:00 p.m., Pacific Time. Even if you plan to attend the annual meeting, please complete, sign, date and promptly return the enclosed proxy card in the enclosed postage-prepaid envelope or vote by internet or telephone as indicated on your proxy card or voting instruction form. At the annual meeting, you will be asked 1.To consider and vote upon a proposal to adopt and approve the Patent Sale Agreement, dated as of November 5, 2012, by and between Bridge Crossing, LLC and MIPS Technologies. The patent sale agreement contemplates the sale of all of our right, title and interest in 495 active issued patents and patent applications to Bridge Crossing and sublicensable rights to 82 of our patents and patent applications for $350 million in cash. Bridge Crossing is a Delaware limited liability company that is wholly owned by a series of the defensive patent aggregator Allied Security Trust I. The patents and patent applications to be sold pursuant to the patent sale agreement relate to features, functionality, instruction set architectures and microarchitectural characteristics of microprocessors and related semiconductor hardware. The adoption and approval of the patent sale agreement is not conditioned upon the stockholders’ approval of any other proposal; 2.To consider and vote upon a proposal to adopt and approve the certificate of amendment to MIPS Technologies’ Amended and Restated Certificate of Incorporation.If the certificate of amendment is adopted, approved and filed, MIPS Technologies will distribute the proceeds from the patent sale agreement and all cash on hand, less $99,700,000, and you will be entitled to receive 0.1479 shares of MIPS Technologies’ common stock (to be converted into approximately $1.08 in merger consideration as described below) and what is currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes, for each share of MIPS Technologies common stock that you own at the time of filing of the certificate of amendment.This estimate reflects management’s current estimate of cash held by MIPS Technologies following the patent sale and immediately prior to the recapitalization, which will be affected by our operating results, estimated transaction expenses, timing of the recapitalization and other factors.The filing of the certificate of amendment is conditioned upon the stockholders’ approval of Proposal No. 1 and Proposal No. 3; 3.To consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger, dated as of November 5, 2012, by and among MIPS Technologies, Imagination Technologies Group plc and Imagination Acquisition Sub, Inc., an indirect wholly owned subsidiary of Imagination Technologies Group plc. The merger agreement contemplates the merger of Acquisition Sub with and into MIPS Technologies, with MIPS Technologies continuing as the surviving corporation and a wholly owned, indirect subsidiary of Imagination Technologies following the merger. The merger is conditioned upon the stockholders’ approval of Proposal No. 1 and Table of Contents Proposal No. 2.Upon consummation of the patent sale, completion of the filing of the certificate of amendment described above and the consummation of the merger, you will be entitled to receive a total of approximately $7.31 per share for each share of MIPS Technologies common stock that you owned prior to the filing of the certificate of amendment, without interest and less any applicable withholding taxes, comprised of an estimated $6.23 per share from the recapitalization, subject to fluctuation as described above, and (unless you have perfected your appraisal rights with respect to the merger) the merger proceeds of approximately $1.08 for each share of MIPS Technologies common stock that you own prior to the filing of the certificate of amendment described below, which is $7.31 in cash for each share of MIPS Technologies common stock that you receive after the filing of the certificate of amendment described below. Stockholders will only receive aggregate proceeds in the amount of $7.31 per share for each share of MIPS Technologies common stock owned prior to the recapitalization upon approval of Proposal No. 1 and Proposal No. 2 and upon consummation of the patent sale, filing of the certificate of amendment and consummation of the merger; 4.To consider and vote upon the election of three Class II directors to serve three-year terms; 5.To consider and vote upon the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year, which ends on June 30, 2013; 6.To consider and vote, on an advisory basis, on merger-related executive compensation; 7.To consider and vote, on an advisory basis, on executive compensation; 8.To approve the adjournment of the annual meeting, if necessary or appropriate, to solicit additional proxies to adopt the patent sale agreement, certificate of amendment and merger agreement; and 9.To transact such other matters incident to the conduct of the annual meeting. After careful consideration, our board of directors has unanimously determined that (i) it is expedient, advisable and in the best interests of MIPS Technologies and its stockholders that MIPS Technologies enter into the patent sale agreement, and subject to its terms and conditions, to consummate the patent sale and the other transactions contemplated by the patent sale agreement; (ii) it is advisable, and in the best interests of and fair to MIPS Technologies and its stockholders, that MIPS Technologies adopt the certificate of amendment, and subject to its terms and conditions, to consummate the recapitalization and the other transactions contemplated by the certificate of amendment; (iii) it is advisable, and in the best interests of and fair to MIPS Technologies and its stockholders, that MIPS Technologies enter into the merger agreement, and subject to its terms and conditions, to consummate the merger and the other transactions contemplated by the merger agreement; and (iv) the consideration to be paid to MIPS Technologies in the patent sale and to the stockholders of MIPS Technologies in the merger are each fair to, and in the best interests of, MIPS Technologies and its stockholders. Our board of directors unanimously recommends that you vote “FOR” the proposals to adopt the patent sale agreement, certificate of amendment and merger agreement and each of the other proposals to be considered at the annual meeting. Your vote is very important, regardless of the number of shares you own. We cannot complete the patent sale unless the patent sale agreement is adopted by the affirmative vote of the holders of a majority of the outstanding shares of our common stock. We cannot complete the merger or file the certificate of amendment unless each of the patent sale agreement, certificate of amendment and merger agreement are adopted by the affirmative vote of the holders of a majority of the outstanding shares of our common stock.The failure of any stockholder to vote on the proposal to adopt the patent sale agreement, certificate of amendment or merger agreement will have the same effect as a vote against the adoption of the patent sale agreement, certificate of amendment or merger agreement, respectively. Neither the adoption of the certificate of amendment nor the merger agreement are required in connection with the completion of the patent sale or the adoption of the patent sale agreement. Our board of directors considered a number of factors in evaluating the transactions and also consulted with our financial advisor and outside legal counsel. The attached proxy statement contains a detailed discussion of the background of, and reasons for, the transactions, as well as the terms of the patent sale agreement and merger agreement. A copy of the patent sale agreement is attached as Annex A, a copy of the merger agreement is attached as Annex C and a copy of the certificate of amendment is attached as Annex F to the proxy statement. Table of Contents For further information regarding the matters to be voted on at the annual meeting, we encourage you to read the proxy statement carefully and in its entirety. You may also obtain more information about MIPS Technologies from documents we have filed with the Securities and Exchange Commission. The record date for the determination of the stockholders entitled to notice of and to vote at the annual meeting is November 28, 2012.If you have more questions about these proposals or would like additional copies of the proxy statement, please contact Bill Slater, Chief Financial Officer of MIPS Technologies, Inc., at 955 East Arques Avenue, Sunnyvale, California94085 or by telephone at (408) 530-5000. We appreciate your interest in MIPS and ask for your continued support of our plans and strategies to deliver value to all stockholders.Even if you plan to attend the annual meeting in person, please complete, sign, date, and promptly return the enclosed proxy card in the enclosed postage-prepaid envelope or by electronic means. This will not limit your right to attend or vote at the annual meeting.If you vote in person at the annual meeting, that vote will revoke any prior proxy that you have submitted. Sincerely, Sincerely, Kenneth L. Coleman Sandeep Vij Chairman Chief Executive Officer and President These transactions have not been approved or disapproved by the Securities and Exchange Commission, nor has the Securities and Exchange Commission passed upon the fairness or merits of these transactions or the accuracy or adequacy of the information contained in this proxy statement. Any representation to the contrary is unlawful. The accompanying proxy statement is dated , 2012 and is first being made available to stockholders on or about , 2012. Additional copies of our proxy statement and Annual Report on Form 10-K can be obtained free of charge by contacting Investor Relations at (408)530-5200. Table of Contents PRELMIINARY PROXY STATEMENT - SUBJECT TO COMPLETION DATED NOVEMBER 20, 2012 MIPS TECHNOLOGIES, INC. SUNNYVALE, CALIFORNIA94085 NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS , 2012 To the Stockholders of MIPS TECHNOLOGIES, INC.: NOTICE IS HEREBY GIVEN that the 2012 Annual Meeting of Stockholders (“Annual Meeting”) of MIPS Technologies, Inc. (“MIPS Technologies”) will be held at our corporate headquarters at 955 East Arques Avenue, Sunnyvale, California94085 on January 23, 2013. The Annual Meeting will begin at 2:00 p.m. Pacific Time, for the following purposes: 1.To consider and vote on a proposal to adopt the Patent Sale Agreement, dated as of November 5, 2012 (as the same may be amended from time to time, the “Patent Sale Agreement”), by and between Bridge Crossing, LLC (“Bridge Crossing”), a Delaware limited liability company that is wholly owned by a series of the defensive patent aggregator Allied Security Trust I, and MIPS Technologies. A copy of the Patent Sale Agreement is attached as AnnexA to the accompanying proxy statement. Pursuant to the terms and subject to the conditions of the Patent Sale Agreement, among other things, MIPS Technologies will (a) sell to Bridge Crossing all its right, title and interest in and to certain patents, under which it will receive licenses back for each patent sold and (b) grant to Bridge Crossing a license in the patents MIPS Technologies will retain (the “Patent Sale”), as more fully described in the accompanying proxy statement. The Patent Sale is not conditioned upon the stockholders’ approval of any other proposal at the Annual Meeting. 2.To consider and vote upon the approval and adoption of the Certificate of Amendment to MIPS Technologies’ Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”).A copy of the Certificate of Amendment is attached as AnnexF to the accompanying proxy statement.If the Certificate of Amendment is adopted and filed, MIPS Technologies will distribute the proceeds from the Patent Sale and all cash on hand, less $99,700,000, and you will be entitled to receive 0.1479 shares of MIPS Technologies’ common stock (to be converted into $7.31 in cash per share, which is approximately $1.08 for each 0.1479 shares, in merger consideration) and what is currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes, for each share of MIPS Technologies common stock that you own at the time of filing of the Certificate of Amendment (the “recapitalization”).This estimate reflects management’s current estimate of cash held by MIPS Technologies following the patent sale and immediately prior to the recapitalization, which will be affected by our operating results, estimated transaction expenses, timing of the recapitalization and other factors.Together with the approximately $1.08 per pre-recapitalization share from the Merger, this represents an estimated total consideration of $7.31 per share from the recapitalization and the Merger.The filing of the Certificate of Amendment is conditioned upon the stockholders’ approval of Proposal No. 1 and Proposal No. 3. 3.To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of November 5, 2012 (as the same may be amended from time to time, the “Merger Agreement”), by and among MIPS Technologies, Imagination Technologies Group plc, a public limited company under the laws of England and Wales (“Imagination Technologies”), and Imagination Acquisition Sub, Inc., a Delaware corporation and an indirect wholly Table of Contents owned subsidiary of Imagination Technologies (“Acquisition Sub”). A copy of the Merger Agreement is attached as AnnexC to the accompanying proxy statement.Following the consummation of the Patent Sale, the consummation of the transactions contemplated under the Merger Agreement and the above-described recapitalization, shares of MIPS Technologies common stock outstanding prior to the recapitalization will have been converted into the right to receive a total of approximately $7.31 in cash per share, without interest and less any applicable withholding taxes, subject to fluctuation in the proceeds of the recapitalization, as more fully described in the accompanying proxy statement.Pursuant to the terms and subject to the conditions of the Merger Agreement, among other things, (a) Acquisition Sub will merge with and into MIPS Technologies, with MIPS Technologies being the surviving corporation (the “Merger”), (b) the recapitalization (defined above) is to be effected and each share of MIPS Technologies’ common stock converted into the right to receive an estimated $6.23 in cash and 0.1479 shares of our common stock, subject to fluctuation, without interest and less withholding taxes, as described below and (c) each share of MIPS Technologies’ common stock, par value $0.001 per share (other than treasury shares, shares owned by MIPS Technologies’ subsidiaries, shares owned by Imagination Technologies, Acquisition Sub or any other subsidiary of Imagination Technologies, and shares held by stockholders who have properly demanded, exercised and perfected and not withdrawn a demand for statutory appraisal rights, if any) outstanding after the recapitalization described above will be converted into the right to receive $7.31 in cash per share (or approximately $1.08 per pre-recapitalization share).The Merger is conditioned upon the stockholders’ approval of Proposal No. 1 and Proposal No. 2. Stockholders will only receive aggregate proceeds in the amount of $7.31 per share for each share of MIPS Technologies common stock owned prior to the recapitalization upon approval of Proposal No. 1 and Proposal No. 2 and upon consummation of the Patent Sale, filing of the Certificate of Amendment and consummation of the Merger. 4.To consider and vote upon the election of three Class II directors to serve three-year terms; 5.To consider and vote upon the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year, which ends on June 30, 2013; 6.To consider and vote, on an advisory basis, on merger-related executive compensation; 7.To consider and vote, on an advisory basis, on executive compensation; 8.To approve the adjournment of the Annual Meeting, if necessary or appropriate, to solicit additional proxies to adopt the Patent Sale Agreement, Certificate of Amendment and Merger Agreement; and 9.To transact such other matters incident to the conduct of the Annual Meeting. Only stockholders of record at the close of business on November 28, 2012 are entitled to notice of and to vote at the Annual Meeting. All stockholders are cordially invited to attend the Annual Meeting in person. However, to ensure your representation at the Annual Meeting, you are urged to complete, sign, date and return the enclosed proxy card as promptly as possible in the postage-prepaid envelope enclosed for that purpose or to vote by internet or telephone as indicated on your proxy card or voting instruction form. Any stockholder of record or person holding a valid legal proxy may attend the Annual Meeting and may vote in person, even though he or she has previously returned a proxy.If you vote in person at the Annual Meeting, that vote will revoke any prior proxy that you have submitted. If you hold your shares through a bank, broker or other custodian, you must obtain a legal proxy from such custodian in order to vote in person at the Annual Meeting. The adoption of the Patent Sale Agreement, Certificate of Amendment and the Merger Agreement are separate and distinct proposals and each requires the affirmative vote of the holders of a majority of the outstanding shares of MIPS Technologies’ common stock that are entitled to vote at the Annual Meeting. The Patent Sale Agreement may be adopted without the approval of the Certificate of Amendment or the Merger Agreement, but the adoption of the Certificate of Amendment and the Merger Agreement each require the adoption of the Patent Sale Agreement. The approval of the proposal to adjourn the Annual Meeting, the non-binding advisory proposal Table of Contents regarding certain merger-related executive compensation arrangements, the non-binding advisory proposal regarding executive compensation arrangements and the ratification of appointment of our independent registered public accounting firm each require the affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote on the particular proposal at the Annual Meeting, assuming a quorum is present. The election of our Class II directors will be by a plurality vote of the holders of outstanding shares of our common stock that are entitled to vote at the Annual Meeting, assuming a quorum is present.Even if you plan to attend the Annual Meeting in person, we request that you complete, sign, date and return the enclosed proxy or submit your proxy by telephone or the Internet prior to the Annual Meeting to ensure that your shares will be represented at the Annual Meeting if you are unable to attend. If you have Internet access, we encourage you to vote via the Internet. If you are a stockholder of record, voting in person at the Annual Meeting will revoke any proxy previously submitted. If you hold your shares through a bank, broker or other custodian, you must obtain a legal proxy from such custodian in order to vote in person at the Annual Meeting. If you fail to return your proxy card or do not submit your proxy by phone or the Internet and you fail to attend the Annual Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the meeting. The failure of any stockholder to vote in person or by proxy on the proposal to adopt the Patent Sale Agreement, Certificate of Amendment or Merger Agreement will have the same effect as a vote against the adoption of the Patent Sale Agreement, Certificate of Amendment or Merger Agreement, but will not affect the outcome of any of the other proposals other than as noted above that the consummation of the Merger and filing of the Certificate of Amendment are conditioned upon the approval of each of the proposals to adopt the Patent Sale Agreement, Merger Agreementand Certificate of Amendment. If you return a proxy card or attend the Annual Meeting in person but abstain from voting, this will have the effect of a vote against each of the proposals, except for the election of our Class II directors. If your shares are held by a bank or broker, please bring to the Annual Meeting your statement evidencing your beneficial ownership of MIPS Technologies’ common stock. All stockholders should also bring photo identification. After careful consideration, our board of directors has unanimously determined that (i) it is expedient, advisable and in the best interests of MIPS Technologies and its stockholders that MIPS Technologies enter into the Patent Sale Agreement, and subject to its terms and conditions, to consummate the Patent Sale and the other transactions contemplated by the Patent Sale Agreement; (ii) it is advisable, and in the best interests of and fair to MIPS Technologies and its stockholders, that MIPS Technologies adopt the certificate of amendment, and subject to its terms and conditions, to consummate the recapitalization and the other transactions contemplated by the Certificate of Amendment; (iii) it is advisable, and in the best interests of and fair to MIPS Technologies and its stockholders, that MIPS Technologies enter into the Merger Agreement, and subject to its terms and conditions, to consummate the Merger and the other transactions contemplated by the Merger Agreement; and (iv) the consideration to be paid to MIPS Technologies in the Patent Sale and to the stockholders of MIPS Technologies in the Merger are each fair to, and in the best interests of, MIPS Technologies and its stockholders.Our board of directors has unanimously approved the execution, delivery and performance by MIPS Technologies of its obligations under the Patent Sale Agreement and the Merger Agreement and the filing of the Certificate of Amendment and the consummation of the transactions contemplated thereby, including the Patent Sale, recapitalization and Merger. Table of Contents The board of directors unanimously recommends that you vote “FOR” adoption of the Patent Sale Agreement, “FOR” adoption of the Certificate of Amendment, “FOR” adoption of the Merger Agreement and “FOR” each of the other proposals. Stockholders of MIPS Technologies who do not vote in favor of the adoption of the Merger Agreement will have the right to seek appraisal of the fair value of their shares if the Merger is completed, but only if they submit a written demand for appraisal to MIPS Technologies before the vote is taken on the Merger Agreement and they comply with all requirements of Delaware law, which are summarized in the accompanying proxy statement beginning on page 159 and which are also set forth as Annex E to the proxy statement. By Order of the Board of Directors of MIPS TECHNOLOGIES, INC. Gail H. Shulman Vice President, General Counsel and Corporate Secretary Sunnyvale, California , 2012 YOUR VOTE IS IMPORTANT In order to ensure your representation at the annual meeting, you are requested to complete, sign and date the enclosed proxy as promptly as possible and return it in the enclosed envelope or to vote by internet or telephone.If you vote in person at the annual meeting, that vote will revoke any prior proxy that you have submitted. Table of Contents TABLE OF CONTENTS Page SUMMARY TERM SHEET 1 The Parties to the Patent Sale 1 The Patent Sale 1 Reasons for the Patent Sale and Recommendation of Our Board of Directors 2 Opinion of Our Financial Advisor on the Patent Sale 3 Financing of the Patent Sale 3 Conditions to the Closing of the Patent Sale 3 No Solicitation of Other Offers 5 Regulatory Matters of the Patent Sale 5 Termination of the Patent Sale 5 License Agreements 6 The Parties to the Merger 7 The Recapitalization 7 The Merger 8 Effects of the Merger 8 Treatment of Stock Options and Restricted Stock Units 8 Treatment of Employee Stock Purchase Plan 9 Reasons for the Merger and Recommendation of Our Board of Directors 9 Opinion of Our Financial Advisor on the Merger 11 Financing of the Merger 11 Interests of Our Directors and Executive Officers in the Patent Sale, Recapitalization and Merger 11 Conditions to the Closing of the Merger 12 No Solicitation of Other Offers 14 Regulatory Matters of the Merger 14 Termination of the Merger Agreement 14 Fees and Expenses 17 United States Federal Income Tax Consequences of the Merger 17 Appraisal Rights 18 Market Price of Common Stock 18 QUESTIONS AND ANSWERS ABOUT THE PROPOSED TRANSACTIONS AND THE ANNUAL MEETING 19 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION 29 THE ANNUAL MEETING 32 Date, Time and Place of the Annual Meeting 32 Purpose of the Proxy Statement and Proxy Card 32 Purpose of the Annual Meeting 32 Stockholders Entitled to Vote and Quorum 33 Methods of Voting 33 Adjournments and Postponements 34 Vote Required 34 Abstentions and Broker Non-Vote Voting 35 Share Ownership of MIPS' Directors and Executive Officers 36 Voting of Proxies 36 Proxies without Instructions 36 Revocation of Proxies 36 Solicitation of Proxies 36 Other Matters 37 Availability of Documents 37 Table of Contents THE PARTIES TO THE PROPOSED TRANSACTIONS 38 MIPS Technologies, Inc. 38 Bridge Crossing, LLC 38 Imagination Technologies Group plc 38 Acquisition Sub 39 BACKGROUND OF THE PROPOSED TRANSACTIONS 40 PROPOSAL NO. 1—THE PATENT SALE 50 The Proposal to Approve the Patent Sale Agreement 50 Vote Required for Approval of the Patent Sale Agreement 50 Reasons for the Patent Sale; Recommendation of Our Board of Directors 50 Opinion of Our Financial Advisor on the Patent Sale 55 Financing Related to the Patent Sale 58 PATENT SALE AGREEMENT 59 The Parties to the Patent Sale 59 Closing of the Patent Sale 60 Purchase Price 60 Representations and Warranties 60 Covenants and Agreements 63 Further Actions and Agreements 65 No Solicitation of Other Offers 66 Escrow and Indemnification 68 Regulatory Matters of the Patent Sale 68 Conditions to the Closing of the Patent Sale 69 Termination of the Patent Sale Agreement 70 Termination Fees 71 Amendments, Waivers; Third Party Beneficiaries 71 License Agreements 72 PROPOSAL NO. 2—APPROVAL AND ADOPTION OF THE CERTIFICATE OF AMENDMENT TO MIPS' AMENDED AND RESTATED CERTIFICATE OF INCORPORATION 73 Reasons for the Recapitalization 73 Effect of the Recapitalization on Holders of Outstanding Common Stock and Equity Awards 74 United States Federal Income Tax Consequences of the Recapitalization 74 PROPOSAL NO. 3—THE MERGER 75 The Proposal to Adopt the Merger Agreement 75 Vote Required for Adoption of the Merger Agreement 75 Rights of Stockholdres Who Object to the Merger 75 The Recapitalization 76 Reasons for the Merger; Recommendation of Our Board of Directors 76 Opinion of Our Financial Advisor 81 Certain Unaudited Financial Projections 86 Treatment of Stock Options and Restricted Stock Units 88 Treatment of Employee Stock Purchase Plan 88 Interests of Our Directors and Executive Officers in the Patent Sale, Recapitalization and Merger 89 Indemnification and Insurance 91 Golden Parachute Compensation 92 United States Federal Income Tax Consequences of the Merger 93 Regulatory Matters of the Merger 93 Financing Related to the Merger 93 Effects on Us if the Merger is Not Completed 94 Delisting and Deregistration of Our Common Stock 94 Table of Contents THE MERGER AGREEMENT 95 The Merger 95 Effective Time of the Merger 96 Merger Consideration 96 Payment for the Shares of Common Stock 96 Treatment of Stock Options and Restricted Stock Units 97 Treatment of Employee Stock Purchase Plan 98 Representations and Warranties 98 Conduct of Business Prior to Closing Proxy Statement and Stockholders Meeting No Solicitation of Other Offers Adverse Recommendation Change/Termination in Connection with a Superior Proposal Agreements to Use Reasonable Best Efforts Indemnification and Insurance Fees and Expenses Employee Benefits Other Covenants Relating to the Conduct of Our Business Conditions to the Closing of the Merger Termination of the Merger Agreement Termination Fees 114 Specific Performance Amendments; Waivers PROPOSAL NO. 4—ELECTION OF DIRECTORS 116 Directors and Nominees for Director 116 Board of Directors’ Meetings and Committees 121 Corporate Governance 122 Board Leadership Structure Board Involvement in Risk Oversight 124 Compensation Risk Assessment 124 Director Compensation 124 Compensation Committee Interlocks and Insider Participation 126 Board’s Recommendation 126 PROPOSAL NO. 5—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 127 Fees Paid to the Independent Registered Public Accounting Firm 127 Table of Contents PROPOSAL NO. 6—ADVISORY VOTE ON MERGER-RELATED EXECUTIVE COMPENSATION PROPOSAL NO. 7—ADVISORY VOTE ON EXECUTIVE COMPENSATION 129 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 130 COMPENSATION AND NOMINATING COMMITTEE REPORT 132 Composition of the Committee 132 Charter 132 Compensation Committee Report 132 PERFORMANCE GRAPH 133 EXECUTIVE COMPENSATION 134 Overview of our Compensation Program 134 Summary of Fiscal 2012 Compensation Program 135 Process for Determining Executive Compensation 136 Elements of Compensation 136 Fiscal 2012 Compensation 140 Fiscal 2013 Compensation 141 Say on Pay 141 Change in Control Agreements 142 Potential Payments upon Change in Control and Termination 142 Other Agreements 143 Tax Treatment of Executive Compensation 143 Summary Compensation Table for Fiscal 2012 144 Grants of Plan-Based Awards in Fiscal Year 2012 146 Outstanding Equity Awards at Fiscal Year-End 148 Option Exercises and Stock Vested 149 Pension Benefits Non-Qualified Deferred Compensation Plan 150 Certain Relationships and Related Transactions 151 REPORT OF THE AUDIT AND CORPORATE GOVERNANCE COMMITTEE 152 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE PROPOSAL NO. 8—AUTHORITY TO ADJOURN THE ANNUAL MEETING 154 The Adjournment Proposal 154 Vote Required for Approval and Board Recommendation UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS STOCKHOLDER PROPOSALS FOR 2 159 DISSENTERS' RIGHTS OF APPRAISAL 160 OTHER MATTERS 164 WHERE YOU CAN FIND MORE INFORMATION 165 SHAREHOLDER LIST 166 ANNEX A – PATENT SALE AGREEMENT, DATED AS OF NOVEMBER 5, 2012, BY AND BETWEEN BRIDGE CROSSING, LLC AND MIPS TECHNOLOGIES, INC. A-1 ANNEX B–OPINION OF OCEAN TOMO LLC B-1 ANNEXC–AGREEMENT AND PLAN OF MERGER, DATED AS OF NOVEMBER 5, 2012, BY AND AMONG IMAGINATION TECHNOLOGIES GROUP PLC, IMAGINATION ACQUISITION SUB, INC., AND MIPS TECHNOLOGIES, INC. C-1 ANNEX D –OPINIONOPINION OF J.P. MORGAN D-1 ANNEX E –SECTION E-1 ANNEX F–CERTIFICATE OF AMENDMENTTO MIPS' AMENDED AND RESTATED CERTIFICATE OF INCORPORATION F-1 Table of Contents SUMMARY TERM SHEET The following summary highlights selected information in this proxy statement, dated , 2012 and first made available to stockholders on or about , 2012, and may not contain all the information that may be important to you. Accordingly, we encourage you to read this proxy statement, its annexes and the documents referred to or incorporated by reference in this proxy statement carefully and in their entirety. Each item in this summary includes a page reference directing you to a more complete description of that topic. See “Where You Can Find More Information” beginning on page 165 of this proxy statement. References to “MIPS Technologies,” “MIPS,” the “Company,” “we,” “our” or “us” in this proxy statement refer to MIPS Technologies, Inc. and its subsidiaries, and references to “the board,” “the board of directors” or “our board of directors” refer to the board of directors of MIPS Technologies, Inc., unless, in each case, otherwise indicated or the context otherwise requires. The Parties to the Patent Sale MIPS Technologies, Inc. MIPS Technologies, Inc. (NASDAQ: MIPS) is a leading provider of industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications. The MIPS architecture powers some of the world’s most popular electronic products. Our technology is broadly used in products such as digital televisions, set-top boxes, Blu-ray players, broadband customer premises equipment (CPE), WiFi access points and routers, networking infrastructure and portable/mobile communications and entertainment products. MIPS Technologies is headquartered in Sunnyvale, CA and employs approximately 164 people. Bridge Crossing LLC Bridge Crossing LLC, a Delaware limited liability company, is wholly owned by a series of Allied Security Trust I, a member-based defensive patent aggregator. Allied Security Trust I currently has 26 members in the information technology, semiconductors, consumer electronics, social networking, communications (wired and wireless), medical information systems and other high tech industries, 11 of which participated in the patent sale (which 11 members we refer to as initial participants). Avaya, Hewlett-Packard, IBM, Intel, Motorola, Oracle, Philips and Research in Motion are among the members of Allied Security Trust I, but such members are not necessarily initial participants. Allied Security Trust I is based in Lambertville, New Jersey. The Patent Sale The Patent Sale Agreement, dated as of November 5, 2012, which we refer to as the patent sale agreement, provides that, upon the terms and subject to the conditions set forth in the patent sale agreement, MIPS Technologies will sell to Bridge Crossing all of our right, title and interest in 495 active issued U.S. and foreign patents and patent applications, which we refer to as the patent sale. The patents and patent applications to be sold to Bridge Crossing under the patent sale are referred to as the assigned patents. Three of our patents, which were originally designated assigned patents, have expired. Under the patent sale agreement, MIPS Technologies will transfer its ownership to the assigned patents to Bridge Crossing and will receive a broad license-back under the assigned patents to cover the business of MIPS Technologies and its present and future affiliates. In addition, 82 patents and patent applications will remain with MIPS, which patents and patent applications we refer to as the retained patents. The retained patents will be non-exclusively licensed to Bridge Crossing, with Bridge Crossing having the right to grant sublicenses under the retained patents to any licensee under the assigned patents for a twelve-month period. The license to Bridge Crossing under the retained patents and the license-back to MIPS Technologies under the assigned patents are described in greater detail in “The Patent Sale Agreement—License Agreements” beginning on page 72 of this proxy statement. 1 Table of Contents Reasons for the Patent Sale and Recommendation of Our Board of Directors After careful consideration, our board of directors unanimously (i) determined that it is expedient, advisable and in the best interests of MIPS Technologies and its stockholders for MIPS Technologies to enter into the patent sale agreement, (ii) approved and adopted the terms of the patent sale agreement, (iii) authorized the execution, delivery and performance by MIPS Technologies of its obligations under the patent sale agreement and the consummation of the transactions contemplated thereby, including the sale of the patents and the license agreements to be executed in connection therewith, and (iv) recommended and declared it advisable that the stockholders approve and adopt the patent sale agreement, and directed that such matter be submitted for consideration of the stockholders of MIPS Technologies at the annual meeting. Our board of directors unanimously recommends that MIPS Technologies’ stockholders vote “FOR” the adoption of the patent sale agreement and “FOR” the adjournment of the annual meeting, if necessary or appropriate, to solicit additional proxies. In reaching its recommendation, our board of directors consulted with MIPS Technologies’ management and its financial and legal advisors and considered a number of substantive factors, both positive and negative, and the potential benefits and detriments of the patent sale, which are described in greater detail herein. Among other factors, our board of directors believed that the following factors supported its decision to approve the proposed patent sale: · The comparability of the patent sale to MIPS Technologies’ other alternatives. · The opinion of Ocean Tomo LLC, which we refer to as Ocean Tomo. · The terms of the patent sale agreement. · The terms of the license agreements. · The opportunities and challenges facing MIPS Technologies. · The fact that the consummation of the proposed patent sale would require the affirmative vote of the holders of a majority of the outstanding shares of MIPS Technologies’ common stock entitled to vote. Our board of directors also considered potential risks or negative factors relating to the patent sale, including the following: · The fact that the completion of the patent sale will preclude MIPS Technologies’ stockholders from having the opportunity to participate in the future appreciation of the value of its capital stock derived from ownership of certain of MIPS Technologies’ patents. · The fact that, although the patent sale agreement contains a “fiduciary out,” it does not contain a “go shop” provision. The fact that the patent sale agreement contains certain provisions, including the termination fees, restrictions on providing information to and negotiating with a third party that makes an unsolicited acquisition proposal, and the required vote provisions obligating MIPS Technologies to convene the annual meeting for the purpose of obtaining stockholder approval of the proposal to adopt the patent sale agreement, even if our board of directors changes its recommendation regarding the patent sale and the patent sale agreement, that may inhibit other potential patent buyers from submitting potentially superior proposals to acquire MIPS Technologies’ patents. 2 Table of Contents Opinion of Our Financial Advisor on the Patent Sale On June 18, 2012, MIPS Technologies retained Ocean Tomo, LLC, which we refer to as Ocean Tomo, as its intellectual property advisor for the purpose of advising MIPS Technologies in connection with a potential patent sale transaction and to evaluate whether the consideration in the proposed patent sale was fair, from a financial point of view, to MIPS Technologies. At the meeting of the MIPS Technologies board of directors on November 4, 2012, Ocean Tomo rendered its oral opinion, which was subsequently confirmed in writing, that, as of November 4, 2012 and based upon and subject to the various factors, assumptions, qualifications and limitations set forth in the written opinion, the $350 million in cash consideration to be paid to MIPS Technologies in the patent sale was fair, from a financial point of view, to MIPS Technologies. The Ocean Tomo written opinion, dated November 4, 2012, is sometimes referred to herein as the Ocean Tomo opinion. The full text of the written opinion of Ocean Tomo dated November 4, 2012, which sets forth, among other things, the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in rendering its opinion, is attached as Annex B to this proxy statement and is incorporated herein by reference. The summary of Ocean Tomo’s opinion set forth in this document is qualified in its entirety by reference to the full text of the opinion. Stockholders should read this opinion carefully and in its entirety. Ocean Tomo’s opinion is directed to the MIPS Technologies board of directors, addresses only the fairness from a financial point of view, to MIPS Technologies, of the $350 million in cash consideration to be paid to MIPS Technologies as consideration for the proposed patent sale, and does not address any other aspect of the patent sale or any other transactions, including those covered by the merger agreement (including the fairness of any such transactions). Ocean Tomo provided its advisory services and opinion for the information and assistance of the MIPS Technologies board of directors in connection with its consideration of the proposed patent sale. Under the terms of its engagement letter, Ocean Tomo provided MIPS Technologies with financial advisory services in connection with the proposed patent sale for which it will be paid a total of approximately $2.5 million on a contingent fee basis if the patent sale is consummated. The opinion of Ocean Tomo does not constitute a recommendation as to how any stockholder should vote with respect to the proposed patent sale or any other matter. Financing of the Patent Sale Bridge Crossing has represented in the patent sale agreement that it has, and as of the closing will have, sufficient immediately available funds to pay when due the aggregate patent sale consideration and to pay when due all of its fees and expenses related to the transactions contemplated by the patent sale agreement, and that it has deposited an amount equal to $350,000,000 with an escrow agent. Conditions to the Closing of the Patent Sale Conditions to Each Party’s Obligations.Each party’s obligation to complete the patent sale is subject to the satisfaction (or written waiver, if permissible under applicable law) of the following conditions: · the patent sale agreement must have been adopted by the affirmative vote of the holders of a majority of the outstanding shares of our common stock; · nogovernmental authority shall have enacted, issued, promulgated, enforced or entered any law or order which enjoins, limits, restricts, restrains, or otherwise prohibits the consummation of the patent sale; and · there shall not be any litigation by any governmental authority threatened in writing or pending seeking to restrain or prohibit the consummation of the patent sale. 3 Table of Contents Conditions to Bridge Crossing’s Obligations.The obligations of Bridge Crossing to complete the patent sale are subject to the satisfaction (or written waiver, if permissible under applicable law) of the following further conditions: · MIPS Technologies must have performed in all material respects all of its material obligations under the patent sale agreement required to be performed by it prior to the effective time of the patent sale; · each of the representations and warranties made by MIPS Technologies set forth in the patent sale agreement, other than the representation and warranty regarding the assignability of the assigned patents and the licensability of the retained patents, must be true as if made at and as of the effective time of the patent sale (except to the extent made as of a specific date), with such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect (as defined in “The Patent Sale Agreement—Representations and Warranties” below); · all assigned patents must be assignable to and all retained patents must be licensable to Bridge Crossing, except where such non-assignability or non-licensability does not pose a material threat of patent infringement to any of Bridge Crossing’s initial participants that would likely result in Bridge Crossing (representing the interests of its initial participants) being deprived of a significant portion of the value of the patent sale; · MIPS Technologies must deliver to Bridge Crossing at closing a certificate with respect to satisfaction of the foregoing conditions; · there shall not be any current suit, action or proceeding in which a third party asserts that the assigned patents are not solely owned by MIPS Technologies or its affiliates or that the assigned patents may not be assigned to Bridge Crossing or that the retained patents may not be licensed to Bridge Crossing, except for any suits initiated after MIPS Technologies and Bridge Crossing had entered into the patent sale agreement; and · MIPS Technologies must have executed and delivered (or caused to have been delivered, as applicable) certain instruments necessary for the assignment of the assigned patents to Bridge Crossing. Conditions to MIPS Technologies’ Obligations.The obligation of MIPS Technologies to complete the patent sale is subject to the satisfaction (or written waiver, if permissible under applicable law) of the following further conditions: · Bridge Crossing must have performed in all material respects all of its material obligations under the patent sale agreement required to be performed by it prior to the effective time of the patent sale; · each of the representations and warranties made by Bridge Crossing set forth in the patent sale agreement must be true as if made at and as of the effective time of the patent sale (except to the extent made as of a specific date), with such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Patent Purchaser Material Adverse Effect (as defined in “The Patent Sale Agreement—Representations and Warranties” below); · Bridge Crossing must deliver to MIPS Technologies at closing a certificate with respect to the satisfaction of the foregoing conditions; and · Bridge Crossing must have delivered (or caused to have been delivered, as applicable) the purchase price, escrow amount and certain ancillary agreements to MIPS Technologies. 4 Table of Contents No Solicitation of Other Offers Subject to certain exceptions, the patent sale agreement provides that neither MIPS Technologies nor any of its subsidiaries shall, and MIPS Technologies and its subsidiaries shall not authorize any of their respective officers, directors, employees, consultants, investment bankers, attorneys, accountants, agents, advisors, affiliates and other representatives to, initiate, seek, solicit or knowingly encourage or facilitate any inquiries, discussions, requests or offers that constitute or could reasonably be expected to lead to a “competing proposal” (as defined in the patent sale agreement; see “The Patent Sale Agreement — No Solicitation of Other Offers” on page 66 of this proxy statement); engage in, continue or otherwise participate in any discussions or negotiations with, or furnish any non-public information relating to MIPS Technologies to, any person that, to the knowledge of MIPS Technologies, is seeking to make or has made a competing proposal; or approve, endorse, recommend or enter into any agreement with respect to a competing proposal. Regulatory Matters of the Patent Sale We have determined that no clearances from governmental agencies are required prior to the completion of the patent sale. However, such governmental authorities could take action under applicable antitrust laws, including seeking to prohibit the completion of the patent sale. For a more detailed discussion of the requirements regarding regulatory matters under the patent sale agreement, please see “The Patent Sale Agreement — Regulatory Matters of the Patent Sale” beginning on page 68 of this proxy statement and “The Patent Sale Agreement — Covenants and Agreements” beginning on page 63 of this proxy statement. Termination of the Patent Sale Agreement The patent sale agreement may be terminated at any time prior to the consummation of the patent sale, whether before or after stockholder approval of the patent sale has been obtained: · by mutual written consent of MIPS Technologies and Bridge Crossing; · by either MIPS Technologies or Bridge Crossing if the patent sale is not consummated on or before April 5, 2013, provided that this right to terminate is not available to any party if the failure of such party to perform any of its obligations under the patent sale agreement has been a principal cause of or resulted in the failure of the patent sale to be consummated on or before the termination date; · by MIPS Technologies if MIPS Technologies’ board of directors has determined to enter into a definitive agreement providing for the implementation of a superior proposal and MIPS Technologies enters into such definitive agreement and pays Bridge Crossing a termination fee of $10,000,000; or · by Bridge Crossing, if: · MIPS Technologies has breached its obligations set forth in the section “The Patent Sale Agreement—No Solicitation of Other Offers” in any material respect; · MIPS Technologies’ board of directors effects an adverse recommendation change; or · MIPS Technologies enters into a definitive agreement pursuant to a competing proposal. MIPS Technologies must pay a termination fee of $30,000,000 to Bridge Crossing if MIPS Technologies fails to sell the assigned patents and license the retained patents to Bridge Crossing in material breach of the patent sale agreement and enters into an agreement with a third party to sell, assign or exclusively license a majority of the assigned patents and retained patents (other than in the case of the merger or any other sale of MIPS Technologies) within twelve months after terminating the patent sale agreement, which we refer to as a wrongful termination payment. 5 Table of Contents MIPS Technologies must pay a termination fee of $10,000,000, which we refer to as the ordinary termination fee, to Bridge Crossing if: · its board of directors has determined to enter into a definitive agreement providing for the implementation of a superior proposal and MIPS Technologies enters into such definitive agreement; · it has breached its obligations set forth in the section “The Patent Sale Agreement—No Solicitation of Other Offers” in any material respect; or · its board of directors effects an adverse recommendation change. The patent sale agreement provides that, subject to Bridge Crossing’s right to specific performance against MIPS Technologies to enforce MIPS Technologies’ obligations under the patent sale agreement. Bridge Crossing’s right to receive termination fees set forth above shall constitute liquidated damages and the sole and exclusive remedy of Bridge Crossing against MIPS Technologies and its subsidiaries for all losses suffered as a result of the failure of the patent sale.The patent sale agreement provides that in no event will MIPS Technologies be required to pay the ordinary termination fee after making the wrongful termination payment, that MIPS Technologies will be credited any ordinary termination fee it has paid if it is required to make the wrongful termination payment, that MIPS Technologies will in no event be required to pay the ordinary termination fee or make the wrongful termination payment on more than one occasion and that the termination fee will be reduced by any amount as may be required to be deducted or withheld under applicable tax law. License Agreements Assigned Patent License Agreement In connection with the patent sale, MIPS Technologies will receive a license-back under the assigned patents under the terms of the Assigned Patent License Agreement. This license-back will grant MIPS Technologies and its present and future affiliates—including Imagination Technologies Group plc if the below-described merger is consummated—a worldwide, non-exclusive, irrevocable, sublicensable, transferable, royalty-free license to freely exploit the technologies covered by the assigned patents for use in connection with any product, service, technology, material or process of MIPS Technologies, its present and future affiliates or any customers of any of the foregoing. The license will not be terminable except by express mutual agreement by the parties and will continue until the expiration of the last to expire of the assigned patents. Retained Patent License Agreement As part of the patent sale, Bridge Crossing will receive a worldwide, non-exclusive, non-transferable, royalty-free license under the retained patents. For the twelve-month period after the closing of the patent sale, Bridge Crossing will offer sublicenses under the retained patents to its members in conjunction with licenses under the assigned patents. The sublicenses under the retained patents will permit the initial participants of Bridge Crossing and any third party who purchases a license under the assigned patents and a sublicense under the retained patents during the twelve-month period after the closing of the patent sale to exploit the technologies covered by the retained patents for use in connection with any product, service, technology, material or process of that sublicensee, its present and future affiliates, and any customers of any of the foregoing, provided that the license under the retained patents does not grant any rights to clone the MIPS architectures. The sublicenses granted under the retained patents are revocable in certain circumstances, including where a sublicensee directly or indirectly asserts, otherwise participates in or funds (i) a patent infringement suit alleging that a MIPS architecture as implemented by a customer of MIPS Technologies infringes a patent, (ii) a patent infringement counterclaim (including an ITC action) in response to a lawsuit brought by MIPS Technologies alleging that such sublicensee is infringing one or more retained patents by cloning the MIPS architecture, or (iii) any lawsuit or other proceeding challenging the patentability, validity, scope, ownership or enforceability of the retained patents. Unless earlier terminated under the provisions described above, the sublicenses granted under the retained patents will continue until the expiration of the last to expire of the retained patents. 6 Table of Contents The Parties to the Merger MIPS Technologies, Inc. MIPS Technologies, Inc. (NASDAQ: MIPS) is a leading provider of industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications. The MIPS architecture powers some of the world’s most popular electronic products. Our technology is broadly used in products such as digital televisions, set-top boxes, Blu-ray players, broadband customer premises equipment (CPE), WiFi access points and routers, networking infrastructure and portable/mobile communications and entertainment products. MIPS Technologies is headquartered in Sunnyvale, CA and employs approximately 164 people. Imagination Technologies Group plc Imagination Technologies Group plc (LSE: IMG.L) is a global leader in multimedia and communication technologies and creates and licenses market-leading processor solutions for graphics, video, and display, embedded processing, multi-standard communications and connectivity, and cross-platform V.VoIP & VoLTE. These silicon and software intellectual property (IP) solutions for systems-on-chip (SoC) are complemented by an extensive portfolio of software drivers, developer tools and extensive market and technology-focused ecosystems. Imagination Technologies is headquartered in Hertfordshire in the United Kingdom and employs approximately 1,200 people. Acquisition Sub Imagination Acquisition Sub, Inc., a Delaware corporation, which we refer to as Acquisition Sub, is an indirect wholly owned subsidiary of Imagination Technologies. Acquisition Sub was formed exclusively for the purpose of effecting the merger, as described in this proxy statement. The Recapitalization Following the closing of the patent sale but prior to the closing of the merger, MIPS Technologies will effect a recapitalization by amending our certificate of incorporation such that MIPS Technologies will distribute the proceeds from the patent sale and all cash on hand, less $99,700,000, and you will be entitled to receive 0.1479 shares of MIPS Technologies’ common stock and what is currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes, for each share of MIPS Technologies common stock that you own at the time of filing of the certificate of amendment, which we refer to as the recapitalization.This estimate reflects management’s current estimate of cash held by MIPS Technologies following the patent sale and immediately prior to the recapitalization, which will be affected by our operating results, estimated transaction expenses, timing of the recapitalization and other factors.Your preexisting shares of common stock will be cancelled, so the only shares you own following the recapitalization will be these 0.1479 shares per share of our common stock that you previously owned.See “Proposal 2—Approval and Adoption of the Certificate of Amendment to MIPS’ Amended and Restated Certificate of Incorporation” and the text of the certificate of amendment to MIPS’ Amended and Restated Certificate of Incorporation, which we refer to as the certificate of amendment, reproduced in its entirety as Annex F. 7 Table of Contents The Merger The Agreement and Plan of Merger, dated as of November 5, 2012, which we refer to as the merger agreement, provides that, upon the terms and subject to the conditions set forth in the merger agreement, Acquisition Sub will merge with and into MIPS Technologies, which we refer to as the merger. MIPS Technologies will be the surviving corporation in the merger and will continue to do business as “MIPS Technologies, Inc.” following the merger (as a wholly owned indirect subsidiary of Imagination Technologies). In the merger, each share of MIPS Technologies common stock outstanding after giving effect to the recapitalization described above under the heading “The Recapitalization” (other than treasury shares, shares owned by any wholly owned subsidiary of MIPS Technologies, shares owned by Imagination Technologies, Acquisition Sub or any other subsidiary of Imagination Technologies, and shares held by stockholders who have properly demanded, exercised and perfected and not withdrawn a demand for statutory appraisal rights, if any, which we refer to as dissenting shares) will be converted into the right to receive $7.31 in cash (equivalent to approximately $1.08 for each share of MIPS Technologies common stock outstanding prior to the recapitalization), which we refer to as the merger consideration, without interest and less any applicable withholding taxes. Effects of the Merger After giving effect to the recapitalization described above under the heading “The Recapitalization” and the merger, you will be entitled to receive a total of approximately $7.31 per share that you owned prior to the recapitalization.This estimate is subject to a fluctuation in the recapitalization proceeds (currently estimated to be $6.23), but not the merger proceeds.The following details how this total amount is calculated. From the recapitalization, concurrently with the merger consideration, you will receive what is currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes, as describedabove under the heading “The Recapitalization.” From the merger, you will be entitled to receive approximately $1.08 for each share of MIPS common stock that you owned prior to the recapitalization, which represents exactly $7.31 in cash for each share of our common stock that you own at the effective time of the merger after giving effect to the recapitalization, without interest and less any applicable withholding taxes, unless you have properly demanded, exercised and perfected and not withdrawn your statutory dissenter’s rights of appraisal under Delaware law with respect to the merger. The appraisal rights described in this paragraph apply only with respect to the adoption of the merger agreement by holders of our common stock and do not apply in connection with the patent sale or the recapitalization described above. As a result of the merger, MIPS Technologies will cease to be an independent, publicly traded company and will become a wholly owned indirect subsidiary of Imagination Technologies. You will not own any shares of stock of MIPS Technologies or the surviving corporation following the merger. Stockholders will only receive aggregate proceeds in the amount of approximately $7.31 per share for each share of MIPS Technologies common stock owned prior to the recapitalization upon approval of Proposal No. 1 and Proposal No. 2 and upon consummation of the patent sale, filing of the certificate of amendment and consummation of the merger. Treatment of Stock Options and Restricted Stock Units In connection with the patent sale, the recapitalization and the merger, pursuant to MIPS Technologies’ equity incentive plans and programs, MIPS Technologies equity awards will be subject to the following treatment. MIPS Technologies Stock Options.Individuals holding stock options at the time of the recapitalization will generally be entitled to receive a cash payment in respect of each vested or unvested option based on the value of a share of MIPS Technologies common stock, calculated as set forth in the merger agreement, over the exercise price of the option, less any applicable withholding taxes, and all stock options will be cancelled at the time of the recapitalization. Stock options with an exercise price per share is equal to or greater than the value of a share of MIPS Technologies common stock will be cancelled for no value. 8 Table of Contents MIPS Technologies Restricted Stock Units.Following the closing of the patent sale and in connection with the patent sale, the recapitalization and the certificate of amendment, the restricted stock units that are outstanding immediately prior to the recapitalization will be converted into the right to receive a total of approximately $7.31 per share of common stock subject to such restricted stock units prior to the recapitalization, calculated as follows.In the recapitalization, the restricted stock units will be converted into (i) an amount in cash currently estimated to be approximately $6.23 per share of common stock subject to such restricted stock units, without interest and less any applicable withholding taxes, subject to fluctuation as described above under the heading “The Recapitalization,” and (ii) restricted stock units denominated in 0.1479 shares of MIPS Technologies common stock.Additionally, with respect to the restricted stock units that remain outstanding immediately prior to the effective time of the merger, after giving effect to the conversion described in the previous sentence, the vesting restrictions will lapse and the restricted stock units will be deemed fully vested as of the effective time, and such restricted stock units will be cancelled and converted into the right to receive a cash amount equal to the product of the total number of shares of common stock subject to such restricted stock units, multiplied by the merger consideration of $7.31 per share of common stock (approximately $1.08 per share of common stock subject to such restricted stock units prior to the recapitalization), without interest and less any applicable withholding taxes. All payments owed to holders of restricted stock units will be made promptly after the effective time of the merger by Imagination Technologies through the surviving corporation’s payroll account. Treatment of Employee Stock Purchase Plan Our Employee Stock Purchase Plan, as amended, or ESPP, authorizes the issuance of up to1,499,955 shares of MIPS Technologies common stock and is for the benefit of qualifying employees and directors as designated by our board of directors. With respect to the ESPP, consistent with the terms of the ESPP and the merger agreement and subject to the closing of the merger: · the current offering period under the ESPP will end on January 15, 2013; and · the ESPP will terminate effective as of the day immediately preceding the closing date of the merger. Reasons for the Merger and Recommendation of Our Board of Directors Our board of directors, acting with the advice and assistance of MIPS Technologies’ management and financial and legal advisors, carefully evaluated the merger agreement and the transactions contemplated thereby. Our board of directors determined that it is in the best interests of MIPS Technologies and its stockholders, and has declared it advisable, for MIPS Technologies to enter into the merger agreement. At a meeting on November 4, 2012, our board of directors unanimously resolved to approve the execution, delivery and performance by MIPS Technologies of its obligations under the merger agreement and the consummation of the transactions contemplated thereby, including the merger, and to recommend to the stockholders of MIPS Technologies that they adopt the merger agreement. 9 Table of Contents In reaching its recommendation, our board of directors consulted with MIPS Technologies’ management and its financial and legal advisors and considered a number of substantive factors, both positive and negative, and potential benefits and detriments of the merger. Our board of directors believed that, taken as a whole, the following factors supported its decision to approve the proposed merger: · The historical market prices of MIPS Technologies common stock compared to the proposed merger consideration of $7.31 per share of MIPS Technologies common stock, after giving effect to the recapitalization. · The comparability of the merger to MIPS Technologies’ other alternatives. · The opinion of J.P. Morgan Securities LLC, which we refer to as J.P. Morgan. · The terms of the merger agreement. · The fact that dissenters’ appraisal rights would be available to MIPS Technologies’ stockholders under Delaware law. Our board of directors also considered potential risks or negative factors relating to the merger, including the following: · The fact that the completion of the merger will preclude MIPS Technologies’ stockholders from having the opportunity to participate in MIPS Technologies’ future earnings growth and the future appreciation of the value of its capital stock that could be anticipated if its strategic plan were successfully implemented on a stand-alone basis. · The fact that, although the merger agreement contains a “fiduciary out,” it does not contain a “go shop” provision. 10 Table of Contents The fact that the merger agreement contains certain provisions, including the $2,750,000 termination fee, restrictions on providing information to and negotiating with a third party that makes an unsolicited acquisition proposal, and the required vote provisions obligating MIPS Technologies to convene the annual meeting for the purpose of obtaining stockholder approval of the proposal to adopt the merger agreement, such that even if our board of directors changes its recommendation regarding the merger and the merger agreement, other potential acquirors may be dissuaded or inhibited from submitting potentially superior proposals to acquire MIPS Technologies. Opinion of Our Financial Advisor on the Merger Pursuant to an engagement letter dated November 18, 2011, as amended October 31, 2012, MIPS Technologies retained J.P. Morgan as its financial advisor in connection with the proposed merger.At the meeting of the board of directors of MIPS Technologies on November 4, 2012, J.P. Morgan rendered its oral opinion to the board of directors of MIPS Technologies that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid to the holders of MIPS Technologies’ common stock, after giving effect to the recapitalization, in the proposed merger was fair, from a financial point of view, to MIPS Technologies stockholders.J.P. Morgan has confirmed its November 4, 2012 oral opinion by delivering its written opinion to the board of directors of MIPS Technologies, dated November 5, 2012, that, as of such date, the consideration to be paid to the holders of MIPS Technologies’ common stock, after giving effect to the recapitalization, in the proposed merger was fair, from a financial point of view, to MIPS Technologies stockholders.No limitations were imposed by MIPS Technologies’ board of Directors upon J.P. Morgan with respect to the investigations made or procedures followed by it in rendering its opinions. The full text of the written opinion of J.P. Morgan dated November 5, 2012, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex D to this Proxy Statement and is incorporated herein by reference.MIPS Technologies’ stockholders are urged to read the opinion in its entirety.J.P. Morgan’s written opinion is addressed to the board of directors of MIPS Technologies, is directed only to the consideration to be paid in the merger and does not constitute a recommendation to any stockholder of MIPS Technologies as to how such stockholder should vote at the MIPS Technologies annual meeting.The summary of the opinion of J.P. Morgan set forth in this Proxy Statement is qualified in its entirety by reference to the full text of such opinion. For services rendered in connection with the merger, recapitalization, patent sale and related license agreements, MIPS Technologies has agreed to pay J.P. Morgan a fee of approximately $9.0 million, a substantial portion of which will become payable only if the transactions contemplated by the merger agreement (including the recapitalization), patent sale agreement and related license agreements are consummated. For a more complete description, see “The Merger — Opinion ofOur Financial Advisor on the Merger” beginning on page 81 of this proxy statement. Also see Annex D to this proxy statement. Financing of the Merger Imagination Technologies has represented in the merger agreement that it has, and as of the closing will have, sufficient immediately available funds to pay when due the aggregate merger consideration and to pay when due all of its fees and expenses related to the transactions contemplated by the merger agreement. The receipt of financing by Imagination Technologies is not a condition to the obligations of either party to complete the merger under the terms of the merger agreement. Interests of Our Directors and Executive Officers in the Patent Sale, Recapitalization and Merger In considering the recommendations of the board of directors, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, your interests as a stockholder, and that may present actual or potential conflicts of interest. Such interests may include payments in respect of equity awards, certain transaction-related bonuses and/or severance payments under change in control agreements entered into between MIPS Technologies and its executive officers which become payable upon a qualifying termination event within 24 months following a change in control. 11 Table of Contents For a more complete description of the interests of MIPS Technologies’ executive officers and directors in the merger, see “The Merger — Interests of Our Directors and Executive Officers in the Patent Sale, Recapitalization and Merger” beginning on page 89 of this proxy statement. Conditions to the Closing of the Merger Conditions to Each Party’s Obligations.Each party’s obligation to complete the merger is subject to the satisfaction (or written waiver, if permissible under applicable law) of the following conditions: · the merger agreement and the recapitalization must have been adopted by the affirmative vote of the holders of a majority of the outstanding shares of our common stock; · nogovernmental authority shall have enacted, issued, promulgated, enforced or entered any law or order which enjoins, limits, restricts, restrains, or otherwise prohibits the consummation of the merger; · the parties must have received the written approval of the Committee on Foreign Investment in the United States (CFIUS), approving the merger and other transactions contemplated by the merger agreement; · the recapitalization must have been consummated; and · the patent sale must have been consummated. Conditions to Imagination Technologies’ and Acquisition Sub’s Obligations.The obligations of Imagination Technologies and Acquisition Sub to complete the merger are subject to the satisfaction (or written waiver, if permissible under applicable law) of the following further conditions: · each of the representations and warranties made by MIPS Technologies set forth in the merger agreement, disregarding all qualifications contained therein relating to materiality or “Company Material Adverse Effect” (as defined in the merger agreement, as described in “The Merger Agreement — Representations and Warranties” beginning on page 98 of this proxy statement), must be true as if made at and as of the signing of the merger agreement and the effective time of the merger (except to the extent made as of a specific date), with such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect as of the effective time of the merger as though made as of the effective time of the merger; · MIPS Technologies must have performed or complied in all material respects with all agreements and covenants required by the merger agreement to be performed or complied with by it on or prior to the effective time of the merger; · MIPS Technologies must have available an amount of cash greater than or equal to $99,700,000, or the “holdback amount”; · MIPS Technologies must deliver to Imagination Technologies at closing a certificate with respect to the satisfaction of the foregoing conditions relating to its representations, warranties and covenants, and the availability of cash greater than or equal to the holdback amount; · there shall be no pending law, order, suit, action or proceeding by any governmental authority enjoining, limiting, restricting, restraining, or otherwise prohibiting the consummation of the closing of the merger or to the extent directly or indirectly connected with the patent sale, seeking to establish or prohibit the consummation of the closing of the merger; 12 Table of Contents · no Company Material Adverse Effect must have occurred since the date of the merger agreement and be continuing; · MIPS Technologies must deliver to Imagination Technologies a certificate that MIPS has not been a United States real property holding corporation; · appraisal rights must not have been exercised with respect to more than fifteen percent (15%) of all the issued and outstanding shares of our common stock; · MIPS Technologies must have obtained and fully paid the premium for a non-cancellable extension of its directors’ and officers’ liability coverage under MIPS Technologies’ existing directors’ and officers’ insurance policies and fiduciary liability insurance policies for a claims reporting or discovery period of at least six (6) years from and after the effective time of the merger from an insurance carrier with the same or better credit rating as MIPS Technologies’ current insurance carrier with terms, conditions, retentions and limits of liability no less favorable than those currently provided and disclosed to Imagination Technologies; · MIPS Technologies must have paid its transaction costs related to the Patent Sale; · MIPS Technologies must have paid J.P. Morgan for its delivery of a fairness opinion to MIPS Technologies; and · MIPS Technologies must deliver to Imagination Technologies at closing a certificate that no claims for indemnification under the Patent Sale Agreement have been made by Bridge Crossing, LLC. Conditions to MIPS Technologies’ Obligations.The obligation of MIPS Technologies to complete the merger is subject to the satisfaction (or written waiver, if permissible under applicable law) of the following further conditions: · the representations and warranties made by Imagination Technologies and Acquisition Sub set forth in the merger agreement, disregarding all qualifications contained therein relating to materiality or “Parent Material Adverse Effect” (as defined in the merger agreement, as described in “The Merger Agreement — Representations and Warranties” beginning on page 98 of this proxy statement), must be true as if made at and as of the signing of the merger agreement and the effective time of the merger (except to the extent made as of a specific date), with such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect as of the effective time of the merger as though made as of the effective time of the merger; · Imagination Technologies and Acquisition Sub must have performed in all material respects all of their obligations under the merger agreement required to be performed by them prior to the effective time of the merger; and · Imagination Technologies must deliver to MIPS Technologies at closing a certificate with respect to the satisfaction of the foregoing conditions relating to its and Acquisition Sub’s representations, warranties and covenants. 13 Table of Contents No Solicitation of Other Offers Subject to certain exceptions, the merger agreement provides that neither MIPS Technologies nor any of its subsidiaries shall, and MIPS Technologies and its subsidiaries shall not authorize any of their respective officers, directors, employees, consultants, investment bankers, attorneys, accountants, agents, advisors, affiliates and other representatives to, initiate, seek, solicit or knowingly encourage or facilitate any inquiries, discussions, requests or offers that constitute or could reasonably be expected to lead to a “competing proposal” (as defined in the merger agreement; see “The Merger Agreement — Adverse Recommendation Change/Termination in Connection with a Superior Proposal” on page 107 of this proxy statement); engage in, continue or otherwise participate in any discussions or negotiations with, or furnish any non-public information relating to MIPS Technologies to, any person that, to the knowledge of MIPS Technologies, is seeking to make or has made a competing proposal; or approve, endorse, recommend or enter into any agreement with respect to a competing proposal. Regulatory Matters of the Merger MIPS Technologies and Imagination Technologies intend to prepare, prefile and file with CFIUS a joint voluntary notice of the transactions contemplated by the merger agreement pursuant to the Defense Production Act of 1950, as amended, and to provide CFIUS with any additional or supplemental information it requests to obtain a written notification issued by CFIUS that it has concluded its review (or, if CFIUS deems necessary, its investigation) and determined that there are no unresolved national security concerns with respect to the transactions contemplated by the merger agreement.Completion of CFIUS’ review is a condition to each party’s obligations under the merger agreement. We have determined that no other clearances from governmental agencies are required prior to the completion of the merger. However, such governmental authorities could take action under applicable antitrust laws, including seeking to prohibit the completion of the merger. For a more detailed discussion of the requirements regarding regulatory matters under the merger agreement, please see “The Merger — Regulatory Matters of the Merger” beginning on page 93 of this proxy statement and “The Merger Agreement — Agreements to Use Reasonable Best Efforts” beginning on page 108 of this proxy statement. Termination of the Merger Agreement The merger agreement may be terminated at any time prior to the consummation of the merger, whether before or after stockholder approval of the merger has been obtained: · by mutual written consent of MIPS Technologies and Imagination Technologies; · by either MIPS Technologies or Imagination Technologies if: · the merger is not consummated on or before April 5, 2013, which we refer to as the termination date, provided that this right to terminate is not available to any party if the failure of such party to perform any of its obligations under the merger agreement, the failure to act in good faith or the failure to use its reasonable best efforts to consummate the merger and the other transactions contemplated by the merger agreement has been a principal cause of or resulted in the failure of the merger to be consummated on or before the termination date; 14 Table of Contents · there is a law that prohibits the consummation of the merger on the terms contemplated by the merger agreement, or any governmental authority of competent jurisdiction issues any order or takes any other action (which order or action has become final and non-appealable) that permanently restrains, enjoins or otherwise prohibits the transactions contemplated by the merger agreement, but the party seeking termination for this reason must have used its reasonable best efforts to remove such order or action, and provided that this right to terminate is not available to any party if the issuance of such final, non-appealable order was primarily due to the failure of such party (including Acquisition Sub in the case of Imagination Technologies) to perform any of its obligations under the merger agreement; or · the MIPS Technologies stockholders do not adopt the merger agreement and certificate of amendment at the annual meeting or any adjournment or postponement thereof; · by MIPS Technologies, if: · Imagination Technologies or Acquisition Sub have breached or failed to perform in any material respect any of their representations, warranties, covenants or agreements under the merger agreement, which breach or failure to perform (a) would result in a failure of the closing conditions for the benefit of MIPS Technologies relating to Imagination Technologies’ and Acquisition Sub’s representations, warranties and covenants and (b) cannot be cured by the termination date, or if curable, is not cured by Imagination Technologies within thirty (30) days of receipt by Imagination Technologies of written notice from MIPS Technologies of such breach or failure, provided that this right to terminate will not be available to MIPS Technologies if it is in material breach of any of its obligations under the merger agreement; · prior to receipt of MIPS Technologies’ stockholders’ approval of the merger agreement and the certificate of amendment, MIPS Technologies’ board of directors has determined to enter into a definitive agreement with respect to a superior proposal by process permitted under the merger agreement and MIPS Technologies pays a termination fee of $2,750,000 and Imagination Technologies’ reasonable and documented out-of-pocket fees and expenses incurred in connection with the merger agreement and the transactions contemplated thereby (such fees and expenses to not exceed $2,000,000) to Imagination Technologies concurrently with such termination; or · all conditions to Imagination Technologies’ and Acquisition Sub’s obligation to close have been satisfied, and Imagination Technologies and Acquisition Sub fail to consummate the merger within three (3) business days following the date the closing of the merger should have occurred. · by Imagination Technologies, if: · MIPS Technologies has breached or failed to perform in any material respect any of its representations, warranties, covenants or agreements under the merger agreement, which breach or failure to perform (a) would result in a failure of the closing conditions for the benefit of Imagination Technologies relating to MIPS Technologies’ representations, warranties and covenants and (b) cannot be cured by the termination date, or if curable, is not cured by MIPS Technologies within thirty (30) days of receipt by MIPS Technologies of written notice from Imagination Technologies of such breach, provided that this right to terminate will not be available to Imagination Technologies if it is in material breach of any of its obligations under the merger agreement; 15 Table of Contents · MIPS Technologies materially amends, changes, modifies or waives the terms, conditions and obligations of the patent sale agreement, the assigned patent license agreement or the retained patent license agreement in a way that would reasonably be expected to have a material adverse effect on the surviving corporation and does so without the express prior written consent of Imagination Technologies; · there is any effect, change, event or occurrence that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; or · MIPS Technologies’ board of directors effects an adverse recommendation change, approves or recommends a competing proposal or MIPS Technologies enters into an alternative acquisition agreement or fails to include its recommendation that our stockholders adopt the merger agreement and approve the transactions contemplated thereby in this proxy statement. If the merger agreement is terminated by MIPS Technologies or by Imagination Technologies under the conditions described in further detail below, a termination fee in the amount of $2,750,000, in addition to Imagination Technologies’ reasonable and documented out-of-pocket fees and expenses incurred in connection with the merger agreement and the transactions contemplated thereby (such fees and expenses to not exceed $2,000,000), may be payable by MIPS Technologies to Imagination Technologies. MIPS Technologies must pay the termination fee and Imagination Technologies’ fees and expenses to Imagination Technologies if: · (A) MIPS Technologies or Imagination Technologies terminates the merger agreement because the merger has not been consummated by the termination date or the MIPS Technologies stockholders do not adopt the merger agreement at the annual meeting or any adjournment or postponement thereof, and (B) (i) a competing proposal has been publicly announced and (ii) within 12 months of such termination MIPS Technologies enters into, agrees to or consummates a transaction regarding such competing proposal or any other competing proposal, provided that, for these purposes, references to “20% or more” in the definition of “competing proposal” are deemed references to “50% or more;” · (A) Imagination Technologies terminates the agreement because MIPS Technologies has breached any of its representations, warranties, covenants or agreements under the merger agreement, which breach (i) would result in a failure of any closing conditions for the benefit of Imagination Technologies and (ii) is incapable of being cured by the termination date, or if curable, is not cured by thirty (30) days following receipt by MIPS Technologies of written notice from Imagination Technologies of such breach, provided that this right to terminate will not be available to Imagination Technologies if it is in material breach of any of its obligations under the merger agreement, and (B) (i) a competing proposal has been publicly announced and (ii) within 12 months of such termination MIPS Technologies enters into, agrees to or consummates a transaction regarding such competing proposal or any other competing proposal, provided that, for these purposes, references to “20% or more” in the definition of “competing proposal” are deemed references to “50% or more;” · (A) Imagination Technologies terminates the merger agreement because MIPS Technologies’ board of directors effects an adverse recommendation change or fails to include its recommendation that our stockholders adopt the merger agreement and the transactions contemplated thereby in this proxy statement, and (B)(i) a competing proposal has been publicly announced and (ii) within 12 months of such termination MIPS Technologies enters into, agrees to or consummates a transaction regarding such competing proposal or any other competing proposal, provided that, for these purposes, references to “20% or more” in the definition of “competing proposal” are deemed references to “50% or more;” 16 Table of Contents · (A) Imagination Technologies terminates the agreement because MIPS Technologies materially amends, changes, modifies or waives the terms, conditions and obligations of the patent sale agreement, the assigned patent license agreement or the retained patent license agreement in a way that would reasonably be expected to have a material adverse effect on the surviving corporation and does so without the express prior written consent of Imagination Technologies, and (B)(i) a competing proposal has been publicly announced and (ii) within 12 months of such termination MIPS Technologies enters into, agrees to or consummates a transaction regarding such competing proposal or any other competing proposal, provided that, for these purposes, references to “20% or more” in the definition of “competing proposal” are deemed references to “50% or more;” · Imagination Technologies terminates the agreement because MIPS Technologies’ board of directors approves or recommends a competing proposal or MIPS Technologies enters into a definitive agreement with respect to such proposal; or · MIPS Technologies terminates the merger agreement because MIPS Technologies’ board of directors has determined to enter into a definitive agreement with respect to a superior proposal. The merger agreement provides that in no event will MIPS Technologies be required to pay the termination fee on more than one occasion and that the termination fee will be reduced by any amount as may be required to be deducted or withheld under applicable tax law. The termination fee constitutes liquidated damages in a reasonable amount that will compensate Imagination Technologies in the circumstances in which such fee is payable for the efforts and resources expended and opportunities foregone while negotiating the merger agreement and in reliance on the merger agreement and on the expectation of the consummation of the transactions contemplated therein. Fees and Expenses Whether or not the merger is consummated, all costs and expenses incurred in connection with the merger agreement and the merger and the other transactions contemplated by the merger agreement will be paid by the party incurring such expense. However, if the merger agreement is terminated under certain circumstances described in more detail under the caption “The Merger Agreement — Termination Fees” beginning on page 114 of this proxy statement, MIPS Technologies may be required to reimburse Imagination Technologies for its reasonable and documented out-of-pocket transaction-related expenses up to $2,000,000. United States Federal Income Tax Consequences of the Merger Consummation of the merger is conditioned on, among other things, consummation of the recapitalization.The recapitalization and merger are intended to constitute, and MIPS Technologies, Imagination Technologies, and Acquisition Sub have all agreed to treat the recapitalization and merger as, a single integrated transaction for U.S. federal income tax purposes.However, there can be no assurance that the Internal Revenue Services, or IRS, or a court will agree that the recapitalization and the merger are an integrated transaction. Assuming that, as expected, the recapitalization and merger are treated as a single integrated transaction, the receipt of cash in exchange for your shares of common stock pursuant to the recapitalization and the merger will generally be a taxable transaction to U.S. holders (as defined below in “United States Federal Income Tax Considerations” beginning on page 155 of this proxy statement) for U.S. federal income tax purposes. A U.S. holder will generally recognize gain or loss equal to the difference between the aggregate amount of cash received by such holder in the recapitalization and the merger and such holder’s adjusted tax basis in the shares of common stock exchanged for cash in the recapitalization and the merger. For further information on the anticipated tax consequences of the recapitalization and the merger, see “United States Federal Income Tax Considerations” beginning on page 155 of this proxy statement. Because individual circumstances may differ, we recommend that you consult your own tax advisor to determine the particular U.S. federal, state, local and foreign income and other tax consequences of the merger and the recapitalization to you. 17 Table of Contents Appraisal Rights Under Delaware law, holders of our common stock who follow certain specified procedures and who do not vote in favor of adopting the merger agreement will have the right to seek appraisal of the fair value of their shares of our common stock as determined by the Delaware Court of Chancery if the merger is completed, but only if they comply with all requirements of Delaware law (including Section 262 of the General Corporation Law of the State of Delaware, which we refer to as the DGCL, the text of which can be found in Annex E of this proxy statement), which are summarized in this proxy statement. This appraisal amount could be more than, the same as or less than the merger consideration. Any holder of our common stock intending to exercise appraisal rights, among other things, must submit a written demand for an appraisal to us prior to the vote on the adoption of the merger agreement and must not vote or otherwise submit a proxy in favor of adoption of the merger agreement. Your failure to follow exactly the procedures specified under Delaware law will result in the loss of your ability to seek and obtain appraisal rights. The appraisal rights and procedures described in this paragraph apply only with respect to the adoption of the merger agreement by holders of our common stock and do not apply in connection with the patent sale or the recapitalization described above. Market Price of Common Stock The closing sale price of our common stock on NASDAQ on November 5, 2012, the last trading day prior to the announcement of the merger, was $7.02. On , 2012, the last trading day before the date of this proxy statement, the closing sale price of our common stock on NASDAQ was $ . The aggregate proceeds from the patent sale, recapitalization and merger of $7.31 per share for each share of our common stock owned prior to the recapitalization represents a 40% premium to the closing price of our common stock on NASDAQ on April 11, 2012, the day prior to the first public rumor of a potential sale of MIPS Technologies. 18 Table of Contents QUESTIONS AND ANSWERS ABOUT THE PROPOSED TRANSACTIONS ANDTHE ANNUAL MEETING The following questions and answers are intended to briefly address some commonly asked questions regarding the patent sale, the patent sale agreement, the merger, the merger agreement, the recapitalization and the annual meeting. These questions and answers may not address all questions that may be important to you as a MIPS Technologies stockholder. Please refer to the “Summary Term Sheet” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement, which you should read carefully and in their entirety. See “Where You Can Find More Information” beginning on page 165. Q: What am I being asked to vote on? A: You are being asked to adopt a patent sale agreement that provides for the sale of all of our right, title and interest in 495 active issued patents and patent applications to Bridge Crossing and the grant of sublicensable rights to 82 of our patents and patent applications, whereby MIPS Technologies will receive licenses back for each patent sold and grant to Bridge Crossing a license in the patents MIPS Technologies will retain. You are also being asked to adopt a merger agreement that provides for the acquisition of MIPS Technologies by Imagination Technologies. Further, you are being asked to vote to approve and adopt a certificate of amendment to MIPS Technologies’ certificate of incorporation. If the patent sale agreement is adopted and the sale of patents consummated, if the merger agreement is adopted and the merger to be consummated and if the certificate of amendment is approved, adopted and filed, you will be entitled to receive a total of approximately $7.31 per share that you owned prior to the recapitalization. MIPS Technologies has not made any decision yet as to any distribution of proceeds in the event that the patent sale agreement is adopted and the sale of patent is consummated but the merger agreement is not adopted and the merger is not consummated and the certificate of amendment is not approved. This estimate is subject to a fluctuation in the recapitalization proceeds (currently estimated to be $6.23), but not the merger proceeds.The following details how this total amount is calculated.MIPS Technologies will distribute the proceeds from the patent sale and all cash on hand, less $99,700,000, and you will be entitled to receive 0.1479 shares of MIPS Technologies’ common stock and what is currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes, for each share of MIPS Technologies common stock that you own at the time of filing of the certificate of amendment, which we refer to as the recapitalization. This estimate reflects management’s current estimate of cash held by MIPS Technologies following the patent sale and immediately prior to the recapitalization, which will be affected by our operating results, estimated transaction expenses, timing of the recapitalization and other factors. The consummation of the recapitalization is contingent upon the adoption of the patent sale agreement and the merger agreement by our stockholders. Once the merger agreement has been adopted by our stockholders and other closing conditions under the merger agreement have been satisfied or waived, Acquisition Sub, an indirect wholly owned subsidiary of Imagination Technologies, will merge with and into MIPS Technologies. MIPS Technologies will be the surviving corporation in the merger and will become a wholly owned subsidiary of Imagination Technologies. Upon the consummation of the merger, you will be entitled to $7.31 per share of common stock you own after giving effect to the recapitalization (equivalent to approximately $1.08 per share you own prior to the recapitalization), without interest and less any applicable withholding taxes, unless you have perfected your appraisal rights with respect to the merger. The consummation of the merger is contingent upon the adoption of the patent sale agreement and the certificate of amendment by our stockholders. You are also being asked to elect three Class II directors to serve until the 2015 annual meeting of Stockholders and until their successors are elected and qualified.You are also being asked to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year, which ends on June 30, 2013. You are also being asked to vote on a non-binding proposal regarding merger-related executive compensation. You are also being asked to vote on a non-binding proposal regarding executive compensation. Finally, you are also being asked to vote to adjourn the annual meeting to a later date if necessary or appropriate to solicit additional proxies in favor of the proposal to adopt the patent sale agreement, merger agreement and the certificate of amendment if there are insufficient votes to adopt either agreement at the time of the annual meeting. This proxy statement contains important information about the proposed transactions and the annual meeting of stockholders, and you should read this proxy statement carefully and in its entirety. 19 Table of Contents Q: Who will be the directors of MIPS Technologies if the merger is completed? A: If the merger is completed, the MIPS Technologies board of directors following the completion of the merger will be composed of the directors of Acquisition Sub at the effective time of the merger and all directors of MIPS Technologies immediately prior to the completion of the merger will cease to be MIPS Technologies directors as of the time of the completion of the merger. Q: What will be the consequences of the Patent Sale, the recapitalization and the merger to the MIPS Technologies directors and officers? A: A number of MIPS Technologies’ directors and executive officers may have interests in the recapitalization and the merger that are different from, or in addition to, the interests of other MIPS Technologies stockholders. Such interests relate to, or arise from, among other things, (1) the right to receive cash in exchange for the cancellation of vested and unvested stock options, upon the recapitalization; (2) the right of holders of restricted stock units to receive at the time of the recapitalization for such restricted stock units (i) an amount in cash currently estimated to be $6.23 per share of common stock subject to such restricted stock units (without interest and less any applicable withholding taxes) and (ii) restricted stock units denominated in 0.1479 shares of MIPS Technologies common stock; (3) the accelerated vesting of restricted stock units and cancellation of such awards at the effective time of the Merger in exchange for the right to receive a cash amount equal to the product of (i) the total number of shares of MIPS Technologies common stock subject to such restricted stock units immediately prior to the effective time and after giving effect to the recapitalization, multiplied by (ii) the merger consideration of $7.31 (equivalent to approximately $1.08 for each share of MIPS Technologies common stock subject to such restricted stock units prior to the recapitalization), without interest and less any applicable withholding taxes; (4) certain severance payments under change in control agreements entered into between MIPS Technologies and its executive officers, which become payable upon a qualifying termination event within 24 months following a change in control; (5) potential transaction-related bonuses; and (6) the fact that, with respect to pre-merger acts and omissions, MIPS Technologies will be required to purchase directors’ and officers’ insurance coverage with respect to, and Imagination Technologies will and the surviving corporation will continue to provide indemnification, advancement of expenses to, current and former directors and officers of MIPS Technologies after the merger. For a description of these interests, see “The Merger — Interests ofOur Directors and Executive Officers in the Merger.” Q: How are votes counted? A: Votes will be counted by the inspector of election appointed for the annual meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes. “Broker non-votes” result when brokers are precluded from exercising their voting discretion with respect to the approval of non-routine matters such as the adoption of the merger agreement, the adoption of the patent sale agreement, the adoption of the certificate of amendment, the proposal for the election of directors and the proposal to approve the adjournment of the annual meeting for the purpose of obtaining additional votes and thus, absent specific instructions from the beneficial owner of those shares, brokers are not empowered to vote the shares with respect to the approval of such non-routine matters. Because the adoption of the patent sale agreement, adoption of the merger agreement and approval and adoption of the certificate of amendment each require the approval of the holders of a majority of the shares of our outstanding common stock, broker non-votes and abstentions will have the same effect as a vote “AGAINST” each such proposal.Because the approval of the proposal to ratify the appointment of Ernst & Young as our independent registered public accounting firm for the current fiscal year, approval of the proposal to adjourn the annual meeting, if necessary or appropriate, to solicit additional proxies, the non-binding proposal regarding merger-related executive compensation and the non-binding proposal regarding executive compensation each require the affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote on these particular proposals at the annual meeting, they will not be affected by broker non-votes, but abstentions will have the same effect as a vote “AGAINST” each such proposal. 20 Table of Contents Q: What will I receive in the merger? A: Upon consummation of the patent sale and completion of the recapitalization and the merger, you will be entitled to receive a total of approximately $7.31 per share that you owned prior to the recapitalization.This estimate is subject to fluctuation in the recapitalization proceeds (currently estimated to be $6.23 per share), but not the merger proceeds.The following details how this total amount is calculated. From the recapitalization, concurrently with the merger consideration, you will receive what is currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes, for each share of our common stock that you own at the effective time of the recapitalization. This estimate reflects management’s current estimate of cash held by MIPS Technologies following the patent sale and immediately prior to the recapitalization, which will be affected by our operating results, estimated transaction expenses, timing of the recapitalization and other factors.You will also receive exactly 0.1479 shares of our common stock for each share of common stock you own at the effective time of the recapitalization.Your preexisting shares of common stock will be cancelled, so the only shares you own following the recapitalization will be these 0.1479 shares per share of our common stock that you previously owned. From the merger, you will be entitled to receive approximately $1.08 for each share of MIPS common stock that you owned prior to the recapitalization, which represents exactly $7.31 in cash for each share of our common stock that you own at the effective time of the merger after giving effect to the recapitalization, without interest and less any applicable withholding taxes, unless you have perfected your appraisal rights with respect to the merger. For example, if you own 100 shares of our common stock at the effective time of the merger after giving effect to the recapitalization, you will receive $731 in cash in exchange for your remaining shares of our common stock in the merger, less any applicable withholding taxes. You will not own any shares of stock of MIPS Technologies or the surviving corporation following the merger. Stockholders will only receive aggregate proceeds in the amount of approximately $7.31 per share for each share of MIPS Technologies common stock owned prior to the recapitalization upon approval of Proposal No. 1 and Proposal No. 2 and upon consummation of the patent sale, filing of the certificate of amendment and consummation of the merger. Q: After the merger is completed, how will I receive the cash for my shares? A: Promptly after the merger is completed, the paying agent appointed by Imagination Technologiesand approved by MIPS Technologies will mail written instructions on how to exchange your MIPS Technologies common stock certificates for the per share merger consideration of $7.31 in cash (equivalent to approximately $1.08 for each share of MIPS Technologies common stock that you own prior to the recapitalization), without interest and less any applicable withholding taxes, and the cash you will receive pursuant to the recapitalization. You will receive cash for your shares from the paying agent after you comply with these instructions. Q: How will I receive the cash if I have lost my stock certificate? A: If your stock certificate is lost, stolen or destroyed, you must deliver an affidavit and may be required by Parent to post a bond as indemnity against any claim that may be made with respect to such certificate prior to receiving the merger consideration of $7.31 in cash per share after giving effect to the recapitalization (equivalent to approximately $1.08 for each share of MIPS Technologies common stock that you own prior to the recapitalization), without interest and less any applicable withholding taxes, and the cash pursuant to the recapitalization (currently estimated to be approximately $6.23 per share that you own prior to the recapitalization), without interest and less any applicable withholding taxes. 21 Table of Contents Q: When and where is the annual meeting? A: The annual meeting of stockholders of MIPS Technologies will be held on January 23, 2013, at our corporate headquarters, located at 955 East Arques Avenue, Sunnyvale, California94085 commencing at 2:00 p.m., Pacific Time. Q: Who is entitled to vote at the annual meeting? A: Only stockholders of MIPS Technologies as of the close of business on November 28, 2012, the record date for the annual meeting, are entitled to receive notice of the annual meeting and to vote the shares of MIPS Technologies common stock that they held at that time at the annual meeting, or at any adjournment or postponement of the annual meeting. Q: Who is entitled to attend the annual meeting? A: Please note that space limitations make it necessary to limit attendance at the annual meeting to stockholders as of the record date (or their authorized representatives). If your shares are held by a bank or broker, please bring to the annual meeting your statement evidencing your beneficial ownership of our common stock as of the record date. All stockholders should also bring photo identification. Q: What vote is required for MIPS Technologies’ stockholders to adopt the patent sale agreement, merger agreement or certificate of amendment? A: The adoption of each of the patent sale agreement, merger agreement and certificate of amendment requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote at the annual meeting. As of the close of business on November 28, 2012, the record date for the annual meeting, there were shares of MIPS Technologies common stock issued and outstanding. Q: What vote of our stockholders is required to approve the proposal to approve and adopt the certificate of amendment; to approve the proposal to elect three Class II directors to serve three-year terms; to approve the proposal to ratify the appointment of Ernst & Young as our independent registered public accounting firm for the current fiscal year; to approve the proposal to adjourn the annual meeting, if necessary or appropriate, to solicit additional proxies; to approve the non-binding proposal regarding merger-related executive compensation; and to approve the non-binding proposal regarding executive compensation? A: The proposal to approve and adopt the certificate of amendment; the proposal to ratify the appointment of Ernst & Young as our independent registered public accounting firm for the current fiscal year; the proposal to adjourn the annual meeting, if necessary or appropriate, to solicit additional proxies; the non-binding proposal regarding executive compensation; and the non-binding proposal regarding merger-related executive compensation each require the affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote on these particular proposals at the annual meeting, assuming a quorum is present. The directors will be elected at the meeting by a plurality of the shares present and entitled to vote in the election and actually cast. 22 Table of Contents Q: How does MIPS Technologies’ board of directors recommend that I vote? A: MIPS Technologies’ board of directors, after careful consideration of a variety of factors described in this proxy statement, unanimously recommends that you vote “FOR” the proposal to adopt the patent sale agreement, “FOR” the proposal to adopt the merger agreement, “FOR” the proposal to approve and adopt the certificate of amendment, “FOR” the proposal to elect three Class II directors to serve three-year terms, “FOR” the proposal to ratify the appointment of Ernst & Young as our independent registered public accounting firm for the current fiscal year, “FOR” the proposal adjourn the annual meeting, if necessary or appropriate, to solicit additional proxies, “FOR” the non-binding proposal regarding executive compensation and “FOR” the non-binding proposal regarding merger-related executive compensation. You should read “The Patent Sale—Reasons for the Patent Sale; Recommendation of Our Board of Directors” and “The Merger — Reasons for the Merger; Recommendation of our Board of Directors” beginning on pages 76 and 81 respectively, of this proxy statement for a discussion of the factors that the board of directors considered in deciding to recommend the adoption of both the patent sale agreement and the merger agreement. Q: What happens if the patent sale or merger is not consummated? A: If the patent sale agreement is not adopted by our stockholders, or if the patent sale is not consummated for any other reason, MIPS Technologies will retain ownership of its current patent portfolio. Because the closing of the patent sale is a condition to the closing of the merger, if the patent sale is not consummated, the merger cannot be consummated either. If the merger agreement is not adopted by our stockholders, or if the merger is not consummated for any other reason, stockholders will not receive any payment for their shares in connection with the merger or the recapitalization and the holders of stock options and restricted stock units will not receive any payment for their awards in connection with the patent sale, the recapitalization and the merger, which in each case will only occur if the merger is approved. Instead, MIPS Technologies will remain an independent public company and our common stock will continue to be listed and traded on NASDAQ. MIPS Technologies has not made any decision yet as to any distribution of proceeds in the event that the patent sale agreement is adopted and the sale of patent is consummated but the merger agreement is not adopted and the merger is not consummated and the certificate of amendment is not approved. Under circumstances specified in the patent sale agreement, MIPS Technologies may be required to pay Bridge Crossing a termination fee, which circumstances are described in greater detail under the caption “The Patent Sale Agreement — Termination Fees” beginning on page 71 of this proxy statement. Under circumstances specified in the merger agreement, MIPS Technologies may be required to pay Imagination Technologies a termination fee and reimburse Imagination Technologies for its transaction-related expenses, each described in greater detail under the caption “The Merger Agreement — Termination Fees” beginning on page 114 of this proxy statement. Q: How was the purchase price for the assets determined? A: The purchase price for the assets proposed to be sold to Bridge Crossing was negotiated between representatives of MIPS Technologies and representatives of Bridge Crossing. We have received a fairness opinion from Ocean Tomo, LLC concluding that the consideration to be received by us for the assets is fair, from a financial point of view, to MIPS Technologies. A copy of the fairness opinion from Ocean Tomo, LLC is included as Annex B to this proxy statement. 23 Table of Contents Q: Am I entitled to appraisal rights in connection with the asset sale or the recapitalization? A: No. Delaware law does not provide for stockholder appraisal rights in connection with the sale of a company’s assets or a recapitalization. Appraisal rights are only available with respect to the fair value of the shares of MIPS Technologies common stock after giving effect to the patent sale and recapitalization. Q: What do I need to do now? A: We urge you to carefully read this proxy statement in its entirety, including its annexes, and to consider how the patent sale, merger and each of the other proposals affect you. Even if you plan to attend the annual meeting, if you hold your shares in your own name as the stockholder of record, please vote your shares by completing, signing, dating and returning the enclosed proxy card; using the telephone number printed on your proxy card; or using the Internet voting instructions printed on your proxy card. If you have Internet access, we encourage you to vote via the Internet. You can also attend the annual meeting and vote in person. If you hold your shares in “street name,” follow the procedures provided by your broker, bank or other nominee. 24 Table of Contents PLEASE DO NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD. YOU WILL RECEIVE DETAILED INSTRUCTIONS CONCERNING EXCHANGE OF YOUR STOCK CERTIFICATES IF THE MERGER IS CONSUMMATED. Q:How do I vote? A:You may vote by: · using the telephone number printed on your proxy card; · using the Internet voting instructions printed on your proxy card; · signing and dating each proxy card you receive and returning it in the enclosed prepaid envelope; · attending the annual meeting and voting in person; or · if you hold your shares in “street name,” following the procedures provided by your broker, bank or other nominee. If you return your signed and dated proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted “FOR” the proposal to adopt the patent sale agreement, “FOR” the proposal to adopt the merger agreement, “FOR” the proposal to approve and adopt the certificate of amendment, “FOR” the proposal to elect three Class II directors to serve three-year terms, “FOR” the proposal to ratify the appointment of Ernst & Young as our independent registered public accounting firm for the current fiscal year, “FOR” the proposal to adjourn the annual meeting, if necessary or appropriate, to solicit additional proxies, “FOR” the non-binding proposal regarding executive compensation and “FOR” the non-binding proposal regarding merger-related executive compensation. If you do not return your signed and dated proxy card, your shares will not be voted and the effect will be the same as a vote against the adoption of the patent sale agreement, the merger agreement, the certificate of amendment, the ratification of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year, the non-binding proposal regarding executive compensation and the non-binding proposal regarding executive compensation, but will not have an effect on the election of Class II directors at the annual meeting, so long as a quorum is otherwise present, or the proposal to adjourn the annual meeting, if necessary or appropriate, to solicit additional proxies. Q: How can I change or revoke my vote? A: You have the right to change or revoke your proxy at any time before the vote is taken at the annual meeting: · if you hold your shares in your name as a stockholder of record, by written notice to our Corporate Secretary, at 955 East Arques Avenue, Sunnyvale, California94085; · by attending the annual meeting and voting in person (your attendance at the meeting will not, by itself, revoke your proxy; you must vote in person at the meeting); · by submitting a later-dated proxy card; 25 Table of Contents · by re-voting by telephone or the Internet (only your latest telephone or Internet vote will be counted); or · if you have instructed a broker, bank or other nominee to vote your shares, by following the directions received from your broker, bank or other nominee to change those instructions. Q: If my shares are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me? A: Your broker, bank or other nominee will only be permitted to vote your shares if you instruct your broker, bank or other nominee how to vote. You should follow the procedures provided by your broker, bank or other nominee regarding the voting of your shares. If you do not instruct your broker, bank or other nominee to vote your shares, your shares will not be voted and the effect will be the same as a vote against the adoption of the patent sale agreement, the merger agreement, the certificate of amendment, the ratification of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year, the non-binding proposal regarding executive compensation and the non-binding proposal regarding merger-related executive compensation, but will not have an effect on the election of Class II directors at the annual meeting, so long as a quorum is otherwise present. Q: What do I do if I receive more than one proxy or set of voting instructions? A: If you also hold shares directly as a record holder, in “street name,” or otherwise through a nominee, you may receive more than one proxy and/or set of voting instructions relating to the annual meeting. These should each be voted and/or returned separately as described elsewhere in this proxy statement in order to ensure that all of your shares are voted. Q: What is a quorum? A: A quorum of the holders of the outstanding shares of our common stock must be present for the annual meeting to be held. A quorum is present if the holders of a majority of the outstanding shares of our common stock entitled to vote are present at the meeting, either in person or represented by proxy. Abstentions and broker non-votes are counted as present for the purpose of determining whether a quorum is present. A broker non-vote occurs on an item when a broker is not permitted to vote on that item without instructions from the beneficial owner of the shares and no instructions are given. Q: What happens if I sell my shares before the annual meeting? A: The record date of the annual meeting is earlier than the annual meeting and the date that the merger is expected to be completed. If you transfer your shares of common stock after the record date but before the annual meeting, you will retain your right to vote at the annual meeting, but will have transferred the right to receive $7.31 per post-recapitalization share in cash to be received by our stockholders in the merger (equivalent to approximately $1.08 for each share of MIPS Technologies common stock that you own prior to the recapitalization), without interest and less any applicable withholding taxes, and what is currently estimated to be approximately $6.23 per pre-recapitalization share in cash, without interest and less any applicable withholding taxes, to be received by our stockholders in the recapitalization. In order to receive these amounts, you must hold your shares through completion of the merger. 26 Table of Contents Q: Am I entitled to exercise appraisal rights instead of receiving the merger consideration for my shares? A: Yes. As a holder of our common stock, you are entitled to appraisal rights under Delaware law in connection with the merger if you meet certain conditions. In order to perfect appraisal rights, you must follow exactly the procedures specified under Delaware law. See “Dissenters’ Rights of Appraisal” beginning on page 160 of this proxy statement and Annex E to this proxy statement. Q: What governmental and regulatory approvals are required? A: MIPS Technologies and Imagination Technologies intend to prepare, prefile and file with CFIUS a joint voluntary notice of the transactions contemplated by the merger agreement pursuant to the Defense Production Act of 1950, as amended, and to provide CFIUS with any additional or supplemental information it requests to obtain a written notification issued by CFIUS that it has concluded its review (or, if CFIUS deems necessary, its investigation) and determined that there are no unresolved national security concerns with respect to the transactions contemplated by the merger agreement.Completion of CFIUS’ review is a condition to each party’s obligations under the merger agreement. We have determined that no other clearances from governmental agencies are required prior to the completion of the merger. However, such governmental authorities could take action under applicable antitrust laws, including seeking to prohibit the completion of the merger. For more information on the governmental and regulatory approvals required for completion of the merger, see “The Merger — Regulatory Matters of the Merger.” Q: Will the merger be taxable to me? A: Consummation of the merger is conditioned on, among other things, consummation of the recapitalization.The recapitalization and merger are intended to constitute, and MIPS Technologies, Imagination Technologies, and Acquisition Sub have all agreed to treat the recapitalization and merger as, a single integrated transaction for U.S. federal income tax purposes.However, there can be no assurance that the IRS or a court will agree that the recapitalization and the merger are an integrated transaction. Assuming that, as expected, the recapitalization and merger are treated as a single integrated transaction, the receipt of cash in exchange for your shares of common stock pursuant to the recapitalization and the merger will generally be a taxable transaction to U.S. holders (as defined below in “United States Federal Income Tax Considerations” beginning on page 155 of this proxy statement) for U.S. federal income tax purposes. A U.S. holder will generally recognize gain or loss equal to the difference between the aggregate amount of cash received by such holder in the recapitalization and the merger and such holder’s adjusted tax basis in the shares of common stock exchanged for cash in the recapitalization and the merger. For further information on the anticipated tax consequences of the recapitalization and the merger, see “United States Federal Income Tax Considerations” beginning on page 155 of this proxy statement. Because individual circumstances may differ, we recommend that you consult your own tax advisor to determine the particular U.S. federal, state, local and foreign income and other tax consequences of the merger and the recapitalization to you. 27 Table of Contents Q: When are the patent sale and merger expected to be completed? A: We are working toward completing the patent sale and merger as quickly as possible, and we anticipate that both will be completed in the first quarter of 2013, subject to the satisfaction or waiver of all closing conditions. However, the exact timing of the completion of either the patent sale or the merger cannot be predicted. In order to complete the patent sale, we must obtain stockholder approval for the patent sale agreement and the closing conditions under the patent sale agreement must be satisfied or waived. In order to complete the merger, we must obtain stockholder approval for the merger agreement and the closing conditions under the merger agreement must be satisfied or waived. The patent sale may be consummated without the adoption of the merger agreement; however, the merger cannot be consummated unless the patent sale is consummated first. See “The Patent Sale agreement—Closing of the Patent Sale,” “The Patent Sale Agreement—Conditions to the Closing of the Patent Sale,” “The Merger Agreement — Effective Time of the Merger” and “The Merger Agreement — Conditions to the Closing of theMerger” beginning on pages 60, 69, 96 and 110 of this proxy statement, respectively. Q: Will a proxy solicitor be used? A: Yes. MIPS Technologies has engaged Georgeson Inc., which we refer to as Georgeson, to assist in the solicitation of proxies for the Annual Meeting, and MIPS Technologies estimates it will pay Georgeson a fee of approximately $27,500. MIPS Technologies has also agreed to reimburse Georgeson for reasonable and documented out-of-pocket expenses incurred in connection with the proxy solicitation and to indemnify Georgeson against certain losses, costs and expenses. If you have any questions, or need assistance voting your shares, please contact the firm assisting us in the solicitation of proxies: Georgeson Inc. 199 Water Street New York, New York 10038 Call Toll-Free: (800) 248-7605 Email: mips@georgeson.com Q: Who can help answer any other questions that I have? A: If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of our common stock, or need additional copies of the proxy statement or the enclosed proxy card, please contact Bill Slater, Chief Financial Officer of MIPS Technologies, Inc., at 955 East Arques Avenue, Sunnyvale, California94085 or by telephone at (408) 530-5000. 28 Table of Contents CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION This proxy statement, and the documents to which we refer you in this proxy statement, contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “intends,” “projects,” “estimates” or other words of similar meaning including, without limitation, under the headings “Summary Term Sheet,” “Questions and Answers about the Proposed Transactions and the Annual Meeting,” “The Patent Sale,” “Reasons for the Patent Sale; Recommendation of Our Board of Directors,” “Opinion of Our Financial Advisor on the Patent Sale,” “Regulatory Matters of the Patent Sale,” “The Merger,” “Reasons for the Merger; Recommendation of Our Board of Directors,” “Regulatory Matters of the Merger,” “Opinion of Our Financial Advisor on the Merger,” “Compensation Risk Assessment,”“Fiscal 2013 Compensation,” “Potential Payments Upon Change in Control and Termination” and “Market Price Data and Dividend Information.” Forward-looking statements are based on certain assumptions and expectations of future events. MIPS Technologies cannot guarantee that these assumptions and expectations are accurate or will be realized. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully in documents filed with the Securities and Exchange Commission, which we refer to as the SEC, by MIPS Technologies, particularly under the heading “Risk Factors” in Part I, Item 1A of MIPS Technologies’ Annual Report on Form 10-K for the year ended June 30, 2012 Amendment No. 1 thereto and in and subsequent filings with the SEC, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to: · the effect of the announcement of the sale of patents or the merger on our business relationships (including with employees, customers and suppliers), operating results and business generally; · our business and results of operations may suffer if the patent sale or the merger are not consummated; · our ability to sustain or grow our license and contract revenue; · the variability of our operating results from one period to another based on changes in the size and nature of our license agreements; · our ability to compete against much larger companies in the microprocessor IP market that have larger market share and broader lines of products; · the uncertainty of success in our strategic efforts around patent monetization; · the adverse impact of a number of factors on our royalty revenue; · the impact on our revenue of the loss of a key customer or any significant delays in our customers’ product development plans; · the negative impact to our financial results from economic conditions; · fluctuations in our financial results that could affect our stock price; · limits in our ability to achieve design wins unless we are able to develop enhancements and new generations of our intellectual property; · volatility of our stock price; 29 Table of Contents · adverse impact on our revenue growth if we fail in the market for mobile products; · inability to compete and grow if we do not succeed on key platforms, including ANDROID™;; · exposure to various legal, business, political and economic risks associated with our international operations; · continued reliance on third-party technologies for the development of our products; · reliance on the efforts of third parties to enhance our technology offerings and our ecosystem; · dependence on royalties from the sale of products incorporating our technology and our limited visibility as to the timing and amount of such sales; · dependence on key personnel; · potential claims of infringement on the intellectual property rights of others; · our ability to compete effectively in the market for SoC intellectual property cores and related designs; · our ability to obtain or enforce intellectual property rights; · variance in our results of operations as a result of the methods, estimates, and judgments that we use in applying our accounting policies; · changes in effective tax rates or adverse outcomes from examination of our income tax returns; · the possibility we may experience security breaches; · claims and liabilities in connection with the sale of our discontinued business; 30 Table of Contents · failure of our past restructurings to sufficiently reduce our expenses relative to future revenue; · catastrophic events that may disrupt our business and harm our operating results; · impairments to long-lived assets; · exposure of the market value of our investment portfolio to fluctuations in interest rates and changes in credit ratings which could have a material adverse impact on our financial condition and results of operations; · adverse impact of macroeconomic conditions and other factors on our other income (expense), net, set forth in our consolidated statements of operations; · pending, threatened or future legal proceedings, including legal proceedings that have been or may be instituted against MIPS Technologies and others relating to the merger agreement; · the occurrence of any event, change or other circumstances that could give rise to the termination of the patent sale agreement or the merger agreement; · the failure of our stockholders to adopt the patent sale or the merger; · risks related to obtaining the requisite consents to the sale of patents or the merger, including, without limitation, the timing (including possible delays) and receipt of regulatory approvals from various governmental authorities (including any conditions, limitations or restrictions placed on these approvals) and the risk that one or more governmental authorities may deny approval; · the failure of the patent sale or the merger to close for any other reason; · the amount of the costs, fees, expenses and charges related to the patent sale or the merger; · risks that the proposed transactions disrupt current business plans and operations and the potential difficulties in attracting and retaining employees as a result of the patent sale or the merger; and · the timing of the completion of the patent sale or the merger and the impact of the patent sale or the merger on our capital resources, cash requirements, profitability, management resources and liquidity; Any forward-looking statement made by us in this proxy statement speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Except as required by applicable law, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. 31 Table of Contents THE ANNUAL MEETING Date, Time and Place of the Annual Meeting This proxy statement is being furnished by our board of directors to holders of our common stock, par value $0.001 per share, in connection with the solicitation of proxies by our board of directors for use at the 2012 annual meeting of MIPS Technologies stockholders to be held on January 23, 2013 at our corporate headquarters at 955 East Arques Avenue, Sunnyvale, California commencing at 2:00 p.m., Pacific Time, which we refer to as our annual meeting, and at any adjournment or postponement thereof. The purposes of the annual meeting are set forth in this proxy statement and in the accompanying Notice of the annual meeting of Stockholders. Our complete mailing address is MIPS Technologies, Inc., 955 East Arques Avenue, Sunnyvale, California94085, and our telephone number is (408) 530-5000. This proxy statement and the accompanying form of proxy are first being made available to our stockholders on or about , 2012. Purpose of the Proxy Statement and Proxy Card This proxy statement is being furnished to you in connection with the solicitation of proxies by, and on behalf of, our board of directors for use at the annual meeting, and is accompanied by a form of proxy. Purpose of the Annual Meeting The purpose of the annual meeting is to take action upon the following: · Consideration and adoption of the patent sale agreement; · Consideration and adoption of the certificate of amendment; · Consideration and adoption of the merger agreement; · Election of three Class II directors to serve three-year terms; · Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the current fiscal year, which ends on June 30, 2013; · Consideration and approval on a non-binding basis of merger-related executive compensation; · Consideration and approval on a non-binding basis of executive compensation; · To approve the adjournment of the annual meeting, if necessary or appropriate, to solicit additional proxies to adopt the patent sale agreement and merger agreement; and · To transact such other matters incident to the conduct of the annual meeting. 32 Table of Contents With the exception of the certificate of amendment and merger agreement, each of the proposals is independent, and is not contingent on adoption by MIPS Technologies stockholders of any of the other proposals. The consummation of the patent sale and the recapitalization as effected by the certificate of amendment, are each conditions to the consummation of the merger agreement. The consummation of the recapitalization is conditioned on the approval of the merger agreement. Stockholders Entitled to Vote and Quorum The MIPS board of directors has fixed the close of business on November 28, 2012 as the record date for the determination of the stockholders entitled to notice of, and to vote at, the annual meeting. Accordingly, only holders of record on this date will be entitled to notice of, and to vote at, the annual meeting. As of the close of business on the record date, there were outstanding and entitled to vote shares of common stock, constituting all of the voting stock of MIPS. As of the record date, there were holders of record of our common stock. Each holder of record of our common stock on the record date is entitled to one vote per share, which may be cast either in person or by proxy, at the annual meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of common stock entitled to vote at the annual meeting is necessary to constitute a quorum. Shares of our common stock present in person or by proxy will be counted for the purpose of determining whether a quorum is present at the annual meeting. Shares that abstain from voting and shares held by a broker nominee in “street name” that indicates on a proxy that it does not have discretionary authority to vote as to a particular matter, will be treated as shares that are present in person or by proxy and entitled to vote at the annual meeting for purposes of determining whether a quorum exists. Methods of Voting If you are a stockholder of record of MIPS Technologies common stock as of the record date, you may submit your vote on any or all of the matters being considered at the annual meeting in person or by proxy. You may vote by proxy in any of the following ways: Voting by Mail. You may vote by proxy by mail by completing, signing and dating the enclosed proxy card and returning it in the prepaid and addressed envelope enclosed with the proxy materials delivered by mail.If you vote by mail, you are authorizing the individuals named on the proxy card (referred to in this proxy statement as proxies) to vote your shares at the annual meeting in the manner you indicate. We encourage you to complete, sign, date and return the proxy card even if you plan to attend the annual meeting so that your shares will be voted if you are unable to attend the annual meeting. If you received more than one proxy card, it is an indication that your shares are held in multiple accounts. Please complete, sign, date and return all proxy cards to ensure that all of your shares are voted. Voting by Telephone. You may vote by proxy by telephone by dialing 1-800-690-6903 and following the instructions for telephone voting shown on your proxy card. Voting over the Internet. You may vote by proxy over the Internet by going to the web address http://www.proxyvote.com and following the instructions for Internet voting shown on your proxy card. If your shares are held in “street name” for your account by a broker, bank or other nominee, please refer to your proxy card or the information forwarded by your broker, bank or other nominee to see which options are available to you. 33 Table of Contents If you plan to attend the annual meeting and vote in person, we will provide you with a ballot at the annual meeting. If your shares are held in “street name” for your account by a broker, bank or other nominee, and you wish to vote at the annual meeting, you will need to bring to the annual meeting a legal proxy from your broker, bank or other nominee authorizing you to vote such shares. Adjournments and Postponements Although it is not currently expected, the annual meeting may be adjourned or postponed to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes to adopt the patent sale agreement, certificate of amendment or merger agreement at the time of such adjournment or postponement. Our Amended and Restated Bylaws provide that any adjournment may be made without prior notice if announced at the meeting at which the adjournment is taken. Any signed proxies received by us prior to 9:00 a.m., Pacific Time, on the date of the annual meeting in which no voting instructions are provided on such matter will be voted “FOR” an adjournment of the annual meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes to adopt the patent sale agreement, certificate of amendment or merger agreement at the time of such adjournment. Whether or not a quorum exists, holders of a majority of our shares of common stock present in person or represented by proxy and entitled to vote at the annual meeting may adjourn the annual meeting. Any adjournment or postponement of the annual meeting for the purpose of soliciting additional proxies will allow our stockholders who have already sent in their proxies to revoke them at any time prior to their use at the annual meeting as adjourned or postponed. MIPS Technologies shall use commercially reasonable efforts to hold the annual meeting no later than fifteen days following the date for which the annual meeting was originally scheduled. Vote Required The votes required and the method of calculation for the proposals to be considered at the annual meeting are as follows: Proposal No. 1 — Adoption of Patent Sale Agreement.The approval and adoption of the patent sale agreement requires the affirmative vote of a majority of the outstanding stock entitled to vote. The approval and adoption of the patent sale agreement is a condition to the closing of the patent sale. Proposal No. 2 — Adoption of Certificate of Amendment.The approval and adoption of the certificate of amendment requires the affirmative vote of a majority of the outstanding stock entitled to vote.Proposal No. 2 cannot be approved and adopted unless Proposal No. 3 and Proposal No. 1 are approved and adopted. Proposal No. 3 — Adoption of Merger Agreement.The approval and adoption of the merger agreement requires the affirmative vote of a majority of the outstanding stock entitled to vote. The approval and adoption of the merger agreement is a condition to the closing of the merger. Proposal No. 3 cannot be approved and adopted unless Proposal No. 1 and Proposal No. 2 are approved and adopted. 34 Table of Contents Proposal No. 4 — Election of Directors.The three Class II directors will be elected at the meeting by a plurality of the votes cast. Proposal No. 5 — Ratification of Appointment of Independent Registered Public Accounting Firm. Ratification of the appointment of Ernst & Young LLP for the current fiscal year, which ends on June 30, 2013, requires the affirmative vote of a majority of the shares present at the annual meeting, in person or by proxy. Proposal No. 6 — Advisory Vote on Merger-Related Executive Compensation.Approval of a non-binding proposal regarding certain merger-related executive compensation arrangements requires the affirmative vote of a majority of the shares present at the annual meeting, in person or by proxy. Proposal No. 7 — Advisory Vote on Executive Compensation.Approval of a non-binding proposal regarding executive compensation arrangements requires the affirmative vote of a majority of the shares present at the annual meeting, in person or by proxy. Proposal No. 8 — Approval of Authority of Adjourn the Annual Meeting.Adjournment of the annual meeting to solicit additional proxies for the adoption of the patent sale agreement, merger agreement and certificate of amendment requires the affirmative vote of a majority of the shares present at the annual meeting, in person or by proxy. Abstentions and Broker Non-Vote Voting If you return a proxy card that indicates an abstention from voting on any proposal, other than the proposal to elect three Class II directors, the shares represented will be counted as present for the purpose of determining a quorum and will have the same effect as votes “AGAINST” the proposal. In connection with the proposal to elect three Class II directors, abstentions will have no effect on the outcome of the vote. A broker is entitled to vote shares held for a beneficial holder on routine matters, such as the ratification of the appointment of Ernst & Young LLP as MIPS Technologies’ independent registered public accounting firm, without instructions from the beneficial holder of those shares.On the other hand, a broker is not entitled to vote shares held for a beneficial holder on certain non-routine items, such as the election of directors and the advisory vote on executive compensation, absent instructions from the beneficial holders of such shares. Consequently, if you hold your shares in street name and you do not submit any voting instructions to your broker, your shares will constitute “broker non-votes.” Broker non-votes will not be voted on non-routine matters and will not be counted in determining the number of shares necessary for approval of these matters, although they will count for purposes of determining whether a quorum exists.However, because the approval of the merger agreement, patent sale agreement and certificate of amendment require the approval of a majority of all outstanding shares, a broker non-vote will have the same effect as a vote “AGAINST” those three proposals. 35 Table of Contents Share Ownership of MIPS’ Directors and Executive Officers As of November 28, 2012, the directors and executive officers of MIPS Technologies held and were entitled to vote, in the aggregate, shares of our common stock, representing approximately % of the outstanding common stock. MIPS Technologies expects that its directors and executive officers will vote all of their shares of common stock “FOR” the adoption of the patent sale agreement, the merger agreement and the other proposals to be considered at the annual meeting. Voting of Proxies All shares of our common stock represented at the annual meeting by properly executed proxies that have not been revoked will be voted at the annual meeting in accordance with the instructions indicated on such proxies. The persons named in the enclosed form of proxy and acting thereunder will have discretion to vote in accordance with their judgment on any other matters incident to the conduct of the annual meeting. Please note that if a stockholder’s shares are held of record by a broker, bank or other nominee and that stockholder wishes to vote at the meeting, the stockholder must bring to the meeting a letter from the broker, bank or other nominee confirming the stockholder’s beneficial ownership of the shares and granting a proxy to the stockholder to vote the shares at the meeting. Proxies without Instructions Proxy cards returned without instruction that have been signed by stockholders of record (other than in the case of broker non-votes) will be voted as recommended by our board of directors. Revocation of Proxies Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. Proxies may be revoked by (i) filing with the Corporate Secretary of MIPS, at or before the taking of the vote at the annual meeting, a written notice of revocation bearing a later date than the proxy, (ii) duly executing a later dated proxy relating to the same shares and delivering it to the Corporate Secretary of MIPS before the taking of the vote at the annual meeting, or (iii) attending the annual meeting and voting in person (although attendance at the annual meeting will not in and of itself constitute a revocation of the proxy). Any written notice of revocation or subsequent proxy should be sent to MIPS Technologies, Inc., 955 East Arques Avenue, Sunnyvale, California94085, Attention: Corporate Secretary, or hand delivered to the Corporate Secretary of MIPS at or before the taking of the vote at the annual meeting. Solicitation of Proxies MIPS will pay the cost of soliciting proxies. In addition to solicitation by use of the mails, proxies may be solicited from MIPS stockholders by directors, officers and employees of MIPS in person or by telephone, telegram or other means of communication. Such directors, officers and employees will not be additionally compensated, but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. 36 Table of Contents Arrangements will be made with brokerage houses, custodians, nominees and fiduciaries for forwarding of proxy materials to beneficial owners of shares held of record by such brokerage houses, custodians, nominees and fiduciaries and for reimbursement of their reasonable expenses incurred in connection therewith. Stockholders sharing an address may receive only one set of proxy materials to that address unless they have provided contrary instructions. MIPS will deliver promptly upon written or oral request a separate set of the proxy materials to a stockholder at a shared address to which a single copy of the proxy materials was delivered. A stockholder may notify MIPS that he (she) wishes to receive a separate copy of the proxy materials, and stockholders sharing an address may request delivery of a single copy of the proxy materials by writing to the Corporate Secretary at our corporate headquarters, 955 East Arques Avenue, Sunnyvale, California94085 or calling (408)530-5200. Other Matters MIPS Technologies is not currently aware of any other business to be acted upon at the annual meeting. If, however, other matters are properly brought before the annual meeting, or any adjourned or postponed meeting, your proxies include discretionary authority on the part of the individuals appointed to vote your shares or act on those matters according to their best judgment. Availability of Documents If you have questions about the patent sale, merger, certificate of amendment or any of the other proposals set forth in this proxy statement or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact Bill Slater, Chief Financial Officer of MIPS Technologies, Inc., at 955 East Arques Avenue, Sunnyvale, California94085 or by telephone at (408) 530-5000. The reports, opinions or appraisals referenced in this proxy statement will be made available for inspection and copying during ordinary business hours at our corporate offices located at 955 East Arques Avenue, Sunnyvale, California94085 by any interested holder of our common stock. Other than with respect to parties participating in MIPS Technologies’ process of reviewing strategic alternatives who properly executed non-disclosure agreements pursuant to this process, to MIPS Technologies’ knowledge, no provision has been made by MIPS Technologies to grant the unaffiliated stockholders of MIPS Technologies access to the files of MIPS Technologies, Imagination Technologies or Acquisition Sub or to obtain counsel or appraisal services at the expense of any of the foregoing. 37 Table of Contents THE PARTIES TO THE PROPOSED TRANSACTIONS MIPS Technologies, Inc. MIPS Technologies, Inc. 955 East Arques Avenue Sunnyvale, CA 94085 (408) 530-5000 MIPS Technologies, Inc. (NASDAQ: MIPS) is a leading provider of industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications. The MIPS architecture powers some of the world’s most popular electronic products. Our technology is broadly used in products such as digital televisions, set-top boxes, Blu-ray players, broadband customer premises equipment (CPE), WiFi access points and routers, networking infrastructure and portable/mobile communications and entertainment products. MIPS Technologies is headquartered in Sunnyvale, CA and employs approximately 164 people. Bridge Crossing, LLC Bridge Crossing, LLC 80 Lambert Lane, Suite 115 Lambertville, New Jersey 08530 (215) 968-0123 Bridge Crossing LLC, a Delaware limited liability company, is wholly owned by a series of Allied Security Trust I, a member-based defensive patent aggregator. Allied Security Trust I currently has 26 members in the information technology, semiconductors, consumer electronics, social networking, communications (wired and wireless), medical information systems and other high tech industries, 11 of which participated in the patent sale (which 11 members we refer to as initial participants). Avaya, Hewlett-Packard, IBM, Intel, Motorola, Oracle, Philips and Research in Motion are among the members of Allied Security Trust I, but such members did not necessarily participate in the patent sale. Allied Security Trust I is based in Lambertville, New Jersey. Imagination Technologies Group plc Imagination Technologies Group plc Imagination House, Home Park Estate, Kings Langley, Hertfordshire WD4 8LZ +44 (0)1923 260511 Imagination Technologies Group plc (LSE: IMG.L) is a global leader in multimedia and communication technologies and creates and licenses market-leading processor solutions for graphics, video, and display, embedded processing, multi-standard communications and connectivity, and cross-platform V.VoIP & VoLTE. These silicon and software intellectual property (IP) solutions for systems-on-chip (SoC) are complemented by an extensive portfolio of software drivers, developer tools and extensive market and technology-focused ecosystems. Imagination Technologies is headquartered in Hertfordshire in the United Kingdom and employs approximately 1,200 people. 38 Table of Contents Acquisition Sub Imagination Acquisition Sub, Inc. Imagination House, Home Park Estate, Kings Langley, Hertfordshire WD4 8LZ +44 (0)1923 260511 Imagination Acquisition Sub, Inc., a Delaware corporation, which we refer to as Acquisition Sub, is an indirect wholly owned subsidiary of Imagination Technologies. Acquisition Sub was formed exclusively for the purpose of effecting the merger, as described in this proxy statement. 39 Table of Contents BACKGROUND OF THE PROPOSED TRANSACTIONS Our board of directors and management have regularly evaluated our business and operations, our long-term strategic goals and alternatives, and our prospects as an independent company. Our board of directors and management have also regularly reviewed and assessed trends and conditions impacting MIPS Technologies and its industry, changes in the marketplace and applicable law, and MIPS Technologies’ competitive market position, growth and revenue potential. As part of its ongoing review of MIPS Technologies and its position in its industry, our board of directors has also regularly reviewed the strategic alternatives available to MIPS Technologies to enhance stockholder value, including, among other things, possible strategic combinations, acquisitions and divestitures.Beginning in 2010, MIPS Technologies began to focus more specifically on various alternatives for monetizing the value of our patent portfolio and the strategic alternatives to MIPS Technologies to enhance stockholder value.In September 2011, MIPS Technologies engaged Ocean Tomo to assist the Company in a detailed review and assessment of its patent assets. On February 8, 2011, we entered into an engagement letter with J.P. Morgan effective as of December 22, 2010, pursuant to which J.P. Morgan was engaged to provide certain financial advisory services in connection with a possible transaction with CEVA, Inc., to whom we refer to as CEVA. From February, 2011 until May, 2011, MIPS Technologies and J.P. Morgan engaged in preliminary discussions with CEVA and its financial advisors around a possible business combination transaction between the two companies. No formal proposals were made during this period of time. The discussions ceased after both CEVA and MIPS Technologies decided that a transaction was not possible at that time due to various factors, including stock market valuations for each company. On November 18, 2011, we entered into an engagement letter with J.P. Morgan effective as of August 23, 2011, pursuant to which J.P. Morgan was engaged to provide certain financial advisory services in connection with our evaluation of various alternatives, including, without limitation, a sale of all or a portion of MIPS Technologies. On January 25, 2012, we announced publicly that we were actively assessing alternatives to unlock the value in our patent portfolio. In early 2012, we received a proposal from Party A, expressing an interest in a proposed patent assignment transaction whereby we would receive guaranteed payments of $60 Million over three years plus some portion of future net licensing revenue. In early 2012, we received a proposal from Party B, expressing an interest in a proposed exclusive licensing structure whereby we would receive guaranteed payments of $20 Million over one year plus some portion of future net licensing revenue. In January 2012, we received an unsolicited proposal from Party C, expressing an interest in a proposed exclusive licensing structure whereby we would receive guaranteed payments of at least $100 million in aggregate over five years. At a board meeting on February 1, 2012, J.P. Morgan presented financial information and analyses with respect to the Company and the potential valuation of the Company in the context of a sale.Based upon the ongoing review of strategic alternatives, our board of directors determined to direct J.P. Morgan to contact certain parties on a confidential basis with a view to determining whether they may have an interest in acquiring MIPS Technologies as a whole. Theboard determined that it would be preferable at this stage of the process to focus on the sale ofthe companyas a whole rather than in pieces, on the basis that a single transaction for the entire company would be more manageable to structure and could potentially lead to greater shareholder value.At this meeting, the board of directors formed the strategic advisory committee and appointed Kenneth L. Coleman (Chairman), Robert R. Herb, William M. Kelly, Fred Weber and Jeffrey S. McCreary to the committee.The committee has the responsibility for working with and advising the board of directors on strategic projects identified from time to time by the board of directors.The committee was formed in conjunction with a settlement agreement that the Company signed with Starboard Value LP and its related entities. In the period from February 2012 through May 2012, in our review of the various alternatives to enhance stockholder value, J.P. Morgan contacted approximately 10 potential buyers for the sale of MIPS Technologies as whole. The potential buyers included large public technology companies based in the United States and internationally who were thought to have both a strategic rationale and the financial wherewithal to complete such a transaction.Potential buyers who responded favorably were asked to enter into non-disclosure agreements with us. In the period from February 2012 through May 2012, one potential buyer executed a new non-disclosure agreement with us, while one was bound under an existing non-disclosure agreement. 40 Table of Contents On February 23, 2012, our board of directors held a meeting to discuss our strategic alternatives.Members of our senior management and representatives of J.P. Morgan attended.At the meeting, a representative of J.P. Morgan provided an update on its contacts with potential buyers and the level of interest expressed by each potential buyer. On March 7, 2012, our board of directors held a meeting to discuss our strategic alternatives.Members of our senior management and representatives of J.P. Morgan attended.At the meeting, a representative of J.P. Morgan provided an update on its contacts with potential buyers and the level of interest expressed by each potential buyer. On March 19, 2012, following discussions with our management, Party D submitted a licensing proposal whereby we would receive guaranteed payments of at least $100 million in aggregate over five years and a share of future royalty revenues. On March 28, 2012, the strategic advisory committee of our board of directors met to discuss the strategic alternatives for MIPS Technologies.Members of our senior management attended.Mr. Vij provided the strategic advisory committee with a status report on our process for considering strategic alternatives.Gail Shulman, our General Counsel, led the strategic advisory committee through an overview of alternatives for realizing enhanced value from our patent portfolio. On April 3, 2012, following discussions with our management, Party E submitted a licensing proposal whereby we would receive guaranteed payments of at least $20 million in aggregate over three years and a share of future royalty revenues. On April 4, 2012, we received an unsolicited proposal from Bridge Crossing expressing an interest in an acquisition or license of all patents and patent applications owned by MIPS Technologies for $125 million. On April 17, 2012, our board of directors held a meeting to consider and discuss our strategic alternatives. Representatives of J.P. Morgan and members of our senior management were present at the meeting. Mr. Vij and J.P. Morgan gave our board of directors an update on various strategic options for MIPS Technologies and discussed recent communications with potential counterparties. On April 18, 2012, members of our management team held a meeting with members of a public company to whom we refer to as Party F, where our management team gave a presentation on the MIPS Technologies business to members of Party F's business development and legal teams. During that meeting, our management team had a due diligence session with Party F focused on our business and patents and intellectual property portfolio. In April 2012, our management worked with J.P. Morgan to contact additionalparties who might be interested in the acquisition of 100% of the outstanding shares of our common stock. On April 12, 2012, Bloomberg reported that the Company had hired a financial advisor to pursue a potential sale. Shares of MIPS Technologies traded up 26% and closed at $6.58 that day. On April 27, 2012, our board of directors held a meeting. Representatives of Skadden Arps and J.P. Morgan and members of our senior management attended the meeting.At the meeting, representatives of J.P. Morgan provided an update on its contacts with potential buyers and the level of interest expressed by each potential buyer.Representatives of J.P. Morgan reported to our board of directors on interactions with a public company to whom we refer to as Party G, and representatives of Skadden discussed potential regulatory considerations associated with a potential combination with Party G. 41 Table of Contents On May 3, 2012, our board of directors met to discuss strategic alternatives.Representatives of J.P. Morgan, Skadden Arps and members of our senior management were present at the meeting.A representative of J.P. Morgan made a presentation to our board of directors regarding the status of discussions with several potential counterparties and the status of their interest in a transaction with MIPS Technologies.During the meeting, Mr. Vij was contacted by a representative of Party F and was informed that Party F was not interested in a potential acquisition of MIPS Technologies at this time.Representatives of J.P. Morgan led our board of directors through a discussion on the next steps of the strategic review process, including a timeline for the process.Representatives of J.P. Morgan and Skadden Arps discussed the regulatory (including antitrust) considerations related to a potential transaction with Party G. Representatives of Skadden Arps reviewed with the directors their fiduciary duties. The board determined that in light of the reduced prospects for a sale of the company as a whole, it would be appropriate to broaden the process to include parties who might be interested in acquiring less than the entire company. On May 7, 2012, J.P. Morgan contacted representatives of Imagination Technologies to inquire as to their level of interest in an acquisition of the Company. On May 14, 2012, representatives of Imagination Technologies indicated to J.P. Morgan that they would be interested in an acquisition of the core business but not the entire patent portfolio. During May 2012, presentations were given by our management team to potential strategic partners.Representatives of Party G met with J.P. Morgan on May 15, 2012, and with management on May 16, 2012. On May 21, 2012, our board of directors held a meeting to consider and discuss our strategic alternatives. Representatives of J.P. Morgan, Skadden Arps and members of our senior management were present at the meeting. J.P. Morgan updated our board of directors on the process, the status of discussions with potential buyers and the strategic alternatives for MIPS Technologies, including a potential staged transaction in which our patent portfolio, referred to as PatentCo, would be sold separately from our operating business, referred to as LicenseCo. On May 22, 2012, Mr. Vij received a call from the CEO of Party G notifying him that Party G was no longer interested in acquiring 100% of the common stock of MIPS Technologies. On May 24, 2012, J.P. Morgan received a proposal from Bridge Crossing expressing an interest in an acquisition or license of all patents and patent applications owned by MIPS Technologies for $251 million. On May 25, 2012, our board of directors held a meeting.Representatives of J.P. Morgan, Skadden Arps and members of our senior management were present at the meeting.J.P. Morgan updated our board of directors on its discussions with potential partners, noting that Party F verbally expressed interest in possibly purchasing selected patent families from MIPS Technologies.Mr. Vij noted to our board of directors that Imagination Technologies expressed interest in buying LicenseCo. A representative of J.P. Morgan then summarized the financial terms of the Bridge Crossing proposal for our board of directors and explained that Party G was a member of this consortium of companies interested in an acquisition or license to all of the MIPS Technologies patents and patent applications. J.P. Morgan then led a discussion of the potential staged transaction of selling PatentCo and simultaneously selling LicenseCo to a separate buyer.Our board discussed the opportunities and challenges that would be posed by the continuation of MIPS Technologies as an independent company assuming that a PatentCo transaction was completed but a LicenseCo transaction was not completed. Representatives of J.P. Morgan made a preliminary presentation concerning the valuation of MIPS Technologies.After a lengthy discussion, our board of directors directed management and J.P. Morgan to expand the strategic review process to include potentially selling PatentCo and LicenseCo separately, while at the same time continuing to review alternatives for a sale of the entire company. Representatives of Skadden Arps reviewed with the directors their fiduciary duties. 42 Table of Contents In the period from May 2012 through August 2012, J.P. Morgan contacted approximately 20 potential buyers for the sale of PatentCo and approximately 20 potential buyers for the sale of LicenseCo. The potential buyers for PatentCo included large public technology companies and non-practicing patent monetization entities, including Bridge Crossing.The potential buyers for LicenseCo included financial buyers and technology companies based in the United States and internationally, including Imagination Technologies. Potential buyers who responded favorably were asked to enter into non-disclosure agreements with us. In the period from May 2012 through August 2012, approximately eight potential buyers, in addition to the two who had previously done so, executed non-disclosure agreements with us. On June 1, 2012, J.P. Morgan contacted representatives of CEVA to inquire as to their level of interest in an acquisition of LicenseCo. On June 7, 2012, our board of directors held a meeting. Representatives of Skadden Arps and J.P. Morgan and members of our senior management attended the meeting. Our management team reviewed an independent analysis that it had received from Ocean Tomo on the value of our patents relative to a potential patent license with Broadcom Corporation. Our board determined that it would be appropriate to pursue the Broadcom discussions on a separate track from the rest of the process, on the basis that a nonexclusive license with Broadcom could both be financially attractive in its own right and could validate a higher value for an ultimate PatentCo transaction. During June and July of 2012, members of our management and representatives of J.P. Morgan also participated in telephonic and in-person due diligence sessions with participating parties and responded to numerous questions and various requests for additional information from each of these parties. From June 2012 through August 2012, we granted access to potential buyers to the virtual data room that we had created in connection with the process.Throughout the process to the execution of the patent sale agreement and the merger agreement, the virtual data room was updated with new information, including, without limitation, specific information requested by Bridge Crossing, Imagination Technologies and CEVA,as well as other potential buyers who had executed non-disclosure agreements with us. On June 18, 2012, our board of directors held a meeting. Representatives of Skadden Arps, J.P. Morgan and Ocean Tomo and members of our senior management attended the meeting.Our board of directors approved the engagement of Ocean Tomo as intellectual property advisors in connection with its review of potential PatentCo alternatives.Representatives of J.P. Morgan updated our board of directors regarding its contacts with potential buyers.Later that day, at the direction of our board of directors, J.P. Morgan sent letters to prospective PatentCo buyers and LicenseCo buyers, requesting that each such participating party submit a preliminary non-binding indication of interest by June 29, 2012, together with a mark-up of the form of term sheet that J.P. Morgan would send to the parties on June 20, 2012. On June 29, 2012, we entered into a license agreement with Broadcom Corporation, to whom we refer to as Broadcom, pursuant to which we granted Broadcom a non-exclusive license to our patents as of June 29, 2012, for $26.5 million in cash and other consideration. On July 2, 2012, our board of directors held a meeting to discuss the preliminary non-binding indications of interest received.Representatives of Skadden Arps, J.P. Morgan and Ocean Tomo and members of our senior management attended the meeting. Representatives of J.P. Morgan reviewed the financial terms of each of the non-binding preliminary indications of interest received from potential counterparties on June 29th, including with respect to a LicenseCo transaction: 43 Table of Contents · a proposal fromCEVA with a purchase price range between $60 million and $90 million · a proposal from Party I with a purchase price range between $90 million and $100 million (noting that Party I had not performed as much diligence as CEVA) J.P. Morgan reported to our board of directors that Imagination Technologies was not in a position to provide MIPS Technologies with a proposal but that they were still very interested in a transaction.A representative from J.P. Morgan noted that with respect to a PatentCo transaction, it received: · twoalternative proposals from Bridge Crossing, an acquisition of PatentCo for $260 million or an exclusive license to the patent assets in PatentCo for $210 million · a proposal from Party F for $75 million · a proposal from Party J for $20 million · a proposal from Party K for $12 million for a subset of the patents included in PatentCo A representative from Skadden Arps discussed the tax consequences of a bifurcated transaction.Our board of directors discussed various strategic implications of a bifurcated transaction. On July 10, 2012, we engaged in conversations with a private equity buyer who was potentially interested in an acquisition of the Company at a market premium to the current market value of the Company.As conversations progressed between July 10, 2012 and July 20, 2012, this interest became limited to funding of an enforcement group focused on acquisition and subsequent monetization of PatentCo.However, on July 20, 2012, without engaging in due diligence, the private equity buyer determined that it was no longer interested in pursuing the opportunity at this time. On July 17, 2012, J.P. Morgan sent final round process letters to Bridge Crossing for the PatentCo transaction and to Imagination Technologies,CEVA and Party I for the LicenseCo transaction, requesting that each submit a best and final offer by August 7, 2012. On or around July 13th, 2012 through July 17th, 2012, J.P. Morgan worked with Bridge Crossing to identify a means of structuring the transaction as an asset sale of LicenseCo followed by sale of the stock of MIPS Technologies to Bridge Crossing in order to provide for a more tax efficient transaction.However, Bridge Crossing was not able to structure the transaction in this manner. 44 Table of Contents On July 20, 2012, a representative of a U.S. public company to whom we refer to as Party L contacted J.P. Morgan about re-engaging in the LicenseCo process. On July 30, 2012, our board of directors held a meeting.Representatives of J.P. Morgan, Skadden and Ocean Tomo and members of our senior management attended the meeting.Representatives of J.P. Morgan provided an update of the process with respect to potential buyers.Our board of directors discussed the difficulty of reaching a tax efficient structure with Bridge Crossing and that Bridge Crossing would have to significantly increase its offer price if MIPS Technologies must sell PatentCo in a taxable transaction.Mr. Vij led a discussion about the reactions of other industry participants to the announcement of the license agreement with Broadcom and how we might leverage that to support the strategic process.Our board of directors decided to extend the deadline for final bids from potential buyers to August 15, 2012.William Slater, our chief financial officer, made a presentation to our board of directors providing a review and analysis of various strategic options.Mr. Slater led a discussion of our board of directors on the financial and non-financial issues and considerations associated with each option. On July 31, 2012, Party I informed J.P. Morgan that they would not continue with the process as they could not support their initial view on value. On August 6, 2012, a form of draft patent sale agreement and related license agreements were distributed to Bridge Crossing, with a request to return a mark-up of the agreements along with its final bid on August 15, 2012.On that same day, a form of merger agreement was distributed to Imagination Technologies,CEVA and Party L, with a request that such parties return a mark-up of the agreement along with their final bids on August 15, 2012. On August 7, 2012, Bridge Crossing submitted a final proposal letter including a revised purchase price of $350 million in cash for the purchase ofPatentCo.Bridge Crossing also included a mark-up of the draft patent sale agreement with its letter.On that same day, Party D submitted a revised licensing proposal whereby Party D and MIPS Technologies would form a licensing partnership for nine months after which Party D might acquire PatentCo for $100 to $130 million. On August 9, 2012, our board of directors met to consider and discuss the proposals received and to discuss our strategic alternatives. Representatives of Skadden Arps, J.P. Morgan and Ocean Tomo and members of our senior management attended the meeting. At this meeting, representatives of J.P. Morgan updated our board of directors on the strategic review process and reviewed with our board of directors the parameters and status of the respective proposals received.A representative of J.P. Morgan reported to our board of directors that Bridge Crossing provided a revised indication of interest of $350 million for an outright purchase of PatentCo and sublicensable rights to patents retained by LicenseCo, however Bridge Crossing desired to move quickly in a manner that did not allow for a simultaneous LicenseCo transaction.A representative of Skadden Arps led a discussion about the timeline for a transaction with Bridge Crossing, taking into account the necessary stockholder approval, as well as some of the terms of Bridge Crossing's proposal around Bridge Crossing's financing arrangements, certainty of closing and the ability to respond to competing proposals.In addition, Skadden Arps led a discussion with respect to the licensing rights associated with Bridge Crossing's proposal, and the alternatives for our operating business in the event that a LicenseCo transaction could not be completed simultaneously with a PatentCo transaction.In addition, J.P. Morgan noted that with respect to a LicenseCo transaction each of Imagination Technologies,CEVA and Party L expressed interest in exploring a transaction with MIPS Technologies, although final proposals had not yet been received.A representative of Skadden Arps made a presentation to our board of directors on the expected timing for the strategic review process.Skadden Arps explained the fiduciary duties of our board of directors as they relate to the current phase of the process. 45 Table of Contents On August 21, 2012, our board of directors held a meeting. Representatives of J.P. Morgan, Ocean Tomo and Skadden Arps and members of our senior management attended the meeting. At the meeting, representatives of J.P. Morgan provided an update on the process and reviewed the financial terms of each of the proposals. J.P. Morgan reported that with respect to a LicenseCo transaction: · CEVAsubmitted a key issues list on August 17, 2012 and indicated it would likely decrease its preliminary purchase price range of $60 million to $90 million · Party L submitted a proposal on August 15, 2012 to acquire certain retained patents and enter into related license agreements in exchange for a series of cash payments that J.P. Morgan estimated to have a net present value of $45 million over a period of five years · Imagination Technologies submitted a proposal on August 15, 2012 with a purchase price of $72 million A representative of Skadden Arps reviewed the key terms of the proposals from CEVA and Imagination Technologies, including that Imagination Technologies' proposal required a distribution of all cash held by us to our stockholders, net of an amount necessary to pay taxes, prior to the acquisition.In addition, a representative of Skadden Arps reviewed the key terms of the proposal from Bridge Crossing, including Bridge Crossing's request for a 3-week exclusivity period. On August 23, 2012, at the instruction of our board of directors, J.P. Morgan contacted representatives of CEVAand indicated that MIPS Technologies had received several proposals for LicenseCo and that CEVA’s proposal was the only one that was submitted after the requested time and without a specific value.J.P. Morgan also communicated that MIPS Technologies anticipated entering exclusivity with one party within the next 7 to 10 days. On August 31, 2012, our board of directors held a meeting to discuss the PatentCo proposal received from Bridge Crossing and the LicenseCo proposals received from Imagination Technologies andCEVA.Representatives of Skadden Arps, J.P. Morgan and Ocean Tomo and members of our senior management attended this meeting. A representative of Skadden Arps described the elements of a draft exclusivity letter and non-binding term sheet with Bridge Crossing, including, that Bridge Crossing had stated that its proposal would expire at the end of the day due to the expiration of the binding capital commitment from a member of the consortium.Management led a discussion of the state of the LicenseCo proposals, including, without limitation, issues relating to the number of patents that would be retained by us following a PatentCo transaction and the terms of the license agreement to the patents we retain.Our board of directors considered, among other things, the potential incompatibilities between the LicenseCo and the Bridge Crossing proposals with respect to the intellectual property proposed to be purchased by the respective parties, the tax implications of the contemplated transactions, the anticipated date of execution of definitive transaction documents and various milestones to completion.Following a detailed discussion, our board of directors authorized our management to enter into an exclusivity arrangement with Bridge Crossing with respect to a sale of PatentCo. Following that meeting, on August 31, 2012, we entered into an agreement with Bridge Crossing with respect to its August 8, 2012 proposal granting exclusivity until September 30, 2012. 46 Table of Contents On September 7, 2012, our board of directors held a meeting to discuss LicenseCo proposals received from Imagination Technologies andCEVA.Representatives of Skadden Arps, J.P. Morgan and Ocean Tomo and members of our senior management attended this meeting. Mr. Vij updated our board of directors on the discussions with Imagination Technologies andCEVA.Mr. Vij noted that our management team made significant progress with Imagination Technologies during meetings in the United Kingdom between the two management teams.A representative of Skadden Arps described the elements of a draft exclusivity letter and non-binding term sheet with Imagination Technologies, including, that Imagination Technologies agreed to an exclusivity period that would expire on September 30, 2012, and that we had a carve-out from the exclusivity period to negotiate non-exclusive licenses on terms similar to the recent license agreement with Broadcom.A representative of Skadden Arps reviewed the terms ofCEVA's proposed term sheet for an acquisition of LicenseCo, including thatCEVA had decreased its offer from a range of $60 million to $90 million to $50 million, inclusive of all employee severance, accruals payable and change in control payments.The board of directors considered, among other things, that the deductions in the CEVA term sheet make the price offered by CEVA substantially less than the $50 million headline valuation and less than the $72 million offer from Imagination Technologies. Following a detailed discussion, our board of directors authorized our management to enter into an exclusivity arrangement with Imagination Technologies with respect to a sale of LicenseCo. Following that meeting, on September 7, 2012, we entered into an agreement with Imagination Technologies with respect to its August 31, 2012 proposal granting exclusivity until September 30, 2012. On September 9, 2012, Skadden Arps distributed to Fenwick & West LLP, Bridge Crossing’s outside legal counsel, a revised draft patent sale agreement.On September 14, 2012, Skadden Arps distributed to DLA Piper LLP, Imagination Technologies' outside legal counsel, a revised draft merger agreement. During the period from September 9, 2012 through November 2, 2012, we exchanged drafts and mark-ups of the patent sale agreement for the purchase of PatentCo and the related license agreements with the Bridge Crossing, and engaged in telephonic and in-person negotiations with Bridge Crossing regarding the patent sale agreement and related license agreements. During this period, we also exchanged drafts and mark-ups of the draft merger agreement with Imagination Technologies and engaged in telephonic and in-person negotiations with Imagination Technologies regarding the draft merger agreement with respect to the sale of LicenseCo. Bridge Crossing, Imagination Technologies and each of their legal and financial advisors also continued their respective due diligence investigations. On September 30, 2012, our board of directors held a meeting. Representatives of J.P. Morgan, Ocean Tomo and Skadden Arps and members of our senior management attended the meeting.Members of our management team discussed the status of negotiations with Bridge Crossing and Imagination Technologies, including that significant issues remained open with respect to the license to Bridge Crossing under the retained patent license agreement.Representatives of Skadden Arps and J.P. Morgan led a discussion of tactical alternatives to make progress with Bridge Crossing on the retained patent license.After a discussion, our board of directors authorized management to extend the exclusivity period with Imagination Technologies for a period of 10 days and, in the event progresswas made with Bridge Crossing and as management deemed appropriate, to extend the exclusivity period with Bridge Crossing for 10 days. On September 30, 2012, acting pursuant to the authority provided by our board of directors, the Company entered into an extension of Imagination Technologies’ exclusivity period until October 10, 2012.Our management team decided to let Bridge Crossing's exclusivity period lapse and it was never extended. 47 Table of Contents On October 10, 2012, our board of directors held a meeting and discussed the status of negotiations and discussions with Bridge Crossing and Imagination Technologies. Representatives of J.P. Morgan, Ocean Tomo and Skadden Arps and members of our senior management attended the meeting.Mr. Vij also led a discussion on the status of the exclusivity agreements with Imagination Technologies and Bridge Crossing. On October 11, 2012, acting pursuant to the authority provided by our board of directors, the Company entered into an extension of the Imagination Technologies’ exclusivity period for an additional 10 days. On October 19, 2012, our board of directors held a meeting to discuss the status of the process. Representatives of J.P. Morgan, Ocean Tomo and Skadden Arps and members of our senior management attended the meeting. Members of our management team updated our board of directors on the status of negotiations with Bridge Crossing and Imagination Technologies.Our board of directors was informed that management communicated to Bridge Crossing and Imagination Technologies that MIPS Technologies was interested in announcing the LicenseCo transaction and PatentCo transaction simultaneously and that time was of the essence.A representative of Skadden Arps reviewed the fiduciary duties of our board of directors as they relate to the current phase of the process. Our board of directors authorized our management to extend the exclusivity periods for Bridge Crossing and Imagination Technologies, as management deemed appropriate in each case, for a period of 10 days. On October 20, 2012, acting pursuant to the authority provided by our board of directors, the Company entered into an extension of the Imagination Technologies’ exclusivity period for an additional 10 days. On October 22, 2012 and October 23, 2012, members of our senior management participated in extensive in-person negotiations, with representatives of Skadden Arps participating by phone, with members of Imagination Technologies and representatives of DLA Piper regarding issues raised in the draft merger agreement mark-ups and the PatentCo license agreements. Among the principal issues discussed were the scope of the licenses granted in the PatentCo transaction and the conditions to closing in the merger agreement. On October 30, 2012, our board of directors held a meeting to discuss progress in the negotiations with Imagination Technologies and Bridge Crossing. Representatives of J.P. Morgan, Ocean Tomo and Skadden Arps and members of our senior management attended the meeting.Management updated our board of directors on the progress made with respect to finalizing the PatentCo transaction with Bridge Crossing, and noted that Bridge Crossing had repeatedly stressed it was at its time limit for holding its consortium together and that certain binding commitments would expire in early November.Management also reported to our board of directors that, following discussions with individual directors and the management team, MIPS Technologies had requested that Bridge Crossing increase its proposal to $385 million from $350 million in exchange for signing the PatentCo transaction ahead of the LicenseCo transaction.Bridge Crossing declined our proposal.Mr. Vij updated our board of directors on the revised proposal from Imagination Technologies that provided for a purchase price of $43 million, which was a reduction from the proposed purchase price of $72 million. Mr. Vij reported that following a series of negotiations with Imagination Technologies, Imagination Technologies increased the revised proposal to $60 million.A representative of J.P. Morgan summarized the principal financial terms of the revised proposal from Imagination Technologies. Our board of directors discussed the complexities of the respective negotiations and of the relationship between the proposed transactions. Following the discussion, our board of directors authorized MIPS Technologies’ management to extend the period of exclusivity with Imagination to November 4, 2012. 48 Table of Contents On the morning of November 4, 2012, our board of directors held a meeting, which members of our senior management and representatives of J.P. Morgan, Ocean Tomo and Skadden Arps attended. Prior to this meeting, the members of our board of directors were provided with summaries of the current terms of the drafts of the patent sale agreement, the license agreements and the merger agreement, along withmaterials related to the proposed merger and the proposed patent sale. At the meeting: · representatives of Skadden Arps reviewed with the board of directors its fiduciary duties in considering the proposed transactions; · our board of directors considered the positive and negative factors and risks in connection with the proposed transactions, as discussed in the sections entitled, “The Merger – Reasons for the Merger and Recommendation of Our Board of Directors” and “The Patent Sale – Reasons for the Patent Sale and Recommendation of Our Board of Directors”below; · a representative of Ocean Tomo made a financial presentation and rendered to our board of directors its oral opinion, subsequently confirmed in writing, that as of November 4, 2012, and based upon and subject to the various factors, assumptions, qualifications and limitations set forth in the written opinion, the consideration of $350 millionto be received by MIPS Technologies pursuant to the proposed patent sale agreement was fair, from a financial point of view, to MIPS Technologies, asdiscussed in “The Patent Sale – Opinion of Our Financial Advisor on the Patent Sale.” Such opinion is attached hereto as Annex B; and · a representative of J.P. Morgan made a financial presentation and rendered to our board of directors its oral opinion, subsequently confirmed in writing, that as of November 4, 2012, and based upon and subject to the various factors, assumptions, qualifications and limitations set forth in the written opinion, the $7.31 per share to be received by holders of shares of MIPS Technologies common stock, after giving effect to the patent sale and recapitalization, pursuant to the proposed merger agreement was fair, from a financial point of view, to such holders as discussed in “The Merger – Opinion of Our Financial Advisor on the Merger.” Such opinion is attached hereto as Annex D. Following a lengthy and detailed discussion and following careful consideration of the proposed patent sale agreement and the proposed merger agreement and the transactions contemplated by those agreements, our board of directors unanimously (1) approved and declared expedient and advisable the patent sale agreement, the patent sale and the other transactions contemplated by the patent sale agreement, (2) declared that the terms of the patent sale agreement and the transaction contemplated by the patent sale agreement, including the patent sale and the license agreements, on the terms and subject to the conditions set forth therein, are in the best interests of MIPS Technologies and its stockholders, (3) approved and declared advisable the certificate of amendment and the recapitalization and the other transactions contemplated by the certificate of amendment, (4) declared that the terms of the certificate of amendment and the transactions contemplated by the certificate of amendment, including the recapitalization, on the terms and subject to the conditions set forth therein, are in the best interests of the stockholders of MIPS Technologies, (5) approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement and (6) declared that the terms of the merger agreement and the transactions contemplated by the merger agreement, including the merger, on the terms and subject to the conditions set forth therein, are in the best interests of the stockholders of MIPS Technologies. Our board of directors unanimously resolved to recommend that MIPS Technologies’ stockholders (a) approve and adopt the patent sale agreement and the transactions contemplated thereby, including the patent sale, (b) approve and adopt the certificate of amendment and the transactions contemplated thereby, including the recapitalization and (c) approve and adopt the merger agreement and the transactions contemplated thereby, including the merger. Our board of directors authorized the appropriate officers of MIPS Technologies to finalize and execute the patent sale agreement, merger agreement and related documentation. During the course of the day of November 5, 2012, we and representatives of Skadden Arps, Fenwick & West, and Bridge Crossing finalized and executed the patent sale agreement and the related escrow agreement, and we and representatives of Skadden Arps, DLA Piper and Imagination Technologies finalized and executed the merger agreement. On the late evening of November 5, 2012, we issued a press release announcing the execution of the patent sale agreement and the execution of the merger agreement. Subsequently, on November 19, 2012, CEVA sent MIPS Technologies a written unsolicited non-binding proposal to acquire all the outstanding shares of MIPS Technologies, following the patent sale and recapitalization, for $75 million in cash. The proposal is subject to the approval of CEVA's board of directors and a brief period of confirmatory due diligence. As required under the merger agreement, MIPS Technologies promptly provided Imagination Technologies with a copy of the unsolicited CEVA proposal, and, since MIPS was prohibited under the merger agreement from responding to the unsolicited proposal, we did not respond to CEVA at this time. On November 20, 2012, our board of directors held a meeting to discuss the proposal from CEVA. Representatives of J.P. Morgan and Skadden Arps and members of our senior management attended the meeting. Representatives of Skadden Arps reviewed with the board its fiduciary duties in the context of the CEVA proposal. J.P. Morgan reviewed a preliminary financial analysis of a potential CEVA transaction at the price proposed by CEVA in light of MIPS Technologies’ pending merger with Imagination Technologies. After discussion, our board of directors determined in good faith, after consultation with its financial and legal advisors, that the CEVA proposal could reasonably be expected to lead to, a superior proposal, that failure to take such action would likely be inconsistent with the directors’ fiduciary duties under Delaware law, and that it was in the best interest of MIPS Technologies and its stockholders for MIPS Technologies to enter into exploratory discussions with CEVA. Accordingly, our board of directors authorized management to enter into a confidentiality agreement with CEVA on terms substantially the same as the confidentiality agreement with Imagination Technologies. Our board of directors is currently evaluating the proposal from CEVA and has not made a determination as to whether CEVA's proposal is superior to MIPS Technologies' pending transaction with Imagination Technologies. Our board of directors continues to recommend the merger agreement with Imagination Technologies to our stockholders. Our board of directors is not withdrawing its recommendation with respect to the merger agreement and the merger, or proposing to do so, and is not making any recommendation with respect to the proposal received from CEVA. 49 Table of Contents PROPOSAL NO. 1—THE PATENT SALE The Proposal to Approve the Patent Sale Agreement On November 5, 2012, MIPS Technologies and Bridge Crossing entered into the patent sale agreement. MIPS Technologies’ board of directors has unanimously determined that it is expedient, advisable and in the best interests of MIPS Technologies and its stockholders, approved and adopted the terms of the patent sale agreement, authorized the execution, delivery and performance by MIPS Technologies of its obligations under the patent sale agreement and the consummation of the transactions contemplated thereby, including the sale of the patents and the license agreements to be executed in connection therewith, and recommended and declared it advisable that the stockholders approve and adopt the patent sale agreement. MIPS Technologies stockholders will be asked to consider and vote on a proposal at the annual meeting to adopt the patent sale agreement pursuant to the requirements of Delaware law. Vote Required for Approval of the Patent Sale Agreement Adoption of the patent sale agreement requires the affirmative vote of a majority of the shares of our common stock outstanding and entitled to vote as of the record date. For the proposal to adopt the patent sale agreement, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions and broker non-votes, if any, will be counted as present for the purpose of determining whether a quorum is present at the annual meeting. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote against the proposal to adopt the patent sale agreement. For the reasons described below, our board of directors recommends that you vote “FOR” the adoption of the Patent Sale Agreement. Reasons for the Patent Sale; Recommendation of Our Board of Directors After careful consideration, our board of directors unanimously (i) determined that it is expedient, advisable and in the best interests of MIPS Technologies and its stockholders for MIPS Technologies to enter into the patent sale agreement, (ii) approved and adopted the terms of the patent sale agreement, (iii) authorized the execution, delivery and performance by MIPS Technologies of its obligations under the patent sale agreement and the consummation of the transactions contemplated thereby, including the sale of the patents and the license agreements to be executed in connection therewith, and (iv) recommended and declared it advisable that the stockholders approve and adopt the patent sale agreement, and directed that such matter be submitted for consideration of the stockholders of MIPS Technologies at the annual meeting. Our board of directors unanimously recommends that MIPS Technologies’ stockholders vote “FOR” the adoption of the patent sale agreement and “FOR” the adjournment of the annual meeting, if necessary or appropriate, to solicit additional proxies. 50 Table of Contents In reaching its recommendation, our board of directors consulted with MIPS Technologies’ management and its financial and legal advisors and considered a number of substantive factors, both positive and negative, and the potential benefits and detriments of the patent sale, which are described in greater detail herein. Among other factors, our board of directors believed that the following factors supported its decision to approve the proposed patent sale: · The comparability of the patent sale to MIPS Technologies’ other alternatives. · The opinion of Ocean Tomo LLC, which we refer to as Ocean Tomo. · The terms of the patent sale agreement. · The terms of the license agreements. · The Opportunities and Challenges Facing MIPS Technologies.Our board of directors considered the opportunities and challenges facing us, as well as the uncertainties surrounding our ability to successfully execute our business plan. Specifically, our board of directors considered the opportunities and challenges relating to, among other things, our recent history of operating losses, the uncertainty of successfully licensing our technology to additional customers and the uncertainty of securing license agreements providing for significant license fees and on-going royalties, the risk that companies that use processor architectures and coresmay adoptstrategies of internal development rather than licensing third party technology platforms such as ours, and the overall competitive landscape of the processor architecture space. Our board of directors considered the significant risks that we would be unable to secure licensing arrangements with enough customers to generate sufficient revenues to achieve profitability. In addition, our board of directors also considered the diminished pipeline for potential licensing transactions in the near future; the increasing proliferation of technologies licensedby our competitors thatmay be used as an alternativeto our technology, thereby eroding our market share; risks associated with other patent monetization strategies; thevalue toexpeditiously monetizing the patent portfolio in a single transaction as compared to a multiyear process of pursuing individual licenses, the likely decline of the value of the portfolio over time as patents expire; and the risk of meeting market expectations regarding the pace of signing new licensing agreements for our technology. · Comparability to Other Alternatives.Our board of directors consideredMIPS Technologies’ business, product and technology pipelines, financial condition and results of operations, both on a historical and prospective basis. Our board of directors also consideredthat a significant portion of MIPS Technologies’ value is represented by its product and technology pipeline, which by its nature is subject to risk and uncertainty, and that the patent sale consideration to be paid by Bridge Crossing takes into account the value of this product and technology pipeline and provides liquidity to MIPS Technologies’ stockholders on an immediate basis. Our board of directors also considered that there are, in general, business, financial, market and execution risks associated with remaining independent and successfully implementing MIPS Technologies’ stand-alone business plan, as well as macroeconomic factors, rapidly changing technologies, evolving industry standards and increased competition.Our board of directors also considered certain strategic alternatives to the patent sale, including the sale or disposition of other assets of MIPS Technologies. In connection therewith, among other things, our board of directors also considered: 51 Table of Contents · the fact that MIPS Technologies had conducted an extensive and thorough strategic alternative review process in 2012, during which, among other things: contacts were made to approximately 20 potential strategic partners; diligence was conducted by six potential strategic partners; initial indications of interest were submitted by six potential strategic partners; four formal bids were submitted; and of all of the parties who had submitted indications of interest, Bridge Crossing’s proposal was the highest and was materially higher than the other bids; · based on the results of the 2012 process, our board of directors’ belief that it was unlikely that any other strategic partners would be willing to pay more than $350,000,000 in cash; and · a business model for the Company to monetize the patent portfolio itself. · Financial Advisor Opinion.Our board of directors considered the financial presentation of Ocean Tomo, and its oral opinion delivered to our board of directors (which opinion was subsequently confirmed in writing) to the effect that, as of November 4, 2012 and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in the opinion, the purchase price to be received by MIPS Technologies pursuant to the patent sale agreement was fair from a financial point of view to MIPS Technologies, as more fully described under “The Patent Sale—Opinion of Our Financial Advisor on the Patent Sale” beginning on page 55 of this proxy statement. The opinion of Ocean Tomo is addressed to, and for the use and benefit of, our board of directors of MIPS Technologies in connection with and for purposes of its evaluation of the patent sale and does not constitute a recommendation as to how any holder of MIPS Technologies common stock should vote with respect to the patent sale. The full text of Ocean Tomo’s written opinion, dated November 4, 2012, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with such opinion is attached as Annex B to this proxy statement and is incorporated herein by reference. · Terms of the Patent Sale Agreement.Our board of directors considered the terms and conditions of the patent sale agreement, including: · the number and nature of the conditions to Bridge Crossing’s obligation to consummate the patent sale; · MIPS Technologies’ ability under the patent sale agreement to furnish information to and conduct negotiations with a third party in certain circumstances, as more fully described under “The Patent Sale Agreement — No Solicitation of Other Offers” beginning on page 66 of this proxy statement; · our board of directors’ ability to modify and change its recommendation to stockholders in response to a superior proposal from a third party or in response to an intervening event, if after consultation with its legal advisors the board determines in good faith that, the failure to take such action would be inconsistent with its fiduciary duties to MIPS Technologies’ stockholders; 52 Table of Contents · that MIPS Technologies can terminate the patent sale agreement if, concurrently with such termination, MIPS Technologies enters into a definitive agreement providing for the implementation of a superior proposal under certain conditions and upon payment to Bridge Crossing of a $10,000,000 termination fee; · that Bridge Crossing has agreed to use its reasonable best efforts to cause the patent sale to be consummated; and · the fact that all such terms and conditions were the product of extensive arm’s-length negotiations between MIPS Technologies and Bridge Crossing. · Termination Fee.Our board of directors considered the termination fees ($30,000,000 in the case of a wrongful termination payment and $10,000,000 in other circumstances to accept a superior proposal) , including the views of MIPS Technologies’ financial and legal advisors as to the customary nature of the existence and size of termination fees in transactions similar to the patent sale. Our board of directors concluded that a termination fee of this size for the transactions contemplated by the patent sale agreement should not unduly deter a third party from making, or inhibit our board of directors in evaluating, negotiating, and, if appropriate, terminating the patent sale agreement to enter into a transaction that is, a superior proposal. · Likelihood of Consummation.Our board of directors considered the likelihood that the patent sale will be completed, including Bridge Crossing’s agreement to use its reasonable best efforts to complete the patent sale. Our board of directors also considered the fact that Bridge Crossing did not require stockholder approval for the transaction. · Financing Related to the Patent Sale.Our board of directors considered the fact thatBridge Crossing represented in the patent sale agreement that it has, and as of the closing will have, sufficient immediately available funds to pay when due the aggregate patent sale consideration and to pay when due all of its fees and expenses related to the transactions contemplated by the patent sale agreement, and that it has deposited an amount equal to $350,000,000 with an escrow agent. · Stockholder Vote.Our board of directors considered the fact that the consummation of the proposed patent sale would require the affirmative vote of the holders of a majority of the outstanding shares of MIPS Technologies’ common stock entitled to vote. Our board of directors noted that shares owned by members of management represented a relatively small percentage of the outstanding shares and that, accordingly, the patent sale agreement would, in effect, need to be approved by a majority of the shares held by MIPS Technologies’ other stockholders. Our board of directors also considered potential risks or negative factors relating to the patent sale, including the following: · the fact that the completion of the patent sale will preclude MIPS Technologies’ stockholders from having the opportunity to participate in the future appreciation of the value of its capital stock derived from ownership of certain of MIPS Technologies’ patents; · the fact that, although the patent sale agreement contains a “fiduciary out,” it does not contain a “go shop” provision; 53 Table of Contents · the fact that the patent sale agreement contains certain provisions, including the termination fees, restrictions on providing information to and negotiating with a third party that makes an unsolicited acquisition proposal, and the required vote provisions obligating MIPS Technologies to convene the annual meeting for the purpose of obtaining stockholder approval of the proposal to adopt the patent sale agreement, even if our board of directors changes its recommendation regarding the patent sale and the patent sale agreement (unless MIPS Technologies terminates the patent sale agreement, enters into a definitive agreement relating to a superior proposal and pays the applicable termination fee), that may inhibit other potential patent buyers from submitting potentially superior proposals to acquire MIPS Technologies’ patents; · the fact that not all conditions to the closing of the patent sale are within MIPS Technologies’ control; · the fact that MIPS Technologies has incurred and will continue to incur significant transaction costs and expenses in connection with the proposed transaction, regardless of whether the patent sale is consummated; · the fact that the operations of MIPS Technologies will be restricted by interim operating covenants under the patent sale agreement during the period between the signing of the patent sale agreement and the completion of the patent sale, which could effectively prohibit MIPS Technologies from undertaking material strategic initiatives or other material transactions without Bridge Crossing’s consent, to the detriment of MIPS Technologies and its stockholders; and · the patent sale will be a taxable sale by MIPS Technologies of corporate assets for U.S. federal income tax purposes, and MIPS Technologies anticipates that it will recognize substantial gain as a result of the patent sale.Such gain will generate U.S. federal income tax liability to MIPS Technologies that will reduce the amount of cash available for exchange to stockholders in the recapitalization.Further, the merger and the recapitalization are intended to be an integrated taxable transaction for U.S. federal income tax purposes, in which case our stockholders will generally be required to pay U.S. federal income tax on any gains they realize as a result of the receipt of cash in exchange for shares of our common stock pursuant to the recapitalization and the merger. Our board of directors concluded that the potentially negative factors associated with the proposed patent sale were outweighed by the opportunity for MIPS Technologies’ stockholders to realize a premium on the value of their common stock, unlock the value of the patents through a bifurcated transaction, and monetize their investment in MIPS Technologies for the purchase price. Our board of directors believed that the proposed patent sale represents the highest price reasonably available to the stockholders in connection with the monetization of our patent portfolioand eliminates the unavoidable risks and uncertainty affecting the future prospects of MIPS Technologies on a stand-alone basis. Accordingly, our board of directors concluded that it was in the best interests of MIPS Technologies and its stockholders, and declared it expedient and advisable, for MIPS Technologies to enter into the patent sale agreement, and approved the execution, delivery and performance by MIPS Technologies of its obligations under the patent sale agreement and the consummation of the transactions contemplated thereby, including the patent sale. 54 Table of Contents The foregoing discussion summarizes the material information and factors considered by our board of directors in its consideration of the proposed patent sale. Our board of directors collectively reached the unanimous decision to approve the patent sale agreement and related transactions in light of the factors described above and other factors that each member of our board of directors felt were appropriate. In view of the variety of factors and the quality and amount of information considered, our board of directors did not find it practicable to, and did not make specific assessments of, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. Individual members of our board of directors may have given different weight to different factors. Our board of directors unanimously recommends that you vote “FOR” the adoption of the Patent Sale Agreement. Opinion of Our Financial Advisor on the Patent Sale On June 18, 2012, MIPS Technologies retained Ocean Tomo as its intellectual property advisor for the purpose of advising MIPS Technologies in connection with a potential patent sale transaction and to evaluate whether the consideration in the proposed patent sale was fair, from a financial point of view, to MIPS Technologies. We selected Ocean Tomo to act as our financial advisor based on its qualifications, expertise, reputation and knowledge of MIPS Technologies’ business and the industry in which we operate. Ocean Tomo has provided its written consent to the reproduction of the Ocean Tomo opinion in this proxy statement. At the meeting of the MIPS Technologies board of directors on November 4, 2012, Ocean Tomo rendered its oral opinion, which was subsequently confirmed in writing, that, as of November 4, 2012 and based upon and subject to the various factors, assumptions, qualifications and limitations set forth in the written opinion, the $350 million in cash consideration to be paid to MIPS Technologies in the patent sale was fair, from a financial point of view, to MIPS Technologies. The full text of the written opinion of Ocean Tomo dated November 4, 2012, which sets forth, among other things, the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in rendering its opinion, is attached as Annex B to this proxy statement and is incorporated herein by reference. The summary of Ocean Tomo’s opinion set forth in this document is qualified in its entirety by reference to the full text of the opinion. Stockholders should read this opinion carefully and in its entirety. Ocean Tomo’s opinion is directed to the MIPS Technologies board of directors, addresses only the fairness from a financial point of view, to MIPS Technologies, of the $350 million in cash consideration to be paid to MIPS Technologies as consideration for the proposed patent sale, and does not address any other aspect of the patent sale or any other transactions, including those covered by the merger agreement (including the fairness of any such transactions). Ocean Tomo provided its advisory services and opinion for the information and assistance of the MIPS Technologies board of directors in connection with its consideration of the proposed patent sale. The opinion of Ocean Tomo does not constitute a recommendation as to how any stockholder should vote with respect to the proposed patent sale or any other matter. In arriving at its opinion, Ocean Tomo reviewed, among other things: (i) a draft of the patent sale agreement, dated November 2, 2012, as well as related license agreements; (ii) the Annual Report on Form 10-K of MIPS Technologies for the year ended June 30, 2012 and the Annual Reports on Form 10-K for each of the three years preceding and the year ending June 30, 2011; (iii) interim reports to stockholders and Quarterly Reports on Form 10-Q of MIPS Technologies; (iv) certain publicly available research analyst reports for MIPS Technologies; (v) transcripts of MIPS Technologies quarterly earnings calls held within the twelve months preceding November 4, 2012; (vi) the information contained in the electronic data room organized and maintained by MIPS Technologies in connection with the patent sale; and (vii) a list of the patents to be sold by MIPS Technologies to Bridge Crossing in the patent sale. Ocean Tomo also reviewed potential income streams for the patents under a licensing scenario and data specific to the patent assets. Additionally, Ocean Tomo discussed past and current operations and financial conditions and prospects of MIPS Technologies with senior executives of MIPS Technologies. Ocean Tomo also reviewed historical market prices and trading activity for MIPS Technologies’ common stock and compared the financial performance of MIPS Technologies and the prices and trading activity of MIPS Technologies’ common stock with that of certain other selected publicly traded companies and their securities. In addition, Ocean Tomo performed such other analyses, reviewed such information and considered such other factors as Ocean Tomo deemed appropriate. 55 Table of Contents In arriving at its opinion, Ocean Tomo assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to Ocean Tomo by MIPS Technologies. With respect to the potential income streams for the patents under a licensing scenario, Ocean Tomo was advised by the management of MIPS Technologies that it believes those potential income streams reasonably reflect the potential income streams of the patents under a licensing scenario. Ocean Tomo assumed that the final executed patent sale agreement would not differ in any respect material to the Ocean Tomo opinion from the draft patent sale agreement dated November 2, 2012 that it reviewed and that the patent sale would be consummated in accordance with the terms set forth in the draft agreement, without any modification or delay material to the Ocean Tomo opinion. In addition, Ocean Tomo assumed that, in connection with the receipt of all the necessary approvals of the patent sale agreement, no delays, limitations, conditions or restrictions would be imposed that could have an adverse effect on the expected benefits of the patent sale in any way meaningful to Ocean Tomo’s analysis. Ocean Tomo did not make a formal independent evaluation or appraisal of the patent assets, nor was it furnished with any such evaluation or appraisal. Ocean Tomo did perform prior intellectual property strategic advisory services for MIPS Technologies that included an analysis of the patent assets, the compensation for which was non-contingent. In addition, Ocean Tomo has relied, without independent verification, upon the assessment of management of MIPS Technologies as to the existing and future technology and products of MIPS Technologies and the risks associated with such technology and products. Ocean Tomo did not express any opinion as to the impact of the patent sale on the solvency or viability of MIPS Technologies or the ability of MIPS Technologies to pay its obligations when they come due. The Ocean Tomo opinion does not address the merits of MIPS Technologies’ underlying business decision to effect the patent sale, or the relative merits of the patent sale as compared to any alternative business strategies or alternatives that may be available to MIPS Technologies. The Ocean Tomo opinion is limited to and addresses only the fairness, from a financial point of view, as of November 4, 2012, of the $350 million in cash consideration to be paid to MIPS Technologies pursuant to the patent sale agreement. Ocean Tomo was not been asked to, and has not, expressed any view on, and the Ocean Tomo opinion does not address, any other term or aspect of the patent sale agreement or the transaction contemplated thereby, including, without limitation, the structure or form of the transaction or the fairness of the transaction to, or any consideration to be received in connection therewith by, or the impact of the transaction on, the holders of any class of securities, creditors, or other constituencies of MIPS Technologies or any party; nor as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors, or employees of MIPS Technologies or any party, or class of such persons in connection with the transaction, whether relative to the consideration for the patent sale to be paid to MIPS Technologies pursuant to the patent sale agreement or otherwise. The Ocean Tomo opinion is necessarily based on financial, economic, monetary, market and other circumstances as in effect on, and the information made available to Ocean Tomo as of, the date the opinion was delivered, and Ocean Tomo has not assumed any obligation or responsibility to update, revise or reaffirm the Ocean Tomo opinion based on circumstances, developments or events occurring after the date the opinion was delivered. The Ocean Tomo opinion does not constitute a recommendation to any stockholder of MIPS Technologies as to how such stockholder should vote or act with respect to the transaction or any other matter. The following is a brief summary of the material analyses performed by Ocean Tomo in connection with its opinion dated November 4, 2012. The analyses and factors described below must be considered as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying the Ocean Tomo opinion. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by Ocean Tomo, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses that Ocean Tomo conducted. 56 Table of Contents Selected Transactions Analysis. Ocean Tomo compared the $350 million in cash consideration to be paid to MIPS Technologies pursuant to the patent sale agreement, on a per-patent basis, to the per-patent consideration paid in the publicly disclosed transactions summarized below: Date Acquired By Acquired From Price (000’s) Number of Patents Cost per Patent (000’s) Jan-10 Intellectual Ventures Avistar $ 42 $ Apr-10 HP Palm $ $ Nov-10 CPTN Holdings Novell $ $ Jun-11 Wi-Lan Glenayre $ 60 $ July-11 HTC S3 Graphics $ $ Jul-11 Rockstar Bidco Nortel $ $ Aug-11 Google Motorola Mobility $ $ Jan-12 Acacia Research Adaptix $ $ Apr-12 Microsoft AOL $ $ Apr-12 Facebook Microsoft/AOL $ $ Jun-12 Interdigital Intel $ $ N/A RPX Various Patents $ $ Based upon the transaction data above and the draft of the patent sale agreement, dated November 2, 2012, reviewed by Ocean Tomo in arriving at its opinion, Ocean Tomo determined that the per-patent selected transaction prices ranged from $133,000 to $1.28 million and that the value of the patents to be transferred under the patent sale agreement implied by the selected transactions ranged from $66.1 million to $633.2 million. No transaction included in the selected transactions analysis is identical to the transaction contemplated by the patent sale agreement. In particular, Ocean Tomo advised the MIPS Technologies board of directors that the HP-Palm transaction, the HTC-S3 Graphics transaction, the Rockstar Bidco-Nortel transaction, the Acacia Research-Adaptix transaction, the Microsoft-AOL transaction and the Facebook-Microsoft/AOL transaction are not comparable to the transaction contemplated by the patent sale agreement. The summarized publicly-disclosed transactions were selected, among other reasons, because they represent assignments of large portfolios of patents for which the consideration paid was publicly disclosed. Some of the selected transactions entailed going concern enterprises or other subject matter apart from intellectual property.Ocean Tomo made judgments and assumptions with regard to the comparability, or lack thereof, of each of the selected transactions to the transaction contemplated by the patent sale agreement. Mathematical analysis, such as determining the arithmetic mean, or the high or low, is not in itself a meaningful method of using the selected transaction data.In addition, Ocean Tomo advised the MIPS Technologies board of directors to give little weight to the selected transaction analysis because Ocean Tomo believes that selected transactions analysis does not merit strong consideration in patent sales, and other analyses such as discounted cash flow analysis are much more meaningful in this context. Discounted Cash Flow Analysis. Ocean Tomo performed a discounted cash flow (“DCF”) analysis of the potential income streams for the patents under a licensing scenario for November of 2012 through December of 2024, the average expiration date of the patent assets. Ocean Tomo was advised by the management of MIPS Technologies that it believes those potential income streams reasonably reflect the potential income streams of the patents under a licensing scenario. These potential income values were discounted to present values as of November 2, 2012 using a discount rate of 25%, reflecting Ocean Tomo’s judgment concerning the riskiness of the potential income streams. This analysis implied a range of present values of the patent assets of approximately $239.9 million to $307.9 million. 57 Table of Contents Miscellaneous. In connection with the review of the patent sale by the MIPS Technologies board of directors, Ocean Tomo performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not susceptible to a fully reliable partial analysis or summary description. In arriving at its opinion, Ocean Tomo considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Ocean Tomo believes that selecting any portion of its analyses, without considering all analyses as a whole, could create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, Ocean Tomo may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of values resulting from any particular analysis described above should not be taken to be the view held by Ocean Tomo of the actual value of the patent assets. In performing its analyses, Ocean Tomo made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of MIPS Technologies. Any estimates contained in the analyses performed by Ocean Tomo are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates. Ocean Tomo conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the $350 million in cash consideration to be received by MIPS Technologies pursuant to the patent sale agreement, and in connection with the delivery of its opinion to the MIPS Technologies board of directors. These analyses do not purport to be appraisals or to reflect the prices at which the patent assets might actually transact. The Ocean Tomo opinion and its presentation to the MIPS Technologies board of directors was one of many factors considered by the MIPS Technologies board of directors in deciding to approve the patent sale agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the MIPS Technologies board of directors with respect to the consideration to be received by MIPS Technologies pursuant to the patent sale or of whether the MIPS Technologies board of directors would have been willing to agree to a different consideration. The consideration was determined through arm’s-length negotiations between MIPS Technologies and Bridge Crossing and was approved by the MIPS Technologies board of directors. Ocean Tomo provided advice to MIPS Technologies during these negotiations. Ocean Tomo did not, however, recommend any specific consideration to MIPS Technologies or that any specific consideration constituted the only appropriate consideration for the patent sale. Ocean Tomo provides investment banking and other services to a wide range of corporations and individuals, domestically and offshore, from which conflicting interests or duties may arise. During the two-year period prior to the date of the Ocean Tomo opinion, neither Ocean Tomo nor any of its affiliates has provided investment banking services to MIPS Technologies or Bridge Crossing for which Ocean Tomo or any of its affiliates received, or may receive, compensation. However, Ocean Tomo or its affiliates may in the future provide investment banking and other financial services to MIPS Technologies, Bridge Crossing or any of their respective affiliates for which it would expect to receive compensation. Under the terms of its engagement letter, Ocean Tomo provided MIPS Technologies with financial advisory services in connection with the proposed patent sale for which it will be paid a total of approximately $2.5 million on a contingent fee basis if the patent sale is consummated. MIPS Technologies has also agreed to reimburse Ocean Tomo for its expenses incurred in performing its services. In addition, MIPS Technologies has agreed to indemnify Ocean Tomo and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling Ocean Tomo or any of its affiliates against certain liabilities and expenses related to or arising out of MIPS Technologies’ engagement of Ocean Tomo. Financing Related to the Patent Sale Bridge Crossing has represented in the patent sale agreement that it has, and as of the closing will have, sufficient immediately available funds to pay when due the aggregate patent sale consideration and to pay when due all of its fees and expenses related to the transactions contemplated by the patent sale agreement, and that it has deposited an amount equal to $350,000,000 with an escrow agent. 58 Table of Contents THE PATENT SALE AGREEMENT The summary of the material terms of the patent sale agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the patent sale agreement, a copy of which is attached to this proxy statement as Annex A and which we incorporate by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information about the patent sale agreement that is important to you. We encourage you to read the patent sale agreement carefully and in its entirety. The patent sale agreement has been included to provide you with information regarding its terms. It is not intended to provide any other factual information about MIPS Technologies or Bridge Crossing. Such information can be found elsewhere in this proxy statement and in the other public filings MIPS Technologies makes with the SEC, which are available without charge at www.sec.gov. The representations, warranties and covenants contained in the patent sale agreement were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the patent sale agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the patent sale agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the patent sale agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Bridge Crossing, MIPS Technologies or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the patent sale agreement, and subsequent developments or new information qualifying a representation or warranty have been included in or incorporated by reference into this proxy statement. For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone or relied upon as characterizations of the actual state of facts or condition of MIPS Technologies, Bridge Crossing or any of their respective subsidiaries or affiliates. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this proxy statement or incorporated by reference into this proxy statement. The Parties to the Patent Sale MIPS Technologies, Inc. MIPS Technologies, Inc. 955 East Arques Avenue Sunnyvale, CA 94085 (408) 530-5000 MIPS Technologies, Inc. (NASDAQ: MIPS) is a leading provider of industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications. The MIPS architecture powers some of the world’s most popular electronic products. Our technology is broadly used in products such as digital televisions, set-top boxes, Blu-ray players, broadband customer premises equipment (CPE), WiFi access points and routers, networking infrastructure and portable/mobile communications and entertainment products. MIPS Technologies is headquartered in Sunnyvale, CA and employs approximately 164 people. 59 Table of Contents Bridge Crossing, LLC Bridge Crossing, LLC, a Delaware limited liability company, is wholly owned by a series of Allied Security Trust I, a member-based defensive patent aggregator. Allied Security Trust I currently has 26 members in the information technology, semiconductors, consumer electronics, social networking, communications (wired and wireless), medical information systems and other high tech industries, 11 of which participated in the patent sale (which 11 members we refer to as initial participants). Avaya, Hewlett-Packard, IBM, Intel, Motorola, Oracle, Philips and Research in Motion are among the members of Allied Security Trust I, but such members did not necessarily participate in the patent sale. Allied Security Trust I is based in Lambertville, New Jersey. Closing of the Patent Sale We expect to complete the patent sale as soon as practicable after our stockholders adopt the patent sale agreement and all other conditions to closing have been satisfied or waived. Unless otherwise agreed by the parties to the patent sale agreement, the parties are required to close the patent sale no later than the second business day after the satisfaction or, to the extent permitted by law, waiver of the conditions to the closing of the patent sale (excluding conditions that, by their terms, cannot be satisfied until the closing, but subject to the satisfaction or, to the extent permitted by law, waiver of those conditions at such time). The conditions to the closing of the patent sale are described under the caption “The Patent Sale Agreement — Conditions to theClosing of thePatent Sale” beginning on page 69 of this proxy statement. Purchase Price At the closing of the patent sale, Bridge Crossing will pay us $315,000,000 in cash and deposit $35,000,000 with an escrow agent to satisfy indemnification claims. However, if the merger will be consummated immediately following the closing of the patent sale, then the amount to be deposited in escrow will be paid directly to MIPS Technologies immediately prior to and subject to the consummation of the merger. See “The Patent Sale agreement—Escrow and Indemnification” beginning on page 68 of this proxy statement. Representations and Warranties In the patent sale agreement, MIPS Technologies has made representations and warranties to Bridge Crossing relating to, among other things: · its corporate organization, good standing and qualification; · its ownership of the patents to be sold to Bridge Crossing, which we refer to as the assigned patents, its ability to license the patents it will retain, which we refer to as the retained patents, and the absence of orders, decisions, injunctions, judgments, decrees or rulings from a governmental authority binding MIPS or, to MIPS’ knowledge, any portion of the patents and the absence of current litigation in which, to MIPS’ knowledge, a third party is asserting that MIPS does not own the assigned patents or that the assigned patents may not be assigned or the retained patents licensed to Bridge Crossing; · its corporate power and authority to enter into the patent sale agreement and to consummate the transactions contemplated by the patent sale agreement; · the absence of conflicts with law, MIPS Technologies’ organizational documents and certain contracts to which MIPS Technologies is a party; 60 Table of Contents · the provision of certain documentation relating to the assigned patents; · the provision of all agreements, other than standard outbound license agreements, between MIPS Technologies and a third party that contain obligations with respect to intellectual property, technology, products or services that relate to the assigned patents; · the accuracy of the information supplied by MIPS Technologies for inclusion in this proxy statement; · the absence of any other patents owned by MIPS Technologies outside of the assigned patents and the retained patents; · the absence of certain changes; · payment of all maintenance and annuity fees with respect to the assigned patents; · the absence of exclusive licenses under the assigned patents or retained patents; · patents and patent applications which have been abandoned by MIPS and which will be transferred, along with the all rights to revive or reinstate such patents and patent applications, to Bridge Crossing; · the stockholder vote required to adopt the patent sale agreement; · the absence of conflict between any of the terms and conditions of the merger or any other attempts to sell the remainder of MIPS Technologies after the patent sale has been consummated and any of the terms and conditions of the agreements governing the patent sale; and · the absence of any other representations and warranties with respect to MIPS Technologies. Many of MIPS Technologies’ representations and warranties are qualified by a “Seller Material Adverse Effect” standard. For purposes of the patent sale agreement, “Seller Material Adverse Effect” is defined to mean: · Any event, state of facts, development, change, effect or occurrence that, individually or in the aggregate, (a) has or is reasonably likely to have a material adverse effect on the business, assets (including, without limitation, the assigned patents and retained patents), liabilities, financial condition or results of operations of MIPS Technologies and its subsidiaries, taken as a whole, or (b) prevents or materially impairs the ability of MIPS Technologies to perform any of its obligations under the patent sale agreement or consummate the patent sale. 61 Table of Contents · A Seller Material Adverse Effect shall not include for purposes of clause (a) above any event, state of facts, development, change, effect or occurrence resulting from any of the following: · changes in general economic or political conditions or in the securities, credit or financial markets in general in any country or region in which MIPS Technologies or any of its subsidiaries conducts business; · changes that affect the industries in which MIPS Technologies and its subsidiaries operate; · the entry into or performance of the patent sale agreement or the transactions contemplated thereby, including compliance with the covenants set forth therein and any action taken or omitted to be taken by MIPS Technologies at the request of or with the consent of Bridge Crossing; · any natural disaster, acts of terrorism, war or armed hostilities, or any escalation or worsening thereof; · any changes in laws applicable to MIPS Technologies or any of its subsidiaries or any of their respective properties or assets or changes in generally accepted accounting principles or rules and policies of the Public Company Accounting Oversight Board; · changes in the price or trading volume of the common stock of MIPS Technologies or any failure to meet internal or published projections, forecasts or revenue, net retail sales, comparable store sales or earnings predictions for any period; · any loss of, or change in, the relationship of MIPS Technologies or any of MIPS Technologies’ subsidiaries, contractual or otherwise, with its customers, suppliers, vendors,lenders, employees, investors or venture partners arising out of the execution, delivery or performance of the patent sale agreement and the transactions contemplated hereby or the announcement of any of the foregoing; · the execution or announcement of the merger or any other sale of MIPS Technologies in accordance with the terms of the patent sale agreement; or · any litigation arising from allegations of a breach of fiduciary duty or other violation of applicable law relating to the patent sale agreement or the transactions contemplated thereby. 62 Table of Contents In the patent sale agreement, Bridge Crossing made representations and warranties relating to: · their corporate organization and good standing; · the provisions of Allied Security Trust I’s trust agreement and that it is in full force and effect; · their corporate power and authority to enter into the patent sale agreement and to consummate the transactions contemplated by the patent sale agreement; · the absence of conflicts with law, their organizational documents and contracts to which they are a party; · the accuracy of the information supplied by Bridge Crossing for inclusion in this proxy statement; · the availability of funds necessary to pay the purchase price and the deposit of an amount equal to the purchase price with an escrow agent; · the waiver by Bridge Crossing’s initial participants of the buy-out option under the trust agreement of Allied Security Trust I; and · a disclaimer of other representations and warranties with respect to MIPS Technologies. Some of Bridge Crossing’s representations and warranties are qualified by a “Patent Purchaser Material Adverse Effect” standard. For purposes of the patent sale agreement, “Patent Purchaser Material Adverse Effect” is defined to mean any change, effect or circumstance that is materially adverse to the business, operations, results of operations or financial condition of Bridge Crossing, or which, individually or in the aggregate, may reasonably be expected to prevent or materially delay or impair the ability of Bridge Crossing to consummate the patent sale and the other transactions contemplated by the patent sale agreement. Covenants and Agreements MIPS Technologies has agreed in the patent sale agreement that, until the earlier of the closing of the patent sale and the termination of the patent sale agreement, it will: · pay all U.S. and foreign maintenance, annuity and other fees payable on the assigned patents which are due on or prior to the patent sale closing; and 63 Table of Contents · continue the prosecution of all matters before the U.S. Patent and Trademark Office (PTO) and foreign patent offices relating to the assigned patents in its reasonable discretion, consistent with past practice and in the ordinary course of business, and bear the costs of such prosecution. MIPS Technologies has also agreed that, until the earlier of the closing of the patent sale and the termination of the patent sale agreement, it will not, and will not permit any of its affiliates to: · assign, transfer, sell, grant or permit to exist any lien on any assigned patent or retained patent, except for certain permitted liens, provided that MIPS Technologies will notify Bridge Crossing within five business days if it enters into any standard outbound licenses; · commence any offensive litigation, arbitration, U.S. International Trade Commission or other offensive adversarial proceedings involving any of the assigned patents or retained patents, or waive, release, assign, settle or compromise any material action, suit or proceeding relating to the assigned patents to the extent that such waiver, release, assignment, settlement or compromise imposes any obligation that will bind Bridge Crossing after the closing of the patent sale or grants or permits any material lien (other than a certain permitted liens) under or with respect to the assigned patents; · abandon or dedicate to the public any of the assigned patents; and · enter into a binding, written agreement or commitment to take any of the foregoing actions. Agreements to Use Reasonable Best Efforts Subject to the terms and conditions set forth in the patent sale agreement, each of MIPS Technologies and Bridge Crossing has agreed to use their respective reasonable best efforts to: · until the six month anniversary of the closing of the patent sale, obtain all consents, approvals, orders, waivers and authorizations of, and actions or non-actions by, any governmental authority or third party necessary in connection with the consummation of the transactions contemplated by the patent sale agreement, make all necessary registrations, declarations and filings with, and notices to, any governmental authorities and take all reasonable steps as may be necessary to avoid a suit, action, proceeding or investigation by any governmental authority; and · execute and deliver any additional instruments reasonably necessary to consummate the merger. 64 Table of Contents Bridge Crossing has agreed to use their reasonable best efforts to promptly take any and all steps reasonably necessary to obtain all consents under any antitrust laws that may be required by any foreign or U.S. federal, state or local governmental authority. MIPS Technologies is obligated to give any notices to third parties and use its reasonable best efforts to obtain all consents (other than those specified above in this section) necessary to consummate the patent sale. Further Actions and Agreements Proxy Statement and Stockholders Meeting As promptly as practicable after the SEC or its staff advises that it has no further comments on this proxy statement, we are required to duly call and hold a meeting of our stockholders for the purpose of obtaining their adoption of the patent sale agreement. Subject to the right of our board of directors to make an adverse recommendation change (described in the section of this proxy statement entitled “The Patent Sale Agreement — No Solicitation of Other Offers” beginning on page 66), we are obligated to include in this proxy statement the recommendation of our board of directors that our stockholders vote in favor of the proposal to adopt the patent sale agreement, and we must use our reasonable best efforts to obtain stockholder approval of the proposal to adopt the patent sale agreement. After careful consideration, our board of directors unanimously (i) determined that it is expedient, advisable and in the best interests of MIPS Technologies and its stockholders for MIPS Technologies to enter into the patent sale agreement, (ii) approved and adopted the terms of the patent sale agreement, (iii) authorized the execution, delivery and performance by MIPS Technologies of its obligations under the patent sale agreement and the consummation of the transactions contemplated thereby, including the sale of the patents and the license agreements to be executed in connection therewith, and (iv) recommended and declared it advisable that the stockholders approve and adopt the patent sale agreement, and directed that such matter be submitted for consideration of the stockholders of MIPS Technologies at the annual meeting. Our board of directors unanimously recommends that MIPS Technologies’ stockholders vote “FOR” the adoption of the patent sale agreement. Further Assurances The patent sale agreement contains additional agreements between MIPS Technologies and Bridge Crossing relating to, among other things: · press releases and other public announcements relating to the patent sale and the transactions contemplated by the patent sale agreement; · delivery, filing and execution of documents and reasonable further actions necessary for Bridge Crossing to perfect its title in the assigned patents; · liens on the assigned patents; · transfer of previously undisclosed patents that would have been categorized as assigned patents; 65 Table of Contents · each party’s obligation to keep information provided to each other confidential; and · the notification of certain developments. No Solicitation of Other Offers In connection with the patent sale agreement, we have agreed that neither we nor our subsidiaries will authorize our and their respective officers, directors, employees, consultants, investment bankers, attorneys, accountants, agents, advisors, affiliates and other representatives to: · initiate, solicit, seek or knowingly encourage or facilitate any inquiries, offers, discussions or requests that constitute or could reasonably be expected to lead to any “competing proposal” (as defined below under the heading “Adverse Recommendation Change”); · engage in, continue or otherwise participate in any discussions or negotiations with, or furnish any non-public information relating to MIPS Technologies to, any person that, to the knowledge of MIPS Technologies, is seeking to make or has made a competing proposal; or · approve, endorse, recommend or enter into any agreement with respect to a competing proposal. Notwithstanding the restrictions described above, prior to the time that our stockholders adopt the patent sale agreement, if we receive a competing proposal that our board of directors determines in good faith (after consultation with its legal and financial advisors) constitutes, or could reasonably be expected to lead to, a superior proposal, and (after consultation with its legal advisors) determines in good faith that a failure to take the following actions would reasonably be expected to be inconsistent with the directors’ fiduciary duties, we may: · furnish pursuant to a confidentiality agreement permitted by the patent sale agreement non-public information with respect to MIPS Technologies and its subsidiaries to the party making the competing proposal; and · engage in negotiations and discussions with the party making the competing proposal with respect to such competing proposal. However, we may not take the actions described in the foregoing two bullet points unless we notify Bridge Crossing orally and in writing that we intend to take such actions. After taking these actions, we must continue to advise Bridge Crossing on the current basis of the status and material terms of any discussions and negotiations with the third party. 66 Table of Contents From the time we enter into the patent sale agreement, we must advise Bridge Crossing of the following within 36 hours of receipt of:(i) any competing proposal, (ii) any written indication of interest which could reasonably lead to a competing proposal and (iii) any material modifications or amendments thereto.Concurrently with advising Bridge Crossing in writing of the receipt of a competing proposal or any indication of interest, MIPS Technologies shall advise Bridge Crossing of the material terms and conditions of any such competing proposal or indication of interest and deliver a copy of all written materials received by Bridge Crossing in connection with such competing proposal or indication of interest. In addition to the rights described above, we may terminate the merger agreement and enter into a definitive agreement providing for the implementation of a superior proposal under certain circumstances. See “Adverse Recommendation Change” below. Adverse Recommendation Change Our board of directors has unanimously resolved to recommend that our stockholders adopt the patent sale agreement, and the patent sale agreement provides that we and our board of directors may not withdraw, change, qualify or modify or publicly propose to withdraw, change, qualify or modify, in a manner that is adverse to Bridge Crossing, the board of director’s recommendation with respect to the patent sale agreement and the merger or approve, adopt or recommend, or publicly propose to approve, adopt or recommend, any competing proposal or cause or permit MIPS Technologies to enter into a competing proposal, any of the above actions, an “adverse recommendation change.” However, prior to the adoption of the patent sale agreement by our stockholders, our board of directors may (A) terminate the patent sale agreement to enter into a definitive agreement with respect to a superior proposal or (B) effect an adverse recommendation change if there is a material event, change, development, effect, occurrence or state of facts that was not known to MIPS Technologies prior to entering into the patent sale agreement and was not reasonably foreseeable if it determines in good faith, after consultation with its legal advisors, that failure to do so may be inconsistent with its fiduciary duties to MIPS Technologies’ stockholders under applicable law. If our board of directors intends to effect an adverse recommendation change or terminate the patent sale agreement in response to a superior proposal, it must provide Bridge Crossing with five business days’ notice of our board of directors’ intent to effect an adverse recommendation change or terminate the patent sale agreement, and Bridge Crossing will then have five business days after receipt of notice to make such adjustments to the patent sale agreement at least as favorable as the prospect of abandoning the patent sale or such superior proposal, respectively. Any proposed amendment to the financial terms of a superior proposal or any other material terms thereof will entitle Bridge Crossing to an additional two business day period to propose changes to the patent sale agreement. The patent sale agreement defines a “competing proposal” as, other than the patent sale agreement, any bona fide proposal or offer from any person or group (other than Bridge Crossing or any subsidiaries) relating to: (A) any sale, license (other than non-exclusive licenses granted in the ordinary course of MIPS Technologies’ business consistent with its past practice) or other disposition of any material portion of the assigned patents or the retained patents or (B) the grant of an exclusive license to a material portion of the assigned patents or the retained patents, whether such sale, exclusive license, or disposition takes the form of an asset sale, conversion, liquidation, dissolution, reorganization, recapitalization, exclusive license or similar agreement or any other transaction or form. The patent sale agreement defines a “superior proposal” as an unsolicited, written competing proposal on terms which our board of directors determines in good faith, after consultation with our legal and financial advisors, and considering such factors as our board of directors considers to be appropriate are more favorable from a financial perspective to MIPS Technologies and our stockholders than the patent sale. 67 Table of Contents If our board of directors decides to effect an adverse recommendation change, breaches any of the terms described in this section or enters into a definitive agreement with respect to a superior proposal, Bridge Crossing may terminate the patent sale agreement and, if Bridge Crossing terminates by reason of these circumstances, we must pay the applicable termination fee as described in further detail in “The Patent Sale Agreement — Termination Fees” beginning on page 71 of this proxy statement.If our board of directors decides to enter into a definitive agreement with respect to a superior proposal in accordance with its ability to do so as described in this section, and if we would like to terminate the patent sale agreement by reason of that circumstance, we must pay the applicable termination fee as described in further detail in “The Patent Sale Agreement — Termination Fees” beginning on page71 of this proxy statement concurrently with such termination. If we fail to sell the assigned patents and license the retained patents to Bridge Crossing in material breach of the patent sale agreement and enter into an agreement with a third party to sell, assign or exclusively license a majority of the assigned patents and retained patents (other than in the case of the merger or any other sale of MIPS Technologies) within twelve months after terminating the patent sale agreement, we must pay the applicable termination fee as described in further detail in “The Patent Sale Agreement — Termination Fees” beginning on page 71 of this proxy statement, less the amount of any termination fee previously paid to Bridge Crossing under the prior paragraph. Escrow and Indemnification At the closing of the patent sale, Bridge Crossing will deposit $35,000,000, or the escrow amount, with Wells Fargo N.A., its escrow agent, into a fund which shall be available to indemnify Bridge Crossing for certain losses. The escrow period shall commence from the closing of the patent sale and terminate upon the earlier of (a) the twelve month anniversary of the closing of the patent sale and (b) the closing of the merger. In the event that the merger is consummated immediately following the closing of the patent sale, the escrow amount shall be paid to MIPS Technologies immediately prior to and subject to the consummation of the merger, and all MIPS Technologies’ indemnification obligations shall terminate. During the escrow period, MIPS Technologies and Bridge Crossing shall indemnify each other and their respective affiliates, directors, officers, employees, agents and representatives against certain losses relating to inaccuracies of any representation or warranty made by, any breach of any covenant or agreement made by or certain liabilities or obligations allocated to each respective party under the patent sale agreement. In addition, during the escrow period, the right to obtain indemnification from the escrow fund shall be Bridge Crossing’s sole and exclusive remedy for monetary damages. Bridge Crossing shall not be entitled to receive any portion of the escrow amount for any indemnification obligations until the aggregate amount of losses exceeds $1,500,000, in which case, the party seeking indemnification shall be entitled to receive the amount of losses in excess of this amount. In no event shall MIPS Technologies or Bridge Crossing have any indemnification liability for losses in excess of the escrow amount. The indemnification obligations of MIPS Technologies and Bridge Crossing shall terminate upon the termination of the escrow period. Any portion of the escrow fund at the conclusion of the escrow period that MIPS Technologies and Bridge Crossing reasonably believe may be necessary to satisfy any unresolved claims for losses during the escrow period shall remain in the escrow fund until such claims have been resolved or satisfied. Regulatory Matters of the Patent Sale We have determined that no clearances from governmental agencies are required prior to the completion of the patent sale. However, such governmental authorities could take action under applicable antitrust laws, including seeking to prohibit the completion of the patent sale. For a more detailed discussion of the requirements regarding regulatory matters under the patent sale agreement, please see “The Patent Sale Agreement — Covenants and Agreements” beginning on page 63 of this proxy statement. 68 Table of Contents Conditions to the Closing of the Patent Sale Conditions to Each Party’s Obligations.Each party’s obligation to complete the patent sale is subject to the satisfaction (or written waiver, if permissible under applicable law) of the following conditions: · the patent sale agreement must have been adopted by the affirmative vote of the holders of a majority of the outstanding shares of our common stock; · nogovernmental authority shall have enacted, issued, promulgated, enforced or entered any law or order which enjoins, limits, restricts, restrains, or otherwise prohibits the consummation of the patent sale; and · there shall not be any litigation by any governmental authority threatened in writing or pending seeking to restrain or prohibit the consummation of the patent sale. Conditions to Bridge Crossing’s Obligations.The obligations of Bridge Crossing to complete the patent sale are subject to the satisfaction (or written waiver, if permissible under applicable law) of the following further conditions: · MIPS Technologies must have performed in all material respects all of its material obligations under the patent sale agreement required to be performed by it prior to the effective time of the patent sale; · each of the representations and warranties made by MIPS Technologies set forth in the patent sale agreement, other than the representation and warranty regarding the assignability of the assigned patents and the licensability of the retained patents, must be true as if made at and as of the effective time of the patent sale (except to the extent made as of a specific date), with such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect; · all assigned patents must be assignable to and all retained patents must be licensable to Bridge Crossing, except where such non-assignability or non-licensability does not pose a material threat of patent infringement to any of Bridge Crossing’s initial participants that would likely result in Bridge Crossing (representing the interests of its initial participants) being deprived of a significant portion of the value of the patent sale; · MIPS Technologies must deliver to Bridge Crossing at closing a certificate with respect to satisfaction of the foregoing conditions; · there shall not be any current suit, action or proceeding in which a third party asserts that the assigned patents are not solely owned by MIPS Technologies or its affiliates or that the assigned patents may not be assigned to Bridge Crossing or that the retained patents may not be licensed to Bridge Crossing, except for any suits initiated after MIPS Technologies and Bridge Crossing had entered into the patent sale agreement; and · MIPS Technologies must have executed and delivered (or caused to have been delivered, as applicable) certain instruments necessary for the assignment of the assigned patents to Bridge Crossing. 69 Table of Contents Conditions to MIPS Technologies’ Obligations.The obligation of MIPS Technologies to complete the patent sale is subject to the satisfaction (or written waiver, if permissible under applicable law) of the following further conditions: · Bridge Crossing must have performed in all material respects all of its material obligations under the patent sale agreement required to be performed by it prior to the effective time of the patent sale; · each of the representations and warranties made by Bridge Crossing set forth in the patent sale agreement must be true as if made at and as of the effective time of the patent sale (except to the extent made as of a specific date), with such exceptions as have not had and would not reasonably be expected to have, individually or in the aggregate, a Patent Purchaser Material Adverse Effect; · Bridge Crossing must deliver to MIPS Technologies at closing a certificate with respect to the satisfaction of the foregoing conditions; and · Bridge Crossing must have executed and delivered (or caused to have been delivered, as applicable) the purchase price, escrow amount and certain ancillary agreements to MIPS Technologies. Termination of the Patent Sale Agreement The patent sale agreement may be terminated at any time prior to the consummation of the patent sale, whether before or after stockholder approval of the patent sale has been obtained: · by mutual written consent of MIPS Technologies and Bridge Crossing; · by either MIPS Technologies or Bridge Crossing if the patent sale is not consummated on or before April 5, 2013, provided that this right to terminate is not available to any party if the failure of such party to perform any of its obligations under the patent sale agreement has been a principal cause of or resulted in the failure of the patent sale to be consummated on or before the termination date; · by MIPS Technologies if MIPS Technologies’ board of directors has determined to enter into a definitive agreement providing for the implementation of a superior proposal as permitted by the non-solicitation provisions of the patent sale agreement and MIPS Technologies enters into such definitive agreement and pays Bridge Crossing a termination fee of $10,000,000; or · by Bridge Crossing, if: · MIPS Technologies has breached its obligations set forth in the section “The Patent Sale Agreement—No Solicitation of Other Offers” in any material respect; · MIPS Technologies’ board of directors effects an adverse recommendation change; or · MIPS Technologies enters into a definitive agreement pursuant to a competing proposal. 70 Table of Contents Termination Fees If the patent sale agreement is terminated by MIPS Technologies or by Bridge Crossing under the conditions described in further detail below, a termination fee in the amount of either $10,000,000 or $30,000,000, depending on the manner of termination, may be payable by MIPS Technologies to Bridge Crossing. MIPS Technologies must pay a termination fee of $30,000,000, which we refer to as the wrongful termination payment, to Bridge Crossing if MIPS Technologies fails to sell the assigned patents and license the retained patents to Bridge Crossing in material breach of the patent sale agreement and enters into an agreement with a third party to sell, assign or exclusively license a majority of the assigned patents and retained patents (other than in the case of the merger or any other sale of MIPS Technologies) within twelve months after terminating the patent sale agreement, less the below $10,000,000 termination fee if previously paid to Bridge Crossing. MIPS Technologies must pay a termination fee of $10,000,000 to Bridge Crossing if: · MIPS Technologies’ board of directors has determined to enter into a definitive agreement providing for the implementation of a superior proposal without violation of its obligations set forth in the section “The Patent Sale Agreement—No Solicitation of Other Offers,” and MIPS Technologies terminates the patent sale agreement by reason of these circumstances; · MIPS Technologies has breached its obligations set forth in the section “The Patent Sale Agreement—No Solicitation of Other Offers” in any material respect, its board of directors has made an adverse recommendation change or it enters into a definitive agreement providing for the implementation of a superior proposal, and Bridge Crossing terminates the patent sale agreement by reason of these circumstances. The patent sale agreement provides that, subject to Bridge Crossing’s right to specific performance against MIPS Technologies to enforce MIPS Technologies’ obligations under the patent sale agreement, Bridge Crossing’s right to receive termination fees set forth above shall constitute liquidated damages and the sole and exclusive remedy of Bridge Crossing against MIPS Technologies and its subsidiaries for all losses suffered as a result of the failure of the patent sale.The patent sale agreement provides that in no event will MIPS Technologies be required to pay the $10,000,000 termination fee after making the wrongful termination payment, that MIPS Technologies will be credited any ordinary termination fee it has paid if it is required to make the wrongful termination payment, that MIPS Technologies will in no event be required to pay the $10,000,000 termination fee or make the wrongful termination payment on more than one occasion and that the $10,000,000 termination fee and wrongful termination payment will be reduced by any amount as may be required to be deducted or withheld under applicable tax law. Amendments, Waivers; Third Party Beneficiaries The parties may amend the patent sale agreement at any time before stockholder approval of the patent sale. After stockholder approval of the patent sale has been obtained, the parties may not amend the patent sale agreement in a way that by law or the rules of any stock exchange requires further approval by MIPS Technologies’ stockholders, unless MIPS Technologies obtains that further approval. All amendments to the patent sale agreement must be in writing and signed by MIPS Technologies and Bridge Crossing. At any time before the consummation of the patent sale, each of the parties may, to the extent permitted by applicable law, by written instrument: · extend the time for the performance of any of the obligations or other acts of the other parties; · waive any inaccuracies in the representations and warranties of the other parties contained in the patent sale agreement or in any document delivered pursuant to the patent sale agreement; or · waive compliance with any of the agreements or conditions contained in the patent sale agreement. 71 Table of Contents The patent sale agreement is not intended to and shall not confer any rights or remedies upon any person other than MIPS Technologies and Bridge Crossing and their respective successors and permitted assigns, other than the escrow agent and any parties to be indemnified. License Agreements Assigned Patent License Agreement In connection with the patent sale, MIPS Technologies will receive a license-back under the assigned patents under the terms of the Assigned Patent License Agreement. This license-back will grant MIPS Technologies and its present and future affiliates—including Imagination Technologies Group plc if the below-described merger is consummated—a worldwide, non-exclusive, irrevocable, sublicensable, transferable, royalty-free license to freely exploit the technologies covered by the assigned patents for use in connection with any product, service, technology, material or process of MIPS Technologies, its present and future affiliates or any customers of any of the foregoing. The license will not be terminable except by express mutual agreement by the parties and will continue until the expiration of the last to expire of the assigned patents. Retained Patent License Agreement As part of the patent sale, Bridge Crossing will receive a worldwide, non-exclusive, non-transferable, royalty-free license under the retained patents. For the twelve-month period after the closing of the patent sale, Bridge Crossing will offer sublicenses under the retained patents to its members in conjunction with licenses under the assigned patents. The sublicenses under the retained patents will permit the initial participants of Bridge Crossing and any third party who purchases a license under the assigned patents and a sublicense under the retained patents during the twelve-month period after the closing of the patent sale to exploit the technologies covered by the retained patents for use in connection with any product, service, technology, material or process of that sublicensee, its present and future affiliates, and any customers of any of the foregoing, provided that the license under the retained patents does not grant any rights to clone the MIPS architectures. The sublicenses granted under the retained patents are revocable in certain circumstances, including where a sublicensee directly or indirectly asserts, otherwise participates in or funds (i) a patent infringement suit alleging that a MIPS architecture as implemented by a customer of MIPS Technologies infringes a patent, (ii) a patent infringement counterclaim (including an ITC action) in response to a lawsuit brought by MIPS Technologies alleging that such sublicensee is infringing one or more retained patents by cloning the MIPS architecture, or (iii) any lawsuit or other proceeding challenging the patentability, validity, scope, ownership or enforceability of the retained patents. Unless earlier terminated under the provisions described above, the sublicenses granted under the retained patents will continue until the expiration of the last to expire of the retained patents. 72 Table of Contents PROPOSAL NO. 2— APPROVAL AND ADOPTION OF THE CERTIFICATE OF AMENDMENT TO MIPS’ AMENDED AND RESTATED CERTIFICATE OF INCORPORATION The merger agreement provides that following the closing of the patent sale but prior to the closing of the merger, MIPS Technologies will effect a recapitalization by amending our certificate of incorporation such that MIPS Technologies will distribute the proceeds from the Patent Sale and all cash on hand, less $99,700,000, and you will be entitled to receive 0.1479 shares of MIPS Technologies’ common stock and what is currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes, for each share of MIPS Technologies common stock that you own at the time of filing of the certificate of amendment.The recapitalization is a condition to the consummation of the merger. The recapitalization will only be consummated if the patent sale has been consummated and if the merger will be consummated.See Annex F for the text of the certificate of amendment reproduced in its entirety. On November 4, 2012, our board of directors adopted resolutions (1) declaring that an amendment to our Amended and Restated Certificate of Incorporation to effect the recapitalization, as described below, was advisable and (2) directing that a proposal to approve the recapitalization be submitted to the holders of our common stock. The form of the proposed amendment to our Amended and Restated Certificate of Incorporation to effect the recapitalization is attached to this proxy statement as Annex F. If approved by our stockholders, the recapitalization would be effected immediately upon the filing and effectiveness of the certificate of amendment to our Amended and Restated Certificate of Incorporation pursuant to the Delaware General Corporation Law. Without any further action on the part of MIPS Technologies or its stockholders, each share of common stock issued and outstanding immediately prior to the effective time of the recapitalization, shall automatically be reclassified, changed and converted into 0.1479 shares of validly issued, fully paid and non-assessable MIPS Technologies common stock and the right to receive a payment in cash from the MIPS Technologies’ transfer agent, currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes.This estimate reflects management’s current estimate of cash held by MIPS Technologies following the patent sale and immediately prior to the recapitalization, which will be affected by our operating results, estimated transaction expenses, timing of the recapitalization and other factors. Under Delaware law and our Amended and Restated Certificate of Incorporation, the vote of holders of a majority of the shares of common stock outstanding as of November 28, 2012, is required to approve the recapitalization. Reasons for the Recapitalization Our board of directors is submitting the recapitalization to stockholders for approval with the primary intent of facilitating the merger by using the after-tax proceeds from the patent sale to effect a partial redemption of our stockholders. The conversion of each share of common stock issued and outstanding immediately prior to the effective time of the recapitalization and the payment of cash are both a condition to, and part of a plan that includes, the consummation of the merger. Accordingly, Imagination Technologies, Acquisition Sub and MIPS Technologies shall treat the conversion of each share of common stock and the payment of cash as a single integrated transaction for U.S. federal income tax purposes and shall file all tax returns and reports consistent with such treatment. For this reason, we believe that effecting the recapitalization is in our and our stockholders’ best interests. 73 Table of Contents Effect of the Recapitalization on Holders of Outstanding Common Stock and Equity Awards Shares of common stock issued and outstanding at the effective time of the recapitalization will be affected by the recapitalization. The number of shares of common stock issued and outstanding as of November 28, 2012, is approximatelymillion. If approved and effected, the recapitalization will be realized simultaneously for all of our common stock. The recapitalization will affect all holders of our common stock uniformly and will not affect any stockholder’s percentage ownership interest in our company. In addition, the recapitalization will not affect any stockholder’s proportionate voting power (subject to the treatment of fractional shares). Individuals holding stock options at the time of the recapitalization will generally be entitled to receive, in exchange for cancellation of such stock options, a cash payment in respect of each vested or unvested stock option based on the fair market value of a share of MIPS Technologies common stock, determined as set forth in the merger agreement, over the exercise price of the stock option.Following the closing of the patent sale and in connection with the patent sale, the recapitalization and the certificate of amendment, the restricted stock units that are outstanding immediately prior to the recapitalization will be converted into the right to receive a total of approximately $7.31 per share of common stock subject to such restricted stock units prior to the recapitalization, calculated as follows.In the recapitalization, the restricted stock units will be converted into (i) an amount in cash currently estimated to be approximately $6.23 per share of common stock subject to such restricted stock units, without interest and less any applicable withholding taxes, subject to fluctuation as described above and (ii) restricted stock units denominated in 0.1479 shares of MIPS Technologies common stock.Additionally, with respect to the restricted stock units that remain outstanding immediately prior to the effective time of the merger, after giving effect to the conversion described in the previous sentence, the vesting restrictions will lapse and the restricted stock units will be deemed fully vested as of the effective time, and such restricted stock units will be cancelled and converted into the right to receive a cash amount equal to the product of the total number of shares of common stock subject to such restricted stock units, multiplied by the merger consideration of $7.31 per share of common stock (approximately $1.08 per share of common stock subject to such restricted stock units prior to the recapitalization), without interest and less any applicable withholding taxes. All payments owed to holders of restricted stock units will be made promptly after the effective time of the merger by Imagination Technologies through the surviving corporation’s payroll account. Stockholders will only receive aggregate proceeds in the amount of $7.31 per share for each share of MIPS Technologies common stock owned prior to the recapitalization upon approval of Proposal No. 1 and Proposal No. 2 and upon consummation of the patent sale, filing of the certificate of amendment and consummation of the merger. United States Federal Income Tax Consequences of the Recapitalization The anticipated tax consequences of the recapitalization are as described in “United States Federal Income Tax Considerations” beginning on page 155 of this proxy statement. Our board of directors unanimously recommends that MIPS Technologies’ stockholders vote “FOR” the adoption of the certificate of amendment to MIPS Technologies’ Amended and Restated Certificate of Incorporation. 74 Table of Contents PROPOSAL NO. 3—THE MERGER The Proposal to Adopt the Merger Agreement On November 5, 2012, MIPS Technologies, Imagination Technologies and Acquisition Sub entered into the merger agreement. MIPS Technologies’ board of directors has unanimously determined that it is in the best interests of MIPS Technologies and its stockholders, and has declared it advisable, for MIPS Technologies to enter into the merger agreement, and has unanimously approved the execution, delivery and performance by MIPS Technologies of its obligations thereunder and the consummation of the transactions contemplated thereby, including the merger. MIPS Technologies stockholders will be asked to consider and vote on a proposal at the annual meeting to adopt the merger agreement pursuant to the requirements of Delaware law. Vote Required for Adoption of the Merger Agreement Adoption of the merger agreement requires the affirmative vote of a majority of the shares of our common stock outstanding and entitled to vote as of the record date. For the proposal to adopt the merger agreement, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions and broker non-votes, if any, will be counted as present for the purpose of determining whether a quorum is present at the annual meeting. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote against the proposal to adopt the merger agreement. For the reasons described below, our board of directors recommends that you vote “FOR” the adoption of the merger agreement. Rights of Stockholders Who Object to the Merger Stockholders are entitled to statutory appraisal rights under Delaware law in connection with the merger. This means that you are entitled to have the fair value of your shares determined by the Delaware Court of Chancery and to receive payment based on that valuation. The ultimate amount you receive as a dissenting stockholder in an appraisal proceeding may be more than, the same as or less than the amount you would have received under the merger agreement. To exercise your appraisal rights, you must submit a written demand for appraisal to MIPS Technologies before the vote is taken on the merger agreement and you must not vote in favor of the adoption of the merger agreement. Your failure to follow exactly the procedures specified under Delaware law will result in the loss of your appraisal rights. See “Dissenters’ Rights of Appraisal” beginning on page 160 of this proxy statement and the text of the Delaware appraisal rights statute reproduced in its entirety as Annex E. 75 Table of Contents The Recapitalization The merger agreement provides that following the closing of the patent sale but prior to the closing of the merger, MIPS Technologies will effect the recapitalization by amending its certificate of incorporation.Upon completion of the recapitalization and the merger, you will be entitled to receive a total of approximately $7.31 per share that you owned prior to the recapitalization.This estimate is subject to a fluctuation in the recapitalization proceeds (currently estimated to be $6.23), but not the merger proceeds.The following details how this total amount is calculated. From the recapitalization, concurrently with the merger consideration, you will receive what is currently estimated to be approximately $6.23 in cash, without interest and less any applicable withholding taxes, for each share of our common stock that you own at the effective time of the recapitalization. This estimate reflects management’s current estimate of cash held by MIPS Technologies following the patent sale and immediately prior to the recapitalization, which will be affected by our operating results, estimated transaction expenses, timing of the recapitalization and other factors.You will also receive exactly 0.1479 shares of our common stock for each share of common stock you own at the effective time of the recapitalization.Your preexisting shares of common stock will be cancelled, so the only shares you own following the recapitalization will be these 0.1479 shares per share of our common stock that you previously owned. From the merger, you will be entitled to receive approximately $1.08 for each share of MIPS common stock that you owned prior to the recapitalization, which represents exactly $7.31 in cash for each share of our common stock that you own at the effective time of the merger after giving effect to the recapitalization, without interest and less any applicable withholding taxes, unless you have perfected your appraisal rights with respect to the merger.You will not own any shares of stock of MIPS Technologies or the surviving corporation following the merger.Stockholders will only receive aggregate proceeds in the amount of approximately $7.31 per share for each share of MIPS Technologies common stock owned prior to the recapitalization upon approval of Proposal No. 1 and Proposal No. 2 and upon consummation of the patent sale, filing of the certificate of amendment and consummation of the merger. Adoption of the amendment to the certificate of incorporation effecting the recapitalization requires the affirmative vote of a majority of the shares of our common stock outstanding and entitled to vote as of the record date. The recapitalization is a condition to the consummation of the merger, and the recapitalization will not be consummated unless the patent sale and the merger are also consummated. See “Proposal 2—Approval and Adoption of the certificate of amendment to MIPS’ Amended and Restated Certificate of Incorporation” and the text of the certificate of amendment reproduced in its entirety as Annex F. Reasons for the Merger; Recommendation of Our Board of Directors Our board of directors, acting with the advice and assistance of MIPS Technologies’ management and financial and legal advisors, carefully evaluated the merger agreement and the transactions contemplated thereby. Our board of directors determined that it is in the best interests of MIPS Technologies and its stockholders, and has declared it advisable, for MIPS Technologies to enter into the merger agreement. At a meeting on November 4, 2012, our board of directors unanimously resolved to approve the execution, delivery and performance by MIPS Technologies of its obligations under the merger agreement and the consummation of the transactions contemplated thereby, including the merger, and to recommend to the stockholders of MIPS Technologies that they adopt the merger agreement. 76 Table of Contents In reaching its recommendation, our board of directors consulted with MIPS Technologies’ management and its financial and legal advisors and considered a number of substantive factors, both positive and negative, and potential benefits and detriments of the merger. Our board of directors believed that, taken as a whole, the following factors supported its decision to approve the proposed merger: · Consideration; Historical Market Prices.Our board of directors considered the historical market prices of MIPS Technologies common stock and noted that the proposed merger consideration of $7.31 per share of MIPS Technologies common stock, after giving effect to the recapitalization (equivalent to approximately $1.08 for each share of MIPS Technologies common stock outstanding prior to the recapitalization) and assuming consummation of the patent sale, represented a premium of 40% over the closing price of MIPS Technologies common stock before news reports of a possible transaction emerged on April 11, 2012 and a 15% premium over the closing price on August 30, 2012 before an analyst report that a transaction was likely to occur. Additionally, our board of directors observed that the $7.31 per share merger consideration, after giving effect to the recapitalization (equivalent to approximately $1.08 for each share of MIPS Technologies common stock outstanding prior to the recapitalization) and assuming consummation of the patent sale, represented a 72% enterprise value premium over the closing price on April 11, 2012 and a 23% enterprise value premium over the closing price on August 30, 2012. Our board of directors also noted that the merger consideration was all cash, which provides certainty of value to MIPS Technologies’ stockholders, and was attractive as compared to the prices and price ranges reflected in the indications of interest received from other strategic parties during 2012. Our board of directors believes that the $7.31 per share cash consideration, after giving effect to the patent sale and the recapitalization (equivalent to approximately $1.08 for each share of MIPS Technologies common stock outstanding prior to the recapitalization), was a full and fair price to acquire MIPS Technologies. · Comparability to Other Alternatives.Our board of directors consideredMIPS Technologies’ business, product and technology pipelines, financial condition and results of operations, both on a historical and prospective basis. Our board of directors also considered that a significant portion of MIPS Technologies’ value is represented by its product and technology pipeline, which by its nature is subject to risk and uncertainty, and that the merger consideration to be paid by Imagination Technologies takes into account the value of this product and technology pipeline and provides liquidity to MIPS Technologies’ stockholders on an immediate basis. Our board of directors also considered that there are, in general, business, financial, market and execution risks associated with remaining independent and successfully implementing MIPS Technologies’ stand-alone business plan, including the costs of being a sub-scale public company and the execution challenges of beingmore of a competitive factor in an increasingly mobile and converging processor IP market, as well as macroeconomic factors, rapidly changing technologies, evolving industry standards and increased competition. Our board of directors also considered certain strategic alternatives to the merger, including the possibility of remaining as a stand-alone public company and the sale or disposition of a part of MIPS Technologies’ business or our patent portfolio without a sale of the whole company. In connection therewith, among other things, our board of directors also considered: · the fact that MIPS Technologies had conducted an extensive and thorough strategic alternative review process in 2012, during which, among other things: contacts were made with approximately 20 potential acquirers; diligence was conducted by six potential acquirers; initial indications of interest were submitted by four potential acquirers; and three formal bids were submitted; and · based on the results of the 2012 process and discussions with J.P. Morgan with respect to the parties most likely to be interested in acquiring MIPS Technologies, our board of directors’ belief that it was unlikely that any other strategic buyers or financial sponsors would be willing to pay more than $7.31 per share in cash, even if MIPS Technologies were to conduct another auction process, and that a failed auction, particularly in light of the 2012 process and related press reports, would be highly detrimental to MIPS Technologies by posing significant risks to our existing operations, including risks related to employee retention. 77 Table of Contents · Financial Advisor Opinion.Our board of directors considered the financial presentation of J.P. Morgan, and its oral opinion delivered to our board of directors (which opinion was subsequently confirmed in writing) to the effect that, as of November 4, 2012 and based upon and subject to the various assumptions, considerations, qualifications and limitations set forth in the opinion, the $7.31 merger consideration to be received by holders of shares of MIPS Technologies common stock (other than Imagination Technologies, Acquisition Sub and their respective affiliates), after giving effect to the patent sale and recapitalization (equivalent to approximately $1.08 per share of MIPS Technologies common stock outstanding prior to the recapitalization), pursuant to the merger agreement was fair from a financial point of view to such holders, as more fully described under “The MergerOpinion of Our Financial Advisor on the Merger” beginning on page 81 of this proxy statement. The opinion of J.P. Morgan is addressed to, and for the use and benefit of, our board of directors of MIPS Technologies in connection with and for purposes of its evaluation of the merger and does not constitute a recommendation as to how any holder of MIPS Technologies common stock should vote with respect to the merger. The full text of J.P. Morgan’s written opinion, dated November 5, 2012, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with such opinion is attached as Annex D to this proxy statement and is incorporated herein by reference. · Terms of the Merger Agreement.Our board of directors considered the terms and conditions of the merger agreement, including: · the limited number and nature of the conditions to Imagination Technologies’ obligation to consummate the merger; · MIPS Technologies’ ability under the merger agreement to furnish information to and conduct negotiations with a third party in certain circumstances, as more fully described under “The Merger Agreement — No Solicitation of Other Offers” beginning on page106 of this proxy statement; · our board of directors’ ability to modify and change its recommendation to stockholders in response to an unsolicited superior proposal from a third party if the failure to take such action would be inconsistent with its fiduciary duties to MIPS Technologies’ stockholders; · that MIPS Technologies can terminate the merger agreement if, concurrently with such termination, MIPS Technologies enters into a definitive agreement providing for the implementation of a superior proposal under certain conditions; · that Imagination Technologies has agreed to use its reasonable best efforts to cause the merger to be consummated; · that the merger agreement provides MIPS Technologies sufficient operating flexibility to conduct its business generally in the ordinary course between the signing of the merger agreement and the completion of the merger; and 78 Table of Contents · the fact that all such terms and conditions were the product of extensive arm’s-length negotiations between MIPS Technologies and Imagination Technologies. · Termination Fee.Our board of directors considered the $2,750,000 termination fee and the reimbursement of certain fees and expenses (up to $2,000,000), including the views of MIPS Technologies’ financial and legal advisors as to the customary nature of the existence and size of termination fees in transactions similar to the merger. Our board of directors concluded that a termination fee of this size for the transactions contemplated by the merger agreement should not unduly deter a third party from making, or inhibit our board of directors in evaluating, negotiating, and, if appropriate, terminating the merger agreement to enter into a transaction that is, a superior proposal. · Likelihood of Consummation.Our board of directors considered the likelihood that the merger will be completed, including Imagination Technologies’ agreement to use its reasonable best efforts to complete the merger. Our board of directors also considered the fact that Imagination Technologies did not require stockholder approval for the transaction. · Financing Related to the Merger.Our board of directors considered the fact that Imagination Technologies has represented in the merger agreement that it has, and as of the closing will have, sufficient immediately available funds to pay when due the aggregate merger consideration and to pay when due all of its fees and expenses related to the transactions contemplated by the merger agreement. The receipt of financing by Imagination Technologies is not a condition to the obligations of either party to complete the merger under the terms of the merger agreement. · Stockholder Vote.Our board of directors considered the fact that the consummation of the proposed merger would require the affirmative vote of the holders of a majority of the outstanding shares of MIPS Technologies’ common stock entitled to vote. Our board of directors noted that shares owned by members of management represented a relatively small percentage of the outstanding shares and that, accordingly, the merger agreement would, in effect, need to be approved by a majority of the shares held by MIPS Technologies’ other stockholders. · Availability of Appraisal Rights.Our board of directors considered the fact that dissenters’ appraisal rights would be available to MIPS Technologies’ stockholders under Delaware law. Our board of directors also considered potential risks or negative factors relating to the merger, including the following: · the fact that the completion of the merger will preclude MIPS Technologies’ stockholders from having the opportunity to participate in MIPS Technologies’ future earnings growth and the future appreciation of the value of its capital stock that could be anticipated if its strategic plan were successfully implemented on a stand-alone basis; · the fact that, although the merger agreement contains a “fiduciary out,” it does not contain a “go shop” provision; 79 Table of Contents · the fact that the merger agreement contains certain provisions, including the $2,750,000 termination fee, restrictions on providing information to and negotiating with a third party that makes an unsolicited acquisition proposal, and the required vote provisions obligating MIPS Technologies to convene the annual meeting for the purpose of obtaining stockholder approval of the proposal to adopt the merger agreement, such that even if our board of directors changes its recommendation regarding the merger and the merger agreement (unless MIPS Technologies terminates the merger agreement, our board of directors of MIPS Technologies determines to enter into a definitive agreement with respect to a superior proposal as permitted by the merger agreement and MIPS Technologies pays the termination fee concurrently with such termination, or unless Imagination Technologies terminates the merger agreement), other potential acquirors may be dissuaded or inhibited from submitting potentially superior proposals to acquire MIPS Technologies; · the fact that not all conditions to the closing of the merger, including the required approvals of governmental authorities, are within MIPS Technologies’ control; · the fact that MIPS Technologies has incurred and will continue to incur significant transaction costs and expenses in connection with the proposed transaction, regardless of whether the merger is consummated; · the fact that the operations of MIPS Technologies will be restricted by interim operating covenants under the merger agreement during the period between the signing of the merger agreement and the completion of the merger, which could effectively prohibit MIPS Technologies from undertaking material strategic initiatives or other material transactions without Imagination Technologies’ consent, to the detriment of MIPS Technologies and its stockholders; · the potential negative effect of the pendency of the merger on MIPS Technologies’ business and relationships with employees, customers, providers, suppliers, regulators and the communities in which it operates, including the risk that certain key members of senior management might choose not to remain employed with MIPS Technologies prior to the completion of the merger, regardless of the completion of the merger; and · the merger and the recapitalization are intended to be an integrated taxable transaction for U.S. federal income tax purposes, in which case our stockholders will generally be required to pay U.S. federal income tax on any gains they realize as a result of the receipt of cash in exchange for shares of our common stock pursuant to the recapitalization and the merger. Our board of directors concluded that the potentially negative factors associated with the proposed merger were outweighed by the opportunity for MIPS Technologies’ stockholders to realize a significant premium on the value of their common stock and monetize their investment in MIPS Technologies for the $7.31 per share cash merger consideration after giving effect to the recapitalization (equivalent to approximately $1.08 for each share of MIPS Technologies common stock outstanding prior to the recapitalization). Our board of directors believed that the proposed merger represents the highest price reasonably available to the stockholders and eliminates the unavoidable risks and uncertainty affecting the future prospects of MIPS Technologies on a stand-alone basis after consummating the patent sale. Accordingly, our board of directors concluded that it was in the best interests of MIPS Technologies and its stockholders, and declared it advisable, for MIPS Technologies to enter into the merger agreement, and approved the execution, delivery and performance by MIPS Technologies of its obligations under the merger agreement and the consummation of the transactions contemplated thereby, including the merger. 80 Table of Contents In addition, our board of directors was aware of and considered the interests that our directors and executive officers may have with respect to the merger that differ from, or are in addition to, their interests as stockholders of MIPS Technologies generally, as described in “The Merger— Interests ofOur Directors and Executive Officers in the Merger” beginning on page 89 of this proxy statement, which our board of directors considered as being neutral in its evaluation of the merger. The foregoing discussion summarizes the material information and factors considered by our board of directors in its consideration of the proposed merger. Our board of directors collectively reached the unanimous decision to approve the merger agreement and related transactions in light of the factors described above and other factors that each member of our board of directors felt were appropriate. In view of the variety of factors and the quality and amount of information considered, our board of directors did not find it practicable to, and did not make specific assessments of, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. Individual members of our board of directors may have given different weight to different factors. Our board of directors unanimously recommends that you vote “FOR” the adoption of the Merger Agreement. Opinion of Our Financial Advisor on the Merger Pursuant to an engagement letter dated November 18, 2011, as amended October 31, 2012, MIPS Technologies retained J.P. Morgan as its financial advisor in connection with the proposed merger. At the meeting of the board of directors of MIPS Technologies on November 4, 2012, J.P. Morgan rendered its oral opinion to the board of directors of MIPS Technologies that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid to the holders of MIPS Technologies’ common stock, after giving effect to the recapitalization, in the proposed merger was fair, from a financial point of view, to MIPS Technologies stockholders.J.P. Morgan has confirmed its November 4, 2012 oral opinion by delivering its written opinion to the board of directors of MIPS Technologies, dated November 5, 2012, that, as of such date, the consideration to be paid to the holders of MIPS Technologies’ common stock, after giving effect to the recapitalization, in the proposed merger was fair, from a financial point of view, to MIPS Technologies stockholders.No limitations were imposed by MIPS Technologies’ board of Directors upon J.P. Morgan with respect to the investigations made or procedures followed by it in rendering its opinions. The full text of the written opinion of J.P. Morgan dated November 5, 2012, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex D to this Proxy Statement and is incorporated herein by reference.MIPS Technologies’ stockholders are urged to read the opinion in its entirety.J.P. Morgan’s written opinion is addressed to the board of directors of MIPS Technologies, is directed only to the consideration to be paid in the merger and does not constitute a recommendation to any stockholder of MIPS Technologies as to how such stockholder should vote at the MIPS Technologies annual meeting.The summary of the opinion of J.P. Morgan set forth in this Proxy Statement is qualified in its entirety by reference to the full text of such opinion. 81 Table of Contents In arriving at its opinion, J.P. Morgan, among other things: · reviewed a draft dated November 2, 2012 of the patent sale agreement and related license agreements, and a draft dated November 2, 2012 of the merger agreement, which provided for a recapitalization of the MIPS Technologies common stock and the distribution of certain cash generated pursuant to the patent sale agreement and related license agreements; · reviewed certain publicly available business and financial information concerning MIPS Technologies and the industries in which it operates; · compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving companies J.P. Morgan deemed relevant and the consideration received for such companies; · compared the financial and operating performance of MIPS Technologies with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of MIPS Technologies common stock and certain publicly traded securities of such other companies; · reviewed certain internal financial analyses and forecasts prepared by the management of MIPS Technologies relating to its business; and · performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion. J.P. Morgan also held discussions with certain members of the management of MIPS Technologies with respect to certain aspects of the merger, and the past and current business operations of MIPS Technologies, the financial condition and future prospects and operations of MIPS Technologies, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry. J.P. Morgan relied upon and assumed, without assuming responsibility or liability for independent verification, the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by MIPS Technologies or otherwise reviewed by or for J.P. Morgan.J.P. Morgan did not conduct or was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of MIPS Technologies under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to it or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial condition of MIPS Technologies to which such analyses or forecasts relate.J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based.J.P. Morgan also assumed that themerger and the other transactions contemplated by the merger agreement (including the recapitalization and completion of the transactions contemplated by the patent sale agreement and related license agreements) will be consummated as described in each respective agreement without waiver of any conditions contained therein, and that the respective definitive agreements will not differ in any material respects from the drafts thereof provided to J.P. Morgan.J.P. Morgan relied as to all legal matters relevant to the rendering of its opinion upon the advice of counsel.J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on MIPS Technologies or on the contemplated benefits of the merger. 82 Table of Contents The projections furnished to J.P. Morgan for MIPS Technologies were prepared by the management of MIPS Technologies.MIPS Technologies does not publicly disclose internal management projections of the type provided to J.P. Morgan in connection with J.P. Morgan’s analysis of the merger, and such projections were not prepared with a view toward public disclosure.These projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates.Accordingly, actual results could vary significantly from those set forth in such projections.See “The Merger—Certain Unaudited Financial Projections” for more information about these projections. J.P. Morgan’s opinion is based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion.Subsequent developments may affect J.P. Morgan’s opinion, and J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion.J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of MIPS Technologies’ common stock, after giving effect to the recapitalization, patent sale and related license agreements, in the proposed merger, and J.P. Morgan has expressed no opinion as to the fairness of the merger to, or any consideration of, the holders of any other class of securities, creditors or other constituencies of MIPS Technologies or the underlying decision by MIPS Technologies to engage in the merger. J.P. Morgan expressed no opinion as to the price at which MIPS Technologies’ common stock will trade at any future time.J.P. Morgan assumed for all purposes related to its opinion that the recapitalization would result in approximately 8.2 million shares outstanding prior to the merger. In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methods in reaching its opinion.The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with providing its opinion. Public Trading Multiples.Using publicly available information, J.P. Morgan compared selected financial data of MIPS Technologies with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to MIPS Technologies after giving effect to the recapitalization, patent sale and related license agreements.The companies selected by J.P. Morgan were: · Applied Micro Circuits Corporation · CEVA, Inc. · Ikanos Communications, Inc. · Lattice Incorporated · Rambus Inc. · Tessera Technologies, Inc. J.P. Morgan selected these companies because, among other reasons, based on J.P. Morgan’s judgment and experience, they are similar to MIPS Technologies after giving effect to the recapitalization, patent sale and related license agreements. None of the selected companies reviewed is identical to MIPS Technologies. Accordingly, a complete analysis of the results of the following calculations cannot be limited to a quantitative review of such results and involves complex considerations and judgments concerning the differences in the financial and operating characteristics of the selected companies compared to MIPS Technologies and other factors that could affect the public trading value of the selected companies and MIPS Technologies. 83 Table of Contents Using publicly available information, J.P. Morgan calculated for each of the selected companies the firm value as a multiple of estimated revenue for calendar year 2013 (the “FV/Revenue Multiple”). Based on the results of its analysis of the FV/Revenue Multiple for each of the companies and other factors that J.P. Morgan deemed appropriate, J.P. Morgan calculated a representative FV/Revenue Multiple range of 0.5x to 1.0x. J.P. Morgan then calculated the equity value per share of common stock implied by applying this range of multiples to MIPS Technologies management’s estimates offiscal year 2013 revenue under both Case 1 and Case 2.Both Case 1 and Case 2 reflect management’s projected financial results after giving effect to the recapitalization, patent sale and related license agreements. This analysis performed by J.P. Morgan yielded implied trading values for the MIPS Technologies common stock of approximately $3.10 to $6.25 per share under Case 1, and $2.80 to $5.55 per share under Case 2, and aggregate common stock value of $25 million to $50 million under Case 1 and $25 million to $45 million under Case 2. Values presented were rounded to the nearest $0.05 per share and $5 million, respectively, and the per-share prices assumed a post-recapitalization share count of approximately 8.2 million shares.J.P. Morgan noted that the consideration per share to be received by the holders of MIPS Technologies common stock in the mergeris $7.31 per share, and the aggregate merger consideration is $60 million. Selected Transaction Analysis.Using publicly available information, J.P. Morgan examined selected transactions with respect to businesses which J.P. Morgan determined to be comparable to MIPS Technologies’ business after giving effect to the recapitalization, patent sale and related license agreements.Specifically, J.P. Morgan reviewed the following transactions: Acquiror Target Month and Year Announced Zoran Corporation Microtune, Inc. September 2010 Microchip Technology Inc. Silicon Storage Technology, Inc. February 2010 Virage Logic Corporation ARC International Corp. August 2009 Synopsys, Inc. Chipidea Microelectronica S.A. May 2009 Integrated Device Technology, Inc. Tundra Semiconductor Corp. April 2009 ON Semiconductor Corporation Catalyst Semiconductor, Inc. July 2008 Freescale Semiconductor, Ltd. SigmaTel, Inc. February 2008 Using publicly available information, J.P. Morgan calculated for each of the selected companies the firm value as a multiple of the one-year forward revenue (the “Forward Revenue Multiple”). Based on the results of this analysis and other factors that J.P. Morgan deemed appropriate, J.P. Morgan calculated a representative Forward Revenue Multiple range of 0.4x to 1.1x. J.P. Morgan then calculated the equity value per share of common stock implied by applying this range of multiples to MIPS Technologies management’s estimates of fiscal year 2013 revenue under both Case 1 and Case 2. This analysis performed by J.P. Morgan yielded implied equity values for the MIPS Technologies common stock of approximately $2.50 to $6.85 per share under Case 1, and $2.20 to $6.10 per share under Case 2, and aggregate common stock value of $20 million to $55 million under Case 1 and $20 million to $50 million under Case 2. Values presented were rounded to the nearest $0.05 per share and $5 million, respectively, and the per-share prices assumed a post-recapitalization share count of approximately 8.2 million shares.J.P. Morgan noted that the consideration per share to be received by the holders of MIPS Technologies common stock in the merger is $7.31, and the aggregate merger consideration is $60 million. 84 Table of Contents Discounted Cash Flow Analysis.J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining the fully diluted equity value per share of MIPS Technologies common stock after the giving effect to the recapitalization, patent sale and related license agreements.A discounted cash flow analysis is a method of evaluating an asset using estimates of the future unlevered free cash flows generated by assets and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” For the purposes of the J.P. Morgan opinion, “present value” refers to the current value of one or more future unlevered free cash flows from the asset, which we refer to as that asset’s cash flows, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other appropriate factors. For purposes of the J.P. Morgan opinion, “terminal value” refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period. J.P. Morgan calculated the unlevered free cash flows that MIPS Technologies is expected to generate during fiscal years 2013 through 2025 based upon two sets of financial projections prepared by the management of MIPS Technologies through the fiscal year ended 2020, Case 1 and Case 2, and extrapolated by J.P. Morgan after discussion with management through 2025, which management subsequently reviewed and approved for J.P. Morgan’s use.J.P. Morgan also calculated a range of terminal asset values of MIPS Technologies at the end of the 13-year period ending fiscal year ended 2025 by applying a perpetual growth rate ranging from 0.0% to 3.0% of the unlevered free cash flow ofMIPS Technologies during the final year of the 13-year period.The unlevered free cash flows and the range of terminal asset values were then discounted to present values using a range of discount rates from 12.0% to 16.0%, which were chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of MIPS Technologies.Based on the management projections under Case 1, applying perpetual growth rates ranging from 1.0% to 3.0% and discount rates ranging from 12.0% to 16.0%, the discounted cash flow analysis indicated a range of equity values of between negative $1.15 and negative $1.20 per share of MIPS Technologies common stock, and aggregate common stock value of negative $10 million. Based on the management projections under Case 2, applying a perpetual growth rate of 0.0% and discount rates ranging from 12.0% to 16.0%, the discounted cash flow analysis indicated a range of equity values of between $2.75 and $3.25 per share of MIPS Technologies common stock, and aggregate common stock value of $25 million. Values presented were rounded to the nearest $0.05 per share and $5 million, respectively, and the per-share prices assumed a post-recapitalization share count of approximately 8.2 million shares. The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion.Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. None of the selected companies reviewed as described in the above summary is identical to MIPS Technologies, and none of the selected transactions reviewed was identical to the merger. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of MIPS Technologies. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of J.P. Morgan’s analysis, may be considered similar to the merger. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to MIPS Technologies and the transactions compared to the merger. 85 Table of Contents As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes.J.P. Morgan was selected to advise MIPS Technologies with respect to the merger on the basis of such experience and its familiarity with MIPS Technologies. For services rendered in connection with the merger, recapitalization, patent sale and related license agreements, MIPS Technologies has agreed to pay J.P. Morgan a fee of approximately $9.0 million, a substantial portion of which will become payable only if the transactions contemplated by the merger agreement (including the recapitalization), patent sale agreement and related license agreements are consummated. In addition, MIPS Technologies has agreed to reimburse J.P. Morgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities, including liabilities arising under the Federal securities laws. During the two years preceding the date of its opinion, neither J.P. Morgan nor its affiliates have had any other material financial advisory or other material commercial or investment banking relationships with MIPS Technologies or Imagination Technologies. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of MIPS Technologies or Imagination Technologies for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities. Certain Unaudited Financial Projections The financial projections comprised three cases, Case 1 and Case 2, and a third case provided to potential bidders which we refer to as Case 3.The following summarizes Case 1, Case 2 and Case 3 that were prepared by management on the basis and for the limited and specific context described below.Case 1 is a disinvestment scenario prepared by management that includes substantial reductions in business investment and assumes that MIPS Technologies’ business remains consistent with the current trends that MIPS Technologies is experiencing in the market.Case 2, also provided by management, assumes that MIPS Technologies’ business is restructured to collect future royalties, but MIPS Technologies no longer actively develops or licenses products going forward.Case 3 was prepared by management with a view to showing bidders the potential performance of MIPS Technologies’ remaining business following the patent sale with the backing of an acquirer entity following an acquisition such as the merger and assumes that we have become part of such an acquirer’s business. MIPS Technologies does not, as a matter of course, publicly disclose projections of future revenues, earnings or other financial performance of the type disclosed below.MIPS Technologies has included in this proxy statement Case 1 and Case 2 only because such projections and forecasts were provided by MIPS Technologies to J.P. Morgan and, with respect to Case 3, potential bidders.Case 1 and Case 2 were not provided to any party other than J.P. Morgan. These financial projections and forecasts were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, the IFRS or U.S. GAAP.Ernst & Young LLP, MIPS Technologies’ independent registered public accounting firm, has not examined or compiled or performed any procedures on any of the financial projections, expressed any conclusion or provided any form of assurance with respect to the financial projections and, accordingly, assumes no responsibility for them.The report of Ernst & Young LLP, included elsewhere or incorporated by reference in this proxy statement, relates to the historical financial information of MIPS Technologies.It does not extend to the financial projections and should not be read to do so.The inclusion of this information in this proxy statement should not be regarded as an indication that MIPS Technologies or any recipient of this information considered, now considers or will consider this information to be necessarily predictive of future results.MIPS Technologies does not intend to update or otherwise revise the financial projections to correct any errors existing in such projections when made, to reflect circumstances existing after the date when made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the financial projections are shown to be in error. 86 Table of Contents Although presented with numerical specificity, the financial projections and forecasts included in this proxy statement are based on numerous estimates and assumptions that are subject to factors, such as future performance of currently marketed products, third party competition for marketed products, future business development activities, industry performance, general business, economic, market and financial conditions and the other factors listed in this proxy statement under the section entitled “Cautionary Note Regarding Forward-Looking Statements,” which are difficult to predict and most of which are beyond the control of MIPS Technologies.These or other factors may cause the financial projections or the underlying assumptions and estimates to be inaccurate.Since the financial projections cover multiple years, such information by its nature becomes less reliable with each successive year.The financial projections also do not take into account any circumstances or events occurring after the date they were prepared, except that the projections assume consummation of, and give effect to, the patent sale and recapitalization, and that Case 3, in addition to the patent sale and recapitalization, gives effect to a transaction similar to the merger from the perspective of a potential acquirer.The inclusion of the financial projections and forecasts in this proxy statement shall not be deemed an admission or representation by MIPS Technologies that such information is material.The inclusion of the projections should not be regarded as an indication that MIPS Technologies considered or now considers them to be a reliable prediction of future results and you should not rely on them as such.Accordingly, there can be no assurance that the financial projections will be realized, and actual results may vary materially from those reflected in the projections.You should read the section entitled “Cautionary Note Regarding Forward-Looking Statements” for additional information regarding the risks inherent in forward-looking information such as the financial projections. Certain of the financial projections set forth herein may be considered non-U.S. GAAP financial measures.MIPS Technologies believes this information could be useful in evaluating, on a prospective basis, its potential future operating performance and cash flow.Non-U.S. GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP, and non-U.S. GAAP financial measures as used by MIPS Technologies may not be comparable to similarly titled amounts used by other companies. The below dollar amounts are in millions of U.S. dollars, rounded to the nearest one million dollars, for each fiscal year ending June 30. Case 1 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Revenue $

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) February 3, 2014 Prudential Bancorp, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 000-55084 46-2935427 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 1834 Oregon Avenue, Philadelphia, Pennsylvania (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (215) 755-1500 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 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)) Item5.07 Submission of Matters to a Vote of Security Holders (a)An Annual Meeting of Shareholders of Prudential Bancorp, Inc. of Pennsylvania (the “Company”) was held on February 3, 2014. (b)There were 9,544,809 shares of common stock of the Company eligible to be voted at the Annual Meeting and 8,192,874 shares represented in person or by proxy at the Annual Meeting, which constituted a quorum to conduct business at the meeting. The items voted upon at the Annual Meeting and the vote for each proposal were as follows: 1.Election of directors for a three year term: FOR WITHHELD BROKER NON-VOTES Joseph R. Corrato Bruce E. Miller Francis V. Mulcahy 2.To ratify the appointment of S.R. Snodgrass, A.C. as the Company’s independent registered public accounting firm for the year ending September 30, 2014. FOR AGAINST ABSTAIN Each of the nominees was elected as a director and the proposal to ratify the appointment of S.R. Snodgrass, A.C. as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2014 was adopted by the shareholders of the Company at the Annual Meeting. (c)Not applicable. 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. PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA By: /s/Joseph R. Corrato Name: Joseph R. Corrato Title: Executive Vice President and Chief Financial Officer Date: February 4, 2014

Name: Council Regulation (EC) No 827/2004 of 26 April 2004 prohibiting imports of Atlantic bigeye tuna (Thunnus obesus) originating in Bolivia, Cambodia, Equatorial Guinea, Georgia and Sierra Leone and repealing Regulation (EC) No 1036/2001 Type: Regulation Subject Matter: international trade; Europe; Africa; Asia and Oceania; trade; America; fisheries; natural environment Date Published: nan Avis juridique important|32004R0827Council Regulation (EC) No 827/2004 of 26 April 2004 prohibiting imports of Atlantic bigeye tuna (Thunnus obesus) originating in Bolivia, Cambodia, Equatorial Guinea, Georgia and Sierra Leone and repealing Regulation (EC) No 1036/2001 Official Journal L 127 , 29/04/2004 P. 0021 - 0022Council Regulation (EC) No 827/2004of 26 April 2004prohibiting imports of Atlantic bigeye tuna (Thunnus obesus) originating in Bolivia, Cambodia, Equatorial Guinea, Georgia and Sierra Leone and repealing Regulation (EC) No 1036/2001THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community, and in particular Article 133 thereof,Having regard to the proposal from the Commission,Whereas:(1) Fishery resources, which are an exhaustible natural resource, should be protected in the interests of biological balances and global food security.(2) In 1998 the International Commission for the Conservation of Atlantic Tunas (ICCAT), to which the European Community is a contracting party, adopted resolution 98-18 concerning unreported and unregulated catches of tuna by large-scale longline vessels in the Convention area.(3) The stocks concerned cannot be managed effectively by the ICCAT contracting parties, whose fishermen are obliged to reduce their catches of tuna, unless all non-contracting parties fishing Atlantic bigeye tuna cooperate with ICCAT and comply with its conservation and management measures.(4) ICCAT has identified Belize, Bolivia, Cambodia, Equatorial Guinea, Georgia, Honduras, Saint Vincent and the Grenadines and Sierra Leone as countries whose vessels fish Atlantic bigeye tuna in a manner which diminishes the effectiveness of the organisation's tuna conservation measures, substantiating its findings with data concerning catches, trade and the activities of vessels.(5) Imports of Atlantic bigeye tuna originating in Belize, Cambodia, Equatorial Guinea, Honduras and Saint Vincent and the Grenadines are currently prohibited by Regulation (EC) No 1036/2001 of 22 May 2001 prohibiting imports of Atlantic bigeye tuna (Thunnnus obesus) originating in Belize, Cambodia, Equatorial Guinea, Saint Vincent and the Grenadines and Honduras(1).(6) ICCAT has taken note of the strengthening of cooperation with Honduras for the conservation of Atlantic bigeye tuna. At its 2002 annual meeting it recommended the lifting of the prohibition of imports of Atlantic bigeye tuna in any form imposed by the contracting parties on Honduras.(7) ICCAT has taken note of the progress of cooperation with Belize and Saint Vincent and the Grenadines for the conservation of Atlantic bigeye tuna. At its 2003 annual meeting it lifted, as of 1 January 2004, the prohibition of imports of Atlantic bigeye tuna in any form imposed by the contracting parties on Belize and Saint Vincent and the Grenadines.(8) ICCAT's attempts to encourage Bolivia, Cambodia, Equatorial Guinea, Georgia and Sierra Leone to comply with measures for the conservation and management of Atlantic bigeye tuna have been to no avail.(9) ICCAT has recommended its contracting parties to take appropriate steps to prohibit imports of Atlantic bigeye tuna products in any form from Bolivia, Georgia and Sierra Leone and to continue prohibiting such imports from Cambodia and Equatorial Guinea. These measures will be lifted as soon as it is established that the countries in question have brought their fishing practices into line with ICCAT's measures. These measures should therefore be implemented by the Community, which has sole competence in this matter. However, in view of the notification periods required by ICCAT, the ban on imports from Georgia should not enter into force until 1 July 2004.(10) These measures are compatible with the Community's obligations under other international agreements.(11) For the sake of transparency, Regulation (EC) No 1036/2001 should therefore be repealed and replaced by this Regulation,HAS ADOPTED THIS REGULATION:Article 1For the purposes of this Regulation, "importation" means the customs procedures referred to in Article 4(15)(a), (15)(b) and (16)(a) to (16)(f) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code(2).Article 21. The importation into the Community of Atlantic bigeye tuna (Thunnus obesus) originating in Bolivia, Cambodia, Equatorial Guinea and Sierra Leone and falling within CN codes ex 0301 99 90, 0302 34 00, ex 0302 70 00, 0303 44 00, ex 0303 80 00, ex 0304 10 38, ex 0304 10 98, ex 0304 20 45, ex 0304 90 97 ex 0305 10 00, ex 0305 20 00, ex 0305 30 90, ex 0305 49 80, ex 0305 59 80 and ex 0305 69 80 is prohibited.2. The importation of any processed product derived from the Atlantic bigeye tuna referred to in paragraph 1 and falling within codes ex 1604 14 11, ex 1604 14 16 and ex 1604 14 18 and ex 1604 20 70 is prohibited.3. The importation into the Community of Atlantic bigeye tuna (Thunnus obesus) originating in Georgia and falling within CN codes ex 0301 99 90, 0302 34 00, 0303 44 00, ex 0304 10 38, ex 0304 10 98, ex 0304 20 45, ex 0304 90 97, ex 0305 20 00, ex 0305 30 90, ex 0305 49 80, ex 0305 59 80 and ex 0305 69 80 is prohibited.4. The importation of any processed product derived from the Atlantic bigeye tuna referred to in paragraph 3 and falling within codes ex 1604 14 11, ex 1604 14 16 and ex 1604 14 18 and ex 1604 20 70 is prohibited.Article 3This Regulation shall not apply to quantities of the products referred to in Article 2 and originating in Bolivia, Georgia and Sierra Leone which can be shown to the satisfaction of the competent national authorities to have been under way to Community territory on the date of its entry into force and which are released for free circulation no later than 14 days after that date.Article 41. Regulation (EC) No 1036/2001 is hereby repealed.2. References to the repealed Regulation shall be construed as being made to this Regulation.Article 5This Regulation shall enter into force on the seventh day following that of its publication in the Official Journal of the European Union.Article 2(3) and (4) shall apply from 1 July 2004.This Regulation shall be binding in its entirety and directly applicable in all Member States.Done at Luxembourg, 26 April 2004.For the CouncilThe PresidentB. Cowen(1) OJ L 145, 31.5.2001, p. 10.(2) OJ L 302, 19.10.1992, p. 1. Regulation as last amended by Commission Regulation (EC) No 60/2004 (OJ L 9, 15.1.2004, p. 8).

Exhibit 10.5   INDEMNIFICATION AGREEMENT   [                ] (the “Effective Date”), by and between Select Income REIT, a Maryland real estate investment trust (the “Company”), and [                ]   WHEREAS, Indemnitee currently serves as a [                ] of the Company and   [                ], the Company has agreed to indemnify and to advance expenses proceedings, to the maximum extent permitted by law as hereinafter provided; and         representing 10% or more of the combined voting power of all the Company’s trustees without the prior approval of at least two-thirds of the members of the Board of Trustees of the Company (the “Board of Trustees”) in office immediately       director, trustee, officer or agent of the Company and the status of a person who, while a director, trustee, officer or agent of the Company, is or was serving at the request of the Company as a director, trustee, officer or agent of another foreign or domestic real estate investment trust, corporation, partnership, limited liability company, joint venture, trust, other enterprise       selected by the Indemnitee and reasonably acceptable to the Company, that is experienced in matters of business law and that neither is, nor in the past two concerning Indemnitee under this Agreement or of other indemnities of the Company under similar indemnification agreements), or (ii) any other party to or indemnification or advance of Expenses hereunder.       2   Section 2-418(g) of the Maryland General Corporation Law (“MGCL”), as applicable to a Maryland real estate investment trust by virtue of Section 8-301(15) of the Maryland REIT Law.   Section 3.           Proceedings Other Than Derivative Proceedings by or in the or completed Proceeding, other than a derivative Proceeding by or in the right of the Company (or, if applicable, such other enterprise at which Indemnitee is Section 3, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by him or on his behalf in connection with a Proceeding by reason of Indemnitee’s Corporate unlawful.   made a party to any threatened, pending or completed derivative Proceeding enterprise at which Indemnitee is or was serving at the request of the Company) shall be indemnified against all amounts paid in settlement and all Expenses incurred by him or on his behalf in connection with such Proceeding unless it is     statement or statements shall   3   described in Section 5.  To the extent that Expenses advanced to Indemnitee do post security therefor.   Indemnification.     the determination as   4   to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.   one is appointed pursuant to this Section 7.       indemnification.     provided by Section 16, be entitled to an adjudication in an appropriate court of the State of Maryland or in any other court of competent jurisdiction or (B) be entitled to seek an award in arbitration as provided by Section 16, in each case of his entitlement to such indemnification or advance of Expenses.     this Section 9, absent a   5     judicial adjudication of or an award in arbitration as provided by Section 16 to enforce his rights under, or to recover damages for breach of, this Agreement by the Company, Indemnitee shall be entitled to recover in full from the Company, and shall be indemnified in full by the Company for, any and all Expenses incurred by him in such judicial adjudication or arbitration if it is determined that the Indemnitee is entitled to enforce any of his rights under, or to recover any damages for breach of, this Agreement by the Company.       any such Proceeding under Section 10(a) above, and the counsel selected by the Company shall be reasonably satisfactory to Indemnitee.  The Company shall not, reasonably satisfactory to Indemnitee.  This Section 10(b) shall not apply to a Proceeding brought by Indemnitee under Section 9 above or Section 15.     6   matter.   Section 11.         Liability Insurance.  To the extent the Company maintains an insurance policy or policies providing liability insurance for any of its directors, trustees or officers, Indemnitee shall be covered by such policy or coverage available for any Company director, trustee or officer during the Indemnitee’s tenure as a director, trustee or officer and, following a a period of six years thereafter.     Restated Declaration of Trust (as the same may be further amended from time to time, the “Declaration of Trust”) or Amended and Restated Bylaws of the Company (as the same may be further amended from time to time, the “Bylaws”), any agreement or a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board of Trustees, or otherwise.  No amendment,     otherwise.   7     agent of the Company or of any other real estate investment trust, corporation, plan or other enterprise which such person is or was serving at the written legal representatives.   part, of the business and/or assets of the Company shall be automatically deemed to have assumed and agreed to perform this Agreement in the same manner and to succession had taken place, provided that no such assumption shall relieve the Company of its obligations hereunder.  To the extent required by applicable law to give effect to the foregoing sentence and to the extent requested by Indemnitee, the Company shall require and cause any such successor to expressly assume and agree to perform this Agreement by written agreement in form and substance satisfactory to Indemnitee.     Section 15.         Limitation and Exception to Right of Indemnification or under this Agreement, the Declaration of Trust, the Bylaws, liability insurance policy or policies, if any, or otherwise or (ii) the Declaration of Trust, the Bylaws, a resolution of the shareholders entitled to vote generally in the election of trustees or of the Board of Trustees or an agreement approved by the Board of Trustees to which the Company is a party expressly provides otherwise.   8   Section 16.         Arbitration.   (i) regarding the Indemnitee’s entitlement to indemnification or advance of Expenses hereunder or otherwise arising out of or relating to this Agreement, or purposes of this Section 16, shall mean any shareholder of record or any trustee, officer, manager (including Reit Management & Research LLC or its as “Disputes”) or relating in any way to such a Dispute or Disputes, shall on Rules may be modified in this Section 16.  For the avoidance of doubt, and not   by respondent of a copy of the demand for arbitration.  Such arbitrators may be affiliates or interested persons of such parties.  If either party fails to timely select an arbitrator, the other party to the Dispute shall select a       9   proceedings or Award rendered hereunder and the validity, effect and   (f)        Except to the extent expressly provided by this Agreement (including Section 5 and Section 9(d)) or as otherwise agreed by the parties, each party in a derivative case or class action by a shareholder of the Company, award any       Section 17.         Period of Limitations.  To the fullest extent permitted by law, no legal action shall be brought, and no cause of action shall be asserted, by or on behalf of the Company or any controlled affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal   10   Section 18.         Reports to Shareholders.  To the extent required by the MGCL, the Company shall report in writing to its shareholders the payment of any Agreement arising out of a derivative Proceeding by or in the right of the Company with the notice of the meeting of shareholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.       Section 21.         Modification and Waiver.  No supplement, modification or   Section 22.         Notices.  Any notice, report or other communication required   page hereto.     Select Income REIT Two Newton Place Attn:  Secretary       11   Section 24.         Miscellaneous.  Use of the masculine pronoun in this Agreement shall be deemed to include usage of the feminine pronoun where appropriate.     12         SELECT INCOME REIT       By:     Name:   Title:       INDEMNITEE           Name:   Address:     EXHIBIT A     The Board of Trustees of Select Income REIT     Ladies and Gentlemen:   Agreement dated                             , 20    , by and between Select Income REIT (the “Company”) and the undersigned Indemnitee (the “Indemnification   the Indemnification Agreement.           WITNESS:         (SEAL)     Schedule to Exhibit 10.5     Name of Signatory   Date David M. Blackman   March 8, 2012 Jennifer B. Clark   March 8, 2012 Donna D. Fraiche   March 8, 2012 William A. Lamkin   March 8, 2012 John C. Popeo   March 8, 2012 Adam D. Portnoy   March 8, 2012 Barry M. Portnoy   March 8, 2012 Jeffrey P. Somers   March 8, 2012 Vern D. Larkin   March 8, 2012  

September 23, 2014 EDGAR United States Securities and Exchange Commission Judiciary Plaza treet, N.E. Washington, D.C. 20549 Re: Form N-CSR John Hancock Preferred Income Fund II (the “Registrant”) File No. 811-21202 Ladies and Gentlemen: Enclosed herewith for filing pursuant to the Investment Company Act of 1940 and the Securities Exchange Act of 1934 is the Registrant’s Form N-CSR filing for the period ending July 31, 2014. If you have any questions or comments regarding this filing, please contact the undersigned at (617) 663-4497. Sincerely, /s/ Salvatore Schiavone Salvatore Schiavone Treasurer

Title: Is Carmax bullying me or do I have to pay for their mistake? Question:Hi everyone. This is my first post here, forgive me for any mistakes and/or confusion. I am located in California. I had an Audi that was nearing its lease end on March 16th. The Audi dealer told me to check and see if my local Carmax would buy it from me for the residual amount I owed or close to that to prevent me from paying any lease end fees to Audi. On March 8th, I went to Carmax, they gave me an offer for $31,000. The residual value of the car was $31,017 so I would only need to pay $17. Carmax contacted Audi to confirm the residual payout amount, filled out the paperwork, and I went in, signed everything, paid my $17 and turned in my car. About 2 weeks later I get a letter from Audi saying my account is clear and I owe them nothing and I thought everything was done. About a week after that on March 31st I received a call from my local Carmax stating that the residual amount that Audi had told them was if an individual was to buy the car out, not a dealer. The actual dealer buyout is $32,800, which leaves me owing $1800. She said Audi would not release the title of the vehicle until I paid this amount. I told the manager at Carmax I would not have done this deal if I knew the buyout was going to be that high. I signed predicated on the fact that the residual buyout was $31,017. I said I want to cancel this deal and I would like my car back. She said that she can't do this because Carmax has already sold my vehicle. I asked how could they sell the vehicle without the title, and she said in California there is a 30 day period where they are still able to sell the vehicle while waiting for the title. I told her I would not be paying and she said that it would go to the Carmax main office for collections. I then called Audi/VW financial. They told me that they had faxed over a buyout amount to Carmax on March 8th stating it was $32,800. They said that they did not give any other buyout amount to Carmax. I then called Carmax back and told them they had the proper amount faxed to them. The manager told me that they "never received a fax" and that they talked to "Jack" at Audi and he gave them the buyout amount of $31,017 over the phone. So I called Audi back and they stated that they NEVER give out any buyout information over the phone, even to dealers. I explained my situation to them and they stated that Carmax is in the wrong and should not be coming after me for the money because of their mistake. I asked them if they could give me a copy of the fax they sent to Carmax and they said they could not. I asked them if they could send me an official statement saying they do not give buyout information over the phone, they said they could not do that. They did tell me however, that they would speak to Carmax main office directly given authorization from me which lasts 72 hours. I said I would wait to hear from Carmax and then call to give authorization. So, yesterday I got a letter from Carmax main office stating that "the creditor who held a lien on the Vehicle informed Carmax on 3/8/16 that I owed $31,017" and that they "subsequently learned I owe $1872 more on the vehicle than was originally disclosed to Carmax" so based on the "vehicle purchase agreement that I signed states that I understand and agree to pay the entire amount of the actual payoff amount owed." I read my purchase agreement and it does state this, however, Carmax is stating that Audi originally gave them a $31,017 buyout which Audi denies doing. Does this fact invalidate their claim since Audi states Carmax knew the correct buyout since the beginning of this transaction and made a mistake? Can I request to have this deal cancelled and get my car back? If I have Carmax talk to Audi directly and prove that Audi gave them the correct amount on March 8th, am I still legally obligated to pay the difference? This is my first time dealing with a lease return so I appreciate any information you can give me regarding my legal obligations. **Edit:** Meeting with lawyer tomorrow, will update, thanks to everyone for taking the time to read and respond, really appreciate it. I will update with result! **Update:** Spoke with lawyer who is drafting a letter to Carmax, seems to think they will drop this once they see I've gotten a lawyer. Answer #1: So there's a 31k figure and a 32,800 figure *set by Audi*. Audi claims that they only sent the 32,800 number, but somehow the dealer possessed the $31,017 number? Sounds like someone at Audi is lying to you, and fucked up. They are claiming they didn't send the lower figure, meanwhile the dealer is using the contract language to lean on you- after having also fucked up by accepting a number over the phone. I'd get a lawyer. Answer #2: I am not much of a betting man unless the odds are in my favor. In this case, I believe we can safely say that this is not CarMax corporation's first rodeo, and that this has come up before during the years they've been in business; and that CarMax, who has a fleet of attornies on staff, has written their contracts to protect their interests in such a situation. Further, they keep the letter to customers regarding this templated and crank out 4 or 5 of them a day. In short, the way to bet is that, on the letter of the law, you're gonna lose cause they're ready and practiced for this situation. Having said that, I suspect that if you can get past the drone level of the corporate responders, someone in management will agree that you were screwed by the misrepresentations of *their agent*. I would suggest writing to the CEO, or better a regional manager if you can find the name of one, and see if they will *at least split* the cost 50/50 with you.*You had no intent to deceive,* **and accepted their offer**. I would be polite and respectfully angry but not *outraged!!©*. Send the letter certified, just to make it stand out in the crowd in the admin assistant's inbox.Answer #3: Fortunately for you this won't hit collections until long after 30 days which is when the buyer of that car is going to wonder where the hell their title is. Sit tight.Answer #4: So currently Carmax doesn't have the title Audi/vW financial has it. The clock is ticking for the local dealership and Audi/VW will not release the title without the $1800. Sometime in the next two weeks the local carmax dealership is going to have to pay the $1800 to get the title from Audi/VW. Another option would be to purchase the car from Audi/VW for the 31k as they are currently the owners of the car. Pay them and have them release the title to you and tell carmax you will release the car to them for the 31k plus "fees". I also don't see how they could send this to collections that is a scare tactic to try and get you to pay the $1800. Carmax may sue you in court but this is more a problem of the carmax representatives due diligence in the purchase of the car than it is yours. The big question is will car max go after your over $1800? More than likely no, they will take a reduced amount on a settlement but I wouldn't do that until you get served. Watch your credit report. Answer #5: If you signed a contract where your obligations were released in exchange for some money, well, the company can't exactly go back on the contract now. Hope you read the contracts you signed.

SECURITIES EXCHANGE AGREEMENT SECURITIES EXCHANGE AGREEMENT (the “Agreement”), dated as of July 30, 2007, by and among Maverick Oil and Gas, Inc., a Nevada corporation, with headquarters located at 16415 Addison Road, Suite 850, Addison, Texas 75001-5332 (the WHEREAS: A.         The Company, Castlerigg Master Investments Ltd. and Kings Road Investments Ltd. entered into that certain Securities Purchase Agreement, dated as of January 5, 2006 (as amended from time to time in accordance with its terms, the “January 2006 Securities Purchase Agreement”), whereby the Company, among other things, issued to the Buyers (or their predecessors in interest) (i) that aggregate principal amount of senior secured convertible debentures (as amended, the “January 2006 Debentures”), set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers and (ii) warrants (as amended, the “January 2006 Warrants”), to acquire up to that number of additional shares of the (collectively, the “January 2006 Warrant Shares”). B.         The Company, Castlerigg Master Investments Ltd. and Kings Road as of June 21, 2006 (as amended from time to time in accordance with its terms, the “June 2006 Securities Purchase Agreement”), whereby the Company, among other things, issued to the Buyers (or their predecessors in interest) (i) that aggregate principal amount of senior secured convertible debentures (as amended, the “June 2006 Debentures”), set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers and (ii) warrants (as amended, the “June 2006 (collectively, the “June 2006 Warrant Shares”). C.         The Company, Castlerigg Master Investments Ltd. and Kings Road as of November 16, 2006 (as amended from time to time in accordance with its terms, the “November 2006 Securities Purchase Agreement”), whereby the Company, (i) that aggregate principal amount of senior secured convertible debentures (the “November 2006 Debentures;” together with the January 2006 Debentures and the June 2006 Debentures, the “Outstanding Debentures”), set forth opposite such Buyer’s name in column (7) on the Schedule of Buyers and (ii) a warrant (the “November 2006 Warrant;” together with the January 2006 Warrants and the June 2006 Warrants, the “Outstanding Warrants”), to acquire up to that number of additional shares of Common Stock set forth opposite such Buyer’s name in column (8) of the Schedule of Buyers (collectively, the “November 2006 Warrant Shares”).         D.         The Company has authorized a new series of senior secured convertible debentures of the Company, in substantially the form attached hereto as Exhibit A, which shall be convertible into shares of Common Stock, in accordance with the terms of such debentures. E.         Prior to Closing, Kings Road Investments Ltd. has assigned to Kings Road Holdings X Ltd., a Cayman Islands exempted company and wholly-owned subsidiary, all of its (a) Outstanding Debentures and Outstanding Warrants and (b) rights under the January 2006 Securities Purchase Agreement, the June 2006 Securities Purchase Agreement and the November 2006 Securities Purchase Agreement and all of the other agreements relating to its Outstanding Debentures and Outstanding Warrants. F.         Each Buyer and the Company wish to exchange at the Closing (as defined below), upon the terms and conditions contained in this Agreement, (i) that aggregate principal amount of Outstanding Debentures set forth opposite such Buyer’s name in column (9) on the Schedule of Buyers (which aggregate principal amount for all Buyers as of the date hereof is $27,082,301.37) for that aggregate principal amount of senior secured convertible debentures, in substantially the form attached hereto as Exhibit A (collectively, the “Debentures”), as set forth opposite such Buyer’s name in column (11) on the $27,759,503.96) (the Common Stock received upon such conversion, collectively, the “Conversion Shares”), and (ii) the Outstanding Warrants set forth opposite such Buyer’s name in column (10) on the Schedule of Buyers (exercisable in the aggregate for all Buyers as of the date hereof into 77,902,597 shares of Common Stock) for warrants (the “Warrants”), in substantially the form attached hereto as Exhibit B, to acquire up to that number of additional shares of the Common Stock set forth opposite such Buyer’s name in column (12) on the Schedule of H.         Contemporaneously with the execution and delivery of this Agreement, I.          The Debentures, the Conversion Shares, the Warrants and the Warrant   2       1.          EXCHANGE OF OUTSTANDING DEBENTURES AND OUTSTANDING WARRANTS FOR DEBENTURES AND WARRANTS. (a)        Exchange and Cancellation of Outstanding Debentures. Subject to the on the Closing Date (as defined below), (i) the Company shall issue and deliver to each applicable Buyer, and each such Buyer severally, but not jointly, shall accept the principal amount of Debentures as is set forth opposite such Buyer’s name in column (11) on the Schedule of Buyers in exchange for the surrender to the Company the Outstanding Debentures issued to such Buyer. (b)        Exchange and Cancellation of Outstanding Warrants. Subject to the on the Closing Date, (i) the Company shall issue and deliver to each applicable Buyer, and each such Buyer severally, but not jointly, shall accept Warrants to acquire up to that number of additional shares of the Common Stock set forth opposite such Buyer’s name in column (12) on the Schedule of Buyers in exchange for the surrender to the Company the Outstanding Warrants issued to such Buyer. Debentures for Debentures and Outstanding Warrants for Warrants shall occur at York 10173. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York City time, on the date hereof, subject to notification of each Buyer). (d)        Purchase Price. The Debentures and Warrants shall be issued to each Buyer in exchange for the Outstanding Debentures and Outstanding Warrants held by such Buyer, and without the payment of any additional consideration. (e)        Form of Payment. On the Closing Date, (i) each Buyer shall deliver, or cause to be delivered, to the Company for cancellation, the Outstanding Debentures held by such Buyer for the Debentures (in the denominations as such Buyer shall have requested prior to the Closing) to be issued to such Buyer at the Closing, and (ii) each Buyer shall deliver, or cause to be delivered, to the Company for cancellation, the Outstanding Warrants held by such Buyer for the Closing) to be issued to such Buyer at the Closing. At the Closing, the Company shall deliver to each Buyer the Debentures (in the denominations as such Buyer shall have requested prior to the Closing) and the Warrants (in the   3       2. Debentures and the Warrants, (ii) upon conversion of the Debentures will acquire the Conversion Shares, and (iii) upon exercise of the Warrants will acquire the (b)        Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D. Such Buyer is also an “institutional buyer” as such term is defined in Section 11.12(e) of Title 13 of the Official Securities.   4       in the Registration Rights Agreement: the Securities have not been and are not instruments representing the Debentures and the Warrants and, until removed in accordance with Section 3(l) of the Registration Rights Agreement, the stock SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID BY THE SECURITIES. and the Buyer has complied with Section 3(l) of the Registration Rights Agreement, (ii) in connection with a sale, assignment or other transfer, such   5     the 1933 Act, or (iii) such Securities are sold, assigned or transferred pursuant to Rule 144, or such holder provides the Company with reasonable (h)        Residency. Such Buyer is a resident of that jurisdiction specified 3. As an inducement to the Buyers to enter into this Agreement and to consummate the transactions contemplated hereby, the Company represents and warrants to each of the Buyers that each and all of the following representations and warranties (as modified by the disclosure schedules delivered to the Buyers “Schedules”)) are true and correct as of the date of this Agreement. The Schedules shall be arranged by the Company in paragraphs corresponding to the sections and subsections contained in this Section 3. transactions contemplated hereby and the other Transaction Documents, or by the obligations under the Transaction Documents. The Company has no Subsidiaries, Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the Pledge and Security Agreement among the Company and the Buyers dated the date hereof (the “Security Agreement”), and each of the other agreements entered into by the Securities in accordance with the terms hereof and thereof. Except as set forth on Schedule 3(b), the execution and delivery of the Transaction Documents by the Debentures, the reservation for issuance and the issuance   6     of the Conversion Shares issuable upon conversion of the Debentures, the Form D and one or more Registration Statements in accordance with the “Blue Sky” authorities as required therein) no further filing, consent, or remedies. respect to the issue thereof. As of the Closing, except as set forth on Schedule 3(c), the Company shall have reserved from its duly authorized capital stock not issuable upon conversion of the Debentures (assuming for purposes hereof, that the Debentures are convertible at the Conversion Price and without taking into account any limitations on the conversion of the Debentures set forth in the Debentures) and (ii) 100% of the maximum number of shares of Common Stock issuance or conversion in accordance with the Debentures or exercise in representations made by each Buyer in Section 2, the offer and issuance by the issuance of the Debentures, and the Warrants and, except as set forth on Schedule 3(d), the reservation for issuance of the Conversion Shares and the Incorporation or Bylaws (each as defined in Section 3(r)) of the Company or the governing documents of any of its Subsidiaries or the terms of any capital stock the Company or any of its Subsidiaries is a party; or (iii) result in a federal and state securities laws and the rules and regulations of the OTC   7       with the terms hereof or thereof (other than (v) the filing with the SEC of a Form D or one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (w) filings with “Blue Sky” authorities as required thereby, (x) filings required by the Security Agreement and (y) as set forth on Schedule 3(e)). All consents, authorizations, orders, suspension of the Common Stock in the foreseeable future. The Company is not in Except as set forth on Schedule 3(g) and except for the payment of expenses of Castlerigg Master Investments Ltd. to be reimbursed pursuant to Section 4(g), the Company shall not pay any placement agent’s fees, financial advisory fees, or brokers’ commissions relating to or arising out of the transactions contemplated hereby. Notwithstanding the foregoing, the Company shall be against, any   8     Company, its Subsidiaries, their affiliates or any Person acting on their behalf number of Conversion Shares issuable upon conversion of the Debentures, and the number of Warrant Shares issuable upon exercise of the Warrants, will increase to issue Conversion Shares upon conversion of the Debentures in accordance with this Agreement and the Debentures and its obligation to issue the Warrant Shares the Company. the Company. (k)        SEC Documents; Financial Statements. During the two years prior to were filed with the SEC, contained any untrue statement of a   9     2007, since February 28, 2007, there has been no material adverse change and no Company. Except as disclosed in Schedule 3(l), since February 28, 2007, the $100,000, other than in connection with its ongoing oil and gas projects in the ordinary course of business. The Company has not taken any steps to seek reasonably lead a creditor to do so. the Company, its Subsidiaries or their respective business, properties, Incorporation or Bylaws or other governing documents. Neither the Company nor Subsidiaries. Without limiting the generality of the foregoing, the Company is Market in the foreseeable future. During the two (2) years prior to the date or delisting of the Common Stock from the Principal Market. Except as set forth in Schedule 3(a), the Company   10     stock of the Company consists of 10,000,000 shares of preferred stock, $0.001 par value per share, none of which is issued and outstanding, and 335,000,000 shares of Common Stock, of which as of the date hereof, 107,428,360 shares are issued and outstanding, 11,404,000 shares are reserved for issuance pursuant to the Company’s stock option and purchase plans and 189,433,841 shares are reserved for issuance pursuant to securities (including the Outstanding Debentures and the Outstanding Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock (subject to increase to cover the anti-dilution provisions associated therewith). All of such outstanding shares nonassessable. Except as disclosed in Schedule 3(r) or the Company’s Quarterly Report on Form 10-Q for the period ending February 28, 2007: (i) none of the Company’s share capital is subject to preemptive rights or any other similar bound to issue additional share capital of   11     share capital of the Company or any of its Subsidiaries; (iii) there are no its Subsidiaries’ respective businesses. Company’s Quarterly Report on Form 10-Q for the period ended February 28, 2007, contract, agreement or instrument relating to any Indebtedness, or (iv) is a expected to have a Material Adverse Effect, except as otherwise disclosed in Schedule 3(s). Schedule 3(s) provides a detailed description of the material   12     public board, government agency (including the SEC), self-regulatory (v)        Employee Relations. Neither Company nor any of its Subsidiaries is a practices and benefits, terms and conditions of employment and   13     Adverse Effect. except as set forth on Schedule 3(w), which does not materially affect the value of such property and does not interfere with the use made and proposed to be Subsidiaries. Attached as Schedule B to the Schedules is a copy of the unaudited balance sheet of Maverick Operating Company LLC as of June 30, 2007, which balance sheet has been prepared in accordance with generally accepted accounting principles, consistently applied (except (i) as may be otherwise indicated in such balance sheet or the notes thereto, or (ii) to the extent they may exclude footnotes or may be condensed or summary statements) and fairly presents in all material respects the financial position of Maverick Operating Company LLC as of the date thereof (subject to normal year-end audit adjustments). environment, or otherwise relating to the   14     disclosure. Except as set forth on Schedule 3(cc), during the twelve months prior to the date hereof, neither the Company nor any of its Subsidiaries have   15       (ee)       Ranking of Debentures. Except as permitted by the Debentures, no Indebtedness of the Company will rank senior to or pari passu with the Debentures in right of payment, whether with respect to payment of redemptions, (ff)       Form S-3 Eligibility. Upon either (i) the listing and registration of shares of Common Stock on a national securities exchange or (ii) the quotation of Common Stock on an automated quotation system of a national securities association, the Company will be eligible to register the Conversion Shares and 1933 Act, as such form is in effect on the date hereof. For the avoidance of doubt, this Section 3(ff) shall not obligate the Company to list and register of shares of Common Stock on a national securities exchange, or have the Common Stock quoted on an automated quotation system of a national securities association. securities of the Company (except for customary placement fees payable in (ii)        Disclosure. The Company understands and confirms that each of the misleading. Each press release issued by the Company since March 10, 2005 did which, under applicable law, rule or   16     will be contained within the Company’s next due Form 10-Q and information relative to this transaction. (jj)        No Event of Default. After giving effect to the terms of this Agreement, no Default or Event of Default (as defined in the Debentures) shall have occurred and be continuing as of the time immediately following the Closing Date. 4. COVENANTS. reasonable efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement. in the Registration Rights Agreement) shall have sold all the Conversion Shares and Warrant Shares and none of the Debentures or Warrants is outstanding (the termination. (d) Reporting Period (i) unless filed with the SEC through EDGAR and available to the public through the EDGAR system, within one business day after the filing thereof with the SEC, a copy of all Annual Reports on Form 10-K or 10-KSB, any the same day as the release thereof, copies of all press releases issued by the stockholders. (f)         Listing. To the extent the Company’s Registrable Securities are listed upon a national securities exchange or automated quotation system that provides for the listing of   17     securities, the Company shall promptly secure the listing of all of the (g)        Fees. The Company shall reimburse Castlerigg Master Investments Ltd. therewith), which amounts shall be added to the principal amount of the Debentures issued to such Buyer at the Closing. The Company shall be responsible Document, including, without limitation, Section 2(f) hereof. The Company hereby schedules to this Agreement), the form of Debentures, the form of Warrant and Filing”). Any material non-public information provided by the Company to any Buyer in connection with this transaction shall be included by the Company within the aforementioned 8-K Filing. From and after the filing of the 8-K Filing with the SEC, the Company represents and acknowledges that that no Buyer directors, employees or   18     remedy provided herein or in the Transaction Documents, a Buyer may, but shall not be obligated to, notify the Company of such breach and the material, nonpublic information the receipt of which resulted in such breach. Within two business days of receipt of such notice, the Company shall either (a) deliver a notice to such Buyer certifying such material, non-public information has already been publicly disclosed by the Company or (b) make a public disclosure, any applicable Buyer, the Company shall not disclose the name of any Buyer or its affiliates in any filing, announcement, release or otherwise. Debentures are outstanding, the Company shall not, directly or indirectly, without the prior express written consent of the holders of Debentures representing not less than a majority of the aggregate principal amount of the then outstanding Debentures. (k)        Additional Debentures; Variable Securities; Dilutive Issuances. So any Debentures (other than to the Buyers as contemplated hereby) and the Company the Debentures. For so long as any Debentures or Warrants remain outstanding, options to subscribe for or purchase Common Stock or directly or indirectly convertible into or exchangeable or exercisable for Common Stock at a price which varies or may vary after issuance with the market price of the Common the then applicable Conversion Price (as defined in the Debentures) with respect to the Common Stock into which any Debenture is convertible or the then Common Stock into which any Warrant is exercisable. For purposes of clarification, this does not prohibit the issuance of securities with customary “weighted average” or “full ratchet” anti-dilution adjustments which adjust a fixed conversion or exercise price of securities sold by the Company in the future. For so long as any Debentures or Warrants remain outstanding, the Company shall not, in any manner, enter into or effect any Dilutive Issuance (as defined in the Outstanding Debentures) if the effect of such Dilutive Issuance is to cause the Company to be required to   19     issue upon conversion of any Debentures or exercise of any Warrant any shares of Company may issue upon conversion of the Debentures and exercise of the Warrants the Principal Market. acting on their behalf shall, directly or indirectly, make any offers or sales of any security or solicit any offers to buy any security, under circumstances the Principal Market such that the representation set forth in the last sentence of either Section 3(c) or Section 3(d)(iii) would not be accurate as if such representations were made as of such time. (m)       Incurrence of Liens. So long as any Debentures are outstanding, the other than Permitted Liens (as defined in the Debentures), upon any property or Subsidiary. than 100% of the sum of the number of shares of Common Stock issuable upon conversion of all of the Debentures and shares of Common Stock issuable upon (p) (q)        Stockholder Approval. The Company shall, no later than ten (10) days after the Closing Date, file a preliminary Information Statement (as defined below) with the SEC, and take all other steps necessary to effect a reverse stock split at a ratio of not less than 20:1 (the “Reverse Stock Split”) as soon as practicable. Without limiting the generality of the foregoing, the Company shall provide each stockholder an information statement, substantially in the form which has been previously reviewed by the Buyers and McDermott Will & Emery LLP (the “Information Statement”), providing for such reverse stock split in accordance with applicable law (such affirmative approval being referred to herein as the “Stockholder Approval”). The Company shall be obligated to use its best efforts to obtain the Stockholder Approval as soon as practicable.   20       5. notice to each holder of Securities), a register for the Debentures and the whose name the Debentures and the Warrants have been issued (including the name and address of each transferee), the principal amount of Debentures held by such Person, the number of Conversion Shares issuable upon conversion of the Debentures and Warrant Shares issuable upon exercise of the Warrants held by conversion of the Debentures or exercise of the Warrants in the form of Exhibit D attached hereto (the “Irrevocable Transfer Agent Instructions”). The Company 6. CONDITIONS TO THE COMPANY’S OBLIGATION TO EXCHANGE. (a)        The obligation of the Company hereunder to exchange the Outstanding Debentures for the Debentures and the Outstanding Warrants for the Warrants to notice thereof:   21       (ii)        Such Buyer shall have delivered to the Company for exchange its Outstanding Debentures and Outstanding Warrants. 7. CONDITIONS TO EACH BUYER’S OBLIGATION TO EXCHANGE. (a)        The obligation of each Buyer hereunder to exchange the Outstanding Debentures held by it for the Debentures and the Outstanding Warrants held by it for the Warrants at the Closing is subject to the satisfaction, at or before the notice thereof: of the Transaction Documents and (B) the Debentures (in such denominations as such Buyer shall have requested prior to the Closing) and the related Warrants (in such denominations as such Buyer shall have requested prior to the Closing) (ii)        Such Buyer shall have received the opinions of Buchanan Ingersoll & Rooney, PC, and Woodburn & Wedge, each the Company’s outside counsel, dated as of the Closing Date, in substantially the forms of Exhibit E-1 and Exhibit E-2, attached hereto.   22       State of Nevada as of a date reasonably proximate to the Closing Date. Principal Market. party consents and approvals, if any, necessary for the exchange of the Securities. (xii)      The Company shall have obtained all consents, amendments and/or waivers required under (A) the January 2006 Securities Purchase Agreement and the other transaction documents entered into in connection therewith, (B) the June 2006 Securities Purchase Agreement and the other transaction documents entered into in connection therewith and (C) the November 2006 Securities Purchase and the other transaction documents entered into in connection therewith, in each case, necessary for the consummation of the transactions contemplated by the Transaction Documents (including sale of the Securities) or as any Buyer or its counsel may reasonably request. (xiii)     The Company shall have delivered to such Buyer, written consents in the form attached hereto as Exhibit H, executed by stockholders holding the greater of (A) 51% of the outstanding shares of Common Stock or (B) such other percentage of the outstanding shares of Common Stock that is required to approve the Reverse Stock Split (which   23     shall include, without limitation, Line Trust Corporation Limited), indicating such stockholders’ consent to the Reverse Stock Split contemplated by (xiv)     The Company and its Subsidiaries shall have executed and delivered to such Buyer the Security Agreement encumbering all the assets of the Company and its Subsidiaries. (xv)      The Company shall have obtained and delivered to such Buyer searches of Uniform Commercial Code filings in the jurisdiction of formation of the Company and its Subsidiaries, the jurisdiction of the chief executive office of the Company and its Subsidiaries and each jurisdiction where any Collateral (as made in order to perfect the Buyers’ security interest in the Collateral, copies (xvi)     The Company and its Subsidiaries shall have executed and delivered to such Buyer UCC financing statements for each appropriate jurisdiction as is necessary, in the Buyers’ sole discretion, to perfect the Buyers’ security (xvii)    The Company shall have obtained and delivered to such Buyer a waiver from Trident Growth Fund, L.P. with respect to the anti-dilution of its existing warrants, in the form attached hereto as Exhibit I. (xviii)   Each other Buyer shall have concurrently delivered to the Company for exchange its Outstanding Debentures and Outstanding Warrants. 8. INTENTIONALLY DELETED. 9.          TERMINATION. In the event that the Closing shall not have occurred with respect to a Buyer on or before five business days from the date hereof due provided, however, if this Agreement is terminated pursuant to this Section 9, 10. MISCELLANEOUS.   24     signature. Agreement. Agreement made in conformity with the provisions of this Section 10(e) shall be Person   25     the parties to the Transaction Documents, holders of Debentures or holders of otherwise. shall be: 16415 Addison Road, Suite 850 Addison, Texas 75001-5332 Telephone: 214 239-4333   Facsimile: 214 239-4334   Attention: Stephen M. Cohen, Esq.   Chief Executive Officer     Director of Legal Affairs/Corporate Counsel Two Logan Square   18th and Arch Streets, Ste. 1101 Philadelphia, PA 19103   Telephone: 215 545-2702   Facsimile: 215 545-2862     and to Brian North, Esq. Buchanan Ingersoll, PC   1835 Market Street, 14th floor Philadelphia, PA 19103   Telephone: 215 665-3828   Facsimile: 215 665-8760     26       StockTrans, Inc. 44 W. Lastcaster Avenue   Ardmore, PA 19003   Telephone: 800 733-1121   Facsimile: 610 649-7302   Attention: Jonathan Miller of Buyers, 340 Madison Avenue     Telephone: 212 547-5400   Facsimile: 212 547-5444   Attention: hereunder in connection with transfer of any of its Securities without the (i)         Survival. Unless this Agreement is terminated under Section 9, the 10 shall survive the Closing. Each   27     Buyer shall be responsible only for its own representations, warranties, transactions contemplated hereby. law. The indemnification provided in this Section 10(k) shall not apply to any indemnified Liabilities which are the subject of the indemnification provided obligations under this Section 10(k) shall be the same as those set forth in   28         29       signature page to this Securities Exchange Agreement to be duly executed as of COMPANY: MAVERICK OIL AND GAS, INC. By: /s/ Stephen M. Cohen Name: Stephen M. Cohen         BUYERS: By: Name:       By: Name: Title:       EXHIBITS Exhibit A Form of Debentures   Exhibit B Form of Warrants   Exhibit C Registration Rights Agreement   Exhibit D Irrevocable Transfer Agent Instructions   Exhibit E-1 Form of Buchanan Ingersoll & Rooney, PC Opinion Exhibit E-2 Form of Woodburn & Wedge Opinion   Exhibit F Form of Secretary’s Certificate   Exhibit G Form of Officer’s Certificate   Exhibit H Shareholder Consents   Exhibit I Form of Waiver   SCHEDULES   Organization and Qualification     Issuance of Securities   No Conflicts   Consents     Absence of Certain Changes   Equity Capitalization   Indebtedness and Other Contracts   Absence of Litigation   Title       SCHEDULES TO SECURITIES EXCHANGE AGREEMENT These are the Schedules referred to in that certain Securities Exchange Agreement dated as of July 30, 2007 (the “Agreement”) by and among the Buyers referred to therein (the “Buyers”) and Maverick Oil and Gas, Inc. (the the meanings ascribed to them in the Agreement. The headings in the Schedules are for convenience of reference only. or warranty contained in the Agreement or to create any covenant unless clearly specified to the contrary herein. Any disclosure on one Schedule shall be deemed to be disclosed on each other Schedule, provided that the qualification of the related statement in the Agreement is reasonably apparent on its face. Inclusion of any item in the Schedules shall not constitute, or be deemed to be, an                                     Schedule 3(a) - Organization and Qualification Organization and Qualification   Status of Good Standings   Name of Entity EIN# Domestic Jurisdiction Foreign Qualification Documents Received & Dated (if applicable)   98-0377027   Nevada   7-10-2007   Florida   Maverick Operating Company LLC   20-2820985   Texas Texas (Comptroller)   Texas - SOS   Arkansas   Maverick Turner Escalera, LLC   20-2249653   Delaware   7-11-2007   Florida   Texas (Comptroller) 7-17-2007   Texas - SOS   Maverick Whitewater, LLC   20-2249712   Delaware     Colorado   Florida   Maverick Zapata County, LLC     20-2822239 Delaware     Florida   Texas (Comptroller) (1) Maverick Zapata County Exploration, LLC Texas - SOS RBE, LLC   84-1653499 Delaware     Florida   Texas (Comptroller) (1)   Texas - SOS   Maverick Basin Exploration, LLC   13-4282789 Delaware     Florida   Texas (Comptroller) Maverick Deep Basin Exploration, LLC   Texas - SOS Maverick Woodruff County, LLC     45-0527640 Delaware       Arkansas   Florida   Ferrell RBE Holdings, LLC 35-2235277 Delaware No longer active - winding down       (1) Currently not in good standing with the Comptroller in Texas       Schedule 3(b)-Authorization   The Board of Directors of the Company has approved a 20-1 reverse stock split of the Company’s outstanding shares, while leaving the Company’s authorized shares unchanged (the "Reverse Split"). The Company has also received written consents from the holders of over 50% of its outstanding shares of Common Stock authorizing this Reverse Split. The Company will need to file an Information Statement with the SEC and comply with Regulation 14C before the Reverse Split can become effective   Schedule 3(c)-Issuance of Securities   N/A   Schedule 3(d) – No Conflicts   Please refer to discussion in Schedule 3(b) above.     To effectuate the Reverse Split,: (i) the Company will be required to rely upon the consent resolutions provided by its principal shareholders and (ii) the Company will need to file an Information Statement with the SEC, incorporate any comments made by its staff, and comply with Regulation 14C. For the purposes hereof, the Company has presumed that it has secured the consent of the Buyers under the terms of the convertible debentures and warrants issued to them pursuant to the Securities Purchase Agreement dated January 5, 2006 (the "January 2006 SPA"), the Securities Purchase Agreement dated June 21, 2006 (the “June 2006 SPA”), and the Securities Purchase Agreement dated November 16, 2006 (the “November 2006 SPA”) , each between the Company and the Buyers.   Schedule 3(g)-Placement Agent Fees   N/A   Schedule 3(l)-Absence of Certain Changes   ●          Since February 28, 2007, the Company has continued to incur material losses and cash flow deficits during the third and fourth quarters of fiscal year 2007 (collectively, the “Interim Periods”). During the third quarter of fiscal year 2007, the Company completed the sale of its interest in the Barnett Shale project and paid approximately $19 million towards the Outstanding Debentures, including accrued interest. The currently remaining capital resources of the Company will only be sufficient to support the operations of the Company for the immediate term, and absent material proceeds from a capital or financing transaction, the Company will not be able to remain a going concern for more than the immediate term. Accordingly, the Company will need to include reference to a "going concern" risk in its Quarterly Report on Form 10-Q for its third quarter of fiscal year 2007.         ●          During the third quarter of fiscal year 2007, the Company incurred operating losses of approximately $2 million, and has continued to incur operating losses after May 31, 2007, although at lower rates. As of May 31, 2007, the Company believes it had a working capital deficit of approximately $6 million, which includes approximately $2.5 million owed to Fayetteville vendors, $1.6 million of over advances made by Fayetteville project partners, $500,000 in accrued interest expense and $1.2 million accrued in connection with the M. A. Wallace litigation described in Schedule 3(t). Furthermore, our working capital deficit does not reflect in excess of $3 million owed to us by a bankrupt Fayetteville project partner, as we don’t believe there is any reasonable chance of recovery and as these amounts have been reclassified to an investment in the underlying asset account. Furthermore, we are aware that our bankrupt Fayetteville project partner is currently marketing its interest in the Fayetteville shale project. If the sales efforts indicate a fair market value of the Fayetteville interest below our carrying value, we will have to consider making a downward adjustment to that asset on our financial books and records.   ●          Absent a material financing, the Company does not have adequate resources to satisfy its outstanding trade payables. The Company’s inability to satisfy its outstanding trade payables has had an adverse effect on the Company’s ability to remain in operation as a going concern.   ●          Also, in the course of the wind-down of the Company’s activity in Fayetteville, the Company became aware of certain items that could have an adverse effect on the Company if not addressed: (i) a commitment for the continued use of a drilling rig previously deployed in Woodruff County, through January 2008; (ii) drilling commitments that require wells to be drilled on certain acreage within the Fayetteville Shale Project, starting in June 2007 through the end of calendar 2007, which, if not satisfied, will result in a loss of between 30%-35% of the acreage within our Fayetteville project and will impose several million dollars of financial penalties upon the Company; and (iii) commitments to acquire additional leasehold acreage within Woodruff and surrounding counties of Arkansas that have not been funded.   In connection with registration rights granted (see Schedule 3(r) below) to investors who purchased securities during 2004 and 2005, certain claims may be asserted in connection with the Company’s failure to renew its Prospectus dated August 1, 2005, although based upon: (i) the scope of the registration rights agreed to; (ii) the ability of most of those shareholders to sell under Rule 144; and (iii) the market price of the Company’s common stock since the Prospectus became “stale”, the Company does not believe any of these claims could be material. The purchasers in our December 2006 private placement have demand registration rights since their shares were not included in a registration statement on or before March 31, 2007.     The Company has prepared, but not filed, its Quarterly Report on Form 10-Q for the quarter ended May 31, 2007.   Schedule 3(m) – No Undisclosed Events, etc.   The information included within Schedule 3(l) has not been included in any of the Company’s SEC Documents since the information contained therein relates to periods for which no SEC report is yet due and public disclosure is not otherwise required .           Schedule 3(r) – Equity Capitalization   Capitalization   The Company’s equity capitalization is summarized on attached Schedule “A”.   Preemptive and Similar Rights   ●          The Buyers have the rights set forth in Section 4(p) to the January 2006 SPA, the June 2006 SPA and the November 2006 SPA, which rights will be terminated upon the closing of this transaction.   Outstanding Options and Warrants   ●          The Company has issued the options and warrants identified in Schedule "A"   Outstanding Debt Securities and Notes   ●          The Outstanding Debentures issued to the Buyers in the January 2006 SPA, June 2006 SPA and November 2006 SPA, each of which will be exchanged for the Debentures at the closing of this transaction.   Financing Statements   ●          Reference is made to the lien searches secured by the Company and provided to the Buyers on or before the date hereof.   Registration Rights   ●          Registration rights remain in effect covering those transactions and shares identified in the schedules to the January 2006 SPA, June 2006 SPA and November 2006 SPA.   ●          Registration rights remain in effect with respect to the shares covered by the Company’s Prospectus dated August 1, 2005.   ●          The registration rights set forth in Sections 2 and 3 of Registration Rights Agreements related to the January 2006 SPA, June 2006 SPA, and November 2006 SPA, which rights will be terminated upon the closing of this transaction.   ●           Registration rights were granted to the investors who purchased the shares and warrants sold by the Company in a private placement transaction during December 2006. The Company has also elected to register the balance of the approximately 20 million shares purchased from the Company by Line Trust Limited and its affiliates during January 2005.     Anti-Dilution Adjustments         ●          Full-ratchet rights and “gross-up" associated with 533,276 warrants issued or issuable to Trident Growth Fund, L.P. ("Trident") in connection with an October 2005 transaction (@$1.00) and 213,310 Warrants issued to Trident in July 2004 (@$1.00) (although as a result of the convertible debentures and associated warrants, issued pursuant to the January 2006 SPA the exercise price of the Trident Warrants has already been reduced to $.93 per share), have been waived by Trident pursuant to Letter Agreements with the Company dated November 1, 2006 and June 6, 2007, copies of which have been provided to the Buyers.   ●          Full-ratchet rights contained in the Outstanding Warrants issued to the Buyers pursuant to the January 2006 SPA June 2006 SPA and November 2006 SPA, which Outstanding Warrants will be exchanged for Warrants at the closing of this transaction.   No Liabilities or Obligations   ●          The information included in Schedule 3(l) have not been included in any of the Company’s SEC Documents since the information contained therein relates to periods for which no SEC report is yet due, and public disclosure is not otherwise required.       Schedule 3(s) – Indebtedness and Other Contracts   ●          Indebtedness under the Outstanding Debentures issued pursuant to the January 2006 SPA, the June 2006 SPA and the November 2006 SPA, each of which will be exchanged for Debentures at the closing of this transaction.   Schedule 3(t) – Absence of Litigation     On March 5, 2007, M.A. Wallace and Elvia Vaudine Wallace filed suit against us and our wholly-owned subsidiary, Maverick Woodruff County, LLC (“Woodruff County”), in the Circuit Court of Cross County, Arkansas. The plaintiffs have asserted damages of approximately $1.2 million based upon their allegation that Woodruff County failed to perform under the terms of an agreement to lease their acreage in Saint Francis and Woodruff Counties within Arkansas. We have recently filed an answer denying certain of the claims and asserting certain affirmative defenses. However, we are presently unable to predict with any certainty the outcome of this matter in view of the early stage of the proceeding.   On June 5, 2007, Union Drilling, Inc. filed a civil action against Maverick Operating Company, LLC in the Circuit Court of Pulaski County, Arkansas, seeking damages of approximately $1.6 million in connection with work performed by Union Drilling on the Fayetteville project. The Company does not dispute the amount due and owing, and is in the process of attempting to     secure an amicable settlement of the matter. However, any settlement will require a cash payment to Union Drilling which the Company does not presently have.   From time to time Fayetteville vendors and landowers the Company owes money to have threatened to commence litigation to collect the amounts owed to them.   Schedule 3(w) – Title   None.     Section 3(cc) - Internal Accounting and Disclosure Controls   As disclosed in the Company's Quarterly Report on Form 10-Q for the period ended November 30, 2005, some accounting entries relating to debt and equity instruments required adjustment upon review by our independent auditors.                       Schedule A                 Maverick Oil & Gas, Inc.           Summary of Oustanding Capital           PROFORMA* 30-Jul-07                         *Assuming completion of July 30, 2007 transaction.                         DESCRIPTION Oustanding shares calculation           Number of shares           Currently outstanding  shares 107,428,360 [1]       July 30, 2007 Investment Warrants 77,902,597 [2]         July 30, 2007 Debentures 111,038,016 [2], [3]     December 19, 2006 Investment Warrants 5,225,000           Other warrants outstanding 17,185,010 [4]       Currently outstanding options. 3,544,000           Total fully-diluted 322,302,981                                     [1] Reflects surrender of 1,000,000 restricted shares issued to James A. Watt (fomer CEO). Also includes 80,000 restricted shares issued to John Ruddy, 30,000 restricted shares issued to Ron Idom and 30,000 restricted shares issued to Bill Irwin, each of which vest over 3 annual installments commencing March 23, 2007.               [2] See schedule below.                                     [3] Principal oustanding at July 30, 2007 $27,759,503.96 convertible at $0.25/dollar of principal.                 [4] Reflects the surrender of 5,225,000 Warrants by Line Trust on December 19, 2006.                                                 Breakdown of shares issuable in connection with the July [*], 2007 agreement     Exercise of Investment Warrants Conversion of principal amount Beneficial Owner         58,426,949 83,353,512 [Investor]     19,475,648 27,684,504 [Investor]     77,902,597 111,038,016           [2] [3]                               Schedule B                     Maverick Operating Company, LLC           Balance Sheet             As of June 30, 2007                             ASSETS                         Current Assets:                                 Cash & Cash Equivalents   $(34,276)                           Accounts Receivable - Joint Owners               Cygnus Oil & Gas (Note 1) 3,593,142             Bamco Gas, LLC (15,708)             PHT Whitewater 5,323             Chesapeake Operating, Inc. 2,946 3,585,704                           Prepaids & Other Assets:               Deposits - Dallas Office/Rent 3,225             Surety Bond 110,041 113,266                           Total Current Assets   3,664,694                                                       Long-Term Assets:             Property, Plant & Equipment, net               Office Building 214,479             Office Furniture & Equipment 28,658 243,137                           TOTAL ASSETS   $3,907,831                         Note 1:             This balance corresponds to Cygnus' share of drilling and development activity in the Fayetteville Shale. On a consolidated basis, a portion of this receivable has been reclassified to Unproved O&G properties and another portion to exploration expense to reflect the uncollectible status of that receivable due to their their bankruptcy filing.                                                                   LIABILITIES & SHAREHOLDERS' EQUITY                         Current Liabilities:                               Accounts Payable & Accrued Expenses $2,328,549                           Advances from Joint Owners:               Bamco, LLC 992,171             Maverick Whitewater 56,841             535,767 1,584,780                                       Total Current Liabilities   3,913,328                         Shareholders' Equity:               11,749         Year-to-date gain (loss)   (71,803)         Retained earnings prior year   54,557         Total Shareholders' Equity   (5,497)                           TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,907,831                                            

TRANSITION AGREEMENT   TRANSITION AGREEMENT (“Agreement”), dated as of May 5, 2006 between Archer Daniels Midland Company, a Delaware corporation (the “ADM”), and G. Allen Andreas (“Executive”), a citizen of the State of Illinois.   WHEREAS Executive has been employed by ADM in the capacity of Chief Executive Officer (“CEO”) and President; and   WHEREAS Executive has served ADM as a Director and as the Chairman of the Board of Directors (“Chairman”); and   WHEREAS Executive and ADM have agreed that Executive will resign as CEO and President and will continue to serve as Director and Chairman; and   WHEREAS the parties wish to provide for an orderly transition of Executive’s duties and responsibilities as CEO and President, and to document the terms and conditions pertaining to his continuing duties and responsibilities as a Director and as Chairman;   hereby acknowledged, ADM and Executive hereby agree as follows:   Section 1.  Resignation as CEO and President. Executive hereby resigns as CEO and President effective May 1, 2006, and from all of his officer positions with ADM; and Executive will resign as an officer or representative of ADM for any affiliate of ADM and all boards of directors of such affiliates, or for which Executive serves as ADM’s representative, and agrees to execute and deliver any and all further documentation reasonably requested by ADM in order to evidence and effect such resignation(s), as requested by the CEO or the Board. Upon such resignation(s), Executive shall remain an employee of ADM, as well as a Director and Chairman.   Section 2.  Continued Employment as Chairman. Following Executive’s resignation as CEO and President, and prior to his Retirement Date (as defined in Section 3 below)(assuming Executive’s reelection as a Director of ADM), to secure Executive’s continued services for ADM, the other terms and conditions of Executive’s employment (including his current base salary of $3,060,000) shall remain the same as in effect on the date of this Agreement through August 31, 2006 (including Executive’s receipt of his normal equity incentive award for fiscal year 2006); provided, however, that Executive shall not be eligible for equity incentive awards after the August 2006 grant related to ADM’s fiscal year 2006. Thereafter, in lieu of his current base salary, Executive will be paid at the rate of $1,000,000 per annum for his services as Chairman (“Chairman Compensation”), and Executive will be provided with office and secretarial support similar to his current arrangements at a location to be mutually agreed between the parties. Executive will also be provided with air and ground transportation while on ADM business, and access to existing corporate lodging in New York City and Washington, D.C. while on ADM business, similar to his current arrangements. While Executive remains Chairman, he shall perform such normal and customary duties as Director and Chairman and fulfill such other roles in those capacities for ADM as may be reasonably agreed between the Executive and the Board, and shall otherwise continue his normal duties and obligations (including his duty of loyalty) as an employee of ADM.   Section 3.  Retirement as Chairman. After September 1, 2006, for the remainder of ADM’s 2007 fiscal year, upon any date that a majority of the Board or ADM’s shareholders determine, Executive will retire and resign as a Director and as Chairman (the “Retirement Date”). After the conclusion of ADM’s 2007 fiscal year, upon any date that Executive, a majority of the Board or ADM’s shareholders determine, Executive will retire and resign as a Director (assuming Executive’s reelection as a Director of ADM) and as Chairman (then the “Retirement Date”), and Executive agrees to execute and deliver any and all further documentation reasonably requested by ADM in order to evidence and effect the retirement. If Executive’s Retirement Date is prior to July 1, 2008, he shall remain an employee of ADM until the close of business on June 30, 2008, and shall be available (consistent with his outside obligations) to provide such services to the Board and the CEO as shall be reasonably agreed between Executive and the Board. In any event, and regardless of whether Executive remains Chairman, Executive shall cease to be an employee of ADM at the close of business on June 30, 2008.   Section 4.  Payments. Upon Executive’s retirement, ADM shall provide Executive   (a)  Continued Chairman Compensation. If the Retirement Date is prior to September 1, 2009, Executive shall continue to receive his Chairman Compensation until September 1, 2009; provided, however, that if Executive voluntarily elects to retire and resign as a Director and Chairman prior to July 1, 2007, he shall not receive Chairman Compensation after his Retirement Date, and he shall forfeit any unvested equity awards as of his Retirement Date that were granted under ADM’s equity plans other than ADM’s 2002 Incentive Compensation Plan, but he shall receive the remainder of the benefits described in this Agreement. Such Chairman Compensation shall be paid in accordance with ADM’s regular payroll cycles and in a manner consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). If the Retirement Date is on or after September 1, 2009, Executive shall not receive any Chairman Compensation after his Retirement Date.   (b)  Equity Awards. Upon Executive’s Retirement Date, Executive shall continue to vest in his outstanding equity awards as provided in this paragraph. With Plan (including the normal August 2006 award), Executive’s retirement shall conclusively be deemed to be pursuant to “Retirement,” as such term is used in Executive’s various stock award and stock option agreements. With respect to awards granted under other equity plans, subject to Executive’s full compliance with Section 5 below, such awards shall continue to vest in accordance with their regular vesting schedules, and any awards that have not previously vested on September 1, 2009 shall become fully vested on that date. In addition, any vested options shall remain exercisable as if Executive remained employed until the end of the original term (or such shorter period of time as is necessary so that such options are not subject to the tax imposed by Code Section 409A). To the extent any equity awards under ADM’s equity plans other than ADM’s 2002 Incentive Compensation Plan cannot be fully vested and Executive is otherwise entitled to have them vested under the terms of this Agreement, ADM will pay to Executive the cash value of such awards (including the spread between the option price and the current fair market value of ADM’s stock) on the later of the date when such award would otherwise have become vested or the first date on which such payment would not be subject to the tax imposed by Code Section 409A.     pension benefits shall be paid prior to the first date on which they would not be subject to the tax imposed by Code Section 409A.   (ii)  If Executive’s Retirement Date is prior to July 1, 2008, Executive and his family shall be entitled to continued participation as an employee in all Executive and his family were participating on the Retirement Date until the earlier of (A) July 1, 2008, or (B) the date, or dates, Executive receives substantially similar coverage and benefits under the plans and programs of a subsequent employer (such coverage and benefits to be determined on a determined as if Executive had continued to be an active employee of ADM, and ADM shall continue to pay the costs of such coverage under such plans on the same basis as is applicable to active employees covered thereunder; provided that, if participation in any one or more of such plans is not possible under the terms thereof, ADM shall provide substantially identical benefits or, at Executive’s election, reimburse Executive for his cost of obtaining comparable coverage from a third-party insurer. In any event, Executive and his eligible dependents shall be eligible to participate in ADM’s retiree welfare benefits program.   (iii)  If Executive’s Retirement Date is prior to July 1, 2008, Executive shall be credited with service and age credits as an employee under ADM’s supplemental retirement plans until July 1, 2008, and Executive may commence benefits on July 1, 2008 in any form permitted by the applicable retirement plan as of the date of this Agreement. If Executive’s Retirement Date is on or after July 1, 2008, Executive may commence benefits upon his Retirement Date (or the first date on which payment of such benefits would not be subject to tax imposed by Code Section 409A) in any form permitted by the applicable retirement plan as of the   (iv)  If Executive’s Retirement Date is prior to July 1, 2008, Executive shall, until July 1, 2008, receive office and secretarial support similar to his current arrangements at a location to be mutually agreed upon by the parties. If Executive’s Retirement Date is on or after July 1, 2008, he shall not receive office and secretarial assistance after his Retirement Date.   (v)  Executive shall be reimbursed for the reasonable legal and professional fees incurred by him for the negotiation and documentation of this Agreement.   (vi)  Executive shall be paid for any (A) base salary (at the rate of salary in effect immediately prior to the Retirement Date) to the extent earned but unpaid as of the Retirement Date, (B) accrued but unused vacation days and (C) Retirement Date in accordance with Company policy in effect on the Retirement Date which have not yet been reimbursed. Such payment shall be made in accordance with ADM’s standard payroll and expense reimbursement practices.   Section 5.  Covenant Not To Compete. Executive acknowledges and agrees that he has, from time to time, executed Non-Disclosure Agreements with ADM which continue in full force and effect during the period of his employment and thereafter by their terms, and further acknowledges and agrees that during his tenure as CEO Executive had direct access to and personal knowledge of ADM’s most important proprietary business information including, but not limited to, business plans and strategies, financial information, trading and hedging strategies, and operational methods, plans and strategies. This information is proprietary to ADM and subject to reasonable efforts by ADM to secure its confidentiality. This proprietary information has significant value to ADM as it provides ADM with a strategic advantage over its Competitors (as defined below). Were this information provided to ADM’s Competitors, or were Executive to be engaged by ADM’s Competitors, since Executive would not be unable to perform his duties for such Competitors without disclosing ADM’s confidential and proprietary business information, ADM would be irreparably harmed. Therefore, beginning on Executive’s Retirement Date and continuing until September 1, 2009, of ADM, which consent shall not be unreasonably withheld, own any interest in, except the ownership of stock in a publicly-traded company, take any employment with, or act as a director, officer, agent, consultant, advisor, independent contractor or in any other capacity whatsoever, directly or indirectly, with or to any any entity that would compete with any of the material businesses of ADM (“Competitors”). As further consideration for Executive’s agreement to forego such opportunities, ADM will pay Executive $1,000,000 on September 1, 2009 provided that Executive is then in full compliance with the provisions of this Section 5. In the event that Executive continues to serve as Chairman or as a director of ADM after July 1, 2008, the period of non-competition shall begin on the last day of Executive’s service as a director and shall continue for fifteen (15) calendar months thereafter, at which time ADM will pay Executive the $1,000,000 described in the preceding sentence, provided that Executive is then in full compliance with the provisions of this Section 5. During these same periods, Executive will not hire or solicit for employment any executive of ADM or its subsidiaries or affiliates without the prior written consent of the CEO or President of ADM. ADM’s exclusive remedy for Executive’s failure to fully comply with this Section 5 shall be the forfeiture of the payment described in the preceding sentence, the forfeiture of any equity awards issued under plans other than ADM’s 2002 Incentive Compensation Plan that are unvested at the time of such breach, and the forfeiture of any unpaid Chairman Compensation.   Section 6.  Setoff; No Mitigation. No payments or benefits payable to or with respect to Executive pursuant to this Agreement shall be reduced by any amount other source, except as expressly provided in Section 4(c)(ii). Executive shall have no duty to mitigate his damages by seeking other employment.   Section 7.  Indemnification; D&O Coverage. ADM shall continue to indemnify (including, where required, legal defense) for actions prior to Executive’s Retirement Date to the same extent it indemnifies and provides liability insurance coverage to then-current officers and directors of ADM.   Section 8.  Release. In consideration of the post-retirement compensation and benefits to which Executive would not otherwise be entitled by law, contract or under the policies or practices of ADM that will be provided to Executive pursuant to this Agreement, Executive agrees to execute and deliver to ADM between the Retirement Date and 21 days following the Retirement Date a general release and waiver in a form substantially similar to that used for other senior executives of ADM under which Executive releases and discharges ADM and its affiliates, subsidiaries, joint ventures and related entities, and each of their past and present officers, directors, managers, attorneys, benefit plans and plan administrators and agents, from all claims and causes of action of any kind, including, but not limited to, claims and causes of action arising out of Executive’s employment and retirement, but excluding claims and causes of action relating solely to ADM’s obligations to make payments or provide benefits after Executive’s retirement pursuant to the express terms of this Agreement. Executive will not be entitled to receive such post-retirement benefits until the general release and waiver becomes effective in accordance with its terms.   Section 9.  Death or Disability of Executive. If Executive dies or becomes disabled (as such term is defined in ADM’s long term disability plan) at any time after the date hereof, he (or his estate) shall receive the compensation and benefits described in this Agreement to the extent not previously paid to him.   Section 10.  Binding Effect; Revocation; Modification. The parties understand and agree that this Agreement is final and binding and, together with the Non-Disclosure Agreements previously executed by Executive, constitute the complete and exclusive statement of the terms and conditions relating to Executive’s retirement, that this Agreement supersedes all prior agreements and understandings (oral or written) between Executive and ADM relating to Executive’s employment, Retirement Date, or otherwise, that no representations or commitments were made by the parties to induce this Agreement other than as expressly set forth herein and that this Agreement is fully understood by the parties. This Agreement may not be modified or supplemented except by a modification is sought.   Section 11.  Governing Law. The validity, construction and enforceability of Illinois, without regard to its conflicts of laws rules.   Section 12.   Resolution of Disputes. Any disputes under or in connection with arbitration, to be held in Chicago, Illinois in accordance with the rules and Agreement. Pending the resolution of any arbitration or litigation, ADM shall continue payment of all amounts due the Executive under this Agreement and all benefits to which the Executive is entitled at the time the dispute arises.   Section 13.   Waiver; Severability. No waiver by any party at any time of any enforced accordingly.   Section 14.  Withholding. ADM may withhold from any amounts payable under this   Section 15.  Counterparts. This Agreement may be executed by either of the        ARCHER DANIELS MIDLAND COMPANY              By:       s/s O. Glenn Webb   /s/ G. Allen Andreas   Name:  O. Glenn Webb   G. Allen Andreas  Title:    Lead Director            

Exhibit 10.5 AMENDED AND RESTATED SENIOR LIEN INTERCREDITOR AGREEMENT dated as of August 24, 2016 among as RBL Facility Agent and Applicable First Lien Agent, as Term Facility Agent and Applicable Second Lien Agent, as Priority Lien Term Facility Agent, EP ENERGY LLC and THE SUBSIDIARIES OF EP ENERGY LLC NAMED HEREIN      TABLE OF CONTENTS     Page ARTICLE I Definitions   2 Section 1.01. Construction; Certain Defined Terms. 2 17 Section 2.01. Priority of Claims 17 Section 2.02. 19 Section 2.03. No Duties of Senior Representatives; Provision of Notice 21 Section 2.04. 22 Section 2.05. 24 Section 2.06. Certain Agreements With Respect to Bankruptcy or Insolvency Proceedings 24 Section 2.07. Reinstatement 29 Section 2.08. Insurance 29 Section 2.09. Refinancings 29 Section 2.10. Amendments to Security Documents 30 Section 2.11. 31 32 33 ARTICLE V Miscellaneous   33 Section 5.01. Notices 33 Section 5.02. Waivers; Amendment 34 Section 5.03. Parties in Interest 34 Section 5.04. Survival of Agreement 35 Section 5.05. Counterparts 35 Section 5.06. Severability 35 Section 5.07. 35 Section 5.08. WAIVER OF JURY TRIAL 36 Section 5.09. Headings 36 Section 5.10. Conflicts 36 Section 5.11. 36 Section 5.12. Agent Capacities 37 Section 5.13. Supplements 37 Section 5.14. Requirements For Consent and Acknowledgment 37 Section 5.15. Intercreditor Agreements. 38 Section 5.16. Other Junior Intercreditor Agreements 38 Section 5.17. Further Assurances. 39 -i- EXHIBITS: Exhibit A-1 Consent and Acknowledgment (Other First-Lien Priority Secured Obligations) Exhibit A-2 Consent and Acknowledgment (Other Second-Lien Priority Secured Obligations) ii          This AMENDED AND RESTATED SENIOR LIEN INTERCREDITOR AGREEMENT (this “Agreement”) is dated as of August 24, 2016, among JPMORGAN CHASE BANK, N.A. (“JPM”), as the RBL Facility Agent and the Applicable First Lien Agent, CITIBANK N.A. (“Citi’), as the Term Facility Agent and the Applicable Second Lien Agent, EP Energy LLC (the “Company”), the Subsidiaries of the Company named herein, Citi, as the Priority Lien Term Facility Agent, each Other First-Priority Lien Obligations Agent and each Other Second-Priority Lien Obligations Agent from time to time party hereto. Capitalized terms used but not defined in the preamble and the recitals to this Agreement have the meanings set forth in Section 1.01(b) below. On May 24, 2012, JPM, as the RBL Facility Agent and the Applicable First Lien Agent, Citi, as the Term Facility Agent, the Senior Secured Notes Collateral Agent (as defined therein) and the Applicable Second Lien Agent (as defined therein), the Company, the Subsidiaries of the Company named therein and Wilmington Trust, National Association, as the Senior Secured Notes Trustee (as defined therein), entered into that certain Senior Lien Intercreditor Agreement (the “Existing Senior Lien Intercreditor Agreement”). This Agreement amends and restates the Existing Senior Lien Intercreditor Agreement. On the date hereof, the RBL Facility Agent and the Priority Lien Term Facility Agent are also entering into the Priority Lien Intercreditor Agreement. This Agreement governs the relationship between the First-Priority Lien Obligations Secured Parties as a group, on the one hand, and the Second-Priority Lien Obligations Secured Parties as a group, on the other hand, with respect to the Common Collateral, while (a) the Pari Passu Second-Priority Intercreditor Agreement (as defined below) governs the relationship of the Second-Priority Lien Obligations Secured Parties among themselves with respect to the Term/Notes Priority Collateral and (b) the Priority Lien Intercreditor Agreement governs the relationship of the First-Priority Lien Obligations Secured Parties among themselves with respect to the RBL Priority Collateral. In addition, it is understood and agreed that not all First-Priority Lien Obligations Secured Parties or Second-Priority Lien Obligations Secured Parties, as the case may be, such Person (or its Representative or Collateral Agent) does not otherwise have a security interest. acknowledged, the Applicable First Lien Agent (for itself and on behalf of the RBL Secured Parties and any Other First-Priority Lien Obligations Secured Party), the Applicable Second Lien Agent (for itself and on behalf of the Term Facility Secured Parties and any Other Second-Priority Lien Obligations Secured Party), the Company and the Subsidiaries of the Company party hereto hereby agree to amend and restate the Existing Senior Lien Intercreditor Agreement as follows:   ARTICLE I DEFINITIONS SECTION 1.01.    Construction; Certain Defined Terms. specified below: “Applicable Agent” means (a) with respect to the Term/Notes Priority Collateral, the Applicable Second Lien Agent and (b) with respect to the RBL Priority Collateral, the Applicable First Lien Agent. “Applicable First Lien Agent” means the RBL Facility Agent until it shall have notified in writing the Applicable Second Lien Agent, the Term Facility Agent (if not acting as the Applicable Second Lien Agent), the Priority Lien Term Facility Agent and any Other Second-Priority Lien Obligations Agent that another Representative has become the Applicable First Lien Agent for the First-Priority Lien Obligations Secured Parties, as appointed pursuant to the Priority Lien Intercreditor Agreement, a Pari Passu First-Priority Intercreditor Agreement or other First-Priority Lien Obligations Documents. “Applicable Junior Agent” means (a) with respect to the Term/Notes Priority Collateral, the Applicable First Lien Agent, and (b) with respect to the RBL Priority Collateral, the Applicable Second Lien Agent. “Applicable Possessory Collateral Agent” means (a) with respect to the RBL Priority Possessory Collateral, the Applicable First Lien Agent, and (b) with respect to the Term/Notes Priority Possessory Collateral, the Applicable Second Lien Agent. 2 “Applicable Second Lien Agent” means the Term Facility Agent until it shall have notified in writing the Applicable First Lien Agent, the RBL Facility Agent (if not acting as the Applicable First Lien Agent) and any Other First-Priority Lien Obligations Agent that another Representative has become the Applicable Authorized Representative (as defined in the Pari Passu Second-Priority Intercreditor Agreement) for the Second-Priority Lien Obligations Secured Parties, as appointed pursuant to the Pari Passu Second-Priority Intercreditor Agreement or other Second-Priority Lien Obligations Documents. which banking institutions in New York City or Houston, Texas are authorized by law or other governmental actions to close; provided that when used in connection with a LIBOR Loan (as defined in the RBL Facility, the Term Facility and/or the Priority Lien Term Facility), the term “Business Day” shall also partnership interests (whether general or limited) or membership interests; (d) issuing Person; and (e) any warrants, options or other rights to acquire any of the foregoing; but excluding from all of the foregoing interests any debt securities which are convertible into or exchangeable for any of the foregoing equity interests, whether or not such debt securities include any right of “Citi” has the meaning set forth in the preamble hereto. Obligations. “Collateral” means all assets and properties subject to Liens in favor of any Secured Party created by any of the RBL Facility Security Documents, the Term Facility Security Documents, each Other First-Priority Lien Obligations Security Documents or each Other Second-Priority Lien Obligations Security Documents, as applicable, to secure the RBL Facility Obligations, the Term Facility Obligations, any Series of Other First-Priority Lien Obligations or any Series of Other Second-Priority Lien Obligations, as applicable. “Collateral Agent” means the Term Facility Agent, the RBL Facility Agent, each Other First-Priority Lien Obligations Agent, each Other Second-Priority Lien Obligations Agent, or all of the foregoing, as the context may require. “Common Collateral’ means the portion of the Collateral granted to secure one or more Series of the First-Priority Lien Obligations and one or more Series of the Second-Priority Lien Obligations. 3 “Comparable Junior Obligations Collateral Documents” means, in relation to any Common Collateral subject to any Lien created under any Senior Secured Obligations Collateral Document, those Junior Secured Obligations Documents that create a Lien on the same Common Collateral, granted by the same Grantor. “Consent and Acknowledgment” means, as applicable, either (a) an instrument in form and substance substantially similar to Exhibit A-1 hereto, pursuant to which any Other First-Priority Lien Obligations Secured Party, through its First-Priority Lien Obligations Representative, acknowledges this Agreement and consents to be bound by the terms hereof in accordance with Section 5.14 or (b) an instrument in form and substance substantially similar to Exhibit A-2 hereto, pursuant to which any Other Second-Priority Lien Obligations Secured Party, through its Second-Priority Lien Obligations Representative, acknowledges this Agreement and consents to be bound by the terms hereof in accordance with Section 5.14, in case of each of clauses (a) and (b), acknowledged and confirmed by the Applicable First Lien Agent, the Applicable Second Lien Agent and the Company (on behalf of itself and its Subsidiaries party to this Agreement) for any such Obligations, the payment in full in cash or immediately available funds extent no claim has been made) of all such Obligations then outstanding, if any, outstanding under the agreements or instruments (the “Relevant Instruments”) governing such Obligations, delivery of cash collateral or backstop letters of credit in respect thereof in a manner reasonably satisfactory to the Applicable Agent and issuing lenders under such Relevant Instruments, in each case after or the Relevant Instruments; provided that (i) the Discharge of the RBL Facility Obligations shall not be deemed to have occurred if such payments are made in connection with the establishment of another RBL Facility, (ii) the Discharge of the First-Priority Lien Obligations shall not be deemed to have occurred if such payments are made with the proceeds of other First-Priority Lien Obligations that constitute an exchange or replacement for or a refinancing of such First-Priority Lien Obligations and (iii) the Discharge of the Second-Priority with the proceeds of other Second-Priority Lien Obligations that constitute an exchange or replacement for or a refinancing of such Second-Priority Lien Obligations. In the event that any Obligations are modified and such Obligations are paid over time or otherwise modified under Section 1129 of the Bankruptcy Code pursuant to a confirmed and consummated Plan of Reorganization, such Obligations shall be deemed to be discharged when the final payment is made, in cash or immediately available funds or in the form of consideration otherwise provided for in such Plan of Reorganization, in respect of such Indebtedness and any obligations pursuant to such 4 new Indebtedness shall have been satisfied. The term “Discharged” shall have a corresponding meaning. District of Columbia. applicable Term Facility Documents, the applicable RBL Facility Documents, any applicable Other First-Priority Lien Obligations Document and/or any applicable Other Second-Priority Lien Obligations Document, as the context may require. “First-Priority Lien Obligations” means (i) the RBL Facility Obligations and (ii) the Other First-Priority Lien Obligations. “First-Priority Lien Obligations Documents” means, collectively, the RBL Facility Documents and the Other First-Priority Lien Obligations Documents. “First-Priority Lien Obligations Representative” means each of the RBL Facility Agent and each Other First-Priority Lien Obligations Agent. “First-Priority Lien Obligations Secured Parties” means, collectively, the RBL Facility Secured Parties and the Other First-Priority Lien Obligations Secured Parties. Subsidiary. “Grantor” means the Company and each Subsidiary of the Company that shall have granted any Lien in favor of any Collateral Agent on any of its assets or properties to secure any of the Obligations. transactions, currency options, spot contracts, fixed-price physical delivery contracts, whether or not exchange traded, or any other similar transactions or 5 “Indebtedness”, “Debt” or other comparable terms as defined in the applicable RBL Facility Documents, the applicable Term Facility Documents, any relevant Other First-Priority Lien Obligations Document or any relevant Other Second-Priority Lien Obligations Document. “JPM” has the meaning set forth in the preamble hereto. “Junior Claims” means (a) with respect to the RBL Priority Collateral, the Term Facility Obligations and each Series of Other Second-Priority Lien Obligations, in each case, secured by such Collateral, and (b) with respect to the Term/Notes Priority Collateral, the RBL Facility Obligations and each Series of Other First-Priority Lien Obligations, in each case, secured by such Collateral. “Junior Representative” means (a) with respect to the Term/Notes Priority Collateral, each First-Priority Lien Obligations Representative, and (b) with respect to the RBL Priority Collateral, each Second-Priority Lien Obligations Representative. “Junior Secured Obligations” means (a) with respect to the Term/Notes Priority Collateral, the RBL Facility Obligations and each Series of Other First-Priority Lien Obligations, and (b) with respect to the RBL Priority Collateral, the Term Facility Obligations and each Series of Other Second-Priority Lien Obligations. the Common Collateral in respect of which such Obligations constitute Junior Claims. “Junior Secured Obligations Documents” means, (a) with respect to the Term/Notes Priority Collateral, the First-Priority Lien Obligations Documents and, (b) with respect to the RBL Priority Collateral, the Second-Priority Lien Obligations Documents. Term/Notes Priority Collateral, the RBL Facility Secured Parties and each Other First-Priority Lien Obligations Secured Parties, and (b) with respect to the RBL Priority Collateral, the Term Facility Secured Parties and each Other Second-Priority Lien Obligations Secured Parties. “Lien” has the meaning set forth in the Term Facility, the Priority Lien Term Facility and/or the RBL Facility. 6 “Mortgages” means the RBL Mortgages, the Term/Notes Mortgages, any Other First-Priority Lien Obligations Mortgage and any Other Second-Priority Lien Obligations Mortgage. “obligations” means any principal, interest (including interest accruing during the period of any bankruptcy, insolvency, receivership or other similar proceedings, regardless of whether allowed or allowable in any such proceeding), Indebtedness. “Obligations” means the First-Priority Lien Obligations and the Second-Priority Lien Obligations. “Other First-Priority Lien Obligations” means obligations of the Company and the other Grantors (other than the RBL Facility Obligations) that are equally and ratably secured with the RBL Facility Obligations (or secured with any other priority relative to the RBL Facility Obligations as is permitted under the RBL Facility Documents and effected through intercreditor arrangements with the RBL Facility Agent or the RBL Facility Secured Parties (which intercreditor arrangements may include the Senior Lien Intercreditor Agreement)) and are designated by the Company as “Other First-Priority Lien Obligations” hereunder, including, without limitation, the Priority Lien Term Facility Obligations; provided that (other than with respect to the Priority Lien Term Obligations) the requirements set forth in Section 5.14 shall have been satisfied. “Other First-Priority Lien Obligations Agent” means, with respect to any Series of Other First-Priority Lien Obligations or any separate facility within such Series, the Person elected, designated or appointed as the administrative agent and/or collateral agent, trustee or similar representative of such Series or such separate facility within such Series by or on behalf of the holders of such Series of Other First-Priority Lien Obligations or such separate facility within such Series, and its respective successors in substantially the same capacity as may from time to time be appointed, including, without limitation, the Priority Lien Term Facility Agent in respect of the Priority Lien Term Facility Obligations. “Other First-Priority Lien Obligations Credit Document” means any evidencing any other Indebtedness, in each case to the extent that (i) the obligations in respect thereof constitute Other First-Priority Lien Obligations (including, without limitation, the Priority Lien Term Facility Obligations) and (ii) the Representative with respect thereto has duly executed and delivered the applicable Consent and Acknowledgment (other than with respect to the Priority Lien Term Facility Obligations). 7 “Other First-Priority Lien Obligations Documents” means, collectively, the Other First-Priority Lien Obligations Credit Documents and the Other First-Priority Lien Obligations Security Documents related thereto. “Other First-Priority Lien Obligations Mortgages” means all mortgages, trust and other security documents relating to any Real Estate Asset in favor of the applicable First-Priority Lien Obligations Representative for the benefit of the Other First-Priority Lien Obligations Secured Parties, including, without limitation, the Priority Lien Term Mortgages. “Other First-Priority Lien Obligations Secured Parties” means, collectively, the holders of any Other First-Priority Lien Obligations (including, without limitation, the Priority Lien Term Facility Obligations) who have directly or indirectly through their respective Other First-Priority Lien Obligations Agents, become party to and bound by this Agreement pursuant to (other than in the case of the Priority Lien Term Facility Agent) a Consent and Acknowledgment in accordance with the provisions of Section 5.14 hereof. “Other First-Priority Lien Obligations Security Documents” means, collectively, the security agreements or any other documents now existing or entered into Grantor to secure any Other First-Priority Lien Obligations, including, without limitation, the Priority Lien Term Facility Security Documents. “Other Second-Priority Lien Obligations” means obligations of the Company and the other Grantors (other than the Term Facility Obligations) that are designated by the Company as “Other Second-Priority Lien Obligations” hereunder (including any interest and fees accruing after the commencement of bankruptcy or insolvency proceedings whether or not allowed in such bankruptcy or insolvency proceeding); provided that the requirements set forth in Section 5.14 “Other Second-Priority Lien Obligations Agent” shall mean, with respect to any Series of Other Second-Priority Lien Obligations or any separate facility within such Series, the Person elected, designated or appointed as the administrative agent and/or collateral agent, trustee or similar representative of such Series or such separate facility within such Series by or on behalf of the holders of such Series of Other Second-Priority Lien Obligations or such separate facility within such Series, and its respective successors in substantially the same “Other Second-Priority Lien Obligations Credit Document” means any obligations in respect thereof constitute Other Second-Priority Lien Obligations 8 and (ii) the Representative with respect thereto has duly executed and delivered the applicable Consent and Acknowledgment. “Other Second-Priority Lien Obligations Documents” means, collectively, the Other Second-Priority Lien Obligations Credit Documents and the Other Second-Priority Lien Obligations Security Documents related thereto. “Other Second-Priority Lien Obligations Mortgages” means all mortgages, trust applicable Second-Priority Lien Obligations Representative for the benefit of the Other Second-Priority Lien Obligations Secured Parties. “Other Second-Priority Lien Obligations Secured Parties” means, collectively, the holders of any Other Second-Priority Lien Obligations who have directly or indirectly through their respective Other Second-Priority Lien Obligations Agents, become party to and bound by this Agreement pursuant to a Consent and Acknowledgment in accordance with the provisions of Section 5.14 hereof. “Other Second-Priority Lien Obligations Security Documents” means, collectively, Grantor to secure any Other Second-Priority Lien Obligations. “Pari Passu First-Priority Intercreditor Agreement” means any intercreditor agreement (other than the Priority Lien Intercreditor Agreement) entered into among the RBL Facility Agent and other First-Priority Lien Obligations Representatives to govern the relationship among the First-Priority Lien Obligations Secured Parties among themselves with respect to the RBL Priority Collateral and/or any other portion of the Common Collateral, as the case may be, as amended, supplemented, restated, replaced or otherwise modified from time “Pari Passu Second-Priority Intercreditor Agreement” means that certain Pari Passu Intercreditor Agreement dated as of May 24, 2012 by and among the Term Facility Agent, the Senior Secured Notes Collateral Agent (as defined therein), the Senior Secured Notes Trustee (as defined therein), any other Second-Priority Lien Obligations Representative, the Company and the Subsidiaries of the Company named therein, with respect to the Term/Notes Priority Collateral and/or any other portion of the Common Collateral, as the case may be, as amended, with its terms or any replacement thereof or any other intercreditor agreement governing the rights and remedies of the Second-Priority Lien Obligations Secured Parties amongst themselves, in respect of the Term/Notes Priority Collateral and/or any other portion of the Common Collateral, as applicable. 9 (i) filing a claim or statement of interest with respect to such Obligations; against any Grantor; (ii) taking any action (not adverse to the Liens securing any Senior Secured Obligations, the priority status thereof, or the rights of the Applicable Agent or any of the Senior Secured Obligations Secured Parties to exercise rights, powers and/or remedies in respect thereof) in order to create, perfect, preserve or protect (but not enforce) its Lien on any of the Collateral; (iii) filing any necessary or appropriate responsive or defensive pleadings in any person objecting to or otherwise seeking the disallowance of the claims or Liens of the Junior Secured Obligations Secured Parties, including any claims secured by the Junior Secured Obligations Collateral, in each case in accordance (iv) filing any pleadings, objections, motions or agreements which assert rights and (v) voting on any Plan of Reorganization, filing any proof of claim, making other filings and making any arguments, obligations, and motions (including in Plan of Reorganization) that are, in each case, in accordance with the terms of this Agreement. “Possessory Collateral” means the Common Collateral in the possession or control of any Collateral Agent (or its agents or bailees), to the extent that possession or control thereof perfects a Lien thereon under the Uniform or bailees) thereof. “Priority Lien Intercreditor Agreement” means that certain Priority Lien Intercreditor Agreement of even date herewith by and among the RBL Facility Agent, the Priority Lien Term Facility Agent, the Company and the Subsidiaries of the Company named therein, with 10 respect to the RBL Priority Collateral and/or any other portion of the Common Collateral, as the case may be, as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms or any replacement thereof governing the rights and remedies of the RBL Facility Secured Parties and the Priority Lien Term Facility Secured Parties amongst themselves, in respect of the RBL Priority Collateral and/or any other portion of the Common “Priority Lien Term Collateral Agreement” shall mean the Collateral Agreement dated as of August 24, 2016 among the Company, each other grantor party thereto and the Priority Lien Term Facility Agent, as amended, supplemented or modified “Priority Lien Term Facility” means (i) the Term Loan Agreement, dated as of August 24, 2016, among the Company, each Subsidiary of the Company from time to time party thereto, the lenders and agents party thereto from time to time and the Priority Lien Term Facility Agent, as amended, restated, supplemented, the maturity thereof (except to the extent any such refinancing, replacement or restructuring is designated by the Company to not be included in the definition of “Priority Lien Term Facility”), and (ii) whether or not the credit agreement be included in the definition of “Priority Lien Term Facility” and subject to the satisfaction of the requirements set forth in Section 5.14, one or more (A) “Priority Lien Term Facility Agent” means the administrative agent and collateral agent for the Priority Lien Term Facility Secured Parties, together with its successors in substantially the same capacity as may from time to time be appointed. As of the date hereof, the Priority Lien Term Facility Agent shall be Citi. “Priority Lien Term Facility Documents” means the Priority Lien Term Facility, the Priority Lien Term Facility Security Documents and any other related documents or instruments executed and delivered pursuant to the Priority Lien Term Facility or the Priority Lien Term Facility Security Documents evidencing or governing the obligations thereunder. 11 “Priority Lien Term Facility Obligations” means all “Term Loan Obligations” (as such term is defined in the Priority Lien Term Collateral Agreement) of the Company and other obligors outstanding under, and all other obligations in respect of, the Priority Lien Term Facility or any of the other Priority Lien Term Facility Documents. “Priority Lien Term Facility Secured Parties” means, at any time, the Persons holding any Priority Lien Term Facility Obligations and the successors and permitted assigns thereof, including the Priority Lien Term Facility Agent and each other “Secured Party” as defined in any applicable Priority Lien Term Facility Document. “Priority Lien Term Mortgages” means all mortgages, trust deeds, deeds of trust, documents relating to any Real Estate Asset in favor of the Priority Lien Term Facility Agent for the benefit of the Priority Lien Term Facility Secured Parties, in each case, executed and recorded pursuant to the applicable Priority Lien Term Facility Documents. “Priority Lien Term Security Agreements” means (a) the Priority Lien Term Collateral Agreement and (b) the Pledge Agreement dated as of August 24, 2016, among the Company, each other pledgor party thereto and the Priority Lien Term Facility Agent, as amended, supplemented or modified from time to time in “Priority Lien Term Security Documents” means the Priority Lien Term Security Agreements, the Priority Lien Term Mortgages and any other documents now or properties of any Grantor to secure any Priority Lien Term Facility Obligations. “RBL Facility” means (i) the Credit Agreement dated as of May 24, 2012, among the Company, EPE Holdings LLC, the lenders and agents party thereto from time to time and the RBL Facility Agent, as amended, restated, supplemented, waived, the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the of “RBL Facility”), and (ii) whether or not the facility referred to in clause definition of “RBL Facility” and subject to the satisfaction of the requirements set forth in Section 5.14, one or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables purpose entities formed to borrow from lenders against such receivables) or financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances) or (C) instruments or agreements evidencing issuers and, in each case, as amended, 12 “RBL Facility Agent” means the administrative agent and the collateral agent for the RBL Facility Secured Parties, together with its successors or co-agents in substantially the same capacity as may from time to time be appointed. As of the date hereof, JPM shall be the RBL Facility Agent. “RBL Facility Documents” means the documentation in respect of the RBL Facility, the RBL Facility Security Agreements and the other “Credit Documents” or comparable terms as defined in the RBL Facility. “RBL Facility Obligations” means all “Obligations” (as such term is defined in the Credit Agreement referred to in clause (i) of the definition of the RBL Facility) of the Company and other obligors outstanding under, and all other obligations in respect of, the RBL Facility or any other RBL Facility Documents. “RBL Facility Secured Parties” means, at any time, the Persons holding any RBL Facility Obligations and the successors and permitted assigns thereof, including the RBL Collateral Agent and each other “Secured Party” as defined in any applicable RBL Facility Document, including each counterparty to any Hedge Agreement or any provider of cash management services, the obligations of which are “Obligations” under the RBL Facility Security Agreements. “RBL Facility Security Agreements” means (a) the Collateral Agreement dated as of May 24, 2012, among the Company, EPE Holdings LLC, each other grantor party thereto and the RBL Facility Agent, as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms, (b) the Pledge Agreement dated as of May 24, 2012, among the Company, each other pledgor party thereto and the RBL Facility Agent, as amended, supplemented or modified from time to time in accordance with its terms, and (c) such other security agreements and pledge agreements entered into from time to time in respect of any RBL Facility described in clause (ii) of the definition thereof, as amended, supplemented, restated or other modified from time to time in accordance with their respective terms. “RBL Facility Security Documents” means the RBL Facility Security Agreements, the RBL Mortgages and any other documents now existing or entered into after the secure any RBL Facility Obligations. “RBL Mortgages” means all “Mortgages” as defined in the RBL Facility. “RBL Priority Collateral” means all of the assets of each Grantor now owned or at any time hereafter acquired constituting Common Collateral, other than the Term/Notes Priority Collateral, to the extent a security interest therein has been or may hereafter be granted to the RBL Facility Agent under the RBL Facility Security Documents or any Other First-Priority Obligations Agent under the Other First-Priority Lien Obligations Security Documents. 13 “RBL Priority Possessory Collateral” means RBL Priority Collateral that is Possessory Collateral. leasehold or otherwise) then owned by any Grantor in any real property. thereof). “Refinanced” and “Refinancing” shall have correlative meanings. “Representative” means (a) in the case of any RBL Facility Obligations, the RBL Facility Agent, (b) in the case of any Term Facility Obligations, the Term Facility Agent, (c) in the case of any Series of Other First-Priority Lien Obligations, each Other First-Priority Lien Obligations Agent of such Series and (d) in the case of any Series of Other Second-Priority Lien Obligations, each Other Second-Priority Lien Obligations Agent of such Series. successor thereto. “Second-Priority Lien Obligations” means the Term Facility Obligations and the Other Second-Priority Lien Obligations. “Second-Priority Lien Obligations Documents” means the Term Facility Documents and each Other Second-Priority Lien Obligations Documents. “Second-Priority Lien Obligations Representative” means, collectively, each of the Term Facility Agent and each Other Second-Priority Lien Obligations Agent. “Second-Priority Lien Obligations Secured Parties” means each of the Term Facility Secured Parties and each Other Second-Priority Lien Obligations Secured Party. “Secured Parties” means, collectively, the First-Priority Lien Obligations Secured Parties and the Second-Priority Lien Obligations Secured Parties. “Senior Claims” means, (a) with respect to the RBL Priority Collateral, each of the First-Priority Lien Obligations secured by such Collateral and, (b) with respect to the Term/Notes Priority Collateral, each of the Second-Priority Lien Obligations secured by such Collateral. “Senior Representative” means, (a) with respect to the Term/Notes Priority Collateral, each Second-Priority Lien Obligations Representative and, (b) with respect to the RBL Priority Collateral, each First-Priority Lien Obligations Representative. 14 “Senior Secured Obligations” means, (a) with respect to the Term/Notes Priority Collateral, the Second-Priority Lien Obligations and, (b) with respect to the RBL Priority Collateral, the First-Priority Lien Obligations. The First-Priority Lien Obligations shall, collectively, constitute one “Class” of Senior Secured Obligations and the Second-Priority Lien Obligations shall, collectively, constitute a separate “Class” of Senior Secured Obligations. the Common Collateral in respect of which such Obligations constitute Senior Claims. “Senior Secured Obligations Collateral Documents” means each Senior Secured Obligations Document pursuant to which a Lien is now or hereafter granted securing any Senior Secured Obligations or under which rights or remedies with “Senior Secured Obligations Documents” means, (a) with respect to the Term/Notes Priority Collateral, the Second-Priority Lien Obligations Documents and, (b) with respect to the RBL Priority Collateral, the First-Priority Lien Obligations Documents. “Senior Secured Obligations Secured Parties” means, (a) with respect to the Term/Notes Priority Collateral, the Second-Priority Lien Obligations Secured Parties and, (b) with respect to the RBL Priority Collateral, the First-Priority Lien Obligations Secured Parties. “Series” means, as applicable, (a)    each of the RBL Facility Obligations and each series of Other First-Priority Lien Obligations, each of which shall constitute a separate Series of the Class of Senior Secured Obligations constituting First-Priority Lien Obligations except that, in the event any two or more series of such Other First-Priority Lien Obligations (i) are secured by identical Collateral held by a common collateral agent and (ii) the Company designates such other First-Priority Lien Obligations to constitute a single Series, such series of Other First-Priority Lien Obligations shall collectively constitute a single Series. The First-Priority Lien Obligations Secured Parties with respect to each Series of First-Priority Lien Obligations shall constitute a separate Series of First-Priority Lien Obligations Secured Parties; and (b)    each of the Term Facility Obligations and each series of Other Second-Priority Lien Obligations, each of which shall constitute a separate Series of the Class of Senior Secured Obligations constituting Second-Priority Lien Obligations, except that, in the event that any two or more series of such Other Second-Priority Lien Obligations (i) are secured by identical Collateral held by a common collateral agent and (ii) the Company designates such Other Second-Priority Lien Obligations to constitute a single Series, such series of Other Second-Priority Lien Obligations shall collectively constitute a single Series. The Second-Priority Lien Obligations Secured Parties with respect to each Series of Second-Priority Lien Obligations shall constitute a separate Series of Second-Priority Lien Obligations Secured Parties. 15 “Subsidiary” has the meaning set forth in the Term Facility, the RBL Facility, each Other First-Priority Lien Obligations Credit Document and/or each Other Second-Priority Lien Obligations Credit Document. “Term Facility” means (i) the Term Loan Agreement, dated as of April 24, 2012, among the Company, each Subsidiary of the Company from time to time party thereto, the lenders and agents party thereto from time to time and the Term Facility Agent, as amended, restated, supplemented, waived, replaced (whether or is designated by the Company to not be included in the definition of “Term definition of “Term Facility” and subject to the satisfaction of the “Term Facility Agent” means the administrative agent and collateral agent for the Term Facility Secured Parties, together with its successors in substantially the same capacity as may from time to time be appointed. As of the date hereof, the Term Facility Agent shall be Citi. “Term Facility Documents” means the Term Facility, the Term Facility Security Documents and any other related documents or instruments executed and delivered pursuant to the Term Facility or the Term Facility Security Documents evidencing “Term Facility Obligations” means all “Term Loan Obligations” (as such term is defined in the Term/Notes Collateral Agreement) of the Company and other obligors outstanding under, and all other obligations in respect of, the Term Facility or any of the other Term Facility Documents. “Term Facility Secured Parties” means, at any time, the Persons holding any Term the Term Facility Agent and each other “Secured Party” as defined in any applicable Term Facility Document. 16 “Term/Notes Collateral Agreement” shall mean the Collateral Agreement dated as of May 24, 2012 among the Company, each other grantor party thereto and the Term “Term/Notes Mortgages” means all mortgages, trust deeds, deeds of trust, deeds relating to any Real Estate Asset in favor of the Applicable Second Lien Agent for the benefit of the Term Facility Secured Parties and any Other Second-Priority Lien Obligations Secured Parties, in each case, executed and recorded pursuant to the applicable Second-Priority Lien Obligations Documents. “Term/Notes Priority Collateral” means all “Pledged Stock” (as such term is defined in each Pledge Agreement referred to in clause (b) of the definition of Term/Notes Security Agreements and the RBL Facility Security Agreements or such comparable term as defined in any relevant Other First-Priority Lien Obligations Security Documents or Other Second-Priority Lien Obligations Security Documents), or any assets within the scope of such definitions secured under any other replacement First-Priority Lien Obligations Document or Second-Priority Lien Obligation Document, in each case to the extent constituting Common Collateral. “Term/Notes Priority Possessory Collateral” shall mean Term/Notes Priority Collateral that is Possessory Collateral. “Term/Notes Security Agreements” means (a) the Term/Notes Collateral Agreement and (b) the Pledge Agreement dated as of May 24, 2012, among the Company, each other pledgor party thereto and the Term Facility Agent, as amended, “Term/Notes Security Documents” means the Term/Notes Security Agreements, the Term/Notes Mortgages and any other documents now existing or entered into after secure any Term Facility Obligations. ARTICLE II      PRIORITIES AND AGREEMENTS WITH RESPECT TO COLLATERAL the First-Priority Lien Obligations Documents or the Second-Priority Lien Obligations Documents to the contrary notwithstanding, if an Event of Default has occurred and is continuing, and any Collateral Agent is taking action to enforce rights in respect of any Collateral (whether in an Insolvency or Liquidation Proceeding or otherwise), or any distribution is made in respect of any Collateral in any Insolvency or Liquidation Proceeding with respect to any Grantor, the Proceeds (subject, in the case of any such distribution, to Section to as “Proceeds”) shall be applied as follows: 17 (i) In the case of the Term/Notes Priority Collateral, FIRST, to the Applicable Second Lien Agent for distribution in accordance with the Pari Passu Second-Priority Intercreditor Agreement or any other applicable Second-Priority Lien Obligations Documents until payment in full of all Second-Priority Lien Obligations, and SECOND, to the Applicable First Lien Agent for distribution in accordance with the Priority Lien Intercreditor Agreement or any other applicable First-Priority Lien Obligations Documents until payment in full of all First-Priority Lien Obligations. (ii) In the case of the RBL Priority Collateral, FIRST, to the Applicable First Lien Agent for distribution in accordance with Obligations, and SECOND, to the Applicable Second Lien Agent for distribution in accordance with Secured Obligations may, subject to the limitations set forth in the applicable RBL Facility Documents, Term Facility Documents, Other First-Priority Lien Obligations Documents and Other Second-Priority Lien Obligations Documents, as applicable, be Refinanced from time to time, all without affecting the defining the relative rights of the First-Priority Lien Obligations Secured Parties vis-a-vis the Second-Priority Lien Obligations Secured Parties, and (ii) a portion of the Senior Secured Obligations consists or may consist of Indebtedness that is revolving in nature, and the amount thereof that may be subsequently reborrowed. The priorities provided for herein shall not be altered or otherwise affected by any Refinancing of either the Junior Secured Obligations (or any part thereof) or the Senior Secured Obligations (or any part thereof), by the release of any Collateral or of any guarantees for any Senior Secured Obligations or any Junior Secured Obligations or by any action that any Collateral. attachment or perfection of any Liens securing the First-Priority Lien Obligations granted on the Collateral or of any Liens securing the Second-Priority Lien Obligations granted on the Collateral and notwithstanding any provision of the Uniform Commercial Code of any 18 jurisdiction, or any other applicable law or the Term Facility Documents, the RBL Facility Documents, any Other First-Priority Lien Obligations Document or any Other Second-Priority Lien Obligations Document, or any defect or deficiencies in, or failure to perfect, any such Liens or any other circumstance whatsoever: (i) (1) the Liens on the Term/Notes Priority Collateral securing the Second-Priority Lien Obligations will rank senior to any Liens on the Term/Notes Priority Collateral securing the First-Priority Lien Obligations, and (2) the Liens on the RBL Priority Collateral securing the First-Priority Lien Obligations will rank senior to any Liens on the RBL Priority Collateral securing the Second-Priority Lien Obligations; (ii) the Applicable First Lien Agent and each First-Priority Lien Obligations Representative, on behalf of themselves and the First-Priority Lien Obligations Secured Parties, hereby agree that the priority of the Liens securing the First-Priority Lien Obligations as among the holders of First-Priority Lien Obligations shall be governed by the Priority Lien Intercreditor Agreement, any Pari Passu First-Priority Intercreditor Agreement or other First-Priority Lien Obligations Documents, as applicable; and (iii) the Applicable Second Lien Agent and each Second-Priority Lien Obligations Representative, on behalf of themselves and the Second-Priority Lien Obligations Second-Priority Lien Obligations as among the holders of Second-Priority Lien Obligations shall be governed by the Pari Passu Second Priority Intercreditor Agreement or other Second-Priority Lien Obligations Documents, as applicable. SECTION 2.02.    Actions With Respect to Collateral; Prohibition on Contesting Liens. (a)    Each of the Applicable First Lien Agent and the Applicable Second Lien Agent, on behalf of itself, each relevant Representative and the relevant Secured Parties, acknowledges and agrees that, until the Discharge of all of the Senior Secured Obligations of a particular Class, (i) only the Applicable Agent shall act or refrain from acting with respect to the Senior Secured Obligations Collateral of such Class and then only on the instructions of the applicable Senior Representative (given in accordance with the Senior Secured Obligations Documents), (ii) no Collateral Agent shall follow any instructions with respect to such Senior Secured Obligations Collateral from any Junior Representative, any of the Junior Secured Obligations Secured Parties or any Applicable Junior Agent, (iii) none of the Applicable Junior Agent, any Junior Representative or any Junior Secured Obligations Secured Party shall, nor shall any of them instruct any Collateral Agent to, commence any judicial or nonjudicial take any action to enforce its interest in or realize upon, or take any other action 19 available to it in respect of, any Senior Secured Obligations Collateral, whether under any RBL Facility Security Document, any Term Facility Security Document, any Other First-Priority Lien Obligations Security Documents or any Other Second-Priority Lien Obligations Security Documents, as applicable, applicable law or otherwise, it being agreed that (A) only the Applicable Agent, acting in accordance with the RBL Facility Security Documents or the Other First-Priority Lien Obligations Security Documents, as applicable, shall be Collateral Agent to do so and (B) notwithstanding the foregoing, the Applicable Junior Agent and each Junior Representative may take Permitted Remedies, and (iv) the Applicable Junior Agent, on behalf of itself, each Junior Representative and the other Junior Secured Obligations Secured Parties, hereby waives any right of subrogation it or any of them may acquire as a result of any payment hereunder until the Discharge of the Senior Secured Obligations has occurred. The Applicable Agent and each Senior Representative may deal with the Senior Secured Obligations Collateral as if they had a senior Lien on such Collateral; provided that, (A) with respect to the First-Priority Lien Representatives, the provisions of the Priority Lien Intercreditor Agreement, any Pari Passu First-Priority Intercreditor Agreement or other First-Priority Lien Obligations Documents shall also be complied with and (B) with respect to the Second-Priority Lien Representatives, the provisions of the Pari Passu Second-Priority Intercreditor Agreement or other Second-Priority Lien Obligations Documents shall also be complied with. Furthermore, each of the Applicable First Lien Agent and the Applicable Second Lien Agent, on behalf of itself, each relevant Representative and the relevant Secured Parties, acknowledges and agrees that no Applicable Junior Agent, Junior Representative or any other Junior Secured Obligations Secured Party will contest, protest or object to any foreclosure proceeding or action brought by any Senior Representative or any other Senior Secured Obligations Secured Party or any other exercise by any Senior Representative or any other Senior Secured Secured Obligations Collateral. (b)    (i) The Applicable Second Lien Agent, each of the Term Facility Agent, the other Term Facility Secured Parties, the Other Second-Priority Lien Obligations Agents and the other Other Second-Priority Lien Obligations Secured Parties each agrees that it will not (and hereby waives any right to) contest or enforceability of a Lien held by or on behalf of any of the RBL Facility Secured Parties and any Other First-Priority Lien Obligations Secured Parties in all or any part of the Collateral, or the provisions of this Agreement. (ii)    The Applicable First Lien Agent, each of the RBL Facility Agent, the other RBL Facility Secured Parties, the Other First-Priority Lien Obligations Agents and the other Other First-Priority Lien Obligations Secured Parties each a Lien held by or on behalf of any of the Second-Priority Lien Obligations Agreement; 20 the rights of any of the Applicable Second Lien Agent, the Term Facility Agent, any Term Facility Secured Party, the Applicable First Lien Agent, the RBL Facility Agent, any other RBL Facility Secured Party, any Other First-Priority Lien Obligations Agent, any other Other First-Priority Lien Obligations Secured Parties, any Other Second-Priority Lien Obligations Agent or any other Other Second-Priority Lien Obligations Secured Parties to enforce this Agreement. (c)    The parties hereto agree to execute, acknowledge and deliver a memorandum of Intercreditor Agreement, together with such other documents in furtherance hereof or thereof, in each case, in proper form for recording in connection with any Mortgages and in form and substance reasonably satisfactory to each of the Collateral Agents, in those jurisdictions where such recording is reasonably recommended or requested by local real estate counsel and/or the title insurance company, or as otherwise deemed reasonably necessary or proper SECTION 2.03.    No Duties of Senior Representatives; Provision of Notice. (a)    Each of the Applicable Junior Agent, Junior Representatives and other Junior Secured Obligations Secured Parties acknowledges and agrees that: (i) none of the Applicable Agent, Senior Representatives or any other Senior Secured Obligations Secured Party shall have any duties or other obligations to the Applicable Junior Agent, the Junior Representatives or the Junior Secured Obligations Secured Parties with respect to any Senior Secured Obligations Collateral, other than to transfer to the Applicable Junior Agent any Proceeds of any such Collateral that constitutes Junior Secured Obligations Collateral remaining in its possession following any sale, transfer or other disposition of such Collateral (in each case, unless the Junior Secured Obligations have been Discharged prior to or concurrently with such sale, transfer, disposition, payment or satisfaction) and the Discharge of the Senior Secured Obligations secured thereby, or if any Senior Representative shall be in possession of all or any part of such Collateral after such payment and satisfaction in full and termination, such Collateral or any part thereof remaining, in each case without any representation or warranty on the part of such Senior Representative or any other Senior Secured Obligations Secured Party; (ii) in furtherance of the foregoing, until the Discharge of the Senior Secured Obligations shall have occurred, the Applicable Agent shall be entitled, for the benefit of the Senior Secured Obligations Secured Parties, to sell, transfer or otherwise dispose of or deal with such Collateral as provided herein and in the applicable Senior Secured Obligation Documents, without regard to any Junior Claims held by any Junior Secured Obligations Secured Party or any rights to which the Junior Secured Obligations Secured Parties would otherwise be entitled as a result of such Junior Claims; and (iii) without limiting the foregoing, none of the Applicable Agent, Senior Representatives or any other Senior Secured Obligations securing the Senior Secured Obligations), or to sell, dispose of or otherwise liquidate all or any portion of such Collateral (or any other collateral securing the Senior Secured Obligations), in any manner that would maximize the return to the Junior Secured Obligations Secured Parties, notwithstanding that may affect the amount of proceeds actually received by the Junior Secured Obligations Secured 21 Applicable Junior Agent, Junior Representatives and other Junior Secured Obligations Secured Parties waives any claim it or any other Junior Secured Obligations Secured Party may now or hereafter have against the Applicable Agent, any Senior Representative or any other Senior Secured Obligations Secured Party (or their representatives) arising out of (i) any actions which the Applicable Agent, such Senior Representative or any such other Senior Secured Obligations Secured Party takes or omits to take (including actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions collection of any claim for all or any part of the Senior Secured Obligations relevant Senior Secured Obligations Documents or any other agreement related (ii) any election by the Applicable Agent, any Senior Representative or any other Senior Secured Obligations Secured Party, in any proceeding instituted Bankruptcy Code or (iii) subject to Section 2.06, any borrowing by, or grant of (b)    The RBL Facility Agent shall, after obtaining actual knowledge that it no longer qualifies as the Applicable First Lien Agent, notify the Company, the other First-Priority Lien Obligations Representatives and the Second-Priority Lien Obligations Representatives of the same. (c)    The Term Facility Agent shall, after obtaining actual knowledge that it no longer qualifies as the Applicable Second Lien Agent, notify the Company, the other Second-Priority Lien Obligations Representatives and the First-Priority SECTION 2.04.    No Interference; Payment Over; Reinstatement. (a) Each of the Obligations Secured Parties agrees that (i) it will not take or cause to be taken any action, the purpose or effect of which is, or could be, to make any Junior Claim pari passu with, or to give such Junior Secured Obligations Secured Party any preference or priority relative to, any Senior Claim with respect to the Collateral securing the Senior Claims or any part thereof, (ii) it will not RBL Facility Security Document, Term Facility Security Document, Other First-Priority Lien Obligations Security Document or Other Second-Priority Lien Obligations Security Document or the validity, attachment, perfection or priority of any Lien under the RBL Facility Security Documents, the Term Facility Security Documents, Other First-Priority Lien Obligations Security Documents or Other Second-Priority Lien Obligations Security Documents, or the validity or enforceability of the priorities, rights or duties established by or the Applicable Agent, any 22 Senior Representative or any other Senior Secured Obligations Secured Party, (iv) it shall not have any right to (A) direct the Applicable Agent, any Senior Representative or any other Senior Secured Obligations Secured Party to exercise any right, remedy or power with respect to any Senior Secured Obligations Collateral or (B) consent to the exercise by the Applicable Agent, any Senior Representative or any other Senior Secured Obligations Secured Party of any right, remedy or power with respect to any Senior Secured Obligations Collateral, (v) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Applicable instructions or otherwise with respect to, and none of the Applicable Agent, any Senior Representative or any other Senior Secured Obligations Secured Party shall be liable for, any action taken or omitted to be taken by the Applicable Agent, any Collateral Agent, any Senior Representative or other Senior Secured Obligations Secured Party with respect to any Senior Secured Obligations Senior Secured Obligations Collateral or any part thereof marshaled upon any foreclosure or other disposition of such Collateral and (vii) it will not rights of any of the Applicable First Lien Agent, the Applicable Second Lien Agent, the Term Facility Agent, any other Term Facility Secured Party, the RBL Parties, any Other Second-Priority Lien Obligations Agent, or any other Other Second-Priority Lien Obligations Secured Parties to enforce this Agreement in (b)    Each of the Applicable Junior Agent, Junior Representatives and other Junior Secured Obligations Secured Parties hereby agrees that if it shall obtain possession of any Senior Secured Obligations Collateral or shall realize any proceeds or payment in respect of any such Collateral, pursuant to any RBL Facility Security Document, Term Facility Security Document, Other First-Priority Lien Obligations Security Document, Other Second-Priority Lien Obligations Security Document or by the exercise of any rights available to it or any of them under applicable law or in any Insolvency or Liquidating Discharge of the Senior Secured Obligations, then it shall hold such Collateral, proceeds or payment in trust for the Senior Secured Obligations Secured Parties Applicable Agent reasonably promptly after obtaining actual knowledge (or notice from the Applicable Agent) that it is in possession of such Collateral, proceeds or payment. Each of the Applicable Junior Agent, Junior Representatives and other Junior Secured Obligations Secured Parties agrees that, if at any time it receives notice or obtains actual knowledge that all or part of any payment with respect to any Senior Secured Obligations previously made shall be rescinded for any reason whatsoever, it shall promptly pay over to the Applicable Agent any respect of any Senior Secured Obligations Collateral and shall promptly turn over any Senior Secured Obligations Collateral then held by it over to the Applicable Agent, and the provisions set forth in this Agreement shall 23 be reinstated as if such payment had not been made, until the Discharge of the Senior Secured Obligations has occurred. SECTION 2.05.    Automatic Release of Junior Liens. (a) Each of the Applicable Second Lien Agent, Second-Priority Lien Obligations Representatives and other Second-Priority Lien Obligations Secured Parties agrees that in the event of a sale, transfer or other disposition of any RBL Priority Collateral in connection with the foreclosure upon or other exercise of rights and remedies with respect to such RBL Priority Collateral that results in the release by the Applicable First Lien Agent of the Lien held by the Applicable First Lien Agent on such RBL Priority Collateral (regardless of whether or not an Event of Default has occurred and is continuing under the Second-Priority Lien Obligations Documents at the time of such sale, transfer or other disposition), the Lien held by each Second-Lien Collateral Agent on such RBL Priority Collateral shall be automatically released; provided that, notwithstanding the foregoing, all Second-Priority Lien Obligations Secured Parties shall be entitled to any Proceeds of a sale, transfer or other disposition under this clause (a) that remain after Discharge of the First-Priority Lien Obligations, and the Liens on such remaining Proceeds securing the Second-Priority Lien Obligations shall not be automatically released pursuant to this Section 2.05(a). (b)    Each of the Applicable First Lien Agent, First-Priority Lien Obligations Representatives and other First-Priority Lien Obligations Secured Parties agrees that in the event of a sale, transfer or other disposition of any Term/Notes rights and remedies with respect to such Term/Notes Priority Collateral that results in the release by the Applicable Second Lien Agent of the Lien held by the Applicable Second Lien Agent on such Term/Notes Priority Collateral (regardless of whether or not an Event of Default has occurred and is continuing under the First-Priority Lien Obligations Documents at the time of such sale, transfer or other disposition), the Lien held by the Applicable First Lien Agent on such Term/Notes Priority Collateral shall be automatically released; provided that, notwithstanding the foregoing, all holders of the First-Priority Lien Obligations shall be entitled to any Proceeds of a sale, transfer or other disposition under this clause (b) that remain after Discharge of the Second-Priority Lien Obligations, and the Liens on such remaining Proceeds securing the First-Priority Lien Obligations shall not be automatically released pursuant to this Section 2.05(b). (c)    Each of the Applicable Junior Agent, Junior Representatives and other Junior Secured Obligations Secured Parties agrees to execute and deliver (at the instruments as shall reasonably be requested by the Applicable Agent or any Senior Representative acting on behalf of the relevant Senior Secured Obligations Secured Parties to evidence and confirm any release of Junior Collateral provided for in this Section 2.05. similar law by or against the Company or any of its Subsidiaries. Without limiting the generality of the foregoing, the provisions of this 24 (b)    If the Company or any of its Subsidiaries shall become subject to a case (a “Bankruptcy Case”) under the Bankruptcy Code: (i) if the Applicable First Lien Agent desires to permit the use of cash collateral or to permit the Company and/or any of its Subsidiaries to obtain financing under Section 363 or Section 364 of the Bankruptcy Code or under any other similar law (“DIP Financing”) either secured by a Lien on, or constituting the proceeds of, the RBL Priority Collateral, then the Applicable Second Lien Agent and the Second-Priority Lien Obligations Secured Parties hereby agree: (A) not to object to such use of cash collateral or DIP Financing or to request adequate protection (except as otherwise expressly permitted by the terms of this Agreement) or any other relief in connection therewith so long as the Second-Priority Lien Obligations Secured Parties retain the benefit of their Liens on the RBL Priority Collateral, including Proceeds thereof arising after the commencement of such Bankruptcy Case (to the extent provided for under applicable law), with the same priority vis-à-vis the First-Priority Lien Obligations Secured Parties (other than with respect to any DIP Financing Liens granted thereto) as existed prior to the commencement of such Bankruptcy Case and (B) to the extent the Liens on the RBL Priority Collateral securing the First-Priority Lien Obligations are subordinated or pari passu with such DIP Financing, to subordinate its Liens on the RBL Priority Collateral to the Liens granted to the lenders providing such DIP Financing (and all obligations relating thereto, including any “carve-out” from the RBL Priority Collateral granting administrative priority status or Lien priority to secure the payment of fees and expenses of the United States Trustee or professionals retained by any debtor or creditors’ committee agreed to by the Applicable First Lien Agent or the First-Priority Lien Obligations Secured Parties) and to any adequate protection Liens granted to the Applicable First Lien Agent on the same basis as the Liens on such RBL Priority Collateral securing the First-Priority Lien Obligations are subordinated to such DIP Financing or to confirm the priorities with respect to such RBL Priority Collateral as set forth herein, as applicable; and (ii) if the Applicable Second Lien Agent desires to permit the Company and/or any of its Subsidiaries to obtain any DIP Financing secured by a Lien on Term/Notes Priority Collateral, then the Applicable First Lien Agent and the First-Priority Lien Obligations Secured Parties hereby agree: (A) not to object to such DIP Financing or to request adequate protection (except as otherwise expressly permitted by the terms of this Agreement) or any other relief in connection therewith so long as the First-Priority Lien 25 Obligations Secured Parties retain the benefit of their Liens on the Term/Notes Priority Collateral, including Proceeds thereof arising after the commencement of such Bankruptcy Case (to the extent provided for under applicable law), with the same priority vis-à-vis the Second-Priority Lien Obligations Secured Parties (other than with respect to any DIP Financing Liens granted thereto) as existed prior to the commencement of such Bankruptcy Case and (B) to the extent the Liens on Term/Notes Priority Collateral securing the Second-Priority Lien Obligations are subordinated or pari passu with such DIP Financing, to subordinate its Liens on the Term/Notes Priority Collateral to the Liens granted to the lenders providing such DIP Financing (and all obligations relating thereto, including any “carve-out” from the Term/Notes Priority Collateral any debtor or creditors’ committee agreed to by the Applicable Second Lien Agent or the Second-Priority Lien Obligations Secured Parties) and to any adequate protection Liens granted to the Applicable Second Lien Agent on the same basis as the Liens on such Term/Notes Priority Collateral securing the Second-Priority Lien Obligations are subordinated to such DIP Financing or to confirm the priorities with respect to such Term/Notes Priority Collateral as set forth Junior Secured Obligations Secured Parties agrees that it will not object to and will not otherwise contest: (i) any motion for relief from the automatic stay or from any injunction against foreclosure or enforcement in respect of the Senior Secured Obligations made by the Applicable Agent, any Senior Representative or any other Senior Secured Obligations Secured Party; (ii) any lawful exercise by any holder of Senior Claims of the right to credit bid Senior Claims in any sale in foreclosure of Collateral that is Senior Secured Obligations Collateral with respect to such Senior Claims; (iii) any other request for judicial relief made in any court by the Applicable Agent, any Senior Representative or any other Senior Secured Obligations Secured Party relating to the lawful enforcement of any Lien on the Senior Secured Obligations Collateral; or (iv) any sale or other disposition of any Senior Secured Obligations Collateral (or any portion thereof) under Section 363 of the Bankruptcy Code or any other applicable provision of the Bankruptcy Code if the Senior Secured Obligations Secured Parties of any Series or the relevant Senior Representative acting on their behalf shall have consented to such sale or disposition of such Senior Secured Obligations Collateral and the applicable order approving such sale or disposition provides that, to the extent the sale is to be free and clear of Liens, the Liens securing the Senior Secured Obligations and the Junior Secured Obligations will attach to the Proceeds of the sale on the same basis of 26 (d)    Each of the Applicable Junior Agent, Junior Representatives and other Junior Secured Obligations Secured Parties agree that it will not seek relief from the automatic stay or any other stay in any insolvency or liquidation proceeding with respect to Senior Secured Obligations Collateral without the prior consent of the Applicable Agent. (e)    Each of the Applicable Junior Agent, Junior Representatives and other Junior Secured Obligations Secured Parties hereby agrees that it will not object to and will not otherwise contest (or support any other Person contesting): (i) any request by the Applicable Agent or any Senior Secured Obligations Secured Party (or any Senior Representative acting on its behalf) for adequate protection with respect to the applicable Senior Secured Obligations Collateral or (ii) any objection by the Applicable Agent or any Senior Secured Obligations Secured Party (or any Senior Representative acting on its behalf) to any motion, relief, action or proceeding based on the Applicable Agent or any Senior Secured Obligations Secured Party (or any Senior Representative acting on its behalf) claiming a lack of adequate protection with respect to the applicable Senior Secured Obligations Collateral. Notwithstanding the foregoing, in any Insolvency or Liquidation Proceeding, (I)(x) if the Senior Secured Obligations Secured Parties (or any subset thereof) are granted adequate protection in the form of a Lien on additional or replacement collateral, then the Applicable Junior Agent or replacement collateral, so long as, with respect to the Senior Secured Obligations Collateral, such Lien is subordinated to the adequate protection Lien granted to the holders of the applicable Senior Secured Obligations, on the same basis as the other Liens securing Junior Secured Obligations on the Senior Secured Obligations Collateral are subordinated to the Liens on Senior Secured Obligations Collateral securing the Senior Secured Obligations under this Agreement and (y) each of the Applicable Junior Agent, Junior Representatives and Junior Secured Obligations Secured Parties hereby agrees that in the event the Applicable Junior Agent seeks or requests adequate protection and such adequate protection is granted in the form of a Lien on additional or replacement collateral, then the Senior Secured Obligations Secured Parties (or the Applicable Agent or the relevant Senior Representative(s) acting on their behalf) shall also be granted a Lien on such additional or replacement collateral as adequate protection for the Senior Secured Obligations and that any adequate protection Lien on such additional or replacement collateral that constitutes Senior Secured Obligations Collateral securing the Junior Secured Obligations shall be subordinated to the adequate protection Liens on such collateral granted to the holders of the Senior Secured Obligations and any other Liens on Senior Secured Obligations Collateral granted to the holders of Senior Secured Obligations on the same basis as the Liens securing Junior Secured Obligations are so subordinated to the Liens securing the Senior Secured Obligations under this Agreement, and (II)(x) if the Senior Secured Obligations form of a superpriority administrative claim, then the Applicable Junior Agent may seek or request adequate protection in the form of a superpriority administrative claim, so long as such claim is subordinated to the adequate protection superpriority claim granted to the holders of the applicable Senior Secured Obligations on the same basis as the other claims with respect to the Junior Secured Obligations are subordinated to the claims with respect to the Senior Secured Obligations under this Agreement and (y) each of the Applicable Junior Agent, Junior Representatives and Junior Secured Obligations Secured Parties hereby agrees that in the event the Applicable Junior Agent seeks or requests adequate 27 superpriority administrative claim, then the Senior Secured Obligations Secured Parties (or the Applicable Agent or the relevant Senior Representative(s) acting on their behalf) shall also be granted a superpriority administrative claim and that any claim granted with respect to the Junior Secured Obligations shall be subordinated to the superpriority administrative claim granted with respect to the Senior Secured Obligations as adequate protection on the same basis as the claims with respect to the Junior Secured Obligations are so subordinated to the claims with respect to the Senior Secured Obligations under this Agreement. (f)    Each of the Applicable Junior Agent, Junior Representatives and other Junior Secured Obligations Secured Parties hereby agrees that (i) it will not oppose or seek to challenge any claim by the Applicable Agent, any Senior Representative or any other Senior Secured Obligations Secured Party for allowance of Senior Secured Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the Applicable Agent’s Lien on the Senior Secured Obligations Collateral, without regard to the existence of the Lien of the Junior Secured Obligations Secured Parties on the Senior Secured Obligations Collateral; and (ii) until the Discharge of Senior Secured Obligations has occurred, the Applicable Junior Agent, on behalf of itself, the Junior Representatives and the Junior Secured Obligations Secured Parties, will disposing of any Collateral. (g)    The Applicable Second Lien Agent, on behalf of itself, the Term Facility Agent, the Term Facility Secured Parties, each Other Second-Priority Lien Obligations Agent and the Other Second-Priority Lien Obligations Secured Parties of the applicable Series, and the Applicable First Lien Agent, on behalf of itself, the RBL Facility Agent, the RBL Facility Secured Parties, each Other First-Priority Lien Obligations Agent and the Other First-Priority Lien Obligations Secured Parties of the applicable Series, acknowledges and intends that: the grants of Liens pursuant to the Second-Priority Lien Obligations Security Documents, on the one hand, and the First-Priority Lien Obligations Security Documents, on the other hand, constitute separate and distinct grants of Liens, and because of, among other things, their differing rights in the Collateral, the First-Priority Lien Obligations are fundamentally different from the Second-Priority Lien Obligations and must be separately classified in any the First-Priority Lien Obligations Secured Parties and the Second-Priority Lien Obligations Secured Parties in respect of any Collateral constitute claims in the same class (rather than separate classes of secured claims), then the Obligations Secured Parties hereby acknowledge and agree that all distributions from the Common Collateral shall be made as if there were separate classes of First-Priority Lien Obligations and Second-Priority Lien Obligations against the the RBL Priority Collateral or the Term/Notes Priority Collateral is sufficient (for this purpose ignoring all claims held by the other Secured Parties for whom such Collateral is Junior Secured Obligations Collateral), the First-Priority Lien Obligations Secured Parties or the Second-Priority Lien Obligations Secured 28 that are available from the Senior Secured Obligations Collateral for each of Obligations Secured Parties (regardless of whether any such claims may or may not be allowed or allowable in whole or in part as against the Company or any of the Grantors in the applicable Insolvency or Liquidation Proceeding(s) pursuant to Section 506(b) of the Bankruptcy Code or otherwise), respectively, before any distribution is made in respect of the Junior Claims from, or with respect to, such Collateral, with the holder of such Junior Claims hereby acknowledging and agreeing to turn over to the respective other Secured Parties amounts otherwise received or receivable by them from, or with respect to, such Collateral to the turnover has the effect of reducing their aggregate recoveries). restructuring plan, both on account of First-Priority Lien Obligations and on account of Second-Priority Lien Obligations, then, to the extent the debt obligations distributed on account of the First-Priority Lien Obligations and on account of the Second-Priority Lien Obligations are secured by Liens upon the Common Collateral, the provisions of this Agreement will survive the Obligations shall have been paid in full and such payment or any part thereof full in cash. SECTION 2.08.    Insurance. As between the Applicable First Lien Agent, on the one hand, and the Applicable Second Lien Agent, the Term Facility Agent and any Other Second-Priority Lien Obligations Agent, on the other hand, only the Applicable First Lien Agent will have the right (subject to the rights of the Grantors under the Term Facility Documents, the RBL Facility Documents, the Other First-Priority Lien Obligations Documents and the Other Second-Priority Lien Obligations Documents) to adjust or settle any insurance policy or claim covering or constituting the RBL Priority Collateral in the event of any loss proceeding affecting the RBL Priority Collateral.   SECTION 2.09.    Refinancings. The RBL Facility Obligations, the Term Facility Obligations, any Series of Other First-Priority Lien Obligations, any Series of Other Second-Priority Lien Obligations and the agreements or indentures governing them may be Refinanced, in each case, without notice to, or the consent (except to the extent a consent is otherwise 29 required to permit the refinancing transaction under any RBL Facility Document, any Term Facility Document, any applicable Other First-Priority Lien Obligations Document or any applicable Other Second-Priority Lien Obligations Document) of any Term Facility Secured Party, any RBL Facility Secured Party, any Other First-Priority Lien Obligations Secured Party or any Other Second-Priority Lien Obligations Secured Party, all without affecting the priorities provided for herein or the other provisions hereof; provided, however, that the requirements set forth in Section 5.14 shall have been satisfied. In connection with any Refinancing contemplated by this Section 2.09, this Agreement may be amended at the request and sole expense of the Company, and without the consent of any Representative, (a) to add parties (or any authorized agent or trustee therefor) providing any such Refinancing, (b) to confirm that such Refinancing Indebtedness in respect of any First-Priority Lien Obligations shall have the same rights and priorities in respect of any RBL Priority Collateral vis-à-vis the Second-Priority Lien Obligations as the Indebtedness being Refinanced and (c) to confirm that such Refinancing Indebtedness in respect of any Second-Priority Lien Obligations shall have the same rights and priorities in respect of any Term/Notes Priority Collateral vis-à-vis the First-Priority Lien Obligations as the Indebtedness being Refinanced, all on the terms provided for herein immediately prior to such Refinancing. SECTION 2.10.    Amendments to Security Documents. (a)    Each of the Applicable Junior Agent and Junior Representatives agrees that each applicable Junior Secured Obligations Document executed as of the date hereof shall include the following language (or language to similar effect approved by the relevant Applicable Agent): interests granted to [applicable Junior Representative] for the benefit of the [applicable Junior Secured Obligations Secured Parties] pursuant to this Agreement and (ii) the exercise of any right or remedy by [applicable Junior Representative] hereunder or the application of proceeds (including insurance proceeds and condemnation proceeds) of any Common Collateral, are subject to the provisions of the Amended and Restated Senior Lien Intercreditor Agreement dated as of August 24, 2016 (as amended, restated, supplemented, replaced or otherwise modified from time to time, the “Senior Lien Intercreditor Agreement”), among Citibank, N.A., as Term Facility Agent and Applicable Second Lien Agent, JPMorgan Chase Bank, N.A., as RBL Facility Agent and Applicable First Lien Agent, Citibank, N.A., as Priority Lien Term Facility Agent, EP Energy LLC and the Subsidiaries of EP Energy LLC party thereto. In the event of any conflict between the terms of the Senior Lien Intercreditor Agreement and the terms of this Agreement, the terms of the Senior Lien Intercreditor Agreement shall govern.” 30 (b)    In the event that any Applicable Agent, any Senior Representative or any Senior Secured Obligations Secured Party enters into any amendment, waiver or consent in respect of or replaces any Senior Secured Obligations Collateral consenting to any departures from any provisions of, any Senior Secured Obligations Collateral Document or changing in any manner the rights of such Applicable Agent, the applicable Senior Representative or the applicable Senior Secured Obligations Secured Parties, the Company or any other Grantor thereunder (including the release of any Liens on any Senior Secured Obligations any comparable provision of each Comparable Junior Obligations Collateral Document without the consent of the Applicable Junior Agent, any Junior Representative or any Junior Secured Obligations Secured Party and without any action by any of the Applicable Junior Agent, Junior Representative or Junior Secured Obligations Secured Party; provided, that such amendment, waiver or consent does not materially adversely affect the rights of the Applicable Junior Agent, any Junior Representative or any Junior Secured Obligations Secured Party in the Senior Secured Obligations Collateral and not in the Senior Secured Obligations Secured Parties that have a security interest in the affected Collateral in a like or similar manner (without regard to the fact that the Liens of such Senior Secured Obligations Collateral Document are senior to the Liens of the Comparable Junior Obligations Collateral Document). The relevant Applicable Agent shall give written notice of such amendment, waiver or consent to the Applicable Junior Agent (which shall forward such notice upon receipt to each relevant Junior Representative); provided that the failure to give such with respect to the provisions of any Junior Obligations Collateral Document as set forth in this Section 2.10(b). SECTION 2.11.    Possessory Collateral Agent as Gratuitous Bailee for Perfection. (a)  Each of the Applicable First Lien Agent and the Applicable Second Lien Agent, on behalf of itself and the relevant Secured Parties, hereby agrees that: (i) each Possessory Collateral Agent shall hold the Possessory of its agents or bailees) as gratuitous bailee for the benefit of each Secured interest granted in such Possessory Collateral pursuant to the Term Facility Security Documents, the RBL Facility Security Documents, the Other First-Priority Lien Obligations Security Documents or the Other Second-Priority Lien Obligations Security Documents, subject to the terms and conditions of this Section 2.11; (ii) to the extent any Possessory Collateral is possessed by or is under the control of a Collateral Agent (either directly or through its agents or bailees) other than the Applicable Possessory Collateral Agent, such Collateral Agent shall deliver such Possessory Collateral to (or shall cause such Possessory Collateral to be delivered to) the Applicable Possessory Collateral Agent and shall take all actions reasonably requested in writing by the Applicable Possessory Collateral Agent to cause the Applicable Possessory Collateral Agent to have possession or control of same; and • pending such Agent shall hold any Possessory Collateral as gratuitous bailee for the benefit pursuant to the applicable RBL Facility Security Documents, Term Facility Security Documents, Other First-Priority Lien Obligations 31 Security Documents or Other Second-Priority Lien Obligations Security Documents, in each case, subject to the terms and conditions of this Section 2.11. (b)    The duties or responsibilities of the Possessory Collateral Agent and each other Collateral Agent under this Section 2.11 shall be limited solely to holding the Possessory Collateral as gratuitous bailee for the benefit of each Secured Party for purposes of perfecting the security interest held by the Secured Parties therein. (c)    Each of the Applicable Second Lien Agent and Second-Priority Lien Obligations Representatives hereby agrees that, upon the Discharge of all Second-Priority Lien Obligations, it shall deliver to the Applicable First Lien endorsements (or otherwise allow the Applicable First Lien Agent to obtain control of such Possessory Collateral) or as a court of competent jurisdiction may otherwise direct. The Company shall take such further action as is required to effectuate the transfer contemplated hereby and shall indemnify the Possessory Collateral Agent for loss or damage suffered by the Possessory by the Possessory Collateral Agent as a result of its own willful misconduct, gross negligence or bad faith. None of the Term Facility Agent or any Other Second-Priority Lien Obligations Agent shall be obligated to follow instructions from the Applicable First Lien Agent in contravention of this Agreement. (d)    Each of the Applicable First Lien Agent and First-Priority Lien First-Priority Lien Obligations, it shall deliver to the Applicable Second Lien endorsements (or otherwise allow the Applicable Second Lien Agent to obtain gross negligence or bad faith. Neither the RBL Facility Agent nor any Other First-Priority Lien Obligations Agent shall be obligated to follow instructions from the Applicable Second Lien Agent in contravention of this Agreement. ARTICLE III Junior Secured Obligations, or the Collateral subject to 32 writing by the other Representatives and shall be entitled to make such that if a Representative shall fail or refuse reasonably promptly to provide the requested information, the requesting Representative shall be entitled to make Company. Each Representative may rely conclusively, and shall be fully protected Subsidiaries, any Secured Party or any other Person as a result of such determination. ARTICLE IV      CONSENT OF GRANTORS of the Grantors under the Term Facility Security Documents, the RBL Facility Security Documents, the Other First-Priority Lien Obligations Security Documents and the Other Second-Priority Lien Obligations Security Documents will in no way be diminished or otherwise affected by such provisions or arrangements (except as expressly provided herein or therein). ARTICLE V      MISCELLANEOUS service, mailed by certified or registered mail, sent by facsimile, or sent to the e-mail address of the applicable recipient specified below (or the email address of a representative of the applicable recipient designated by such recipient from time to time to the parties hereto), as follows: (a)    if to the Applicable Second Lien Agent as of the date hereof or the Term Facility Agent, to it at Citibank, N.A., Global Loans, Ops 111, 1615 Brett Road, New Castle, DE 19720, Attn: Dan Boselli (Facsimile No. (212) 994-0961, Email: Daniel.john.boselli@citi.com); (b)    if to the Applicable First Lien Agent as of the date hereof, the RBL Facility Agent, to it at JPMorgan Chase Bank, N.A., 712 Main Street, Floor 85, Houston, TX, 77002, Attn: Jo Linda Papadakis (Telephone No. (713) 216-7743, Facsimile No. (713) 216-7770, Email: jo.l.papadakis@jpmorgan.com); (c)    if to the Priority Lien Term Facility Agent as of the date hereof, to it at Citibank, N.A., Global Loans, Ops 111, 1615 Brett Road, New Castle, DE 19720, 33 (d)    if to the Company, to it at EP Energy LLC, 1001 Louisiana Street, Houston, TX 77002, Attn: Dane Whitehead and Marguerite Woung-Chapman (Facsimile No. (713) 420-6603); and (e)    if to any other Grantor, to it in care of the Company as provided in Section 5.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 5.01. shall be permitted by clause (b) of this Section, and then such waiver or circumstances. (b)    Subject to the last sentence of Section 2.10(b) and Section 5.14 hereof, neither this Agreement nor any provision hereof may be terminated, waived, entered into by the Applicable First Lien Agent (as directed by the Representative of each Series of the First-Priority Lien Obligations (with the consent of the relevant First-Priority Lien Obligations Secured Parties of such Series to the extent required by, and in accordance with, the terms of the applicable First-Priority Lien Obligations Documents)), the Applicable Second Lien Agent (as directed by the Representative of each Series of Second-Priority Lien Obligations (with the consent of the relevant Second-Priority Lien Obligations Secured Parties of such Series to the extent required by, and in accordance with, the terms of the applicable Second-Priority Lien Obligations Documents)) and, to the extent such amendment, waiver or modification adversely affects its rights and obligations, the Company. 34 the other RBL Facility Secured Parties, the other Term Facility Secured Parties, the Other First-Priority Lien Obligations Secured Parties and the Other Second-Priority Lien Obligations Secured Parties, all of whom are intended to be this Agreement by electronic or facsimile transmission shall be as effective as SECTION 5.07.    Governing Law; Jurisdiction; Consent to Service of Process. (a) 35 in any court referred to in clause (b) of this Section 5.07. Each of the parties SECTION 5.09.    Headings. Article, Section and Annex headings used herein are this Agreement. SECTION 5.10.    Conflicts. In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any of the Term Facility Documents, the RBL Facility Documents, any Other First-Priority Lien Obligations Documents and/or any Other Second-Priority Lien Obligations SECTION 5.11.    Provisions Solely to Define Relative Rights. The provisions of relative rights of the First-Priority Lien Obligations Secured Parties and the Second-Priority Lien Obligations Secured Parties in relation to one another. Agreement (provided that nothing in this Agreement (other than Section 2.05, 2.06, 2.10, 2.11 and Article V) is intended to or will amend, waive or otherwise modify the provisions of the Term Facility, the RBL Facility, any Other First-Priority Lien Obligations Credit Documents or any Other Second-Priority Lien Obligations Credit Documents), and none of the Company, or any other Grantor may rely on the terms hereof (other than Sections 2.05, 2.06, 2.10, 2.11 obligations of the Company or any other Grantor, which are absolute and payable in accordance with their terms. Notwithstanding anything to the contrary herein or in any RBL Facility Document, any Term Facility Document, any Other First-Priority Lien Obligations Document or any Other Second-Priority Lien Obligations Document, the Grantors shall not be required to act or refrain from 36 acting (a) pursuant to this Agreement, any Term Facility Document or any Other Second-Priority Lien Obligations Document, as the case may be, with respect to any RBL Priority Collateral in any manner that would cause a default under any RBL Facility Document or any Other First-Priority Lien Obligations Document, or (b) pursuant to this Agreement, any RBL Facility Document or any Other First-Priority Lien Obligations Document, as the case may be, with respect to any Term/Notes Priority Collateral in any manner that would cause a default under any Term Facility Document or any other Other Second-Priority Lien Obligations Document. SECTION 5.12.    Agent Capacities. Except as expressly set forth herein, none of the Term Facility Agent, the RBL Facility Agent, the Other First-Priority Lien Obligations Agents or the Other Second-Priority Lien Obligations Agents shall duties and obligations, if any, being subject to and governed by the Term Facility Documents, the RBL Facility Documents, the applicable Other First-Priority Lien Obligations Documents or the applicable Other Second-Priority Lien Obligations Documents, as the case may be. It is understood and agreed that (i) JPM is entering into this Agreement in its capacity as administrative agent under the RBL Facility, and the provisions of Section 12 of Facility applicable to JPM as administrative agent and collateral agent thereunder shall also apply to JPM as the RBL Agent hereunder and (ii) Citi is entering into this Agreement in its capacity as (x) administrative agent and collateral agent under the Term Loan Agreement referred to in clause (i) of the definition of Term Facility and collateral agent under the Term Facility Security Documents and (y) administrative agent and collateral agent under the Term Loan Agreement referred to in clause (i) of the definition of Priority Lien Term Facility and collateral agent under the Priority Lien Term Facility Security Documents, and the provisions of Article IV of the Pari Passu Second-Priority Intercreditor Agreement applicable to the collateral agent thereunder shall also apply to Citi as Term Facility Agent hereunder. SECTION 5.13.    Supplements. Upon the execution by any Subsidiary of the Company of a supplement hereto in form and substance satisfactory to the Applicable First Lien Agent and the Applicable Second Lien Agent, such provisions hereof to the same extent as the Company and each Grantor are so bound. SECTION 5.14.    Requirements For Consent and Acknowledgment. The Company may designate hereunder additional obligations as RBL Facility Obligations, Term Facility Obligations, Priority Term Facility Obligations, Other First-Priority Lien Obligations, Other Second-Priority Lien Obligations or as a Refinancing of the Senior Secured Obligations or Second-Priority Lien Obligations of any Series if the incurrence of such obligations is permitted under each of the First-Priority Lien Obligations Documents, the Second-Priority Lien Obligations Documents and this Agreement. If so permitted, the Company shall (i) notify the Applicable Agent in writing of such designation (and the Applicable Agent shall forward such notice to each Representative then existing) and (ii) cause any applicable agent in connection with such designation or Refinancing to execute and deliver to each Representative then existing, a Consent and Acknowledgment substantially in the form of Exhibit A-1 or Exhibit A-2, as applicable, hereto. In connection with any Other First-Priority Lien Obligations or Other 37 Second-Priority Lien Obligations contemplated by this Section 5.14, this Agreement may be amended at the request and sole expense of the Company, by the Applicable First Lien Agent and the Applicable Second Lien Agent (without the consent of any Secured Party hereunder) (a) to add parties (or any authorized agent or trustee therefor) providing any such obligations, (b) to confirm that the holders of such Other First-Priority Lien Obligations shall have the same rights and priorities with respect to the Collateral vis-a-vis the holders of the Second-Priority Lien Obligations as the other First-Priority Obligations and (c) to confirm that such Other Second-Priority Lien Obligations shall have the same rights and priorities with respect to the Collateral vis-a-vis the holders of the First-Priority Lien Obligations as the other Second-Priority Obligations. SECTION 5.15.    Intercreditor Agreements. Notwithstanding anything to the contrary contained in this Agreement, each party hereto agrees that the First-Priority Lien Obligations Secured Parties (as among themselves) and the Second-Priority Lien Obligations Secured Parties (as among arrangements) with the Applicable First Lien Agent or the Applicable Second Lien Agent, respectively, governing the rights, benefits and privileges as among the First-Priority Lien Obligations Secured Parties or the Second-Priority Lien Obligations Secured Parties, as the case may be, in respect of the Common Collateral, this Agreement, the RBL Facility Security Documents, any Other First-Priority Lien Obligations Security Documents, the Term Facility Security Documents or any Other Second-Priority Lien Obligations Security Documents, as the case may be, including as to the application of Proceeds of the Common Collateral, the priority in respect of the Common Collateral, voting rights, control of the Common Collateral and waivers with respect to the Common with the provisions of this Agreement, any First-Priority Lien Obligations Documents or any Second-Priority Lien Obligations Documents, as the case may be. In any event, if a respective intercreditor agreement (or similar arrangement) amendment, modification or other change to this Agreement, any First-Priority Lien Obligations Document or any Second-Priority Lien Obligations Document, and the provisions of this Agreement and the First-Priority Lien Obligations Documents and Second-Priority Lien Obligations Documents shall remain in full provisions may be amended, supplemented or otherwise modified from time to time SECTION 5.16.    Other Junior Intercreditor Agreements. In addition, in the event that the Company or any Subsidiary incurs any obligations secured by a lien on any Collateral that is junior to any Series of First-Priority Lien Obligations (and not designated hereunder as Second-Priority Lien Obligations) or junior to the Second-Priority Lien Obligations, then the Applicable First Lien Agent and/or the Applicable Second Lien Agent may enter into an intercreditor agreement with the agent or trustee for the lenders with respect to such secured obligations to reflect the relative lien priorities of such parties with respect to the Collateral and governing the relative rights, including as to application of Proceeds of the Collateral, priority in respect of 38 Common Collateral, voting rights, control of the Collateral and waivers with respect to the Collateral, in each case so long as such secured obligations are Lien Obligations Documents or the Second-Priority Lien Obligations Documents, as the case may be. If any such intercreditor agreement (or similar arrangement) is entered into, the provisions thereof shall not be (or be construed to be) an Lien Obligations Documents or any Second-Priority Lien Obligations Documents, and the provisions of this Agreement, the First-Priority Lien Obligations Documents and the Second-Priority Lien Obligations Documents shall remain in in accordance with the respective terms thereof, including to give effect to any Each of the Applicable First Lien Agent, on behalf of itself and each applicable First-Priority Lien Obligations Secured Party, and the Applicable Second Lien Agent, on behalf of itself, each Second-Priority Lien Obligations Representative and each other Second-Priority Lien Obligations Secured Party, agrees that it and each of them shall take such further action and shall execute and deliver to the other Applicable Agent and the Secured Parties of the other Class such additional documents and instruments (in recordable form, if requested) as such Applicable Agent or such Secured Parties may reasonably request to effectuate the terms of, and the Lien priorities contemplated by, this Agreement. above written. JPMORGAN CHASE BANK, N.A., as RBL Agent and Applicable First Lien Agent By: /s/ Jo Linda Papadakis____________________ Title: Authorized Officer CITIBANK, N.A., as Term Facility Agent and Applicable Second Lien Agent 39 By: /s/ Joseph Roffini ______________________ Name: Joseph Roffini Title: Vice President CITIBANK, N.A., as Priority Lien Term Facility Agent Name: Joseph Roffini Title: Vice President EP ENERGY LLC By:    /s/ Kyle A. McCuen______________________ EP ENERGY GLOBAL LLC          EXHIBIT A-1 CONSENT AND ACKNOWLEDGMENT1  This CONSENT AND ACKNOWLEDGMENT (this “Consent”) dated as of [mm] [dd], [yyyy], is executed by [ ], as an Other First-Priority Lien Obligations Agent (the “New Agent”), and acknowledged by [JPMORGAN CHASE BANK, N.A.], as the Applicable First Lien Agent, [CITIBANK, N.A.], as the Applicable Second Lien Agent, and EP Energy LLC (on behalf of itself and certain of its Subsidiaries). This Consent is with respect to that certain Amended and Restated Senior Lien Intercreditor Agreement, dated as of August 24, 2016 (as the same may be Reference is made to [describe new indebtedness] with respect to which [new agents] (the “New Agent”) is acting as [trustee/collateral agent/authorized representative]. First-Priority Lien Obligations Agent solely for the Secured Parties under [ ].   1 To be updated in the event of a Refinancing debt or other debt provided for in Section 5.14.   above written. [NEW AGENT] By:_______________ Title: Name: [ ], as Applicable First Lien Agent By:_____________________________ Title: Name:   [ ], as Applicable Second Lien Agent By:_____________________________ Title: Name: Intercreditor Agreement By:_____________________________ Title: Name:          EXHIBIT A-2 CONSENT AND ACKNOWLEDGMENT2  (Other Second-Priority Lien Obligations) is executed by [ ], as an Other Second-Priority Lien Obligations Agent (the “New representative]. Agreement as an Other Second-Priority Lien Obligations Agent as if it were an Other Second-Priority Lien Obligations Agent as of the date of the Intercreditor Second-Priority Lien Obligations Agent solely for the Secured Parties under [ ].                                                     2To be updated in the event of a Refinancing debt or other debt provided for in Section 5.14.            above written. [NEW AGENT] By:_______________ Title: Name: By:_____________________________ Title: Name:   By:_____________________________ Title: Name: Intercreditor Agreement By:_____________________________ Title: Name: